Annual Report & Accounts 2022
Roger White
Chief Executive
I am pleased to present A.G. BARR p.l.c.’s Annual Report
and Accounts for the 53-week year ended 30 January 2022.
We aim to provide a fair, balanced and understandable assessment of the
Company, including our business model, strategy, performance and prospects
in relation to material financial, economic, social, environmental and
governance issues.
Our report includes a comprehensive assessment of the principal risks facing
the business. It also seeks to identify and evaluate matters that are of common
material interest to our stakeholders and to our business, to understand how
they may affect our ability to create value over time. These matters are integral
to our planning processes and help support the delivery of our strategy.
Our overarching business purpose remains steadfast – to create value, with
values – for our shareholders, consumers, customers and for society as a whole.
We do this by building great brands.
I am delighted with the resilience that our business has demonstrated over the
past 12 months. We have continued to provide excellent customer service, high
quality products and strong business support to all of our customers. We have
delivered an excellent financial performance against a volatile backdrop, whilst
at the same time delivering on our strategic priorities, and I am particularly
proud of the progress we have made across our “No Time To Waste”
environmental sustainability programme.
I remain confident in both our ability to deliver continued growth in both revenue
and profit in the coming year and in our longer-term continued success,
delivering on our strategic priorities – connecting with consumers, building
brands, driving efficiency and building trust.
1
Full year dividend*
12.0p
Excludes 10.0p special dividend
paid in October 2021
IN THIS REPORT
STRATEGIC REPORT
Our Business 2
Our Brands 4
Chairman’s Introduction 6
Our Business Model 8
Our Strategy and Financial KPIs 10
Chief Executive’s Review 12
Our Strategy in Action 18
Responsibility Report 22
Non-Financial KPIs 24
Financial Review 46
Risk Management 50
CORPORATE GOVERNANCE
Board of Directors 58
Corporate Governance Report 60
Audit and Risk Committee Report 72
Directors’ Remuneration Report 76
Directors’ Report 110
Statement of Directors’ Responsibilities 116
ACCOUNTS
Independent Auditor’s Report to the
members of A.G. BARR p.l.c. only 117
Consolidated Income Statement 126
Statements of Financial Position 127
Statement of Comprehensive Income 128
Statement of Changes in Equity 129
Cash Flow Statements 131
Notes to the Accounts 132
Glossary 188
Reconciliation of Non-GAAP Measures 190
Notice of Annual General Meeting 192
A.G. Barr is a UK-based branded consumer goods business focused on growth.
We are brand owners and builders, offering a diverse and differentiated
portfolio of products that people love.
Revenue
£268.6m
18.3%
Profit before tax*
(before exceptional items)
£41.5m
26.5%
Basic earnings per share (EPS)
25.09p
46.1%
Corporate Governance
Our section 172(1) statement describing how the directors have had regard to the matters set out in section 172(1)(a) to (f) when
performing their duties under section 172 of the Companies Act 2006 is set out in the Corporate Governance Report on pages 60 to 71
and is incorporated by reference into this Strategic Report.
Year-on-year movement compares the 53-week financial year
ended 30 January 2022 with the 52-week financial year ended
24 January 2021.
* Items marked with an asterisk are non-GAAP measures. Definitions and relevant reconciliations are provided in the Glossary
on pages 188 to 191.
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A.G. BARR p.l.c. Annual Report and Accounts 2022
Our Business
Established over 140 years ago in
Scotland and now operating across the
UK and with export markets throughout
the world, we strive to grow our business
both organically and through
partnerships and acquisition.
Employing 895 people across nine
UK locations, we are proud to be a
responsible business that listens to our
consumers, builds lasting customer
relationships, takes care of our people,
values diversity, gives something back
to our communities and works to
minimise our environmental impact.
At our core is the Barr Soft Drinks
business unit, home to some of the
UK’s most loved soft drinks brands. We
make it our business to understand what
consumers want and build great tasting
and differentiated soft drinks brands that
people love.
Whether it’s the iconic IRN-BRU,
launched in 1901 and still going strong
today, our vibrant RUBICON fruit, juice
and energy drinks, or our unique range
of BARR flavours, our brands offer
people a choice of great tasting
products and bring exciting innovation
to the market.
Enhancing our portfolio, we also operate
a limited number of brand partnerships,
complementing our own range of
products with global brands SNAPPLE
and BUNDABERG Brewed Drinks in the
UK and beyond.
But we’re not just about soft drinks –
our FUNKIN business unit operates in
the exciting and growing cocktail market.
The FUNKIN brand’s mission is to
democratise cocktails, providing
innovative and unique purées, syrups and
mixers, as well as ready to drink cocktails
for behind the bar and at home.
Over recent years we have also entered
new markets such as zero proof spirits
and plant-based milk, taking equity
stakes in small but high potential
businesses – initially with the STRYKK
brand and most recently through an
equity stake in MOMA Foods Limited.
Number of employees
895
Brands
15
UK sites
9
A.G. Barr is a branded consumer goods business focused on growth.
Our overarching purpose is to create value, with values – for our
shareholders, consumers, customers and for society as a whole.
We do this by building great brands.
Our people and culture
For more information on our people,
culture and employee values see
pages 22 to 30.
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Strategic Report Corporate Governance Accounts
Connecting with
consumers
Driving efficiency
Building trust
Building brands
OUR STRATEGIC
PRIORITIES
OUR PURPOSE & MISSION
To create value, with values – for our shareholders, consumers, customers
and for society as a whole. We do this by building great brands.
OUR BUSINESS
MODEL
Make
Market
Sell
Move
OUR EMPLOYEE VALUES
A shared culture supported by EPIC values at Funkin and Barr Behaviours in our Barr Soft Drinks business
OUR RESPONSIBILITY
Our values include our commitment to responsible actions, underpinned by four key commitments:
Acting with
integrity
Respecting the
environment
Supporting
healthy living
Giving
back
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A.G. BARR p.l.c. Annual Report and Accounts 2022
Our Brands
We are brand owners and builders, offering a diverse
and differentiated portfolio of products that people love.
An iconic brand with a unique taste. IRN-BRU
offers consumers choice – Regular, Sugar Free,
XTRA, Energy and 1901 – all containing the
same IRN-BRU essence, bru’d to a secret recipe
of 32 flavours since 1901.
Funkin cocktails are best served
everywhere. The Funkin brand provides
innovative and unique purées, syrups,
mixers and ready to drink cocktails, for
behind the bar and at home – making
ordinary occasions extraordinary.
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Strategic Report Corporate Governance Accounts
Discover different with Rubicon’s big bold flavours
that you don’t find in your everyday fruit bowl.
Rubicon has a range of fruity still, sparkling,
flavoured water and energy drinks, making Rubicon
the unboring choice of soft drink.
BARR FLAVOURS
A fun, energetic brand that
has been bringing families
a unique range of great
tasting and great value
flavours since 1875.
PORTFOLIO AND PARTNERSHIP BRANDS
Our wide portfolio of regional and specialist brands, alongside
our complementary partnership brands, enhance our core
brand proposition.
Brands that people love
Information on our full portfolio
of brands can be found at
https://www.agbarr.co.uk/our-brands/
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A.G. BARR p.l.c. Annual Report and Accounts 2022
Chairman’s
Introduction
“As my tenure at A.G. Barr draws to a close, I am delighted that
my last introduction to the Annual Report and Accounts sees
the business return to strong growth. I hand the Chairman’s
role across to Mark Allen OBE with the business in good
health and with a team excited and motivated for the future.”
John R. Nicolson
Chairman
During my seven years as Chairman, the business has
shown both its resilience and decisiveness in response
to external factors, from a sugar tax to a global pandemic,
but more importantly it has demonstrated its internal
strength and drive for growth. This resolve and ambition
have been as evident as ever in the past 12 months.
Revenue grew by 18.3% year-on-year and we finished
the year with profit before tax and exceptional items*
of £41.5m, 26.5% ahead of the prior year and ahead
of our pre Covid-19 profit levels, which included the
Rockstar brand.
These results are all the more pleasing taking into
account the continued impact of the Covid-19
pandemic, industry-wide labour and supply chain
challenges and the current inflationary backdrop.
Highlights during the year included:
• Strong momentum across the soft drinks portfolio,
supported by continued brand investment
• Significant progress made in further establishing
Funkin as a leading consumer cocktail brand
• Innovation success, particularly in the energy
category
• The 61.8% equity investment in MOMA Foods
Limited, demonstrating the Group’s continued
ambition and drive to find opportunities to
participate in exciting new growth categories
The entire A.G. Barr team has remained focused
on delivering our brand building strategy, investing
for growth and creating a business to be proud of.
Dividend
We recommenced dividend payments during the
financial year with both an interim and a special
dividend paid in October 2021. The Group benefited
from a number of one-off cash inflows that were
outside normal trading and the Board concluded
that a special dividend should be distributed to
shareholders, recognising the one-off and
non-operating nature of the cash receipts.
At the end of the full financial year, the Board is now
pleased to maintain its progressive dividend policy and
recommends a final dividend of 10.0p per share to give
a proposed total dividend for the full year of 12.0p per
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Strategic Report Corporate Governance Accounts
“The entire A.G. Barr team
has remained focused
on delivering our brand
strategy, investing for
growth and creating a
business to be proud of.”
John R. Nicolson
Chairman
share, plus the 10.0p special dividend paid in October
2021. The final dividend is payable on 10 June 2022 to
shareholders on the Register of Members at the close
of business on 13 May 2022. The ex-dividend date is
12 May 2022.
Board
As previously communicated, we were pleased to
welcome Mark Allen OBE and Zoe Howorth to the
Board in July 2021 as independent Non-Executive
Directors. Both are already adding significant value
to our Board discussions. Zoe also chairs the newly
established Environmental, Social and Governance
(ESG) Committee which has already played an
important role in the development of the Group’s
net-zero commitments.
Mark will assume the role of Chairman in April 2022
and I have every confidence that he will lead the
Board very effectively, bringing his significant
experience and leadership capability to the fore.
Having completed eight years as a Non-Executive
Director, Pam Powell stood down from the Board at
the end of June 2021 as part of the long-term Board
succession plan. We would like to thank Pam for her
support, insight and guidance during her term on
theBoard.
Responsibility
It has been a year of real progress throughout
our responsibility agenda, particularly so across
our “No Time To Waste” environmental sustainability
programme. Roger shares more detail in his Chief
Executive’s Review, and a full review of the year’s
activity is detailed in the Responsibility Report on
pages 22 to 45. However, I would particularly highlight
another year-on-year improvement in our Climate
Disclosure Project (CDP) climate change questionnaire
score. CDP is a globally recognised environmental
disclosure system and our improved A- classification is
a welcome independent and external validation of the
great work being done across the business to address
the impact of climate change.
People and culture
A.G. Barr has a positive, results-driven and supportive
culture, developed over many years. It has been
encouraging to see the progress made across a
range of people matters during my time as Chairman,
particularly so in the area of diversity and inclusion.
One important illustration of note is the increase
in female leadership, with women now making
up over 40% of A.G. Barr’s senior management.
Events over the past two years have been challenging
for many of us, both personally and professionally,
and on behalf of the Board I want to extend my thanks
to the full team for the huge part they have played in
overcoming the challenges faced, and delivering such
a strong performance across the year. It has been more
important than ever to support our people through
these tough times and I have been very encouraged to
learn more about the strong mental health awareness
and support culture that is well established across
thebusiness.
Prospects
We have a portfolio with strong brand equity, a
successful growth strategy and a team of passionate,
committed and capable people across the Group.
With our proven track record of delivery we are well
positioned to further grow and develop our business
in 2022 and beyond.
John R. Nicolson
Chairman
29 March 2022
* Items marked with an asterisk are non-GAAP measures.
Definitions and relevant reconciliations are provided in the
Glossary on pages 188 to 191.
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A.G. BARR p.l.c. Annual Report and Accounts 2022
Our Business Model
We are brand owners and builders, offering a diverse and differentiated portfolio
of products that people love.
Our overarching purpose is to create value, with values – for our shareholders,
consumers, customers and for society as a whole. We do this by building great brands.
Our business model is simple, effective and profitable.
Our people
895
We are a business with one shared,
successful culture where we work
brilliantly together. Underpinning
everything that we do is our belief
in performance through people –
a positive and engaged team is central
to oursuccess.
Our brands
15
As brand owners and builders, listening
carefully to our consumers is paramount,
and by doing so we have developed a
diverse and differentiated portfolio of
branded products to satisfy their needs
and offer choice.
Our fleet/networ k
70
With a fleet of more than 70 vehicles,
and long-standing relationships with
our key distribution partners, we strive to
deliver great service to all our customers,
from the biggest food service customer
to the smallest local shop.
Our direct suppliers
70
We work in partnership with our key
suppliers to ensure high quality products
that are sourced and manufactured
in a fair, ethical and environmentally
responsible way.
Our UK locations
9
We operate across nine UK sites – our
Cumbernauld site is home to our Head
Office, manufacturing, warehousing
and sales offices and across the rest of
the UK we have offices at Bolton and
Camden, two further manufacturing
facilities at Milton Keynes and Forfar,
and four regional distribution depots
at Newcastle, Moston, Wednesbury
andDagenham.
We behave responsibly…
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Strategic Report Corporate Governance Accounts
We make…
We pride ourselves on our effective
and safe manufacturing capabilities,
producing high quality products
across our well-invested and efficient
production sites in Cumbernauld, Forfar
and Milton Keynes. From sourcing our
raw materials to designing our packaging,
we aim to reduce our environmental
impact while delivering continuous
improvement across our supply chain.
Underpinning everything we do is our belief that how we act reflects who we are. We take our
responsibilities seriously and continuously strive to be a sustainable and responsible business
that listens to our consumers, takes care of our people, values diversity, works to minimise our
environmental impact and gives something back to the communities we serve.
We market…
When it comes to marketing, innovating
and building our brands we like to have
some fun, appealing to our broad range
of consumers, whether that’s through
advertising campaigns, digital and social
media, sponsorship or supporting local
community events.
We move…
Operating across multiple routes to
market, we have a well established and
efficient distribution network, with our
Barr Direct channel in particular setting
us apart, by offering a tailored and
personal direct to store service to
thousands of independent retailers
across the UK.
We sell…
Building long-lasting relationships
with our customers across all our key
markets is fundamental to our business.
Whether it’s a large food retailer, a
wholesaler, a regional restaurant group
or a local independent retailer, we work
collaboratively with all our customers
to understand their businesses and
find winning consumer propositions
in a practical and profitable way.
Shareholders
£13.4m of dividends paid
during the year. £5.8m
re-invested in long-term
business growth through
annual capital expenditure.
Dividends paid
£13.4m
Suppliers and customers
Directly contracted with more
than 70 suppliers with an
annual spend of over £100m
while working closely with
thousands of customers to
co-create joint business plans.
Suppliers
70
Employees
£40.2m paid in salaries and
wages to our 895 employees
across the UK.
Salaries paid
£40.2m
UK economy and
communities
With 96% of our revenue
generated in the UK, and
through our £6.5m corporation
tax and £4.8m national
insurance payments to the
government, we continue to
play our part in growing the UK
economy while also donating
over £100k to good causes
across our communities.
Charitable donation
£100k
Years of responsible actions
145+
WHAT WE DO WE CREATE VALUE, WITH VALUES…
Our business model has proven successful for more than 140 years
and continues to create and deliver value, with values, to a wide
range of stakeholders.
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A.G. BARR p.l.c. Annual Report and Accounts 2022
Our Strategy
and Financial KPIs
Our overarching purpose is to create value, with values – for our shareholders, consumers,
customers and for society as a whole. We do this by building great brands.
OUR STRATEGIC PRIORITIES
Connecting with
consumers
Consumer insight drives our
business. Consumer preferences
are changing and we ensure
that we take the time to listen,
to understand and respond
proactively to ensure our portfolio
of brands constantly develops and
meets our consumers’ needs.
Read more on pages 18 to 20. Read more on pages 18 to 20. Read more on page 21. Read more on page 21.
Building brands
We are brand owners and
builders, offering a diverse and
differentiated portfolio of
products that people love.
With our powerful brands, and
a strong track record of bringing
successful innovation to market,
we seek to grow brand awareness,
loyalty and product distribution so
that we outperform themarket.
Driving efficiency
We continually strive for greater
effectiveness across our business,
investing for growth and
efficiency, while also ensuring
strong financial controls are in
place. As our business develops,
we are committed to driving
continuous improvement across
our processes and technology.
As an asset-backed business we
drive operational improvements,
flexibility and efficiency through
our expansionary capital
investment programmes,
equipping us with some of the
industry’s most advanced
operational capability.
Building trust
Building and maintaining
long-lasting trust and successful
relationships is central to our
business and always has been.
Our responsible behaviour over
the last 145 years has created a
firm foundation, upon which we
want to build further. Being a
trusted business that acts with
integrity is fundamental to our
stakeholder relationships – from
our consumers and customers to
our suppliers and communities.
Equally, as the world around us
changes, with climate change in
particular becoming increasingly
more pressing, our strategic
choices are more than ever
informed and supported by our
desire to do the right thing and
to play our part in addressing
the key issues facing society.
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Strategic Report Corporate Governance Accounts
£50.7m
£43.4m
2022
2021
41.2%
44.2%
2022
2021
20.5%
19.8%
2022
2021
17.18p
25.09p
2022
2021
12.0p
2022
N/A
2021
£32.8m
£41.5m
2022
2021
16.0%
19.6%
2022
2021
£227.0m
£268.6m
2022
2021
14.8%
15.6%
2022
2021
Net cash from operating activities
£43.4m
(14.4%)
Gross margin*
44.2%
292 bps
Profit before tax and exceptional items*
£41.5m
26.5%
Operating margin before exceptional items*
15.6%
83bps
EBITDA margin*
19.8%
(68)bps
Return on capital employed*
19.6%
355bps
Basic earnings per share
25.09p
46.1%
Full year dividend per share*
12.0p
Revenue
£268.6m
18.3%
KEY PERFORMANCE INDICATORS
Net cash from operating activities is defined as the cash
generated/(used) in the ongoing regular business activities
in the year.
Reported gross profit divided by revenue. Profit before tax less any exceptional items.
Operating profit before exceptional items and before the
deduction of interest and taxation, divided by revenue.
EBITDA (defined as operating profit before exceptional items,
depreciation and amortisation) divided by revenue.
Profit before tax and exceptional items as a percentage of
invested capital. Invested capital is defined as year end
non-current plus current assets less current liabilities excluding
all balances relating to any provisions, financial instruments,
interest-bearing liabilities and cash or cash equivalents.
Key performance indicators (KPIs) relate to the 53-week financial year ended 30 January 2022 and the 52-week financial year
ended 24 January 2021.
* Items marked with an asterisk are non-GAAP measures. Definitions and relevant reconciliations are provided in the Glossary
on pages 188 to 191.
Reported profit attributable to equity holders divided
by weighted average number of shares in issue.
Total dividend declared for the full year excluding any
special dividend.
The increase in value of revenue recorded relative to
the prior year.
Non-financial KPIs
Can be found on page 24.
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A.G. BARR p.l.c. Annual Report and Accounts 2022
Chief Executive’s Review
“I am pleased to report our results for the 53 weeks ended 30 January 2022.
We have delivered a strong financial performance during what was another
volatile year. We successfully navigated intermittent Covid-19 restrictions and
periods of significant market recovery, as well as the well documented issues
associated with labour shortages, material availability challenges and the
beginning of a period of higher inflation across the UK.”
Roger White
Chief Executive
We have made significant progress across all our
key financial metrics as follows:
• Group revenue £268.6m (2021: £227.0m)
• Profit before tax and exceptional items* £41.5m
(2021: £32.8m)
• Profit before tax and after exceptional items £42.2m
(2021: £26.0m)
• Operating margin before exceptional items* 15.6%
(2021: 14.8%)
• Net cash at bank* of £68.4m (2021: £50.0m)
• Basic earnings per share before exceptional items*
24.46p (2021: 22.31p)
Note: 2021 comparatives above are for the 52 weeks ended
24 January 2021.
I would like to take this opportunity to thank the entire
A.G. Barr team who have continued to demonstrate
their ability to adapt to all the challenges faced. I would
also like to recognise our suppliers and our customers,
with whom we have worked in partnership throughout
the pandemic to maintain consumer availability.
Our trading has strengthened across the year as
a consequence of the successful execution of our
growth strategy, investing in our brands, innovation,
operations and people, combined with a general
market recovery.
While there were several periods across 2021 when
social restrictions were in place, impacting
consumption patterns, we have also experienced
periods of elevated demand, such as in Spring 2021
when the hospitality sector reopened and restocked
accordingly. As restrictions eased across Summer and
into Autumn 2021, we saw notable uplifts in our out of
home and hospitality channels, while retaining strong
take home trading, alongside strong growth in online
channels. While the emergence of the Omicron variant
towards the end of our financial year led to further
unexpected social restrictions, and some operational
challenges related to employee absence, our brand
momentum was not materially impacted and we exited
the year strongly.
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Strategic Report Corporate Governance Accounts
Statutory profit before tax of £42.2m is a 62.3%
year-on-year increase and sees us materially ahead of
our 2019/20 (52-week) pre Covid-19 profit levels, which
included the contribution from the Rockstar brand.
Soft drinks market
At the outset of the Covid-19 pandemic in March 2020
we saw significant shifts in consumer purchasing
behaviour, largely in response to the social restrictions
put in place by Governments across the UK. Hospitality
and on-the-go consumption fell, while take home
purchasing increased. This in turn led to a
corresponding decline in those sub sectors more
associated with impulse purchasing, such as water and
sports drinks. It also led to an increase in share for sub
categories such as dilutes, with more people working
and schooling at home, as well as for mixers, cola and
lemonade, as sales moved from the hospitality channel,
largely unmeasured by retail data sets, into the home.
Over the past 12 months, particularly as lockdown
restrictions have eased, these trends are gradually
reversing, with both consumer behaviour and market
data beginning to return to pre Covid-19 levels.
Once again, the soft drinks market has proven its
resilience in volatile times with IRI Marketplace data for
the 52 weeks to 29 January 2022 recording the total UK
soft drinks retail market increasing in value by 8.9% and
in volume by 1.7%. Carbonates grew in value by 7.3%,
while stills grew 11.1%. The strong value growth across
the market reflects a number of dynamics, including
the recovery of the “drink now” channel and a
reduction in promotional activity against a backdrop of
UK costinflation.
We have maintained our value share of the soft drinks
retail market, however the category disruption, as
detailed above, means our strong revenue performance
is not fully reflected in the retail market data read. That
said, we have seen market share value gains in England
and Wales, driven by significant growth in take home
multipack formats. Our share in Scotland has been
impacted by strong growth in certain channels not
captured in the market read.
Cocktail market
The hospitality sector remained closed at the outset of
our financial year. However since the channel began to
reopen in the Spring of 2021, the cocktail category has
performed extremely well, benefiting from increased
numbers of consumers returning to venues and
increasing levels of participation in the category.
Cocktails outperformed other categories and
experienced 61% like-for-like growth in the 10 weeks
post reopening versus the same 10 weeks in 2019. This
outperformance continued, with cocktails accounting
for 9.9% of total venue drink sales from April 2021 to the
23 October 2021, versus 6.0% in the same 2019period.
While the emergence of the Omicron variant towards
the end of 2021 led to both the reintroduction of some
social restrictions and increased consumer caution
over the festive period, the cocktail category remains a
significant growth opportunity for the hospitality sector
in general. GB consumers drinking cocktails out of the
home have now reached 7.4m, the equivalent of 15%
of the adult population, with 43% of those consumers
drinking cocktails at least weekly, a 13% increase
versus2019.
Cocktail consumption at home, which accelerated
dramatically during 2020, has continued its positive
growth momentum notwithstanding the reopening
of the hospitality sector. The total ready to drink (RTD)
category is in strong growth, now worth £509m on
a moving annual total basis. Within this RTD category,
cocktails make up 18% (£92m) and have grown by
44% year-on-year.
(Sources: CGA Mixed Drinks Report Q1 2021; CGA Drinks Recovery
Tracker; CGA Mixed Drinks Report Q3 2021. Nielsen Pre Mixed
Alcoholic Drinks Total Coverage Data MAT 15/01/2022).
Group revenue
£268.6m
(2021: £227.0m)
Profit before tax and exceptional items*
£41.5m
(2021: £32.8m)
“Our trading strengthened
across the year as a
consequence of the
successful execution of our
growth strategy, investing
in our brands, innovation,
operations and people,
combined with a general
market recovery.”
Roger White
Chief Executive
Responsibility Report
Details of all our responsibility
commitments, goals and activities
can be found on pages 22 to 45.
14
A.G. BARR p.l.c. Annual Report and Accounts 2022
Chief Executive’s Review continued
Strategy execution
We remain committed to our strategic priorities –
connecting with consumers, building brands, driving
efficiency and building trust. Within this framework
we have made good progress in short-term delivery,
in medium-term planning as well as in our longer-term
goal setting, particularly across our environmental
sustainability agenda and our net-zero commitments.
Connecting with consumers
We entered the 2021/22 financial year with a large
number of Covid-19-related social restrictions still
in place. However, having continued to invest in our
brands in 2020, we were determined to accelerate our
core brand growth in 2021 through a materially higher
level of brand development activity and an enhanced
sales execution programme.
We developed and executed exciting marketing
campaigns across our core brands, IRN-BRU, Rubicon
and Funkin, with extensive activity, both above and
below the line, across the year. As a result:
Brand
Revenue growth
versus 2020/21*
Revenue growth
versus 2019/20*
(pre Covid-19)
IRN-BRU 16.8% 5.5%
Rubicon 39.8% 26.1%
Funkin 1 17.6% 92.1%
* 52-week financial years.
Building brands
We have continued to deliver on our strategic aim
of building a multi-beverage portfolio of brands,
with a specific focus on developing within higher
growthsectors.
We have a long-standing and proven brand building
capability within the energy sector, which we brought
to bear within our Company-owned portfolio, initially
with IRN-BRU Energy, and more recently with the
creation and launch of our new Rubicon RAW Energy
range. This new addition to our Rubicon portfolio is
specifically aimed at the growing number of consumers
entering the energy category who are looking for a
more natural, juice-based energy proposition. We have
successfully supported Rubicon RAW Energy with our
first ever major digital only marketing campaign,
utilising a range of marketing channels focused around
outdoor activities and their associated communities.
After a successful launch phase, we are now building
on the strong rate of sale and are further developing
the UK-wide distribution of this exciting addition to
ourportfolio.
Funkin has made particularly strong progress across
the past 12 months as a market-leading consumer
brand with first mover advantage within RTD cocktails.
As we anticipated 12 months ago, the reopening of the
hospitality sector and the outperformance of cocktails
within this channel have not impacted the growth
momentum of Funkin RTD cocktails in the take home
channel. Funkin has grown its RTD distribution base
and delivered successful product and pack innovation.
This has been supported by above the line marketing
investment, aimed at building Funkin brand awareness
and trial in this exciting new take home category.
15
Strategic Report Corporate Governance Accounts
“The growth potential
of our business is
underpinned by our
growing brands, our highly
capable people and our
resilient infrastructure.”
Roger White
Chief Executive
Funkin remains the UK’s number one RTD
cocktailbrand.
In addition to the innovation and development of
our existing brand portfolio, we have further invested
in growth potential with our initial 61.8% equity stake in
MOMA Foods Limited. Plant-based milk is a fast-growing
category and MOMA’s oat milk is a premium quality
product which we believe has significantpotential.
MOMA’s oat milk, launched in 2020, is one of the UK’s
leading oat milk brands and sits alongside their existing
porridge and oat based products. This is a really exciting
investment for A.G. Barr and a positive indication of our
growth ambition. We expect to acquire the remaining
38.2% of MOMA over the next three years.
Driving efficiency
2021/22 was a year characterised by supply chain
challenges, including key material availability issues
and driver shortages. Against this backdrop, our focus
for much of the year was on the resilience of our
operations, prioritising customer service and
product availability over costs.
However our drive for long-term efficiency
and effectiveness continued at pace. Our value
optimisation programme identified a pipeline of
product optimisation and cost reduction initiatives,
which are now helping to mitigate the higher inflation
that began to bite at the end of 2021. This is a long-
term programme which we expect to add considerable
value for some time to come across a wide range of
business areas, from reductions in packaging weight
and usage through to minimising miles travelled and
optimising our distribution network.
We have also developed and launched a new
multi-year manufacturing excellence programme –
“Brilliance in the Making” – investing significantly in our
people and processes to drive long-term operational
efficiency across our manufacturing base.
While we chose to limit our capital expenditure during
the pandemic, we will now begin to accelerate our
capital investment programme in both normal
replacement and growth projects. In the short-term, this
will see higher capital investment, before returning to
more normal levels in the medium-term as we prioritise
investment for growth, sustainability and efficiency.
Building trust
In another year when Covid-19 permeated much of
our personal and professional lives, we continued to
prioritise the safety and wellbeing of our employees,
while at the same time looking beyond the pandemic,
making positive changes to support our cultural
development. From hybrid working and mental health
support, to progressing gender balance and engaging
with our communities, we are proud of the responsible
actions we have taken across the year and the progress
we continue to make.
It is becoming increasingly clear that corporate
commitments alone are not enough, they need to
be supported by honest and meaningful actions. We
are proud of how our values have underpinned our
behaviours and decision making over many decades,
however we know that the trust we have earned from
our consumers, customers and stakeholders needs
to be backed up by purposeful and responsible
actions,today.
We reached a major milestone in 2021 within
our environmental sustainability programme,
“No Time To Waste”, completing an assessment of
our carbon footprint across our full product life cycle
and value chain. This data has now allowed us to set
science-based targets that will guide us on our journey
to becoming a net-zero business. Mindful of the
importance of balancing ambition with genuine
deliverability, and using the Science Based Target
Initiative’s new Net-Zero Standard to ensure the most
credible basis of measurement, we are committing
to be net-zero across our own operations by 2035.
We have developed a deliverable and realistic
decarbonisation roadmap to underpin this commitment
and we are already making good progress as detailed
in our Responsibility Report on pages 22 to 45. We are
working closely with our suppliers and partners with a
commitment to become net-zero across our full supply
chain by 2050, if not sooner.
Strategy in action
Examples of our strategy in action
can be found on pages 18 to 21.
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A.G. BARR p.l.c. Annual Report and Accounts 2022
Outlook
Our business and brands have once again proved
their resilience in uncertain and often challenging
circumstances.
We have delivered an excellent financial performance,
generated by strong topline sales growth, resulting in
a profit performance ahead of 2019/20 pre-pandemic
levels and underpinned by a very robust balance sheet
with a recommencement of our progressive and
sustainable dividend.
We continue to take action to improve our
environmental sustainability. Much of our focus in the
coming year will be on increasing our use of recycled
materials, reducing our carbon footprint and readying
our business for a successful deposit return scheme
implementation due to go live in Scotland in
August2023.
We enter the new financial year with good momentum,
exciting brand and sales plans, and have taken action to
mitigate the significant inflationary pressures we face.
The growth potential of our business is underpinned by
our growing brands, our highly capable people and our
resilient infrastructure. We plan to invest further in all of
these important areas and I remain confident in our
ability to deliver continued growth in both revenue
and profit in the coming year.
Roger White
Chief Executive
29 March 2022
* Items marked with an asterisk are non-GAAP measures. Definitions and relevant
reconciliations are provided in the Glossary on pages 188 to 191.
Net cash at bank*
£68.4m
(2021: £50.0m)
Basic earnings per share before
exceptional items*
24.46p
(2021: 22.31p)
Chief Executive’s Review continued
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Strategic Report Corporate Governance Accounts
OUR INVESTMENT CASE
Ambitious with clear and consistent value-driven strategy
Brand owner and builder with differentiated portfolio
Strong customer and consumer focus
Asset-backed, simple and effective business model
Disciplined capital allocation
Growth potential within key markets
A responsible business
Long-term strong financial performance
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A.G. BARR p.l.c. Annual Report and Accounts 2022
Our Strategy
in Action
Rubicon Spring, Fabulously Fruitified
2021 was Rubicon Spring’s best performing year to date – it is now the biggest
500ml drink within the flavoured water category and growing 36% year-on-year.
Across the year, we ran three national campaigns targeting 16-34 year olds:
• May saw us launch Pineapple Passion flavour across key social platforms,
including Spotify sponsored social sessions, together with a national
consumer sampling plan. The campaign’s tag – “It’s Spring Water Fabulously
Fruitified” – reinforced Spring’s positioning whilst introducing the new
exciting flavour
• Summer saw the “Make the Unboring Choice” campaign run across
broadcast and on-demand TV, alongside out of home media, Spotify
andsocial
• January saw the launch of Rubicon Spring’s “Squeeze” campaign –
reinforcing its health credentials to consumers looking for exciting
healthychoices
A great year for Rubicon Spring.
IRN-BRU magic
Over its 120 years, IRN-BRU has developed quite a reputation for its
humorous, unique and sometimes irreverent advertising, and 2021
was no exception. “Let’s Just Agree it Tastes Magic” was one of the
brand’s biggest marketing campaigns to date across TV, social media
and sampling. The filming took place in Romania, at the same set used
for the Hollywood blockbuster movie “Cold Mountain”.
Building
brands
Connecting
with consumers
Connecting
with consumers
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Strategic Report Corporate Governance Accounts
Funkin No 1
Funkin is the number 1 RTD cocktail brand in the UK.
Our “Best Served Everywhere” campaign cemented this top position,
interacting with consumers across TV and out of home media,
throughout the summer and at Christmas.
In November, our range of RTD cocktails picked up five medals in the
Spirits Business Pre-mixed and RTD Masters, against stiff competition
from more than 100 branded competitors.
Bibbidy Bobbidy BRU!
This year saw IRN-BRU appoint RuPaul’s Drag Race UK & Bafta winner
Lawrence Chaney as Scotland’s very first “Fairy Godmaw”, sprinkling
orange magic dust across the festive period.
The “Bibbidy Bobbidy BRU!” campaign put BRU firmly at the heart
of Christmas with Lawrence donning their fairy wings and granting
Christmas wishes for IRN-BRU fans across Scotland.
The campaign began with a series of social films including “IRN-
BINGO”, starring the Fairy Godmaw herself. This was followed by
consumer engagement which encouraged fans to send in their
Christmas wishes to the Fairy Godmaw across social channels in
return for special IRN-BRU festive packs. The Fairy Godmaw took to
the streets of Glasgow and Edinburgh to meet Christmas shoppers
and surprised IRN-BRU superfans with deliveries of IRN-BRU in person,
making their Christmas wishes come BRU!
With widespread PR coverage and strong influencer engagement,
the campaign saw the Fairy Godmaw became a Scottish icon over
Christmas with people putting her picture on top of their trees,
creating fan art, recreating her BRU look, and asking her to sign cans
of BRU at shows.
Building
brands
Connecting
with consumers
Connecting
with consumers
20
A.G. BARR p.l.c. Annual Report and Accounts 2022
Our Strategy in Action continued
Rubicon RAW Energy
Our new energy brand Rubicon RAW Energy was launched in
February 2021, introducing an exciting and different energy drink
to the market. Available in three exotic fruity flavours, Rubicon RAW
Energy delivers a big energy hit from natural caffeine combined with
the big fruit flavour and amazing taste that Rubicon is famous for.
Since launch, we’ve sold over 11 million cans.
We targeted our marketing activity around communities where big
can energy drinkers dominate – including hiking and surfing – and
we engaged with consumers through sampling, social and digital
activation, and by engaging with influencers to drive brand reach
and credibility with the right audience. This strategy, combined with
partnerships with organisations like the British Mountaineering
Council, contributed to a very successful first year.
IRN-BRU celebrated
tournament virgins
The Euros football tournament presented IRN-BRU with the
opportunity to engage with the estimated one-fifth of the population
that had never seen Scotland’s men’s team play at a major tournament.
Two new “Tournament Virgins” adverts helped prepare tournament
newbies ahead of the Summer. The brand also teamed up with
Scotland football legend Colin Hendry to give out lucky IRN-BRU pants
to the Tartan Army. The lucky pants were a huge hit on social media.
Building
brands
Connecting
with consumers
Connecting
with consumers
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Strategic Report Corporate Governance Accounts
Building
Trust
Driving
Efficiency
Building
Trust
New electric forklift trucks
Our new 70-strong electric forklift fleet arrived in 2021, in an efficiency
move that took us away from LPG-powered trucks. The upgrade to a fully
electric forklift fleet, using a combination of lithium-ion technology and
conventional battery powered vehicles, allows for continuous green
operation of the fleet 24 hours a day, seven days a week.
And as lithium-ion batteries do not emit any gases during charging, the
need for expensive exhaust systems at charging stations was removed.
Manual handling was reduced too, with no need for gas cylinder
changes, giving our teams increased uptime to meet customer demand.
With sustainability a key driver for us, the switch to lithium-ion brought
with it a reduced carbon footprint benefit – and immediately reduced the
levels of air and noise pollution in our indoor spaces, creating a cleaner
and more pleasant working environment.
Reducing waste at Milton Keynes
Recycling is vital – but just as important is producing less waste to
begin with.
Our Milton Keynes team embraced this ethos when they moved away
from cardboard delivery boxes from one of their biggest engineering
parts suppliers. Now the team takes deliveries in reusable Tote Boxes,
that are taken away and reused, also saving energy and time
associated with cardboard baling.
This move to reusable delivery boxes has removed the equivalent of
12,500 sheets of paper per year – enough to stretch around Wembley
Stadium 3.75 times.
Driving
Efficiency
Strategy
For information on our strategy,
see pages 10 and 11.
22
A.G. BARR p.l.c. Annual Report and Accounts 2022
Responsibility Report
Behaving responsibly for over 145years. We are proud of our brands
and business. We are also proud of the positive contribution we believe
we make to society. It is our belief that how we act reflects who and
what we are.
While there will be actions we take that contribute both directly and indirectly to many of the SDGs, we
have focused our SDG connections where we believe we can most directly play our part. These are:
Good health and wellbeing
Ensure healthy lives and promote
wellbeing for all at all ages.
Gender equality
Achieve gender equality and empower
all women and girls.
Decent work and economic growth
Promote sustained, inclusive and
sustainable economic growth, full and
productive employment, and decent
work for all.
Responsible consumption
and production
Ensure sustainable consumption and
production patterns.
Climate action
Take urgent action to combat climate
change and its impacts.
We focus our specific responsibility goals and commitments on those areas where we believe we can make the greatest positive economic, environmental and social
impact, supporting our contribution to a sustainable future for all. We also engage with a wide range of stakeholders, as set out on pages 62 to 67, to ensure that our
priorities are aligned. As such, behaving responsibly at A.G. Barr is underpinned by four key commitments which we believe to be material matters to both our business
and our key stakeholders:
Our overarching business purpose is to create value,
with values – for our shareholders, consumers,
customers and for society as a whole. Our values
include our commitment to behave responsibly. Our
responsibility agenda has always been woven into the
fabric of our business and, in today’s world, as we grow
and develop, it’s more important than ever that we play
our part in addressing the key issues facing society,
such as the need to tackle the impact of
climatechange.
We are also mindful that our actions can contribute
towards global improvements. The 2030 Agenda
for Sustainable Development, adopted by all United
Nations Member States in 2015, provides a shared
blueprint for peace and prosperity for people and the
planet, now and into the future. At its heart are the 17
Sustainable Development Goals (SDGs), which are an
urgent call for action by all countries – developed and
developing – in a global partnership. They recognise
that ending poverty and other deprivations must go
hand-in-hand with strategies that improve health
and education, reduce inequality and spur economic
growth – all while tackling climate change and working
to preserve our oceans and forests.
For over 145 years we’ve been brand owners and
builders, offering a diverse and differentiated portfolio of
products that people love and our business has grown
as a result. The continued financial strength of our
business is important not only to our 895 employees
and our shareholders, but also on a broader basis,
where our performance positively impacts a wide range
of stakeholders, from customers and suppliers to the
communities we operate in and the UK economy
as a whole.
23
Strategic Report Corporate Governance Accounts
Note: Goals above stated in calendar years
OUR KEY RESPONSIBILITY COMMITMENTS
We act with
integrity
We respect
the environment
We support
healthy living
We give
back
Key focus areas Key focus areas Key focus areas Key focus areas
• Safety and wellbeing
• Employee engagement
• Responsible policies and practices
• Carbon reduction
• Packaging
• Water and waste
• Sustainable sourcing
• Calorie reduction
• Responsible advertising
and marketing
• Labelling
• Community engagement
• Charity partnership
• Employee volunteering
Long-term goals Long-term goals Long-term goals Long-term goals
Accident incident rate
• Zero work related accidents
Employee engagement
• 2022 Goal: 80%
Women in Leadership
• 2025 Goal: 45%
Never again send non-hazardous
waste to landfill
Reduction in greenhouse gas emissions
• 2025 Goal: 40% reduction from a 2015
base year. This goal has been achieved,
with new carbon reduction goals
detailedbelow.
Carbon emission reduction across our
own operations (Scope 1 & 2 emissions
market-based approach)
• 2030 Goal: 60% reduction from
a 2020 base year
• 2035 Goal: 90% reduction* from
a 2020 base year
Improvement in water usage
efficiency New** 2025 Goal
• 2025 Goal: 10% improvement from
a 2020 baseyear
Recycled PET content
• 2022 Goal: IRN-BRU and Rubicon
100%rPET
• 2023 Goal: Full portfolio 100% rPET
New Goal Carbon emission
reduction across our wider
supply chain (Scope 3 emissions)
• 2030 Goal: 25% reduction from
a 2020 base year
• 2050 Goal: 90% reduction* from
a 2020 base year
To continue to advertise responsibly,
offer a wide range of pack sizes to assist
with portion control and, by providing
clear nutritional information, enabling
our consumers to make informed
choices.
To support our corporate charity
partnership by donating £150,000 over
three years and raising awareness across
our own teams.
Key policies
We have high expectations of our suppliers, our partners and ourselves.
Across more than 145 years of operation, we have developed robust
and responsible policies that guide what we do and how we work with
others. The key policies, statements and guidelines we rely upon and
that support our responsibility commitments are now available on our
Group website at www.agbarr.co.uk.
* Net-zero achievement in accordance with revised Science Based Target Initiative requirements.
** See commentary in Water and Waste section on pages 34 and 35.
Note: Goals above stated in calendar years
24
A.G. BARR p.l.c. Annual Report and Accounts 2022
7.1
9.0
8.6
2022
2021
2020
39%
39%
41%
2022
2021
2020
(16.0)%
(17.0)%
(11. 0)%
2022
2021
2020
77%
N/A
75%
2022
2021
2020
36.2%
41.0%
45.2%
2022
2021
2020
97.2%
100%
100%
2022
2021
2020
Non-Financial KPIs
Responsibility Report continued
In support of our responsibility commitments we measure
a range of non-financial KPIs as set outbelow:
Accident incident rate
8.6
Women in leadership
41%
Improvement in
water usage efficiency
(11.0)%
Employee engagement
75%
Reduction in
greenhouse gas emissions
45.2%
Non-hazardous waste
diverted fromlandfill
100%
Number of accidents (RIDDOR) per 1,000 people – relative to
both our employees and agency workers. Further information
is provided in our Safety and wellbeing culture section on
pages 26 and 27.
Number of females defined as leaders/senior managers
across Barr Soft Drinks and Funkin business unitscombined.
Baseline 2015. Ratio of total water used relative to total litres
of product produced. Further information is provided in our
Waste and water section on pages 34 and 35. Numbers in
brackets indicate reduction in water usage efficiency.
As measured by our annual “Your Voice Matters” employee
survey. Due to the impact of Covid-19, no survey was
conducted in 2020/21.
Percentage reduction in total Scope 1 and Scope 2 greenhouse
gas emissions. Baseline 2015. Previous long term goal now
achieved and replaced with new science-based targets as
detailed on page 23.
Quantity of waste from Company-owned sites diverted
from landfill relative to total waste.
25
Strategic Report Corporate Governance Accounts
Non-financial information statement
The information presented here, and throughout the
report as cross-referenced below, complies with the
requirement under sections 414CA and 414CB of the
Companies Act 2006 to provide information on certain
non-financial matters. Our Responsibility Report on
pages 22 to 45 provides the required information in
relation to content on environmental matters, our
employees, community issues and social matters,
as well as setting out our non-financial metrics. Our
business risks are included within our Risk Management
section on pages 50 to 57. The Responsibility Report
also complies with the Streamlined Energy and Carbon
Reporting (SECR) requirements as required by the
Companies (Directors’ Report) and Limited Liability
Partnerships (Energy and Carbon Report) Regulations
2018. We have complied with the requirements of
Listing Rule 9.8.6R by including climate-related financial
disclosures consistent with the Task Force on Climate-
related Financial Disclosures (TCFD) recommendations
and recommended disclosures.
It is the Group’s policy to conduct all of its business in
an honest and ethical manner. It is committed to acting
professionally, fairly and with integrity in all its business
dealings and relationships wherever it operates.
The Group is a UK Living Wage accredited employer.
The Group publishes its Modern Slavery Act
Transparency Statement annually. This explains the
steps that we take to seek to ensure that there are no
incidents of modern slavery within the business and
its supply chain, in accordance with the UK Modern
Slavery Act 2015. The Board reviews the Group’s
operational, legal and compliance framework to
prevent modern slavery in its supply chain, which
includes employee training, contractual terms and
conditions, and due diligence processes.
The Group’s Anti-bribery and Corruption Policy (ABC
Policy) available on the Group website, emphasises
the Group’s zero tolerance approach to bribery and
corruption. It sets out the Group’s responsibilities, and
of those working for it and parties acting on its behalf,
in observing and upholding its position on bribery and
corruption in compliance with applicable laws, and
provides information and guidance to those working for
the Group and parties acting on its behalf on how to
recognise and deal with bribery and corruption issues.
The ABC Policy is clearly communicated to all
employees. Anti-bribery and corruption training is
provided to all employees on induction and on a
regular basis thereafter. The Group maintains an
anti-bribery and corruption register, which records
details of corporate hospitality, and gifts given and
received by employees over a specified value. The
Group’s international department undertakes
appropriate due diligence on all third parties acting on
its behalf and maintains a third-party anti-bribery and
corruption register. As confirmed on page 73, the Audit
and Risk Committee reviews the effectiveness of the
Group’s anti-bribery systems and controls, reviews and
approves the Group’s ABC Policy on an annual basis.
No bribery and corruption issues arose during theyear.
There is currently no specific human rights policy in
place however our new Supplier Code of Conduct,
available on the Group website at www.agbarr.co.uk,
sets out the minimum standards we require our
suppliers to meet, including human rights, and forms
part of their contractual commitment to us. As a UK
business, we comply with the full spectrum of
employee protection legislation. We believe our existing
policies ensure the rights of our own employees are
respected fully and our robust supplier controls, as set
out on page 35 provide assurance when considering
human rights impacts beyond our direct control.
Business Model
A description of our business model
can be found on pages 8 and 9.
26
A.G. BARR p.l.c. Annual Report and Accounts 2022
We act with integrity
Safety and wellbeing culture
We work hard to create a culture in which safety and
wellbeing are our top priorities. Our ultimate goals in
this area are zero work-related accidents and the
provision of safe and healthy working environments for
all. We continuously improve our management systems
to underpin our objectives and to ensure compliance
with all health and safety related legislation as a
minimum. Our thorough and varied safety
management activity programme is designed to keep
safety at the top of everyone’s agenda, with actions
ranging from safety awareness initiatives and
behavioural safety training, to site audits and reporting.
The safety of our employees remained paramount in
another year impacted by the Covid-19 pandemic. We
continued to ensure our most vulnerable colleagues
were protected, as well as maintaining strong safety
controls across our sites to safeguard all of our people,
particularly those colleagues working in key production,
warehousing and delivery roles who were unable to
work from home at any stage during the pandemic.
Having sought the views of our homeworking
colleagues on post Covid-19 ways of working, the
clear preference was for a blend of homeworking and
office/field working and, as such, we are now trialling
hybrid working for a 12-month period.
Since partnering with Mental Health UK as our
employee-chosen charity in 2019, there has been an
increasing focus on raising mental health awareness
within the workplace, creating a culture where mental
health conversations are encouraged and our people
are properly supported. We now have 54 Mental Health
First Aiders across the business, specially trained to be
there for those who need them, and Mentally Healthy
In focus
Important accreditations
We are delighted to have now successfully
achieved ISO 45001 certification following a
review of our health and safety management
system along with a programme of robust
internal audits.
The feedback from the audits was extremely
positive around senior management
commitment, employee engagement, good
local health and safety practice, as well as
robust hierarchy of controls and accident
reporting and management systems.
This important accreditation is a pleasing
validation of the hard work that is ongoing
to improve our health and safety processes,
standards and culture.
In addition, following a thorough and
independent audit of our Cumbernauld,
Milton Keynes and Forfar manufacturing
facilities, we were delighted to retain our
British Retail Consortium (BRC) AA rating.
The BRC accreditation programme provides
a framework to assess and manage product
safety, integrity, legality and quality, as well
as the operational controls within food and
drink manufacturing and processing.
Recognised by supermarkets and large
organisations worldwide, an AA certification
is the highest possible rating for a BRC
planned audit and independently confirms
that high food safety standards are in place.
Responsibility Report continued
Workplace training is now being undertaken by
allemployees.
We have continued to review our workplace activities
and are focused on reducing risk through the
implementation of suitable control measures. Positively,
our lost time accident incident rate has decreased
during the year with a significant reduction in minor
non lost time injuries with a corresponding high
number of safety conversations taking place.
Unfortunately, we did sustain a number of lost time
accidents, the majority of which were associated with
manual handling operations. We continue to partner
with manual handling specialists who have developed
a tailored programme of training, video productions
and coaching resources to help encourage all team
members to operate safely.
27
Strategic Report Corporate Governance Accounts
In focus
Forfar sets the safety
standard
Our Forfar site achieved a very significant
milestone in January 2022 – three years
with zero lost time accidents.
This is an incredible result for a
manufacturing facility and is testimony
to the hard work and strong safety culture
across the Forfar site.
Safety is the first topic of the day at Forfar,
with each shift starting with a safety
moment, and a recent refresh of all the
site’s safe operating procedures has raised
safety awareness even further and played
a valuable part in this achievement.
Additional health and safety initiatives included:
• Ongoing review and roll out of updated risk
assessments and safe systems of work
• Internal training, including dynamic risk assessment,
contractor control and accident investigation
training
• Provision of IOSH Working and Managing Safely
courses across our supply chain operations
• Implementation of Rackeye, racking impact
monitoring system, within our warehouses.
This has helped improve operator awareness
and reduce racking impact
• Introduction of a new managed service for Display
Screen Equipment assessments, including for our
home and field-based employees
• Two-way communication via health and safety
committees and representatives across all
business areas
Our accident incident rate KPI, as detailed in our
non-financial KPIs on page 24, includes those accidents
involving our own and agency employees, however as
part of our regular accident monitoring and reporting
processes, any accidents that occur on our premises
by contractors or other third parties are recorded,
fully investigated and the learnings taken into account.
We are continuing to work with the Keil Centre,
chartered psychologists and ergonomists with
significant safety-related experience, carrying out
follow-up workshops across our supply chain
operations to reassess our health and safety cultural
maturity. In addition to the assessments with Keil,
we conduct annual health and safety surveys to help
ensure we are on course with our improvement plans.
Previous assessments have resulted in a comprehensive
safety improvement programme with a range of
interventions identified across our teams to drive
improved safety-related behaviours, awareness
and decision making.
We will continue to work hard towards delivering
an improved safety performance in the year ahead.
Employee engagement
A.G. Barr has a positive, results-driven and supportive
culture, developed over many years. We believe that
our culture is unique and makes A.G. Barr a great place
to work. We want to ensure that the essence of what
it means to work at A.G. Barr is valued and nurtured.
Underpinning everything that we do is our belief in
performance through people – a positive and engaged
team is central to our success.
Over the past 12 months the working practices
established in 2020 by and large continued unchanged,
with many employees working from home for
the majority of the year and our essential workers
in our factories, warehouses and logistics operations
continuing to work with Covid-19 safety measures
in place.
With government guidance changing regularly, and
often differing from one part of the UK to another,
communication was key. We worked hard to update
our teams quickly and clearly, ensuring that we
articulated what government communications meant
on a practical basis within our business. We also kept
our communications positive and engaging, mindful of
the need to support our people through difficult times
and maintain a sense of fun and involvement.
28
A.G. BARR p.l.c. Annual Report and Accounts 2022
Employee values
The employee values across Barr Soft Drinks
are embodied by our Barr Behaviours – a simple
behavioural framework central to who we are and
how we operate. These behaviours are at the heart
and soul of Barr Soft Drinks and support how we work
together to enhance performance. Whether recruiting
new employees or developing our existing teams, our
Barr Behaviours are core to our thinking and ensure
we are all focused on our performance potential.
Our behaviours centre on four main areas:
• Being Brilliant – striving to be the best “Barr” none,
by always looking to the future and seeking to
improve
• Always Learning – valuing feedback and taking
responsibility for our development
• Results Driven – achieving high personal, team
and business performance against clear objectives
• Relationships Matter – building strong relationships
with colleagues, customers and consumers
Funkin’s EPIC employee values centre on:
• the Entrepreneurial spirit that started Funkin and
remains critical to the future success of the business
• the People with a passion for the Funkin brand,
a sense of independence and the feeling that
everyone matters and everyone can make a
difference
• Innovation – constantly looking for new ways to
deliver innovative solutions for our customers and
consumers
• Collaboration – not only with our customers but
also internally and with our partners
In focus
Your Voice Matters
Our 2021 “Your Voice Matters”
employee engagement survey
results saw our highest ever
response rate, with 88% of our
people sharing their views and
opinions with us. While down
slightly on the prior survey,
conducted before the pandemic,
our overall employee engagement
score was 75%, ahead of the UK
FMCG benchmark of 73%.
(Source: Willis Towers Watson)
In focus
Wellbeing at Work
Our Wellbeing Hub is a portal
available to the entire business,
containing a wealth of useful
information to support health and
wellbeing. From webinars on how
to manage stress, to details on our
Employee Assistance Programme, the
hub has proven invaluable to many of
our colleagues, particularly in recent
times when the pandemic has felt
ever present.
While the Wellbeing Hub is a helpful
online resource, at times nothing can
compare with human contact and a
friendly face. We recently participated
in Time to Talk Day, with drop in
sessions arranged to allow colleagues
to take a break from work for 15
minutes and simply chat with
colleagues, old or new, about
everyday things.
We act with integrity continued
Learning and development
Learning and development in our business is about
creating a Company-wide culture in which everyone
is supported and challenged to take ownership of
their results, the impact they have on others and their
careers. Our teams are encouraged to take the lead in
their own personal development, drawing from a wide
range of learning opportunities. Our award-winning
iLearn platform is our hub for development activity, with
hundreds of hours of learning immediately accessible
to all. We also recognise that people learn in many
different ways – from classroom training and job
shadowing to our successful mentoring programme
and externally provided training courses, we try to
ensure there’s something to suit every individual in
every area of the business.
Over the past 12 months we have continued to offer as
many learning opportunities as possible to our people,
despite some of the challenges associated with the
pandemic – whether our online Manager Essentials
programme, our successful NVQ candidates at our
Milton Keynes site or our ever popular Sales Academy –
learning and development remains an important part
of our culture.
Responsibility Report continued
29
Strategic Report Corporate Governance Accounts
73%
27%
59%
41%
70%
30%
In focus
A Royal Visit and a
Grand Opening
We were delighted to welcome
Her Majesty The Queen and The Duke
of Cambridge, Earl of Strathearn, to
our Cumbernauld facility in June 2021.
Her Majesty officially opened our new
£13m process facility and both royal
visitors spent time meeting employees
and local schoolchildren.
The Royal visit also took place in the
Cumbernauld site’s 25th anniversary
year, which saw a team of employees
affectionately known as the “BRU
CRU” organise a wide range of
celebratory and fun employee
engagement activities to mark the
site’s silver anniversary.
Diversity and inclusion
We believe that diverse and inclusive organisations that
respect and value difference allow people to perform
at their best. That’s why we’re taking steps to create
an inclusive and positive working environment that
encourages people with different backgrounds,
experiences and perspectives to come together to
work more effectively and creatively, with gender
equality a specific and current area of focus.
The key metrics from our latest Barr Soft Drinks Gender Pay Report are detailed below:
Gender Diversity 2022
2021 2022
Male 7 8
Female 3 3
2021 2022
Male 54 54
Female 34 38
2021 2022
Male 610 625
Female 251 270
Board & Company Secretary Leadership Team All employees
The gender balance across the organisation now sits
at 70% men and 30% women, broadly indicative of
our industry. On our journey towards greater gender
equality in 2020 we set a new KPI related to women
in leadership, targeting 45% women across the
leadership population by 2025. We are encouraged
to see progress in our journey, with 41% senior female
representation across the business at the year end,
up from 29% in April 2017, and a year-on-year
improvement on 39% in 2020/21.
Mean Gender Pay Gap
3.0%
2020: 0.7%
Median Gender Pay Gap
2.7%
2020: -1.1%
Mean Bonus Pay Gap
42.2%
2020: 34.6%
Median Bonus Pay Gap
0%
2020: -15%
Positive numbers are favourable to men and negative numbers are favourable to women.
30
A.G. BARR p.l.c. Annual Report and Accounts 2022
We act with integrity continued
The mean gender pay gap is the difference in the
average hourly pay for women compared with men,
within a company. In 2021 our mean gender pay gap
widened slightly due to 2020 data being impacted by
the pandemic, excluding those on furlough or with
reduced pay. Overall, we have narrowed our gap
from 4.1% in 2018 to 3.0% in 2021.
In common with many businesses, our bonus scheme
payment thresholds are linked to business performance
and generally increase with seniority. Our mean bonus
gap, which is 42.2% in favour of men, is influenced by
the higher proportion of men in more senior roles.
Our median bonus gap is 0%. There is therefore no
difference in median bonus between men and women.
% employees receiving a bonus payment
Male
84%
2020: 74.1%
Female
82%
2020: 70.8%
Over 80% of employees received bonus payments
in 2021, reflecting the financial performance in what
was an extremely unusual and challenging year.
In 2020, there was a circa four percentage point
difference in the percentage of men receiving a bonus
in comparison with women. Positively, in 2021, this
narrowed to a two percentage point difference.
With regard to closing the gender pay gap in particular
we know this will take time, however we believe we
are taking positive steps to support improvement in this
area as shown in our longer-term results. These show
that our mean gender pay gap has reduced from 12%
in 2017 to 3% in this year’s report.
As part of our commitment to creating a more inclusive
culture, we continue to evolve our diversity and
inclusion (D&I) approach by listening to our employees,
running employee focus groups and using this valuable
feedback to develop plans tailored to our business and
our people. Across 2021, despite the challenges of the
Covid-19 pandemic, we have made progress in the
delivery of this plan across our three key focus areas:
• Gender Diversity in Recruitment and Development
• Flexible Working
• Gender Diversity in Leadership
The full Barr Soft Drinks Gender Pay Report is available
on our website at www.agbarr.co.uk.
We look forward to delivering further improvements
in 2022 and will continue to work on creating an
environment that is inclusive, where people feel they can
be themselves at work and where their opinions count.
Reward
Our approach to reward aims to link remuneration
with the delivery of our key strategic priorities and our
overarching purpose, to create value, with values –
for our shareholders, consumers, customers and for
society as a whole.
We strive to offer a fair and transparent total reward
package that drives a performance-led culture and
is linked to both the long-term sustainable success
of the business and our values.
We target our pay at the market median or above,
ensuring we can attract and retain high-calibre
employees. We operate a number of incentive and
bonus schemes, as well as performance related pay
arrangements, designed to reward and motivate strong
individual and collective performance.
We offer employees a modern and flexible range of
benefits, offering choice to our increasingly diverse
workforce. Every employee receives a flexible benefit
allowance with which they can select the benefits most
suitable to them personally. Healthcare features
prominently, with a selection of health-related benefits
made available either on a core benefit basis or within the
suite of flexible benefits made available to all employees.
We comply fully with all the regulations associated
with rewarding our employees fairly and are a UK Living
Wage accredited employer.
More information on how we ensure that our approach
to remuneration supports our strategy is available in the
Directors’ Remuneration Report on pages 76 to 109.
Risk and regulation awareness
We have a robust risk management framework in
place that is embedded across the business. In addition
to the corporate risk register, governed by the Board,
functional risk registers have been developed across
our teams, allowing a wide range of employees at
different levels to contribute to our risk assessment
and assurance processes.
Our reputation is extremely important to us and it is the
responsibility of every employee to act professionally,
fairly and with integrity. This requires an understanding
of the regulatory risks we face and how we can all play
a part in mitigating these risks.
In support of this, we require all employees to complete
the following five mandatory training modules:
• Introduction to Risk
• Data Protection
• Competition, Pricing and Confidentiality
• Bribery and Corruption
• Tax Evasion
Responsibility Report continued
Risk Management
Further details on our risk
management actions can be
found on pages 50 to 57.
31
Strategic Report Corporate Governance Accounts
We respect the environment
We take our environmental responsibilities very
seriously, constantly seeking to minimise our impact on
the world we operate in, whether through carbon and
energy reduction, our water and waste control actions
or the general reduction of our environmental impacts
on areas such as packaging.
We have been accredited to the Environmental Standard
ISO 14001 since 2003. This certification provides a
framework against which we have developed
comprehensive environmental procedures and
monitoring systems. These processes have allowed us
to measure our environmental performance and focus
our activities on delivering long-term improvements.
Carbon reduction
We have an important role to play in the transition
to a low carbon and climate-resilient economy.
We have already exceeded our previously set
greenhouse gas emission target of a 40% reduction
based on a 2015 baseline, supported by a variety of
decarbonisation initiatives, such as our move to 100%
renewable electricity at all our sites. Further details on
both our energy emissions and our energy efficiency
actions and savings during the past 12 months are
provided in our Streamlined Energy & Carbon Reporting
(SECR) section on pages 36 and 37.
In 2021, working with independent sustainability
experts The Carbon Trust, we undertook a thorough
assessment of our 2020/21 Scope 1, 2 and 3 emissions
to establish our carbon footprint across our full product
life cycle and value chain. This covered the goods we
purchase and the resources, fuel and energy we use in
our day to day activities, right through to the point we
deliver to customers. This important data has allowed
us to accurately measure and verify our full carbon
footprint for the first time.
Note: The graphics show our 2020/21 Scope 1, 2 (market-based) and Scope 3 emissions data.
Our SECR section on pages 36 and 37 also provides 2021/22 Scope 1 and 2 data.
SCOPE 1
Direct emissions from
activities we control
SCOPE 2
Location-based. Indirect emissions
from purchased energy
SCOPE 3
All other emissions from
sources we don’t control
4%
5,434 tonnes CO
2
e 1,888 tonnes CO
2
e 147,280 tonnes CO
2
e
1%
95%
17.5%
12%
Ingredients
57%
Packaging
6%
Equipment & Services
4%
Manufacturing
17.5%
Transport
2%
In-Shop
Refrigeration
1%
Waste
Management
0.5%
Staff Commuting
& Travel
Total Emissions: 154,602 tonnes CO
2
Our 2020 greenhouse gas emissions
Where our emissions come from
32
A.G. BARR p.l.c. Annual Report and Accounts 2022
In 2015, 196 governments signed the Paris Agreement,
which aims to keep average temperature increase to
well below 2°C above pre-industrial levels. More
explicitly, the agreement sets out to limit the
temperature increase even further to 1.5°C.
The Science Based Target Initiative (SBTi) enables
companies to demonstrate their leadership on climate
action by publicly committing to science-based
greenhouse gas (GHG) reduction targets. Science-
based targets provide clearly defined pathways for
companies to reduce GHG emissions. Targets are
considered science-based if they are in line with
what the latest climate science deems necessary
to meet the goals of the Paris Agreement.
SBTi requires companies to focus initially on emissions
from their direct GHG emissions (Scope 1), their indirect
emissions, including the consumption of purchased
electricity (Scope 2) and then on their wider indirect
(Scope 3) emissions.
Last year we communicated our ambition to be
net- zero by 2040, if not sooner, however we also
made it clear that as a business that prides itself on
acting with integrity we would only confirm our
net-zero commitment as and when we had a
robust and deliverable plan in place.
In October 2021, just ahead of the COP 26 Conference,
the SBTi published a new and more stringent Net-Zero
Standard, which for the first time quantified the
long-term carbon reductions that organisations must
now deliver to become truly net-zero. Prior to this new
standard, the SBTi only required organisations to set
near-term targets, meaning organisations could make
long-term net-zero commitments inclusive of material
amounts of carbon offsetting.
The SBTi’s new Net-Zero Standard now requires
a minimum 90% carbon reduction across 90% of
Scope 3 emissions before any offsetting of residual
emissions can be taken into account. This new standard
significantly increases the level of true decarbonisation
required across organisations’ full supply chains.
We respect the environment continued
Responsibility Report continued
“The number of businesses committing to reach
net-zero emissions has grown rapidly, but not
all net-zero targets are equal. Without adhering
to a common definition, net-zero targets can be
inconsistent, and their collective impact is strongly
limited. While the growing interest in net-zero
targets represents an unparalleled opportunity to
drive corporate climate action, it has also created
a pressing need for a common understanding of
“net-zero” in a corporate context. Business leaders
need a robust, science-based framework for
setting net-zero targets. Otherwise, they risk
continuing to invest in business models that are
inconsistent with the goals of the Paris Agreement.
Through a transparent multi-stakeholder process,
the Science Based Targets initiative (SBTi) has
developed the first global science-based standard
for companies to set net-zero targets. The
Net-Zero Standard gives business leaders
confidence that their near-term and long-term
targets are aligned with what is needed to
contribute to a habitable planet, and it provides
clarity on business climate action to a wide range
of stakeholders.
Through the SBTi, companies can commit to
net-zero, which includes setting validated near-
term and long-term science-based targets
consistent with limiting temperature rise to 1.5°C,
to become distinguished as climate leaders and
drive forward the global transition to net-zero.“
Source: SBTi Net-Zero Standard – October 2021
In focus
The Road to Electric
Electric vehicles will play a big part
in our journey towards net-zero
with progress in this important area
already being made:
• 70 LPG-powered forklift trucks
now replaced by a fully electric
forklift fleet using a combination
of lithium-ion technology and
conventional battery-powered
vehicles
• new Company Car Policy
allowing only hybrid and electric
cars, and a long-term plan to
reduce the size of this greener
fleet to essential users only
• electric vehicle charging points
have now been installed at all
our main sites
33
Strategic Report Corporate Governance Accounts
We are pleased to report that following our full
carbon footprint assessment, and aligned to the
SBTi’s significantly more challenging updated
Net-Zero Standard, we have now set clear science-
based carbon reduction targets*, as detailed on page
23, that will underpin our decarbonisation plans and
our net-zero commitments.
We have now accelerated our carbon reduction
programme across our Scope 1 and 2 emissions
and are committing to be net-zero across our own
operations by 2035. We have a deliverable and realistic
decarbonisation roadmap which builds on the progress
we have made and pushes further, from electric
vehicles and solar panels to air source heat pumps
and degasification projects.
For our indirect Scope 3 emissions, including purchased
goods and services as well as upstream and downstream
transport and distribution, we are working closely with
our suppliers and partners with a commitment to
become net-zero across our full supply chain by 2050,
if not sooner.
Our ambitious commitments are being delivered
through our “No Time To Waste” environmental
sustainability programme, which brings together
net-zero, plastic and packaging, waste, water and
sustainable sourcing workstreams. “No Time To Waste”
is a hugely important programme for the business
and our Barr Soft Drinks and Funkin business units are
working together and jointly committed to increase our
sustainability and reduce our environmental impact.
Further information is available on pages 38 to 43
within our TCFD disclosures.
* Pending SBTi validation
In focus
Green motoring at Moston
Our Moston depot has been playing its part supporting
our “No Time To Waste” environmental sustainability
programme by switching nine of its delivery trucks from
diesel to Hydrotreated Vegetable Oil (HVO) fuel for a
six-month trial period.
HVO is a paraffinic bio-based liquid fuel made from
various kinds of vegetable oils such as rapeseed,
sunflower and soybean.
It has a less pungent smell than diesel and when used
in HGV vehicles it has a range of benefits including the
reduction of CO
2
emissions and other gases.
34
A.G. BARR p.l.c. Annual Report and Accounts 2022
In focus
Clear future for Simply Fruity
A new pack format for Simply Fruity sees
harder to recycle coloured plastic bottles
replaced with a clear bottle made from 50%
recycled material along with delicious new
recipes – and all wrapped in 100% recycled
film. This is a step change for the brand and
another clear demonstration of our drive for
more sustainable packaging to play our part
in addressing climate change.
In focus
Leading the Way
We’re one of the first businesses
to introduce 100% recyclable
packaging film made from 100%
recycled content, which is now used
in all our consumer multipacks. This
move alone saves 400 tonnes of
virgin plastic a year – that’s the
weight of about 250 cars.
Packaging
We believe that packaging should be treated by all as a
valuable resource and recycled, not discarded as litter.
100% of our soft drinks packaging is recyclable, with
clear on-pack recycling messages. In addition, we
continually seek to reduce the amount of packaging
we use and have made significant achievements in
this area. We use 20% less material in our plastic bottle
designs than we did more than a decade ago and we
recently removed difficult to recycle polypropylene
sleeves from millions of our bottles.
As part of our “No Time To Waste” environmental
sustainability programme, our plastic and packaging
workstream has established a clear strategy with a
long-term goal of 100% circular packaging. This means a
future where packaging is reduced, reused and recycled.
Reducing the footprint of our packaging will be a
critical part of our journey to reach net-zero with some
of the progress we have made in 2021 detailed below:
• With the planning and preparation we undertook in
2021, we’re on track to have all IRN-BRU and Rubicon
in bottles made from 100% recycled plastic in 2022,
with the rest of the portfolio following suit in 2023
• We were one of the first businesses in the UK to
introduce 100% recyclable packaging film made
from 100% recycled content, which is now on all
our consumer multipacks
• We’ve light-weighted the shrink wrap used in our
factories, which has removed 75 tonnes of plastic
on an annual basis
• Our 1 litre soft drinks cartons now contain plant-
based plastic. This more sustainable material
significantly reduces the carton’s carbon footprint,
and packs now carry the Carbon Trust logo as a result
As a founder member of Circularity Scotland Limited
(CSL), the new not-for-profit administrator of Scotland’s
Deposit Return Scheme (DRS), we’re committed to
creating a truly circular system for drinks containers.
DRS in Scotland is due to be implemented in August
2023 and we are now in an important planning and
preparation phase, working with our customers and
CSL to ensure as smooth a transition and as successful
a scheme as possible. By incentivising consumers to
return their drinks containers, DRS will set drinks
packaging apart, as drinks containers will become part
of a truly circular economy. In countries where DRS is
already operational, such as Norway and Germany,
return rates of plastic bottles for example reach as high
as 98%. In addition, the quality of recycled material
available from a DRS system is expected to be much
higher than the quality produced by current household
recycling. We believe this will vastly improve the
availability of recycled material to go back into our
drinks containers.
We respect the environment continued
Water and waste
As a drinks manufacturer, water is a principal ingredient
and as such we understand how valuable it is as a
resource. However, there is increasing awareness of
the challenges faced in managing water resources and
we are extremely aware of the part we have to play in
protecting this precious commodity.
The principles we apply to our packaging reduction
programmes equally apply to our approach to good
water stewardship – each is about reducing, reusing
and recycling. We understand that there are steps we
can take to be better stewards of the water we use.
Beyond the water in our products, a large part of our
water consumption is in cleaning our process lines
and manufacturing equipment, to ensure our products
meet our rigorous quality standards.
Responsibility Report continued
35
Strategic Report Corporate Governance Accounts
We also know that the most significant water use in our
value chain is in agriculture, where the crops that we
rely on for many of our products – such as mangoes
– are grown in hot, potentially water-stressed areas. By
understanding our water footprint, we can take action
to encourage change close to home – and further
afield with our global suppliers.
In 2021 we undertook more detailed analysis of our
water footprint at all our production sites. By working
with an independent agency to carry out a thorough
audit across our manufacturing sites, we now have a
better understanding of how and where we use water,
and can now take a more evidence-based approach to
our water reduction and reuse plans in the coming year.
The results of that work have allowed us to develop
a water strategy for the business, with clear targets
and an action plan of water efficiency improvement
initiatives to deliver over the next three years. Our water
management plan also allows us to take a risk-based
approach to the management of our suppliers, with
emphasis on the impact of our global supply chain
on water-stressed areas. Ultimate responsibility for the
review and delivery of this water strategy sits with our
CEO, as water is a key pillar of our “No Time To Waste”
environmental sustainability programme.
While there was a modest year-on-year improvement
in our water usage efficiency, our KPI in this area has
declined and we did not achieve our target. Following
our independent water audit and assessment we have
reviewed our target for water reduction, based on this
validation work. We were pleased to find we are in line
with our competitors in terms of our ratio of water
used to volumes of product made. We also now have
a better understanding of our true water footprint, at a
business-wide and local site level. As a result, we have
re-calibrated our target, now setting an objective of a
10% reduction in our water use by 2025, against a
2020 baseline.
Once again, we were pleased to achieve our long-term
target related to waste. 100% of our non-hazardous
waste is now diverted from landfill, and our objective is
now to maintain this performance on a permanent basis.
Sustainable sourcing
As climate change and a rising population put pressure on
our limited natural resources, it is important for all our raw
materials to be sourced sustainably and used effectively.
As one of our “No Time To Waste” environmental
sustainability workstreams, we reviewed and updated
our sustainable sourcing strategy in 2021, reinforcing
our commitment to supplying high-quality products
that are sourced and manufactured in a fair, ethical
and environmentally responsible way.
As part of this review we developed a new Supplier
Code of Conduct, setting out the key supplier principles
we work to and the minimum standards we require our
suppliers to meet, which form part of their contractual
commitments to us. This Code is fundamental to
ensuring we work with suppliers who uphold the
highest standards with respect to human rights,
conditions of employment and who actively reduce
their environmental footprint. We ensure our critical
suppliers have embedded sustainable and ethical
practices in their organisations, and that they are
committed to maintaining these principles within
their own supply chain.
Our suppliers must acknowledge their compliance on
an annual basis through our stringent supplier approval
process, which uses questionnaires and audits to
confirm adherence to our standards across a broad
range of requirements. For many years we have used
the Supplier Ethical Data Exchange (Sedex) platform,
a not-for-profit global membership organisation
dedicated to driving improvements in ethical and
responsible business practices. As part of our NTTW
Sustainable Sourcing Strategy review, we have now
extended our use of the Sedex platform, using the
Sedex Supplier Approval Questionnaire as an important
secondary validation step which allows independent
benchmarking of suppliers on a consistent
measurablebasis.
The output from these questionnaires will also allow
us to collaborate and engage with our suppliers to set
objectives and action plans to deliver sustainable and
continuous improvements. This includes active and
ongoing dialogue with our key suppliers related to
net-zero – their Scope 1 and 2 emission reductions will,
in turn, support our delivery of our Scope 3 science-
based targets, and ultimately our net-zero ambition.
Materiality and stakeholder engagement
We regularly engage with internal and external
stakeholders to ensure that our responsibility agenda
is addressing the material issues.
Governance
Our responsibility agenda is integrated into our
strategic, financial and business planning, as well
as our risk management processes, with ultimate
accountability sitting with the Board.
Our Executive teams across both business units,
Barr Soft Drinks and Funkin, are responsible for the
delivery and execution of our responsibility actions
and programmes, supported where appropriate by
sub-committees and functional or project teams.
Further information on the governance of our
climate-related risks and opportunities is detailed
in our TCFD disclosures on pages 38 to 43.
Corporate Governance
Report
Further information on our corporate
governance framework can be found
on pages 60 to 71.
36
A.G. BARR p.l.c. Annual Report and Accounts 2022
Independent assurance
We have continued to work with third-party auditors,
the Carbon Trust, across 2021. They have undertaken a
carbon audit of our Group operations for Scope 1 and 2
emissions for the year ended January 2022 (verified
against the ISO 14064-3 standard), as well as completing
a Scope 3 assessment for the year ended January 2021.
Having developed the world’s first certification for
organisational CO
2
e Reduction Standard and product
carbon footprints, the Carbon Trust is the leading
carbon footprint certification body.
During 2021 we were also pleased to improve our
climate change questionnaire rating from the Climate
Disclosure Project (CDP) to an A- classification. CDP is
a not-for-profit charity that runs a global environmental
disclosure system. CDP is widely used and considered
to be one of the most comprehensive independent
environmental data sets available. The CDP Score
Report allows us to benchmark and compare our
environmental stewardship with peers, and provides
additional information that can help inform our
forward-looking improvement programmes.
We also underwent an internal audit review of our
environmental sustainability programme conducted
by subject matter resource from EY. The report was
graded satisfactory with limited recommendations.
The report was presented to the Audit and Risk
Committee and the recommended actions will
be tracked by the Committee.
Streamlined Energy and Carbon Reporting
(SECR)
We are reporting against the SECR framework for
the second year. We report as a quoted Company and
confirm that all the minimum requirements have been
addressed and are presented here.
Our total energy consumption for 2021/2022 was
46,281,416 kWh. This includes our electricity, steam,
natural gas usage and other thermal fuels for our
production, distribution and office buildings, as well as
transport fuels for logistics vehicles and Company cars.
Under a location-based approach, the total global
Scope 1 & 2 carbon emissions associated with our
reported energy use and fugitive emissions from
refrigerant leaks for 2021/2022 were 9,600.19 tCO
2
e,
as summarised in the table below:
Carbon Emissions (Location-based)* 2021-22 2020-21
Scope 1 emissions – (tCO
2
e) 3,847.87 5,434.40
Scope 2 emissions – purchased
electricity (tCO
2
e) 4,752.63 4,885.53
Scope 2 emissions – purchased
steam (tCO
2
e) 999.68 –
Total Scope 1 & 2 emissions (tCO
2
e) 9,600.19 10,319.93
* The location-based approach applies UK grid average carbon
emission factors to all Scope 2 purchased electricity.
Under a market-based approach the total global Scope
1 and 2 carbon emissions associated with our reported
energy use and fugitive emissions from refrigerant leaks
for 2021/2022 are 4,883.52 tCO
2
e, as summarised in
the table below:
Carbon Emissions (Market-based)* 2021-22 2020-21
Scope 1 emissions – (tCO
2
e) 3,847.87 5,434.40
Scope 2 emissions – purchased
electricity (tCO
2
e) 35.96 1,887.98
Scope 2 emissions – purchased
steam (tCO
2
e) 999.68 –
Total Scope 1 & 2 emissions (tCO
2
e) 4,883.52 7,322.38
* The market-based approach accounts for zero carbon
renewable electricity purchase (backed by Renewable Energy
Guarantees of Origin) at all our facilities, excluding the Funkin
and Middlebrook leased sites.
We respect the environment continued
SECR reported figures from our previous Annual Report
(year ended 24 January 2021) are also included for
comparison. It should be noted that in 2020/2021,
natural gas used to produce steam at Cumbernauld
accounted for 1,125 tCO
2
e of Scope 1 emissions. In
2021/2022, purchased steam provided by a third-party
at Cumbernauld is categorised under Scope 2 and
accounts for 999.7 tCO
2
e.
Methodology
The methodology used is the WBCSD/WRI Greenhouse
Gas Protocol – a corporate accounting standard revised
edition in conjunction with UK Government
environmental reporting guidelines including SECR
guidance. An operational control approach has been
taken. We have used the UK Government greenhouse
gas conversion factors for company reporting 2021.
Intensity ratio
For 2021/2022, our emissions intensity, measured as
the total Scope 1 & 2 emissions relative to the thousand
litres of product produced is 21.55 kg CO
2
e per
thousand litres of product produced. This compares
with 24.95 kg CO
2
e per thousand litres of product
produced, as detailed in our previous Annual Report.
Energy efficiency actions
1. We have transitioned our fleet of forklift trucks away
from LPG to 100% renewable electricity, resulting
in estimated annual CO
2
e savings of 300 tonnes
(based on 2020 numbers).
2. We have installed electric vehicle charging points
at our Cumbernauld and Milton Keynes sites in order
to support the transition of employee and Company
cars towards electric vehicles.
3. We have started a trial on HVO as an alternative fuel
to diesel on our fleet of HGVs at the Moston site.
4. In addition, this is the first full year of procuring
REGO-backed renewable electricity across all
our operational sites, leading to a significant
reduction in Scope 2 emissions (under
market-based reporting).
Responsibility Report continued
37
Strategic Report Corporate Governance Accounts
Additional data
Reported emissions (and carbon offsets) (tonnes CO
2
e)
of carbon dioxide equivalent in the stated period
24/01/2021
– 29/01/2022
26/01/2020
– 24/01/2021
Total net emissions 9,600 10,320
Total gross emissions (scope 1 and 2) 9,600 10,320
Total direct and indirect emissions (scope 1 and 2) 9,600 10,320
Total direct (scope 1) emissions 3,848 5,434
Direct emissions (scope 1) stationary combustion 1,839 3,074
Direct emissions(scope 1) mobile combustion 0.0 0.0
Direct emissions (scope 1) from transport fuels 2,009 2,304
Direct emissions (scope 1) from other mobile combustion 0.0 0.0
Direct emissions (scope 1) from process sources 0.0 0.0
Direct emissions (scope 1) from fugitive sources 0.0 56.5
Direct emissions (scope 1) from agricultural sources 0.0 0.0
Total indirect emissions (scope 2) 5,752 4,886
Indirect emissions (scope 2) from electricity 4,753 4,886
Indirect emissions (scope 2) from purchased steam 999.7 0.0
Indirect emissions (scope 2) from purchased heating 0.0 0.0
Indirect emissions (scope 2) from purchased cooling 0.0 0.0
Energy consumption (kWh)
Kilowatt hour equivalent in the stated period
Energy consumption used to calculate emissions 46,218,416 46,493,654
Energy consumption, combustion of gas 9,129,265 14,974,793
Energy consumption, electricity 22,383,215 20,955,356
Energy consumption, combustion of transport fuel 8,469,091 9,084,274
Energy consumption, other (Thermal Fuels) 107,296 1,479,230
Intensity ratio
Intensity ratio 0.022 0.025
The reported emissions intensity ratio is the total gross emissions (Scope 1 & 2 in tonnes CO
2
e) per thousand litres of product produced
Intensity ratio based solely on mandatory data True True
Task Force on Climate-related
Financial Disclosures
The Task Force on Climate-related Financial Disclosures
(TCFD) provides a framework for companies to report
the potential financial impacts from climate change on
their business, as well as reporting the progress made
by the organisation against the targets set to mitigate
climate-related risks and to reduce its impact on
theenvironment. This framework is designed to help
investors and wider stakeholders understand how
businesses are managing climate-related financial risks,
across four key areas:
Governance – setting out the respective roles of
the Board and management team in managing risks
and opportunities.
Strategy – identifying risks and opportunities over
different time horizons and explaining how these
impact strategic and financial planning.
Risk Management – having processes in place for
managing identified risks and including these within
the overall risk management framework.
Metrics and Targets – explaining how both climate
change impact and exposure to risks are measured,
setting targets and tracking ongoing progress.
Using this framework we set out our full TCFD
disclosures on pages 38 to 43.
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A.G. BARR p.l.c. Annual Report and Accounts 2022
Emerging Risks
& Opportunities
Group
Board
Barr Soft Drinks
and Funkin
Executive Teams
Group Risk
Committee
“No Time To
Waste” Steering
Group
Capital Allocation
Committee
Audit and Risk
Committee
ESG Committee
Remuneration
Committee
Nomination
Committee
We respect the environment continued
Governance
Board of Directors
The A.G. Barr Board has responsibility for the oversight
of climate-related risks and opportunities impacting
theGroup.
The Board of Directors considers climate-related risks
and opportunities when setting and reviewing the
Company strategy and when agreeing future objectives
and key performance indicators.
The Board carries out a full review of our corporate
risk register and principal risks, including those related
to climate change, twice a year. In addition, the Board
regularly discusses climate-related issues across a
variety of Board meeting agenda items. These include
matters arising from its sub-committees, particularly
from the Environmental, Social and Governance (ESG)
Committee, as well as from general business updates,
where climate-related issues will often be integral.
Examples during the year include discussions on
science-based target setting and net-zero roadmaps,
as well as the approval of our strategic capital
investment programme, incorporating greenhouse gas
reductionprojects.
A new structured process for identifying and
quantifying
emerging
risks and opportunities across the
Group, similar to our risk management approach, has
recently been agreed and is now being implemented.
This will provide a framework to support broader
thinking on new and emerging areas, including those
related to climate change, with input from both our
Barr Soft Drinks and Funkin Executive teams, and will
have an important role to play in the Board’s strategic
planning process.
Corporate climate-related targets, set by the Executive
teams and ratified by the ESG Committee, are
monitored by the Board on a monthly basis.
The Board, in turn, delegates some elements
of its responsibility to its various sub-committees,
as set outbelow:
• The Audit and Risk Committee has the delegated
responsibility to monitor our internal financial
controls as well as our internal control and risk
management systems. Its risk management
oversight includes the review of our corporate risk
register and principal risks, including those related
to climate change, at least twice per year.
• The Environmental, Social and Governance
Committee assists the Board in fulfilling its
oversight responsibilities with respect to the
Company’s management of all relevant ESG matters.
The ESG Committee has delegated responsibility
for approving the Company’s environmental
sustainability strategy and reporting back to
theBoard. The ESG Committee owns, and is
responsible for monitoring and updating, our
material risks and opportunities related to
climate change.
• The Remuneration Committee is responsible for
determining our remuneration policy, including how
climate-related factors are taken into consideration
and reflected in reward. Further information is
available in our Directors’ Remuneration Report
on pages 76 to 109.
• The Nomination Committee is responsible for
Board appointments and succession planning. In
2021 the Nomination Committee approved the
appointment of Zoe Howorth as a Non-Executive
Director with the additional responsibility of chairing
the newly formed Environmental, Social and
Governance Committee. Zoe has extensive FMCG
experience, specifically across the food and beverage
sector, and has a particular interest in the area of
climate change, bringing an additional level of rigour
and challenge to climate-related discussions.
Responsibility Report continued
39
Strategic Report Corporate Governance Accounts
Barr Soft Drinks and Funkin Business Units
Our Executive teams across both business units, Barr
Soft Drinks and Funkin, are responsible for managing
the climate-related risks and opportunities faced by our
business on both a long-term strategic basis and day
to day. Our strategic planning process considers both
the risks and opportunities arising from climate change
and a specific process related to emerging risks and
opportunities has recently been agreed and is now
being introduced. The Executive teams are supported
across a number of areas as set out below:
• Our Group Risk Committee ensures that a strong
framework is in place to manage operational risks
effectively, including those associated with climate
change. The Committee oversees our principal risks
and uncertainties, and reviews the effectiveness of
risk management and compliance systems in
managing those risks. The aim of the Committee
is to ensure that employees understand the
importance of good risk management, a supportive
risk management culture is embedded across the
Group and that risk management processes are
clearly deployed.
• The “No Time To Waste” (NTTW) Steering Group,
chaired by our CEO, governs our Group-wide
environmental sustainability programme. The NTTW
Steering Group has overall responsibility for setting
the Group’s environmental sustainability strategy, for
achieving the Company’s climate change objectives,
and for monitoring and managing risks and
opportunities related to climate change.
The NTTW programme encompasses five key
workstreams associated with reducing the effects
of climate change – Net-Zero, Plastic & Packaging,
Sustainable Sourcing, Waste and Water.
Each workstream, and its associated team, owns
a risk register relevant to its specific area of focus.
The risks identified, along with opportunities arising
from the climate change agenda, are reviewed on
a monthly basis by the Steering Group.
• Our Capital Allocation Committee is responsible
for ensuring the best use of our capital resources
in line with our strategy and plans. This includes
the review and approval of capital expenditure
programmes related to environmental sustainability,
taking into account the risks and opportunities in
investment decisions.
• A new Emerging Risks and Opportunities Group
has recently been formed comprised of our CEO,
Finance Director, Funkin Executive Chairman,
Head of IT/Chair of Barr Soft Drinks Executive
Committee and our Head of Group Risk. Both our
Barr Soft Drinks and Funkin Executive teams will be
responsible for identifying and managing emerging
risks and opportunities. This group will conduct an
annual review prior to making recommendations to
the Board, the output from which will form part of
our Board’s annual Strategy Review.
Strategy
Our Board has ultimate responsibility for agreeing our
business strategy, taking into account, and reflecting
where appropriate, the risks and opportunities
associated with climate change. As detailed above,
the Board’s strategic thinking and decision making
is supported and informed by our Executive teams
and by a number of Board sub-committees.
Our strategic timeframes are as follows:
• Short-term: 0 to 1 years
• Medium-term: 1 to 5 years
• Long-term: 5+ years
The opportunities, as well as physical and transition
risks considered material to our business, are detailed
below along with our strategic responses.
40
A.G. BARR p.l.c. Annual Report and Accounts 2022
We respect the environment continued
Our methodology for defining material financial and strategic impacts on our business is aligned with our risk management approach,
detailed in the Risk Management section below, with the three impacts being:
Moderate Major Critical
Physical risks – associated with increased severity of extreme weather events such as cyclones and floods (acute), and associated with changes in
precipitation patterns and extreme variability in weather patterns, rising mean temperatures and rising sea levels (chronic).
Risk Type & Description Timeframe Potential
financial impact
Chronic risk
The risk that climate change impacts the future availability, quality and cost of the natural ingredients required to
manufacture our products, such as sugar, fruit juices and water.
Long-term
Strategic response:
We have dedicated Sustainable Sourcing and Water workstreams within our “No Time To Waste” environmental sustainability programme, and have recently
approved more ambitious strategies in these areas. Further information is available on pages 34 and 35, however by way of illustration of action taken related to
fruit availability, we have developed a network of suppliers who can supply materials from different origins and have set up a programme to approve fruit juices
from different geographic sources, such as passion fruit from Vietnam, in addition to our existing supply from Ecuador, thus reducing risk of supply and
ultimately protecting sales.
Transition risks – associated with changes to policy and legislation, technology, the market and reputation.
Risk Type & Description Timeframe Potential
financial impact
Policy and legal risk
The risk of higher costs as a consequence of planned/potential regulation such as a carbon tax, or packaging related
regulations/taxes such as the UK Plastic Tax, UK Extended Producer Responsibility (EPR) and the EU Single-Use
Plastics Directive.
Long-term
Strategic response:
As detailed previously in this report, we have set science-based targets that will see us becoming net-zero across our own operations by 2035 and across our
full supply chain by 2050, if not sooner. We have already begun our decarbonisation journey in areas such as transitioning to 100% renewable electricity and
100% electric forklift trucks.
We are also focused on reducing, reusing and recycling across our packaging. 100% of our soft drinks packaging is already recyclable and we are increasing our
use of recycled material. We now have 100% recycled plastic film across all of our consumer multipacks and are making good progress on our commitment to
have 100% recycled content across our full portfolio of plastic bottles by 2023.
Discussions are also underway with our glass and aluminium can suppliers on how we can work together to increase recycled content in the products they
provide. We are reducing packaging where possible, such as in a recent reduction of stretch wrap weight.
In addition, we are positive supporters of the implementation of DRS in the UK, which will help to mitigate potential EPR costs for the business – the latest
government proposals in this area have confirmed that containers subject to DRS will be out of scope of EPR.
Responsibility Report continued
41
Strategic Report Corporate Governance Accounts
Transition risks – associated with changes to policy and legislation, technology, the market and reputation.
Risk Type & Description Timeframe Potential
financial impact
Market risk
The risk that consumer behaviours change in relation to single-use packaging or as a result of regulatory changes
designed to reduce the impact of climate change, such as DRSs, resulting in a reduction in demand for our products
or consumers switching to brands perceived as more sustainable.
Medium-term
Strategic response:
As detailed above, we are positive supporters of the implementation of DRSs, confirmed to launch in Scotland in 2023, and expected to launch in England
in 2024 or later. By incentivising consumers to return their drinks containers, DRS will set drinks packaging apart, as drinks containers will become part of a
truly circular economy.
The delivery of our net-zero roadmaps, and specifically our drive to reduce, reuse and recycle across our packaging, are key to improving our environmental
credentials and further building trust with consumers.
Opportunities – associated with resource efficiency, energy sources, products and services, markets and resilience.
Opportunity Description & Type Timeframe Potential
financial impact
Energy source opportunity
Use of lower-emission energy sources, such as photovoltaic panels and heat pumps for the generation of electricity,
heat and steam, leading to a reduction in greenhouse gas emissions.
Medium-term
Strategic response:
These initiatives present a significant opportunity to reduce our Scope 1 (reduction of gas consumption from heat pumps) and Scope 2 (on-site electricity
generation from photovoltaic panels) emissions, thereby mitigating the on-cost associated with the potential introduction of carbon pricing while also
potentially delivering utility cost reductions.
Market opportunity
The opportunity that consumer behaviours change, with consumption patterns shifting towards products perceived
to be more environmentally friendly, resulting in sales opportunities. More environmentally orientated consumer
behaviours could include supporting companies who have clear plans to achieve net-zero or who are actively
engaged in DRS. It could also extend to increased “staycations” or the favouring of domestic produced products.
Long-term
Strategic response:
Communication with our customers and consumers is key to ensuring our environmental sustainability plans and progress are well understood. We provide
regular updates to our customers via our sales force and we are increasingly communicating directly with all consumers, both on pack and through traditional
and social mediachannels.
Moderate Major Critical
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A.G. BARR p.l.c. Annual Report and Accounts 2022
We respect the environment continued
Best-case climate scenario
IEA Net-Zero by 2050
Worst-case climate scenario
IPCC RCP8.5/SSP5
Scenario narrative & context
Under this scenario, global warming is limited to
below 1.5°C above pre-industrial levels by 2100 through
global collaboration and policy intervention to reduce
greenhouse gas emissions and reach net-zero
emissions by 2050.
For example, this scenario foresees the implementation
of a carbon price/tax that could start at $75 per tonne
CO
2
e in 2025 for developed countries, rising to $205
per tonne CO
2
e in 2040.
We chose this scenario to assess transition risks and
because its time horizon aligns with the UK Government’s
pledge to achieve net-zero by 2050, therefore offering
a plausible pathway for our local authorities.
Scenario narrative & context
Limited efforts are made by governments and
businesses to reduce greenhouse gas emissions,
leading to temperature rises of 4°C above pre-
industrial levels by 2100.
In this scenario, the emphasis turns to protecting
the population and operational assets from the
catastrophic impact of the changing climate as
opposed to reducing the emissions themselves.
We chose this scenario to assess the potential
physical risks on our business and supply chain,
as it is supported with long-term data ranges on
temperature, precipitations and rise in sea levels.
The data from the scenario extends to 2100 and
allows us to take medium and long-term views on
risks, considering the impact of market change in
the locations of our own assets and at the origin
of our key materials.
The climate-related risks considered material to our business are detailed above, however this scenario planning
process identified a range of other risks and opportunities.
Risk management
Identifying risks
Each department or function in the Company has
its own risk register that is reviewed on a regular basis.
Climate-related risks are identified and assessed
alongside other business risks during the departmental
reviews. Departmental risk registers feed into the
corporate risk register, which is reviewed by our
Group Risk Committee every two months.
Historically, the Group Risk Committee has also been
responsible for the Group’s emerging risk register, with
a longer-term horizon than that considered by the
departmental units. However, this process is now being
replaced by the Emerging Risks and Opportunities
Group, as detailed in the Governance section above.
The Group Risk Committee will retain oversight of
emerging risks going forward.
The recently formed ESG Committee owns, and is
responsible for monitoring and updating, our material
risks and opportunities related to climate change,
as detailed above in the Strategy section. The ESG
Committee has been supported by a cross-functional
group of senior executives who helped input into
this process both in terms of risk identification and
assessment aligned to worst case and best case
climate scenarios, as detailed here:
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Strategic Report Corporate Governance Accounts
Assessing risks
Our corporate risk register guidelines provide the
framework for defining financial and strategic impacts
on our business. This framework applies equally to
climate-related risks and categorises five levels of risk
impact: “insignificant”, “minor”, “moderate”, “major”
and“critical”.
The corporate risk register guidelines also include
definitions for the likelihood of the risks, including:
“rare”, “unlikely”, “possible”, “likely” and “almost certain”.
Different parameters are taken into account when
assessing the potential impact of a risk, including
financial aspects, environmental aspects, and other
aspects such as health & safety and corporate
reputation. Each risk is given a risk rating before
and after mitigating actions.
Gross risk impacts that fall in the categories of
“moderate”, “major” or “critical” would be deemed
to bematerial.
From a financial perspective, a “moderate” impact is
defined as impacting financial turnover or profit by
between 3 and 10%, a “major” impact is defined as
impacting financial turnover or profit by more than 10%
and less than 25%. A financial impact of 25% of more
on turnover or profit would be deemed as “critical”.
Managing risks
The resolution of moderate impacts requires the input
from the Executive team. The resolution of major and
critical impacts requires the input from the Board
and/or its sub-committees.
The Group Risk Committee reports back to the Audit
and Risk Committee, attended by Directors on the
Board. Similarly, the ESG Committee reports to the
Board on the material climate-related risks identified.
Mitigating actions are developed for each risk and their
effectiveness is reviewed on an ongoing basis. New
actions are triggered in order to further reduce the
net score of each risk, especially for those risks that
sit outside of the Board risk appetite. Functional risk
registers are reviewed in depth by the Risk Committee
according to an annual schedule to ensure that risks are
well represented and that actions are taken to reduce
the level of risk for the business.
Some recent risk management examples related to
climate change in particular include:
• Our risk registers cover upstream risks, such as
the risk of climate change on material availability.
For example, the physical risk that climate change
impacts negatively on fruit availability and fruit
quality features on our procurement risk register.
There have been recent examples of poor weather
impacting the availability of fruits such as lychee.
The use of the worst-case climate scenario outlined
above (RCP 8.5) also highlights a risk that the rise of
temperatures and associated more extreme weather
patterns in the geographical areas where fruits are
grown may impact the availability of raw materials
in the future. This risk was rated a 3 for likelihood
(“possible”: “Event should occur at some time
(30-50%)”) and as a 3 for impact (“moderate” with
a potential impact on turnover/profit estimated
between 3-10%). As a result of that assessment,
mitigating actions were put in place, including
monthly (and sometimes weekly) calls with suppliers
to monitor weather patterns and the impact on fruit
availability and quality. Alternative supply sources
were also considered.
• Our Commercial function and our “No Time To
Waste” Steering Group review the risks associated
with climate-related competitor activities, consumer
choices and customer strategies. For example, the
risk of soft drink purchasing behaviours changing
due to the increasing attention/importance given
by consumers to sustainability matters. In response,
we carried out a piece of consumer research to
understand how different sustainability matters,
including climate change, impact purchasing
behaviours and what risks and opportunities
this represents for our brands and business. The
programme of activities linked to increasing the
amount of recycled plastic content in our packaging
is an important part of our mitigating actions.
Metrics & Targets
A full review of our energy consumption and GHG
emissions data can be found on pages 36 and 37 within
our SECR disclosure. In addition, we have submitted
science-based carbon reduction targets to the Science
Based Target Initiative for approval, in line with the latest
climate science recommendations necessary to meet
the goals of the Paris Agreement and limit the
temperature increase to 1.5°C above pre-industrial levels.
These targets are detailed on page 23 and set out our
commitment to be net-zero across our own operations
by 2035 and across our wider supply chain by 2050,
if not sooner. Other climate-related targets and key
performance indicators are detailed on pages 23 to 24.
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A.G. BARR p.l.c. Annual Report and Accounts 2022
We support healthy living
Calorie reduction
Our job has always been, and continues to be,
about understanding consumers and their changing
tastes and preferences, and providing them with great
products. Evidence shows that most soft drinks
consumers want to reduce their sugar intake while still
enjoying great tasting drinks. We have been reducing
the sugar content across our portfolio and introducing
new and innovative reduced sugar products in
response to our consumers’ changing tastes and
preferences for many years.
98% of our soft drinks portfolio by volume is considered
no or low sugar, containing less than 5g total sugars per
100ml, and exempt from the UK Soft Drinks Industry
Levy, often referred to colloquially as the sugar tax.
New price and location restrictions will come into force
in England from October 2022, applicable to High Fat,
Sugar and Salt (HFSS) products. The definition of “high
sugar” for standard soft drinks is greater than 4.5g total
sugar per 100ml. We can confirm that from April 2022,
six months ahead of the new regulations, 98% of our
soft drinks portfolio will be HFSS exempt.
This positive portfolio position is supported by our
in-house research, development and innovation team,
which delivers a wide range of reformulation and
innovation projects, using the experience they have
gained over many years to optimise recipes and carry
out robust consumer research to ensure our recipes
meet consumer needs.
Responsible advertising and marketing
We take our responsibility in how we market, promote
and advertise our products very seriously. We advertise
responsibly, offer a wide range of pack sizes to assist
with portion control and, by providing clear nutritional
information, enable our consumers to make informed
choices. We fully comply with all of the appropriate
regulations and in some cases go beyond the standards
set, such as in the area of energy drinks where our
industry code exceeds regulatory requirements.
Labelling
We have always been committed to providing clear
calorie and nutritional information on our soft drinks
packs to help consumers choose products that are
right for them. We were one of the earliest adopters
of the government’s voluntary front of pack nutritional
labelling on all our Company-owned soft drinks brands,
which is a simple traffic light style scheme, making it
even easier for consumers to find the information
theyneed.
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Strategic Report Corporate Governance Accounts
We give back
Community engagement
Since 1875, we have always supported and worked
closely with the communities in which we operate.
We provide financial, in-kind, practical and employee
volunteering support to a wide range of charities,
good causes and community groups each year
across theUK.
Charity partnership
Our current employee-chosen charity partner,
Mental Health UK, brings together four national mental
health charities working across the country and provides
advice, information and support to those who need it.
Our corporate donation of £150K over the three-year
partnership is supplemented by employee fundraising
from teams across the business who undertake a range
of impressive activities in support of this importantcharity.
Employee volunteering
We encourage employees from across the business
to take part in volunteering activities, giving something
back to the communities we serve. Our employee
volunteering policy allows every employee the
opportunity to take paid time off to volunteer with
our employee-nominated charity.
In focus
IRN-BRU 32 charity
fundraiser
Inspired by the 32 ingredients within
our IRN-BRU secret recipe essence,
teams across the business took part in
our IRN-BRU 32 challenge in June 2021.
Participants had 32 days to complete
a feat of their choosing every day and
fundraise £32 per person for our charity
partner, Mental Health UK.
From running and hula-hooping to
wearing the same colour every day,
our employees embraced the challenge
with their usual enthusiasm. In total,
the IRN-BRU 32 challenge raised over
£16,000 for Mental Health UK.
46
A.G. BARR p.l.c. Annual Report and Accounts 2022
Financial Review
“We have produced a strong set of financial results in 2021/22 that
returns the business to a position ahead of 2019/20 pre Covid-19
revenue and profit levels.”
Stuart Lorimer
Finance Director
The following is based on results for the 53 weeks
ended 30 January 2022. Comparatives, unless
otherwise stated, relate to the 52 weeks ended
24 January 2021.
Overview
We have produced a strong set of financial results
in 2021/22 (53-week) that returns the business to a
position ahead of 2019/20 (52-week) pre Covid-19
revenue and profit levels, despite the continued
backdrop of the pandemic, its impact on consumer
behaviours and various supply chain challenges.
We have delivered strong growth across all key financial
metrics and are on a positive trajectory:
2021/22
(53 weeks)
Versus 2020/21
(52 weeks)
Revenue £268.6m +£41.6m +18.3%
Gross margin (before
exceptionals) 44.2% +239bps
Profit before tax
(reported) £42.2m +£16.2m +62.3%
Profit before tax
(before exceptionals) £41.5m +£8.7m +26.5%
Operating margin
(before exceptionals) 15.6% +83bps
Net cash at bank £68.4m +£18.4m +36.8%
EPS (basic p/share) 25.09p +7.9p +46.1%
We entered the pandemic with strong financial
fundamentals and took prompt action to protect and
right-size the Group in the face of both Covid-19 and
the loss of the Rockstar franchise. We believe these
actions have been successful and have enabled us to
emerge as a stronger, more resilient business with a
clear strategy for value enhancing growth.
Our revenue increase was driven by the powerful
combination of volume growth, favourable mix, tight cost
control and selective pricing benefits. Volume advanced
across the portfolio with all our core carbonated soft
47
Strategic Report Corporate Governance Accounts
drinks and Funkin cocktails in strong growth. Volume and
mix were both supported, particularly in the first half, by
the relaxation of Covid-19 restrictions and the reopening
of the hospitality sector, and further underpinned by
successful innovation and £6m of revenue from an
extra week of trading (53-week year).
Throughout the pandemic, we have worked
collaboratively with our customers to ensure we
recognise the impact of restrictions on the brand
support and discounts we provide. This involved
numerous commercial discussions and, in certain
circumstances, changes to promotional terms. This
has resulted in a change in estimate and recognition
of £4.9m of additional variable consideration, which has
contributed to the revenue growth experienced in the
year. Our brand support spend (including this additional
consideration) as a percentage of revenue remained
consistent year-on-year.
We were not immune from the well-publicised impact
of the pandemic on supply chains and freight networks
in terms of both labour availability and input costs.
We face continued cost pressure and high commodity
prices. Despite these headwinds, the operating leverage
benefits from higher volumes, combined with gains
from operational efficiency programmes and the
benefits of our rolling commodity hedges, secured
a 239 basis point improvement in gross margin.
Operating costs increased 25% primarily driven by the
impact of increased volumes, higher logistics costs,
increased variable rewards and our strategy to drive
long-term brand equity through enhanced marketing
investment. Despite the cost pressures faced and the
investments made, operating margins improved 83
basis points to 15.6% to deliver profit before tax (PBT)
of £41.5m –a 26.5% improvement year-on-year.
Covid-19 update
During the 2020/21 financial year, numerous actions
were implemented to mitigate the adverse impact of
Covid-19 restrictions, including reduced marketing
investment and discretionary spend as well as curtailing
all non-essential capital expenditure. The past 12
months have seen a disciplined rebuild of investment in
these areas. Previous sensitivity analysis that quantified
the expected impact of Covid-19 on our business
proved to be reasonable during the period of the most
widespread restrictions and these have continued to be
used as the basis of our scenario analysis to model
different levels of impact on revenue, profit and cash.
Under all the scenarios modelled, and before any
mitigating actions, our forecasts indicate a high level
of financial headroom and ongoing business resilience.
Segmental performance
We make decisions on a business unit basis which
allows agile, responsive and effective operational
management. The information reviewed by the
Board and senior executives is based on this divisional
segmentation. As a result, the financial performance
discussed below is primarily focused on the
performance of our two business units, Barr Soft Drinks
and Funkin, as this best reflects our management of the
Group. Further detail on the segmental performance
is detailed in note 2 to the financial statements.
Barr Soft Drinks
Barr Soft Drinks, which represents over 85% of Group
sales and gross profits, returned to revenue growth
with strong volume gains across the core portfolio.
This growth was driven by a resurgence in out of
home consumption, as Covid-19 restrictions eased, the
successful launch of Rubicon RAW Energy in February
2021, which partially mitigated the loss of the Rockstar
franchise, as well as the underlying positive momentum
of our core brands. Gross margin improved by 264
basis points to 44.9%, benefiting from stronger volume
and improved mix.
The IRN-BRU brand grew volume, revenue and gross
margin, benefiting from distribution gains in England as
well as the reintroduction of IRN-BRU 1901 in Scotland.
Particularly strong growth of single serve cans and
smaller PET packs, along with optimisation of
promotional mix and price, supported improved
margins. The launch of Rubicon RAW Energy and
the strong growth of Rubicon Spring were major
contributors to revenue and margin growth across the
Rubicon portfolio. Other portfolio brands, including Barr
Flavours, KA and Simply Fruity, grew revenue and margin.
The Strathmore Water brand grew volume and revenue
as the hospitality sector reopened, although margin
was constrained by significant inflation in glass costs.
Funkin
Funkin revenue and gross margin both grew strongly in
2021/22, benefiting from the reopening of the hospitality
sector and the continued success of the take home
business, which maintained momentum across the full
period, building on the strong foundations laid in the prior
year. Funkin revenue more than doubled the prior year
up £19.9m to £36.9m, with margin up 396 basis points
at 39.8%. This strong performance was delivered despite
industry-wide supply chain challenges, including the
shortage of cans which somewhat constrained overall
growth opportunities. As previously communicated,
Funkin did benefit from the restocking of the hospitality
sector, particularly in the first half of the financial year.
Other
The “Other” segment primarily represents two months
of sales and contribution associated with MOMA Foods
Limited following the Group’s investment in a 61.8%
equity stake in December 2021.
Operating margin
At a Group level, our marketing spend grew ahead
of sales as we increased investment behind our core
growth driving brands, IRN-BRU, Rubicon and Funkin.
Other operating costs increased year-on-year as the
business began to return to more normal working
practices and as inflationary cost pressures were
experienced in areas such as logistics. Our strong
trading performance and cost controls more than
offset these cost pressures, enabling operating margin,
before exceptional items to expand 83bps to 15.6%.
Exceptional items
In the year ended 30 January 2022, we have recognised,
and have separately disclosed, a £0.7m gain on the sale
of our Sheffield site, which closed in 2020. Although
not material in size or nature if taken in isolation, the
site disposal was part of a Group-wide re-engineering
programme, the costs of which were considered to
be non-recurring and exceptional in nature and were
reported as exceptional in 2020/21. As such, it is
considered appropriate to take the associated gain
as exceptional in 2021/22.
Interest
Net finance charges, totalling £0.4m, comprise the
service fees associated with the Group’s revolving credit
facilities, lease interest costs under IFRS 16 and notional
finance costs associated with the defined benefit
pension deficit under IAS 19.
48
A.G. BARR p.l.c. Annual Report and Accounts 2022
Financial Review continued
Taxation
Our reported tax expense of £14.4m (2020/21: £6.9m)
represents an effective tax rate of 34.1% (2020/21:
26.8%). This is higher than the UK statutory rate of
19.0%, primarily due to the impact of the change in
corporation tax rate from 19% to 25% on deferred tax,
which has increased the deferred tax liability by £5.7m.
Excluding the impact of the increase in rate for deferred
tax the effective tax rate would be c.21%.
The prior year tax charge and effective tax rate of
26.8% were significantly higher primarily due to a
one-off revaluation of deferred tax balances, following
the UK Government decision to reverse the planned
reduction in UK corporation tax rate from 19% to 17%
as well as non-deductible elements within our 2020/21
exceptionals items.
Earnings Per Share (EPS)
Basic EPS, before exceptionals, was 24.46p (2020/21:
22.31p), an increase of 9.7%, based on a basic weighted
average of 111,187,778 shares (2020/21: 111,171,047).
This reflects the strong profit performance offset
by the increased tax charge as detailed above. Basic
EPS post exceptionals was 25.09p (2020/21: 17.18p),
an increase of 46.1%. Based on a diluted weighted
average of 111,844,852 shares, diluted EPS was
24.95p (2020/21: 17.16p).
Dividends
In March 2020, the Board took the decision to temporarily
suspend dividend payments, with the aim of protecting
liquidity at the onset of the Covid-19 pandemic. In
September 2021, the Group communicated its intention
to resume dividend payments with the announcement
of a 2.0p interim dividend and a one-off special dividend
of 10.0p in recognition of the benefit from a number of
one-off cash inflows that were not part of normal trading.
The resumption of dividends after the Covid-19 related
pause in 2020/2021 reflects the Board’s confidence in the
Group’s financial resilience and future growth prospects.
The Group’s dividend policy aims to deliver a progressive
and sustainable dividend to shareholders that has regard
to current performance trends, including sales, profit
after tax and cash, and satisfies certain guiding principles:
• Dividend cover: targeting two times cover
• Pay-out ratio: targeting 50% of free cash flow
• Consistent with medium-term profit outlook
For the period ended 30 January 2022, dividend cover
was two times. The recommended final dividend for the
period, to be put to the shareholders for approval at the
Annual General Meeting is 10.0 pence. This will bring
the full year dividend to 12.0 pence per share. Subject
to approval by shareholders, the final dividend will be
paid to holders of ordinary shares on the register as of
12 May 2022 with an ex-dividend date of 10 June 2022.
Balance Sheet and Cash Flow
We entered the pandemic with a strong balance
sheet and significant liquidity, and we exit the year
in a stronger financial position.
The balance sheet has further strengthened on the back
of the strong trading performance with £68.4m net cash
at bank* as of 30 January 2022. This is a £18.4m increase
on the prior year after the payment of total shareholder
dividends of £13.4m and the MOMA investment.
The total asset base has increased £34.2m to £336.3m,
reflecting the MOMA investment, including the future
contingent consideration, the increased cash position
and higher working capital.
Working capital has increased as a result of the
underlying growth in trading, an element of receivables
phasing given year end timing and a conscious effort to
rebuild our inventory base of both finished goods and
raw materials, to provide increased resilience across
the supply chain. Year end payables and accruals have
increased by £16.7m reflecting the reintroduction of
employee incentives, the consolidation of MOMA and
an element of marketing and track investment phasing.
During the year, we made an incremental VAT payment
associated with the prior year’s Covid-19 VAT deferral.
We maintained strong operational controls to protect
customer service while ensuring that there were no
significant inventory write-offs or debt concerns.
We remain committed to a well-invested asset base and
continue to invest in our manufacturing infrastructure.
At £5.8m (2020/21: £5.9m), our capital additions reflect
a year when we experienced both longer equipment
lead times and the effect of restrictions on our
operations. Our multi-year process facility replacement
programme at Cumbernauld was completed on budget
and is now fully operational. During the year, we also
took the decision to increase our canning capacity and
capability in our Milton Keynes site. Equipment deposits
are included in the 2021/22 capital spend with the
capacity due to come on-stream in Quarter 1 2023.
The strong trading and profit performance, alongside
an abnormally low capital spend and lower pension
deficit resulted in a return on capital employed (ROCE),
increasing from 16.0% in 2020/21 to 19.6% in 2021/22.
Investment in MOMA Foods Ltd
On 6 December 2021, the Group completed a 61.8%
equity investment in MOMA Foods Limited (MOMA)
for a total consideration of £6.2m in cash. At the same
time, the Group and the vendor entered into a put/call
agreement whereby the Group and the vendor have
the right to sell/buy the remaining 38.2% shareholding
to the other party in three tranches over the next three
years. This provides A.G. Barr with a path to full
ownership by the end of the financial year 2024/25.
The call options have no value for accounting
purposes. However, the put options are required to be
valued and booked on the balance sheet. Accordingly,
a liability of £5.0m has been recognised at the period
end, recorded at the present value of the estimated
redemption value, using forecast revenue and earnings
of MOMA. Under this basis, for the 2021/22 financial
year, MOMA has an investment valuation of £10.0m,
contibuted £1.1m to revenue and had an immaterial
impact on profit. A non-controlling interest in equity
has been recognised in respect of this acquisition.
Investment in associate – Elegantly Spirited
Limited (Strykk Brand)
In June 2019, the Group made a 20% minority equity
investment in Elegantly Spirited Limited (ESL), a business
start-up in the emerging zero proof spirits market, and
the owner of the STRYKK brand, a range of zero proof
spirits products. During the financial year 2020/21, the
Group exercised its right to participate in further ESL
funding through a £1m convertible loan note.
The Covid-19 related challenges in the hospitality sector
resulted in the STRYKK brand temporarily refocusing its
strategy from the on-premise to the grocery channel.
The retail market for zero proof spirits is becoming
increasingly competitive, however the reopening of the
hospitality sector is expected to allow the STRYYK brand
to develop further in the coming year.
ESL is recognised as an associate, with the investment
accounted for under the equity method of accounting.
49
Strategic Report Corporate Governance Accounts
The investment was originally recognised at the
transaction investment price (£1.0m) and subsequently
adjusted to reflect the Group’s share of the loss since
our investment (£0.3m). The Loan note (£1.0m) has
been recognised on the balance sheet under loans
and receivables. The Group has the right, but not
the obligation, to participate in future equity funding
initiated by ESL.
Financial risk management
The Group’s risk management process is owned by the
Board and operates at every level within the business
to support the successful delivery of our strategic
objectives. The process is based on a balance of risk
and opportunity, determined through assessment of
the likelihood and impact of the risk and within the
context of the Group’s risk appetite, as established by
the Board. Risks are monitored throughout the year
with consideration to internal and external factors
and the Group’s risk appetite, and updates to risks and
mitigation plans are made as required. During the year,
the business undertook several dynamic risk
assessments to ensure rapid and appropriate responses
to the evolving Covid-19 pandemic as well as the
impact of supply chain disruption and inflationary
pressures on our operations. The principal risks that
could potentially have a significant impact on our
business have not changed since the end of the
financial year.
Treasury and commodity risk management
The treasury and commodity risks faced by the Group
continue to be identified and managed by the Group
Treasury and Commodity Committee, whose activities
are carried out in accordance with Board approved
policies and subject to regular Audit and Risk Committee
reviews. No transactions are entered into for speculative
purposes. Key financial risks managed by this committee
include exposures to foreign exchange rates, the
management of the Group’s debt, commodity and
liquidity positions. The Group uses financial instruments
to hedge against foreign currency exposures.
The Group seeks to mitigate risks in relation to
the continuity of supply of key raw materials and
ingredients by developing strong commercial
relationships with its key suppliers. The Group
manages commodity pricing risk actively and where
commercially appropriate, will enter into fixed price
supply contracts with suppliers to improve certainty.
The Group enters into insurance arrangements to
cover certain insurable risks where external insurance
is considered by management to be an appropriate
economic means of mitigating these risks.
As at 30 January 2022, in addition to the Group’s
cash position, the Group had £30m of committed and
unutilised debt facilities, consisting of two revolving
credit facilities with two individual banks, providing the
business with a secure funding platform. These facilities
are continually reviewed to ensure they remain
appropriate in terms of quantum, duration and cost
effectiveness. One of these facilities (£10m) expires
in April 2023 and the other (£20m) expires in February
2026. The ongoing facilities provide security and
optionality, should debt capacity be required to
facilitate corporate opportunities.
Accounting policies
The Group’s financial statements have been prepared
in accordance with International Financial Reporting
Standards (IFRSs) and the Listing Rules of the Financial
Conduct Authority.
There have been no changes to the accounting policies
applied this year. All new or amended standards that are
applicable have been adopted with no material impact
on the results for the current and prior reporting periods.
Pensions
The Group continues to operate two pension plans:
the A.G. BARR p.l.c. (2005) Defined Contribution
Pension Scheme and the A.G. BARR p.l.c. (2008)
Pension and Life Assurance Scheme. The latter
is a defined benefit scheme based on final salary,
which also includes a defined contribution section
for pension provision to senior managers.
The defined benefit scheme has been closed to
new entrants since 5 April 2002 (and to new executive
entrants since 14 August 2003) and closed to future
accrual for members in May 2016. Existing and new
employees have been invited to join the Company-
wide defined contribution scheme.
The defined benefit pension scheme triennial valuation
as at April 2020 identified a £7.7m deficit on a technical
provisions basis, as at that date, reflecting the substantial
reduction in the value of the Scheme’s investments
which occurred at the start of the Covid-19 crisis.
The Company agreed with the Pension Scheme Trustee
that the ongoing deficit recovery plan of a £1.0m per
annum Company contribution should continue for
the next three years, with the intention of eliminating
the deficit over the medium-term. This plan has been
submitted to the Pension Regulator for approval.
A deficit reduction payment of £1.0m was made to the
defined benefit pension scheme in May 2021. The next
triennial actuarial valuation will be as at April 2023.
On an IAS 19 valuation basis, which is determined before
the benefit of the asset back funding arrangement, the
deficit reduced from £7.9m as at 24 January 2021 to
£1.0m as at the balance sheet date. The reduction in
the net deficit is attributable to the favourable discount
rate change, due to the increase in returns from
corporate bonds used to calculate the discount rates
on the liabilities of the post-employment plans (from
1.4% to 2.2%) and cash contributions, £2.4m, made by
the Company partially offset by the change in inflation
rate assumptions (from 2.9% to 3.6%). Total cash
contributions by the Group to all post-employment
plans in the year ending 30 January 2022 were £4.0m.
The Group continues to work proactively with the
Pension Trustee to de-risk the pension liabilities and
secure the commitments to employee benefits as part
of the Group’s ongoing strategic risk management.
The Group remains of the view that the overall pension
deficit is manageable.
Having delivered a strong recovery in both top and
bottom line performance, the business is in a strong
financial position and well placed to build on its
positivemomentum.
Stuart Lorimer
Finance Director
29 March 2022
Note:
The Group utilises a range of financial and non-financial
performance indicators to manage and report on the business.
These are set out on page 11 and page 24. Financial metrics marked
with an asterisk are non-GAAP measures. Definitions and relevant
reconciliations are provided in the Glossary on pages 188 to 191.
50
A.G. BARR p.l.c. Annual Report and Accounts 2022
Risk Management
Identifying, Evaluating and Managing Risk.
“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.”
Julie Barr
Company Secretary
Risk management approach
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
riskappetite.
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 enhance our 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 at least once 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
51
Strategic Report Corporate Governance Accounts
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 72 to 75.
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 and reputation. The table below
sets out the Group’s principal risks as determined by
the Board, the net risk movement from the prior year
and examples of corresponding controls and mitigating
actions. This represents the Group’s current risk profile
– it is not intended to be an exhaustive list of all risks
facing the Group and the risks are not set out in
priorityorder.
Covid-19
As the Covid-19 crisis continued during the past year,
our primary concern has remained the welfare of
our employees, their families and the communities
in which we operate. Since the start of the Covid-19
pandemic, we have followed Government advice at
all times as a minimum and will continue to do so.
We have taken action as appropriate to protect our
employees and our operations. We continue to monitor
the situation closely as Covid-19 restrictions are eased
and to take appropriate actions to minimise the impact
on our business, with the health and safety of our
employees remaining paramount. There is the ongoing
potential for Covid-19 to have an adverse impact on
our operations and on the demand for our products
and we continue to take action to mitigate possible
consequences. We will continue to follow
developments closely and will take further action to
protect our employees 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 pages 12 to 16, and the viability
disclosures on pages 56 and 57.
Brexit
As reported last year, Brexit-related risks were not
considered to represent a principal risk for the business.
The formal conclusion of UK and European Union (“EU”)
negotiations on post-Brexit trade arrangements in April
2021 has reduced the risks associated with Brexit further.
We will continue to manage Brexit-related impacts on
our business conducted in the EU, particularly on our
processes and documentation, however given that c.3%
of our business is conducted in the EU, we have seen
limited impact on our overall business during the year.
“Effective risk
management is essential
to enable us to achieve
our operational and
strategic objectives
and deliver long term
value creation.”
52
A.G. BARR p.l.c. Annual Report and Accounts 2022
Risk Management continued
The net risk movement from the prior year for each principal risk is set out in the table below.
Movement:
No change Increased Decreased New
Principal risks and uncertainties
Net risks relating to the Group
Risk Impact Controls and mitigating actions Movement
Changes in consumer
preferences, perception
or purchasing behaviour
Consumers may decide
to purchase and consume
alternative brands or spend
less on soft drinks.
The Group offers a broad range of branded products across a
range of flavours, subcategories 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 innovation
across the year we have adapted our portfolio to align with these
changing consumer needs.
Consumer rejection of
reformulated products
Consumers may decide
to purchase and consume
alternative brands or spend
less on soft drinks.
Over a number of years we have implemented our extensive
innovation and reformulation programme, which was completed
prior to the introduction of the Soft Drinks Industry Levy in April
2018. 98% of our current Barr Soft Drinks portfolio produced by
volume contains less than 5g of total sugars per 100ml. From April
2022, six months ahead of new regulations applicable to High Fat,
Sugar and Salt (“HFSS”) products, 98% of our Barr Soft Drinks
portfolio will be HFSS exempt. We recognise that the risk of
consumer rejection of the enhanced sweeteners used in our
reformulated products remains. We continue to closely monitor
consumer acceptance levels and brand performance across our
total portfolio and take appropriate mitigating actions.
Loss of product integrity A loss of product integrity
in the manufacturing supply
chain could lead to a product
withdrawal or recall.
Appropriate risk assessments are carried out on a regular basis and
robust quality controls and processes are in place to maintain the
high quality of our products. A number of additional controls were
implemented during the year to further mitigate product integrity
risks. Product recall procedures are tested regularly.
Loss of continuity of supply
of major raw materials
The loss of continuity of
supply of major raw material
ingredients and/or packaging
materials could impact our
ability to manufacture, with an
adverse impact on the Group’s
sales and operating profits.
There is a robust supplier selection process in place. Supplier
performance is monitored on an ongoing basis and audits are
undertaken for major suppliers. Multiple sources of supply are
sourced wherever possible.
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.
During the year we continued to work closely with key raw
material suppliers in relation to the ongoing impact of Covid-19
on their businesses.
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Strategic Report Corporate Governance Accounts
Risk Impact Controls and mitigating actions Movement
Adverse publicity in relation
to the soft drinks industry,
the Group or its brands
Adverse publicity in relation
to the soft drinks industry,
the Group or its brands could
have an adverse impact on the
Group’s reputation, consumer
consumption patterns, sales
and operating profits.
Our risk management process is designed to identify and monitor
events that may impact the Group as a result of adverse publicity
and to ensure that controls are in place to manage these risks.
Processes are in place to ensure compliance with health and safety
legislation and ethical working standards, and these are regularly
reviewed by the Board and Executive Committee. Quality standards
are well defined, implemented and monitored. Our environmental
commitments are being progressed through our “No Time To
Waste” environmental sustainability programme – further details
are set out below. 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. During the year the Company was recommended for
ISO 45001 certification and subsequently achieved this certification.
Nutritional information is shown on all of our products and we are
long-standing users of the UK Government’s voluntary front of pack
nutritional labelling scheme.
As noted above, the Group has followed the Covid-related advice
from the Government at all times throughout the crisis as a
minimum and will continue to do so.
Government intervention
on climate change and
environmental issues,
e.g. packaging waste
Government intervention
on climate change and
environmental issues, e.g.
the introduction of a Deposit
Return Scheme, could have an
adverse impact on consumer
consumption patterns, sales
and operating profits.
The increased pace of change and level of environmental
campaigning in relation to climate change and areas such as
packaging reported last year has continued during the year. We
have clearly defined responsibility commitments with regard to
waste, water, energy, sustainable sourcing and packaging. We
continue to work 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 and the possible introduction of a DRS in England.
As noted above, various environmental sustainability related
workstreams are being progressed through our “No Time To Waste”
environmental sustainability programme – further details are set
out below.
54
A.G. BARR p.l.c. Annual Report and Accounts 2022
Risk Impact Controls and mitigating actions Movement
Failure to maintain customer
relationships or take account
of changing market dynamics
Failure to maintain appropriate
customer relationships or a
reduction in the customer
base could have an adverse
impact on the Group’s sales
and operating profits.
The Group offers a broad range of brands that it manufactures
and distributes through a variety of trade channels and customers.
Performance is monitored 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.
During the year we continued to engage with customers in relation
to control measures put in place to minimise Covid-related risks for
our respective employees and the wider public.
Inability to protect the Group’s
intellectual property rights
Failure to protect the Group’s
intellectual property rights
could result in a loss of
brand value.
The Group invests considerable effort in proactively protecting
its intellectual property rights, for example through trademark
and design registrations and vigorous legal enforcement as
and when required.
Failure of the Group’s
operational infrastructure
A catastrophic failure of the
Group’s major production or
distribution facilities could lead
to a sustained loss in capacity
or capability.
Assets within the Group are proactively managed and maintained.
Risk assessments are carried out on a regular basis and appropriate
actions taken. Robust business continuity plans are in place and
are regularly tested.
Failure of critical IT systems
or a breach of cyber security
A failure of critical IT systems
could result in a loss of key
systems, business interruption,
lost sales or lost production.
A cyber security breach could
lead to operational disruption,
financial loss and reputational
damage.
IT assets within the Group are proactively managed and procedures
exist that support rapid and clean recovery. Robust business
continuity plans and contingency measures are in place and are
regularly tested. Appropriate processes and controls related to
IT systems resilience and recovery capability are in place.
The risk of cyber attacks continues to increase on an ongoing basis,
including the risk of a ransomware attack. Appropriate cyber risk
monitoring controls are in place and various actions have been
taken during the year to mitigate cyber security related risks and
facilitate business recovery in the event of an attack.
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.
Principal risks and uncertainties continued
Risk Management continued
Movement: No change Increased Decreased New
55
Strategic Report Corporate Governance Accounts
Risk Impact Controls and mitigating actions Movement
Financial risks The Group’s activities expose
it to a variety of financial risks
which include market risk
(including medium-term
movements in exchange
rates, interest rate risk and
commodity price risk),
credit risk and liquidity risk.
Our underlying objective is to reduce foreign currency related
volatility through our cost of goods. Financial risks are reviewed
and managed by the Treasury and Commodity Committee,
which seeks to minimise adverse effects on the Group’s financial
performance through hedging known currency exposures
throughout the year.
The Group’s finance team reviews cash flow forecasts throughout
the year, with headroom against banking covenants assessed
regularly. The finance team uses external tools to assess credit
limits offered to customers, manages trade receivable balances
vigilantly and takes prompt action on overdue accounts. The
Group’s financial control environment is subject to review by both
internal and external audit. Internal audit’s focus is to work with
and challenge management to ensure an appropriate control
environment is maintained.
Last year our internal auditor carried out a review of the operation
of our key financial controls in light of the Covid-19 pandemic,
which concluded that these controls had not been significantly
impacted by Covid-19.
Environmental Social
Governance (“ESG”) risks
An inability to meet the
Group’s ESG commitments
could impact revenue if
consumers choose to
purchase and consume
alternative brands,
Governments impose
additional taxes or the
associated reputational
damage makes it difficult
to recruit talent.
ESG risks were classified as a new principal risk for the Group
during the year due to the increased focus from all stakeholders
(including Governments, customers, consumers, competitors,
employees and investors) on ESG matters, in particular
environmental sustainability.
Five environmental sustainability related workstreams are being
progressed through our Group-wide “No Time To Waste” (“NTTW”)
environmental sustainability programme: plastic, net-zero,
sustainable sourcing, water and waste. The NTTW programme
reports to the NTTW Steering Group, which is responsible for
setting the Group’s environmental strategy, for achieving the
Group’s environmental targets, and for monitoring and managing
the associated risks. The NTTW Steering Group is overseen by the
ESG Board Committee, which was newly established during the
year. Further detail is provided in the Responsibility Report on
pages 22 to 45.
56
A.G. BARR p.l.c. Annual Report and Accounts 2022
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 2025, taking account of the Group’s current
financial and market position, future prospects and the
Group’s principal risks, as detailed in the
StrategicReport.
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
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, 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:
Scenario Estimated impact
Disruption as a result of cyber-attack, resulting
in factories ceasing production
No sales for the month following attack, followed
by a gradual return to normalised levels from month
five onwards. Significant incremental one off costs
as a result
Significant adverse damage to one of the Group’s
principal brands (e.g. IRN-BRU)
A sizeable reduction (in the region of 40%) in
brand revenue, sustained over the duration of the
viability period
Significant changes in consumer preferences and
governmental impact in relation to sugar, plastics and
the introduction of a Deposit Return Scheme (DRS),
specifically in Scotland
A reduction in volumes sold (<5%) over and above
current estimates as a result of DRS, from the
proposed DRS implementation date until the
end of the viability period
The impact of a pandemic (e.g. Covid-19), associated
restrictions, and a consequent channel shift and
reduction in consumer demand
A reduction in revenue (in the region of 10%) for
one year, to the extent experienced during the
Covid-19 pandemic
Rising costs across energy and material supplies Substantial cost increases suffered for the duration
of the viability period, with consequential impact
on pricing and volumes sold (in the region
of 2% reduction)
Risk Management continued
57
Strategic Report Corporate Governance Accounts
The directors also measured the impact of a number
of scenarios occurring together. Finally a reverse
“stress test” was performed allowing the Board to
assess circumstances that would render its business
modelunviable.
As part of our Task Force on Climate-related Financial
Disclosures (TCFD) the Group has assessed potential
financial impacts from climate change to the business.
The financial plan for the Group includes the best
estimate of the impacts of climate change on financial
performance, including material cost inflation, an
increase in climate related regulatory costs, and a
change to consumer behaviour. None of the physical
and transition risks which are considered material to
our business would present a risk to viability over the
planning period. These risks are detailed on pages 40
and 41.
Credit facilities
The outputs of these scenario tests were reviewed
against the Group’s current and projected future net
cash/debt and liquidity position. The Group closed
the financial year with net cash at bank of £68.4m.
In addition, the Group had £30m of committed and
unutilised debt facilities, consisting of two revolving
credit facilities with individual banks. During the viability
period, one of these facilities will expire, resulting in
a £10m reduction to the debt available. The revolving
credit facilities have two financial covenants, relating
to interest cover and leverage, and a material adverse
change clause.
Result of stress tests
Under the most severe but plausible combined
scenarios above, and with no cost mitigation, the
Group would not require access to any debt facility.
Should the financial loss be worse than this scenario
assumes, sizeable cost mitigation opportunities, such
as those accessed in the year ended 24 January 2021,
would be available to the Group to further preserve
viability.
The reverse stress test showed that a volume drop
significantly beyond our severe but plausible scenarios,
both in depth and duration, would be required in order
to render the business model unviable. These
circumstances are therefore considered implausible.
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 2025.
The Strategic Report set out on pages 2 to 57 of
this annual report has been approved by the Board.
By order of the Board
Julie Barr
Company Secretary
29 March 2022
58
A.G. BARR p.l.c. Annual Report and Accounts 2022
Board of Directors
John R. Nicolson
B.A. (Hons)
Chairman
Roger A. White
M.A. (Hons)
Chief Executive
Stuart Lorimer
BAcc. (Hons), C.A., M.C.T.
Finance Director
Jonathan D. Kemp
B.A. (Hons)
Commercial Director
W. Robin G. Barr
C.A.
Non-Executive Director
Biography
John’s career was spent with ICI,
Unilever, Fosters Brewing Group,
Scottish and Newcastle plc and
Chairman of Baltika SA (Russia). Latterly
as President Americas for Heineken NV
and Deputy Chairman of CCU SA
(Chile) and Non-Executive Director
of PZ Cussons plc. He held various
positions in marketing and sales before
moving into corporate development
and then general management.
John brings extensive knowledge of the
role of a director on boards of both UK
plc’s and listed international companies
since 2000, and as a chairman since
2005. He has an executive background
in commercial activities and corporate
development, acquired while being
responsible for a large number of
international businesses.
Roger is a member of the Board of
Management and Executive Council
and is a past President of the British
Soft Drinks Association. Previously
held numerous senior positions in
food group Rank Hovis McDougall.
Scottish plc Chief Executive of the year
in 2010. Honorary Doctorate from the
University of Edinburgh in 2014.
Roger brings a wealth of
consumer goods experience
and corporate leadership.
Stuart was with Diageo for 22 years
in a range of roles and countries,
ultimately as the FD for Diageo’s
Global Supply Operation.
Stuart brings significant experience
in FMCG in both alcoholic and
soft drinks sectors and a strong
background in governance and
performance management
as a qualified CA and FD.
Jonathan has had a successful career
in various commercial roles within
Procter and Gamble.
Jonathan brings FMCG specialism
in customer business development,
consumer brand building and
commercial proposition optimisation.
Robin is a past President of the British
Soft Drinks Association. Robin brings
financial skills and an extensive
understanding of UK markets to the
Board. As Executive Chairman from
1978 to 2009 Robin brings a historical
background to discussions to the Board.
He is a qualified accountant and a
Trustee of the Company’s two
pension schemes.
Term of Office
Joined the Company in 2013
as a Non-Executive Director.
Appointed Chairman January 2015.
Joined the Company in 2002
as Managing Director. Appointed
Chief Executive in 2004.
Joined the Company as
Finance Director in January 2015.
Joined the Company in 2003
as Commercial Director.
Joined the Company in 1960.
Appointed Director in 1964
and Chairman in 1978. Retired
as Chairman and appointed
Non-Executive Director in 2009.
External Appointments
Non-Executive Director
of PZ Cussonsplc.
Non-Executive Director of Troy
Income & Growth Trust, Non-
Executive Director of William Jackson
Food Group Limited, Director of
Elegantly Spirited Limited, Director
of MOMA Foods Limited.
Director of MOMA Foods Limited. Non-Executive Director of
Cricket Scotland Limited.
None
Committee Membership
Nomination Committee (Chair) Environmental, Social and
Governance Committee
Nomination Committee
59
Strategic Report Corporate Governance Accounts
David J. Ritchie
B.A. (Hons), A.C.A.
Non-Executive Director
Susan V. Barratt
B.A. (Hons), A.C.A.
Senior Non-Executive Director
Nicholas B. E. Wharton
A.C.A.
Non-Executive Director
Mark Allen OBE
L.L.B. (Hons)
Non-Executive Director
Zoe Howorth
B.A. (Hons)
Non-Executive Director
Biography
David is a qualified Chartered
Accountant and former Chief
Executive of Bovis Homes Group PLC
(Bovis). He joined Bovis in 1998 from
KPMG as Group Financial Controller,
becoming Group Finance Director
in 2002 and Chief Executive in 2008.
David brings significant operational
experience and governance
knowledge from his 15 years leading
a listed FTSE250 company plus
strong financial oversight through his
30 years as a financial professional.
Susan is a Chartered Accountant and
spent the earlier part of her career
in senior finance roles at Geest plc,
Whitbread plc and Laurel Pub
Company. Formerly CEO of Natures
Way Foods Limited, Eldridge Pope plc
and Non-Executive Director of
Higgidy Limited.
Susan brings considerable
operational experience and
knowledge of the FMCG industry.
Nick is a qualified Chartered
Accountant and was formerly CFO
of both Superdry plc and Halfords
Group Plc and CEO of Dunelm plc.
He has held a number of senior
executive roles across retail and
FMCG businesses, including Boots
and Cadbury Schweppes, and until
December 2019 was a non-executive
director and Chair of the Audit
Committee at Mothercare Plc.
Nick brings extensive retail experience
both in the UK and internationally,
substantial plc and governance
experience from executive and
non-executive roles on listed
company boards and significant
financial experience as a qualified
chartered accountant and CFO.
Mark’s early career in the police
force sparked an interest in law.
After completing a law degree Mark
held a variety of corporate roles,
initially with Shell and latterly with
Dairy Crest where he was CEO
from 2007 to 2019. Mark has held
non-executive roles at Howdens,
Dairy UK, Warburtons and Norcros
plc, where he was Chair from July
2020 until April 2021.
Mark brings a deep understanding
of consumer goods, as well as
significant public company
experience.
An economics graduate, Zoe has
had a successful career spanning a
range of roles at Procter and Gamble,
United Biscuits and The Coca-Cola
Company where she spent 16 years,
culminating in her role as UK
Marketing Director from 2010 – 2013.
Zoe has also held a number of
non-executive director roles with
private companies.
Zoe brings extensive FMCG
experience, specifically across
the food and beverage sector,
as well as consumer brand marketing
capability and direct to consumer
digital understanding.
Term of Office
Joined the Company in April 2015
as a Non-Executive Director.
Joined the Company in January 2018
as a Non-Executive Director.
Joined the Company in November
2018 as a Non-Executive Director.
Joined the Company in July 2021
as a Non-Executive Director.
Joined the Company in July 2021
as a Non-Executive Director.
External Appointments
CEO of WElink Homes UK,
Executive Chair of Lucas Design
Group.
CEO of The Institute of Grocery
Distribution.
Group Chief Financial Officer
of Pepco Group N.V.
Non-Executive Chair of Halo Foods
Limited.
Non-Executive Director of Water
Babies International, Non-Executive
Director of International Schools
Partnership Limited.
Committee Membership
Audit and Risk Committee
Nomination Committee
Remuneration Committee (Chair)
Audit and Risk Committee
Nomination Committee
Remuneration Committee
Environmental, Social and
Governance Committee
Audit and Risk Committee (Chair)
Nomination Committee
Audit and Risk Committee
Nomination Committee
Remuneration Committee
Environmental, Social and
Governance Committee (Chair)
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A.G. BARR p.l.c. Annual Report and Accounts 2022
Corporate Governance Report
Chairman’s introduction
“I am pleased to present our Corporate Governance Report
for the year ended 30 January 2022.”
John R. Nicolson
Chairman
Dear Shareholder,
This year’s Corporate Governance Report describes
our approach to governance and sets out how the
principles of the 2018 UK Corporate Governance Code
have been applied during the year. Information about
the operation of the Board and its committees, and an
overview of the Company’s system of internal controls
are also included.
Having completed eight years as a non-executive
director, Pam Powell stood down from the Board at
the end of June 2021 as part of the long term Board
succession plan. I would like to thank Pam for her
valuable contribution over the past eight years in helping
to shape the direction and performance of the business.
We were pleased to welcome Mark Allen OBE to
the Board during the year, who was appointed as an
independent non-executive director and Chairman
designate. I will step down from the Board prior to the
Annual General Meeting in May 2022 following nine
years as a non-executive director of the Company, seven
of which have been as Chairman. Mark will succeed me
as Chairman when I step down from the Board. Mark is
a highly experienced director and Board member with
a long and successful career across multiple sectors.
We were also delighted to welcome Zoe Howorth
to the Board during the year, who was appointed as an
independent non-executive director. Zoe brings extensive
FMCG experience to the Board, specifically across the
food and beverage sector, as well as consumer brand
marketing expertise and direct to consumer digital
capabilities. Zoe Chairs the Board’s newly established
Environmental, Social and Governance Committee
and succeeded Pam Powell as the Board’s designated
workforce engagement director. Otherwise there
were no changes to the Board during the year.
Further details of the Board’s composition are
given on pages 58 and 59.
John R. Nicolson
Chairman
29 March 2022
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Strategic Report Corporate Governance Accounts
The Board
The Company is led by a strong and experienced board of
directors (the “Board”) which brings a depth and diversity
of expertise to the leadership of the Company. The Board
is committed to ensuring that it has an appropriate
balance of skills, experience and knowledge of the Group
to enable it to discharge its duties and responsibilities
effectively. The Nomination Committee report set out
below describes how the Board achieves that aim.
The Board currently has ten members, comprising
three executive directors, the non-executive Chairman,
five independent non-executive directors and one
non-independent non-executive director. Biographical
details of the directors are set out on pages 58 and 59.
The roles of Chairman and Chief Executive are separate
and there is a clear division of responsibilities between
those roles. The Chairman leads the Board and ensures
the effective engagement and contribution of all
non-executive and executive directors. The Chairman
facilitates constructive Board relations and ensures
that Board meetings are underpinned by a culture of
openness and challenge, with sufficient time made
available to debate issues arising. The Chairman ensures
that the Board receive accurate, timely and clear
information. The annual Board performance evaluation
referred to below evaluates the Chairman’s performance
in these areas. The Chief Executive has responsibility for
all Group businesses and acts in accordance with the
authority delegated from the Board. The non-executive
directors support the development of the Group’s
strategy and provide constructive challenge to the
executive directors. The senior independent non-
executive director, S.V. Barratt, is available to shareholders
if they have concerns which have not been resolved via
the normal channels of Chairman, Chief Executive, or
the other executive directors, or where communication
through such channels would be inappropriate.
The Board considers that M. Allen OBE, S.V. Barratt,
Z.L. Howorth, D.J. Ritchie and N.B.E. Wharton are
independent for the purposes of provision 10 of the 2018
UK Corporate Governance Code, issued by the Financial
Reporting Council in July 2018 (the “Code”), and that the
relationships and circumstances set out in that provision
which may appear relevant to the determination of
independence do not apply. The Board considers that
P. Powell was independent for the purposes of the Code
until she stood down from the Board at the end of June
2021. The Board considers that, on appointment, the
Chairman was independent for the purposes of provision
9 of the Code. In addition to his role as Chairman of the
Company, J.R. Nicolson is a director of PZ Cussons PLC.
During the year, J.R. Nicolson stepped down as a director
of Stocks Spirits Group PLC. The Board does not consider
that J.R. Nicolson’s other commitments have any impact
on his ability to discharge his duties as Chairman of the
Company effectively. S.V. Barratt fulfilled the role of senior
independent director during the year to 30 January 2022.
The Articles of Association require directors to retire
and submit themselves for election at the first Annual
General Meeting (“AGM”) following appointment and
to retire no later than the third annual general meeting
after the annual general meeting at which they were
last elected or re-elected. However, in order to comply
with the Code, all directors (other than M. Allen OBE
and Z.L. Howorth) will submit themselves for re-election
at the AGM. M. Allen OBE and Z.L. Howorth will retire
and submit themselves for election at the AGM.
Details of directors’ remuneration and interests in
shares of the Company are given in the Directors’
Remuneration Report on pages 76 to 109.
Role of the Board
The Board is responsible for the long-term success
of the Group, determines the strategic direction of
the Group and reviews operating, financial and risk
performance. There is a formal schedule of matters
reserved for the Board, which is subject to annual
review and includes the approval of the Group’s
annual business plan, the Group’s strategy, acquisitions,
disposals and capital expenditure projects above
certain thresholds, the financial statements, the
Company’s dividend policy, transactions involving
the issue or purchase of Company shares, borrowing
powers, appointments to the Board, alterations to the
Memorandum and Articles of Association, legal actions
brought by or against the Group above certain
thresholds, and the scope of delegations to Board
committees, subsidiary boards and the Executive
Committee. Responsibility for the development of
policy and strategy and operational management is
delegated to the executive directors and an Executive
Committee, which as at the date of this report includes
the executive directors and five senior managers.
The Board’s governance supports the delivery of its
strategy to deliver long-term sustainable value through:
– Leadership: the Board is collectively responsible for
the long-term sustainable success of the Company.
The composition of the Board and an explanation
of their skills, experience and contribution are set
out on pages 58 and 59. Further information on the
Board’s leadership, its division of responsibilities and
the role of the non-executive directors in providing
constructive challenge and supporting the
development of strategy is set out above. The Board
approves the Group’s strategy and annual budget,
reviews subsequent progress and makes decisions
related to matters reserved for the Board in order
to support the delivery of its strategy.
– Effectiveness: the Board’s governance framework
ensures the effectiveness of the Board. Please see
below for information on induction, training and
development for directors and the Board
performance evaluation.
– Accountability: the Audit and Risk Committee report
(pages 72 to 75) and the report on Risk Management
(pages 50 to 57) describe how the Board ensures a
fair, balanced and understandable assessment of the
Company’s performance and prospects and how it
assesses its principal risks. The Audit and Risk
Committee report sets out how the Company
maintains an appropriate relationship with its
external auditor, consistent with the Code and
statutory requirements.
– Remuneration: the Directors’ Remuneration Policy
(pages 96 to 109) and detailed remuneration report
(pages 79 to 95) describe how the Remuneration
Committee ensures that the executive directors’
remuneration is designed to promote the long-term
success of the Company.
– Shareholder relations and engagement: the section
172(1) statement set out below describes how the
Company engages with shareholders.
Section 172(1) statement
Stakeholder engagement
Effective engagement with our key stakeholders is
critical to the long-term success of the Company.
Understanding the perspectives of our stakeholders and
building good relationships enables their views to be
taken into account in Board and Committee discussions
and decision-making. The Board will continue to focus
on enhancing its engagement with key stakeholders.
Our key stakeholders that the Board considers to be
relevant to the business model, strategy and Company
success are set out in the table below, together with
how we engaged with them during the year, and the
impact of that engagement on the Company’s strategy
and the principal decisions taken during the year.
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A.G. BARR p.l.c. Annual Report and Accounts 2022
Key Stakeholder Form of Engagement How This Stakeholder Group Influenced Board/Committee Discussions and Decisions
Shareholders
We have regular discussions with, and briefings for, investors.
The Company endeavours to ensure senior management is available
to interact with existing and potential shareholders on as flexible a basis
as possible. The Chief Executive and Finance Director offer meetings
to institutional shareholders twice annually as a minimum in order to
communicate business updates and to develop an understanding of
their views on governance, performance against strategy and other
matters of interest such as sustainability. All directors have the
opportunity to attend these meetings.
Board committee chairs seek engagement with shareholders
on significant matters related to their areas of responsibility.
The Chairman ensures at each Board meeting that the Board as
a whole has a clear understanding of the views of shareholders.
Due to Covid-related government restrictions, shareholders were not
permitted to attend the 2021 AGM in person. However, all shareholders,
including private investors, had the opportunity to submit questions in
advance of the AGM on matters relating to the Company’s operation
and performance. Answers to shareholder questions were sent to
individual shareholders as soon as possible following the AGM.
The Chief Executive and Finance Director brief the Board on discussions with
investors and institutional shareholders. Independent feedback following key
meetings is coordinated and provided to the Board by the Company’s brokers
and financial PR agencies on a regular basis.
Board members listen and respond to the views of investors and institutional
shareholders and feedback to the business as necessary. During the year,
discussions with investors and shareholders regarding the impact of Covid-19
on the business informed the Board’s discussions regarding the financial
performance of the business and positively influenced the Board’s decision
to recommence dividends – see further below.
Feedback from our major shareholders and investor base on their key
sustainability challenges influenced the structure and content of the
Company’s new Environmental Sustainability Strategy, which was approved
by the Board. This feedback also directly influenced the Board’s decision to
create a new Board committee – the Environmental, Social and Governance
(“ESG”) Committee – and to approve its terms of reference. The Board also
decided to categorise ESG as a principal risk for the Company. The views of
our major shareholders and investor base were taken into account in the
Board’s decision to approve the Company’s net zero science-based targets
for submission to the Science Based Target Initiative for approval. The Board
has committed to be net zero across our own operations by 2035 and across
our full supply chain by 2050, if not sooner. These decisions were taken by
the Board with the aim of promoting the success of the Company for its
shareholders in the long term.
In March 2020, given the unprecedented circumstances arising from Covid-19,
the Board took the decision to temporarily suspend dividend payments, with
the aim of conserving cash and maintaining balance sheet flexibility. The views
of major shareholders and the investment community were sought and
informed significant Board discussions regarding the potential resumption
of dividend payments during the year. The Board considered a wide range
of factors when reviewing its dividend policy; the views of major shareholders
helped to shape the application of the dividend policy. As a consequence
of these discussions and considerations the Board decided that dividend
payments should be resumed during the year, with the payment of an interim
dividend and a one-off special dividend in October 2021.
Subsequent to the Board’s decision, the CEO and Finance Director re-engaged
with major shareholders to ensure that they were supportive of the Board’s
plans regarding dividend payments.
Corporate Governance Report continued
63
Strategic Report Corporate Governance Accounts
Key Stakeholder Form of Engagement How This Stakeholder Group Influenced Board/Committee Discussions and Decisions
Customers
We have regular engagement with our customers through virtual or
face-to-face meetings, conferences and events. Regular reviews of
joint business plans take place to ensure that we are aligned on our
shared goals.
During the year we continued to engage with customers in relation
to control measures put in place to minimise Covid-related risks for
our respective employees and the wider public.
During the year we engaged with customers in relation to key product
launches. We also continued to engage with customers on their views
and attitudes towards plastic packaging and the planned Deposit Return
Scheme (“DRS”) in Scotland.
During the year, we engaged with our customers in relation to a
planned price increase, with the aim of mitigating the impact of
significant inflationary cost pressures on the business.
The Commercial Director provides a commercial update to every Board
meeting. A formal review of customers and channels is presented to and
discussed by the Board annually.
Information on customer service levels, including performance against a
customer service level KPI, is included in the Board papers for every meeting.
We have worked hard during the year to maintain good customer services
levels despite significant Covid-related supply chain challenges. The Board
supported management’s proposal to secure incremental third party storage
facilities during the year, with due regard to general supply chain challenges,
and also raw material and driver shortages.
Discussions with customers regarding Covid-related risks and controls
influenced the Board’s discussions and support for the Covid Steering Group’s
decisions during the year regarding the health and safety of our employees.
During the year, the Board discussed updates provided to it regarding the
impact of Covid-19 on different customer channels, customer investment
plans and customer management strategy.
Feedback from customers in relation to plastic packaging informed discussions
and continued to help drive internal decision-making regarding various
environmental initiatives, for example our plans to increase the recycled PET
content of our plastic bottles.
Feedback from key customers regarding their sustainability commitments
influenced the structure and content of the Company’s new Environmental
Sustainability Strategy, which was approved by the Board. It also influenced the
Board’s decision to create a new ESG Committee and its decision to approve
the Company’s net zero science-based targets, as noted above.
Engagement with key customers during the year influenced the Board’s
discussions and decisions regarding the annual budgeting and long-term
strategic planning processes for the Group.
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Key Stakeholder Form of Engagement How This Stakeholder Group Influenced Board/Committee Discussions and Decisions
Consumers
We are committed to engaging with our consumers through a variety
of channels regarding any questions, concerns or feedback which
they may have. Our consumer care team aims to respond efficiently
and effectively to all matters raised by consumers, whether by email,
telephone, social media or post.
Consumer research is conducted prior to the launch of key products
and in relation to key marketing campaigns, as appropriate.
The Board gains insight into consumer needs, behaviours and
motivations through regular detailed brand reviews at Board meetings
throughout the year. The Board also reviews market and consumer
insight data at every Board meeting. The Board receives presentations
from senior members of management on consumer trends, brands
and key marketing initiatives.
The Commercial Director provides a marketing update to every Board meeting.
A formal review of brands and innovation is presented to and discussed by the
Board annually.
A structured research programme of consumer usage and attitudes is carried
out on a regular basis, which informs the Board’s risk review process and its
discussions regarding its appetite for risks and opportunities in this area.
During the year the Board received presentations on the performance of key
brands, innovation and marketing campaigns. The Board discussed and were
supportive of the brand and innovation strategy for the following year. The
Board also received a presentation on Social Media and Digital Technology
and were supportive of the action plan to grow key brands in line with this
framework. During the year the Board discussed and were supportive of key
brand plans for the following year.
Research to understand consumers’ attitudes and behaviours towards
sustainability influenced the structure and content of the Company’s new
Environmental Sustainability Strategy, which was approved by the Board,
as noted above.
Suppliers
We ensure that we source raw materials in a responsible manner and
require our suppliers to commit to our Supplier Code of Conduct and
to comply with the provisions of our Modern Slavery Statement and
Anti-bribery and Corruption Policy.
We seek to mitigate risks in relation to the continuity of supply of
key raw materials and ingredients by developing strong commercial
relationships with our key suppliers.
We have regular engagement with our suppliers through virtual and
face-to-face meetings, conferences and events.
During the year we continued to engage with key raw material suppliers
in relation to the impact of Covid-19 on their businesses in light of
significant supply chain challenges. We also continued to engage with
third party contractors regarding visits to Company sites, to ensure that
only essential activities were undertaken and that appropriate control
measures were in place to minimise Covid-related risks for our
respective employees and the wider public.
During the year we engaged with key suppliers on matters related
to climate change, including innovation in sustainable packaging.
The Company complies with the Prompt Payment Code guidelines,
paying in excess of 90% of its supplier invoices on time.
Updates on supply chain activities, including key suppliers, are provided
to every Board meeting and are considered and discussed by the meeting.
A review of supply chain strategy, including procurement, is presented to
and discussed by the Board annually.
The Board approves all key supplier contracts above certain thresholds
in accordance with the Company’s Statement of Delegated Authorities.
Feedback from key suppliers regarding their sustainability commitments
influenced the structure and content of the Company’s new Environmental
Sustainability Strategy, which was approved by the Board. It also influenced the
Board’s decision to create a new ESG Committee and its decision to approve
the Company’s net zero science-based targets (particularly in relation to scope
3 emissions), as noted above. We are working closely with our suppliers and
have committed to become net zero across our full supply chain by 2050,
if not sooner.
Engagement with key suppliers during the year informed the Board’s
discussions and decisions regarding the annual budgeting and long-term
strategic planning processes for the Group.
Corporate Governance Report continued
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Strategic Report Corporate Governance Accounts
Key Stakeholder Form of Engagement How This Stakeholder Group Influenced Board/Committee Discussions and Decisions
Employees
The Group is committed to engaging employees at all levels regarding
matters which affect them and the performance of the Group. This is
achieved in a number of ways, including the use of regular briefing
procedures, which twice yearly include a report on trading results.
Regular communication meetings are held to keep employees
up-to-date with Group performance. Leadership team “hangouts” take
place on a monthly basis to keep this group updated and to provide
the opportunity for them to ask questions on business related matters.
Consultation meetings also take place when the Company is making
decisions that are likely to affect employees’ interests, at which
employee representatives’ views are taken into account. The Group’s
intranet site provides up-to-date information regarding the Group’s
activities. A magazine for employees, “Juicy Bits”, is issued on a regular
basis. In addition, an employee engagement survey “Your Voice Matters”
is carried out on an annual basis, which seeks feedback from all
employees on a range of areas; action plans are created in response
to the results of eachsurvey.
In addition to the Company’s existing employee engagement
mechanisms, and as required by the UK Corporate Governance Code,
during the year the Nomination Committee reviewed and approved
the Board’s current mechanism for workforce engagement, being a
designated non-executive director, as an appropriate mechanism for
workforce engagement. P. Powell was the designated workforce
engagement director until 1 July 2021. With effect from that date,
Z.L. Howorth became the designated workforce engagement director.
A structured plan for workforce engagement is developed for each year.
During the year, this included virtual engagement sessions held by
Z.L. Howorth – supported by certain other non-executive directors – for
employees of different roles and levels across different Company sites,
the aim of which was to encourage participation across the workforce
in order to understand their views on matters which affect them. The
focus of the engagement sessions held during the year was on listening
to employees’ concerns regarding the impact of Covid-19 on them and
in particular on their health and safety and mental wellbeing, and also
listening to employees’ views on sustainability.
The continued appointment of a designated non-executive director as
a mechanism for workforce engagement strengthens the link between
employees and the Board, helps to build an open and transparent culture
and to ensure that all employees have a voice in the Company’s future success.
It also helps the Board to make better informed decisions based on the broad
perspectives of the workforce. Updates on progress regarding workforce
engagement are provided at every Board meeting. During the year, these
updates focused on the impact of Covid-19 on employees and in particular
on their health and safety and mental wellbeing. It was reported that, overall,
the good level of workforce engagement had continued during the year and
feedback from the employee engagement sessions was generally positive.
Discussion areas during these sessions included hybrid working arrangements,
employee wellbeing, and a desire to return to face-to-face meetings and
collective celebration of Company success. There is also an ambition to
achieve more women in leadership roles in the business. The Board discussed
the updates provided to it by the workforce engagement director throughout
the year and were supportive of the Covid Steering Group’s decisions during
the year regarding the health and safety of our employees, including the
planned structured return to work programme.
Covid-19 updates were also provided to the Board by the CEO at every Board
meeting during the year, which focussed on the impact of Covid-19 on
employees’ health and safety and mental wellbeing.
During the year, the Board reviewed and approved the Company’s Workforce
Engagement Terms of Reference.
During the year, the Board reviewed and approved the Company’s Speaking Up
Policy and associated procedures.
The results of the “Your Voice Matters” employee engagement survey carried
out during the year were presented to and discussed by the Board. The results
of the survey were generally positive, with a high employee response rate and
overall employee engagement score; the improvement in the area of health
and safety compared to 2019 was particularly pleasing. The Board were
supportive of local action planning activities which would take place in
response to the results of the survey.
The Board held a session on people and succession planning in May 2021.
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Key Stakeholder Form of Engagement How This Stakeholder Group Influenced Board/Committee Discussions and Decisions
Employees
continued
During the year there was an exceptionally high level of engagement
with employees generally regarding Covid-related matters, through
regular communications and briefings and via the Coronavirus portal
on the intranet. The process was led by the Covid Steering Group,
which met weekly throughout the year to continue to manage the
crisis as effectively as possible, with the health and safety of employees
being paramount. The implementation of Covid-related processes and
procedures continued throughout the year in accordance with the
government’s guidance as a minimum, with regular communication
to employees. A Mental Health Hub was available on the intranet and
various other mental health activities took place to continue to help
support employees through the crisis. Guidance and support was
also provided by the corporate charity chosen by employees,
Mental HealthUK.
The Company has a Speaking Up Policy in place, which complies with
the 2018 UK Corporate Governance Code, together with associated
procedures, including employee awareness and training, to ensure that
employees are encouraged to raise any matters of concern in a timely
manner. The Speaking Up Policy is communicated to all employees
through a variety of channels. A designated email address is available
to employees to enable them to raise any matters of concern. A
communications campaign continued during the year to help raise
employee awareness of the Speaking Up Policy and to encourage
employees to come forward if they want to raise any matters
ofconcern.
Further information on how we engage with our key stakeholders is set
out in the Strategic Report on pages 2 to 57 and in the Directors’ Report
on pages 110 to 115.
During the year, an employee consultation process was carried out in relation
to the transition from a trust-based structure for the Company’s two defined
contribution pension schemes to an outsourced master trust structure.
The employee feedback from the consultation process was generally positive
and influenced the Company’s decision to progress and implement the new
arrangement in July 2021.
During the year, an employee consultation process commenced in relation
to the proposed closure of the Barr Direct England Depot at Newcastle;
employees’ feedback from this consultation process will directly influence
the Board’s discussions and decision regarding the proposal.
The results of the employee sustainability survey influenced the Company’s
new Environmental Sustainability Strategy, which was approved by the Board,
as noted above.
Corporate Governance Report continued
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Strategic Report Corporate Governance Accounts
Key Stakeholder Form of Engagement How This Stakeholder Group Influenced Board/Committee Discussions and Decisions
Government
We engage with governments and political bodies in an open and
constructive manner on issues which affect our business, both directly
and through relevant trade associations such as the British Soft Drinks
Association (“BSDA”).
During the year much of our government engagement has related to
DRS in Scotland and has been done in conjunction with the BSDA and
Circularity Scotland Limited, the not-for-profit organisation approved to
discharge industry’s Scottish DRS legal obligations. We have taken steps
to communicate our position on key implementation matters to ensure
our views were understood and where possible taken into account in
decision-making.
Updates on engagement with UK and devolved governments and political
bodies were provided to the Board by the Chief Executive throughout the year
and influenced its discussions. This engagement also shaped internal activity
in relation to these areas during the year.
Our insights and understanding from engagement with UK and devolved
governments and political bodies during the year informed the Board’s
discussions and decisions regarding the annual budgeting and long-term
strategic planning processes for the Group.
Reviews of the regulatory framework under which the Group operates are
presented to the Board on a regular basis and inform the Board’s discussions
and decisions regarding capital expenditure and areas of business
development.
The Board’s ESG Committee discussed and supported our internal project
planning for the introduction of a DRS in Scotland and our net zero plans –
this work was informed by our engagement with the Scottish government
during the year.
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Corporate culture and reputation
The Board and the Executive Committee have a critical
role in creating and embedding the right corporate
culture for the business. The Board aims to maintain
the Company’s reputation for the highest standards
of business conduct and to create a culture that is
responsible, diverse and inclusive. The Company’s
workforce is critical to its future success. The
Company’s focus on employee engagement will
continue in order to create a culture that enables
and supports a highly motivated and diverse workforce,
to ensure that its workforce do the right thing for its
stakeholders and deliver long-term sustainable success
for the business. During the year extensive activities
took place in response to the ongoing Covid-19 crisis
to ensure that this culture was maintained throughout
the year, as described in the table above. The Board
regularly assesses and monitors the Company’s culture,
primarily through feedback from employees from the
annual employee engagement survey “Your Voice
Matters”, and ensures that appropriate actions are taken
to address the findings thereof. Last year the employee
engagement survey was postponed due to the Covid-19
crisis and recommenced in the year under review; the
results of this survey showed a high employee response
rate and overall employee engagement score. During
the year, action plans were progressed in response to
the findings of reviews of the Company’s health and
safety culture, which took place in conjunction with
the Keil Centre in the prior year. The business received
ISO 45001 accreditation during the year – the level of
employee engagement and the role of safety
representatives were highlighted by assessors as
positive indicators of a strong health and safety culture.
Further reviews of the Company’s health and safety
culture in conjunction with the Keil Centre are planned
for the following year. Further information on the
Company’s culture and workforce engagement is
included in the Directors’ Report on pages 110 to 115
and in the Strategic Report on pages 2 to 57.
Community and environment
Information regarding the impact of the Company’s
operations on the community and the environment
is included in the Strategic Report on pages 2 to 57.
Acting fairly as between members of the Company
The Board recognises its legal and regulatory duties
to act fairly as between members of the Company and
has put appropriate structures and processes in place to
ensure it complies with all relevant legal requirements,
for example in relation to the disclosure of inside
information to shareholders.
Conflicts of interest
The Articles of Association allow the Board to authorise
potential conflicts of interest that may arise from time
to time, subject to certain conditions. The Company
has established appropriate conflicts authorisation
procedures, whereby actual or potential conflicts
are regularly reviewed and authorisations sought as
appropriate. During the year, no such conflicts arose
and no such authorisations were sought.
Professional advice
All directors have access to the advice of the Company
Secretary, who is responsible for advising the Board
on all governance matters. The non-executive directors
have access to senior management of the business.
Induction, training and development
On appointment to the Board, directors are provided
with a full, formal and tailored programme of induction,
to familiarise them with the Group’s businesses, the
risks and strategic challenges the Group faces, and
the economic, competitive, legal and regulatory
environment in which the Group operates. The
induction includes, amongst other activities, meetings
with Board members, the Company Secretary, senior
management and other employees, site visits, market
visits and the provision of information relating to the
Group, including briefings on key business activities.
The Company Secretary provides information to new
directors regarding Board policies and procedures,
and corporate governance matters. A programme of
strategic and other reviews, together with the other
training provided during the year, ensures that directors
continually update their skills, their knowledge and
familiarity with the Group’s businesses, and their
awareness of sector, risk, regulatory, legal, financial and
other developments to enable them to fulfil effectively
their role on the Board and committees of the Board.
Corporate Governance Report continued
Board performance evaluation
Every year the performance and effectiveness of
the Board, its committees and individual directors
is evaluated. This year the evaluation was carried out
internally, having last been externally facilitated during
the year to January 2020. The evaluation was led by the
Chairman and conducted by the completion of detailed
and comprehensive written survey questionnaires by
all Board members and the Company Secretary. The
Board questionnaire covered such themes as strategy
and risk taking, leadership and accountability, how
the Board works, Board culture, line of sight and risk
management, with a similar degree of coverage for
each of the committees. The full written report was
shared with and discussed by the Board and each of
the committees. The Chairman discussed the results
with the directors on an individual basis. Overall, the
review found that the Board and its committees were
functioning in an effective manner and performing
satisfactorily, with no major issues identified. Actions
will be taken to address certain areas arising from the
evaluation, including the dedication of more time
to succession planning and strategy and certain
improvements to the Board papers.
The non-executive directors, led by the senior
independent director, carried out a performance
evaluation of the Chairman without the Chairman
present, taking into account the views of the executive
directors. It was concluded that J.R. Nicolson’s
performance continues to be strong and that he
demonstrates effective leadership. The Chairman
is pleased to confirm that, following performance
evaluation of the directors, all of the directors’
performances continue to be effective and all of
the directors continue to demonstrate commitment
to the role of director, including commitment of time
for Board meetings and committee meetings and
any other relevant duties.
Meetings and attendance
Board meetings are scheduled to be held seven times
each year. Between these meetings, as required,
additional Board meetings (and/or Board committee
meetings) may be held to progress the Company’s
business. A part of each Board meeting is dedicated
to the discussion of specific strategy matters.
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Strategic Report Corporate Governance Accounts
In advance of all Board meetings the directors are
supplied with detailed and comprehensive papers
covering the Group’s operating functions. Members of
the management team attend and make presentations
as appropriate at meetings of the Board. The Company
Secretary is responsible to the Board for the timeliness
and quality of information provided to it. The Chairman
holds meetings with the non-executive directors during
the year without the executive directors being present.
The attendance of directors at scheduled Board and
committee meetings in the year to 30 January 2022
is set out below. During the year, the Board also
convened one additional Board meeting in relation
to various matters, including a trading update and
the budget for the year to 30 January 2022. All of the
directors who could have attended that Board meeting
did so, with the exception of N.B.E. Wharton who was
unavailable due to ill-health.
Board
Maximum 8
Audit and Risk
Committee
Maximum 4
Remuneration
Committee
Maximum 5
Nomination
Committee
Maximum 3
ESG
Committee
Maximum 2
Executive
R.A. White* 8 – 4 3 2
S. Lorimer** 8 4 – – –
J.D. Kemp 8 – – – –
Non-executive
J.R. Nicolson*** 8 – 3 3 –
M. Allen**** 4 2 – 2 –
W.R.G. Barr 8 – – 3 –
S.V. Barratt 8 4 5 3 2
Z.L. Howorth
†
4 1 2 2 2
P. Powell
††
4 2 3 1 –
D.J. Ritchie
†††
8 4 5 3 1
N.B.E. Wharton 6 3 – 2 –
*
R.A. White attended Board committee meetings during the year by invitation.
**
S. Lorimer attended Audit and Risk Committee meetings during the year by invitation.
***
J.R. Nicolson attended Remuneration Committee meetings during the year by invitation.
****
M. Allen was appointed to the Board on 1 July 2021 and could have attended a maximum of four Board meetings, two Audit and Risk
Committee meetings and two Nomination Committee meetings.
†
Z.L. Howorth was appointed to the Board on 1 July 2021 and could have attended a maximum of four Board meetings, two
Remuneration Committee meetings and two ESG Committee meetings. Z.L. Howorth attended Audit and Risk Committee and
Nomination Committee meetings during the year by invitation.
††
P. Powell resigned from the Board on 1 July 2021 and could have attended a maximum of four Board meetings, two Audit and Risk
Committee meetings, three Remuneration Committee meetings and one Nomination Committee meeting.
†††
D.J. Ritchie attended ESG Committee meetings during the year by invitation.
Committees of the Board
The terms of reference of the principal committees
of the Board – Audit and Risk, Remuneration,
Nomination and ESG – have been approved by the
Board and are available on the Company’s website,
www.agbarr.co.uk.
Those terms of reference have been reviewed in the
current year and are reviewed at least annually. The work
carried out by the Nomination Committee in discharging
its responsibilities is summarised below. The work carried
out by the Audit and Risk Committee is described within
the Audit and Risk Committee’s Report on pages 72 to 75.
The work carried out by the Remuneration Committee
is described within the Directors’ Remuneration Report
on pages 76 to 109. The work carried out by the ESG
Committee, which was established during the year,
is described within the Responsibility Report on pages
22 and 45.
The Board has a Market Disclosure Committee which
comprises S.V. Barratt, R.A. White, S. Lorimer and the
Company Secretary. The Market Disclosure Committee
meets only when required and is responsible for
overseeing the disclosure of information by the
Company to meet its obligations under the Market
Abuse Regulation and the Financial Conduct Authority’s
Listing Rules and Disclosure Guidance and
Transparency Rules. There were no meetings of the
Market Disclosure Committee held during the year.
The Board also has an Equity Investment Committee
which comprises J.R. Nicolson, R.A. White, S. Lorimer
and the Company Secretary. The Equity Investment
Committee meets only when required and is
responsible for overseeing the Company’s minority
equity investment in Elegantly Spirited Limited and
any other future similar equity investments in investee
companies. There were no meetings of the Equity
Investment Committee held during the year.
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Nomination Committee
The Nomination Committee comprises J.R. Nicolson,
M. Allen OBE, W.R.G. Barr, S.V. Barratt, D.J. Ritchie and
N.B.E. Wharton. P. Powell resigned from the Nomination
Committee on 1 July 2021. The Nomination Committee
is chaired by J.R. Nicolson. The Nomination Committee
leads the process for making appointments to the Board
and ensures that there is a formal, rigorous and
transparent procedure for the appointment of new
directors to the Board. The remit of the Nomination
Committee also includes reviewing the composition
of the Board through a full evaluation of the skills,
knowledge and experience of directors and ensuring
plans are in place for orderly succession for appointments
to the Board. When identifying potential new directors for
appointment to the Board, the Nomination Committee
retains the services of an external search consultant.
The Nomination Committee makes recommendations
to the Board on its membership and the membership
of its principalcommittees.
The Nomination Committee is required, in accordance
with its terms of reference, to meet at least once per year.
The Nomination Committee met three times during
the year and, amongst other matters, considered the
structure, size and composition of the Board and its
committees, cognisant of the need to ensure that they
have the right combination of skills, experience and
knowledge, and bearing in mind the length of service
of the Board as a whole and the need to regularly refresh
its membership. The Nomination Committee considered
a corporate succession plan for the Board and senior
management, based on merit and objective criteria and
cognisant of the need to build a diverse and inclusive
culture. The Nomination Committee also received an
update on workforce engagement from the Board’s
designated non-executive director, approved the Board’s
current mechanism for workforce engagement and
recommended the workforce engagement terms of
reference to the Board forapproval.
The Nomination Committee considered and
recommended the appointment of M. Allen OBE
to the Board, the Audit and Risk Committee and
the Nomination Committee.
The Nomination Committee also considered and
recommended the appointment of Z.L. Howorth to
the Board, the Remuneration Committee and the ESG
Committee. Z.L. Howorth succeeded P. Powell as the
Board’s designated workforce engagement director.
In identifying potential new non-executive directors for
these positions, the Nomination Committee retained
the services of Sam Allen Associates, an external
search consultant. Sam Allen Associates has no other
connection with the Company other than the provision
of these services.
The Board believes that building a diverse and inclusive
culture is integral to the success of the Company.
Diversity includes aspects such as diversity of skills,
perspectives, industry experience, educational and
professional background, gender, ethnicity and age. The
Company’s Board and Executive Committee Diversity
Policy (“Diversity Policy”) provides that these aspects will
be considered in determining the optimum composition
of the Board and Executive Committee, with the aim
of achieving an appropriate balance. All appointments
to the Board and Executive Committee are made on
merit, against objective criteria, and with due regard
for the benefits of diversity and inclusion. Whilst no
formal measurable objectives have been set for female
representation at Board or Executive Committee level,
the Company remains committed to the principles
of gender diversity and intends to move towards one
third female representation on the Board and Executive
Committee within a reasonable timeframe. The
Nomination Committee is responsible for overseeing the
implementation of the Diversity Policy. The Nomination
Committee reviews the Diversity Policy at least annually
to ensure its effectiveness, with any amendments
recommended to the Board for approval. Prior to the
resignation of P. Powell as non-executive director and
the appointment of M. Allen OBE and Z.L Howorth as
non-executive directors on 1 July 2021, 22% of the Board
were female. Following the resignation of P. Powell and
the appointment of M. Allen OBE and Z.L. Howorth, 20%
of the Board were female. As at the date of this report,
25% of the Executive Committee are female and 39%
of the Executive Committee’s direct reports are female.
The disclosure relating to gender diversity within the
Company is included in the Strategic Report on page 29.
Treasury and Commodity Committee
The Treasury and Commodity Committee consists
of R.A. White, S. Lorimer and senior members of the
finance, legal and procurement departments. The
Treasury and Commodity Committee’s terms of
reference are reviewed and approved annually by
the Audit and Risk Committee. The Treasury and
Commodity Committee reviews purchase requirements
in foreign currencies and implements strategies,
including the use of foreign exchange hedges, in order
to reduce the risk of foreign exchange exposure and
provide certainty over the value of non-domestic
purchases in the short to medium term. The Treasury
and Commodity Committee’s remit includes the ability
to utilise certain financial instruments in order to hedge
the Group’s exposure to interest rate fluctuations. The
Treasury and Commodity Committee also monitors the
Group’s short and medium term funding requirements,
provides oversight of hedge accounting and adherence
to hedge accounting standards, monitors the ongoing
requirements of the Company’s various employee share
schemes, monitors cash flow and any capital restructure
programmes, and annually reviews the Company’s
Statement of Delegated Authorities.
Internal control
The Board has overall responsibility for the Group’s
internal control systems and annually reviews their
effectiveness, including a review of financial,
operational, compliance and risk management controls.
The implementation and maintenance of the risk
management and internal control systems are the
responsibility of the executive directors and other senior
management. The systems are designed to manage
rather than eliminate the risk of failure to achieve business
objectives and to provide reasonable, but not absolute,
assurance against material misstatement or loss.
The Board has reviewed the effectiveness of the
Group’s risk management and internal control systems,
including financial, operational and compliance controls,
in accordance with the Code for the period from
25 January 2021 to the date of approval of this annual
report. No significant failings or weaknesses were
identified from this review during the year. Had any
failings or weaknesses been identified then the Board
would have taken the action required to remedythem.
Corporate Governance Report continued
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Strategic Report Corporate Governance Accounts
The Board confirms that there is an ongoing process,
embedded in the Group’s integrated internal control
systems, allowing for the identification, evaluation and
management of significant risks, as well as a reporting
process to the Board. This risk management process
has been in place throughout the year ended
30 January 2022 and up to the date of the approval of
this annual report. The Board has carried out a robust,
systematic assessment of the principal and emerging
risks facing the Group during the period, including
those which would threaten its business model, future
performance, solvency or liquidity. Information on the
Group’s risk management framework, including the
operation of the Group’s Risk Committee, is set out
in the Strategic Report on pages 50 and 57.
The three main elements of the Group’s internal
control system are as follows:
The Board
The Board has overall responsibility for the Group’s
internal control systems and exercises this through
an organisational structure with clearly defined levels
of responsibility and authority as well as appropriate
reporting procedures.
The Board has a schedule of matters that are brought
to it, or its duly authorised committees, for decision,
aimed at maintaining effective control over strategic,
financial, operational and compliance issues.
This structure includes the Audit and Risk Committee
which, with the Finance Director, reviews the
effectiveness of the internal financial and operating
control environment.
Financial reporting
There is a comprehensive strategic planning, budgeting
and forecasting system with an annual operating plan
approved by the Board. Monthly financial information,
including trading results, cash flow statement, statement
of financial position and indebtedness, isreported.
The Board and the Executive Committee review the
business and financial performance against the prior
year and against annual plans approved by the Board.
Audits and reviews
The key internal risks identified in the Group are subject to
regular audits or reviews by the internal auditors. This role
is fulfilled by an external professional services firm which
is independent from the Board and the Group.
The review of the internal auditor’s work by the Audit
and Risk Committee and monitoring procedures in
place ensure that the findings of the audits are acted
upon and subsequent reviews confirm compliance
with any agreed action plans.
The Board confirms that there has been an independent
internal audit function in place for theyear.
Share capital structure
The share capital structure of the Company is set out
in the Directors’ Report.
UK Corporate Governance Code compliance
The Company is committed to the principles of
corporate governance contained in the Code. A copy
of the Code is available on the Financial Reporting
Council’s website, www.frc.org.uk.
Each of the provisions of the Code has been reviewed
and, where necessary, steps have been taken to ensure
that the Company is in compliance with all of those
provisions as at the date of this report. The directors
consider that the Company has complied throughout
the year ended 30 January 2022 with the provisions
of the Code, except as set out below.
Provision 38 of the code states that pension contribution
rates for executive directors, or payments in lieu, should
be aligned to those available to the workforce. As
disclosed in the Directors’ Remuneration Report,
R.A. White and S. Lorimer receive a cash allowance equal
to their contractual pension provision of 24% of salary.
J.D. Kemp receives a cash allowance equal to his
contractual pension provision of 19% of salary, which will
rise to 24% of salary. J.D. Kemp receives a cash allowance
equal to his contractual pension provision of 19% of
salary, which will rise to 24% of salary following his 50th
birthday. These provisions will continue to be honoured
as contractual commitments made to these incumbent
executive directors. As disclosed in the Directors’
Remuneration Policy, the maximum company pension
contribution for any new executive director appointments
will be aligned to the wider workforce, which is currently
capped at 17% of salary.
Provision 39 of the Code states that executive directors’
contracts should contain a maximum notice period of
one year. As disclosed in the Directors’ Remuneration
Report, the service contracts with R.A. White and J.D.
Kemp provide for a notice period of 12 months except
during the six months following either a takeover of or by
the Company or a Company reconstruction. Under these
conditions and certain circumstances the directors are
entitled to a liquidated damages payment equal to the
director’s basic salary at termination plus the value of all
contractual benefits for a two year period. Given the size
of the Company and the sector dynamics at the time
these directors were recruited, the Remuneration
Committee considered this provision appropriate in
order to attract and retain high calibre executive directors.
As disclosed in the Directors’ Remuneration Report, this
provision will continue to be honoured as a contractual
commitment made to these directors; however this
provision was not included in S. Lorimer’s service
contract and will not be included in service contracts
with other new executive directors appointed in future,
to ensure that future executive directors’ service contracts
comply with provision 39 of the Code.
A copy of the financial statements has been placed
on the Company’s website, www.agbarr.co.uk.
The maintenance and integrity of this website is the
responsibility of the directors. Legislation in the UK
governing the preparation and dissemination of
financial statements may differ from legislation
in other jurisdictions.
By order of the Board
J.A. Barr
Company Secretary
29 March 2022
72
A.G. BARR p.l.c. Annual Report and Accounts 2022
Audit and Risk Committee Report
Composition
During the year the Audit and Risk Committee (the
“ARC”) comprised five non-executive directors: N.B.E.
Wharton, M. Allen OBE (appointed 1 July 2021), S.V.
Barratt, P. Powell (resigned 1 July 2021) and D.J. Ritchie.
The ARC is chaired by N.B.E. Wharton. During the year,
certain meetings were chaired by S.V. Barratt when
N.B.E. Wharton was unavailable due to ill-health. The
Board is satisfied that N.B.E. Wharton and S.V. Barratt
have recent and relevant financial experience as
required by provision 24 of the Code. The Board has
determined that the current composition of the ARC
as a whole has competence relevant to the sector in
which the Company operates, to enable it to deal
effectively with the matters it is required to address
and to challenge management when necessary.
Biographical details relating to each of the ARC
members are shown on pages 58 and 59.
Meetings
The ARC met four times during the year. The meetings
are attended by the ARC members and, by invitation,
the Finance Director, the Group Financial Controller,
the Company Secretary and representatives from the
external and internal auditors. The ARC meets regularly
with executive directors and management, as well as
privately with the external and internal auditors.
Role and responsibilities
The primary role of the ARC is to assist the Board in
fulfilling its oversight responsibilities. This includes:
– Financial reporting:
– monitoring the integrity of the annual and interim
financial statements and formal announcements
relating to the Group’s financial performance
and reviewing any significant financial reporting
judgements and disclosures which they contain;
– if requested by the Board, providing advice on
whether the Annual Report and Accounts are
fair, balanced and understandable; and
– reporting to the Board on the appropriateness
of the Group’s accounting policies and practices.
– Internal control and risk management:
– reviewing and monitoring the effectiveness
of the Group’s internal control and risk
management systems;
– reviewing and monitoring the effectiveness of
the internal audit function, which is resourced
externally, and management’s responsiveness
to any findings and recommendations; and
– reviewing the Group’s risk register and
emerging risks.
– Policies and procedures:
– reviewing and approving the terms of reference
for the Company’s Treasury and Commodity
Committee;
– reviewing the Group’s delegated authority limits;
– reviewing and monitoring the Group’s Tax risk
management policy;
– reviewing and monitoring the Group’s Anti-
facilitation of tax evasion policy;
– reviewing and monitoring the appropriateness of
the Group’s Anti-bribery policies and procedures;
– approving the appointment and removal of the
internal auditor;
– making recommendations to the Board in
relation to the appointment and removal of the
external auditor and approving its remuneration
and terms of engagement;
– reviewing and monitoring the external auditor’s
independence and objectivity and the
effectiveness of the audit process;
– reviewing the policy on the engagement of the
external auditor to supply non-audit services; and
– reporting to the Board on how it has discharged
its responsibilities.
Activities of the Audit and Risk Committee
During the period under review, the ARC has:
– Financial reporting:
– reviewed and discussed with the external
auditor the key accounting considerations and
judgements reflected in the Group’s results for
the six month period ended 1 August 2021;
– reviewed and agreed the external auditor’s audit
strategy memorandum in advance of its audit
for the year ended 30 January 2022;
– discussed the report received from the external
auditor regarding its audit in respect of the year
ended 30 January 2022, which included
comments on its findings on internal control
and key audit risks and a statement on its
independence and objectivity;
– received and reviewed reports from
management regarding their approach to key
accounting considerations and judgements in
the half year and full year financial statements;
– reviewed the half year and full year financial
statements;
– discussed and agreed the nature and scope
of the work to be performed by the external
auditors; and
– reviewed the results of this audit work and the
response of management to matters raised.
– Internal control and risk management:
– received reports from internal audit covering
various aspects of the Group’s operations,
controls and processes;
– received reports on the operation of the Group’s
Risk Committee, including reports on the
operation of the Group’s Covid Steering Group
and its management of Covid-related risks during
the year which is overseen by the Risk
Committee;
– reviewed the Group’s risk register and the Group’s
principal risks in light of the Board’s risk appetite
for key risk areas, together with the systems and
processes for mitigating those risks;
– received reports from management on the
actions taken by the business to mitigate cyber
risks, including the risk of a ransomware attack;
– reviewed the Group’s emerging risks;
– discussed and agreed the nature and scope of
the work to be performed by the internal auditor;
– reviewed the results of this audit work and the
response of management to matters raised;
– reviewed the effectiveness of the Group’s risk
management and internal control systems
(including financial, operational, compliance
and risk management controls); and
– reviewed and approved the Company’s viability
statement.
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Strategic Report Corporate Governance Accounts
Consideration of the effectiveness of the Group’s risk
management and internal control systems is set out in
the Corporate Governance Report on pages 70 and 71.
– Policies and procedures:
– reviewed and approved the terms of reference
for the Company’s Treasury and Commodity
Committee;
– reviewed and recommended the Group’s
Tax risk management policy to the Board;
– reviewed and approved the Group’s
Anti-facilitation of tax evasion policy;
– reviewed the effectiveness of the Group’s
Anti-bribery systems and controls and reviewed
and approved the Group’s Anti-bribery and
Corruption policy;
– reviewed the Group’s delegated authority limits;
– approved the reappointment of the internal auditor;
– made recommendations to the Board on the
appointment and remuneration of the external
auditor and monitored the performance of the
auditor;
– monitored and reviewed the performance of the
incumbent internal auditor and the effectiveness
of the Group’s internal audit activities;
– reviewed its policies on the supply of non-audit
services by the external auditor and on the
employment of former employees of the Group’s
external auditor;
– reviewed the non-audit services provided to the
Group by the external auditor and monitored and
assessed the independence of both the external
and internal auditors; and
– reviewed the performance of the ARC and its
terms of reference.
At the request of the Board, the ARC also considered
whether the Annual Report and Accounts for the year
ended 30 January 2022, taken as a whole, are fair,
balanced and understandable and provide the information
necessary for shareholders to assess the Company’s
position and performance, business model and strategy.
Following review of management’s processes in this
regard and consideration of the draft Annual Report and
Accounts, the ARC recommended to the Board that it
could make the required disclosure as set out in the
Directors’ Responsibilities Statement on page 116.
Significant areas
The significant matters and key accounting judgements
considered by the ARC during the year were:
– Revenue recognition – brand support accruals:
judgement is required by management when
determining the level of brand support accruals
at the year end. During the year, the ARC received
and considered reports from management on the
level of accruals at the half year and at the year end.
It also received and considered reports from the
external auditor following their review of net revenue
and brand support accruals during the period. The
ARC considered these reports and was satisfied that
the estimates and judgements made by
management are appropriate.
– Management override of controls: there is a risk
of fraud associated with the potential override of
internal controls by management. During the year,
the ARC received and considered a report from the
external auditor which stated that its procedures,
which included the use of data analytics, did not
identify any errors or significant deficiencies in
internal controls. The ARC was content that there
were no issues arising.
Other areas
Other matters considered by the ARC during
the year were:
– The presentation and explanation of the use of
alternative performance measures (“APMs”): the ARC
considered a report from the external auditor on
management’s presentation of APMs in the Annual
Report and Accounts for the year ended 30 January
2022, including a report on whether the use of
APMs and statutory figures was generally well
balanced and APMs were appropriately labelled
and defined, and was satisfied that APMs were
appropriately presented.
– Assumptions used in the Company’s defined benefit
pension scheme: the Company operates the
A.G. BARR p.l.c. (2008) Pension and Life Assurance
Scheme, which includes a defined benefit section.
The Company engages a third party, Hymans
Robertson, to assist in the valuation of the defined
benefit pension scheme liability. There is a risk
related to judgements made by management in
valuing the defined benefit pension scheme liability,
including the appropriateness of the discount rate
and inflation rate assumptions. These variables can
have a material impact in calculating the quantum of
the defined benefit liability. During the year the ARC
received and considered a report from the external
auditor which stated that it had carried out a review
and benchmarking exercise of the assumptions used
by Hymans Robertson and concluded that they
were within an acceptable range. After discussion
and challenge the ARC was satisfied that the
assumptions proposed were reasonable and these
were approved.
– Impairment of intangible assets: the ARC considered
a report from management in relation to their
impairment reviews of the intangible asset base and
was satisfied with management’s conclusion that
no impairment indicators exist and an impairment
assessment is not required. The external auditor
concurred with management’s assessment.
– The Company’s investment in MOMA Foods Limited
(“MOMA”): the Company acquired an initial c.62%
equity stake in MOMA in December 2021. The
identification and valuation of intangibles as well
as the valuation of other assets acquired and related
assumptions, including any impairment
considerations, were a key area of focus. During the
year the ARC received and considered reports from
the external auditor and management on these
matters, together with a report from the external
auditor on the assumptions and methodology used
in the calculation of the fair value of the put and
call options in place for the remaining c.38% equity
stake in MOMA. The ARC was satisfied with these
reports and with the accounting for the investment
in MOMA.
– Going concern: the ARC considered reports from
management regarding the going concern
assumption and the key environmental (including
Covid) and trading sensitivities applied, and was
satisfied that this assumption was appropriate.
– Viability: the ARC considered reports from
management regarding the viability statement,
including information on the Group’s financing
facilities, and approved the viability statement.
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The ARC receives regular presentations from members
of the senior management team. During the year, the
ARC considered presentations from representatives of
the management team on cyber security, commercial
investment, procedures to prevent bribery and
corruption, procedures to prevent the facilitation
of tax evasion, tax strategy and pension schemes.
External audit
The Group’s external auditor is Deloitte LLP (“Deloitte”).
The current audit partner is David Sweeney, who has
held the role since May 2017. The ARC reviews the
external auditor’s performance, independence and
objectivity annually. The ARC ensures that procedures
are in place to safeguard the external auditor’s
independence and objectivity. The external auditor
reports regularly to the ARC on the actions that it
has taken to comply with professional and regulatory
requirements and current best practice in order
to maintain its independence and objectivity.
The Group has a policy in place which ensures that the
provision of non-audit services by the external auditor
does not impair the auditor’s independence or objectivity.
This policy reflects the Financial Reporting Council’s
Ethical Standard 2019, such that the external auditor may
only provide non-audit services which are closely linked
to the audit itself or are required by law or regulation.
The policy was complied with during the year.
Details of the amounts paid to the external auditor
during the year for audit and non-audit services are
set out in Note 3 to the financial statements. The ratio
of fees for non-audit services to those for audit services
for the year was 18%, within the 70% cap in the Financial
Reporting Council’s guidance. The ARC considered the
nature and level of non-audit services provided and was
satisfied that the objectivity and independence of the
external auditor were not affected by the non-audit
work undertaken. The non-audit fees during the year
related to the performance of the half year review and
work regarding foreign sales volumes. The nature of
and level of fees for the non-audit services provided
were considered by Deloitte who concluded that they
did not present a threat to Deloitte’s independence.
Deloitte was appointed as the Group’s external auditor
in May 2017 following a competitive tender process.
There are no contractual obligations which restrict the
ARC’s choice of external auditor. The senior statutory
auditor rotates every five years to ensure independence.
A new audit partner will therefore replace David
Sweeney during the 2022/23 financial year. The ARC
acknowledges the requirement to tender the external
audit contract at least every ten years. The Company
confirms that it has complied with the provisions of the
Competition and Markets Authority’s Statutory Audit
Services Order in respect of the financial year.
During the year, the ARC reviewed and monitored the
external auditor’s independence and objectivity and the
effectiveness of the external audit process. The ARC
reviewed and approved the external auditor’s plan for
undertaking the half year review and the year end audit,
including the scope of their work and their proposed
approach to the key risk areas identified. After discussion
and challenge the ARC approved this plan. The ARC
reviewed the detailed reports prepared by the external
auditor setting out their findings from the half year
review and the year end audit, with a particular focus on
the areas of audit risk identified. The ARC also received
comprehensive papers from management in relation to
the half year review and the year end audit. The ARC
held meetings with the external auditor in the absence
of management to discuss the interim review and the
year end audit findings and processes. The ARC was
satisfied with the internal processes run by management
and their response to challenge by the external auditor.
The ARC carried out a review of the effectiveness of the
external auditor and the external audit process during the
year, led by the Chair of the ARC. This review included
an internally facilitated detailed and comprehensive
evaluation of the Group’s external auditor and the
external audit process using written survey
questionnaires, which were completed by members of
the ARC, the executive directors and relevant members
of senior management. The results of the evaluation
were shared with the ARC and the external auditor.
Following these reviews and meetings, and after debate
and discussion, the ARC was satisfied with Deloitte’s
performance during the year, that it was objective
and independent, and that the external audit process
remains effective, with no major issues identified.
The ARC has recommended to the Board that a
resolution proposing the appointment of Deloitte
be put to shareholders at the 2022 AGM.
Internal audit
At the beginning of each year, an internal audit plan
is developed by the internal auditor following meetings
with directors and senior managers within the business
and with reference to the significant risks contained
within the Group’s risk register and identified controls.
The ARC approves the internal audit plan for the first
half of the year at the beginning of the year and the
plan for the second half of the year at the June ARC
meeting. The ARC receives updates on progress against
the plan and the recommendations arising from the
internal audits throughout the year, together with
updates on management’s progress against
outstanding actions. The ARC held meetings with
the internal auditor in the absence of management
to discuss the internal audit findings and processes.
The ARC carried out a review of the effectiveness
of the internal audit function and the Company’s risk
management and internal control systems during the
year, led by the Chair of the ARC. This review included
an internally facilitated detailed and comprehensive
evaluation of these matters using written survey
questionnaires, which were completed by members of
the ARC, the executive directors and relevant members
of senior management. The results of the evaluation
were shared with the ARC and the internal auditor.
Following these reviews and meetings, the ARC was
satisfied that the internal audit function was performing
in an effective manner and that the Company’s risk
management and internal control systems were
effective, with no major issues identified.
Audit and Risk Committee Report continued
75
Strategic Report Corporate Governance Accounts
Audit and Risk Committee evaluation
The ARC carried out a review of the performance
and effectiveness of the ARC during the year, led by
the Chair of the ARC. This review included an internally
facilitated detailed and comprehensive evaluation of
the performance and effectiveness of the ARC using
written survey questionnaires, which were completed
by members of the ARC and the Company Secretary.
The results of the evaluation were shared with the ARC.
Overall, the review found that the ARC was functioning
in an effective manner and performing satisfactorily,
with no major issues identified.
Nick Wharton
Chair of the Audit and Risk Committee
29 March 2022
76
A.G. BARR p.l.c. Annual Report and Accounts 2022
Directors’ Remuneration Report
Remuneration Committee – Chair’s Statement
Introduction
On behalf of the Board, I am pleased to present the
Directors’ Remuneration Report for the year ended
30 January 2022, which sets out the Directors’
Remuneration Policy and the Annual Report on
Remuneration.
The current Directors’ Remuneration Policy was
approved by a binding vote at the 2020 AGM and
became effective for three years from the close of
that meeting. For ease of reference, we are including
the Remuneration Policy in this year’s Directors’
Remuneration Report on pages 96 to 109. The Annual
Report on Remuneration on pages 79 to 95 provides
details of the amounts earned by the directors in
respect of the year ended 30 January 2022 and how
the Remuneration Policy will be operated for the year
commencing 31 January 2022. The Annual Report
on Remuneration will be subject to an advisory vote
at the 2022 AGM.
I am delighted to report on the ongoing strong level
of support received from shareholders last year, as
evidenced by the voting outcome at the 2021 AGM.
The resolution seeking approval of the Annual Report
on Remuneration was supported by over 95% of the
votes cast.
Remuneration in context
Undoubtedly, it must be recognised that the last year
has remained very challenging with the evolution of
the Covid-19 pandemic, well publicised global supply
chain issues and more aggressive rates of cost inflation
across all sectors. In this context, the Remuneration
Committee has considered the experiences of key
stakeholders over the year, as well as overall Group
performance, when making executive remuneration
decisions in respect of 2021/22 and the forthcoming
financial year. We have outlined below the key drivers
of our decisions:
Group performance
– The Group has performed well throughout the
2021/22 year and delivered profit before tax and
exceptional items of £41.5m, an increase of 26.5%
on the prior year.
– Revenue increased by 18% to £268.6m, exceeding
the pre-pandemic revenue in 2019/20 of £256m.
– Strong cash management ensured that the Group
exited the financial year with net cash at bank*
of £68.4m.
Shareholder experience
– The Group reintroduced dividends for shareholders
with an interim dividend of 2p per share plus a
special dividend of 10p per share paid in October
2021. There is a proposed final dividend for the
2021/22 financial year of 10p.
– The share price at the end of the financial year of
£4.95 was similar to the start of the year, reflecting
the ongoing uncertainty in the financial markets
associated with the Covid-19 pandemic and wider
economic uncertainties.
– The Group made encouraging progress in its
No Time To Waste environmental sustainability
programme.
Employee experience
– The Group continued production across its
facilities under ongoing Covid-19 protocols.
– No employees were furloughed during the
financial year.
– The Group paid bonuses for the 2020/21 financial
year to employees based on strong individual
performance through the challenging period of the
Covid-19 pandemic. The executive directors waived
their earned bonuses for the 2020/21 financial year.
– Increased levels of employee engagement have
been introduced to support employees who
continue to work from home, focused particularly
on mental wellbeing.
Customer experience
– Strong support provided to the Group’s customers
notwithstanding the volatile market backdrop and
global supply chain issues.
Government support
– No further Government support was taken during
the financial year.
Pay for performance in 2021/22
The Remuneration Committee remains committed to a
responsible approach to executive pay and believes that
variable pay should only be earned for achievement
against stretching targets.
Achievement against annual bonus targets –
full bonus paid for exceptional performance
The executive directors were set stretching targets for
profit before tax (“PBT”), which account for 80% of bonus
opportunity for each director. The PBT target range of
£31m to £36m (for the 53 week period) reflected the
ambitions for growth of the business set against
challenging external conditions, including the ongoing
impact of the Covid-19 pandemic. By meeting and
overcoming these external challenges, the executive
directors delivered strong growth in revenue and achieved
PBT of £41.5m, £5.5m above the maximum bonus
target. As a result, the Remuneration Committee decided
to award a full bonus for the PBT portion of the bonus.
Each of the executive directors was also set stretching
individual strategic objectives tailored to their role
and responsibilities, which account for 20% of bonus
opportunity for each director. The Remuneration
Committee reviewed each of the directors’ strategic
objectives in turn, to fully understand the extent to
which each strategic objective had been achieved.
Given the fast changing environment in which the
Company operated during 2021, a number of the
set strategic objectives were adapted or substituted
by other objectives which increased in importance.
Where this occurred, the Remuneration Committee
has reviewed progress across all strategic objectives
applicable in the year. The Remuneration Committee
was satisfied that strong progress had been achieved by
each of the executive directors towards their strategic
objectives and agreed to award a full bonus for each
director related to directors’ strategic objectives.
Reflective of a very strong performance, each of the
directors will be awarded a full bonus for the 2021/22
financial year, being 125% of basic salary. Further details
can be found on pages 81 and 82.
* This is a non-GAAP measure. A definition and reconciliation are
provided in the Glossary on pages 188 to 191.
77
Strategic Report Corporate Governance Accounts
Achievement against Long Term Incentive Plan
(“LTIP”) targets – 2019 LTIP awards lapse in full
The 2019 LTIP used the key metric of cumulative
Earnings Per Share (“EPS”) to assess the long-term
performance of the executive directors. The cumulative
EPS over the three years ended 30 January 2022 was
72.73p, which compared to the EPS target range set in
April 2019 of 95.0p to 110.0p. The under performance
against the targets set reflect the challenges faced by
the Company in 2019/20 and the impact of Covid-19
during 2020/21 and 2021/22. The outcome of an LTIP
granted in April 2019 given this backdrop is consistent
with the fact that no bonuses were paid to the directors
for 2019/20 and 2020/21. Given this outcome, the
Remuneration Committee concluded that none of the
2019 LTIP awards will vest and these awards will lapse
in full according to the rules. Further details can be
found on page 83.
I can confirm that no discretion has been exercised in
respect of the executives’ pay during the 2021/22 period
and the Committee is confident that the Remuneration
Policy has operated as intended during the year.
Review of outcomes in relation to wider Company
performance and stakeholder experience
The Remuneration Committee concluded that in light
of both wider business performance and stakeholder
experience outlined above, the decision to award full
bonus to directors for the financial year combined with
the decision that the 2019 LTIP will lapse in full were
fair and appropriate.
Other pay decisions in respect of 2021/22
Set out below are the other decisions made during
the year in respect of remuneration.
Base salary increases – in line with wider workforce
The Remuneration Committee reviewed executive
director salaries during the year and awarded increases
of 1.8% in line with the increases awarded to the
wider workforce.
LTIP awards – awards granted based on stretching
Net Revenue growth targets
As disclosed in last year’s report, in the context of
the Covid-19 pandemic and the associated economic
uncertainty, the Remuneration Committee decided that
it would be appropriate to make a one-off change to
the performance measures attached to LTIP awards in
2021 to base the awards solely on the revenue recovery
strategy agreed with the executive team. The logic
for this was based on future growth in revenue being
vital to the long term fortunes of the business and its
stakeholders, which will deliver strong operating
cashflows and allow the business to continue to invest
in the future.
Based on 2020/21 revenue performance and with
appropriate account taken of the removal of the
Rockstar contract, the Remuneration Committee
established stretching Net Revenue performance
targets which require significant growth in Net Revenue
over the three year vesting period. Net Revenue targets
were set for each of the three financial years: 2021/22,
2022/23 and 2023/24. There is a strong correlation
between revenue and profits in the Company given its
FMCG sector traits and the Remuneration Committee
views the incentivisation of strong revenue growth as
key to delivering improving earnings for shareholders
in the long term.
The Remuneration Committee also considered the
significant uncertainty in the market and the potential
for movements in Total Shareholder Return (“TSR”)
unrelated to Company performance in deciding not
to implement the relative TSR measure (vs FTSE 250
excluding financial services) for these awards.
These awards were granted on 12 April 2021 at a value
equal to 150% of base salary, consistent with the normal
maximum opportunity under the Remuneration Policy
introduced in 2020. The targets are set out on page 84.
Employee engagement
The Remuneration Committee recognises the
importance of culture and effective employee
engagement in the creation of a good workplace. The
Board’s role is to ensure that effective processes and
procedures are in place for gathering workforce views
and engaging in meaningful dialogue with employees.
The Board receives regular updates on workforce
engagement throughout the year. Further information
on employee engagement is included in the Corporate
Governance Report on pages 65 and 66.
Looking forward – implementation
of Remuneration Policy for 2022/23
Set out below are the decisions anticipated to
be made during 2022/23 in implementing the
Remuneration Policy.
Base salary – workforce level increases
In line with the range of salary increases across the
Group, and to reflect the commitment and effort of our
executive directors, an increase of 3.0% will be made to
the executive directors’ base salaries with effect from
1 April 2022. An increase of 3.0% will also be made
to the Chairman’s fee and the other non-executive
directors’ basic fee with effect from 1 April 2022.
Annual Bonus – to be operated in line with
Remuneration Policy
The Remuneration Committee intends to operate the
bonus scheme for the year ending 29 January 2023
in line with the Remuneration Policy, subject to an
ongoing review of the uncertainties of the Covid-19
pandemic, with awards continuing to be subject to a
combination of PBT and individual strategic objectives.
Details of bonus award levels and performance
measure weightings are provided on page 82.
Performance targets for these bonus awards will be
disclosed in the Annual Report on Remuneration for
the year ending 29 January 2023.
78
A.G. BARR p.l.c. Annual Report and Accounts 2022
Directors’ Remuneration Report continued
LTIP – awards at normal level of opportunity with
targets based on EPS, TSR and Environmental
Sustainability measures
In line with the Remuneration Policy, the Remuneration
Committee intends to grant LTIP awards at the normal
maximum opportunity of 150% of base salary in April
this year. These LTIP awards will be assessed over the
following three years based on stretching targets set
across three performance measures: EPS, TSR and
Environmental Sustainability.
EPS is a key performance indicator for the Company
and shareholders, and remains a highly credible measure
of long term performance. Significant uncertainty for UK
focused consumer goods businesses remains, therefore
setting a three-year forward looking cumulative EPS
target is challenging. However, the Remuneration
Committee is confident that the target range selected
is appropriately stretching and will help the Group drive
growth in shareholder earnings. The EPS targets have
been set specifically not taking into account the future
impact of the introduction of the Deposit Return
Scheme (“DRS”) in Scotland from August 2023. The
overall impact of the DRS is very challenging to assess
with acceptable accuracy at this early stage. The
Remuneration Committee has resolved to monitor
the impact of the DRS post its implementation with
the expectation that the EPS targets set in 2022 will
be adjusted during the vesting period to enable the
DRS impact to be included in the targets prior to the
vesting date.
TSR is a relative performance measure which creates
strong alignment between the executive directors and
shareholders. As for the LTIP awards granted in 2020,
the TSR performance of the Company will be
compared over the three years to the TSR of the
FTSE 250 index (excluding financial services).
Following full discussion, the Remuneration Committee
believes that environmental sustainability is important
to the long term success of the business and the
executive directors’ remuneration should be related
to their performance in this area. A new performance
measure will therefore be introduced for the 2022 LTIP
awards based on environmental sustainability targets.
Details of the 2022 LTIP awards are provided on page
84. Details of the performance targets set for the 2022
LTIP awards will be disclosed in the Annual Report on
Remuneration for the year ending 29 January 2023.
I look forward to your support at the upcoming AGM.
David J. Ritchie
Chair of the Remuneration Committee
29 March 2022
79
Strategic Report Corporate Governance Accounts
Annual report on remuneration
The following parts of the Remuneration Report are subject to audit, other than the elements explaining the application of the Remuneration Policy for 2022/23.
Single figure table – audited information
The aggregate remuneration provided to directors who have served as directors in the year ended 30 January 2022 is set out below, along with the aggregate remuneration
provided to such directors for the year ended 24 January 2021.
Director
Jan 22
Salary/
fees
£000
Jan 21
Salary/
fees
£000
Jan 22
Benefits
£000
Jan 21
Benefits
£000
Jan 22
Bonus
£000
Jan 21
Bonus
£000
Jan 22
Long term
incentives
£000
Jan 21
Long term
incentives
£000
Jan 22
Pension
£000
Jan 21
Pension
£000
Jan 22
Total fixed
remuneration
£000
Jan 21
Total fixed
remuneration
£000
Jan 22
Total variable
remuneration
£000
Jan 21
Total variable
remuneration
£000
Jan 22
Total
remuneration
£000
Jan 21
Total
remuneration
£000
Executive
R.A. White 487 451 39 33 599 – – – 167 226 693 710 599 – 1,292 710
S. Lorimer 335 280 18 26 412 – – – 68 59 421 365 412 – 833 365
J.D. Kemp 251 236 23 24 314 – – – 42 63 316 323 314 – 630 323
Non-executive
J.R. Nicolson 147 138 – – – – – – – – 147 138 – – 147 138
M. Allen* 29 – – – – – – – – – 29 – – – 29 –
W.R.G. Barr 50 47 – – – – – – – – 50 47 – – 50 47
S.V. Barratt 52 48 – – – – – – – – 52 48 – – 52 48
M.A. Griffiths** – 14 – – – – – – – – – 14 – – – 14
Z.L. Howorth* 29 – – – – – – – – – 29 – – – 29 –
P. Powell*** 21 47 – – – – – – – – 21 47 – – 21 47
D.J. Ritchie 58 54 – – – – – – – – 58 54 – – 58 54
N.B.E. Wharton 58 52 – – – – – – – – 58 52 – – 58 52
Total 1,517 1,367 80 83 1,325 – – – 277 348 1,874 1,798 1,325 – 3,199 1,798
* M. Allen and Z.L. Howorth were appointed to the Board on 1 July 2021. The remuneration above was paid in respect of their services from that date.
** M.A. Griffiths stepped down from the Board on 30 April 2020. The remuneration above was paid in respect of his services until that date.
*** P. Powell stepped down from the Board on 1 July 2021. The remuneration above was paid in respect of her services until that date.
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Directors’ Remuneration Report continued
The figures in the single figure table on the previous page are derived from the following:
(a) Salary and fees
The amount of salary/fees received in the year. A salary sacrifice arrangement is operated by the Company.
Employees who join this arrangement no longer pay contributions to the pension scheme but receive a lower
taxable salary. Directors’ salaries are shown gross of any salary sacrifice pension contributions.
(b) Benefits
The value of benefits received in the year. These include car allowance, fuel benefit, private medical insurance,
healthcare cash plan, flex-cash, the value of SAYE options vesting in the year, and AESOP free and matching shares
awarded in the year.
SAYE: option shares are valued at the market price of the option shares at the date of vesting less the option
exercise price.
AESOP: free and matching shares are valued at market value at the date of award.
Details of the executive directors’ interests in the SAYE are set out on page 95.
(c) Bonus
A description of the annual bonus in respect of the year and Group and personal performance against which
the bonus pay-out was determined is provided on page 82.
(d) Long term incentives
The value of LTIP awards that vest in respect of the year.
Details of the executive directors’ interests in the LTIP are set out on page 94.
(e) Pension
The pension figure includes:
– pension cash alternatives equal to the executive directors’ contractual pension provision;
– for individuals in the 2008 Scheme’s defined benefit section, the additional value accrued in the year calculated
using the HMRC method (using a multiplier of 20); and
– the value of the accrued liability for the year in respect of the Company’s contribution for each director
participating in the A.G. BARR p.l.c. Unfunded Retirement Benefit Scheme (“URBS”).
Further details of pension benefits are set out on pages 84 and 85.
Individual elements of remuneration
Base salary and fees
Base salaries for individual executive directors for the year ended 30 January 2022 and for the following year are set out in the table below:
Executive director
Base salary for
year ended
30 January 2022
£000
Base salary for
year ending
29 January 2023
£000 Increase %
R.A. White 479 493 3.0%
S. Lorimer 330 339 3.0%
J.D. Kemp 251 258 3.0%
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Strategic Report Corporate Governance Accounts
Details of non-executive directors’ fees for the year ended 30 January 2022 and for the following year are set out in the table below:
Non-executive director fee
Year ended
30 January 2022
£000
Year ending
29 January 2023
£000 Increase %
Chairman of the Company* 147 158 8.4%
Basic fee 50 51 3.0%
Additional fee for chairing Audit and Risk Committee 8 8 -%
Additional fee for chairing Remuneration Committee 8 8 -%
Additional fee for Senior Independent Director 2 2 -%
* A market review of the Chair’s fees took place as part of the recruitment process for a new Chair of the Company, with the result that M. Allen’s fees as Chair will be £160k
from the date he succeeds J.R. Nicolson as Chair, prior to the 2022 AGM.
Benefits – audited information
The benefits figure for each of the executive directors is detailed as follows:
Year ended 30 January 2022
Executive director
Car and fuel
benefit
£000
Other*
£000
AESOP awards
£000
Total
£000
R.A. White 37 1 1 39
S. Lorimer 16 1 1 18
J.D. Kemp 21 1 1 23
Total 74 3 3 80
* Other costs included private medical insurance, healthcare cash plan and flex-cash as they are below £1,000 separately
The value of the AESOP awards is the sum of the AESOP free and matching shares awarded to the directors in the year.
Annual bonus
The maximum annual bonus award opportunity for each executive director in respect of the year ended 30 January 2022 was 125% of salary,
with 80% of the bonus assessed against the achievement of Group profit before tax, excluding exceptional items, compared against a set of
profit targets and 20% based on strategic objectives. The executive directors earned a total of £1.3m as annual bonus for the year, representing
125% of R.A. White’s salary, 125% of S. Lorimer’s salary and 125% of J.D. Kemp’s salary. 20% of the bonus will be deferred into shares for two years
and subject to malus and clawback provisions, as set out in the Remuneration Policy.
The target for the annual bonus based on profit before tax and performance against that target is set out in the table below. 50% of this element
of the bonus could be earned for on-target performance with zero paid for threshold performance and a broadly linear scale through to full
payment of this element of the bonus for performance at or above the maximum target.
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Directors’ Remuneration Report continued
Threshold
target On target
Maximum
target
Actual
performance
Maximum
opportunity
percentage
of bonus
Actual pay-out
percentage of
bonus
Profit before tax excluding exceptional items £31.0m £33.5m £36.0m £41.5m 80% 80%
Strategic objectives for the year ended 30 January 2022 account for 20% of the bonus and targets were set around the Company’s key areas
of strategic focus at the start of the financial year. Details of the strategic objectives for the year ended 30 January 2022 and the Committee’s
determination of performance against them is set out in the table below.
Given the fast changing environment in which the Company operated during 2021, a number of the set strategic objectives were adapted
or substituted by other objectives which increased in importance. Where this occurred, the Remuneration Committee has reviewed progress
across all strategic objectives applicable in the year. The Remuneration Committee was satisfied that each of the executive directors had
performed strongly against their strategic objectives. Following full discussion and debate, the Remuneration Committee concluded that
all of the executive directors had earned this element of the bonus in full.
Measure Weighting Pay-out
R.A. White 20% 20%
Develop a key brand growth objective
Deliver an environmental sustainability objective
Deliver an objective relating to M&A
Deliver a succession planning objective
S. Lorimer 20% 20%
Deliver an objective related to the impact of technology on the Group
Deliver the supply chain excellence programme
Deliver a capital structure optimisation objective
Deliver an objective related to the strategic commercial plan
J.D. Kemp 20% 20%
Deliver a key brand growth objective
Deliver a key innovation objective
Deliver a key commercial project
Deliver an objective relating to environmental sustainability
Annual bonus for 2022/23
For the 2022/23 financial year 80% of bonus potential will be assessed against growth in Group profit before tax excluding exceptional items,
which is an important indicator of the success of the Company’s strategy. Performance targets will be set at challenging levels, with 50% of this
element of the annual bonus being earned for on-target performance. The remainder of the annual bonus (20% of bonus potential) will be
assessed against individual strategic objectives to align the reward structure with key strategic priorities and to encourage behaviours which
facilitate profitable growth and the future development of the business. The actual performance targets are not disclosed as they are considered
to be commercially sensitive at this time and should therefore remain confidential to the Company. The Remuneration Committee will continue
to disclose how the bonus earned relates to performance against the targets on a retrospective basis meaning this information will be disclosed
in the Annual Report on Remuneration for the year ending 29 January 2023.
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Strategic Report Corporate Governance Accounts
Long term incentives – audited information
Awards vesting in respect of the financial period
LTIP awards granted in April 2019 were subject to the following EPS performance measure:
% of maximum
opportunity
Threshold
vesting at 20% of
the maximum
award
Maximum
vesting at 100%
of the maximum
award
Actual
cumulative
EPS for period
Cumulative EPS for the period including 2019/20, 2020/21 and 2021/22 100% 95.0p 110.0p 72.73p
The salary used in the calculation of the award is the individual director’s salary at 1 April 2019.
Details of LTIP awards vesting in respect of the financial period are set out below:
Year ended 30 January 2022
Executive director
Total shares
Number
Vesting (% of
maximum
opportunity)
%
Shares awarded
Number
Share price**
£
LTIP value
£000
R.A. White 72,686 0% – – –
S. Lorimer 42,946 0% – – –
J.D. Kemp 38,114 0% – – –
Total 153,746 – –
The ESOS award was granted in April 2019 and is subject to the same performance measures as the LTIP awards granted in April 2019, as set out
above. Details of ESOS awards vesting in respect of the financial period are set out below:
Year ended 30 January 2022
Executive director
Total shares
Number
Vesting* (% of
maximum
opportunity)
%
Shares awarded
Number
Share price**
£
ESOS value
£000
S. Lorimer 2,222 0% – – –
Total 2,222 – –
* Based on cumulative EPS of 72.73p for the three years ended 30 January 2022.
** No share price has been provided as there is no vesting.
Awards granted during the financial period
During the year ended 30 January 2022 the following LTIP awards were granted equating to 150% of salary:
Executive director
Type of
award
Number of
shares
Share price at
grant
Market value
at grant
£000
% of award
vesting at
threshold
%
Performance
period
Years (ends
28 January 2024)
R.A. White LTIP award – nil cost option 143,337 503p 721 20.0 3
S. Lorimer LTIP award – nil cost option 98,663 503p 496 20.0 3
J.D. Kemp LTIP award – nil cost option 75,161 503p 378 20.0 3
The share price at grant is the five day average of the middle-market closing share prices preceding the date of grant rounded down.
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Directors’ Remuneration Report continued
The salary used in the calculation of the award is the individual director’s salary at 1 April 2021.
Vesting of the LTIP awards granted in the year ended 30 January 2022 will be based 100% on the net revenue targets set out below for each of
the three financial years: 2021/22, 2022/23 and 2023/24. The targets operate discretely and are assessed for each of the three years, such that a
proportion of the one third award allocated will be earned or not for each year. Although performance against the relevant net revenue target is
assessed each year, the Remuneration Committee will not determine the final outcome until the end of the third year taking performance over
the whole three year period into consideration.
Net revenue performance targets:
% of maximum
opportunity
Threshold
vesting at 20% of
the maximum
award
Maximum
vesting at 100%
of the maximum
award
Actual net
revenue for
period
Net revenue (£m) for the period ended 2021/22 33% 220 230 268.6
Net revenue (£m) for the period ended 2022/23 33% 225 235 –
Net revenue (£m) for the period ended 2023/24 33% 230 250 –
There is straight-line vesting between these points and no reward below threshold net revenue performance.
Long term incentives for 2022/23
LTIP awards granted in 2022 will be granted with a maximum opportunity of 150% of basic salary for the executive directors. These LTIP awards
will be based 60% on a cumulative EPS performance measure, 30% on a relative TSR performance measure and 10% on an Environmental
Sustainability performance measure for 2022/23, 2023/24 and 2024/25.
EPS is a key performance indicator for the Company and shareholders, and remains a highly credible measure of long term performance.
TSR is a relative performance measure which creates strong alignment between the executive directors and shareholders. The TSR performance
of the Company will be compared over the three years to the TSR of the FTSE 250 index (excluding financial services). 20% of the maximum award
will vest for achieving threshold performance and 100% of the maximum award will vest for achieving maximum performance. There will be
straight-line vesting between the points and no vesting below threshold performance.
A new performance measure will be introduced for the 2022 LTIP awards based around the Group’s No Time To Waste environmental
sustainability programme.
The EPS targets are considered commercially sensitive at this time on the basis that they give competitors insight into the Company’s longer
term forecasts which the Board considers confidential. The EPS targets will be disclosed in next year’s Annual Report on Remuneration.
Significant uncertainty for UK focused consumer group businessess remains, therefore setting a three year forward looking cumulative EPS target
is challenging. However, the Remuneration Committee is confident that the target range selected is appropriately stretching and will help the Group
drive growth in shareholder earnings. The EPS targets have been set specifically not taking into account the future impact of the introduction of the
Deposit Return Scheme (“DRS”) in Scotland from August 2023. The overall impact of the DRS is very challenging to assess with acceptable accuracy
at this early stage. The Remuneration Committee has resolved to monitor the impact of the DRS post its implementation with the expectation that
the EPS targets set in 2022 will be adjusted during the vesting period to enable the DRS impact to be included in the targets prior to the vesting date.
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Strategic Report Corporate Governance Accounts
Total pension entitlements – audited information
Executive directors are all members of the A.G. BARR p.l.c. (2008) Pension and Life Assurance Scheme (the “2008 Scheme”) or the A.G. Barr
Retirement Plan. The 2008 Scheme has a defined benefit section and a defined contribution section. The defined benefit section was closed to
new entrants from 14 August 2003 and to future accrual from 1 May 2016. All assets held in the defined contribution section of the 2008 Scheme
were transferred to the A.G. Barr Retirement Plan in September 2021. R.A. White is a deferred member of the defined benefit section of the 2008
Scheme and ceased his accrual on 5 April 2011.
The movement in value of executive director pensions (which exclude any pension contributions made in respect of an individual under the
Company’s salary sacrifice arrangement) are detailed in the following table. This movement is made up of Company pension contributions,
changes in the value of defined benefit pension scheme accrual and pension cash equivalents:
Year ended 30 January 2022
Executive director
Defined benefit
accrual
£000
Pension cash
equivalent
£000
Total
£000
R.A. White 66 101 167
S. Lorimer – 68 68
J.D. Kemp – 42 42
Total 66 211 277
Details of the entitlements accruing to the director who is a deferred member of the defined benefit section are detailed in the table below:
Accrued pension
at 30 January
2022
£000
Normal
retirement age
R.A. White 82 63*
* The normal retirement age specified in the 2008 Scheme rules for R.A. White is age 63, however he is also entitled under the 2008 Scheme rules to retire at age 60 without
an actuarial reduction to his pension benefits and without any consent required.
Early retirement can be taken at age 55 subject to Trustee consent. The accrued pension would be reduced relative to age 60 to take account
of its early payment.
R.A. White ceased his accrual under the defined benefit plan on 5 April 2011. Under the terms of his service contract, R.A. White is entitled
to revaluation of his deferred benefits in line with RPI until his normal retirement date. The rules of the 2008 Scheme provide for revaluation
increases in deferment in line with CPI. R.A. White elected for Fixed Protection 2012 to protect his benefits accrued under the 2008 Scheme.
To enable R.A. White to continue to benefit from Fixed Protection 2012, his deferred benefits were re-valued in line with CPI and, to the extent
that RPI exceeds CPI in any year, a corresponding additional contribution was made to his URBS. R.A. White withdrew from the URBS scheme
during the year ended 24 January 2021 and any additional contributions accruing since then have been paid to R.A. White in cash. In addition,
R.A. White will continue to be entitled to receive life assurance benefits as if he were in pensionable service under the 2008 Scheme until his normal
retirement date notwithstanding the termination of his employment with the Company, but only in circumstances where he is a “good leaver”.
Dependants of the executive directors are eligible for dependants’ pensions and the payment of a lump sum in the event of death in service.
Where the 2008 Scheme provides a pension on a defined benefit basis, final pensionable salary is used to determine the director’s pension
entitlement. Where benefits are provided on a defined contribution basis, the benefits depend on the director’s accumulated fund.
Lump sum life assurance cover is provided at five or eight times pensionable salary dependent upon the date of joining the 2008 Scheme.
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A.G. BARR p.l.c. Annual Report and Accounts 2022
Directors’ Remuneration Report continued
No contributions were paid to the defined contribution section of the 2008 Scheme or the A.G. Barr Retirement Plan during the years ended
30 January 2022 and 24 January 2021.
The URBS was approved by the Remuneration Committee and is an unfunded employer financed retirement benefits scheme. It was established
to satisfy the Company’s contractual obligations to provide retirement benefits for the benefit of the executive directors. During the year ended
24 January 2021, R.A. White and J.D. Kemp terminated their respective URBS arrangements with the agreement of the Company and withdrew
their funds.
The maximum Company contribution under the URBS in respect of R.A. White was 24% of his salary.
All directors have now elected to receive Company pension contributions in the form of a cash allowance and no longer participate in the URBS.
R.A. White and S. Lorimer receive a cash allowance equal to their contractual pension provision of 24% of salary. J.D. Kemp receives a cash
allowance equal to his contractual pension provision of 19% of salary, which will rise to 24% of salary following his 50th birthday.
Payments to past directors – audited information
There were no payments made to past directors during the year in respect of services provided to the Company as a director.
Payments for loss of office – audited information
No payments for loss of office were made during the year.
Statement of directors’ shareholding and share interests – audited information
The Remuneration Committee updated its share ownership guidelines applicable from 2020/21 and the CEO and other executive directors
are required to build a shareholding equal to 200% and 150% of gross basic salary respectively. Until this guideline is met, executive directors
are required to retain all vested shares from the LTIP and half of any bonus pay-out after tax to purchase shares in the Company. The full policy
is disclosed in the Remuneration Policy approved by shareholders at the 2020 AGM.
At the year end, R.A. White and J.D. Kemp met the respective 200% and 150% of gross basic salary requirement applicable for the year ended
30 January 2022, with shareholdings equal to 387% and 307% of gross basic salary as at 30 January 2022 respectively. S. Lorimer was appointed
to the Board on 5 January 2015 and is currently required to build up a shareholding equal to 150% of his gross basic salary. S. Lorimer’s
shareholding was equal to 76% of gross basic salary as at 30 January 2022. In accordance with the Remuneration Policy, S. Lorimer is required
to retain all net shares (after tax) acquired from the exercise of LTIP awards and half of his net bonus pay-out (after tax) to purchase shares in the
Company; the latter requirement will be net of the 20% of S Lorimer’s bonus which will be deferred into shares for two years referred to above.
The interests of each executive director of the Company as at 30 January 2022 (including those held by their connected persons) were as set out
below. There were no changes to these interests between 30 January 2022 and 28 March 2022 with the exception of the following changes: an
increase in R.A. White’s holding of 90 shares, an increase in S. Lorimer’s holding of 90 shares and an increase in J.D. Kemp’s holding of 90 shares.
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Strategic Report Corporate Governance Accounts
Unvested
Director Type
Owned
outright
Exercised
during the
year
Lapsed during
the year
Subject to
performance
conditions
Not subject to
performance
conditions
Total as at
30 January 2022
Executive
R.A. White Shares 375,862 – – – – 375,862
LTIP share options – – (91,305) 349,922 – 349,922
ESOS share options – – (1,890) – – –
SAYE options – – (4,564) – 3,925 3,925
AESOP matching shares – 173 – – 707 707
S. Lorimer Shares 50,668 – – – – 50,668
LTIP share options – – (53,946) 233,783 – 233,783
ESOS share options – – – 2,222 – 2,222
SAYE options – – (4,812) – 3,925 3,925
AESOP matching shares – 172 – – 706 706
Shares – connected persons’ holding* – – – – – 655,326
J.D. Kemp Shares 156,038 – – – – 156,038
LTIP share options – – (47,87 7 ) 183,494 – 183,494
ESOS share options – – (1,890) - – –
SAYE options – – (4,660) – 3,925 3,925
AESOP matching shares – 173 – – 707 707
Non-executive
W.R.G. Barr Shares 7,516, 326 – – – – 7,516,326
Shares – connected persons’ holding** – – – – – 9,460,507
J.R. Nicolson Shares 11,500 – – – – 11,500
D.J. Ritchie Shares 1,000 – – – – 1,000
N.B.E. Wharton Shares 1,597 – – – – 1,597
Z.L. Howorth Shares 5,631 – – – – 5,631
M. Allen Shares 10,000 – – – – 10,000
* S. Lorimer’s connected persons’ shareholding includes shares related to his position as director of Robert Barr Ltd, the trustee of various employee benefit trusts.
** W.R.G. Barr’s connected persons’ shareholding includes shares related to his position as trustee of various family and charitable trusts.
The “Owned outright” shares set out in the table above are the shares owned outright by the directors. These include any AESOP free shares
awarded during the year and any shares retained during the year following the exercise of LTIP awards, ESOS awards and SAYE options.
The number of AESOP free shares awarded and share options exercised under the LTIP, ESOS and SAYE in the year are included in the
“Exercised during the year” column.
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Directors’ Remuneration Report continued
The table below shows the directors’ total shareholdings split between those with and without performance conditions. The non-executive
directors’ shareholdings above are all shares with no performance conditions.
Executive director
Shares – no
performance
conditions
Share
options
– performance
conditions
Share
options – no
performance
conditions
Total shares/
share options
R.A. White 375,862 349,922 3,925 730,416
S. Lorimer 51,374 236,005 3,925 291,304
J.D. Kemp 156,745 183,494 3,925 344,164
There were no shares vested and unexercised as at 30 January 2022.
The following sections of the Remuneration Report are not subject to audit.
Performance graph and table
The graph below shows the Company’s Total Shareholder Return (“TSR”) performance against the FTSE 250 excluding investment trusts over
the past ten years. In the opinion of the Board, the FTSE 250 excluding investment trusts is the most appropriate index against which the TSR
of the Company should be measured because it represents a broad equity market index of which the Company is a past constituent member
and reflects the Company’s scale and complexity of operations.
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
100
150
200
250
300
A.G. BARR FTSE 250 Ex.Investment Trusts
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Strategic Report Corporate Governance Accounts
CEO remuneration for previous ten years
The table below shows details of the total remuneration, annual bonus and LTIP paid out for R.A. White over the last ten financial years:
Total
remuneration*
£000
Annual bonus as
a % of maximum
opportunity
LTIP as a %
of maximum
opportunity
Year ended 30 January 2022 1,292 100.0% 0.0%
Year ended 24 January 2021 710 0.0% 0.0%
Year ended 25 January 2020 739 0.0% 0.0%
Year ended 26 January 2019 1,434 91.0% 39.9%
Year ended 27 January 2018 1,279 78.0% 22.8%
Year ended 28 January 2017 915 23.0% 40.0%
Year ended 30 January 2016 839 0.0% 37.9%
Year ended 25 January 2015 1,075 75.5% 31.9%
Year ended 26 January 2014 989 57.8% 38.2%
Year ended 27 January 2013 1,086 50.0% 68.5%
Percentage change in director remuneration
The table below sets out, in relation to salary, taxable benefits (car allowance, fuel benefit) and annual bonus, the increase between the pay for the
year ended 24 January 2021 and the pay for the year ended 30 January 2022 for the executive and non-executive directors compared to the wider
workforce. For these purposes, the wider workforce includes all Group employees who were continuously employed by the Group during the two
years ended 30 January 2022 but excludes executive and non-executive directors. The salaries for the financial year ended 24 January 2021 reflect
the salary reduction of 20% accepted by the directors and non-executive directors for three months during the initial Covid lockdown period.
Year ended 30 January 2022
Salary Jan 22* Benefits Jan 22
Annual bonus
Jan 22 Salary Jan 21 Benefits Jan 21 Annual bonus
R.A. White 8.0% 21.2% 100.0% (4.3%) (8.5%) -%
S. Lorimer 19.5% (30.8%) 100.0% 0.8% 4.4% -%
J.D. Kemp 6.5% (4.2%) 100.0% (4.4%) -% -%
J.R. Nicolson 6.8% -% -% (5.0%) -% -%
M. Allen 100.0% -% -% -% -% -%
W.R.G. Barr 6.8% -% -% (5.0%) -% -%
S.V. Barratt 7.4% -% -% (1.7%) -% -%
Z.L. Howorth 100.0% -% -% -% -% -%
D.J. Ritchie 6.6% -% -% (5.0%) -% -%
N.B.E. Wharton 10.4% -% -% 6.7% -% -%
Wider workforce 1.8% -% 307.0%** -% -% 100.0%***
* The annual percentage change in salary is calculated by reference to actual salary paid for the financial year ended 30 January 2022 compared to financial year ended
24 January 2021. The salaries for the financial year ended 24 January 2021 reflect the salary reduction of 20% accepted by the directors and non-executive directors for
three months during the initial Covid lockdown period.
** In the year to 24 January 2021 an annual bonus was paid to the wider workforce and, as referred to above, was earned but waived by the executive directors.
*** No annual bonus was paid to the executive directors or the wider workforce in respect of the year to 25 January 2020. In respect of the year to 24 January 2021 an annual
bonus was paid to the wider workforce and was earned but waived by the executive directors.
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CEO Pay Ratio
The table below sets out the ratio of the A.G. BARR p.l.c. CEO single total figure of remuneration for 2021 (as detailed on page 79) as a ratio
of the equivalent single figure for the lower quartile, median and upper quartile UK employee (calculated on a full-time equivalent basis).
Total pay ratio Method 25th Percentile
Median
Percentile 75th Percentile
Year ended 30 January 2022 B 42:1 34:1 23:1
Year ended 24 January 2021 B 25:1 21:1 16:1
Year ended 25 January 2020 B 27:1 22:1 16:1
As is permitted by the legislation, and consistent with last year, we have calculated the ratio using Option B whereby representative employees
are identified using the latest A.G. BARR p.l.c. gender pay gap statistics as this was the most pragmatic approach and believed to produce
representative results. A number of employees around the 25th, 50th and 75th percentile were identified and their total pay and benefits
calculated to ensure that the most representative employees were selected. Employee pay for the representative employees was calculated
on the same basis as the CEO and so includes items such as short-term and long-term incentive payments relating to the financial year ending
30 January 2022. The calculations have assumed that a full-time equivalent week consists of 37.5 working hours.
The regulations require the total pay and benefits and the salary component of total pay and benefits to be set out as follows:
Base salary
Total pay and
benefits
CEO remuneration £487,000 £1,292,000
25th percentile employee £20,174 £30,547
Median percentile employee £30,539 £3 7,654
75th percentile employee £35,538 £55,524
A.G. BARR p.l.c.’s principles for pay setting and progression in our wider workforce are the same as for our executives – total reward being
sufficiently competitive to attract and retain high calibre individuals without over-paying and providing the opportunity for individual development
and career progression. The pay ratios reflect how remuneration arrangements differ as accountability increases for more senior roles within the
organisation and in particular the ratios reflect the weighting towards long-term value creation and alignment with shareholder interests for the
CEO. We are satisfied that the median pay ratio voluntarily reported this year is consistent with our wider pay, reward and progression policies for
employees. The median reference employee has the opportunity for annual pay increases, annual performance payments and career progression
and development opportunities.
Relative importance of spend on pay
The following table sets out the percentage change in dividends and the overall expenditure on pay (as a whole across the organisation).
Percentage change
Year ended
24 January 2021
£000
Year ended
30 January 2022
£000 % change
Dividends -* 13,365 100.0%
Overall expenditure on pay 43,500 45,400 4.4%
* No dividends are payable in respect of the year ended 24 January 2021.
Directors’ Remuneration Report continued
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The Remuneration Committee
The following directors were members of the Remuneration Committee during the year: D.J. Ritchie (Chairman), S.V. Barratt, Z.L. Howorth
(appointed 1 July 2021) and P. Powell (resigned 1 July 2021).
Whilst J.R. Nicolson is no longer a member of the Remuneration Committee, on some occasions, in his role as Chairman, he is invited to attend
the Remuneration Committee meetings and provide guidance on behalf of the Board as required. During the year, the Remuneration Committee
received advice from R.A. White (CEO) in respect of the remuneration of the other executive directors, who was not in attendance when his own
remuneration was being discussed. The Remuneration Committee received assistance from J.A. Barr (Company Secretary), who acts as secretary
to the Remuneration Committee, and from other members of management, who may attend meetings by invitation, except when matters
relating to their own remuneration are being discussed.
The Remuneration Committee meets at least twice a year and is responsible for determining, within agreed terms of reference, all aspects of the
remuneration of the executive directors, the Executive Committee and such other members of senior management as it is designated to consider.
The Remuneration Committee reviews the remuneration trends, pay levels and employment conditions across the Group. The Remuneration
Committee is also responsible for determining the remuneration of the Chairman of the Company.
The Remuneration Committee recognises the importance of culture and effective employee engagement in the creation of a good workplace.
Workforce engagement sessions are held during the year, led by the Board’s designated workforce engagement director. These sessions provide
an opportunity to engage with employees on the Company’s pay policy for employees and executive directors. The Board receives regular
updates on workforce engagement throughout the year. Further information on employee engagement is included in the Corporate Governance
Report on pages 65 and 66.
The Remuneration Committee carried out a review of its performance and effectiveness during the year. This review included a detailed and
comprehensive evaluation of the performance and effectiveness of the Remuneration Committee using written survey questionnaires, which were
completed by members of the Remuneration Committee. The results of the evaluation were shared with the Remuneration Committee. Overall, the
review found that the Remuneration Committee was functioning in an effective manner and performing satisfactorily, with no major issues identified.
Key activities in the year
The Remuneration Committee met five times during the financial year. Key activities are shown below:
– Continued to implement the Directors’ Remuneration Policy which received strong support from shareholders and was approved at the 2020 AGM;
– Assessed the impact of Covid-19 on how the Directors’ Remuneration Policy should be applied during 2021;
– Reviewed remuneration trends, pay levels and employment conditions across the Company;
– Reviewed and set annual salaries for the executive directors and Executive Committee consistent with the wider workforce;
– Set targets for the annual bonus for the executive directors and the Executive Committee;
– Reviewed and approved the grant of LTIP awards to the executive directors and a divisional director;
– Set targets for the LTIP for the executive directors and a divisional director;
– Considered performance measures for the LTIP awards to be granted in the following year;
– Reviewed and set annual fees for the Chairman of the Company;
– Reviewed achievement against targets set and determined the appropriate level of pay-out for the annual bonus for the executive directors
and the Executive Committee in the context of wider business performance;
– Reviewed achievement against targets set and determined the appropriate level of pay-out for the LTIP for the executive directors in the
context of wider business performance;
– Reviewed and recommended the Directors’ Remuneration Report for the year ended 24 January 2021 to the Board for approval;
– Carried out a remuneration adviser tender process and appointed PwC as the Remuneration Committee’s adviser;
– Reviewed market and corporate governance updates to ensure the Remuneration Committee remained up to date on the quickly evolving
governance landscape and best practice;
– Reviewed the Remuneration Committee’s terms of reference; and
– Review the Remuneration Committee’s performance and effectiveness during the year.
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A.G. BARR p.l.c. Annual Report and Accounts 2022
The terms of reference of the Remuneration Committee are available on the Company’s website, www.agbarr.co.uk.
Remuneration principles
The Remuneration Committees approach to executive director remuneration policy and practices is aligned to the Company’s strategic objectives,
shareholders interests and the factors set out in Provision 40 of the 2018 UK Corporate Governance Code (the “Code”), with the aim of supporting
the Company’s strategy and promoting the long term sustainable success of the business.
The table below describes how the Remuneration Committee has addressed each of the factors set out in Provision 40 of the Code.
Factor How this has been addressed
Clarity and simplicity
The reward framework aims to embed transparency and simplicity in the Directors’ Remuneration Policy
(the “Policy”) and remuneration practices. The Remuneration Committee consults with major
shareholders in advance of key proposed changes to executive remuneration, for example when
reviewing the Policy, which was approved by shareholders at the 2020 AGM. Feedback from internal
stakeholders and comments from the proxy voting agencies were also sought. The Remuneration
Committee also engaged with independent external advisers to minimise the risk of any conflicts of
interest. The Remuneration Committee strived to create a refreshed Policy which is clear and simple,
and aligned to Company culture, values and strategy. It wants participants to be able to understand the
Policy and have a clear line of sight between their decisions and behaviours and the effect that these
decisions will have on the variable reward outcomes. Equally, it wants to ensure that reward for executive
directors is straight forward for both shareholders and the wider workforce to understand. The Policy
has been summarised clearly and simply in the Directors’ Remuneration Report.
The Company engages directly with the wider workforce on their remuneration through a variety of
methods, including workforce engagement sessions, regular briefing sessions and the annual employee
engagement survey.
Risk
The Remuneration Committee aims to ensure that there is an appropriate balance between risk and
reward. The remuneration framework includes various features designed to mitigate reputational,
behavioural and other risks, including:
– The Policy encourages directors to continue to take a long-term view when making decisions by
introducing share deferral for the annual bonus and a holding period for vesting LTIP awards until
a shareholding of 300% of salary is reached, increasing the shareholding guideline for all executives,
and introducing a post-employment shareholding requirement to ensure that directors’ interests
continue to be aligned to shareholders even after they have left the business.
– The Policy contains malus and clawback provisions which the Remuneration Committee can use in
certain prescribed circumstances to recover amounts paid to directors or to cancel any unreleased
share awards.
– The Remuneration Committee has a broad discretion to alter the formulaic outcomes of the variable
rewards to ensure that payments to directors reflect the Company’s performance in the round.
Predictability
The Policy sets out the potential award levels and vesting outcomes applicable to the annual bonus
and long term incentive arrangements. Incentive awards are capped as a percentage of salary, which
reduces the risk of any unanticipated pay outcomes. As set out above, the Remuneration Committee
may apply malus, clawback and reasonableness discretion where appropriate.
Directors’ Remuneration Report continued
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Strategic Report Corporate Governance Accounts
Factor How this has been addressed
Proportionality
The Policy was benchmarked against market practice by independent external advisers. Performance
conditions for the annual bonus and long term incentive arrangements require a threshold level of
performance to be achieved before any pay-out is made. These performance conditions are set with
the aim of ensuring that there is a clear link between individual awards and the delivery of the
Company’s long term strategy and success of the business.
Alignment to culture
The Remuneration Committee is satisfied that the Company’s incentive schemes are fit for purpose
and continue to be aligned with Company strategy, through choosing performance metrics which
reflect the Company’s most important KPIs and are aligned with Company purpose, culture and values.
External adviser
During the year, the Remuneration Committee was assisted in its work by the following external consultants:
Adviser Details of appointment Services provided by the Adviser
Fees paid by the Company for
advice to the Remuneration
Committee and basis of charge
Other services provided to the
Company in the year ended
30 January 2022
Willis Towers Watson Appointed by the Remuneration
Committee in December 2018
following a competitive tender
process.
Assistance with the preparation
of the Directors’ Remuneration
Report.
Attendance at Remuneration
Committee meetings.
£10,480
Charged on a time/cost basis.
Insurance broking and advisory
services.
Remuneration advice to
management.
Advice on market practice
developments in executive pay.
The Remuneration Committee is satisfied that all advice received was objective and independent. Willis Towers Watson is a member of the
Remuneration Consultants Group and, as such, voluntarily operate under the Code of Conduct in relation to executive remuneration consulting
in the UK.
PwC were appointed as the Remuneration Committee’s adviser with effect from 7 January 2022, following completion of a remuneration adviser
tender process. The Remuneration Committee is satisfied that PwC are objective and independent. PwC is a member of the Remuneration
Consultants Group and, as such, voluntarily operate under the Code of Conduct in relation to executive remuneration consulting in the UK.
No fees were invoiced by PwC during the period.
Statement of voting at last AGM
The following table sets out actual voting in respect of the resolutions to approve the 2020/21 Annual Report on Remuneration at the Company’s
AGM on 28 May 2021 and the Remuneration Policy at the Company’s AGM on 25 June 2020.
Resolution Votes for % of vote Votes against % of vote Votes withheld
Approve Annual Report on Remuneration 69,548,252 95.98% 2,912,930 4.02% 3,261,725
Approve Remuneration Policy 64,446,604 91.20% 6,216,945 8.80% 2,039,440
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Additional information
Executive directors’ interests in the LTIP
The individual interests of the executive directors under the LTIP are as follows:
LTIP director Date of award
At 24 January
2021
Number
Awarded
Number
Vested
Number
Lapsed
Number
At 30 January
2022
Number Exercisable from
R.A. White 03 April 2018 91,305 – – (91,305) – 03 April 2021
04 April 2019 72,686 – – – 72,686 04 April 2022
02 November 2020 133,899 – – – 133,899 02 November 2023
12 April 2021 – 143,337 – – 143,337 12 April 2024
S. Lorimer 03 April 2018 53,946 – – (53,946) – 03 April 2021
04 April 2019 42,946 – – – 42,946 04 April 2022
02 November 2020 92,174 – – – 92,174 02 November 2023
12 April 2021 – 98,663 – – 98,663 12 April 2024
J.D. Kemp 03 April 2018 47,87 7 – – (47,87 7) – 03 April 2021
04 April 2019 38,114 – – – 38,114 04 April 2022
02 November 2020 70,219 – – – 70,219 03 November 2023
12 April 2021 – 75,161 – – 75,161 12 April 2024
Executive directors’ interests in the ESOS
The individual interests of the executive directors under the ESOS are as follows:
ESOS director Date of award
At 24 January
2021
Number
Awarded
Number
Vested
Number
Lapsed
Number
At 30 January
2022
Number Exercisable from
R.A. White 03 April 2018 1,890 – – (1,890) – 03 April 2021
S. Lorimer 04 April 2019 2,222 – – – 2,222 04 April 2022
J.D. Kemp 03 April 2018 1,890 – – (1,890) - 03 April 2021
Directors’ Remuneration Report continued
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Strategic Report Corporate Governance Accounts
Executive directors’ interests in the SAYE
The individual interests of the executive directors under the SAYE scheme are as follows:
SAYE director
At 24 January
2021
Number
Granted
Number
Exercised
Number
Lapsed
Number
At 30 January
2022
Number
Option
price
Pence Exercisable from
R.A. White 3,682 – – (3,682) – 567 01 October 2020
882 – – (882) – 620 01 July 2021
– 3,925 – – 3,925 469 01 July 2024
S. Lorimer 4,232 – – (4,232) – 567 01 October 2020
580 – – (580) – 620 01 July 2021
– 3,925 – – 3,925 469 01 July 2024
J.D. Kemp 3,894 – – (3,894) – 567 01 October 2020
766 – – (766) – 620 01 July 2021
– 3,925 – – 3,925 469 01 July 2024
Approval
This report was approved by the Board and signed on its behalf by.
David J. Ritchie
Chairman of the Remuneration Committee
29 March 2022
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Directors’ Remuneration Policy
This part of the report sets out the Company’s Directors’ remuneration policy which was approved by shareholders at the 2020 AGM
and became effective for three years from the close of that meeting. The policy for the executive directors has been determined by the
Remuneration Committee. The policy is due to be reviewed by shareholders at the 2023 AGM.
Certain minor explanatory adjustments have been made to the policy to reflect the change in the provision of retirement benefits due to the
cessation of the URBS during 2020/21, the Covid-related change to the performance metrics for the LTIP awards in 2021/22 and the charts setting
out an illustration of the application of the policy for 2022/23. Otherwise, the policy remains the same as that approved by shareholders at the
2020 AGM, which is set out in the Annual Report and Accounts for the year ended 25 January 2020 and available on the Company’s website,
www.agbarr.co.uk.
Executive directors
The table below describes each of the elements of the remuneration package for the executive directors:
Element
Purpose and
link to strategy Operation Maximum opportunity Performance measures
Base salary
Core element
of fixed
remuneration,
reflecting the
size and scope
of the role.
Purpose is to
recruit and
retain directors
of the calibre
required for
the Company.
Usually reviewed annually.
Salary levels are determined by the
Remuneration Committee taking into
account a range of factors including:
– role, experience and individual
performance;
– pay for other employees in the Group;
– prevailing market conditions; and
– external benchmarks for similar
roles at comparable companies.
Although there is no overall maximum,
salary increases are normally reviewed in
the context of the salary increases across
the wider Group.
The Remuneration Committee may award
salary increases above this level to take
account of individual circumstances such as:
– increase in scope and responsibility;
– increase to reflect the executive director’s
development and performance in the role;
or
– alignment to market level.
Not applicable.
Benefits
Ensures the
overall package
is competitive.
Purpose is to
recruit and
retain directors
of the calibre
required for
the Company.
Executive directors receive benefits
in line with market practice, which
may include, for example, a car allowance
or provision of a company car, a biennial
health check, private medical insurance,
life assurance and the ability to “buy” or
“sell” holidays under the Company’s flexible
benefits plan.
Other benefits may be provided based on
individual circumstances. These may include,
for example, relocation and travel allowances.
Whilst the Remuneration Committee has
not set an absolute maximum on the levels
of benefits executive directors receive, the
value of the benefit is at a level which the
Remuneration Committee considers
appropriate against the market and provides
sufficient level of benefit based on individual
circumstances.
Not applicable.
Directors’ Remuneration Report continued
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Strategic Report Corporate Governance Accounts
Element
Purpose and
link to strategy Operation Maximum opportunity Performance measures
Annual
bonus
Rewards
performance
against annual
targets which
support the
strategic
direction of
the Group.
Awards based on annual performance
against key financial and/or strategic targets
and/or the delivery of personal objectives.
Pay-out levels are determined by the
Remuneration Committee after the year end
based on performance against those targets.
The Remuneration Committee has discretion
to amend the bonus pay-out if, in its
judgement, any formulaic output does not
produce a fair result for either the executive
director or the Company, taking into account
overall business performance.
20% of any bonus earned will be deferred
into shares for two years.
At any time before the deferred bonus shares
are released, the Remuneration Committee
has the right to cancel the award in the event
of a material misstatement of the Group’s
financial results or if the participant has been
found guilty of misconduct.
For up to two years following the
determination of a bonus pay-out, the
Remuneration Committee has the right to
recover some or all of the bonus pay-out in
the event of a material misstatement of the
Group’s financial results or if the participant
has been found guilty of misconduct.
Maximum bonus opportunity is 125%
of base salary.
Targets are set annually reflecting the
Company’s strategy and aligned with
key financial, strategic and/or individual
objectives.
Targets, whilst stretching, do not encourage
inappropriate business risks to be taken.
At least 80% of the bonus is assessed against
key financial performance metrics of the
business and the balance may be based
on non-financial strategic measures and/or
individual performance.
Financial metrics
There is no minimum payment at threshold
performance, up to 50% of the maximum
potential for this element of the bonus will
be paid out for on-target performance and
all of the maximum potential will be paid out
for maximum performance.
Non-financial or individual metrics
Payment of the non-financial or individual
metrics will apply on a scale between 0%
and 100% based on the Remuneration
Committee’s assessment of the extent
to which a non-financial or individual
performance metric has been met.
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Element
Purpose and
link to strategy Operation Maximum opportunity Performance measures
Long Term
Incentive
Plan 2014
(“LTIP ”)
Incentivises
executive
directors over
the longer term
and aligns their
interests with
those of
shareholders.
Under the LTIP, awards of conditional shares,
nil cost share options or other such form as
has the same economic effect may be made
with vesting dependent on the achievement
of performance conditions set by the
Remuneration Committee, normally over
a three year performance period. Awards
granted over shares may be settled in cash
at the election of the Remuneration
Committee.
As described on page 108, awards may also
vest in “good leaver” circumstances or on
the death of a participant or on a change
of control.
The Remuneration Committee has the right
to reduce unvested or unexercised awards
and/or delay their vesting in the event of
a material misstatement of the Group’s
financial results or if the participant has
been found guilty of misconduct.
Where an executive director’s shareholding
is less than 300% of base salary, any vesting
awards will be subject to a two year post-
vesting holding period.
For up to two years following the
determination of the vesting outcome of an
award, the Remuneration Committee has the
right to cancel the award if it has not been
exercised, or require repayment of some
or all of the award in the event of a material
misstatement of the Group’s financial results
or if the participant has been found guilty of
misconduct.
The Remuneration Committee may make
a dividend equivalent payment (“Dividend
Equivalents”) to reflect dividends that would
have been paid over the period to vesting on
shares that vest. This payment may be in the
form of additional shares or a cash payment
equal to the value of those additional shares.
The normal maximum award is 150% of
annual base salary in respect of a financial
year. Under the share plan rules the overall
maximum opportunity that may be granted
in respect of a financial year will be 200% of
annual base salary. The normal maximum
award limit will only be exceeded in
exceptional circumstances involving the
recruitment or retention of a senior
employee.
The vesting of awards is subject to the
satisfaction of performance targets set
by the Remuneration Committee.
The performance measures are reviewed
regularly to ensure they remain relevant but
will be based on key financial and/or strategic
and/or total shareholder return related
measures. The relevant metrics and the
respective weightings may vary each year
based upon Company strategic priorities.
Performance measures and weightings
will be set out in the Annual Report on
Remuneration for the relevant financial year.
For achievement of threshold performance
20% of the maximum opportunity will vest.
There will usually be straight line vesting
between threshold and maximum
performance.
Directors’ Remuneration Report continued
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Strategic Report Corporate Governance Accounts
Element
Purpose and
link to strategy Operation Maximum opportunity Performance measures
All employee
share
schemes
To encourage
all employees
to make a
long-term
investment in
the Company’s
shares in a tax
efficient way.
Executive directors are entitled to participate
in a HMRC tax-advantaged All-Employee
Savings Related Share Option Scheme
(“SAYE”) under which they make monthly
savings over a period of three or five years
linked to the grant of an option over the
Company’s shares with an option price which
can be at a discount to the market value of
shares on grant.
Executive directors are also entitled to
participate in a HMRC tax-advantaged
All-Employee Share Ownership Plan
(“AESOP”). The executive directors may
participate in all sections of the AESOP,
being the partnership and matching
section, the free share section and
the dividend share section.
Participation limits are those set by the
UK tax authorities from time to time.
No performance conditions are attached
to awards in line with HMRC practice.
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A.G. BARR p.l.c. Annual Report and Accounts 2022
Element
Purpose and
link to strategy Operation Maximum opportunity Performance measures
Retirement
benefits
Purpose is to
recruit and
retain directors
of the calibre
required for
the Company.
Provides market
competitive
post-
employment
benefits (or
cash allowance
equivalent).
Executive directors are eligible to participate
in the A.G. BARR p.l.c. (2008) Pension and
Life Assurance Scheme (the “Scheme”), which
comprises a defined contribution section and
a defined benefit section. The defined benefit
section was closed to new entrants from
14 August 2003 and to future accrual from
1 May 2016.
Details of the entitlements accruing to the
two executive directors who are deferred
members of the defined benefit section are
detailed in the table on page 85. The
contributions paid to the defined contribution
section in respect of three executive directors
are disclosed on page 85. Details of accruals
under the URBS are disclosed on page 85.
Executive directors may participate in the
A.G. BARR p.l.c. Unfunded Retirement Benefit
Scheme (“URBS”) with the agreement of the
Company. The URBS was established to
satisfy the Company’s contractual obligations
to provide retirement benefits for the benefit
of the executive directors where either the
annual or lifetime allowance has been
exceeded whilst those individuals were
members of the Scheme.
Benefits will be receivable in certain
circumstances, including on retirement,
death, change of control or cessation of
employment in accordance with the rules
of the URBS.
In appropriate circumstances, executive
directors may take a cash supplement
instead of contributions into a pension plan.
New Executive Directors
The maximum combined Company
contribution under the defined contribution
section of the Scheme and the URBS in
respect of new executive directors will be
aligned to the wider workforce (currently
capped at 17% of salary, as defined in the
Scheme rules). Due to the fact that the URBS
ceased to operate during the year ended
24 January 2021, as referenced below, new
directors will likely receive this Company
contribution in the form of a cash allowance.
The Remuneration Committee has discretion
to vary the delivery mechanism for retirement
benefits, however the exercise of this
discretion will not exceed the above limit
for the provision of executive directors’
retirement benefits.
Incumbent Executive Directors
R.A. White ceased his accrual under the
defined benefit section on 5 April 2011.
For R.A. White, the Company’s maximum
contribution under the URBS is equal to 24%
of salary plus any contractual entitlement in
respect of a shortfall in R.A. White’s deferred
pension revaluation as a consequence of
Fixed Protection 2012.
The Company has closed the defined benefit
section of the Scheme to new members and
future accrual but the only executive director
who is a deferred member will continue to
receive benefits in accordance with the terms
of the Scheme, subject to separately agreed
contractual arrangements, including the
arrangement summarised below:
Not applicable.
Directors’ Remuneration Report continued
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Strategic Report Corporate Governance Accounts
Element
Purpose and
link to strategy Operation Maximum opportunity Performance measures
Retirement
benefits
continued
R.A. White will continue to be entitled to
receive life assurance benefits as if he were in
pensionable service under the Scheme until
his normal retirement date notwithstanding
the termination of his employment with the
Company, but only in circumstances where
he is a “good leaver”, as set out in his service
contract.
The maximum combined Company
contribution under the defined contribution
section of the Scheme and the URBS in
respect of the remaining executive directors
is 19% of salary (as defined in the Scheme
rules) rising to 24% of salary following the
executive’s 50th birthday. As referred to in
the Annual Report on Remuneration, all
executive directors have now elected to
receive Company pension contributions in
the form of a cash allowance and no longer
participate in the URBS. The URBS has
therefore ceased to operate.
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A.G. BARR p.l.c. Annual Report and Accounts 2022
Element
Purpose and
link to strategy Operation Maximum opportunity Performance measures
Shareholding
guidelines
Purpose is to
further align
the executive
directors’ long
term interests
with those of
shareholders.
During employment
Executive directors must retain all shares
acquired under Company sponsored share
plans and retain half of any bonus pay-out
after tax to purchase shares in the Company
until the value of their shareholding is equal
to 200% of gross basic salary for the CEO
and 150% of gross basic salary for the other
executive directors.
Until the relevant shareholding is acquired,
the executive director may not, without
Remuneration Committee approval, sell
shares other than to finance any tax liabilities
arising from the vesting or release of awards.
Post-employment
Executive directors must retain for one year
post-employment any shareholding arising
from shares awarded/vesting from both the
deferred bonus and LTIP after 26 January
2020, up to the above shareholding guidelines
Not applicable. Not applicable.
Directors’ Remuneration Report continued
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Strategic Report Corporate Governance Accounts
Chairman and non-executive directors
The table below sets out an overview of the remuneration of non-executive directors:
Purpose and link to strategy Approach of the Company
Sole element of non-executive director remuneration,
set at a level that reflects market conditions and is
sufficient to attract individuals with appropriate
knowledge and expertise.
Fees are normally reviewed annually.
The remuneration of the Chairman is determined by the Remuneration Committee.
Fees are set at a level which reflects the skill, knowledge and experience of the
individual, whilst taking into account appropriate market data.
The Board is responsible for setting the fees of the other non-executive directors.
Fees may include a basic fee and additional fees for further responsibilities (for
example, chairmanship of Board committees and senior independent directorship).
Fees are set taking into account several factors, including the size and complexity
of the business, appropriate market data and the expected time commitment and
contribution for the role.
Non-executive directors do not participate in any of the Company’s share schemes
or bonus schemes nor do they receive any pension contributions. Non-executive
directors may be eligible to receive benefits such as the use of secretarial support,
travel costs or other benefits that may be appropriate.
Actual fee levels are disclosed in the Directors’ Annual Remuneration report for the
relevant financial year.
Explanation of performance metrics chosen and the target setting process
Performance measures are selected that are aligned to the Company’s strategy. Stretching performance targets are set each year for the annual
bonus and LTIP awards. When setting these performance targets, the Remuneration Committee will take into account a number of different
reference points, which may include the Company’s business plans and strategy and the market environment. Full payment or vesting will only occur
for what the Remuneration Committee considers to be stretching performance. Additionally, the Remuneration Committee has discretion to change
formulaic outcomes to ensure that payments made through variable incentive plans are proportionate to the Company’s overall performance.
The annual bonus performance targets have been selected to provide an appropriate balance between incentivising directors to meet financial
targets for the year and achieving strategic and/or personal objectives. The Remuneration Committee also aims to make sure that targets are
set in line with the Company’s risk appetite so as to ensure that executive directors are not incentivised to take inappropriate risks.
The LTIP performance targets reflect the Company’s strategic objectives and therefore the financial and strategic decisions which ultimately
determine the success of the Company. The LTIP performance measures may be based on key financial and/or strategic and/or total shareholder
return related measures. From 2020, LTIP performance will normally be based on Earnings Per Share, which is a key measure of the Company’s
profitability, and relative Total Shareholder Return to further strengthen the link between the interests of the executive directors and the
shareholders. In 2021, given the impact of Covid-19, the LTIP performance measure was based on Net Revenue, targeting a recovery strategy
in this key financial metric which is highly aligned to profits. For 2022, it is intended to introduce a third performance measure aligned with
Environmental Sustainability.
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The Remuneration Committee retains the ability to adjust or set different performance measures if events occur (such as a change in strategy,
a material acquisition and/or a divestment of a Group business or a change in prevailing market conditions) which cause the Remuneration
Committee to determine that the alternative measures are more suitable either for a defined period or for the foreseeable future so that they
achieve their original purpose.
Awards and options may be adjusted in the event of a variation of share capital in accordance with the Scheme rules.
Policy for the remuneration of employees generally
Remuneration arrangements are determined throughout the Group based on the same principle that reward should be achieved for delivery
of the business strategy and should be sufficient to attract and retain high calibre talent.
Under the rules of the LTIP, certain managers are eligible to participate in the LTIP. In 2021, the Head of Supply Chain was granted an LTIP equal
to 50% of base salary and it is anticipated that a similar level award will be granted in 2022. The annual bonus arrangements for the senior
management team are similar to those for the executive directors in that targets are set annually dependent on financial and/or non-financial
performance metrics. The key principles of the remuneration philosophy are applied consistently across the Group below this level, taking
account of the seniority of employees.
Approach to recruitment remuneration
The Policy aims to facilitate the appointment of individuals of sufficient calibre to lead the business and execute the strategy effectively for
the benefit of shareholders. When appointing a new director, the Remuneration Committee seeks to ensure that arrangements are in the
best interests of the Company and in line with market practice.
The Remuneration Committee will take into consideration a number of relevant factors, which may include the calibre of the individual,
the candidate’s existing remuneration package, and the specific circumstances of the individual including the jurisdiction from which the
candidate was recruited.
The Remuneration Committee will typically seek to align the remuneration package with the Company’s Remuneration Policy (as set out in the
Policy table). The maximum level of variable remuneration which may be granted (excluding buy-out awards referred to below) is 325% of salary
(in line with this Policy). Subject to this overall maximum variable remuneration, incentive awards will only be granted above the normal maximum
annual award opportunities where the Remuneration Committee considers there to be a commercial rationale, which may include but is not
limited to circumstances where an executive director is recruited at a time in the year when it would be inappropriate to provide a bonus and/or
LTIP award for that year as there would not be sufficient time to assess performance. The quantum in respect of the months employed during
the year may be transferred to the subsequent year so that reward is provided on a fair and appropriate basis. The Remuneration Committee
will ensure that any such awards are linked to the achievement of appropriate and challenging performance targets and will be forfeited if
performance or continued employment conditions are not achieved. The Remuneration Committee may also alter the performance measures,
performance period and vesting period of the bonus and/or LTIP award, if the Remuneration Committee determines that the circumstances
of the recruitment merit such alteration. The rationale would be clearly explained in the Directors’ Remuneration Report following grant.
The individual will move over time onto a remuneration package that is consistent with the normal maximum annual bonus and LTIP award
opportunities set out in the Policy table.
The Remuneration Committee retains discretion to include other remuneration components or awards which are outside the specific terms
of the Policy (but subject to the limit on variable remuneration) to facilitate the hiring of candidates of an appropriate calibre, where the
Remuneration Committee believes there is a need to do so in the best interests of the Company. The Remuneration Committee would ensure
that awards within the 325% of salary variable remuneration limit are linked to the achievement of appropriate and challenging performance
measures. The Remuneration Committee will not use this discretion to make a non-performance related incentive payment (for example a
“golden hello”).
Directors’ Remuneration Report continued
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Strategic Report Corporate Governance Accounts
In some circumstances, the Remuneration Committee may make payments or awards to recognise or “buy-out” remuneration arrangements
forfeited on leaving a previous employer. The Remuneration Committee will normally aim to do so broadly on a like-for-like basis, taking into
account a number of relevant factors regarding the forfeited arrangements which may include the form of award, any performance conditions
attached to the awards and the time at which they would have vested. These payments or awards are excluded from the maximum level of
variable remuneration referred to above, however the Remuneration Committee’s intention is that the value awarded would be no higher than
the expected value of the forfeited arrangements. Where considered appropriate, such payments or awards will be liable to “malus” and/or
“clawback” on early departure.
Any share awards referred to in this section will be granted as far as possible under the Company’s existing share plans. If necessary, and subject
to the limits referred to above, recruitment awards may be granted outside of these plans as currently permitted under the Listing Rules which
allow for the grant of awards to facilitate, in exceptional circumstances, the recruitment of an executive director.
Where a position is fulfilled internally, any ongoing remuneration obligations or outstanding variable pay elements shall be allowed to continue
according to the original terms.
Where necessary, the Company will pay appropriate relocation, travel and subsistence costs. The Remuneration Committee will seek to ensure
that no more is paid than is necessary.
Fees payable to a newly-appointed Chairman or non-executive director will be in line with the fee policy in place at the time of appointment.
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Illustrations of application of Remuneration Policy
The charts below set out an illustration of the Remuneration Policy for 2022/23 in line with the Remuneration Policy above and include base
salary, pension, benefits and incentives. The charts provide an illustration of the proportion of total remuneration made up of each component
of the Remuneration Policy and the value of each component.
R.A. White – total remuneration S. Lorimer – total remuneration
23%
45%100%
£421k
£938k
£1,608k
£1,354k
32%
38%
31%
31% 26%
32%
26%
16%
Minimum Target Maximum Maximum
(with 50% share
price appreciation
Minimum Target Maximum Maximum
(with 50% share
price appreciation)
22%
46%100%
£651k
£1,403k
£2,377k
£2,007k
32%
31%
32%
37%
26%
27%
31%
16%
J.D Kemp – total remuneration
Minimum Target Maximum Maximum
(with 50% share
price appreciation)
22%
46%
100%
£33 0k
£723k
£1,233k
£1,040k
32%
37%
31%
32% 27%
31%
26%
16%
15%
Base salary, benefits and pension Annual bonus LTIP LTIP – share price appreciation
Directors’ Remuneration Report continued
1 07
Strategic Report Corporate Governance Accounts
Four scenarios have been illustrated for each executive director: Four scenarios have been illustrated for each executive director:
Fixed pay Annual Bonus LTIP
Minimum performance
Fixed elements of remuneration
– base salary, benefits and
pension only.
Base salary is the forward
looking salary (i.e. the salary
effective from 1 April 2022)
and the value for benefits has
been calculated as per the
single figure table on page 89
(i.e. the benefits for the year
ended 30 January 2022).
No bonus. No LTIP vesting.
Performance in line with
expectations
50% of maximum awarded for
achieving target performance
(i.e. 62.5% of salary).
60% of maximum award vesting
for target performance
(i.e. 90% of salary).
Maximum performance
100% of maximum awarded for
achieving maximum performance
(i.e. 125% of salary).
100% of maximum award vesting
for maximum performance
(i.e. 150% of salary).
Maximum performance
plus 50% growth in share price
100% of maximum award vesting
for maximum performance plus
50% growth in share price
(i.e. 225% of salary).
LTIP awards are included in the scenarios above at face value with no share price movement included (except in the “maximum plus 50%” scenario).
Service contracts
Executive directors’ contracts are on a rolling basis and may be terminated on 12 months’ notice by the Company or on 6 months’ notice by
the executive director. Service contracts for new executive directors will generally be limited to 12 months’ notice by the Company.
In line with the Remuneration Policy approved at the 2014 AGM, service contracts entered into prior to this date provide for a notice period of
12 months except during the six months following either a takeover of or by the Company or a Company reconstruction. Under these conditions
and certain circumstances the executive directors are entitled to a liquidated damages payment equal to the executive director’s basic salary
at termination plus the value of all contractual benefits for a two year period. In the event this liquidated damages payment is triggered, the
executive director will also be deemed to be a “good leaver” for the purposes of the Company’s share schemes. Given the size of the Company
and the sector dynamics at the time the directors were recruited, the Remuneration Committee considered this provision appropriate in order to
attract and retain high calibre executive directors. The Remuneration Committee is cognisant of the fact that these provisions do not reflect best
practice. It has therefore previously considered the alternatives available to exit these contractual arrangements, including contractual buy-out.
However, the Remuneration Committee concluded that it was not feasible to place a value on these rights, in order to remove them from the
contracts, which would be acceptable to both parties. It therefore determined that the most appropriate approach would be to maintain the
legacy provisions, however for all future appointments after the approval of the 2014 Remuneration Policy these provisions have not and will
not apply. S. Lorimer’s service contract does not therefore include the legacy provisions.
Non-executive directors are appointed for an initial period of three years, subject to annual re-election by shareholders in accordance with the
Code. Their appointments are terminable by either the Company or the directors themselves upon three months’ notice without compensation.
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Payments for loss of office
The principles on which the determination of payments for loss of office will be approached are set out below:
Policy
Payment in lieu
of notice
Payments to executive directors upon termination of their service contracts will be equal to 12 months’ base salary or the
highest annual salary earned by the executive during the preceding three years, whichever is higher (plus benefits in kind
and pension contributions at the discretion of the Remuneration Committee).
Annual Bonus
This will be at the discretion of the Remuneration Committee on an individual basis and the decision as to whether or not to
award a bonus in full or in part will be dependent upon a number of factors, including the circumstances of the individual’s
departure and their contribution to the business during the bonus period in question. Any bonus amounts paid will typically
be pro-rated for time in service to termination and will, subject to performance, be paid at the usual time.
LTIP
The extent to which any award under the LTIP will vest would be determined based on the leaver provisions contained
within the LTIP rules. The Remuneration Committee shall determine when awards vest in accordance with those provisions.
Awards will normally lapse if the participant leaves employment before vesting. However, awards may vest in “good leaver”
circumstances, including death, disability, ill-health, injury, sale of the participant’s employer, or any other reason
determined by the Remuneration Committee. Any “good leaver” awards will vest at the date of cessation of employment
unless the Remuneration Committee decides they should vest at the normal vesting date. In either case, the extent to
which an award vests will be determined by the Remuneration Committee taking into account the extent to which the
performance conditions have been satisfied and, unless the Remuneration Committee determines otherwise, the period
of time that has elapsed from the date of grant to the date of cessation of employment. The Remuneration Committee
may vest the award on any other basis if it believes there are exceptional circumstances which warrant that.
Options are exercisable for six months from leaving employment or six months from the normal vesting date as appropriate.
Change of
control
Awards under the LTIP will generally vest early on a takeover, merger or other corporate reorganisation. The Remuneration
Committee will determine the level of vesting taking account of performance conditions and, unless the Remuneration
Committee determines otherwise, pro-rating for time, where applicable. Alternatively, participants may be allowed or
required to exchange their awards for awards over shares in the acquiring company.
Awards under all employee share schemes will be expected to vest on a change of control and those which have to meet
specific requirements to benefit from permitted tax benefits will vest in accordance with those requirements.
Mitigation
The executive directors’ service contracts do not provide for any reduction in payments for mitigation or for early payment.
Other payments
Payments may be made under the Company’s all employee share plans which are governed by HMRC tax-advantaged
plan rules and which cover certain leaver provisions. There is no discretionary treatment of leavers under these plans.
In appropriate circumstances, payments may also be made in respect of accrued holiday, outplacement and legal fees.
Where a buy-out award is made under the Listing Rules then the leaver provisions would be determined at the time of the award.
The Remuneration Committee reserves the right to make additional exit payments where such payments are made in good faith in discharge of
an existing legal obligation (or by way of damages for breach of such an obligation) or by way of settlement or compromise of any claim arising
in connection with the termination of a director’s office or employment. In doing so, the Remuneration Committee will recognise and balance
the interests of shareholders and the departing executive director, as well as the interests of the remaining directors.
Where the Remuneration Committee retains discretion it will be used to provide flexibility in certain situations, taking into account the particular
circumstances of the director’s departure and performance.
Directors’ Remuneration Report continued
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Strategic Report Corporate Governance Accounts
Statement of consideration of employment conditions elsewhere in the Company
The Remuneration Committee generally considers pay and employment conditions elsewhere in the Company when considering the executive
directors’ remuneration. When considering base salary increases, the Remuneration Committee reviews overall levels of base pay increases
offered to other employees. Employees are not actively consulted on directors’ remuneration. The Company has regular contact with union
bodies on matters of pay and remuneration for employees covered by collective bargaining or consultation arrangements.
Existing contractual arrangements
The Remuneration Committee retains discretion to make any remuneration payments and payments for loss of office outside the Policy
in this report:
– where the terms of the payment were agreed before the Policy came into effect;
– where the terms of the payment were agreed at a time when the relevant individual was not a director of the Company and, in the opinion
of the Remuneration Committee, the payment was not in consideration of the individual becoming a director of the Company; or
– to satisfy contractual commitments under legacy remuneration arrangements.
For these purposes, the term “payments” includes the satisfaction of awards of variable remuneration and, in relation to an award over shares,
the terms of the payment are agreed at the time the award is granted.
The Remuneration Committee may make minor changes to this Policy which do not have a material advantage to directors, to aid in its operation
or implementation, taking into account the interests of shareholders but without the need to seek shareholder approval.
Statement of consideration of shareholder views
The Remuneration Committee is committed to an ongoing dialogue with shareholders and welcomes feedback on executive and non-executive
directors’ remuneration.
Payments in relation to existing remuneration arrangements
The Remuneration Committee reserves the right to make any remuneration payments and/or payments for loss of office (including exercising any
discretions available to it in connection with such payments) notwithstanding that they are not in line with the Remuneration Policy set out above
where the terms of the payment were agreed:
i. before the date of the 2014 AGM (the date the Company’s first shareholder-approved Remuneration Policy came into effect);
ii. after the date of the 2014 AGM and before the Remuneration Policy set out above came into effect, provided that the terms of the payment
were consistent with the shareholder-approved Remuneration Policy in force at the time they were agreed; or
iii. at a time when the relevant individual was not a director of the Company and, in the opinion of the Remuneration Committee, the payment
was not in consideration for the individual becoming a director of the Company.
For these purposes “payments” includes the Remuneration Committee satisfying awards of variable remuneration and, in relation to an award over
shares, the terms of the payment are “agreed” at the time the award is granted.
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Directors’ Report
The directors present their report and the audited consolidated financial statements of the Group
for the 53 weeks (2021: 52 weeks) ended 30 January 2022.
Strategic Report
The Companies Act 2006 requires the directors to present a review of the business during the year to 30 January 2022 and of the position of the
Group at the end of the financial year, together with a description of the principal risks and uncertainties faced. The Strategic Report can be found
on pages 2 to 57 and is incorporated by reference into this Directors’ Report.
Corporate Governance Statement
The Disclosure and Transparency Rules require certain information to be included in a corporate governance statement in the Directors’ Report.
Information that fulfils the requirements of the corporate governance statement can be found in the Corporate Governance Report on pages 60
to 71 and is incorporated by reference into this Directors’ Report.
Results and dividends
The Group’s profit after tax for the financial year ended 30 January 2022 attributable to equity shareholders amounted to £27.9m (2021: £19.1m).
As reported in the Annual Report and Accounts for the year ended 24 January 2021, the Board expected to recommence dividend payments
during the course of the current year. An interim dividend for the current year of 2.00p (2021: nil) per ordinary share was paid on 29 October 2021.
In addition, a special dividend of 10.00p (2021:nil) per ordinary share was paid on 29 October 2021. In line with its progressive dividend policy,
the Board has proposed a final dividend of 10.00p (2021 final dividend: nil) per ordinary share, which will be paid on 10 June 2022 if approved
at the Company’s annual general meeting on 27 May 2022 (“AGM”).
The directors have taken advantage of the exemption available under s408 of the Companies Act 2006 and have not presented an income
statement for the Company. The Company’s profit for the year was £21.4m (2021: £17.6m).
Directors
The following were directors of the Company during the financial year ended 30 January 2022 and to the date of this report:
– J.R. Nicolson
– R.A. White
– S. Lorimer
– J.D. Kemp
– M. Allen OBE (appointed 1 July 2021)
– W.R.G. Barr
– S.V. Barratt
– Z. L. Howorth (appointed 1 July 2021)
– P. Powell (resigned 1 July 2021)
– D.J. Ritchie
– N.B.E. Wharton
Subject to the Company’s Articles of Association (the “Articles”) and any relevant legislation, the directors may exercise all of the powers of the
Company and may delegate their power and discretion to committees. The powers of the directors to issue or repurchase ordinary shares are set
by resolution at a general meeting of shareholders.
The Articles give the directors power to appoint and remove directors. Under the terms of reference of the Nomination Committee, any
appointment must be recommended by the Nomination Committee for approval by the Board. The Articles require directors to retire and submit
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Strategic Report Corporate Governance Accounts
themselves for election at the first Annual General Meeting following appointment and to retire no later than the third Annual General Meeting
after the Annual General Meeting at which they were last elected or re-elected. However, in order to comply with the UK Corporate Governance
Code, all directors other than M. Allen OBE and Z.L. Howorth will submit themselves for re-election at the AGM. M. Allen OBE and Z.L. Howorth
will retire and offer themselves for election at the AGM. Biographical details of the Board are set out on pages 58 and 59 of this report.
Directors’ interests
Information regarding the directors’ interests in ordinary shares of the Company is provided in the Directors’ Remuneration Report on pages 76
to 109. No director has any other interest in any shares or loan stock of any Group company.
Other than service contracts, no director had a material interest in any contract to which any Group company was a party during the year.
There have been the following changes notified in the directors’ shareholdings between 30 January 2022 and 28 March 2022: an increase
in R.A. White’s holding of 90 shares, an increase in S. Lorimer’s holding of 90 shares and an increase in J.D. Kemp’s holding of 90 shares.
Directors’ indemnity provisions
As at the date of this report, indemnities are in force between the Company and each of its directors under which the Company has agreed to
indemnify each director, to the extent permitted by law, in respect of certain liabilities incurred as a result of carrying out their role as a director
of the Company. The directors are also indemnified against the costs of defending any criminal or civil proceedings or any claim in relation to
the Company or brought by a regulator as they are incurred, provided that where the defence is unsuccessful the director must repay those
defence costs to the Company. The Company’s total liability under each indemnity is limited to £5.0m for each event giving rise to a claim under
that indemnity. The indemnities are qualifying third party indemnity provisions for the purposes of the Companies Act 2006. In addition, the
Company maintained a Directors’ and Officers’ liability insurance policy throughout the financial year and has renewed that policy.
As at the date of this report, indemnities are in force between the Company and each of the directors of the corporate trustee of the A.G. BARR
p.l.c. (2008) Pension and Life Assurance Scheme under which the Company has agreed to indemnify each director, to the extent permitted by
law, in respect of certain liabilities incurred in connection with the corporate trustee’s activities as a trustee of such scheme.
Research and development
The Group undertakes research and development activities in order to develop its range of new and existing products. Expenditure during the
year on research and development amounted to £1.3m (2021: £1.0m).
Political donations and political expenditure
No Group company made any political donations or incurred any political expenditure in the year (2021: £nil).
Post balance sheet events
Relevant post balance sheet events requiring disclosure are included in Note 33 to the accounts.
Employee engagement
Information on employee engagement is included in the Corporate Governance Report on pages 65 and 66 and the Strategic Report on page 27.
All qualifying employees are entitled to join the Savings Related Share Option Scheme (“SAYE”) and the All-Employee Share Ownership Plan
(“AESOP”). Details of these share schemes are provided below.
AESOP
The AESOP is HMRC approved and the executive directors participate in both sections of the scheme, which is open to all qualifying employees.
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Directors’ Report continued
The partnership share element provides that for every two shares a participant purchases in the Company, up to a current maximum contribution
of £150 per month, the Company will purchase one matching share. The matching shares purchased are held in trust in the name of the individual.
There are various rules as to the period of time that the shares must be held in trust but after five years the shares can be released tax free
to the participant.
The free share element allows participants to receive shares to the value of a common percentage of their earnings, related to the performance
of the Group. The maximum value of any annual award is currently £3,600 and the shares awarded are held in trust for five years. Under the
terms of the AESOP rules, any award of free shares to employees is made by the Trustee of the AESOP subject to the Company’s consent.
Under the terms of this scheme, unless they are a “good leaver” the matching shares will be forfeited if the participant leaves the employment
of the Company within three years of the award. All partnership, matching and free shares must be removed from the trust if employment with
the Company ceases.
SAYE
The SAYE is HMRC approved and is available to all qualifying employees, including executive directors. It is based on a three year savings
contract which provides the participant with an option to purchase shares after three years at a discounted price fixed at the time the contract
is taken out, or earlier as provided by the scheme rules. No performance conditions require to be met by any participant in order to exercise
their option under the SAYE.
Employment of disabled persons
The Company strives to build an inclusive and diverse culture where all employees have the opportunity to succeed. Applications for
employment by disabled persons are always fully and fairly considered. In the event of employees becoming disabled every effort is made to
ensure that their employment will continue. The Company is committed to the fair treatment of people with disabilities regarding recruitment,
training, promotion and career development.
Stakeholder engagement – section 172(1) statement
A statement on how the Company has engaged with key stakeholders, including employees, and the impact of that engagement on the
Company’s strategy and the principal decisions taken during the year is set out in the Corporate Governance Report on pages 61 to 68.
This statement also summarises how the directors have had regard to the need to foster the Company’s business relationships with suppliers,
customers and others, and the effect of that regard, including on the principal decisions taken during the year. This statement is incorporated
by reference into this Directors’ Report.
Substantial shareholdings
As at 30 January 2022, the Company had been notified under Rule 5 of the Financial Conduct Authority’s Disclosure and Transparency Rules
of the following interests in the Company’s ordinary share capital:
Number of shares % of voting rights Type of holding
Lindsell Train Limited (discretionary clients) 14,563,305 12.99 Indirect
Caledonia Investments plc 3,279,347 2.92 Direct
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Strategic Report Corporate Governance Accounts
As at 28 March 2022, the Company had been notified under Rule 5 of the Financial Conduct Authority’s Disclosure and Transparency Rules
of the following interest in the Company’s ordinary share capital:
Number of shares % of voting rights Type of holding
Lindsell Train Limited (discretionary clients) 12,690,893 11.33 Indirect
Sanford DeLand Asset Management 5,200,000 4.64 Direct
Otherwise, the position remains the same as at 28 March 2022 as it did at 30 January 2022.
Share capital
As at 30 January 2022 the Company’s issued share capital comprised a single class of ordinary shares of 4 1/6 pence each. All of the Company’s
issued ordinary shares are fully paid up and rank equally in all respects. The rights attaching to the shares are set out in the Articles. Note 29 to
the financial statements contains details of the ordinary share capital.
On a show of hands at a general meeting of the Company every holder of ordinary shares present in person or by proxy and entitled to vote
shall have one vote and, on a poll, every member present in person or by proxy and entitled to vote shall have one vote for every ordinary share
held. The Notice of AGM will give full details of deadlines for exercising voting rights in relation to resolutions to be passed at the AGM. All proxy
votes are counted and the numbers for, against or withheld in relation to each resolution are announced at the AGM and published on the
Company’s website after the meeting. Subject to the relevant statutory provisions and the Articles, shareholders are entitled to a dividend where
declared and paid out of profits available for such purposes.
There are no restrictions on the transfer of ordinary shares in the Company other than:
– those which may from time to time be applicable under existing laws and regulations (for example, insider trading laws); and
– pursuant to the Company’s Share Dealing Codes and applicable regulations, whereby directors and certain employees of the Company
require approval to deal in the Company’s ordinary shares and are prohibited from dealing during closed periods.
At 30 January 2022 the Company had authority, pursuant to the shareholders’ resolution of 28 May 2021, to purchase up to 10% of its issued
ordinary share capital. This authority will expire at the conclusion of the 2022 AGM. It is proposed that this authority be renewed at the 2022
AGM, as detailed in the notice of AGM.
At 30 January 2022 Robert Barr Limited, as trustee of the Savings Related Benefit Trust and the All-Employee Share Ownership Plan Trust
(the “RBL Trustee”), held 0.58% of the issued share capital of the Company in trust for the benefit of the executive directors and employees of the
Group. As at 30 January 2022, Equiniti Share Plan Trustees Limited (the “AESOP Trustee”) held 0.72% of the issued share capital of the Company
in trust for participants in the AESOP.
A dividend waiver is in place in respect of the RBL Trustee’s holdings under the Savings Related Benefit Trust. A dividend waiver is in place
in respect of shares held by the AESOP Trustee and the RBL Trustee under the AESOP which have not been appropriated to participants.
The voting rights in relation to the RBL Trustee’s shareholdings are exercised by the RBL Trustee, who may vote or abstain from voting the shares
as it sees fit in respect of shares which are unvested or have not been appropriated to employees.
Under the rules of the AESOP, eligible employees are entitled to acquire shares in the Company. Details of the AESOP are set out above. AESOP
shares which have been appropriated to participants are held in trust for those participants by the AESOP Trustee. Voting rights in respect of
shares which have been appropriated to participants are exercised by the AESOP Trustee on receipt of participants’ instructions. If a participant
does not submit an instruction to the AESOP Trustee, no vote is registered in respect of those shares. In addition, the AESOP Trustee does not
vote any unappropriated shares held under the AESOP as surplus assets.
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The Executive Share Option Scheme (“ESOS”) was approved by shareholders at the 2010 AGM. Approved Long Term Incentive Plan (“ALTIP”)
awards comprising both a tax-approved option granted under the ESOS and a Long Term Incentive Plan award have been granted to executive
directors. ALTIP awards enable the participant and the Company to benefit from HMRC tax-approved option tax treatment in respect of part of
the award, without increasing the pre-tax value delivered to participants. Other than to enable the grant of ALTIP awards, the Company has not
granted awards to executive directors under the ESOS. Details of the ALTIP awards granted to executive directors are set out on page 83.
The Company is not aware of any agreements between shareholders that may result in restrictions on the transfer of securities or on
votingrights.
Change of control
As disclosed in the Directors’ Remuneration Report, under certain conditions the notice period for R.A. White and J.D. Kemp may increase
from one year to two years in the event of a takeover of or by the Company or a Company reconstruction.
All of the Company’s share incentive plans contain provisions relating to a change of control of the Company. The Company’s banking facilities
may, at the discretion of the lender, be repayable upon a change of control.
Articles of association
The Company’s Articles may only be amended by a special resolution at a general meeting of shareholders. No amendments are proposed
to be made to the existing Articles at the 2022 AGM.
Greenhouse gas emissions
Disclosures regarding greenhouse gas emissions required by the Companies Act 2006 (Strategic Report and Directors’ Report) Regulations
2013 are included in the Strategic Report on page 36 to 43. This information is incorporated by reference into this Directors’ Report.
Task Force on Climate-Related Financial Disclosures (“TCFD”)
Disclosures consistent with the TCFD’s recommendations are included in the Strategic Report on pages 36 and 37.
Financial risk management
Information on the exposure of the Group to certain financial risks and on the Group’s objectives and policies for managing each
of the Group’s main financial risk areas is detailed in the financial risk management disclosure in Note 27.
Contracts of significance
There were no contracts of significance as defined by Listing Rule 9.8 in existence during the financial year.
Going concern
The Group’s business activities, together with the factors likely to affect its future development, performance and position are set out in the
Strategic Report on pages 2 to 57. The financial position of the Group, its cash flows, liquidity position and borrowing facilities are described
in the financial review on pages 46 to 49.
After making the appropriate enquiries, the directors have concluded that the Group will be able to meet its financial obligations for the
foreseeable future and therefore have a reasonable expectation that the Company and the Group overall have adequate resources to continue
in operational existence for the foreseeable future (being at least one year following the date of approval of this annual report) and, accordingly,
consider it appropriate to adopt the going concern basis in preparing the financial statements.
The Company’s viability statement is set out on pages 56 and 57 of the Strategic Report.
Directors’ Report continued
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Strategic Report Corporate Governance Accounts
Directors’ statement as to disclosure of information to auditor
So far as each director is aware, there is no relevant audit information (as defined by the Companies Act 2006) of which the Company’s auditor
is unaware. Each director has taken all steps that ought to be taken by a director to make themselves aware of and to establish that the auditor
is aware of any relevant audit information.
Auditor
The Audit and Risk Committee has responsibility delegated from the Board for making recommendations on the appointment, reappointment,
removal and remuneration of the external auditor.
The auditor, Deloitte LLP, has indicated its willingness to continue in office and a resolution to appoint Deloitte LLP as auditor of the Company
and its subsidiaries, and to authorise the Audit and Risk Committee to fix their remuneration, will be proposed at the 2022 AGM.
Annual General Meeting
The Company’s AGM will be held at 12.00 p.m. on 27 May 2022 at the offices of Ernst & Young LLP, G1 Building, 5 George Square, Glasgow, G2 1DY.
The Notice of the AGM is set out on pages 192 to 201 of this report. A description and explanation of the resolutions to be considered at the
2022 AGM is set out on pages 195 to 197 of this report.
Recommendation to shareholders
The Board considers that all the resolutions to be considered at the AGM are in the best interests of the Company and its shareholders
as a whole and unanimously recommends that you vote in favour of them.
By order of the Board
Julie Barr
Company Secretary
29 March 2022
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A.G. BARR p.l.c. Annual Report and Accounts 2022
Statement of Directors’ Responsibilities
In Respect of the Annual Report and the Financial Statements
The directors are responsible for preparing the Annual Report and the Group and parent Company financial statements in accordance with
applicable law and regulations.
Company law requires the directors to prepare Group and parent Company financial statements for each financial year. Under that law they are
required to prepare the Group financial statements in accordance with IFRSs in conformity with the requirements of the Companies Act 2006.
Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the
state of affairs of the Group and parent Company and of the consolidated profit or loss for that period. In preparing each of the Group and
parent Company financial statements, the directors are required to:
– Properly select and apply accounting policies.
– Present information, including accounting policies, in a manner that provides relevant, reliable, comparable and understandable information.
– Provide additional disclosures when compliance with the specific requirements in IFRSs are insufficient to enable users to understand the impact
of particular transactions, other events and conditions on the Group and parent Company’s financial position and financial performance.
– Make an assessment of the Company’s ability to continue as a going concern.
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the parent Company’s
transactions and disclose with reasonable accuracy at any time the financial position of the parent Company and enable them to ensure
that its financial statements comply with the Companies Act 2006. They have general responsibility for taking such steps as are reasonably
open to them to safeguard the assets of the parent Company and the Group and to prevent and detect fraud and other irregularities.
Under applicable law and regulations, the directors are also responsible for preparing a Directors’ Report, Directors’ Remuneration Report
and Corporate Governance Statement that complies with that law and those regulations.
A copy of the Group and parent Company financial statements has been placed on the Company’s website, www.agbarr.co.uk. The directors
are responsible for the maintenance and integrity of the corporate and financial information included on the Company’s website. Legislation
in the UK governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.
Directors’ statement pursuant to the disclosure and transparency rules
Each of the directors, whose names and functions are set out on pages 58 and 59 of this report, confirm that, to the best of their knowledge:
– The financial statements, prepared in accordance with international accounting standards in conformity with the requirements of the
Companies Act 2006, 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.
– 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.
By order of the Board
R.A. White
Chief Executive
29 March 2022
S. Lorimer
Finance Director
29 March 2022
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Strategic Report Corporate Governance Accounts
Independent Auditor’s Report to the members of A.G. BARR P.L.C.
Report on the audit of the financial statements
1. Opinion
In our opinion:
– the financial statements of A.G. BARR p.l.c. (the ‘parent company’) and its subsidiaries (the ‘group’) give a true and fair view of
the state of the group’s and of the parent company’s affairs as at 30 January 2022 and of the group’s profit for the year then ended;
– the group financial statements have been properly prepared in accordance with United Kingdom adopted international
accounting standards;
– the parent company financial statements have been properly prepared in accordance with United Kingdom adopted international
accounting standards and as applied in accordance with the provisions of the Companies Act 2006; and
– the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.
We have audited the financial statements which comprise:
– the consolidated income statement;
– the consolidated statement of comprehensive income;
– the consolidated and parent company statement of financial position;
– the consolidated and parent company statements of changes in equity;
– the consolidated and parent cash flow statements; and
– the related notes 1 to 33.
The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom adopted international
accounting standards and, as regards the parent company financial statements, as applied in accordance with the provisions of the Companies
Act 2006.
2. Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under
those standards are further described in the auditor’s responsibilities for the audit of the financial statements section of our report.
We are independent of the group and the parent company in accordance with the ethical requirements that are relevant to our audit of the
financial statements in the UK, including the Financial Reporting Council’s (the ‘FRC’s’) Ethical Standard as applied to listed public interest entities,
and we have fulfilled our other ethical responsibilities in accordance with these requirements. The non-audit services provided to the group and
parent company for the year are disclosed in note 3 to the financial statements. We confirm that we have not provided any non-audit services
prohibited by the FRC’s Ethical Standard to the group or the parent company.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
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A.G. BARR p.l.c. Annual Report and Accounts 2022
3. Summary of our audit approach
Key audit matters
The key audit matter that we identified in the current year was:
– Completeness and valuation of brand support discounts and cost accruals.
Materiality
The materiality that we used for the group financial statements was £2,070,000 which was determined on the
basis of 5% of profit before tax and exceptional items.
Scoping
Our full scope and specified audit procedures covered 99% of the Group’s revenue, 100% of the Group’s net
assets, and 100% of the Group’s profit before tax.
Significant changes
in our approach
Our audit approach is consistent with the prior year with the exception of:
– Valuation of Strathmore goodwill, intangible and tangible assets, which is no longer a key audit matter on the basis
that the goodwill and intangible asset balances were fully impaired in the prior year.
4. Conclusions relating to going concern
In auditing the financial statements, we have concluded that the directors’ use of the going concern basis of accounting in the preparation
of the financial statements is appropriate.
Our evaluation of the directors’ assessment of the group’s and parent company’s ability to continue to adopt the going concern basis
of accounting included:
– Challenging underlying data and key assumptions, considering the impact of Covid-19 on the assumptions applied.
– Assessing the integrity of the model used to prepare the forecasts, testing the clerical accuracy of those forecasts, and considering
the historical accuracy of the forecasts prepared by management.
– Assessing headroom in the forecasts (liquidity and covenants).
– Evaluating the financing facilities that are in place during the forecast period including the repayment terms and covenants, and assessing
whether these have been appropriately reflected in the model.
– Assessing the reasonableness of the downside scenarios and sensitivities performed by management; and
– Assessing the appropriateness of the going concern disclosures.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually
or collectively, may cast significant doubt on the group’s and parent company’s ability to continue as a going concern for a period of at least
twelve months from when the financial statements are authorised for issue.
In relation to the reporting on how the group has applied the UK Corporate Governance Code, we have nothing material to add or draw
attention to in relation to the directors’ statement in the financial statements about whether the directors considered it appropriate to adopt
the going concern basis of accounting.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
Independent Auditor’s Report to the members of A.G. BARR P.L.C. continued
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Strategic Report Corporate Governance Accounts
5. Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial statements
of the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) that we identified.
These matters included those which had the greatest effect on: the overall audit strategy, the allocation of resources in the audit; and directing
the efforts of the engagement team.
These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we
do not provide a separate opinion on these matters.
5.1. Completeness and valuation of brand support discounts and cost accruals
Key audit matter
description
Brand support discounts and cost accruals within trade and other payables of £18.1m (2021: £13.8m)
The Group incurs significant costs in agreeing sales discounts to support and develop its brands. Judgement is
required in determining the level of variable consideration recognised and the accrual for such sales discounts and
costs where promotions and brand support campaigns span the year-end and where settlement has not been fully
agreed at year-end, or where prior year claims arise, as the year-end accrual can depend on information not yet
made available by the customer.
Further details are included within “Key Sources of Estimation Uncertainty” as disclosed in the accounting policies
within the financial statements.
Due to the high level of judgements involved, we have determined there is a potential for fraud through possible
manipulation of this balance.
Brand support discounts and cost accruals are included within note 23 to the financial statements.
The Audit and Risk Committee’s consideration in respect of the risk is included on page 73.
How the scope of our
audit responded to
the key audit matter
The audit procedures we performed in respect of this matter included:
– Obtaining an understanding of and testing the relevant controls over the brand support accruals process;
– Meeting with the commercial teams to understand and challenge the brand support discounts in place,
by assessing the movements in the brand support accrual;
– Testing a sample of customers with characteristics of audit interest (customers receiving material brand support
investment, customers with material open promotions at year end, and flagship UK customers), assessing the
accuracy of current year accruals;
– Performing a lookback on judgements made in the previous year, including examining a sample of accrual
releases and assessing the additional variable consideration recognised;
– Examining a sample of key commercial contracts and joint business plans to assess whether the composition
of the accrual is in line with the underlying commercial agreement;
– Obtaining confirmations directly from customers for a sample of open accruals. In cases where no confirmation
reply is received, we performed alternative procedures involving understanding the basis for the accrual and
recalculating the expected accrual based on related sales information;
– Selecting a sample of settlements and releases made after the year-end to determine the accuracy of the
accrual; and,
– Assessing the appropriateness of the disclosures made in the financial statements.
Key observations
We concluded that the assumptions made by management in determining the valuation and completeness of brand
support discount and cost accruals were reasonable.
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6. Our application of materiality
6.1. Materiality
We define materiality as the magnitude of misstatement in the financial statements that makes it probable that the economic decisions of a
reasonably knowledgeable person would be changed or influenced. We use materiality both in planning the scope of our audit work and in
evaluating the results of our work.
Based on our professional judgement, we determined materiality for the financial statements as a whole as follows:
Group financial statements Parent company financial statements
Materiality
£2.07m (2021: £1.58m) £1.89m (2021: £1.44m)
Basis for determining
materiality
5% (2021: 5%) of profit before tax and exceptional items. Parent company materiality equates to 0.7%
(2021: 0.7%) of revenue, capped at 90% (2021: 91.4%)
of Group materiality.
Rationale for the
benchmark applied
We have used profit before tax and before exceptional
items as the benchmark for our determination of
materiality as we consider this to be a critical
performance measure for the Group on the basis that
it is a key metric to analysts and investors and has equal
prominence in the Annual Report. The exceptional items
in the year comprise £0.7m gain on sale on disposal of
the Sheffield distribution depot.
We have used revenue as the benchmark for our
determination of materiality as we consider this to be the
key driver of the business. As statutory materiality would
be higher than component materiality, we have capped
materiality to be 90% of group materiality being £1.89m.
90% is deemed to be appropriate based on the company
only contribution to the Group.
Group materiality PBT and exceptional items
Component
materiality range
£0.51m to £1.89m
Audit and Risk
Committee
reporting threshold
£0.10m
Group materiality
£2.07m
PBT and exceptional
items £41.50m
Independent Auditor’s Report to the members of A.G. BARR P.L.C. continued
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Strategic Report Corporate Governance Accounts
87%
12%
1%
88%
12%
0%
96%
4%
0%
6.2. Performance materiality
We set performance materiality at a level lower than materiality to reduce the probability that, in aggregate, uncorrected and undetected
misstatements exceed the materiality for the financial statements as a whole.
Group financial statements Parent company financial statements
Performance materiality
70% (2021: 70%) of group materiality
(reduced to 60% in areas of greater
management judgement)
70% (2021: 70%) of parent company materiality
(reduced to 60% in areas of greater
management judgement)
Basis and rationale for determining
performance materiality
In determining performance materiality, we considered the following factors:
– Our risk assessment, including our assessment of the group’s overall control environment and
that we considered it appropriate to rely on controls over a number of business processes.
– Our past experience of the audit, and our consideration of the number of corrected and
uncorrected misstatements identified in prior periods.
6.3. Error reporting threshold
We agreed with the Audit and Risk Committee that we would report to the Committee all audit differences in excess of £103,500
(2021: £78,750), as well as differences below that threshold that, in our view, warranted reporting on qualitative grounds. We also report
to the Audit and Risk Committee on disclosure matters that we identified when assessing the overall presentation of the financial statements.
7. An overview of the scope of our audit
7.1. Identification and scoping of components
There are no significant changes in our approach in the current year. Our group audit was scoped by obtaining an understanding of the Group
and its environment through discussions with finance, IT, commercial and supply teams and performing walkthroughs of processes across these
areas, including Group wide controls, and assessing the risks of material misstatements at a Group level.
The significant component to the Group is A.G. BARR p.l.c., which is also the entity in which the trading transactions relating to the brand owned
by Rubicon Drinks Limited are recorded.
The other components to the Group are as follows:
– Funkin Limited
– Funkin USA Limited
– A.G. BARR General Partner Limited
– A.G. BARR Capital Partner Limited
– A.G. BARR (Ireland) Limited
– MOMA Foods Limited
Funkin Limited was subject to specified audit procedures based on the materiality of individual balances, and the remaining non-significant
components were subject to analytical reviews, the group audit team performed all audit work.
Full audit scope
Specified audit procedures
Review group level
Revenue
Profit
before Tax
Net assets
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7.2. Our consideration of the control environment
With the involvement of our IT specialist we obtained an understanding of the relevant IT environment, by performing walkthroughs of
key processes and in some instances performed testing on the relevant general IT controls and business cycles. We took a controls reliance
approach on the relevant controls for certain components within the revenue, expenditure and brand support accrual business process cycles.
7.3. Our considerations of climate-related risks
In planning our audit, we have considered the potential impact of climate change on the Group’s business and its financial statements.
The Group has assessed the risk and opportunities relevant to climate change and has elevated this risk to a principal risk across the Group.
This risk has also been considered and embedded into the businesses as explained in the Strategic Report on pages 36 to 43.
As a part of our audit, we have obtained management’s climate-related risk assessment and held discussions with those charged with governance
to understand the process of identifying climate-related risks, the determination of mitigating actions and the impact on the Group’s financial
statements. While management has acknowledged that the transition and physical risks posed by Climate change have the potential to impact the
medium to long term success of the business, they have assessed that there is no material impact arising from climate change on the judgements
and estimates made in the financial statements as at 30 January 2022 as explained in note 1 on page 143.
We performed our own qualitative risk assessment of the potential impact of climate change on the Group’s account balances and classes
of transaction, and did not identify any additional risks of material misstatement. Our procedures include evaluating the appropriateness of
disclosures included in the financial statements and reading disclosures included in the Strategic Report to consider whether they are materially
consistent with the financial statements and our knowledge obtained in the audit.
8. Other information
The other information comprises the information included in the annual report, other than the financial statements and our auditor’s report
thereon. The directors are responsible for the other information contained within the annual report.
Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report,
we do not express any form of assurance conclusion thereon.
Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the
financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated.
If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material
misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material
misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
9. Responsibilities of directors
As explained more fully in the directors’ responsibilities statement, the directors are responsible for the preparation of the financial statements
and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the
preparation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the group’s and the parent company’s ability to continue
as a going concern, disclosing as applicable, matters related to going concern and using the going concern basis of accounting unless the
directors either intend to liquidate the group or the parent company or to cease operations, or have no realistic alternative but to do so.
Independent Auditor’s Report to the members of A.G. BARR P.L.C. continued
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Strategic Report Corporate Governance Accounts
10. Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement,
whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance,
but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected
to influence the economic decisions of users taken on the basis of these financial statements.
A further description of our responsibilities for the audit of the financial statements is located on the FRC’s website at: www.frc.org.uk/
auditorsresponsibilities. This description forms part of our auditor’s report.
11. Extent to which the audit was considered capable of detecting irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities,
outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of
detecting irregularities, including fraud is detailed below.
11.1. Identifying and assessing potential risks related to irregularities
In identifying and assessing risks of material misstatement in respect of irregularities, including fraud and non-compliance with laws and
regulations, we considered the following:
– the nature of the industry and sector, control environment and business performance including the design of the group’s remuneration
policies, key drivers for directors’ remuneration, bonus levels and performance targets;
– results of our enquiries of management, internal audit, and the Audit and Risk Committee about their own identification and assessment
of the risks of irregularities;
– any matters we identified having obtained and reviewed the group’s documentation of their policies and procedures relating to:
– identifying, evaluating and complying with laws and regulations and whether they were aware of any instances of non-compliance;
– detecting and responding to the risks of fraud and whether they have knowledge of any actual, suspected or alleged fraud;
– the internal controls established to mitigate risks of fraud or non-compliance with laws and regulations;
– the matters discussed among the audit engagement team and relevant internal specialists, including valuations, pensions and IT regarding
how and where fraud might occur in the financial statements and any potential indicators of fraud.
As a result of these procedures, we considered the opportunities and incentives that may exist within the organisation for fraud and identified
the greatest potential for fraud in the following areas in relation to completeness and valuation of brand support discount and cost accruals
given the judgement involved in determining the level of closing accrual. In common with all audits under ISAs (UK), we are also required to
perform specific procedures to respond to the risk of management override.
We also obtained an understanding of the legal and regulatory frameworks that the group operates in, focusing on provisions of those laws
and regulations that had a direct effect on the determination of material amounts and disclosures in the financial statements. The key laws
and regulations we considered in this context included the UK Companies Act, Listing Rules, pensions legislation, tax legislation.
In addition, we considered provisions of other laws and regulations that do not have a direct effect on the financial statements but compliance
with which may be fundamental to the group’s ability to operate or to avoid a material penalty. These included the group’s operating licence
and environmental regulations.
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A.G. BARR p.l.c. Annual Report and Accounts 2022
Independent Auditor’s Report to the members of A.G. BARR P.L.C. continued
11.2. Audit response to risks identified
As a result of performing the above, we identified completeness and valuation of brand support discounts and cost accruals as a key audit
matter related to the potential risk of fraud. The key audit matters section of our report explains the matter in more detail and also describes
the specific procedures we performed in response to that key audit matter.
In addition to the above, our procedures to respond to risks identified included the following:
– reviewing the financial statement disclosures and testing to supporting documentation to assess compliance with provisions of relevant laws
and regulations described as having a direct effect on the financial statements;
– enquiring of management, the Audit and Risk Committee and external legal counsel concerning actual and potential litigation and claims;
– performing analytical procedures to identify any unusual or unexpected relationships that may indicate risks of material misstatement due to fraud;
– reading minutes of meetings of those charged with governance, reviewing internal audit reports; and
– in addressing the risk of fraud through management override of controls, testing the appropriateness of journal entries and other
adjustments; assessing whether the judgements made in making accounting estimates are indicative of a potential bias; and evaluating
the business rationale of any significant transactions that are unusual or outside the normal course of business.
We also communicated relevant identified laws and regulations and potential fraud risks to all engagement team members including internal
specialists, and remained alert to any indications of fraud or non-compliance with laws and regulations throughout the audit.
Report on other legal and regulatory requirements
12. Opinions on other matters prescribed by the Companies Act 2006
In our opinion the part of the directors’ remuneration report to be audited has been properly prepared in accordance with the Companies Act 2006.
In our opinion, based on the work undertaken in the course of the audit:
– the information given in the strategic report and the directors’ report for the financial year for which the financial statements are prepared
is consistent with the financial statements; and
– the strategic report and the directors’ report have been prepared in accordance with applicable legal requirements.
In the light of the knowledge and understanding of the group and the parent company and their environment obtained in the course
of the audit, we have not identified any material misstatements in the strategic report or the directors’ report.
13. Corporate Governance Statement
The Listing Rules require us to review the directors’ statement in relation to going concern, longer-term viability and that part of the Corporate
Governance Statement relating to the group’s compliance with the provisions of the UK Corporate Governance Code specified for our review.
Based on the work undertaken as part of our audit, we have concluded that each of the following elements of the Corporate Governance
Statement is materially consistent with the financial statements and our knowledge obtained during the audit:
– the directors’ statement with regards to the appropriateness of adopting the going concern basis of accounting and any material
uncertainties identified on page 114;
– the directors’ explanation as to its assessment of the group’s prospects, the period this assessment covers and why the period is appropriate
set out on pages 56 and 57;
– the directors’ statement on fair, balanced and understandable set out on page 116;
– the board’s confirmation that it has carried out a robust assessment of the emerging and principal risks set out on pages 52 to 55;
– the section of the annual report that describes the review of effectiveness of risk management and internal control systems set out on pages
70 and 71; and
– the section describing the work of the Audit and Risk Committee set out on pages 72 and 73.
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Strategic Report Corporate Governance Accounts
14. Matters on which we are required to report by exception
14.1. Adequacy of explanations received and accounting records
Under the Companies Act 2006 we are required to report to you if, in our opinion:
– we have not received all the information and explanations we require for our audit; or
– adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been received
from branches not visited by us; or
– the parent company financial statements are not in agreement with the accounting records and returns.
We have nothing to report in respect of these matters.
14.2. Directors’ remuneration
Under the Companies Act 2006 we are also required to report if in our opinion certain disclosures of directors’ remuneration have not
been made or the part of the directors’ remuneration report to be audited is not in agreement with the accounting records and returns.
We have nothing to report in respect of these matters.
15. Other matters which we are required to address
15.1. Auditor tenure
We were appointed by the Audit and Risk Committee, on 31 May 2017 to audit the financial statements for the year ended 27 January 2018
and subsequent financial periods. The period of total uninterrupted engagement including previous renewals and reappointments of the firm
is 5 years, covering the years ending 27 January 2018 to 30 January 2022. The engagement partner, David Sweeney, is required to rotate off
for the year ended 29 January 2023.
15.2. Consistency of the audit report with the additional report to the Audit and Risk Committee
Our audit opinion is consistent with the additional report to the Audit and Risk Committee we are required to provide in accordance with ISAs (UK).
16. Use of our report
This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit
work has been undertaken so that we might state to the company’s members those matters we are required to state to them in an auditor’s
report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the
company and the company’s members as a body, for our audit work, for this report, or for the opinions we have formed.
As required by the Financial Conduct Authority (FCA) Disclosure Guidance and Transparency Rule (DTR) 4.1.14R, these financial statements form
part of the European Single Electronic Format (ESEF) prepared Annual Financial Report filed on the National Storage Mechanism of the UK FCA
in accordance with the ESEF Regulatory Technical Standard (‘ESEF RTS’). This auditor’s report provides no assurance over whether the annual
financial report has been prepared using the single electronic format specified in the ESEF RTS.
David Sweeney, CA (Senior statutory auditor)
For and on behalf of Deloitte LLP
Statutory Auditor
Glasgow, United Kingdom
29 March 2022
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A.G. BARR p.l.c. Annual Report and Accounts 2022
Consolidated Income Statement
For the year ended 30 January 2022
2022 2021
Note
Before
exceptional
items
£m
Exceptional
items*
£m
Total
£m
Before
exceptional
items
£m
Exceptional
items*
£m
Total
£m
Revenue 2 26 8.6 – 26 8.6 2 2 7. 0 – 2 2 7. 0
Cost of sales 7 (150.0 ) – (150.0 ) (1 32. 2 ) (1. 2 ) (1 33.4 )
Gross profit 2 1 18.6 – 118 .6 94.8 (1.2 ) 93 .6
Other income 5, 7 – 0.7 0.7 – 7. 6 7. 6
Operating expenses 6, 7 (76. 6 ) – (76 . 6 ) (61 . 2 ) (13 . 2 ) (74 . 4 )
Operating profit 42. 0 0.7 42.7 33 .6 (6 .8 ) 26. 8
Finance costs 8 (0.4 ) – (0.4 ) (0.7 ) – (0.7 )
Share of after tax results of associates 17 (0. 1 ) – (0.1 ) (0. 1 ) – (0. 1 )
Profit before tax 41 . 5 0.7 4 2.2 32. 8 (6.8 ) 26 .0
Tax on profit 9 (14 .4 ) – (14.4 ) (8 .0 ) 1.1 (6 .9 )
Profit for the year 2 7. 1 0. 7 2 7. 8 24 . 8 (5.7 ) 19. 1
Attributable to:
Equity shareholders of the parent Company 2 7. 2 0.7 2 7. 9 24 . 8 (5 .7 ) 1 9.1
Non-controlling interests (0.1 ) – (0.1 ) – – –
Earnings per share (pence)
Basic earnings per share 10 25.09 1 7. 1 8
Diluted earnings per share 10 24 .9 5 1 7. 1 6
Basic earnings per share before exceptional
items 10 24 .46 2 2. 31
* An explanation of exceptional items is provided in Note 7.
127
Strategic Report Corporate Governance Accounts
Statements of Financial Position
As at 30 January 2022
Group Company
Note
2022
£m
2021
£m
2022
£m
2021
£m
Non-current assets
Intangible assets 12 98.6 90. 5 3.9 5.1
Property, plant and equipment 13 93 .8 96.4 74.4 76.9
Right-of-use assets 14 4. 2 2. 5 23.2 21.5
Loans and receivables 15 1.5 1.0 1.5 1.0
Investment in subsidiary undertakings 16 – – 90.3 84.1
Investment in associates 17 0.7 0.8 0.7 0.8
Retirement benefit surplus 28 – – 15.1 8.9
198. 8 191 . 2 209.1 198.3
Current assets
Inventories 19 24 . 2 1 9. 3 21.0 17.0
Trade and other receivables 20 44.3 3 7. 6 37.2 34.4
Assets classified as held for sale 21 – 0.4 – 0.4
Current tax asset 0.3 0.7 2.5 1.7
Cash and cash equivalents 18 68.7 52.9 59.1 48.1
1 3 7. 5 1 10.9 119.8 101.6
Total assets 336. 3 302.1 328.9 299.9
Current liabilities
Loans and other borrowings 22 0.3 2.9 – 2.9
Trade and other payables 23 54.0 43. 4 59.6 47.1
Derivative financial instruments 15 0.2 0.1 0.2 0.1
Lease liabilities 14, 22 1.3 1 .1 2.6 2.2
Provisions 24 2 .0 1.9 1.8 1.9
5 7. 8 49. 4 64.2 54.2
Non-current liabilities
Deferred tax liabilities 26 21 . 5 14 .6 9.1 5.2
Lease liabilities 14, 22 2.8 1 .4 19.3 18.4
Put liability 25 5.0 – – –
Retirement benefit obligations 28 1 .0 7. 9 – –
30.3 23 .9 28.4 23.6
Capital and reserves attributable to equity holders
Share capital 29 4.7 4.7 4.7 4.7
Share premium account 29 0. 9 0.9 0.9 0.9
Share options reserve 29 1 .6 1 .8 1.5 1.7
Other reserves 29 (5. 1 ) (0 .2 ) (0.1) (0.2)
Retained earnings 29 242 .4 221 .6 229.3 215.0
Total shareholder equity 244 . 5 228.8 236.3 221.1
Non-controlling interest in equity 3.7 – – –
24 8. 2 228.8 236.3 222.1
Total equity and liabilities 336. 3 302.1 328.9 299.9
The Company reported a profit for the financial year ended 30 January 2022 of £21.4m (year ended 24 January 2021: £17.6m).
Company Number: SC005653
The financial statements on pages 126 to 187 were approved by the Board of directors and authorised for issue on 29 March 2022 and were signed on its behalf by:
Roger White Stuart Lorimer
Chief Executive Finance Director
128
A.G. BARR p.l.c. Annual Report and Accounts 2022
Statement of Comprehensive Income
For the year ended 30 January 2022
Group Company
Note
2022
£m
2021
£m
2022
£m
2021
£m
Profit for the year 2 7. 8 19. 1 21.4 17.6
Other comprehensive income
Items that will not be reclassified to profit or loss
Remeasurements on defined benefit pension plans 28 4.7 0.6 4.7 0.6
Deferred tax movements on items above 26 (1 .2 ) (0.1 ) (1.2) (0.1)
Deferred tax remeasurement for movement in tax rate 26 1.5 0.5 1.5 0.5
Items that will be or have been reclassified to profit or loss
Cash flow hedges: 15
Losses arising during the period 0.1 – 0.1 –
Deferred tax movements on items above 26 – – – –
Other comprehensive income for the year, net of tax 5. 1 1 .0 5.1 1.0
Total comprehensive income for the year 32. 9 20. 1 26.5 18.6
Attributable to:
Equity shareholders of the parent Company 33.0 20. 1 26.5 18.6
Non-controlling interests (0.1 ) – – –
129
Strategic Report Corporate Governance Accounts
Statement of Changes in Equity
For the year ended 30 January 2022
Group Note
Share
capital
£m
Share
premium
account
£m
Share
options
reserve
£m
Other
reserves
£m
Retained
earnings
£m
Total
£m
Non-
controlling
interests
£m
Total
£m
At 24 January 2021 4.7 0.9 1 .8 (0. 2 ) 2 21 .6 228.8 – 2 28.8
Profit for the year – – – – 2 7. 9 2 7. 9 (0. 1 ) 2 7. 8
Other comprehensive income – – – 0.1 5.0 5 .1 – 5.1
Total comprehensive income for the year – – – 0. 1 32. 9 33.0 (0.1 ) 32. 9
Company shares purchased for use by
employee benefit trusts 29 – – – – (0. 5 ) (0. 5 ) – (0.5 )
Recognition of share-based payment costs 30 – – 1.2 – – 1.2 – 1.2
Transfer of reserve on share award – – (1 .8 ) – 1 .8 – – –
Recognition of non-controlling interests – – – (5.0 ) – (5 .0 ) 3.8 (1 . 2 )
Deferred tax on items taken direct to reserves 26 – – 0. 4 – – 0.4 – 0.4
Dividends paid 11 – – – – (13 .4 ) (1 3.4 ) – (13 .4 )
At 30 January 2022 4 .7 0. 9 1 .6 (5. 1 ) 242 . 4 24 4. 5 3 .7 24 8. 2
At 25 January 2020 4.7 0.9 1.4 – 201 .3 20 8. 3 – 208 .3
Profit for the year – – – – 1 9.1 1 9.1 – 1 9. 1
Other comprehensive income – – – – 1 .0 1 .0 – 1 .0
Total comprehensive income for the year – – – – 20.1 20.1 – 20.1
Company shares purchased for use by
employee benefit trusts 29 – – – – (0. 1 ) (0.1 ) – (0. 1 )
Recognition of share-based payment costs 30 – – 0.7 – – 0.7 – 0.7
Transfer of reserve on share award – – (0.1 ) – 0.1 – – –
Deferred tax on items taken direct to reserves 26 – – (0. 2 ) – – (0. 2 ) – (0. 2 )
Reallocation between reserves – – – (0. 2 ) 0. 2 – – –
At 24 January 2021 4.7 0.9 1.8 (0. 2 ) 221.6 228.8 – 22 8.8
130
A.G. BARR p.l.c. Annual Report and Accounts 2022
Statement of Changes in Equity continued
For the year ended 30 January 2022
Company Note
Share
capital
£m
Share
premium
account
£m
Share
options
reserve
£m
Other
reserves
£m
Retained
earnings
£m
Total
£m
At 24 January 2021 4.7 0.9 1.7 (0.2) 215.0 222.1
Profit for the year – – – – 21.4 21.4
Other comprehensive income – – – 0.1 5.0 5.1
Total comprehensive income for the year – – – 0.1 26.4 26.5
Company shares purchased for use by
employee benefit trusts 29 – – – – (0.5) (0.5)
Recognition of share-based payment costs 30 – – 1.2 – – 1.2
Transfer of reserve on share award – – (1.8) – 1.8 –
Deferred tax on items taken direct to reserves 26 – – 0.4 – – 0.4
Dividends paid 11 – – – – (13.4) (13.4)
At 30 January 2022 4.7 0.9 1.5 (0.1) 229.3 236.3
At 25 January 2020 4.7 0.9 1.4 – 196.2 203.2
Profit for the year – – – – 17.6 17.6
Other comprehensive income – – – – 1.0 1.0
Total comprehensive income for the year – – – – 18.6 18.6
Company shares purchased for use by
employee benefit trusts 29 – – – – (0.1) (0.1)
Recognition of share-based payment costs 30 – – 0.6 – – 0.6
Transfer of reserve on share award – – (0.1) – 0.1 –
Deferred tax on items taken direct to reserves 26 – – (0.2) – – (0.2)
Reallocation between reserves – – – (0.2) 0.2 –
At 24 January 2021 4.7 0.9 1.7 (0.2) 215.0 222.1
131
Strategic Report Corporate Governance Accounts
Cash Flow Statements
For the year ended 30 January 2022
Group Company
Note
2022
£m
2021
£m
2022
£m
2021
£m
Operating activities
Profit before tax 42.2 26 .0 31.0 22.5
Adjustments for:
Interest and dividends receivable – – – (0.6)
Interest payable 8 0.4 0.7 0.4 1.4
Depreciation of property, plant and equipment 13 9.9 11.8 9.5 11.5
Amortisation of intangible assets 12 1.3 1.1 1.2 1.2
Share-based payment costs 1.2 0.7 1.2 0.6
Share of results in associates 0.1 0. 1 0.1 0.1
Impairment of Strathmore brand – 7. 0 – 7.0
Impairment of Strathmore goodwill – 1 .9 – 1.9
Impairment of Strathmore property, plant and equipment – 1. 1 – 1.1
Funkin goodwill adjustment – 1.3 – –
Gain on sale of property, plant and equipment and available for sale assets (0.7 ) – (0.7) –
Operating cash flows before movements in working capital 5 4.4 51 . 7 42.7 46.7
Increase in inventories (4. 3 ) (1 . 2 ) (4.0) (0.9)
(Increase)/decrease in receivables (5.6 ) 1 9. 8 (2.8) 19.8
Increase/(decrease) in payables 7. 7 ( 7. 1 ) 11.8 (5.5)
Difference between employer pension contributions and amounts recognised
in the income statement (2 . 3 ) (2. 2 ) (2.3) (2.2)
Cash generated by operations 49.9 61 .0 45.4 57.9
Tax paid (6 .5 ) (10. 3 ) (6.5) (8.5)
Net cash from operating activities 43.4 50.7 38.9 49.4
Investing activities
Acquisition of subsidiary (net of cash acquired) 16 (5. 1 ) – (5.5) –
Loan to associate – (1 .0 ) – (1.0)
Purchase of property, plant and equipment (5.0 ) (7. 1 ) (4.9) ( 7.0)
Proceeds on sale of property, plant and equipment and assets held for sale 1.1 0 .1 1.1 0.1
Interest received – – – 0.6
Net cash used in investing activities (9. 0 ) (8 .0 ) (9.3) (7.3)
Financing activities
New loans received – 60.0 – 60.0
Loans receivable (0.5 ) – (0.5) –
Loans repaid – (6 0.0 ) – (60.0)
Lease payments (1 .5 ) (3 . 2 ) (1.5) (3.0)
Purchase of Company shares by employee benefit trusts 29 (0. 2 ) (0. 1 ) (0.2) (0.1)
Dividends paid (1 3. 4 ) – (13.4) –
Interest paid (0.1 ) (0. 3 ) (0.1) (1.0)
Net cash used in financing activities (1 5.7 ) (3.6 ) (15.7) (4.1)
Net increase in cash and cash equivalents 18 .7 39. 1 13.9 38.0
Cash and cash equivalents at beginning of year 50.0 10.9 45.2 7.2
Cash and cash equivalents at end of year 68.7 50.0 59.1 45.2
Cash and cash equivalents per the Group and Company cash flow statements above comprises cash and cash equivalents per the statement of financial position of £52.9 m
and £48.1m respectively, net of bank overdrafts of £2.9 m for the year ended 24 January 2021.
132
A.G. BARR p.l.c. Annual Report and Accounts 2022
Notes to the Accounts
1. Accounting Policies
General information
The Company is a public limited company , which is listed on the London Stock Exchange and incorporated and domiciled in Scotland
The address of its registered office is Westfield House, 4 Mollins Road, Cumbernauld, G68 9HD .
The financial year represents the 53 weeks ended 30 January 2022 (prior financial year 52 weeks ended 24 January 2021).
Summary of significant accounting policies
The principal accounting policies applied in the preparation of these consolidated financial statements are set out below. These policies have
been consistently applied to all the years presented, unless otherwise stated.
Basis of preparation
The consolidated and parent Company financial statements of A.G. BARR p.l.c. have been prepared in accordance with International Financial
Reporting Standards (IFRS) in conformity with the requirements of the Companies Act 2006. They have been prepared under the historical cost
accounting rules except for the derivative financial instruments and the assets of the Group pension scheme which are stated at fair value and
the liabilities of the Group pension scheme which are valued using the projected unit credit method.
The directors have adopted the going concern basis in preparing these accounts after assessing the principal risks. This assessment was
undertaken through the use of a number of severe but plausible downside scenarios that could impact the business (both individually
andcumulatively).
Details of the scenarios that were assessed are listed within the Viability Statement contained on pages 56 and 57. These scenarios include adverse
brand damage to the Group’s largest brand (IRN-BRU), reimposition of restrictions associated with the Covid-19 pandemic, significant disruption
to supply chain (including the closure of a factory), a cyber attack, and significant energy cost inflation. In addition, potential financial impacts
from climate change were assessed, consistent with our Task Force on Climate-related Financial Disclosures, detailed on pages 38 to 43.
The directors’ experience of the Covid-19 pandemic provides confidence over the resilience of our brands, and that the business can react
appropriately to significant downside scenarios. Material cash preservation measures are available, including reducing discretionary spend on
overheads, non-essential capital, marketing investment, and the suspension of dividends.
As at 30 January 2022, the consolidated balance sheet reflects a net asset position of £248.2m, including net cash at bank of £68.4m. The Group
has £30m of committed and unutilised debt facilities, consisting of two revolving credit facilities with two individual banks, providing the business
with a secure funding platform. One of these facilities (£10m) expires in April 2023, with the other (£20m) expiring in February 2026. Throughout
these severe but plausible downside scenarios, the Group continues to have significant liquidity headroom on existing facilities and against the
revolving credit facilities financial covenants.
The directors believe that the Group is well placed to manage its financing and other business risks satisfactorily, and have a reasonable expectation
that the Group and parent Company will have adequate resources to continue in operation for at least 12 months from the signing date of these
consolidated financial statements. They therefore consider it appropriate to adopt the going concern basis of accounting in preparing the
financial statements.
133
Strategic Report Corporate Governance Accounts
The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires
management to exercise its judgement in the process of applying the Group’s accounting policies. The areas involving a higher degree of
judgement or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements are disclosed
on pages 142 and 143.
The directors have taken advantage of the exemption available under s408 of the Companies Act 2006 and have not presented a separate
income statement or statement of comprehensive income for the Company.
Changes in accounting policy and disclosures
(a) New and amended standards adopted by the Group
A number of new or amended standards became applicable for the current reporting period and the Group had to change its accounting
policies as a result of adopting the following standards:
– Interest Rate Benchmark Reform – Phase 2 (Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16)
– IFRIC Agenda Paper 7 – Customer’s Right to Receive Access to the Supplier’s Software Hosted on the Cloud (IAS 38 Intangible Assets)
– IFRS Agenda Paper 2 – Configuration or Customisation Costs in a Cloud Computing Arrangement (IAS 38 Intangible Assets)
The amendments listed above do not have a material impact on the results for the current and prior reporting periods.
(b) New standards, amendments and interpretations issued but not effective for the financial year beginning 31 January 2022 and not
adopted early
A number of new standards and amendments to standards and interpretations are effective for future year ends, and have not been applied
in preparing these financial statements. These standards and amendments are listed in the table below:
International Accounting Standards and Interpretations
IFRS 17 Insurance Contracts
Amendments to IFRS 10 and IAS 28 Sale or Contribution of Assets between an Investor and its Associate or Joint Venture
Amendments to IAS 1 Classification of Liabilities as Current or Non-current
Amendments to IFRS 3 Reference to Conceptual Framework
Amendment to IAS 16 Property, Plant and Equipment – Proceeds before Intended Use
Amendments to IAS 37 Onerous Contracts – Costs of Fulfilling a Contract
Annual Improvements to IFRS Standards 2018 – 2020 Cycle
Amendments to IFRS 1 and IFRS Practice Statement 2 Disclosure of Accounting Policies
Amendments to IAS 8 Definition of Accounting Estimates
There are no new or revised IFRS, amendments or interpretations in issue but not yet effective that are potentially material for the Group and that
have not yet been applied.
134
A.G. BARR p.l.c. Annual Report and Accounts 2022
Notes to the Accounts continued
1. Accounting Policies continued
Consolidation – subsidiaries
Subsidiaries are entities controlled by the Company. The Company controls an entity when it is exposed, or has rights, to variable returns from
its involvement with the entity and has the ability to affect those returns through its power over the entity. The financial statements of subsidiaries
are included in the consolidated financial statements from the date over which control commences until the date on which controlceases.
On the acquisition of a business, identifiable assets and liabilities acquired are measured at their fair value. The cost of the acquisition is
measured at the aggregate of the fair values, at the date of exchange, of assets given, liabilities incurred or assumed, and equity instruments
issued. Any contingent consideration is recognised at fair value at the acquisition date and subsequently until it is settled. The cost of the
acquisition in excess of the Group’s interest in the net fair value of the identifiable net assets acquired is recorded as goodwill.
Non-controlling interests represent the portion of comprehensive income and equity in subsidiaries that is not attributable to the parent
Company shareholders and is presented separately from the parent shareholders’ equity in the Consolidated Balance Sheet.
Intercompany transactions, balances, income and expenses on transactions between Group companies are eliminated. Profits and losses
resulting from intercompany transactions that are recognised in net assets are also eliminated. Accounting policies of subsidiaries are consistent
with those adopted by the Group.
Revenue recognition
Revenue is recognised when control of the goods has passed to the buyer and the amount can be measured reliably. All revenue is recognised
on a point of time basis being primarily the point of delivery to customers’ sites. The majority of goods are dispatched by the Group’s own
distribution network and delivery often occurs on the day of dispatch although some are a few days later therefore revenue is recognised on
delivery to the customer site. None of the Group’s contractual arrangements lead to revenue being recognised over time.
Revenue is the net invoiced sales value, after deducting promotional sales related discounts invoiced by customers, including: brand support
costs; customer incentives; and exclusive of value added tax of goods and services supplied to external customers during the year. Brand
support costs are investments in customer promotional activities. Sales are recorded based on the price specified in the sales invoices, net
of any agreed discounts and rebates. Brand support accruals are included in the statement of financial position.
Sales related discounts and rebates are calculated based on the expected amounts necessary to meet the claims of the Group’s customers
in respect of these discounts and rebates. When the Group expects to grant a discount or relate to a customer, this is treated as variable
consideration and adjustments are made to the transaction price using the expected value method. This variable consideration is only included
to the extent that is highly probable the inclusion will not result in a significant revenue reversal in the future.
Segment reporting
An operating segment is a component of the Group that engages in business activities from which it may earn revenues and incur expenses,
including revenues and expenses that relate to transactions with any of the Group’s other components and for which discrete financial
information is available. Segment results that are reported to the Board and senior executives (as chief operating decision makers) include items
directly attributable to a segment as well as those that can be allocated on a consistent basis.
135
Strategic Report Corporate Governance Accounts
Foreign currency translation
(a) Functional and presentation currency
Functional and presentation currency items included in the financial statements of each of the Group’s entities are measured using the
currency of the primary economic environment in which the entity operates (“the functional currency”). The consolidated financial statements
are presented in £ Sterling, which is the Company’s functional and the Group’s presentation currency.
(b) Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions
or valuation where items are remeasured. Foreign exchange gains and losses resulting from the settlement of such transactions and from
the translation at year end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the income
statement in the same line in which the transaction is recorded.
Exceptional items
As permitted by IAS 1 Presentation of financial statements, an item is treated as exceptional if it is considered unusual by its nature or scale,
and is of such significance that separate disclosure is required for the financial statements to be properly understood. In determining whether
an event or transaction is exceptional, management considers quantitative as well as qualitative factors such as the frequency or predictability
of occurrence as well as the size and nature of an item both individually and when aggregated with similar items, for example restructuring costs,
product development or asset write offs. This presentation is consistent with the way that financial performance is measured by management
and reported to the Board and the Executive Committee and assists in providing a meaningful analysis of our trading results. For further details
refer to Note 7.
Intangible assets
Goodwill
Goodwill represents the excess of the consideration of an acquisition over the fair value of the Group’s share of the net identifiable assets of the
acquired subsidiary at the date of acquisition. Goodwill on acquisitions of subsidiaries is included in intangible assets. Goodwill is tested annually
for impairment and carried at cost less accumulated impairment charges. Impairment charges on goodwill are not reversed. Goodwill is
allocated to cash-generating units for the purpose of impairment testing. The allocation is made to those cash-generating units or groups
of cash-generating units that are expected to benefit from the business combination in which the goodwill arose.
An intangible asset acquired as part of a business combination is recognised outside of goodwill if the asset is separable or arises from
contractual or other legal rights and its fair value can be measured reliably.
Brands
Separately acquired brands are recognised at cost at the date of purchase. Brands acquired in a business combination are recognised at fair
value at the acquisition date. Brands acquired separately or through a business combination are assessed at the date of acquisition as to whether
they have an indefinite life. The assessment includes whether the brand name will continue to trade, and the expected lifetime of the brand.
All brands acquired to date have been assessed as having an indefinite life as they are expected to continue to contribute to the long-term future
of the Group. The brands are reviewed annually for impairment, being carried at cost less accumulated impairment charges.
The fair value of a brand at the date of acquisition is based on the Relief from Royalties method, which is a valuation model based on discounted
cash flows.
136
A.G. BARR p.l.c. Annual Report and Accounts 2022
Notes to the Accounts continued
1. Accounting Policies continued
Customer relationships
Customer relationships acquired in a business combination are recognised at fair value at the acquisition date. The customer relationships
have a finite useful life and are carried at cost less accumulated amortisation. Amortisation is calculated using the straight-line method over
the expected life of the customer relationship.
The fair value of the customer relationships at the acquisition date was based on the Multiple Excess Earnings Method (MEEM) which is a
valuation model based on discounted cash flows. The useful lives of customer relationships are based on the churn rate of the acquired portfolio
and are up to 10 years corresponding to a yearly amortisation of between 10% and 33%. The useful lives of all intangible assets are reviewed
annually and amended, as required, on a prospective basis.
Internally generated software development costs
Internally generated software development costs comprise internal and third-party consultancy costs incurred in relation to the Business
Process Redesign project. Amortisation is charged from the date the software is available for use. This is calculated using the straight-line
method over the expected useful life of the software, which is 10 years.
Property, plant and equipment
Land and buildings comprise mainly factories, distribution sites and offices. All property, plant and equipment is stated at historical cost less
accumulated depreciation and impairments. Historical cost includes expenditure that is directly attributable to the acquisition or construction
of the assets. The purchase price of an asset will include the fair value of the consideration paid to acquire the asset. Borrowing costs directly
attributable to acquisition, construction and/or production of assets that take a substantial time to complete are capitalised.
Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that
future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably.
The carrying amount of any replaced part is derecognised. All other repairs and maintenance are charged to the income statement during
the financial period in which they are incurred.
Land is not depreciated. Depreciation is charged from the date that assets, other than land, are available for use. It is calculated using the
straight-line method to allocate the cost to the residual values of the related assets using the following rates:
Buildings – 1%
Leasehold buildings – Term of lease
Plant, equipment and vehicles – 10% to 33%
Property, plant and equipment residual values and useful lives are reviewed, and adjusted if appropriate, at each year end date. The carrying
value of the property, plant and equipment is reviewed for impairment when events or changes in circumstances indicate that the recoverable
amount may be less than the carrying value.
An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated
recoverable amount.
An item of property, plant and equipment is derecognised on disposal or where no future economic benefits are expected to arise from the
continued use of the asset.
Gains and losses on disposals are determined by comparing the net proceeds with the carrying amount and are recognised within
administration costs in the income statement.
137
Strategic Report Corporate Governance Accounts
Government grants
The Group recognises government grants in accordance with IAS 20. Grants received by the Group are recognised in the income statement
and matched against the costs that the grant are intended to compensate for and are therefore shown net.
Leases
The Group as lessee
For any new contracts entered into, the Group considers whether a contract is, or contains, a lease. A lease is defined as any contract, or part of
a contract, that conveys the right to use an asset (the underlying asset) for a period of time in exchange for consideration. To apply this definition
the Group assesses whether the contract meets three key evaluations which are whether:
– The contract contains an identified asset, which is either explicitly identified in the contract or implicitly specified by being identified at the
time the asset is made available to the Group
– The Group has the right to obtain substantially all of the economic benefits from use of the identified asset throughout the period of use,
considering its rights within the defined scope of the contract
– The Group has the right to direct the use of the identified asset throughout the period of use. The Group assesses whether it has the right
to direct the use of the identified assets through the period of use. The Group assesses whether it has the right to direct “how and for what
purpose” the asset is used throughout the period of use
Measurement and recognition of leases as a lessee
At lease commencement date, the Group recognises a right-of-use asset and a lease liability on the balance sheet. The right-of-use asset is
measured at cost, which is made up of the initial measurement of the lease liability, any initial direct costs incurred by the Group, an estimate
of any costs to dismantle and remove the asset at the end of the lease, and any lease payments made in advance of the lease commencement
date (net of any incentives received). The Group depreciates the right-of-use assets on a straight-line basis from the lease commencement date
to the earlier of the end of the useful life of the asset or the end of the lease term. The Group also assesses the right-of-use asset for impairment
where such indicators exist.
Lease payments included in the measurement of the lease liability are made up of fixed payments, variable payments based on an index or rate,
amounts expected to be payable under a residual guarantee and payments arising from options reasonably certain to be exercised. Subsequent
to initial measurement, the liability will be reduced for payments made and increased for interest. It is remeasured to reflect any reassessment
or modification, or if there are changes in in-substance fixed payments. When the lease liability is remeasured, the corresponding adjustment
is reflected in the right-of-use asset, or profit and loss if the right-of-use asset is already reduced to zero.
The Group has elected to account for short-term leases and leases of low-value assets using the practical expedients. Instead of recognising the
right-of-use asset and lease liability, the payments in relation to these are recognised as an expense in profit or loss on a straight-line basis over
the lease term.
On the balance sheet, right-of-use assets and lease liabilities have been disclosed separately.
Investment in associates
An associate is an entity over which the Group has significant influence that is neither a subsidiary nor an interest in a joint venture. Significant
influence is the power to participate in the financial and operating policy decisions of the investee but is not control or joint control over
thosepolicies.
138
A.G. BARR p.l.c. Annual Report and Accounts 2022
Notes to the Accounts continued
1. Accounting Policies continued
The results, assets and liabilities of associates are incorporated in these financial statements using the equity method of accounting. The
investment is recognised initially in the statement of financial position at cost, and is adjusted thereafter to recognise the Group’s share of the
profit or loss and other comprehensive income of the associate. On acquisition, any excess of the cost of the investments over the Group’s
share of the net fair value of the identifiable assets and liabilities of the investee is recognised as goodwill, which is included within the carrying
amount of the investment. Any excess of the Group’s share of the net fair value of identifiable assets and liabilities over the cost of the
investment, after reassessment, is recognised immediately in profit or loss in which the investment is acquired.
Impairment of non-financial assets
Assets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment. Assets that are subject to
amortisation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not berecoverable.
An impairment charge is recognised in the income statement for the amount by which the asset’s carrying amount exceeds its recoverable
amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. In assessing value in use, the estimated
future cash flows are discounted to their present value using a post-tax discount rate that is based on current market assessments of the time
value of money and risks specific to the asset for which the future cash flow estimates have not been adjusted.
For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows
(cash-generating units). Non-financial assets other than goodwill that suffered an impairment are reviewed for possible reversal of the
impairment at each reporting date.
A previously recognised impairment loss is reversed only if there has been a change in the estimates used to determine the asset’s recoverable
amount since the impairment loss was recognised although any reversal cannot result in a carrying amount that would exceed the carrying
amount that would have been recognised, net of depreciation, had no impairment loss been recognised in prior years.
Non-derivative financial instruments
Non-derivative financial instruments comprise investments in equity and debt securities, loans receivable, trade and other receivables, cash
and cash equivalents, loans and borrowings, and trade payables.
Trade receivables
Trade receivables are recognised initially at transaction price. Subsequent to initial recognition, they are measured at amortised cost using
the effective interest method, less an allowance for expected credit losses (ECL). The amount of the expected credit loss is updated at each
reporting date to reflect changes in credit risk since initial recognition of the receivable. In assessing whether the credit risk on trade receivables
has increased significantly since initial recognition, the Group compares the risk of a default occurring on the receivable at the reporting date
with the risk of a default occurring on the receivable at the date of original recognition. In making this assessment, the Group considers both
quantitative and qualitative information that is reasonable and supportable, including historical experience and forward-looking information that
is available without undue cost and effort. The Group always recognises lifetime ECL for trade receivables. The expected credit loss on these
financial assets are estimated using a provision matrix based on the Group’s historical credit loss experience, adjusted for factors that are specific
to the debtors, general economic conditions and an assessment of both the current as well as the forecast direction of conditions at the
reporting date, including time value of money where appropriate. The carrying amount of the asset is reduced by the allowance for expected
credit losses and the amount of the loss is recognised in the income statement within administration costs.
Trade and other payables
Trade and other payables are recognised initially at fair value. Subsequent to initial recognition they are measured at amortised cost using
the effective interest method.
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Strategic Report Corporate Governance Accounts
Investments
Investments in subsidiaries are carried at cost less impairment in the parent Company accounts.
Cash and cash equivalents
Cash and cash equivalents comprise cash balances and call deposits.
Interest-bearing borrowings
Interest-bearing borrowings are recognised initially at fair value less attributable transaction costs. Subsequent to initial recognition,
interest-bearing borrowings are stated at amortised cost using the effective interest method.
Derivative financial instruments and hedging activities
The Group enters into derivative financial instruments to manage its exposure to foreign exchange rate risks using foreign exchange forward
contracts. Further details of derivative financial instruments are disclosed in Note 15.
Derivatives are recognised initially at fair value at the date a derivative contract is entered into and are subsequently remeasured to their fair
value. The gain or loss on remeasurement is recognised in the income statement immediately unless the derivative is designated and effective
as a hedging instrument, in which event the timing of the recognition in the income statement depends on the nature of the hedge relationship.
A derivative with a positive fair value is recognised as a financial asset, whereas a derivative with a negative fair value is recognised as a financial
liability. Derivatives are not offset in the financial statements unless the Group has both legal right and intention to offset. The impact of hedging
on the Group’s financial position is disclosed in Note 15. A derivative is presented as a non-current asset or a non-current liability if the remaining
maturity of the instrument is more than 12 months and it is not expected to be realised or settled within 12 months. Other derivatives are
presented as current assets or current liabilities.
Cash flow hedges
The Group designates certain derivatives as hedging instruments in respect of foreign currency risk in cash flow hedges, including hedges
of foreign exchange risk on firm commitments.
At the inception of the hedge relationship, the Group documents the relationship between the hedging instrument and the hedged item, along
with its risk management objectives and its strategy for undertaking various hedge transactions. Furthermore, at the inception of the hedge and
on an ongoing basis, the Group documents whether the hedging instrument is effective in offsetting changes in fair values or cash flows of the
hedged item attributable to the hedged risk, which is when the hedging relationship meets all of the following hedge
effectivenessrequirements:
– There is an economic relationship between the hedged item and the hedging instrument
– The effect of credit risk does not dominate the value changes that result from that economic relationship. (The Group does not consider
credit risk to be material but will monitor on an ongoing basis)
– The hedge ratio of the hedging relationship is the same as that resulting from the quantity of the hedged item that the Group actually hedges
and the quantity of the hedging instrument that the Group actually uses to hedge that quantity of hedged item
The Group designates the full change in the fair value of a forward contract (i.e. including the forward elements) as the hedging instruments
for all of its hedging relationships.
The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges is recognised in other
comprehensive income and accumulated under the heading of cash flow hedging reserve. The gain or loss relating to the ineffective portion is
recognised immediately in the income statement within administration costs. Amounts accumulated in equity are recycled through the income
statement in the period when the hedged item affects profit or loss.
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Notes to the Accounts continued
1. Accounting Policies continued
Inventories
Inventories are stated at the lower of cost and net realisable value. Net realisable value is the estimated selling price in the ordinary course
of business less the estimated costs of completing production and selling expenses.
The cost of inventories is based on the first-in first-out principle and includes expenditure incurred in acquiring the inventories and bringing
them to their primary distribution location and condition. This includes direct labour costs and an appropriate share of overheads based on
normal operating activity.
Company shares held by employee benefit trusts
Company shares are purchased on behalf of employee benefit trusts to satisfy the liability of various employee share schemes. The amount
of the consideration paid, including directly attributable costs, is recognised as a charge in equity. Purchased shares are classified as Company
shares held by employee benefit trusts, and presented as a deduction from retained earnings.
Current and deferred income tax
Tax on the profit or loss for the year comprises current and deferred tax.
Current tax is charged in the income statement except where it relates to tax on items recognised directly in equity, in which case it is charged
toequity.
Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at the year end date
and any adjustment to tax payable in respect of previous years.
Deferred tax is provided in full using the liability method, providing for temporary differences between the tax bases of assets and liabilities and
their carrying amounts, in the consolidated financial statements.
The following temporary differences are not provided for:
– the initial recognition of goodwill
– differences relating to investments in subsidiaries to the extent that they will probably not reverse in the foreseeable future
Deferred tax is determined using tax rates and laws that have been enacted or substantively enacted by the year end date and are expected to
apply when the related deferred tax asset is realised or the deferred tax liability is settled. A deferred tax asset is recognised only to the extent that
it is probable that future taxable profits will be available against which the asset can be utilised. Deferred tax assets are reduced to the extent that
it is no longer probable that the related tax benefit will be realised.
Employee benefits
Retirement benefit plans
The Group operates two pension schemes, as detailed in Note 28. The schemes are generally funded through payments to trustee-administered
funds. The Group has both defined benefit and defined contribution plans.
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Strategic Report Corporate Governance Accounts
Defined contribution pension plans
A defined contribution plan is a pension plan under which the Group pays fixed contributions into a separate entity. Obligations for contributions
are recognised as an expense in the income statement as they fall due. The Group has no further payment obligations once the contributions
have been paid.
Defined benefit pension plans
A defined benefit plan is a pension plan that is not a defined contribution plan. Typically defined benefit plans define an amount of pension
benefit that an employee will receive on retirement, usually dependent on one or more factors such as age, years of service and compensation.
The liability/surplus recognised in the statement of financial position in respect of defined benefit pension plans is the present value of plan
assets less the fair value of the defined benefit obligation. The defined benefit obligation is calculated annually by independent actuaries using
the projected unit credit method.
The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows using interest rates of
high-quality corporate bonds that are denominated in the currency in which the benefits will be paid, and that have terms to maturity
approximating to the terms of the related pension liability.
Actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions are charged or credited to equity in other
comprehensive income in the period in which they arise.
The Group recognises gains and losses on the settlement of a defined benefit plan when the settlement occurs. The gain or loss on a settlement
is the difference between the present value of the defined benefit obligation being settled as determined on the date of settlement and the
settlement price, including any plan assets transferred and any payments made directly by the Group in connection with the settlement.
The Group’s defined benefit plan was closed to future accrual on 1 May 2016.
Share-based compensation
The Group grants equity-settled share-based payments to certain employees. These are measured at fair value (excluding the effect of non
market-based vesting conditions) at the grant date. The fair value of the equity-settled share-based payment determined at the grant date is
expensed on a straight-line basis over the vesting period, based on the Group’s estimate of the shares that will eventually vest and adjusted
for the effect of non market-based vesting conditions. Fair value is measured using the Black-Scholes pricing model.
The Group also provides employees with the ability to purchase the Company’s ordinary shares at a discount to the current market value
through payroll.
The Group records as an expense the fair value of the discount on the shares purchased by the employee as a charge to the income statement
and a credit to the share options reserve.
At each year end date, the entity revises its estimates of the number of options that are expected to vest based on the non market vesting
conditions. It recognises the impact of the revision to original estimates, if any, in the income statement, with a corresponding adjustment
to the share options reserve.
Profit-sharing and bonus plans
The Group recognises a liability and an expense for various bonuses based on formulae that take into consideration the profit attributable
to the Company’s shareholders after certain adjustments.
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Notes to the Accounts continued
1. Accounting Policies continued
The Group recognises a provision where there is a contractual obligation or where there is a past practice that has created a constructiveobligation.
Provisions
A provision is recognised if, as the result of a past event, the Group has a present legal or constructive obligation that can be estimated reliably
and it is probable that an outflow of economic benefits will be required to settle the obligation.
A restructuring provision is recognised when the Group has approved a detailed and formal restructuring plan which has been either announced
or has commenced. Future operating costs are not provided for.
Dividend distributions
Dividend distributions to the Company’s shareholders are recognised as a liability in the Group’s financial statements in the period in which
the dividends are approved by the Company’s shareholders.
Share repurchase programme
Any share repurchase programmes would result in the cancellation of repurchased shares and the transfer of the relevant permanent capital
into a Capital Redemption Reserve. The Capital Redemption Reserve is included in “Other reserves” within equity. Refer to Note 29.
Alternative performance measures
Alternative performance measures (APMs) are tracked by management to assess the Group’s operating performance and to inform financial,
strategic and operating decisions. These are therefore presented within the Annual Report and Accounts. Definitions of APMs and reconciliation
to GAAP measures can be found in the Glossary on pages 188 to 191.
Critical accounting judgements and key sources of estimation uncertainty
The preparation of financial statements requires management to make assumptions and estimates that affect the amounts reported for assets
and liabilities as at the statement of financial position date and the amounts reported for revenues and expenses during the year. Due to the
nature of estimation, the actual outcomes may well differ from these estimates.
The critical accounting judgements and key sources of estimation uncertainty at the end of the reporting period that may have a significant risk
of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are:
Exceptional items
The determination of whether items are exceptional or not are set out in Note 7.
Retirement benefit obligations
The determination of any defined benefit pension scheme surplus/obligation is based on assumptions determined with independent actuarial
advice. The assumptions used include discount rate, inflation, pension increases, salary increases, the expected return on scheme assets and
mortality assumptions. The material estimations are those for which a sensitivity analysis is provided in Note 28. The directors consider that
those sensitivities provided in Note 28 represent reasonable sensitivities that could occur.
Sales related rebates and discounts
The Group agrees to pay customers various amounts in the form of sales related rebates and discounts. Accruals are made for each individual
promotion or rebate based on the specific terms and conditions of the customer agreement. Management make estimates on an ongoing basis
to assess customer performance and sales volume to calculate the total amounts earned to be deducted from revenue. Based on total rebate
and discount spend in the year 3% of spend would need to be omitted to result in a material error in the value of accruals made at year end.
143
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Valuation of put liability
During the year, the Group acquired a controlling stake in MOMA Foods Limited and issued a put option to the seller to sell their remaining
shares. The put option is exercisable in June 2025. The put liability valuation is sensitive to revenue forecasts and discount rates. Details of
the assumptions are set out in Note 25.
Climate change is a global challenge and an emerging risk to businesses, people and the environment across the world. We have a role to play
in limiting warming by improving our energy management, reducing our carbon emissions and by helping our customers and suppliers do the
same. In our view, climate change does not create any further key sources of estimation uncertainty in these financial statements. For further
details, see the Risk Management and Sustainability sections of the Strategic Report.
2. Segment reporting
The Board and senior executives have been identified as the Group’s chief operating decision-makers, who review the Group’s internal reporting
in order to assess performance and allocate resources.
The performance of the operating segments is assessed by their reference to their gross profit before exceptional items.
During the year ended 30 January 2022, the Group has amended the composition of reportable segments to better reflect internal reporting.
Accordingly, the Group has restated the previously reported segment information for the year ended 24 January 2021.
Year ended 30 January 2022
Soft drinks
£m
Cocktail
solutions
£m
Other
£m
Total
£m
Total revenue 230.6 36.9 1.1 268.6
Gross profit 103.5 14.7 0.4 118.6
Year ended 24 January 2021 restated
Soft drinks
£m
Cocktail
solutions
£m
Other
£m
Total
£m
Total revenue 210.0 17.0 – 227.0
Gross profit 88.7 6.1 – 94.8
There are no material intersegment sales. All revenue is in relation to product sales, which is recognised at point in time, upon delivery to
thecustomer.
The gross profit before exceptional items from the segment reporting is reconciled to the total profit before income tax, as shown in the
consolidated income statement.
144
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Notes to the Accounts continued
2. Segment reporting continued
All of the assets and liabilities of the Group are managed on a central basis rather than at a segment level. As a result, no reconciliation
of segment assets and liabilities to the statement of financial position has been disclosed for either of the periodspresented.
Included in revenues arising from the above segments are revenues of approximately £51.5m, which arose from sales to the Group’s largest
customer (2021: £45.6m). No other single customers contributed 10% or more to the Group’s revenue in either 2021 or 2022.
All of the segments included within “Soft drinks” and “Cocktail solutions” meet the aggregation criteria set out in IFRS 8 Operating Segments.
Geographical information
The Group operates predominantly in the UK with some worldwide sales. All of the operations of the Group are based in the UK.
Revenue
2022
£m
2021
£m
UK 257.3 219.0
Rest of the world 11.3 8.0
268.6 227.0
The rest of the world revenue includes sales to the Republic of Ireland and international wholesale export houses.
All of the assets of the Group are located in the UK.
3. Profit before tax
The following items have been included in arriving at profit before tax before exceptional items:
2022
£m
2021
£m
Depreciation of property, plant and equipment 8.4 8.9
Depreciation of right-of-use assets 1.5 2.9
Amortisation of intangible assets 1.3 1.1
Cost of inventories charged in cost of sales 150.0 132.2
Trade receivables impairment movement – (0.2)
Foreign exchange gains recognised (0.2) (0.2)
Staff costs (Note 4) 50.2 46.7
R&D costs for the year totalled £1.3m (2021: £1.0m), with elements of these costs included in the table above.
Included within administration costs (Note 6) is the auditor’s remuneration, including expenses for audit and non-audit services.
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Strategic Report Corporate Governance Accounts
The cost includes services from the Company’s auditor and its associates:
2022
£’000
2021
£’000
Statutory audit services
Fees payable to the auditor of the parent Company and consolidated accounts 170 150
Fees payable to the auditor for other services:
Audit of the Company’s subsidiaries pursuant to legislation 20 18
Non-audit services
Audit-related assurance services 30 28
Other services 5 4
4. Employees and directors
2022 2021
Average monthly number of people employed by the Group (including executive directors)
Production and distribution 643 638
Administration 236 261
879 899
Staff costs for the Group for the year
2022
£m
2021
£m
Wages and salaries 40.2 38.9
Social security costs 4.8 4.5
Share-based payments 1.2 0.7
Pension costs – defined contribution plans 3.8 3.6
Pension costs – defined benefit plans 0.2 0.3
Furlough income – (1.3)
50.2 46.7
The expense incurred in relation to redundancy related items has been shown separately in Note 7.
146
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Notes to the Accounts continued
5. Other income
2022 2021
Before
exceptional
items
£m
Exceptional
items*
£m
Total
£m
Before
exceptional
items
£m
Exceptional
items*
£m
Total
£m
Gain on sale of property – 0.7 0.7 – – –
Rockstar compensation – – – – 7.6 7.6
Total – 0.7 0.7 – 7.6 7.6
* Refer to Note 7 for details of exceptional income.
6. Net operating expenses
2022 2021
Before
exceptional
items
£m
Exceptional
items*
£m
Total
£m
Before
exceptional
items
£m
Exceptional
items*
£m
Total
£m
Distribution costs (including selling costs) 41.7 – 41.7 35.7 0.5 36.2
Administration costs 34.9 – 34.9 25.5 12.7 38.2
76.6 – 76.6 61.2 13.2 74.4
* An explanation of exceptional items is provided in Note 7.
7. Exceptional items
Exceptional items are those that in management’s judgement need to be disclosed by virtue of their size and/or nature. In determining whether
an event or transaction is exceptional, management considers quantitative as well as qualitative factors such as the frequency or predictability
of occurrence as well as the size and nature of an item both individually and when aggregated with similar items, for example restructuring costs,
product development or asset write offs. This presentation is consistent with the way that financial performance is measured by management
and reported to the Board and senior executives, and assists in providing a meaningful analysis of our trading results.
Such items are included within the income statement caption to which they relate, and are separately disclosed in the note below.
It is believed that separate disclosure of exceptional items further helps investors to understand the performance of the Group.
2022
£m
2021
£m
Gain on sale of property (0.7) –
Redundancy costs for business reorganisation and restructure – 3.1
Impairment of Strathmore intangible and tangible assets – 10.0
Funkin goodwill adjustment – 1.3
Rockstar compensation – (7.6)
Total exceptional net (income)/charge (0.7) 6.8
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Strategic Report Corporate Governance Accounts
2022
£m
2021
£m
Items included in cost of sales
Redundancy costs for business reorganisation and restructure – 1.2
Total included in cost of sales – 1.2
2022
£m
2021
£m
Items included in other income
Gain on sale of property (0.7) –
Rockstar compensation – (7.6)
Total included in other income (0.7) (7.6)
2022
£m
2021
£m
Items included in administration costs
Redundancy costs for business reorganisation and restructure – 1.4
Impairment of Strathmore brand – 7.0
Impairment of Strathmore goodwill – 1.9
Impairment of Strathmore property, plant and equipment – 1.1
Funkin goodwill adjustment – 1.3
Total included in administration costs – 12.7
2022
£m
2021
£m
Items included in distribution and selling costs
Redundancy costs for business reorganisation and restructure – 0.5
Total included in distribution and selling costs – 0.5
Total exceptional net charge included in operating expenses – 13.2
Total exceptional net (income)/charge (0.7) 6.8
The tax impact of these charges are shown in Note 9.
During the year ended 30 January 2022, a gain on sale was made on the disposal of the Sheffield distribution depot. This asset was classified as
an asset held for sale as at 24 January 2021 and the sale was completed in February 2021. Although the gain on sale in isolation is not exceptional,
the site disposal was part of a Group-wide re-engineering programme, the costs of which were considered to be non-recurring and exceptional
in nature and which were reported as exceptional in the year ended 24 January 2021.
In the prior year, £3.1m of costs were incurred relating to the then ongoing change programme, which commenced in the year ending
25 January 2020 and is now complete. A £10.0m impairment charge of the Strathmore Water business operations was incurred following
a review of intangibles assets in the year. The termination of the Rockstar franchise entitled the Group to a one-off contractual termination
payment of £7.6m, and there was a £1.3m non-cash charge to the income statement relating to Funkin acquisition goodwill.
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Notes to the Accounts continued
8. Finance costs
2022
£m
2021
£m
Interest payable (0.2) (0.4)
Lease interest (0.1) (0.1)
Finance costs relating to defined benefit pension plans (Note 28) (0.1) (0.2)
(0.4) (0.7)
9. Taxation
2022 2021
Group
Before
exceptional
items
£m
Exceptional
items
£m
Total
£m
Before
exceptional
items
£m
Exceptional
items
£m
Total
£m
Charge/(credit) to the income statement
Current tax on profits for the year 7.1 – 7. 1 6.4 0.8 7. 2
Adjustments in respect of prior years (0.3) – (0.3) (0.5) – (0.5)
Total current tax expense 6.8 – 6.8 5.9 0.8 6.7
Deferred tax
Origination and reversal of:
Temporary differences 1.3 – 1.3 0.1 (1.9) (1.8)
Adjustment for change in corporation tax rate 5.7 – 5.7 2.2 – 2.2
Adjustments in respect of prior years 0.6 – 0.6 (0.2) – (0.2)
Total deferred tax expense (Note 25) 7.6 – 7.6 2.1 (1.9) 0.2
Total tax expense/(credit) 14.4 – 14.4 8.0 (1.1) 6.9
In addition to the above movements in deferred tax, a deferred tax credit of £0.3m (2021: credit of £0.4m) has been recognised in other
comprehensive income and a credit of £0.4m (2021: debit of £0.2m) has been taken direct to reserves (Note 26).
The tax on the Group’s profit before tax differs from the amount that would arise using the tax rate applicable to the consolidated profits of the
Group as follows:
2022
£m
2022
%
2021
£m
2021
%
Profit before tax 42.2 26.0
Tax at 19.0% (2021: 19.0%) 8.0 19.0 4.9 19.0
Tax effects of:
Items that are not deductible in determining taxable profit 0.4 0.9 0.6 2.3
Current tax adjustment in respect of prior years (0.3) (0.7) (0.5) (1.9)
Deferred tax adjustment in respect of prior years 0.6 1.4 (0.2) (0.8)
Deferred tax adjustment in respect of change in corporation tax rates 5.7 13.5 2.2 8.5
Other differences – – (0.1) (0.3)
Total tax expense 14.4 34.1 6.9 26.8
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Strategic Report Corporate Governance Accounts
The weighted average tax rate was 34.1% (2021: 26.8%).
In March 2021, the UK Government announced that the corporation tax rate would increase from 19% to 25% effective from 1 April 2023,
which was substantively enacted on 24 May 2021. The impact of this was a one-off increase in the deferred tax charge of £5.7m.
10. Earnings per share
Basic earnings per share has been calculated by dividing the earnings attributable to equity holders of the parent by the weighted average
number of shares in issue during the year, excluding shares held by the employee share scheme trusts.
2022 2021
Profit attributable to equity holders of the Company (£m) 27.9 19.1
Weighted average number of ordinary shares in issue 111,187,778 111,171,047
Basic earnings per share (pence) 25.09 17.18
For diluted earnings per share, the weighted average number of ordinary shares in issue is adjusted to assume conversion of all potentially
dilutive ordinary shares. These represent share options granted to employees where the exercise price is less than the average market price
of the Company’s ordinary shares during the year. The number of shares as calculated above is compared with the number of shares that
would have been issued assuming the exercise of the share options.
2022 2021
Profit attributable to equity holders of the Company (£m) 27.9 19.1
Weighted average number of ordinary shares in issue 111,187,778 111,171,047
Adjustment for dilutive effect of share options 657,074 140,959
Diluted weighted average number of ordinary shares in issue 111,844,852 111,312,006
Diluted earnings per share (pence) 24.95 17.16
The earnings per share figure before exceptional items is calculated by using profit attributable to equity holders before exceptional items:
2022 2021
Profit attributable to equity holders of the Company before exceptional items (£m) 27. 2 24.8
Weighted average number of ordinary shares in issue 111,187,778 111,171,047
Basic earnings per share before exceptional items (pence) 24.46 22.31
This measure has been included in the financial statements as it provides a closer guide to the underlying financial performance, as the
calculation excludes the effect of exceptional items.
150
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Notes to the Accounts continued
11. Dividends
In April 2020, given the unprecedented circumstances arising from Covid-19, we communicated our decision to temporarily suspend dividend
payments, one of a number of important actions we took to conserve cash and maintain balance sheet flexibility. As a result, no dividends were
paid or declared in the year ended 24 January 2021.
As reported in the Annual Report and Accounts for the year ended 24 January 2021, the Board indicated their intention to recommence dividend
payments during the course of the current year.
An interim dividend of 2.0p per share was approved by the Board on 28 September 2021. In addition, following a review of the Group’s net cash
position and future funding requirements, the Board approved a special dividend of 10.0p per share recognising the benefit of a number of
one-off cash inflows that were outside normal trading. These dividends were paid on 29 October 2021 to shareholders on the Register of
Members as of 8 October 2021.
The directors have proposed a final dividend in respect of the year ended 30 January 2022 of 10.0p per share. Subject to approval by
shareholders it will be paid on 10 June 2022 to shareholders on the Register of Members on 13 May 2022.
Dividends paid in the financial year were as follows:
2022
per share
2021
per share
2022
£m
2021
£m
Interim dividend 2.00p – 2.2 –
Special dividend 10.00p – 11.2 –
12.00p – 13.4 –
Dividends payable in respect of the financial year were as follows:
2022
per share
2021
per share
Interim dividend 2.00p –
Special dividend 10.00p –
Final dividend 10.00p –
22.00p –
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Strategic Report Corporate Governance Accounts
12. Intangible assets
Group
Goodwill
£m
Brands
£m
Customer
relationships
£m
Water
rights
£m
Software
development
costs
£m
Total
£m
Cost
At 25 January 2020 39.0 57.1 3.9 0.7 11.9 112.6
Disposals – – – – (0.1) (0.1)
At 24 January 2021 39.0 57.1 3.9 0.7 11.8 112.5
Additions 1.0 8.4 – – – 9.4
At 30 January 2022 40.0 65.5 3.9 0.7 11.8 121.9
Amortisation and impairment losses
At 25 January 2020 0.4 0.3 3.8 0.7 5.6 10.8
Amortisation for the year – – – – 1.1 1.1
Disposals – – – – (0.1) (0.1)
Impairment for the year 1.9 7.0 – – – 8.9
Funkin goodwill adjustment 1.3 – – – – 1.3
At 24 January 2021 3.6 7.3 3.8 0.7 6.6 22.0
Amortisation for the year – – 0.1 – 1.2 1.3
At 30 January 2022 3.6 7.3 3.9 0.7 7.8 23.3
Carrying amounts
At 30 January 2022 36.4 58.2 – – 4.0 98.6
At 24 January 2021 35.4 49.8 0.1 – 5.2 90.5
During the year ended 30 January 2022, the Group acquired a 61.8% interest in MOMA Foods Limited (MOMA), details of brands and goodwill
recognised on acquisition are included in Note 16.
The remaining goodwill and brands recognised relate primarily to the acquisition of the Strathmore Water business, Rubicon Drinks Limited and
Funkin Limited. The software development costs represent internally generated software development costs and third party consultancy costs
incurred in relation to the Business Process Redesign project implemented in 2015.
The opening customer relationships balance represents intangible assets recognised on the acquisition of the Strathmore Water business,
Rubicon Drinks Limited and Funkin Limited. The amortisation charge represents the spreading of the cost over the assets’ expected useful lives.
All customer relationships are fully amortised.
The amortisation costs for the year to 30 January 2022 have been included in the income statement as administration costs.
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Notes to the Accounts continued
12. Intangible assets continued
Company
Goodwill
£m
Brands
£m
Customer
relationships
£m
Water
rights
£m
Software
development
costs
£m
Total
£m
Cost
At 25 January 2020 1.9 7.3 1.0 0.7 11.9 22.8
Disposals – – – – (0.1) (0.1)
At 24 January 2021 1.9 7.3 1.0 0.7 11.8 22.7
At 30 January 2022 1.9 7.3 1.0 0.7 11.8 22.7
Amortisation and impairment losses
At 25 January 2020 – 0.3 1.0 0.7 5.6 7.6
Amortisation for the year – – – – 1.2 1.2
Disposals – – – – (0.1) (0.1)
Impairment for the year 1.9 7.0 – – – 8.9
At 24 January 2021 1.9 7.3 1.0 0.7 6.7 17.6
Amortisation for the year – – – – 1.2 1.2
At 30 January 2022 1.9 7.3 1.0 0.7 7.9 18.8
Carrying amounts
At 30 January 2022 – – – – 3.9 3.9
At 24 January 2021 – – – – 5.1 5.1
The goodwill and brands recognised in the Company relate to the acquisition of the Strathmore Water business. The software development
costs represent internally generated software development costs and third party consultancy costs incurred in relation to the Business Process
Redesign project.
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Impairment tests for goodwill and brands
For impairment testing, goodwill and brands are allocated to the cash-generating unit (CGU) representing the lowest level at which goodwill is
monitored for internal management purposes. The Group tests whether there has been any impairment of intangible assets on an annual basis
or when there is an indication of impairment. The recoverable amount of a CGU is based on value in use calculations. These calculations use
pre-tax cash flow projections based on financial forecasts approved by management which cover a five-year period. Cash flows beyond five
years are extrapolated using the growth rates and other key assumptions noted below.
The aggregate carrying amounts of goodwill allocated to each CGU are:
At 30 January 2022
Goodwill
£m
Brands
£m
Customer
relationships
£m
Total
£m
Rubicon 21.0 43.0 – 64.0
Funkin 14.4 6.8 – 21.2
MOMA 1.0 8.4 – 9.4
Total 36.4 58.2 – 94.6
At 24 January 2021
Goodwill
£m
Brands
£m
Customer
relationships
£m
Total
£m
Rubicon 21.0 43.0 – 64.0
Funkin 14.4 6.8 0.1 21.3
Total 35.4 49.8 0.1 85.3
Key assumptions for each CGU:
2022 2021
Growth rate
%
Discount rate
%
Growth rate
%
Discount rate
%
Rubicon 2.0 8.7 2.0 9.3
Funkin 2.0 8.7 2.0 9.3
Strathmore – 8.7 – 9.3
MOMA 3.0 18.0 – –
In the year ended 24 January 2021, a review of the outlook for both the Strathmore brand and the water sector highlighted an impairment
requirement resulting in the write-down of the Strathmore brand £7.0m, goodwill of £1.9m and tangible fixed assets of plant and equipment of £1.1m.
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Notes to the Accounts continued
12. Intangible assets continued
Key assumptions used in value in use calculations
The following describes each key assumption on which management has based its cash flow projections to undertake impairment testing
ofgoodwill:
– Volume growth rates – reflect management expectations of volume growth based on growth achieved to date, current strategy and
expected market trends, and will vary according to each CGU.
– Marginal contribution – being revenue less material costs and all other marginal costs that management considers to be directly attributable
to the sale of a given product. Marginal contribution is based on approved financial budgets. Key assumptions are made within these budgets
about pricing, discounts and costs based on historical data, current strategy and expected market trends.
– Advertising and promotional spend – financial budgets approved by management are used to determine the value assigned to advertising
and promotional spend. This is based on planned spend for year one and strategic intent thereafter.
– Raw material price, production and distribution costs, selling costs and other overhead inflation – based on approved financial budgets,
which incorporate current material coverage, current strategy and expected market trends.
– The discount rate reflects management’s estimate of post-tax cost of capital adjusted for the specific risks impacting on each operating
unit. The estimated pre-tax cost of capital is based on guidance provided by an independent third party to the Group.
Sensitivity analysis was carried out on the above calculations to review possible levels of impairment under a range of different assumptions,
e.g. adjusting discount rates. At a pre-tax rate of 12%, or a reduction in long-term growth of 1%, none of the CGUs were impaired. Whilst cash
flow projections used within the impairment reviews are subject to inherent uncertainty, reasonably possible changes to the key assumptions
applied in assessing the value in use calculation would not result in a change in the impairment conclusions reached.
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Strategic Report Corporate Governance Accounts
13. Property, plant and equipment
Group
Land and buildings
Plant,
equipment
and vehicles
£m
Assets under
construction
£m
Total
£m
Freehold
£m
Long
leasehold
£m
Cost or deemed cost
At 25 January 2020 62.4 0.4 98.8 14.3 175.9
Additions – – 3.8 2.1 5.9
Transfer from assets under construction 3.2 – 10.6 (13.8) –
Transfer to available for sale assets (0.8) – – – (0.8)
Disposals – – (3.3) – (3.3)
At 24 January 2021 64.8 0.4 109.9 2.6 17 7.7
Additions 0.2 – 1.0 4.6 5.8
Transfer from assets under construction 0.6 – 2.7 (3.3) –
Disposals (0.1) – (0.4) – (0.5)
At 30 January 2022 65.5 0.4 113.2 3.9 183.0
Depreciation
At 25 January 2020 6.7 0.4 67.6 – 74.7
Amount charged for year 0.7 – 8.2 – 8.9
Impairment 0.4 – 0.7 – 1.1
Transfer to available for sale assets (0.4) – – – (0.4)
Disposals – – (3.0) – (3.0)
At 24 January 2021 7.4 0.4 73.5 – 81.3
Amount charged for year 0.8 – 7.6 – 8.4
Disposals (0.1) – (0.4) – (0.5)
At 30 January 2022 8.1 0.4 80.7 – 89.2
Net book value
At 30 January 2022 57.4 – 32.5 3.9 93.8
At 24 January 2021 57.4 – 36.4 2.6 96.4
In the prior year, the Strathmore Water business was tested for impairment, resulting in the impairment of land and buildings of £0.4m and plant
and equipment of £0.7m. Further details are included in Note 12.
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Notes to the Accounts continued
13. Property, plant and equipment continued
Group
Land and buildings
Plant,
equipment
and vehicles
£m
Assets under
construction
£m
Total
£m
Freehold
£m
Long
leasehold
£m
Cost or deemed cost
At 25 January 2020 39.5 0.3 98.1 14.4 152.3
Additions – – 3.7 2.1 5.8
Transfer from assets under construction 3.2 – 10.6 (13.8) –
Transfer to available for sale assets (0.8) – – – (0.8)
Disposals – – (3.3) – (3.3)
At 24 January 2021 41.9 0.3 109.1 2.7 154.0
Additions 0.1 – 0.9 4.5 5.5
Transfer from assets under construction 0.6 – 2.7 (3.3) –
Disposals – – (0.4) – (0.4)
At 30 January 2022 42.6 0.3 112.3 3.9 159.1
Depreciation
At 25 January 2020 3.6 0.3 66.9 – 70.8
Amount charged for year 0.4 – 8.2 – 8.6
Impairment 0.4 – 0.7 – 1.1
Transfer to available for sale assets (0.4) – – – (0.4)
Disposals – – (3.0) – (3.0)
At 24 January 2021 4.0 0.3 72.8 – 7 7.1
Amount charged for year 0.5 – 7.5 – 8.0
Disposals – – (0.4) – (0.4)
At 30 January 2022 4.5 0.3 79.9 – 84.7
Net book value
At 30 January 2022 38.1 – 32.4 3.9 74.4
At 24 January 2021 3 7.9 – 36.3 2.7 76.9
At 30 January 2022, the Group and the Company had entered into contractual commitments for the acquisition of property, plant and
equipment amounting to £9.5m (2021: £0.8m).
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14. Leases
This note provides information for leases where the Group is a lessee. The Group is not a lessor.
(i) Amounts recognised in the balance sheet
The balance sheet shows the following amounts relating to leases:
Group Company
2022
£m
2021
£m
2022
£m
2021
£m
Right-of-use assets
Buildings 0.7 1.1 19.7 19.3
Plant, equipment and vehicles 3.5 1.4 3.5 2.2
4.2 2.5 23.2 21.5
Lease liabilities
Current 1.3 1.1 2.6 2.2
Non-current 2.8 1.4 19.3 18.4
4.1 2.5 21.9 20.6
Company only right-of-use assets and lease liabilities relate to assets leased under the asset-backed funding arrangements, as outlined in Note28.
Additions to the right-of-use assets during 2022 were £3.1m (2021:£0.8m) for the Group and the Company.
(ii) Amounts recognised in the income statement
The income statement shows the following amounts relating to leases:
2022
£m
2021
£m
Depreciation charge of right-of-use assets
Buildings 0.4 0.4
Plant, equipment and vehicles 1.1 2.5
1.5 2.9
Interest expense (including finance cost) 0.1 0.1
Expense related to short-term leases (included in cost of goods sold and administrative expenses) 0.1 0.2
The total cash outflow for leases in 2022 was £1.5m (2021: £3.2m).
At 30 January 2022 the Group has no commitments for short-term leases.
There are no expenses in relation to variable lease payments not included in the measurement of the lease liabilities or income from sub-leasing
right-of-use assets.
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Notes to the Accounts continued
14. Leases continued
(iii) The Group’s leasing activities and how these are accounted for
The Group leases various offices, warehouses, equipment and vehicles. Rental contracts are typically made for fixed periods of 12 months
to 10years, but may have extension options as described (in (iv)) opposite.
Contracts may contain both lease and non-lease components. The Group allocates the consideration in the contract to the lease and non-lease
components based on their relative stand-alone prices. However for leases for real estate for which the Group is a lessee, it has elected not to
separate lease and non-lease components and instead accounts for these as a single lease component.
Lease terms are negotiated on an individual basis and contain a wide range of different terms and conditions. The lease agreements do not
impose any covenants other than the security interests in the leased assets that are held by the lessor. Leased assets may not be used as security
for borrowing purposes.
Assets and liabilities arising from a lease are initially measured on a present value basis. Lease liabilities include the net present value of the
following lease payments:
– Fixed payments (including in-substance fixed payments), less any lease incentives receivable
– Variable lease payments that are based on an index or a rate, initially measured using the index or rate as at the commencement date
– Amounts expected to be payable by the Group under residual value guarantees
– The exercise price of a purchase option if the Group is reasonably certain to exercise that option
– Payments of penalties for terminating the lease, if the lease term reflects the Group exercising that option
Lease payments to be made under reasonably certain extension options are also included in the measurement of the liability.
The lease payments are discounted using the rate implicit in the lease. If that rate cannot be readily determined, which is generally the case
for leases in the Group, the lessee’s incremental borrowing rate is used, being the rate that the Group would have to pay to borrow the
fundsnecessary to obtain an asset of similar value to the right-of-use asset in a similar economic environment with similar terms, security
andconditions.
To determine the incremental borrowing rate, the Group:
– Where possible, uses recent third-party financing received by the Group as a starting point, adjusted to reflect changes in financing
conditions since third-party financing was received
– Uses a build-up approach that starts with a risk-free interest rate adjusted for credit risk for leases
– Makes adjustments specific to the lease, e.g. term, country, currency and security
Lease payments are allocated between principal and finance cost. The finance cost is charged to the income statement over the lease period
so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period.
Right-of-use assets are measured at cost comprising the following:
– The amount of the initial measurement of the lease liability
– Any lease payments made at or before the commencement date less any lease incentives received
– Any initial direct costs
– Restoration costs
Right-of-use assets are generally depreciated over the shorter of the asset’s useful life and the lease term on a straight-line basis.
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Strategic Report Corporate Governance Accounts
Payments associated with short-term leases of equipment and vehicles, and all leases of low-value assets, are recognised on a straight-line
basis as an expense in the income statement. Short-term leases are leases with a lease term of 12 months or less. Low-value assets comprise
IT equipment and small items of office furniture.
(iv) Extension and termination options
Extension and termination options are included in a number of property and equipment leases across the Group. These are used to maximise
operational flexibility in terms of managing the assets used in the Group’s operations. The majority of extension and termination options are
exercisable only by the Group and not by the respective lessor.
(v) Residual value guarantees
To optimise lease costs during the contract period, the Group sometimes provides residual value guarantees in relation to equipment leases.
The Group initially estimates and recognises amounts expected to be paid under residual value guarantee as part of the lease liability. Typically,
the expected residual value at lease commencement is equal to or higher than the guaranteed amount, so the Group does not expect to pay
anything under the guarantees.
15. Derivative financial instruments
Derivative financial liabilities
2022
£m
2021
£m
Derivatives that are designated and effective as hedging instruments carried at fair value:
Foreign currency forward contracts 0.2 0.1
It is the policy of the Group to enter into foreign exchange forward contracts to manage the foreign currency risk associated with anticipated
purchase transactions out to 18 months. This is hedged on a sliding scale basis where the nearer the time of the purchase, the greater the
amount hedged will be.
For the hedges of highly probable forecast purchases, as the critical terms (i.e. the notional amount, life and underlying contracts) of the foreign
exchange forward contracts and their corresponding hedged items are the same, the Group performs a qualitative assessment of effectiveness
and it is expected that the value of the forward contracts and the value of the corresponding hedged items will systematically change in
opposite direction in response to movements in the underlying exchange rates. The Group assesses the ineffectiveness by comparing past
changes in the fair value of the foreign exchange forward contracts with changes in the fair value of a hypothetical derivative.
The main source of hedge ineffectiveness in these hedging relationships is the effect of the counterparty and the Group’s own credit risk on the
fair value of the forward contracts, which is not reflected in the fair value of the hedged item attributable to changes in foreign exchange rates.
This is not considered to be material to the Group. No other sources of ineffectiveness emerged from these hedge relationships.
160
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Notes to the Accounts continued
15. Derivative financial instruments continued
The following table details the foreign currency forward contracts outstanding at the end of the reporting period, as well as information
regarding their related hedged items. Foreign currency forward contract assets and liabilities are presented in the line “Derivative financial
instruments” (either as assets or as liabilities) within the statement of financial position. All of the currency forward contracts are designated
as cash flow hedges.
Average exchange rate
Notional value:
Foreign currency
Notional value:
Local currency
Carrying amount of the
hedging instruments
liabilities
2022 2021 2022 2021 2022 2021 2022 2021
Buy EUR
Less than 3 months 1.17 1.11 3.6 2.3 3.1 2.1 (0.1) –
3 to 6 months 1.16 1.09 3.1 1.9 2.5 1.7 (0.1) –
6 to 12 months 1.16 1.08 1.8 2.4 1.6 2.2 – (0.1)
over 12 months 1.15 1.08 0.4 0.1 0.3 0.1 – –
Buy USD
Less than 3 months – 1.32 – 0.1 – 0.1 – –
3 to 6 months 1.35 – 1.4 – 1.0 – – –
6 to 12 months – 1.36 – 1.1 – 0.8 – –
(0.2) (0.1)
Group and Company
Fair value hierarchies 1 to 3 are based on the degree to which fair value is observable:
Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities
Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices)
or indirectly (i.e. derived from prices)
Level 3: inputs for the asset or liability that are not based on observable market data
The fair value of financial instruments that are not traded in an active market (for example, over-the-counter derivatives) is determined by using
valuation techniques. These valuation techniques maximise the use of observable market data where it is available and rely as little as possible
on entity specific estimates. The fair value of the forward foreign exchange contracts is determined using forward exchange rates at the date
of the statement of financial position, with the resulting value discounted accordingly as relevant.
The following tables show the carrying amounts and fair values of financial assets and financial liabilities. It does not include fair value information
for financial assets and financial liabilities not measured at fair value if the carrying amount is a reasonable approximation of fairvalue.
161
Strategic Report Corporate Governance Accounts
Group
At 30 January 2022
Carrying amount
Fair value –
hedging
instruments
£m
Other financial
assets at
amortised cost
£m
Other financial
liabilities at
amortised cost
£m
Total
£m
Financial assets – Non-current
Loan receivable* – 0.5 – 0.5
Loan receivable from associate – 1.0 – 1.0
– 1.5 – 1.5
Financial assets – Current
Trade receivables – 41.6 – 41.6
Cash and cash equivalents – 68.7 – 68.7
– 110.3 – 110.3
Financial liabilities – Non-current
Lease liabilities – – 2.8 2.8
– – 2.8 2.8
Financial liabilities – Current
Bank borrowings – – 0.3 0.3
Foreign exchange contracts used for hedging 0.2 – – 0.2
Lease liabilities – – 1.3 1.3
Trade payables – – 15.8 15.8
0.2 – 17.4 17.6
162
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Notes to the Accounts continued
15. Derivative financial instruments continued
Group
At 24 January 2021
Carrying amount
Fair value –
hedging
instruments
£m
Other financial
assets at
amortised cost
£m
Other financial
liabilities at fair
value through
equity
£m
Other financial
liabilities at
amortised cost
£m
Total
£m
Financial assets – Non-current
Loan receivable from associate – 1.0 – – 1.0
Financial assets – Current
Trade receivables – 35.6 – – 35.6
Cash and cash equivalents – 52.9 – – 52.9
– 88.5 – – 88.5
Financial liabilities
Bank borrowings – – – 2.9 2.9
Foreign exchange contracts used for hedging 0.1 – – – 0.1
Lease liabilities – – – 2.5 2.5
Trade payables – – – 7.3 7.3
0.1 – – 12.7 12.8
Company
At 30 January 2022
Carrying amount
Fair value –
hedging
instruments
£m
Other financial
assets at
amortised cost
£m
Other financial
liabilities at
amortised cost
£m
Total
£m
Financial assets – Non-current
Loan receivable* – 0.5 – 0.5
Loan receivable from associate – 1.0 – 1.0
– 1.5 – 1.5
Financial assets – Current
Trade and other receivables and amounts due from subsidiary companies – 34.6 – 34.6
Cash and cash equivalents – 59.1 – 59.1
– 93.7 – 93.7
Financial liabilities – Non-current
Lease liabilities – – 19.3 19.3
Trade payables and amounts due to other subsidiary companies – – 25.9 25.9
– – 45.2 45.2
Financial liabilities – Current
Foreign exchange contracts used for hedging 0.2 – – 0.2
Lease liabilities – – 2.6 2.6
0.2 – 2.6 2.8
* The loan receivable was provided in August 2021. The earliest repayment date is August 2023.
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Strategic Report Corporate Governance Accounts
Company
At 24 January 2021
Carrying amount
Fair value –
hedging
instruments
£m
Other financial
assets at
amortised cost
£m
Other financial
liabilities at
amortised cost
£m
Total
£m
Financial assets – Non-current
Loan receivable from associate – 1.0 – 1.0
Financial assets – Current
Trade and other receivables and amounts due from subsidiary companies – 31.2 – 31.2
Cash and cash equivalents – 48.1 – 48.1
– 79.3 – 79.3
Financial liabilities
Bank borrowings – – 2.9 2.9
Foreign exchange contracts used for hedging 0.1 – – 0.1
Lease liabilities – – 20.6 20.6
Trade payables and amounts due to other subsidiary companies – – 12.8 12.8
0.1 – 36.3 36.4
All financial instruments at fair value sit within Level 2 of the fair value hierarchy within Level 3.
Cash and cash equivalents held by the Group have an original maturity of three months or less. The carrying amount of these assets
approximates to their fair value.
The fair value of the current trade and other receivables and the current trade and other payables approximates to their book value as none
of the balances are interest-bearing.
The cumulative amount of gains and losses on effective hedging instruments are held within the cash flow hedge reserve in “Other reserves”.
16. Investment in subsidiaries
Company
2022
£m
2021
£m
Opening investment in subsidiaries 84.1 84.1
Investments made in the year 6.2 –
Closing investment in subsidiaries 90.3 84.1
On 6 December 2021, the Group acquired 61.8% of the shares and voting interests in MOMA Foods Limited (MOMA) granting it control. Included
in the identifiable assets and liabilities of MOMA are inputs (inventories, receivables and payables) and an experienced workforce with technical
expertise. The Group has concluded that, together, the acquired inputs and processes are a business that will create value by generating revenue
in the growing plant-based drinks category, supported by the Group’s brand building capability.
For the two months ended 30 January 2022, MOMA contributed revenue of £1.1m and had an immaterial impact on profit. Had MOMA been
a subsidiary for the full financial year, it would have contributed c. £6m revenue to the Group and broadly broke even on profit.
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Notes to the Accounts continued
16. Investment in subsidiaries continued
The value of identifiable assets and liabilities of MOMA at the date of acquisition were:
£m
Property, plant and equipment 0.2
Intangible assets 8.4
Inventory 0.6
Trade receivables 1.0
Prepayments 0.1
Cash and cash equivalents 0.4
Trade payables (0.7)
Accruals (0.7)
Loans (0.3)
Total identifiable net assets acquired 9.0
Goodwill 1.0
Value on acquisition 10.0
Non-controlling interest (3.8)
Total consideration 6.2
Represented by:
Cash 6.2
As part of the arrangements with non-controlling shareholders of MOMA, the Group issued put options to the sellers to sell the remaining shares
and simultaneously the seller issued call options to the Group to purchase the remaining shares. The put option is exercisable in June 2025 and
the call options are exercisable in two tranches from 2024 to 2025. The exercise prices are derived from a multiple of future earnings. The Group
has recognised non-controlling interests for the remaining shares because the interests subject to the put and call options are not deemed to
have been acquired upon acquisition. Accordingly, the financial liability arising from the put option has not been included in the consideration
transferred and is accounted for separately, with a corresponding entry recorded in equity.
At the acquisition date, the Group recognised a put liability of £8.6m recorded at a present value of £5.0m being the estimated redemption
value, using forecast revenue of MOMA, discounted at a post-tax rate of 18%. Further details are provided in Note 25.
Acquisition-related costs
The Group incurred acquisition-related costs of £0.2m on legal fees and due diligence costs. These costs have been included in
‘Administrative expenses’.
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Strategic Report Corporate Governance Accounts
The goodwill arising represents potential revenue synergies. It is anticipated that on disposal, goodwill and brand will be deductible
for taxpurposes.
During the year to 24 January 2021, the following dormant subsidiary company was dissolved:
Taut (UK) Limited
During the year to 24 January 2021, a new subsidiary was formed in the Republic of Ireland – being A.G. Barr (Ireland) Limited, in which
the Company has a 1 Euro investment.
The principal subsidiaries are as follows:
Principal subsidiary Principal activity
Country of
incorporation
Country of
principal
operations
Funkin Limited Distribution and selling of cocktail solutions England UK
Funkin USA Limited Distribution and selling of cocktail solutions England USA
Rubicon Drinks Limited Manufacture, distribution and selling of soft drinks England UK
MOMA Foods Limited Distribution and selling of plant-based milk England UK
A.G. BARR p.l.c. holds 100% of the equity and votes of the subsidiaries with the exception of MOMA noted above. The subsidiaries have the same
year end as A.G. BARR p.l.c. with the exception of MOMA with a 31 December 2021 year end, and have been included in the Group consolidation.
The companies listed are the trading subsidiaries. Refer to Note 32 for a full list of subsidiary companies.
17. Investment in associates
In June 2019, the Group made a £1m investment in Elegantly Spirited Limited, acquiring a 20% stake in the business. In November 2020,
a £1m loan was provided as disclosed in Note 15.
The following entities have been included in the consolidated financial statements using the equity method:
Name of entity
Country of incorporation and
principal place of business
% of ownership interest Carrying amount
2022
%
2021
%
2022
£m
2021
£m
Elegantly Spirited Limited UK 20 20 0.7 0.8
The primary business of Elegantly Spirited Limited is a brand builder, marketing and selling a range of zero proof distilled spirits. The address
of its registered office is 19 Langham Street, London, England. This investment is consistent with our strategy of building a branded portfolio
of products across both alcohol and non-alcohol beverages. The investment is not considered a material associate and therefore disclosures
are limited to the section below.
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A.G. BARR p.l.c. Annual Report and Accounts 2022
Notes to the Accounts continued
17. Investment in associates continued
Aggregate information of associates that are not individually material
2022
£m
2021
£m
Carrying amount of individually immaterial associates 0.7 0.8
Aggregate amounts of the Group’s share of:
Loss from continuing operations (0.1) (0.1)
Total comprehensive expense (0.1) (0.1)
2022
£m
2021
£m
Opening balance at start of year 0.8 0.9
Share of operating losses (0.1) (0.1)
Closing balance at end of year 0.7 0.8
18. Cash and cash equivalents
Group Company
2022
£m
2021
£m
2022
£m
2021
£m
Cash and cash equivalents 68.7 52.9 59.1 48.1
Cash and cash equivalents in the table above are included in the cash flow statements.
19. Inventories
Group Company
2022
£m
2021
£m
2022
£m
2021
£m
Materials 9.8 8.0 9.8 8.0
Finished goods 14.4 11.3 11.2 9.0
24.2 19.3 21.0 17.0
20. Trade and other receivables
Group Company
2022
£m
2021
£m
2022
£m
2021
£m
Trade receivables 41.7 35.7 34.7 31.5
Less: loss allowance (0.1) (0.1) (0.1) (0.1)
Trade receivables – net 41.6 35.6 34.6 31.4
Prepayments 2.7 2.0 2.3 1.8
Amounts due by subsidiary companies – – 0.3 1.2
44.3 37.6 37. 2 34.4
167
Strategic Report Corporate Governance Accounts
Trade receivables
The average credit period on sales of goods is 60 days. No interest is charged on outstanding trade receivables.
The Group always measures the loss allowance for trade receivables at an amount equal to lifetime ECL. The expected credit losses on trade
receivables are estimated using a provision matrix by reference to past default experience on the debtor and an analysis of the debtor’s current
financial position, adjusted for factors that are specific to the debtors, general economic conditions of the industry in which the debtors operate
and an assessment of both the current as well as the forecast direction of conditions at the reporting date. The Group has recognised a loss
allowance of 50.8% against all receivables over 90 days past due in the year because historic experience has indicated that these receivables are
generally not recoverable. In the prior year, a 34.7% loss allowance was made against all receivables over 90 days past due based on historical
experience at that time.
The level of loss allowance has increased over the year as a result of an increase in the expected credit loss for more than 90 days, with the level
of debt outstanding over 90 days remaining the same.
The Group writes off a trade receivable when there is information that the debtor is in severe financial difficulty and there is no realistic prospect
of recovery, e.g. when the debtor has been placed under liquidation or has entered into bankruptcy proceeding. None of the trade receivables
that have been written off are subject to enforcement activities.
The following table details the risk profile of trade receivables based on the Group’s provision matrix. As the Group’s historical credit loss
experience does not show significantly different loss patterns for different customer segments, the provision for loss allowance based on
past due status is not further distinguished between the Group’s different customer base. The figures in the table below are exclusive of VAT.
The Group’s and Company’s most significant customer, a UK major customer, accounts for £9.4m of the trade receivables carrying amount
at 30 January 2022 (24 January 2021: £6.9m).
Group – 30 January 2022
Trade receivables – days past due
Not past due
£m
<30
£m
31-60
£m
61-90
£m
>90
£m
Total
£m
Expected credit loss rate 0.1% 0.4% 1.8% 7.4% 50.8%
Expected total gross carrying amount at default 28.4 2.8 0.7 0.1 0.1
Lifetime ECL – – – – 0.1 0.1
Group – 24 January 2021
Trade receivables – days past due
Not past due
£m
<30
£m
31-60
£m
61-90
£m
>90
£m
Total
£m
Expected credit loss rate 0.2% 1.4% 4.3% 12.1% 34.7%
Expected total gross carrying amount at default 24.9 2.1 0.7 0.7 0.5
Lifetime ECL – – – – 0.1 0.1
168
A.G. BARR p.l.c. Annual Report and Accounts 2022
Notes to the Accounts continued
20. Trade and other receivables continued
Company – 30 January 2022
Trade receivables – days past due
Not past due
£m
<30
£m
31-60
£m
61-90
£m
>90
£m
Total
£m
Expected credit loss rate 0.1% 1.7% 25.9% 41.2% 52.0%
Expected total gross carrying amount at default 28.4 0.1 – – 0.1
Lifetime ECL – – – – 0.1 0.1
Company – 24 January 2021
Trade receivables – days past due
Not past due
£m
<30
£m
31-60
£m
61-90
£m
>90
£m
Total
£m
Expected credit loss rate 0.2% 5.4% 55.2% 76.9% 87. 2%
Expected total gross carrying amount at default 24.8 0.4 – 0.1 0.2
Lifetime ECL – – – – 0.1 0.1
The Group has applied the simplified approach in IFRS 9 to measure the loss allowance at lifetime ECL. The Group determines the expected
credit losses on these items using a provision matrix, estimated based on historical credit loss experience based on the past due status of the
debtors, adjusted as appropriate to reflect current conditions and estimates of future economic conditions. Accordingly, the credit risk profile
of these assets is presented based on their past due status in terms of the provision matrix.
The maximum exposure for both the Group and the Company to credit risk for trade receivables at the reporting date by type of customer was:
Group Company
2022
£m
2021
£m
2022
£m
2021
£m
Other customers 40.3 34.6 33.3 30.4
Direct sales customers 1.4 1.1 1.4 1.1
Total 41.7 35.7 34.7 31.5
The carrying amount of the Group and Company’s external trade and other receivables are denominated in the following currencies:
Group Company
2022
£m
2021
£m
2022
£m
2021
£m
UK Sterling 43.8 37.4 36.9 34.3
Euro 0.4 0.2 0.3 0.1
US Dollar 0.1 – – –
44.3 37.6 37. 2 34.4
169
Strategic Report Corporate Governance Accounts
21. Assets held for sale
The property related to the distribution depot at Sheffield was presented as held for sale following the closure of the site in March 2020.
This asset was sold in the current year, resulting in a gain on sale included within exceptional income within Note 7.
22. Loans and other borrowings
Group Company
2022
£m
2021
£m
2022
£m
2021
£m
Current
Bank borrowings 0.3 2.9 – 2.9
Lease liabilities 1.3 1.1 2.6 2.2
Non-current
Lease liabilities 2.8 1.4 19.3 18.4
Total borrowings 4.4 5.4 21.9 23.5
All of the Group’s borrowings are denominated in UK Sterling.
As disclosed in Note 16, the Group made an investment in MOMA Foods Limited in the year ending 30 January 2022. MOMA Foods Limited has
two CBIL loans totalling £0.3m, as noted in the table above. These are Sterling debt facilities with £0.1m expiring in May 2024 with the remaining
£0.2m in June 2026.
During the year to 27 January 2018, the Group entered into three revolving credit facilities over periods of three to five years with Royal Bank of
Scotland plc, Bank of Scotland plc and HSBC Bank plc. These facilities provided £60m of Sterling debt facilities. After subsequent negotiations in
March 2019, March 2020, and March 2021, these facilities will be reduced to £30m in February 2022, with £10m expiring in April 2023 with the
remaining £20m facility due to expire in February 2026.
Arrangement fees associated with loan facilities are included in the finance costs line in the income statement.
During the year to 26 January 2014, certain property assets were transferred into A.G. BARR Scottish Limited Partnership and are being leased
back to the Company under a 21-year lease agreement. Further details are included within Note 28.
170
A.G. BARR p.l.c. Annual Report and Accounts 2022
Notes to the Accounts continued
22. Loans and other borrowings continued
The maturity analysis of the lease liabilities are shown in the table below:
Group Company
Lease liabilities
2022
£m
Lease liabilities
2022
£m
Less than one year 1.3 2.6
One to two years 1.0 2.4
Two to three years 0.8 2.4
Three to four years 0.6 2.0
Four to five years 0.4 2.0
Later than five years – 16.1
4.1 27. 5
Less: Unearned interest – (5.6)
4.1 21.9
Group Company
2022
£m
2021
£m
2022
£m
2021
£m
Bank borrowings 0.3 2.9 – 2.9
Lease liability payable within one year 1.3 1.1 2.6 2.2
Current loans and other borrowings disclosed in the statement of financial position 1.6 4.0 2.6 5.1
Group Company
2022
£m
2021
£m
2022
£m
2021
£m
Lease liability payable after more than one year 2.8 1.4 19.3 18.4
Non-current loans and other borrowings disclosed in the statement of financial position 2.8 1.4 19.3 18.4
The movements in the Group borrowings are analysed as follows:
2022
£m
2021
£m
Opening borrowings balance 5.4 7.9
Net lease movements (1.3) (5.4)
Bank overdraft utilised – 2.9
Borrowings acquired/drawn-down 0.3 60.0
Repayments of borrowings – (60.0)
Closing borrowings balance 4.4 5.4
171
Strategic Report Corporate Governance Accounts
Reconciliation to net funds:
2022
£m
2021
£m
Closing borrowings balance (4.4) (5.4)
Cash and cash equivalents (Note 18) 68.7 52.9
Net funds 64.3 47.5
The facilities at 30 January 2022 were as follows:
Total facility
£m
Drawn
£m
Undrawn
£m
Revolving credit facility – three years, expires April 2023 10.0 – 10.0
Revolving credit facility – five years, expires February 2026 20.0 – 20.0
Overdraft 5.1 – 5.1
CBILS loan facility – six years, expires June 2026 0.2 0.2 –
CBILS Revolving credit facility – three years, expires May 2024 0.1 0.1 –
35.4 0.3 35.1
The facilities as at 24 January 2021 were as follows:
Total facility
£m
Drawn
£m
Undrawn
£m
Revolving credit facility – three years, expires February 2022 20.0 – 20.0
Revolving credit facility – three years, expires February 2022 20.0 – 20.0
Revolving credit facility – five years, expires February 2025 20.0 – 20.0
Overdraft 5.0 2.9 2.1
65.0 2.9 62.1
172
A.G. BARR p.l.c. Annual Report and Accounts 2022
Notes to the Accounts continued
23. Trade and other payables
Group Company
2022
£m
2021
£m
2022
£m
2021
£m
Trade payables 15.8 7.3 13.7 5.2
Other taxes and social security costs 1.1 7. 2 1.1 7. 2
Accruals 37.1 28.9 32.6 27.1
Amounts due to subsidiary companies – – 12.2 7.6
54.0 43.4 59.6 47.1
Non-current – – – –
Current 54.0 43.4 59.6 47.1
54.0 43.4 59.6 47.1
The year on year increase in accruals reflects the reintroduction of employees incentives, the consolidation of MOMA and an element ofphasing
relating to marketing and trade investment. Included in trade payables are brand support discounts and cost accruals of £18.1m (2021: £13.8m).
The tables below analyse the Group and Company’s financial liabilities into the relevant maturity groupings based on the remaining period
to the contractual maturity date as at the statement of financial position date. The amounts disclosed in the table below are the contractual
undiscounted cash flows:
Group
As at 30 January 2022
Trade
payables
£m
Financial
instruments
£m
Total
£m
0 to 6 months 15.8 – 15.8
15.8 – 15.8
As at 24 January 2021
Trade
payables
£m
Financial
instruments
£m
Total
£m
0 to 6 months 7.3 – 7.3
7.3 – 7.3
As trade payables are not interest-bearing, their fair value is taken to be the book value.
Disclosures relating to borrowings are included in Note 22.
173
Strategic Report Corporate Governance Accounts
Company
At 30 January 2022
Trade
payables
£m
Financial
instruments
£m
Total
£m
0 to 6 months 13.7 12.2 25.9
13.7 12.2 25.9
At 24 January 2021
Trade
payables
£m
Financial
instruments
£m
Total
£m
0 to 6 months 5.2 7.6 12.8
5.2 7.6 12.8
As trade payables are not interest-bearing, their fair value is taken to be the book value.
Disclosures relating to borrowings are included in Note 22.
The table below details changes in the Group and Company’s liabilities arising from financing activities, including both cash and non-cash changes.
Group
24 January 2021
£m
New leases
£m
Financing
cash flows
£m
30 January 2022
£m
Lease liabilities (Note 14)
2.5 3.1 (1.5) 4.1
Total liabilities from financing activities 2.5 3.1 (1.5) 4.1
24. Provisions
Group Company
2022
£m
2021
£m
2022
£m
2021
£m
Opening provision 1.9 1.2 1.9 1.2
Provision created during the year 0.6 3.0 0.4 3.0
Provision utilised during the year (0.5) (2.3) (0.5) (2.3)
Closing provision 2.0 1.9 1.8 1.9
The provisions above primarily relate to redundancy costs for business reorganisation, chiller and vendor disposal, and for any known obligations
for substantial repairs and supplier related commitments. The majority of the provisions are expected to be utilised within 12 months.
174
A.G. BARR p.l.c. Annual Report and Accounts 2022
Notes to the Accounts continued
25. Put liability
Group
2022
£m
2021
£m
Put liability 5.0 –
The put liability has been derived from an internal valuation, using forecast revenue over the exercise period, discounted at a post-tax rate of 18%
and assuming that the option is exercised in full in the third year following the date of acquisition. The liability is sensitive to reasonably possible
changes in assumptions. If forecast performance increases or decreases by 25%, the value of the liability would decrease or increase by around
£2m – £3m.
Details of the acquisition of MOMA are provided in Note 16.
26. Deferred tax assets and liabilities
Group
Share-
based
payments
£m
Foreign
exchange
contract
hedge
£m
Total
deferred tax
asset
£m
Retirement
benefit
obligations
£m
Share-based
payments
£m
Accelerated
tax
depreciation
£m
Total
deferred tax
liability
£m
Net
deferred tax
liability
£m
At 25 January 2020 – 0.1 0.1 (1.7) (0.3) (12.6) (14.6) (14.5)
(Credit)/charge to the income statement (Note 9) – – – (1.1) 0.1 0.8 (0.2) (0.2)
Charge to other comprehensive income – – – 0.4 – – 0.4 0.4
Credit to other reserves – (0.1) (0.1) – (0.2) – (0.2) (0.3)
At 24 January 2021 – – – (2.4) (0.4) (11.8) (14.6) (14.6)
(Credit)/charge to the income statement (Note 9) – – – (2.8) 0.3 (5.1) (7.6) (7.6)
Charge to other comprehensive income – – – 0.3 – – 0.3 0.3
Change to equity – – – – 0.4 – 0.4 0.4
At 30 January 2022 – – – (4.9) 0.3 (16.9) (21.5) (21.5)
Company
Share-
based
payments
£m
Foreign
exchange
contract
hedge
£m
Total
deferred tax
asset
£m
Retirement
benefit
obligations
£m
Share-based
payments
£m
Accelerated
tax
depreciation
£m
Total
deferred tax
liability
£m
Net
deferred tax
liability
£m
At 25 January 2020 – 0.1 0.1 (1.7) (0.3) (4.0) (6.0) (5.9)
(Charge)/credit to the income statement – – – (1.1) 0.1 1.6 0.6 0.6
Charge to other comprehensive income – – – 0.4 – – 0.4 0.4
Credit to other reserves – (0.1) (0.1) – (0.2) – (0.2) (0.3)
At 24 January 2021 – – – (2.4) (0.4) (2.4) (5.2) (5.2)
(Charge)/credit to the income statement – – – (2.8) 0.3 (2.0) (4.5) (4.5)
Charge to other comprehensive income – – – 0.3 0.3 – 0.6 0.6
At 30 January 2022 – – – (4.9) 0.2 (4.4) (9.1) (9.1)
No deferred tax asset is recognised in the statement of financial position for unused capital losses within the Company of £4.0m (2021: £4.0m).
175
Strategic Report Corporate Governance Accounts
27. Financial risk management
Financial risk factors
The Group’s activities expose it to a variety of financial risks: market risk (including foreign exchange risk, cash flow and fair value interest rate
risk and price risk), credit risk and liquidity risk. The Board has delegated its responsibility for the Group’s overall financial risk programme to the
Treasury and Commodity Committee; this risk programme focuses on the unpredictability of financial markets and seeks to minimise potential
adverse effects on the Group’s financial performance. The Group uses derivative financial instruments to hedge certain risk exposures.
Financial risk management is carried out in accordance with policies approved by the Board of Directors. Management identifies, evaluates and
manages financial risks in close cooperation with the Group’s business units. The Board provides guidance on overall market risk management,
including use of derivative financial instruments and investment of excess liquidity.
In addition, the Treasury and Commodity Committee deals with a range of other treasury matters, details of which are provided in the Corporate
Governance Report.
Market risk
Foreign exchange risk
The Group operates internationally. The Group primarily buys and sells in Sterling but does make purchases and sales denominated in USDollars
and Euros. Due to the hedging arrangements that have been in place for the year ended 30 January 2022, if Sterling had weakened/strengthened
by 10% against the US Dollar or Euro, with all other variables held constant, there would have been an immaterial effect on post-tax profit
(year ended 24 January 2021: immaterial impact on post-taxprofit).
The Group periodically enters into option contracts to purchase foreign currencies for known purchases where the value and volume of
tradingpurchases is known. The Treasury and Commodity Committee assesses whether hedge accounting should be applied for each forward
option contract.
Price risk
The Group is not exposed to equity securities price risk because no such investments are held by the Group other than within pension scheme assets.
The Group purchases a wide range of commodities in the ordinary course of business. Exposure to changes in the market price of certain of
these commodities, including sugar, plastic, aluminium and mango, is managed through the use of forward physical supply contracts, primarily
to convert floating or indexed prices to fixed prices. The use of such contracts to hedge commodity exposures is governed by the Group’s risk
policies and is continually monitored by the Treasury and Commodity Committee. Commodity derivatives also provide a way to meet
customers’ pricing requirements whilst achieving a price structure consistent with the Group’s overall pricing strategy.
All of the Group’s commodity derivatives are treated as “own use” contracts, which are outside the scope of IFRS 9, since they are both entered
into, and continue to be held, for the purposes of the Group’s ordinary operations, and are not net settled (the Group takes physical delivery
of the commodity concerned). “Own use” contracts do not require accounting entries until the commodity purchase actually crystallises.
The majority of the Group’s forward physical contracts and commodity derivatives have original maturities of less than one year.
As all of the commodity contracts qualify for the “own use” treatment, no sensitivity analysis has been carried out.
176
A.G. BARR p.l.c. Annual Report and Accounts 2022
Notes to the Accounts continued
27. Financial risk management continued
Cash flow and fair value interest rate risk
As the Group has no significant interest-bearing assets, the Group’s income and operating cash inflows are substantially independent of changes
in market interest rates.
The Group’s interest rate risk arises from long-term borrowings. Borrowings obtained at variable rates expose the Group to cash flow interest rate
risk, which is partially offset by cash held at variable rates.
For the year ended 30 January 2022, if interest rates on Sterling-denominated borrowings at that date had been 0.5% higher/lower, with all other
variables held constant, there would have been an immaterial change in the post-tax profit for the year (year ended 24 January 2021: immaterial
impact on post-tax profit).
Credit risk
Credit risk is managed on a Group basis. Credit risk arises from cash and cash equivalents and deposits with banks and financial institutions,
as well as credit exposures to major and direct to store customers, including outstanding receivables and committed transactions.
For banks and financial institutions, only independently rated parties with a minimum rating of “A” are accepted. If major customers are
independently rated, these ratings are used. Otherwise, if there is no independent rating, risk control processes assess the credit quality of the
customer, taking into account its financial position, past experience and other factors. Individual risk limits are set by senior management, based
on internal or external ratings. The utilisation of credit limits is regularly monitored. Sales to direct to store customers are largely settled in cash
in order to manage credit risk from smaller, independent stores.
Liquidity risk
Prudent liquidity risk management implies maintaining sufficient cash and marketable securities, the availability of funding through an adequate
amount of committed credit facilities and the ability to close out market positions. Due to the dynamic nature of the underlying business, the
Group maintains flexibility in funding by maintaining sufficient cash reserves and the availability of borrowing facilities.
Management monitors rolling forecasts of the Group’s liquidity reserve (which comprises undrawn borrowing facilities and cash and cash
equivalents) on the basis of expected cash flows. This is carried out at a Group level and involves projecting forward cash flows and considering
the level of liquid assets necessary to meet excesses of expenditure relative to income.
A liquidity analysis is included in Note 22.
Capital risk management
The Group defines “capital” as being net debt plus equity.
The Group’s objective when managing capital is to maintain an appropriate capital structure to balance the needs of the Group, whilst operating
within its bank covenants.
The Group manages its capital structure and makes adjustments to it in light of changes in economic conditions. To maintain or adjust the
capital structure, the Group has a number of options available to it, including modifying dividend payments to shareholders, returning capital
to shareholders or issuing new shares. In this way, the Group balances returns to shareholders between long-term growth and current returns
whilst maintaining capital discipline in relation to investing activities and taking any necessary action on costs to respond to the
currentenvironment.
177
Strategic Report Corporate Governance Accounts
The Group monitors existing equity in issuance on the basis of the net debt/EBITDA (before exceptional items) ratio. Net debt is calculated as
being the net of cash and cash equivalents, interest-bearing loans and borrowings. The net debt position is discussed in the Financial Review
on pages 46 to 49. The net debt/EBITDA (before exceptional items) ratio enables the Group to plan its capital requirements in the medium term.
The Group uses this measure to provide useful information to financial institutions and investors. The Group believes that the current net debt/
EBITDA (before exceptional items) ratio together with existing shares in issuance provides a secure capital structure with a strong level of
financial flexibility to enable the Group to take advantage of opportunities that may arise.
For the year ended 30 January 2022, there was a net cash surplus of £64.3m (year ended 24 January 2021: net cash surplus of £47.5m) with
cash and cash equivalent balances of £68.7m and bank borrowings of £0.3m (year ended 24 January 2021: cash and cash equivalents balance
of £52.9m and bank borrowings of £2.9m).
The Group monitors capital efficiency on the basis of the return on capital employed ratio (ROCE). In the financial year ended 30 January 2022,
ROCE remained strong at 19.6% (2021: 16.0%).
28. Retirement benefit obligations
During the year, the Company operated two pension schemes, the A.G. BARR p.l.c. (2005) Defined Contribution Scheme and the A.G. BARR p.l.c.
(2008) Pension and Life Assurance Scheme. The latter is a funded defined benefit scheme based on final salary, which also includes a defined
contribution section for the pension provision of the new executive entrants. Under the defined benefit scheme, the employees are entitled to
retirement benefits based on final pensionable pay. No other post-retirement benefits are provided. All assets held in the defined contribution
schemes were transferred to the A.G. Barr Retirement Plan in September 2021.
Defined benefit scheme: Actuarial valuation
The assets of the schemes are held separately from those of the Company and are invested in managed funds. A full valuation of the defined
benefit scheme was conducted as at 5 April 2020 using the attained age method and a deficit of £7.7m was determined at that date.
The defined benefit scheme exposes the Group to actuarial risks such as longevity risk, interest rate risk and market investment risk.
Responsibility for governance of the plans, including investment decisions and contribution schedules, lies jointly with the Company and the
board of trustees. The board of trustees is composed of representatives from the Company scheme members and an independent trustee in
accordance with the plan’s rules.
Defined benefit scheme: IAS 19 information
The full actuarial valuation carried out at 5 April 2020 was updated to 30 January 2022 by a qualified independent actuary.
The valuation used for the defined benefit schemes has been based on market conditions as at the Company year end.
The amounts recognised in the statement of financial position are as follows:
Group Company
2022
£m
2021
£m
2022
£m
2021
£m
Present value of funded obligations (114.9) (123.9) (114.9) (123.9)
Fair value of scheme assets 113.9 116.0 113.9 116.0
Deficit recognised under IAS 19 (1.0) (7.9) (1.0) (7.9)
Company contribution made to pension scheme in the year to 26 January 2014 – – 16.1 16.8
(Deficit)/surplus recognised in the statement of financial position (1.0) (7.9) 15.1 8.9
178
A.G. BARR p.l.c. Annual Report and Accounts 2022
Notes to the Accounts continued
28. Retirement benefit obligations continued
The movement in the defined benefit obligation over the year is as follows:
Group and Company
Fair value of
plan assets
£m
Present value
of obligation
£m
Total
£m
At 24 January 2021 116.0 (123.9) ( 7.9)
Current and past service cost – (0.1) (0.1)
Interest income/(expense) 1.6 (1.7) (0.1)
Total cost recognised in income statement 1.6 (1.8) (0.2)
Remeasurements
– changes in demographic assumptions – (0.9) (0.9)
– changes in financial assumptions – 9.5 9.5
– experience – (2.2) (2.2)
– actuarial return on assets excluding amounts recognised in net interest (1.7) – (1.7)
Total remeasurements recognised in other comprehensive income (1.7) 6.4 4.7
Cashflows
Employer contributions 2.4 – 2.4
Benefits paid (4.4) 4.4 –
Total cash outflow (2.0) 4.4 2.4
At 30 January 2022 113.9 (114.9) (1.0)
This table excludes the Company contribution made to the pension scheme through the asset-backed funding arrangement as described below
and reconciled in the table above.
On 1 May 2016, the A.G. BARR p.l.c. (2008) Pension and Life Assurance Scheme was closed to future accrual following a negotiated agreement
between the Company and the board of trustees.
The Company made a £1.0m contribution to the scheme each year in May 2016 through May 2021 and will make a further contribution of
£1.0m in May 2022.
179
Strategic Report Corporate Governance Accounts
The movement in the defined benefit obligation in the year to 25 January 2021 was as follows:
Group and Company
Fair value of
plan assets
£m
Present value
of obligation
£m
Total
£m
At 25 January 2020 116.8 (127.3) (10.5)
Current service cost and past service cost – (0.1) (0.1)
Interest income/(expense) 1.8 (2.0) (0.2)
Total cost recognised in income statement 1.8 (2.1) (0.3)
Remeasurements
– changes in demographic assumptions – 5.1 5.1
– changes in financial assumptions – (5.9) (5.9)
– experience – 0.4 0.4
– actuarial return on assets excluding amounts recognised in net interest 1.0 – 1.0
Total remeasurements recognised in other comprehensive income 1.0 (0.4) 0.6
Cashflows
Employer contributions 2.3 – 2.3
Benefits paid (5.9) 5.9 –
Total cash outflow (3.6) 5.9 2.3
At 24 January 2021 116.0 (123.9) (7.9)
In the year to 26 January 2019, an exceptional charge of £0.7m was included for the past service cost in respect of the equalisation of guaranteed
minimum pensions (GMP) benefits. This related to a 26 October 2018 High Court judgment involving Lloyds Banking Group’s defined benefit
pension schemes. The judgment concluded that the schemes should equalise pension benefits for men and women in relation to GMP benefits.
The judgment has implications for many pension schemes, including the A.G. Barr defined benefit schemes. The £0.7m expense reflected the
best estimate of the effect on our reported pension liabilities. Following a 20 November 2020 ruling regarding equalisation in relation to transfer
payments that may have been made going back to 1990, a further £54k has been provided in relation to these liabilities and is included in the
current and past service costs in the table above.
This table excludes the Company contribution made to the pension scheme through the asset-backed funding arrangement as described below
and reconciled in the table above.
Asset-backed funding arrangement
During the year to 26 January 2014, the Company established the A.G. BARR Scottish Limited Partnership (the “Partnership”) and through
the Partnership has entered into a long-term pension funding arrangement with the Pension Scheme.
Under this arrangement certain property assets were transferred into the Partnership and are being leased back to A.G. BARR p.l.c. under a
21-year lease agreement, generating an income stream of £1.1m per annum for the pension scheme, increasing annually in line with inflation.
The Partnership is controlled by A.G. BARR p.l.c. and its results are consolidated by the Group. The value of the properties transferred into
the Partnership remains included on the Group’s and Company’s balance sheet at carrying values at the date of transfer with the Group
and Company retaining full operational control over these properties.
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A.G. BARR p.l.c. Annual Report and Accounts 2022
Notes to the Accounts continued
28. Retirement benefit obligations continued
At the end of the term of the relevant lease, or earlier if the Scheme becomes fully funded to the extent that the members’ benefits can be
secured with an insurance company, the Company has the option to repurchase the properties in the Partnership for an agreed fixed price.
A “structured entity” is an entity that has been designed so that voting or similar rights are not the dominant factor in deciding who controls
the entity, such as when any voting rights relate only to administrative tasks and the relevant activities are directed by means of contractual
arrangements. As outlined above, during a prior year, certain freehold properties were transferred to a limited Partnership (a structured entity)
established by the Group, the main purpose of which is to lease these properties to a Group company and, as a result, to provide the Group’s
pension scheme with a distribution of profits in the Partnership.
The distribution is subject to discretion exercisable by the Group in certain circumstances; however, given that the Group has the ability to
control the limited Partnership by making an additional contribution into the Scheme, it is the view of the directors that the Group controls
the limited Partnership and therefore it is treated as a consolidated entity.
The carrying value of the properties sold to the Partnership and leased back to the Company remain included on the Group’s and Company’s
balance sheet and continue to be depreciated in line with the Group’s and Company’s accounting policies with the Group and Company
retaining full operational control over these properties.
The Group has taken advantage of the exemption conferred by Regulation 7 of the Partnerships (Accounts) Regulations 2008 and has, therefore,
not appended the accounts of this qualifying partnership to these financial statements. Separate accounts for the Partnership are not required
to be, and have not been, filed at UK Companies House.
As part of the funding arrangement, the Company made a one-off payment to the Pension Scheme of £20.4m to allow it to invest in the
Partnership and in prior years this has been treated as a reduction in the carrying value of the retirement benefit obligation.
As the Partnership results are consolidated within the Group results, no balances are recognised in the consolidated statement of financial position.
Financial assumptions
2022 2021
Discount rate 2.2% 1.4%
Inflation assumption 3.6% 2.9%
Mortality assumptions
2022 2021
Average future life expectancy (in years) for a male pensioner aged 65 22 22
Average future life expectancy (in years) for a female pensioner aged 65 24 23
Average future life expectancy (in years) at age 65 for a male non-pensioner aged 45 23 23
Average future life expectancy (in years) at age 65 for a female non-pensioner aged 45 26 25
The mortality tables adopted in finalising the fair value of the liabilities are the 2019 VITA tables based on the member’s year of birth.
Thisassumes that the expected age at death for males is 87 to 88 and for females is 89 to 91, depending on their age at 30 January 2022.
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The fair value of scheme assets at the year end dates is analysed as follows:
2022 2021
Quoted*
£m
Unquoted
£m
Quoted*
£m
Unquoted
£m
Equities 6.3 – 31.4 –
Bonds 33.0 – 20.8 –
Debt 21.8 – 6.8 –
Cash – 6.4 – 6.4
Buy-in policy – 46.4 – 50.6
Total market value of scheme assets 61.1 52.8 59.0 57.0
* Quoted prices for identical assets or liabilities in active markets.
Sensitivity review
The sensitivity of the overall pension liability to changes in the principal assumptions is:
Year ended 30 January 2022 Change in assumption Impact on overall liabilities
Discount rate Increase/decrease by 1% Decreases/increases liabilities by £20.4m
Rate of inflation Increase/decrease by 1% Increases/decreases liabilities by £6.8m
Life expectancy Increase/decrease by 1 year Increases/decreases liabilities by £4.6m
Year ended 24 January 2021 Change in assumption Impact on overall liabilities
Discount rate Increase/decrease by 0.5% Decreases/increases liabilities by £11.8m
Rate of inflation Increase/decrease by 0.5% Increases/decreases liabilities by £4.9m
Life expectancy Increase/decrease by 1 year Increases/decreases liabilities by £5.0m
Methods and assumptions used in preparing the sensitivity analyses
The sensitivities disclosed were calculated using approximate methods taking into account the duration of the Scheme’s liabilities. They have
been calculated consistently with last period’s disclosures, however these change over time with financial conditions and assumptions.
Risks to which the Scheme exposes the Company
The nature of the Scheme exposes the Company to the risk of paying unanticipated additional contributions to the Scheme in times of adverse
experience. The most financially significant risks are likely to be:
– Asset volatility
The Scheme’s liabilities are calculated using a discount rate set with reference to corporate bond yields in line with the requirements of IAS 19R.
If the Scheme assets underperform this yield, this will create a deficit. The plan holds investments in a portfolio of equity and bonds, which are
expected to outperform corporate bonds in the long term but provide volatility and risk in the short term.
The Trustees have made a number of steps to control the level of investment risk within the Scheme. The Trustee and the Company agreed in
April 2016 to purchase an annuity policy with Canada Life to cover all future pension payments to certain members of the Scheme. This policy
was purchased at a cost of £34.7m and secures the total amount of future pension payments for 100 of the Scheme’s pensioner members. A
second annuity contract was purchased with Canada Life in September 2019 at a cost of £22.7m and secures the total amount of future pension
payments for 82 of the Scheme’s pensioner members. The Trustees will continue to review the risk exposures in light of the longer-term
objectives of the Scheme.
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A.G. BARR p.l.c. Annual Report and Accounts 2022
Notes to the Accounts continued
28. Retirement benefit obligations continued
– Changes in bond yields
A decrease in corporate bond yields will increase plan liabilities. In the event of a reduction in the corporate bond yields, there will be an increase
in the value of the Scheme’s bond holdings.
– Inflation risk
The Group pension obligations are linked to inflation, and higher inflation will lead to higher liabilities. The majority of the Scheme’s assets are
either unaffected by inflation (fixed interest bonds) or loosely correlated with inflation (equities), meaning that an increase in inflation will also
increase the deficit.
– Life expectancy
The Scheme’s obligation is to provide benefits for the life of the members. An increase in life expectancy will result in an increase in the
Scheme’s liabilities.
Policy for recognising gains and losses
The Company recognises actuarial gains and losses immediately, through the remeasurement of the net defined benefit liability.
Asset-liability matching strategies used by the Scheme or the Company
The Scheme does not currently use any specific asset-liability matching strategies. The Trustees’ current investment strategy, having consulted
with the Company, is to invest c.40% of the Scheme’s assets in a mix of equities and diversifying return seeking assets, with the balance in long
dated gilts and corporate bonds, in order to strike a balance between:
– maximising the returns on the Scheme’s assets; and
– minimising the risks associated with the lower than expected returns on the Scheme’s assets.
Description of funding arrangements and funding policy that affect future contributions
The Schedule of Contributions dated March 2018 sets out the current contributions payable by the Company to the Scheme to eliminate the
Scheme deficit. This is in addition to the rental income stream from the asset-backed funding arrangement, which is a commitment that will
offset the requirement for future deficit contributions.
Expected contributions over the next accounting period
A.G. BARR p.l.c. expects to contribute £1.0m to the A.G. BARR p.l.c. (2008) Pension and Life Assurance Scheme for the year to 29 January 2023
in respect of commitments in relation to the Schedule of Contributions, and the Scheme expects to receive further contributions of
approximately £1.3m from the asset-backed funding arrangement in which the Scheme holds an interest.
The weighted average duration of the defined benefit obligation is 18 years.
The expected maturity analysis of the undiscounted defined benefit pension benefit, estimated on the Scheme’s funding is as follows:
Less than
one year
One to
two years
Two to
five years
Greater than
five years
Proportion of total pension benefits to be paid as at 5 April 2021 2% 2% 7% 89%
Proportion of total pension benefits to be paid as at 5 April 2020 2% 2% 7% 89%
Note the above disclosure is given as at the date of the last signed financial statements for the A.G. BARR p.l.c. (2008) Pension and Life Assurance
Scheme, and for the comparative year.
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Defined contribution scheme
The pension costs for the defined contribution schemes are as follows:
2022
£m
2021
£m
Defined contribution costs 3.8 3.6
29. Share capital
2022 2021
Shares £m Shares £m
Authorised, issued and fully paid 112,028,871 4.7 112,028,871 4.7
The Company has one class of ordinary shares which carry no right to fixed income. The shares have a nominal value of 4 1/6 pence.
During the year to 30 January 2022, the Company’s employee benefit trusts purchased 42,778 shares (2021: 47,061) shares. The total amount
paid to acquire the shares has been deducted from shareholders’ equity and is included within retained earnings. At 30 January 2022, the shares
held by the Company’s employee benefit trusts represented 782,873 (2021: 871,660) shares at a purchased cost of £4.7m (2021: £5.2m).
Share repurchase programme
During the year ended 25 January 2020, the Group completed a share repurchase programme, purchasing 1,915,772 shares at a total cost of
£30.0m. The permanent capital has been replaced through the creation of a Capital Redemption Reserve, which is included in “Other reserves”
within equity.
The cash flow hedge reserve is also included in “Other reserves” in equity and records the effective portion of movements in the fair value
of forward foreign exchange contracts that have been designated as part of a cash flow hedge relationship.
The share premium reserve contains the premium arising on the issue of equity shares, net of issue expenses.
30. Share-based payments
As disclosed in the Directors’ Remuneration Report, the Group runs a number of share award plans and share option plans:
– Savings Related Share Option Scheme which is open to all employees
– LTIP and ESOS options which are granted to directors
– AESOP awards that are available to all employees
Share-based payment costs and related deferred and current tax charges are recognised within the share option reserve.
Savings Related Share Option Scheme (SAYE)
All SAYEs outstanding at 30 January 2022 and 24 January 2021 have no performance criteria attached other than the requirement for the
employee to remain in the employment of the Company and to continue contributing to the plan. Options granted under the SAYE must
be exercised within six months of the relevant award vesting date.
The SAYE is open to all qualifying employees in employment at the date of inception of the scheme. Options are normally exercisable after
three years from the date of grant. The price at which options are offered is not less than 80% of the average of the middle-market price of
the five dealing days immediately preceding the date of invitation.
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A.G. BARR p.l.c. Annual Report and Accounts 2022
Notes to the Accounts continued
30. Share-based payments continued
The movements in the number of share options outstanding and their related weighted average exercise prices determined using
the Black-Scholes valuation model are as follows:
2022 2021
Options
Average
exercise price in
pence per share Options
Average
exercise price in
pence per share
At start of the year 896,005 535p 726,367 610p
Granted in the year 377,647 459p 499,393 428p
Forfeited (495,553) 559p (329,755) 538p
Exercised (98,341) 460p – –p
At end of the year 679,758 486p 896,005 535p
The weighted average fair value of the share awards made during the period was determined using the Black-Scholes valuation model.
The significant inputs to the model were as follows:
Date of grant
SAYE
26 May 2021
Number of share awards granted 280,820
Share price at date of grant 575p
Contractual life in years 3
Dividend yield 0%
Expected outcome of meeting performance criteria (at grant date) 70%
Fair value determined at grant date 142p
None of the options listed above were exercisable at the respective year end dates. The outstanding options at the year end had exercise prices
of £6.20, £7.45, £4.28 and £4.59 (2021: £5.67, £6.20 and £7.45 and £4.28).
The weighted average share price on the dates that options were exercised in the year to 30 January 2022 was £5.19.
The weighted average remaining contractual life of the outstanding share options at the year end is two years (2021: two years).
185
Strategic Report Corporate Governance Accounts
LTIP
During the year, an award of shares was made to the executive directors as disclosed in the Directors’ Remuneration Report.
The weighted average fair value of the share awards made during the period was determined using the Black-Scholes valuation model.
Thesignificant inputs to the model were as follows:
Date of grant
LTIP
12 April 2021
Number of share awards granted 317,161
Share price at date of grant 505p
Contractual life in years 3
Dividend yield 0%
Expected outcome of meeting performance criteria (at grant date) 50%
Fair value determined at grant date 504p
AESOP
As described in the Directors’ Remuneration Report, there are two elements to the AESOP.
The partnership share element provides that for every two shares (year to 24 January 2021: two shares) that a participant purchases in
A.G. BARR p.l.c., up to a maximum contribution of £150 per month, the Company will purchase one matching share. The matching shares
purchased are held in trust in the name of the individual. There are various rules as to the period of time that the shares must be held in trust
but after five years, the shares can be released tax free to the participant.
The second element of free shares allows participants to receive shares to the value of a common percentage of their earnings, related to
the performance of the Group. The maximum value of the annual award is £3,600 and the shares awarded are held in trust for five years.
Under the terms of the AESOP rules, any award of free shares to employees is made by the Trustee of the AESOP subject to the Company’s consent.
186
A.G. BARR p.l.c. Annual Report and Accounts 2022
Notes to the Accounts continued
31. 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 services
2022
£m
2021
£m
Rubicon Drinks Limited 5.3 3.8
The amounts disclosed in the table below are the amounts owed to and due from subsidiary companies that are trading subsidiaries.
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 23) are balances due by and due to dormant subsidiary companies.
Amounts owed by related parties Amounts due to related parties
2022
£m
2021
£m
2022
£m
2021
£m
Rubicon Drinks Limited – – 13.1 8.6
Funkin Limited 0.2 1.2 – –
The amounts disclosed in the table below are the amounts owed from investments in associates. The balance is an interest-free equity
convertible loan note.
Amounts due by related parties
2022
£m
2021
£m
Loans to associates
Opening and closing balance 1.0 1.0
Compensation of key management personnel
The remuneration of the executive directors, non-executive directors and senior executives during the year was as follows:
2022
£m
2021
£m
Salaries and short-term benefits 4.6 2.2
Post employment benefits 0.4 0.4
5.0 2.6
The Directors’ Remuneration Report can be found on pages 79 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 £0.5m (2021: £0.4m) for administration services in respect of the retirement benefit plans. At the year end, £nil (2021: £nil)
was outstanding to the service provider on behalf of the retirement benefit plans.
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Strategic Report Corporate Governance Accounts
32. Subsidiaries
The Group’s subsidiaries at 30 January 2022 are set out below. Unless otherwise stated, they have share capital consisting solely of
ordinary shares that are held directly by the Group, and the proportion of ownership interests held equals the voting rights held by the Group.
The country of incorporation or registration is also their principal place of business.
Name of entity
Place of business/
country of incorporation Address
Ownership interest held
by the Group
Principal activities
2022
%
2021
%
Funkin Limited UK Milton Keynes 100 100 Distribution and selling of cocktail solutions
Funkin USA Limited USA Milton Keynes 100 100 Distribution and selling of cocktail solutions
Rubicon Drinks Limited UK Milton Keynes
100
100 Manufacturing, distribution and selling of
exotic soft drinks
A.G. BARR Capital Partner Limited UK Milton Keynes 100 100 Investment holding company
A.G. BARR General Partner Limited UK Cumbernauld 100 100 Investment holding company
A.G. BARR Pension Trustee Limited UK Cumbernauld 100 100 Investment holding company
A.G. BARR Scottish Limited
Partnership UK Cumbernauld 100 100 Investment holding company
Robert Barr Limited UK Cumbernauld 100 100 Non-trading entity
Mandora St Clements Limited UK Milton Keynes 100 100 Non-trading entity
Tizer Limited UK Milton Keynes 100 100 Non-trading entity
A.G. BARR (Ireland) Limited Republic of Ireland Dublin 100 100 Non-trading entity
MOMA Foods Limited UK London 61.8 –
Distribution and selling of plant-based milks
and porridge
The full address for Cumbernauld is: Westfield House, 4 Mollins Road, Cumbernauld, Scotland, G68 9HD.
The full address for Milton Keynes is: Crossley Drive, Magna Park, Milton Keynes, England, MK17 8FL.
The full address for Dublin is: 25-28 North Wall Quay, Dublin 1, Dublin, Ireland.
The full address for London is: Brock House, 19 Langham Street, London, W1W 6BP.
33. Subsequent events
There have been no events that have had a material impact on the Group after the balance sheet date.
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A.G. BARR p.l.c. Annual Report and Accounts 2022
Non-GAAP measures are provided because they are tracked by management to assess the Group’s operating performance and to inform
financial, strategic and operating decisions.
Definition of non-GAAP measures used are provided below:
Capital expenditure is a non-GAAP measure and is defined as the cash purchases of property, plant and equipment, and is disclosed
in the consolidated cash flow statement.
EBITDA is a non-GAAP measure and is defined as operating profit before exceptional items, depreciation and amortisation.
EBITDA margin is a non-GAAP measure and is calculated as EBITDA divided by revenue.
Basic earnings per share before exceptional items is a non-GAAP measure calculated by dividing profit attributable to equity holders
before exceptional items by the weighted average number of shares in issue.
Expansionary capex is a non-GAAP measure and is defined as the purchase of property, plant and equipment that is not the normal
replacement of property, plant and equipment that has come to the end of its useful life. Maintenance capex is a non-GAAP measure
and is defined as the purchase of property, plant and equipment that is the normal replacement of property, plant and equipment that
has come to the end of its useful life. Expansionary capex and maintenance capex add together to the value of purchase of property,
plant and equipment that appears in the consolidated cash flow statement.
Free cash flow is a non-GAAP measure and is defined as the net cash flow as per the cash flow statement excluding the movements
in borrowings, expansionary capex, the net cash flow on the purchase and sale of shares by employee benefit trusts, dividend payments
and non-cash exceptional items.
Full year dividend is a non-GAAP measure and is defined as the total dividends declared for the financial year excluding any special dividends.
Gross margin is a non-GAAP measure calculated by dividing gross profit by revenue.
Market capitalisation is a non-GAAP measure and is defined as the closing share price at the end of a reporting period multiplied
by the number of issued and fully paid shares of the Company.
Net cash at bank is a non-GAAP measure and is defined as the net of cash and cash equivalents and loans and other borrowings
as shown in the statement of financial position.
Glossary
189
Strategic Report Corporate Governance Accounts
Net funds is a non-GAAP measure and is defined as cash and cash equivalents less lease liabilities.
Operating margin is a non-GAAP measure calculated by dividing operating profit by revenue.
Operating margin before exceptional items is a non-GAAP measure calculated by dividing operating profit before
exceptional items byrevenue.
Operating profit before exceptional items is a non-GAAP measure calculated as operating profit less any exceptional items.
This figure appears on the income statement.
Profit before tax and exceptional items is a non-GAAP measure calculated as profit before tax less any exceptional items.
This figure appears on the income statement.
Revenue growth is a non-GAAP measure calculated as the difference in revenue between two reporting periods divided
by the revenue of the earlier reporting period.
Return on capital employed (ROCE) is a non-GAAP measure and is defined as profit before tax and exceptional items as a percentage
of invested capital. Invested capital is a non-GAAP measure defined as period end non-current plus current assets less current liabilities
excluding all balances relating to any provisions, financial instruments, interest-bearing liabilities and cash or cash equivalents.
190
A.G. BARR p.l.c. Annual Report and Accounts 2022
Gross margin
2022
£m
2021
£m
Revenue 268.6 227.0
Reported gross profit 118.6 93.6
Gross margin 44.2% 41.2%
Gross margin before exceptional items
2022
£m
2021
£m
Revenue 268.6 227.0
Gross profit before exceptional items 118.6 94.8
Gross margin before exceptional items 44.2% 41.8%
Operating margin
2022
£m
2021
£m
Revenue 268.6 227.0
Reported operating profit 42.7 26.8
Operating margin 15.9% 11.8%
Operating margin before exceptional items
2022
£m
2021
£m
Revenue 268.6 227.0
Operating profit before exceptional items 42.0 33.6
Operating margin before exceptional items 15.6% 14.8%
EBITDA
2022
£m
2021
£m
Operating profit before exceptional items 42.0 33.6
Depreciation and amortisation 11.2 12.9
EBITDA 53.2 46.5
Reconciliation of Non-GAAP Measures
191
Strategic Report Corporate Governance Accounts
EBITDA margin
2022
£m
2021
£m
Revenue 268.6 227.0
EBITDA 53.2 46.5
EBITDA margin 19.8% 20.5%
Full year dividend
2022
p
2021
p
Interim dividend paid 2.0 –
Final dividend declared 10.0 –
Full year dividend 12.0 –
Net cash at bank
2022
£m
2021
£m
Cash and cash equivalents 68.7 52.9
Loans and other borrowings (0.3) (2.9)
Net cash at bank 68.4 50.0
ROCE
2022
£m
2021
£m
Profit before tax 42.2 26.0
Exceptional items (0.7) 6.8
Profit before tax and exceptional items 41.5 32.8
Intangible assets 98.6 90.5
Property, plant and equipment 93.8 96.4
Right-of-use assets 4.2 2.5
Investment in associates 0.7 0.8
Inventories 24.2 19.3
Trade and other receivables 44.3 37.6
Asset held for sale – 0.4
Current tax 0.3 0.7
Trade and other payables (54.0) (43.4)
Invested capital 212.1 204.8
ROCE 19.6% 16.0%
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A.G. BARR p.l.c. Annual Report and Accounts 2022
THE FOLLOWING INFORMATION IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION. If you are in any doubt as to any matter
referred to in this report or as to the action you should take, you should seek your own personal financial advice from: (i) a stockbroker,
bank manager, solicitor, accountant or other independent professional adviser authorised under the Financial Services and Markets Act
2000 if you are resident in the United Kingdom; or (ii) another appropriately authorised independent financial adviser if you are not
resident in the United Kingdom.
If you have sold or otherwise transferred all of your shares in A.G. BARR p.l.c., please pass this report, together with the accompanying
documents (except the accompanying personalised form of proxy), as soon as possible to the purchaser or transferee, or to the
stockbroker, bank or other person who arranged the sale or transfer so they can pass these documents to the person who now
holds the shares.
Notice is hereby given that the one hundred and eighteenth Annual General Meeting of A.G. Barr p.l.c. (the “Company”) will be held at the
offices of Ernst and Young LLP, G1 Building, 5 George Square, Glasgow, G2 1DY on Friday 27 May 2022 at 12.00 p.m. to consider and, if thought
fit, pass the resolutions set out below. Resolutions 1 to 15 (inclusive) will be proposed as ordinary resolutions and Resolutions 16 and 17 will be
proposed as special resolutions. Voting on each of the resolutions will be conducted by way of a poll.
1. To receive and approve the audited accounts of the group and the Company for the year ended 30 January 2022 together with the directors’
and auditor’s reports thereon.
2. To receive and approve the annual statement by the chairman of the remuneration committee and the directors’ remuneration report
as set out on pages 76 to 78 and pages 79 to 95 respectively of the Company’s annual report and accounts for the year ended
30 January 2022.
3. To declare a final dividend of 10.00 pence per ordinary share of 4 1/6 pence for the year ended 30 January 2022.
4. To elect Mr Mark Allen OBE as a director of the Company.
5. To re-elect Mr Roger Alexander White as a director of the Company.
6. To re-elect Mr Stuart Lorimer as a director of the Company.
7. To re-elect Mr Jonathan David Kemp as a director of the Company.
8. To re-elect Mr William Robin Graham Barr as a director of the Company.
9. To re-elect Ms Susan Verity Barratt as a director of the Company.
10. To elect Ms Zoe Louise Howorth as a director of the Company.
11. To re-elect Mr David James Ritchie as a director of the Company.
12. To re-elect Mr Nicholas Barry Edward Wharton as a director of the Company.
13. To re-appoint Deloitte LLP as the Company’s auditor, to hold office until the conclusion of the next general meeting at which accounts
are laid, and to authorise the audit and risk committee of the board of directors of the Company to fix their remuneration.
Notice of Annual General Meeting
193
Strategic Report Corporate Governance Accounts
14. THAT the board of directors of the Company (the “Board”) be and it is hereby generally and unconditionally authorised pursuant to and in
accordance with section 551 of the Companies Act 2006 (the “2006 Act”) to exercise all the powers of the Company to allot shares in the
capital of the Company and to grant rights to subscribe for or to convert any security into shares in the Company:
(a) up to an aggregate nominal amount of £1,555,956.54; and
(b) up to a further aggregate nominal amount of £1,555,956.54 provided that: (i) they are equity securities (within the meaning of section 560
of the 2006 Act); and (ii) they are offered by way of a rights issue in favour of the holders of shares (excluding the Company in its capacity
as a holder of treasury shares) on the register of members of the Company on a date fixed by the Board where the equity securities
respectively attributable to the interests of such holders are proportionate (as nearly as practicable) to the respective numbers of shares
held by them on that date subject to such exclusions or other arrangements as the Board deems necessary or expedient to deal with:
(i) equity securities representing fractional entitlements; (ii) treasury shares; and / or (iii) legal or practical problems arising in any overseas
territory, the requirements of any regulatory body or any stock exchange or any other matter whatsoever,
provided that this authority shall expire on the earlier of 31 July 2023 and the conclusion of the next annual general meeting of the Company
after the passing of this resolution, save that the Company may before such expiry make an offer or enter into an agreement which would or
might require shares to be allotted, or rights to subscribe for or to convert securities into shares to be granted, after such expiry and the Board
may allot shares or grant such rights in pursuance of such an offer or agreement as if the authority conferred hereby had not expired.
15. THAT the Company’s All Employee Share Ownership Plan (the “AESOP”) originally approved by shareholders at the Company’s annual
general meeting held on 21 May 2001 and re-approved at the Company’s annual general meeting held on 21 May 2012, be and hereby
is re-approved and the Company be and hereby is authorised to continue to make awards under, and otherwise operate, the AESOP in
accordance with its terms until the conclusion of the annual general meeting of the Company to be held in 2032.
16. THAT, subject to the passing of resolution 14 set out in the notice of the annual general meeting of the Company convened for 27 May 2022
(“Resolution 14”), the board of directors of the Company (the “Board”) be and it is hereby generally empowered, pursuant to sections 570
and 573 of the Companies Act 2006 (the “2006 Act”), to allot equity securities (within the meaning of section 560 of the 2006 Act) (including
the grant of rights to subscribe for, or to convert any securities into, ordinary shares of 4 1/6 pence each in the capital of the Company
(“Ordinary Shares”)), wholly for cash either pursuant to the authority conferred on them by Resolution 14 or by way of a sale of treasury
shares (within the meaning of section 560(3) of the 2006 Act) as if section 561(1) of the 2006 Act did not apply to any such allotment or sale,
provided that this power shall be limited to:
(a) the allotment of equity securities, for cash, in connection with a rights issue, open offer or other pre-emptive offer in favour of holders
of Ordinary Shares (excluding the Company in its capacity as a holder of treasury shares) on the register of members of the Company on
a date fixed by the Board where the equity securities respectively attributable to the interests of such holders are proportionate (as nearly
as practicable) to the respective numbers of Ordinary Shares held by them on that date subject to such exclusions or other arrangements
in connection with the rights issue, open offer or other offer as the Board deem necessary or expedient to deal with: (i) equity securities
representing fractional entitlements; (ii) treasury shares; and / or (iii) legal or practical problems arising in any overseas territory, the
requirements of any regulatory body or any stock exchange or any other matter whatsoever; and
(b) the allotment (otherwise than pursuant to sub-paragraph (a) above) of equity securities up to an aggregate nominal amount of £233,393.48,
provided that this authority shall expire on the earlier of 31 July 2023 and the conclusion of the next annual general
meeting of the Company after the passing of this resolution, save that the Company may before such expiry make an offer or enter into an
agreement which would or might require equity securities to be allotted after the expiry of this authority and the Board may allot equity
securities pursuant to such an offer or agreement as if the authority conferred hereby had not expired.
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17. THAT the Company be and is hereby generally and unconditionally authorised for the purposes of section 701 of the Companies Act 2006
(the “2006 Act”) to make one or more market purchases (within the meaning of section 693(4) of the 2006 Act) of ordinary shares of 4 1/6
pence each in the capital of the Company (“Ordinary Shares”), on such terms and in such manner that the directors think fit, provided that:
(a) the maximum aggregate number of Ordinary Shares hereby authorised to be purchased shall be 11,202,887;
(b) the maximum price (exclusive of expenses) which may be paid for an Ordinary Share is an amount equal to the higher of: (i) 105% of the
average of the middle market quotations for an Ordinary Share as derived from the London Stock Exchange Daily Official List for the five
dealing days immediately preceding the day on which the Ordinary Share is purchased; and (ii) the higher of the price of the last
independent trade and the highest current independent bid for an Ordinary Share on the trading venue where the purchase is carried out;
(c) the minimum price which may be paid for an Ordinary Share is an amount equal to its nominal value (in each case exclusive of
associated expenses);
(d) unless previously renewed, varied or revoked, the authority hereby conferred shall expire on the earlier of 31 July 2023 and the conclusion
of the next annual general meeting of the Company after the passing of this resolution, but a contract to purchase Ordinary Shares may
be made before such expiry which will or may be completed wholly or partly thereafter, and a purchase of Ordinary Shares may be made
in pursuance of any such contract; and
(e) an Ordinary Share so purchased shall be cancelled or, if the directors so determine and subject to the provisions of applicable laws or
regulations of the Financial Conduct Authority, held as a treasury share.
By order of the Board
Julie Barr
Company Secretary
26 April 2022
Registered Office
A.G. BARR p.l.c., Westfield House, 4 Mollins Road, Cumbernauld, G68 9HD. Registered in Scotland SC005653.
Shareholders should also read the notes to this Notice of Annual General Meeting which are set out on pages 198 to 201 of this report.
Those notes provide further information about shareholders’ entitlement to attend, speak and vote at the Annual General Meeting
(and their ability to appoint another person to do so on their behalf).
Notice of Annual General Meeting continued
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Explanatory Notes
The following notes provide an explanation of the resolutions to be considered at the 118th annual general meeting (the “AGM”)
of A.G. BARR p.l.c. (the “Company”).
The board of directors of the Company (the “Board”) considers that all the resolutions to be considered at the AGM are in the best interests
of the Company and its shareholders as a whole and unanimously recommends that you vote in favour of them.
Resolutions 1 to 15 (inclusive) will be proposed as ordinary resolutions. This means that for each of those resolutions to be passed, more than
half of the votes cast must be in favour of the resolution.
Resolutions 16 and 17 will be proposed as special resolutions. This means that for each of those resolutions to be passed, at least three-quarters
of the votes cast must be in favour of the resolution.
Resolution 1 – Receive and approve the reports and accounts
Shareholders are being asked to receive and approve the audited accounts of the group and the Company (as audited by Deloitte LLP)
for the year ended 30 January 2022, together with the associated reports of the directors and auditor.
Resolution 2 – Directors’ remuneration
The directors’ remuneration report is divided into three parts: the annual statement by the chairman of the remuneration committee,
the directors’ remuneration policy and the directors’ remuneration report.
– The annual statement by the chairman of the remuneration committee (which is set out on pages 76 to 78 of this report) provides
a summary of the directors’ remuneration policy and the directors’ remuneration report.
– The directors’ remuneration policy (which is set out on pages 96 to 109 of this report) sets out the Company’s future policy on
directors’ remuneration.
– The directors’ remuneration report (which is set out on pages 79 to 95 of this report) gives details of the payments and share awards
made to the directors in connection with their and the Company’s performance during the year ended 30 January 2022. It also details
how the Company’s policy on directors’ remuneration will be operated in the coming year.
This resolution invites shareholders to approve the annual statement by the chairman of the remuneration committee and the directors’
remuneration report (other than the part containing the directors’ remuneration policy which was approved at the annual general meeting
of the Company held in 2020 and which it is expected will not be voted on until the annual general meeting to be held in 2023) for the year
ended 30 January 2022. This resolution is an advisory vote and will not affect the way in which the Company’s remuneration policy has been
implemented. Each year, shareholders will be given an advisory vote on the implementation of the directors’ remuneration policy in relation
to the payments and share awards made to directors during the year under review.
Resolution 3 – Final dividend
Shareholders are being asked to approve a final dividend of 10.00 pence per ordinary share of 4 1/6 pence for the year ended 30 January 2022.
If shareholders approve the recommended final dividend, it will be paid on 10 June 2022 to all shareholders on the Company’s register of
members on 13 May 2022.
Resolutions 4 to 12 inclusive – Re-election and election of directors
The Company’s Articles of Association require that all newly appointed directors retire at the first annual general meeting following their
appointment. Consequently, Mr Mark Allen OBE and Ms Zoe Louise Howorth will retire and offer themselves for election.
The Board complies with the provisions of the UK Corporate Governance Code whereby all directors are subject to annual re-election.
Accordingly, all other directors of the Company are retiring and offering themselves for re-election.
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A.G. BARR p.l.c. Annual Report and Accounts 2022
Biographical details of the directors are set out on pages 58 to 59 of this report. The Board has confirmed that, following formal performance
evaluation, all of the directors continue to perform effectively and demonstrate commitment to their roles. The Board therefore unanimously
recommends the proposed re-election (or election in the case of Mr Mark Allen OBE and Ms Zoe Louise Howorth) of the directors.
Resolution 13 – Re-appointment of auditor
The Company is required to appoint an auditor at each general meeting at which accounts are presented to shareholders and Deloitte LLP
have indicated their willingness to continue in office. Accordingly, shareholders are being asked to approve the re-appointment of Deloitte LLP
as auditor of the Company to hold office until the conclusion of the next general meeting at which accounts are laid before the Company
and to authorise the audit and risk committee of the Board to fix their remuneration.
Resolution 14 – Authority to allot shares
The directors may not allot shares in the Company unless authorised to do so by shareholders in general meeting. Sub-paragraph (a) of
Resolution 14, if passed, will authorise the directors to allot shares having an aggregate nominal value of up to £1,555,956.54, representing
approximately one third of the Company’s issued share capital as at 20 April 2022 (being the latest practicable date prior to the publication
of this report). The directors have no present intention to exercise this authority.
In line with guidance issued by the Investment Association, sub-paragraph (b) of Resolution 14, if passed, will authorise the directors to allot
additional shares in connection with a rights issue having an aggregate nominal value of up to £1,555,956.54, representing approximately
one third of the Company’s issued share capital as at 20 April 2022 (being the latest practicable date prior to the publication of this report).
The directors have no present intention to exercise the authority sought under sub-paragraph (b) of Resolution 14. However, if such authority
is obtained, it will give the Company greater flexibility to allot additional shares for the purpose of a pre-emptive rights issue. This authority will
be used when the directors consider it to be in the best interests of shareholders.
The authorities sought under Resolution 14 will expire on the earlier of 31 July 2023 (being the latest date by which the Company must hold
its annual general meeting in 2023) and the conclusion of the annual general meeting of the Company held in 2023.
Resolution 15 – All Employee Share Ownership Plan
At the Company’s annual general meeting held in 2001, shareholders were asked to approve the terms of the All Employee Share Ownership
Plan (known as the ‘AESOP’). The rules of the AESOP allow the Company to make share awards for up to 80 years – with the authority to do
so expiring in 2081. Principles of good corporate governance recommend that schemes such as the AESOP should only exist for a period of
10 years before they end and a company asks its shareholders to consider putting in place a new scheme. Rather than terminating the existing
AESOP and incurring the cost of setting up a new scheme, the Company has decided to seek shareholder approval for the continued operation
of the AESOP. This is the second time the shareholders have been asked to re-approve the AESOP, following re-approval at the Company’s
annual general meeting held in 2012, and the Company intends to seek a similar shareholder approval every 10 years.
Resolution 16 – Disapplication of statutory pre-emption rights
If the directors wish to allot new shares for cash, the Companies Act 2006 states that the shares must be offered first to existing shareholders
in proportion to their existing shareholdings. For legal, regulatory and practical reasons, it might not be possible or desirable for shares allotted
by means of a pre-emptive offer to be offered to certain shareholders, particularly those resident overseas. Furthermore, it might, in some
circumstances, be in the Company’s interests for the directors to be able to allot some shares for cash without having to offer them first to
existing shareholders. To enable this to be done, shareholders’ statutory pre-emption rights must be disapplied. Accordingly, Resolution 16,
if passed, will empower the directors to allot a limited number of new equity securities without shareholders’ statutory pre-emption rights
applying to such allotment. The authority conferred by Resolution 16 would also cover the sale of treasury shares for cash.
Notice of Annual General Meeting continued
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Sub-paragraph (a) of Resolution 16 will, if passed, confer authority on the directors to make any arrangements which may be necessary
to deal with any legal, regulatory or practical problems arising on a rights issue, an open offer or any other pre-emptive offer in favour of
ordinary shareholders, for example, by excluding certain overseas shareholders from such issue or offer.
Sub-paragraph (b) of Resolution 16 will, if passed, disapply shareholders’ statutory pre-emption rights by empowering the directors to allot
equity securities for cash on a non pre-emptive basis but only new equity securities having a maximum aggregate nominal value of £233,393.48,
representing approximately 5% of the Company’s issued share capital as at 20 April 2022 (being the latest practicable date prior to the publication
of this report).
The authority sought under Resolution 16 will expire on the earlier of 31 July 2023 (being the latest date by which the Company must hold
an annual general meeting in 2023) and the conclusion of the annual general meeting of the Company held in 2023.
Resolution 17 – Purchase of own shares
The Companies Act 2006 permits a company to purchase its own shares provided the purchase has been authorised by shareholders
in general meeting.
Resolution 17, if passed, will give the Company the authority to purchase any of its own issued ordinary shares at a price of not less than
an amount equal to the nominal value of an ordinary share and not more than the higher of: (i) 5% above the average of the middle market
quotations of the Company’s ordinary shares as derived from the London Stock Exchange Daily Official List for the five dealing days before any
purchase is made; and (ii) the higher of the last independent trade of an ordinary share and the highest current independent bid for an ordinary
share on the trading venue where the purchase is carried out.
The authority will enable the purchase of up to a maximum of 11,202,887 ordinary shares, representing approximately 10% of the Company’s
issued ordinary share capital as at the date of the AGM, and will expire on the earlier of 31 July 2023 (being the latest date by which the Company
must hold an annual general meeting in 2023) and the conclusion of the annual general meeting of the Company held in 2023.
The directors will only exercise this buy back authority after careful consideration, taking into account market conditions prevailing at the
time, other investment opportunities, appropriate gearing levels and the overall position of the Company. Purchases would be financed
out of distributable profits and shares purchased would either be cancelled (and the number of shares in issue reduced accordingly) or
held as treasury shares.
The Company operates two share option schemes under which awards may be satisfied by the allotment or transfer of ordinary shares to a
scheme participant. However, in practice, the Company has always satisfied awards to participants by the transfer of ordinary shares from the
trustee of each of the schemes.
As at 20 April 2022 (being the latest practicable date prior to the publication of this report), options had been granted over 1,615,020 ordinary
shares (the “Option Shares”) representing approximately 1.44% of the Company’s issued share capital at that date. If the authority to purchase the
Company’s ordinary shares (as described in Resolution 17) was exercised in full, the Option Shares would have represented approximately 1.60%
of the Company’s issued share capital as at 20 April 2022. As at 20 April 2022, the Company did not hold any treasury shares.
198
A.G. BARR p.l.c. Annual Report and Accounts 2022
NOTES
1. Attending the Annual General Meeting in person
If you wish to attend the Annual General Meeting (“AGM”) in person, you should arrive at the venue for the AGM in good time to allow your
attendance to be registered. It is advisable to have some form of identification with you as you may be asked to provide evidence of your identity
to the Company’s registrar, Equiniti Limited (the “Registrar”), prior to being admitted to the AGM.
2. Appointment of a proxy
Members are entitled to appoint one or more proxies to exercise all or any of their rights to attend, speak and vote at the AGM. A proxy need not
be a member of the Company but must attend the AGM to represent a member. To be validly appointed, a proxy must be appointed using the
procedures set out in these notes and in the notes to the accompanying proxy form.
If a member wishes a proxy to speak on their behalf at the AGM, the member will need to appoint their own choice of proxy (not the Chairman
of the AGM) and give their instructions directly to them. Such an appointment can be made using the proxy form accompanying this notice of
AGM, electronically, through CREST, or through Proxymity.
Members can only appoint more than one proxy where each proxy is appointed to exercise rights attached to different shares. Members cannot
appoint more than one proxy to exercise the rights attached to the same share(s). If a member wishes to appoint more than one proxy, they
should contact the Registrar at Equiniti Limited, Aspect House, Spencer Road, Lancing, BN99 6DA.
A member may instruct their proxy to abstain from voting on a particular resolution to be considered at the AGM by marking the “Withheld”
option in relation to that particular resolution when appointing their proxy. It should be noted that an abstention is not a vote in law and will
not be counted in the calculation of the proportion of votes “For” or “Against” the resolution.
The appointment of a proxy will not prevent a member from attending the AGM and voting in person if he or she wishes.
A person who is not a member of the Company but who has been nominated by a member to enjoy information rights does not have
a right to appoint a proxy under the procedures set out in these notes and should read note 9 below.
3. Appointment of a proxy using a proxy form or electronically
A proxy form for use in connection with the AGM is enclosed. To be valid, any proxy form or other instrument appointing a proxy, together
with any power of attorney or other authority under which it is signed or a certified copy thereof, must be received by post or (during normal
business hours only) by hand by the Registrar at Equiniti Limited, Aspect House, Spencer Road, Lancing, BN99 6DA, or submitted electronically
at www.sharevote.co.uk at least 48 hours before the time of the AGM or any adjournment of that meeting.
If you do not have a proxy form and believe that you should have one, or you require additional proxy forms, please contact the Registrar
at Equiniti Limited, Aspect House, Spencer Road, Lancing, BN99 6DA.
4. Appointment of a proxy through CREST
CREST members who wish to appoint a proxy through the CREST electronic proxy appointment service may do so by using the procedures
described in the CREST Manual and by logging on to: www.euroclear.com. CREST personal members or other CREST sponsored members
and those CREST members who have appointed (a) voting service provider(s) should refer to their CREST sponsor or voting service provider(s)
who will be able to take the appropriate action on their behalf.
Notice of Annual General Meeting continued
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In order for a proxy appointment or instruction made using the CREST service to be valid, the appropriate CREST message (a “CREST Proxy
Instruction”) must be properly authenticated in accordance with Euroclear UK & Ireland Limited’s specifications, and must contain the information
required for such instruction, as described in the CREST Manual. The message, regardless of whether it constitutes the appointment of a proxy
or is an amendment to the instruction given to a previously appointed proxy, must, in order to be valid, be transmitted so as to be received by the
Registrar (ID RA19) no later than 48 hours before the time of the AGM or any adjournment of that meeting. For this purpose, the time of receipt
will be taken to be the time (as determined by the timestamp applied to the message by the CREST Application Host) from which the Registrar
is able to retrieve the message by enquiry to CREST in the manner prescribed by CREST. After this time any change of instructions to a proxy
appointed through CREST should be communicated to the appointee through other means.
CREST members and, where applicable, their CREST sponsors or voting service provider(s) should note that Euroclear UK & Ireland Limited
does not make available special procedures in CREST for any particular message. Normal system timings and limitations will, therefore, apply
in relation to the input of CREST Proxy Instructions. It is the responsibility of the CREST member concerned to take (or, if the CREST member
is a CREST personal member, or sponsored member, or has appointed (a) voting service provider(s), to procure that his/her CREST sponsor or
voting service provider(s) take(s)) such action as shall be necessary to ensure that a message is transmitted by means of the CREST system by
any particular time. In this regard, CREST members and, where applicable, their CREST sponsors or voting system provider(s) are referred to
those sections of the CREST Manual concerning practical limitations of the CREST system and timings.
The Company may treat as invalid a CREST Proxy Instruction in the circumstances set out in Regulation 35(5)(a) of the Uncertificated Securities
Regulations 2001.
5. Appointment of a proxy through Proxymity
If you are an institutional investor you may be able to appoint a proxy electronically via the Proxymity platform, a process which has been agreed
by the Company and approved by the Registrar. For further information regarding Proxymity, please go to www.proxymity.io. Your proxy must
be lodged by 12.00 p.m. on 25 May 2022 in order to be considered valid. Before you can appoint a proxy via this process you will need to have
agreed to Proxymity’s associated terms and conditions. It is important that you read these carefully as you will be bound by them and they will
govern the electronic appointment of your proxy.
6. Appointment of a proxy by joint holders
In the case of joint holders, where more than one of the joint holders purports to appoint a proxy, only the purported appointment submitted
by the most senior holder will be accepted. Seniority is determined by the order in which the names of the joint holders appear in the
Company’s register of members in respect of the joint holding (the first named being the most senior).
7. Corporate representatives
Any corporation which is a member can appoint one or more corporate representatives. Members can only appoint more than one corporate
representative where each corporate representative is appointed to exercise rights attached to different shares. Members cannot appoint more
than one corporate representative to exercise the rights attached to the same share(s).
8. Entitlement to attend and vote
To be entitled to attend and vote at the AGM (and for the purpose of determining the votes they may cast), members must be registered
in the Company’s register of members at 6.30 p.m. on 25 May 2022 (or, if the AGM is adjourned, at 6.30 p.m. on the day two days prior
to the adjourned meeting). Any changes to the Company’s register of members after the relevant deadline will be disregarded in determining
the rights of any person to vote at the AGM.
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A.G. BARR p.l.c. Annual Report and Accounts 2022
9. Nominated persons
Any person to whom this notice is sent who is a person nominated under section 146 of the Companies Act 2006 (the “2006 Act”) to enjoy
information rights (a “Nominated Person”) may, under an agreement between him/her and the member by whom he/she was nominated,
have a right to be appointed (or to have someone else appointed) as a proxy for the AGM. If a Nominated Person has no such proxy appointment
right or does not wish to exercise it, he/she may, under any such agreement, have a right to give instructions to the member as to the exercise of
voting rights.
10. Website giving information regarding the AGM
Information regarding the AGM, including information required by section 311A of the 2006 Act, and a copy of this notice of AGM is available
from www.agbarr.co.uk.
11. Audit concerns
Members should note that it is possible that, pursuant to requests made by members of the Company under section 527 of the 2006 Act,
the Company may be required to publish on a website a statement setting out any matter relating to: (a) the audit of the Company’s accounts
(including the auditor’s report and the conduct of the audit) that are to be laid before the AGM; or (b) any circumstance connected with an
auditor of the Company ceasing to hold office since the previous meeting at which annual accounts and reports were laid in accordance with
section 437 of the 2006 Act. The Company may not require the members requesting any such website publication to pay its expenses in
complying with sections 527 or 528 of the 2006 Act. Where the Company is required to place a statement on a website under section 527 of the
2006 Act, it must forward the statement to the Company’s auditor not later than the time when it makes the statement available on the website.
The business which may be dealt with at the AGM includes any statement that the Company has been required under section 527 of the 2006
Act to publish on a website.
12. Voting rights
As at 20 April 2022 (being the latest practicable date prior to the publication of this notice), the Company’s issued share capital consisted of
112,028,871 ordinary shares of 4 1/6 pence each, carrying one vote each. As at 20 April 2022, the Company did not hold any treasury shares.
Therefore, the total voting rights in the Company as at 20 April 2022 were 112,028,871 votes.
13. Shareholder questions
Shareholders have the right to ask questions related to the business of the meeting. Shareholders can submit questions related to the business
of the meeting by email to agm2022@agbarr.co.uk. Answers to shareholder questions will be sent to individual shareholders as soon as
practically possible after the AGM.
14. Voting at the AGM
Shareholders are able to vote in advance of the meeting using their proxy form enclosed. The proxy form covers all resolutions to be proposed
at the AGM.
Shareholders are being encouraged to submit their votes as early as possible and by no later than 48 hours before the time of the AGM. Votes
can be submitted either by returning the proxy form in the post (postage is pre-paid), or electronically by following the instructions set out on
the proxy form.
Voting on all resolutions at the AGM will be conducted by way of a poll. The results of the poll will be announced to the London Stock Exchange
as soon as possible after the conclusion of the AGM and will be published on our website.
Notice of Annual General Meeting continued
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Strategic Report Corporate Governance Accounts
15. Notification of shareholdings
Any person holding 3% or more of the total voting rights of the Company who appoints a person other than the Chairman of the AGM as his/her
proxy will need to ensure that both he/she, and his/her proxy, comply with their respective disclosure obligations under the UK Disclosure
Guidance and Transparency Rules.
16. Further questions and communication
Under section 319A of the 2006 Act, the Company must cause to be answered any question relating to the business being dealt with at the AGM
put by a member attending the meeting unless answering the question would interfere unduly with the preparation for the meeting or involve
the disclosure of confidential information, or the answer has already been given on a website in the form of an answer to a question, or it is
undesirable in the interests of the Company or the good order of the meeting that the question be answered.
Members who have any general queries about the AGM should contact the Company Secretarial Department by email to:
companysecretarialdepartment@agbarr.co.uk.
Members may not use any electronic address provided in this report or in any related documents (including the accompanying proxy form)
to communicate with the Company for any purpose other than those expressly stated.
17. Documents available for inspection
The following documents will be available for inspection on the day of the AGM at the offices of Ernst and Young LLP, G1 Building,
5 George Square, Glasgow, G2 1DY from 11.45 a.m. until the conclusion of the AGM:
17.1 copies of the service contracts of the Company’s executive directors;
17.2 copies of the letters of appointment of the Company’s non-executive directors; and
17.3 copies of the Company’s All Employee Share Ownership Plan rules.
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Notes
A.G. BARR
300745/204943
A.G. BARR p.l.c.
Westfield House
4 Mollins Road
Cumbernauld
G68 9HD
Tel: 0330 390 3900
Registered Office
Westfield House
4 Mollins Road
Cumbernauld
G68 9HD
Company Secretary
Julie A. Barr,
M.A. (Hons.),
L.L.B. (Dip.),
M.B.A.
Auditors Deloitte LLP
110 Queen Street
Glasgow
G1 3BX
Registrars
Equiniti Ltd
Aspect House
Spencer Road
Lancing
West Sussex
BN99 6DA
Registered Number
SC005653
agbarr.co.uk