A.G. BARR Annual Report 2017

FY2017 Annual Report · A.G. BARR

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Unquenchable
thirst for
improvement
improvement
improvement
improvement
improvement
improvement
improvement
improvement
improvement
improvement
improvement
improvement
improvement
improvement
improvement
improvement
improvement
improvement
improvement
improvement
improvement

A.G. BARR p.l.c. Annual Report and Accounts January 2017

We are a growth driven, branded
consumer goods business, delivering
long-term sustainable value. We build
great tasting brands that people love,
offering them choice and enjoyment.

Unquenchable
Unquenchable
Unquenchable
Unquenchable
Unquenchable
Unquenchable
Unquenchable
Unquenchable
Unquenchable
Unquenchable
Unquenchable
Unquenchable
Unquenchable
Unquenchable
Unquenchable
Unquenchable
Unquenchable
Unquenchable
Unquenchable
Unquenchable
Unquenchable
Unquenchable
Unquenchable
Unquenchable
Unquenchable
thirst for value
value
value
value
value
value
value
value
value
value
value
value
value
value
value
value
value
value
value
value
value
value
value
value
value
value
value

Strategic Report

Corporate Governance

Accounts

Performance at a glance

Our business and brands

Chairman’s Introduction

Business Model

Chief Executive’s Review

Strategy

Key Performance Indicators

Strategy in Action

Financial Review

Risk management

Board of Directors

Directors’ Report

Corporate Governance Report

Audit Committee Report

Directors’ Remuneration Report

Directors’ Statement

Independent Auditor’s
Report to the Members
of A.G. BARR p.l.c. only

Consolidated Income Statement

Statement of
Comprehensive Income

Statement of Changes in Equity

Statements of Financial Position

Cash Flow Statements

Notes to the Accounts

Review of Trading Results

Glossary

Notice of Annual General Meeting

Auditor’s Statement
of Circumstances

129

130

133

142

Strategic Report

Corporate Governance

Accounts

We have made considerable
progress across the business
over the last 12 months and
delivered a solid financial
performance in volatile and
uncertain market conditions.

Strategic Report
I am pleased to present A.G. BARR
p.l.c.’s Annual Report for the year
ended 28 January 2017. The report
provides an overview of our business
model and a comprehensive review of
our strategy, its execution, our ﬁnancial
performance and information on how
we govern our business.

We have made considerable progress
across the business over the last 12
months and delivered a solid ﬁnancial
performance in volatile and uncertain
market conditions. We will continue
to seek opportunities to grow our
business and I believe we are well
placed to continue to deliver consistent
long-term shareholder value.

Revenue

Proﬁt before tax

£257.1m
(0.6)%

£43.1m
+4.4%

Roger White
Chief Executive

EBITDA margin*

20.1%
+0.6%

Net cash

Earnings per share

Full year dividend per share*

£9.7m

30.78p
+3.9%

14.40p
+8.0%

* Items marked with an asterisk are non-GAAP measures. Deﬁnitions and relevant reconciliations are provided in the Glossary on pages 130 to 132.

The term “underlying” has been used to improve comparability between the 52 week reporting period ended 28 January 2017 and the 53 weeks
ended 30 January 2016. In the 53 week reporting period ended 30 January 2016 the Group received non-recurring income associated to the
termination of the Orangina franchise and incurred one-off transaction fees associated to corporate development activities including Funkin Limited.

The underlying ﬁgures for the 53 week reporting period ended 30 January 2016 have been adjusted for the revenue and proﬁt associated to
week 53 and the non-recurring Orangina franchise and one-off corporate development transaction fees.

The underlying ﬁgures for the period ended 28 January 2017 are the reported ﬁgures before exceptional items as disclosed in the consolidated
income statement.

See page 14 for our Strategy in Action€

A.G. BARR p.l.c. Annual Report and Accounts 2017

Strategic Report
Our business and brands

Excellence
in taste

Established over 140 years ago in Scotland,
we are a FTSE 250 business operating across the
UK and with a growing international presence.

IRN-BRU
XTRA
launched

Equivalent number
of cans sold:
20 million

Rubicon
Light & Fruity
launched

Sugar content
reduced by:
50%

Rubicon
Spring
launched

Bottles sold:
7.6 million

A.G. BARR p.l.c. Annual Report and Accounts 2017

Strategic Report

Corporate Governance

Accounts

At our core, we are a successful
branded soft drinks business, building
a diverse and differentiated portfolio
of great tasting brands that people love.

We make it our business to understand
what our consumers want.

Whether it’s our iconic IRN-BRU,
launched in 1901 and still going
strong today, our market leading
RUBICON exotic fruit juice drinks,
or our pure, clear Scottish spring water
STRATHMORE, our brands offer people
a choice of great tasting products and
bring exciting innovation to the market.

Enhancing our portfolio, we also operate
long-term successful partnerships,

complementing our own range of
products with global brands ROCKSTAR
and SNAPPLE in the UK and beyond.

But we’re not just about soft drinks –
with the addition of FUNKIN we have
moved into the cocktail mixer segment,
broadening and strengthening our
portfolio with a unique and exciting
market leading brand in a growing market.

Employing around 900 people
across 10 UK locations, we are
proud to be a sustainable business
that listens to our consumers, builds
lasting customer relationships, takes
care of our employees, gives something
back to our communities and works to
minimise our environmental impact.

OMJ
launched

Sales exceeded:
£1 million

Funkin
performing
well

Sales up:
27%

Snapple
relaunch

Sales up:
20%

A.G. BARR p.l.c. Annual Report and Accounts 2017

Strategic Report
Chairman’s Introduction

A strong platform
for the future

Over the past 12 months we have seen some extremely
signiﬁcant events unfold across the UK and beyond.

The announcement of a soft drinks
sugar tax in the Chancellor’s budget
in March 2016, and the devaluation of
sterling following the UK’s referendum
vote to leave the European Union in
June, added additional external
headwinds in a soft drinks market
already impacted by price deﬂation.

Despite these macro external inﬂuences,
the business has retained a clear focus
on the execution of its strategy and in
particular on internal improvement actions.

sugars per 100ml by the autumn of 2017
is an extremely positive demonstration
of how the business is responding with
both pace and commitment.

Our key partnerships with Rockstar and
Dr Pepper Snapple Group continued to
progress, complementing our own
portfolio both in the UK and increasingly
on an international basis, where we have
delivered further growth, extending our
international footprint and our franchise
territory agreements.

Financially, the business has delivered
another solid performance with proﬁt
before tax and exceptional items* of
£42.4m, an increase of 2.7% on the prior
year (£41.3m), and exits the year with
a strong balance sheet.

The Funkin business, acquired in 2015,
continues to exceed our acquisition
expectations, and we remain highly
encouraged by the continued growth
momentum of the Funkin brand
and business.

We maintained our market share across
the period and continued to invest in our
brands, with the key brands, IRN-BRU
and Rubicon, delivering good growth.
Innovation has been a key strategic
focus across the year and the launches
of IRN-BRU XTRA and Rubicon Spring
in particular, both no added sugar
products, have proven successful.

As consumer tastes and preferences
continue to change, and the demand for
great tasting, reduced sugar products
increases, the recent announcement
that 90% of our Company owned
brands will contain less than 5g of total

Our drive for improvement across
the business has not abated. We have
continued to invest in our asset base,
including the installation of a new
glass ﬁlling line at Cumbernauld, and
are in the process of adding new PET
capability in our Milton Keynes facility.
In addition, we have successfully
completed a Company-wide business
reorganisation that has both enhanced
our organisational capability and
reduced our overhead base.

We exit the year with a strong balance
sheet, and are well placed to exploit growth
opportunities as and when they arise.

* Items marked with an asterisk are non-GAAP measures. Deﬁnitions and relevant

reconciliations are provided in the Glossary on pages 130 to 132.

A.G. BARR p.l.c. Annual Report and Accounts 2017

Dividend
The Board is pleased to be in a position to
maintain its commitment to a progressive
dividend policy and recommend a ﬁnal
dividend of 10.87p per share to give a
total dividend for the full year of 14.40p
per share, a full year increase of 8% on the
prior year. The ﬁnal dividend is payable
on 9 June 2017 to shareholders on the
Register of Members at the close of
business on 12 May 2017. The ex-dividend
date is 11 May 2017.

Share repurchase programme
Given the strength of the balance sheet
and the cash generative nature of the
business, the Board has decided to return
up to £30m to shareholders via an
on-market share repurchase programme.
This programme is anticipated to
commence in the spring of 2017 and
complete within 24 months. The AGM in
May 2017 will be requested to approve
the renewal of the authority granted in
June 2016 for the Board to repurchase
up to 10% of the Company’s own shares.
We do not believe that the repurchase
programme will have any material impact
on our ability to secure acquisition
opportunities should these be identiﬁed.

People
The continued success of the business is
testament to the commitment and skills
of the whole team and I would like to
take this opportunity to extend a thank
you to each and every team member for
their efforts across this year of change
and reorganisation.

“The business has achieved a
great deal in the past year,
building a strong platform for
the future while sustaining
current financial performance.”

John Nicolson, Chairman

The Board continues to operate
effectively, with a complementary mix of
skills and experience providing solid and
effective governance controls. We will
continue to review how to enhance both
the governance model and the advisory
aspect of the Board.

Prospects
The business has achieved a great deal
in the past year, building a strong
platform for the future while sustaining
current ﬁnancial performance.

With great brands, an effective business
model, a clear strategy and a strong
team in place to deliver it, the business
remains well placed to develop further
and realise its long-term potential.

John Nicolson
Chairman

Strategic Report

Corporate Governance

Accounts

A.G. BARR p.l.c. Annual Report and Accounts 2017

Strategic Report
Business Model

Simple, effective,
profitable

We make

We move

We pride ourselves on our effective manufacturing
capabilities, producing high quality products across
our well-invested and efficient production sites, in
Cumbernauld, Forfar and our new state of the art
facility at Milton Keynes. From sourcing our raw
materials across the globe, to designing our
packaging materials, we strive for continuous
improvements, keep safety at the forefront of all
we do, and invest accordingly to ensure we produce
the best tasting products as efficiently as possible.

With a ﬂeet of more than 100 vehicles, and long-
standing relationships with our key distribution
partners, we strive to deliver a great service to
all our customers, from the biggest food service
customer to the smallest local shop. Operating
across multiple routes to market, we have a well
established and efficient distribution network,
with our Direct Store Delivery channel in particular
setting us apart, by offering a tailored and personal
service to thousands of independent retailers across
the UK.

A.G. BARR p.l.c. Annual Report and Accounts 2017
A.G. BARR p.l.c. Annual Report and Accounts 2017

Strategic Report

Corporate Governance

Accounts

We are a growth driven, branded consumer goods
business, delivering long-term sustainable value.

We build great tasting brands that people love,
offering them choice and enjoyment.

This simple but effective approach
is supported by strong partnerships,
talented people and responsible
actions. Our business model has
proven successful for more than
140 years and continues to create
and deliver value in all that we do.

Our business model is simple, effective and proﬁtable.

We market

We sell

Listening carefully to our consumers is paramount
and by doing so we have developed a diverse and
differentiated brand portfolio of great tasting
products to satisfy their needs and offer choice.
And when it comes to marketing and building our
brands we like to have some fun, appealing to our
broad range of consumers, whether that’s through
national TV campaigns, digital media, sponsorship
or supporting local community events.

Building long lasting relationships with our
customers across all our key markets is fundamental
to our business. Whether it’s a multiple grocer, 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, fun and proﬁtable way.

A.G. BARR p.l.c. Annual Report and Accounts 2017
A.G. BARR p.l.c. Annual Report and Accounts 2017

Strategic Report
Chief Executive’s Review

Clarity of
purpose

During the past 12 months our thirst for improvement
has continued, despite the numerous external challenges
that we have had to overcome.

– Our deﬁned beneﬁt pension scheme
was closed to future accrual further
reducing our corporate risk proﬁle.
– Beneﬁts from our Fit for the Future
enabling programme began to ﬁlter
through as planned, including
signiﬁcantly better customer service,
tighter inventory management and
the implementation of a Company-
wide reorganisation.

– Strong cash ﬂow resulted in a net

cash position of £9.7m.

Soft drinks market performance
The UK soft drinks market has
performed robustly across the last 12
months, with growth of 1.2% in value and
1.6% in volume. This total market position
masks a higher degree of volatility than
in prior years, both in terms of monthly
market movements and individual
sub-category performance.

As we previously forecast, deﬂation has
eased across the latter part of the year.
However, the more structural element
of this deﬂation, related to the continued
growth of the lower value water
category, has continued to impact the
total market. Stills experienced volume
growth of just over 3% and value growth
of 1%, with water growth continuing to
be the driving force. In contrast, the
carbonates sector experienced modest
inﬂation, growing value by just over 1%
versus a ﬂat volume position.

We have delivered signiﬁcant business
improvement across our brands, assets,
infrastructure, organisation and our
teams, to support the successful
long-term development of the Company.

The unexpected and unwelcome
announcement of a new punitive tax
regime associated with the manufacture
of soft drinks with added sugar had the
potential to be a major business
distraction. However, I am pleased to
report that we have continued to place
consumers at the heart of our business,
not regulators, and have responded
positively to changing consumer tastes
and preferences across our portfolio.
We will of course continue to work with
the various government bodies involved
in the new regime to ensure that this
new regulatory environment is deployed
appropriately and with as much
common sense as possible.

In this reporting period:
– We maintained overall market share
in UK soft drinks with total Group
revenue of £257.1m, an underlying*
increase of 1.5% on the previous year.

– Proﬁt before tax increased 4.4% on

the prior year to £43.1m.

– Statutory proﬁt before tax and

exceptional items* increased 2.7%
on the prior year to £42.4m.

– Operating margin before exceptional
items* improved 50bps to 16.8%
following our continued tight
cost control.

A.G. BARR p.l.c. Annual Report and Accounts 2017

Strategic Report

Corporate Governance

Accounts

“We have made considerable
progress across the business
over the last 12 months and
delivered a solid financial
performance in volatile and
uncertain market conditions.”

Roger White, Chief Executive

A.G. BARR p.l.c. Annual Report and Accounts 2017

Strategic Report
Chief Executive’s Review continued

The past year has seen a number
of material changes to the macro
environment in which we operate
– the soft drinks sugar tax, the UK’s
decision to leave the EU, the devaluation
of sterling and increased geopolitical
volatility. However, perhaps most
important to our business are the
continuing development of UK
consumer preferences in soft drinks, the
further consolidation and development
of our customer environment and
ﬁnally, the advances across the digital
communication landscape we operate
in. We have continued to respond
positively and with pace to these
changes, focusing on the opportunities
that arise.

Our long-standing reformulation and
product development programme has
seen our portfolio develop signiﬁcantly
across the past year. In March 2017
we announced our intention to meet
consumers’ changing tastes and
preferences with a number of further
signiﬁcant portfolio developments.
The successful development and
launch of Rubicon Spring and IRN-BRU
XTRA have contributed to our forward
development plans, giving us the
insight and conﬁdence to announce
our intention that over 90% of Company
owned brands will contain less than 5g
of total sugars per 100ml by the autumn
of 2017. This is a signiﬁcant and positive
move which supports our consumer-
focused strategy, at the same time
as reducing our overall exposure to
regulatory changes.

During the course of the last ﬁnancial
year our key brands have beneﬁted from
continued investment and innovation.
IRN-BRU and Rubicon in particular exit
the full year with strong momentum
based on positive brand fundamentals.

Strategy
In times of elevated uncertainty, clarity
of purpose and consistency of approach
yield the best outcome in our experience.
We have remained consistent to our
approach and principles across the past
year, focusing on:
–
–
–

strongly differentiated brands;
effective and ﬂexible operations;
innovation based on consumer
understanding;

– growth driven partnerships; and
leveraging the strength and
–
commitment of our teams.

In each of these areas we have
invested effort and resources to
drive improvement and thus increase
competitiveness. Our innovation has
been instrumental in building our
portfolio into the lower and no sugar
consumer space and our technical
developments in this area are critical
to our future success. Our investment
in our assets and infrastructure has
continued with the introduction of new
glass ﬁlling capability at Cumbernauld
and the announcement of our intention
to extend PET capability to our Milton
Keynes site. This gives us a ﬂexible
platform to improve our service, control
our costs and ensure we are capable
of adapting our operations to meet
the portfolio needs of the future.

Our core partnerships, with Rockstar
and the Dr Pepper Snapple Group, have
continued to develop across the period,
with notable extensions to the territories
covered under our Rockstar agreement.
In September 2016 we signed a further
exclusive extension with Rockstar for a
further seven territories, including the
Russian Federation. The Snapple brand
has enjoyed growth of over 20% across
2016/17, with signiﬁcant product
innovation, packaging advancements

A.G. BARR p.l.c. Annual Report and Accounts 2017

Strategic Report

Corporate Governance

Accounts

and further distribution growth in the
UK and internationally. The expansion
of these selective partnerships remains
an important part of our long-term
growth strategy.

We have enjoyed an excellent
performance from our Funkin cocktail
business building on the strong progress
made last year, our ﬁrst year of
ownership. The Funkin team has
continued to deliver excellent
opportunities to customers to access
cocktail market growth with simplicity,
authenticity and excitement. We
anticipate continued growth for the
Funkin business in the traditional
on-trade environment and also from
our planned launch into retail, with a
new ready to mix cocktail product format
which has exciting brand development
and growth potential for the future.

It has been a very busy, and at times
unsettling, year for many of our
colleagues as we have implemented
signiﬁcant levels of change, culminating
in a Company-wide reorganisation
programme in the ﬁnal quarter.
Following our prior year investment in
assets and systems, the reorganisation
has allowed us to streamline and
improve our organisational structure,
reducing employee numbers by around
10% whilst improving operating
effectiveness and ﬂexibility. I would like
to thank all our teams across the
business who have responded positively
to the challenges we face and have now
helped to create a stronger business,
more capable of delivering against our
long-term potential.

Summary
We have made considerable progress
across the business over the last 12
months and delivered a solid ﬁnancial
performance in volatile and uncertain
market conditions. The growth drivers
of our core brands, innovation,
partnerships, Funkin and International
remain at the heart of our future plans.
We are operating from a well-invested
and sustainable asset base, with our new
organisational structures established to
support growth. We will continue to
seek opportunities to grow shareholder
value by utilising our full suite of options
– our organic growth potential, our
strong balance sheet, our core
competencies and our strong culture
– and I believe we are well placed to
continue to deliver consistent long-term
shareholder value.

Roger White
Chief Executive

* Items marked with an asterisk are non-

GAAP measures. Deﬁnitions and relevant
reconciliations are provided in the Glossary
on pages 130 to 132.

A.G. BARR p.l.c. Annual Report and Accounts 2017
A.G. BARR p.l.c. Annual Report and Accounts 2017

12 Strategic Report
Strategy

Delivering long-term
sustainable value

Our overarching business strategy is to deliver
long-term sustainable value in all that we do.

Connecting
with consumers

Building
brands

Understanding
our customers

Consumer insight drives our business.
Our consumers are growing in number,
location and diversity and we ensure
that we take the time to listen, to
understand their needs and to offer
them a choice of great tasting, high
quality products.

We are brand owners and builders,
offering a diverse and differentiated
portfolio of products that people love.
With our own powerful brands,
complementary franchise partner
brands and a strong track record
of bringing successful innovation to
the market, we seek to build brand
awareness, grow our brand equity
and outperform the market.

Building and maintaining long-lasting
and successful customer relationships,
across multiple routes to market, is
central to our business. We work closely
with our customers to develop joint
plans which allow us to share in success.
We pride ourselves on our ability to turn
these shared plans into effective actions,
supporting our customers with excellent
in-store activation of our brand led
activities and delivering the highest
possible levels of service.

Developing
partnerships

Driving
efficiency

Acting
responsibly

With strong ambitions, both within the
UK and internationally, we recognise the
advantages that working in partnership
can deliver. By working closely with
others, whether that be brand franchise
partners, international distributors or
3rd party logistics providers, we develop
complementary relationships that
deliver shared beneﬁts and support
our growing business.

We continually strive for efficiency
across our business, ensuring strong
ﬁnancial controls are in place while also
investing for growth. 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 programme, equipping
us with some of the industry’s most
advanced operational capability.

We believe that how we act reﬂects
who we are. We take our responsibilities
seriously and aim to be a sustainable
and responsible business that listens to
our consumers, takes care of our people,
works to minimise our environmental
impact and gives something back to the
communities we serve.

A.G. BARR p.l.c. Annual Report and Accounts 2017

Key performance indicators

Strategic Report

Corporate Governance

Accounts

Revenue

Gross margin

Proﬁt before tax

Operating margin
before exceptional items

£257.1m
(0.6)%

46.9%
+10bps

£43.1m
+4.4%

16.8%
+50bps

£258.6m

£257.1m

46.8%

46.9%

£41.3m

£43.1m

16.3%

16.8%

2016

2017

2016

2017

2016

2017

2016

2017

The increase in value of revenue
recorded in the period relative to
the prior period.

Gross proﬁt divided by revenue.

Proﬁt before tax and after
exceptional items.

Operating proﬁt before
exceptional items and before
the deduction of interest and
taxation, divided by revenue.

EBITDA margin

Free cash ﬂow

Return on Capital Employed
(ROCE)

20.1%

£43.2m

20.2%

19.5%

20.1%

£43.2m

18.8%

20.2%

£28.2m

Dividend per share

14.40p

13.33p

14.40p

2016

2017

2016

2017

2016

2017

2016

2017

EBITDA (deﬁned as proﬁt on
ordinary activities before tax
less exceptional items, adding
back interest, depreciation,
amortisation and impairment)
divided by revenue.

Net cash ﬂow excluding the
movements in borrowings,
expansionary capex, shares,
dividend payments and
non-cash exceptional items.

Dividend payable in respect
of the ﬁnancial year.

Operating proﬁt before
exceptional items as a
percentage of invested capital.
Invested capital is 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.

A.G. BARR p.l.c. Annual Report and Accounts 2017

1414
14 Strategic Report

Strategy in Action

Connecting with
Connecting with
Connecting with
Connecting with
consumers
consumers
consumers
consumers
consumers
consumers
consumers
consumers
consumers
consumers
consumers
consumers
consumers
consumers
consumers
consumers
consumers
consumers
consumers
consumers
consumers
consumers
consumers
consumers

Consumers’ tastes and behaviours have continued
Consumers’ tastes and behaviours have continued
Consumers’ tastes and behaviours have continued
to evolve and change over the past 12 months and we
have responded positively and with pace. Innovation
continues to play a central role in our portfolio
development, satisfying our consumers’ needs for great
tasting and exciting products, and we delivered a strong
innovation programme across 2016/17. As consumer
tastes and preferences continue to change and the
demand for great tasting, reduced sugar products
increases, the recent announcement that 90% of our
Company owned brands will contain less than 5g of total
sugars per 100ml by the autumn of 2017 is an extremely
positive demonstration of how the business is
responding to consumers.

90%

of our Company owned brands will
contain less than 5g of total sugars
per 100ml by the autumn of 2017.

20m

7.6m

Equivalent number of IRN-BRU XTRA
cans sold in its first six months.

Rubicon Spring bottles
sold since launch.

A.G. BARR p.l.c. Annual Report and Accounts 2017

Strategic Report

Corporate Governance

Accounts

NEW IRN-BRU XTRA

Launched in August 2016, IRN-BRU
XTRA is the ﬁrst permanent new
product from IRN-BRU in 35 years.

In the making for over a year, IRN-BRU
XTRA includes even more of the
IRN-BRU taste that consumers love
but leaves out the sugar for a new
ﬂavour experience.

Supported by an impactful outdoor
marketing campaign, the equivalent
of 20 million cans of IRN-BRU XTRA
were sold in its ﬁrst 6 months.

NEW Rubicon Spring

Launched in the summer of 2016,
Rubicon Spring is an exciting
development for our Rubicon brand
extending the brand reach. Offering
consumers a tasty, healthy and
hydrating drink, in four great fruit
ﬂavours, Rubicon Spring contains no
added sugar and less than 15 calories
in every bottle.

Supported by a national TV advertising
campaign, Rubicon Spring has sold
more than 7.6 million bottles since
its launch.

A.G. BARR p.l.c. Annual Report and Accounts 2017

16 Strategic Report

Strategy in Action continued

Building
Building
Building
Building
Building
Building
Building
Building
Building
brands

We have maintained our market share across the
period and have continued to invest in the long-term
health of our brands. IRN-BRU, Rubicon and Funkin
in particular exit the full year with strong momentum
based on positive brand fundamentals. Funkin grew
revenue by an impressive 27% across the year, while,
on an underlying* basis, IRN-BRU delivered growth
of 3.2% and Rubicon grew by 4.9%.

Funkin grew revenue by

IRN-BRU delivered growth of

Rubicon sales grew by

27%

3.2%

4.9%

* Items marked with an asterisk are non-GAAP measures. Deﬁnitions and
relevant reconciliations are provided in the Glossary on pages 130 to 132.

A.G. BARR p.l.c. Annual Report and Accounts 2017

Strategic Report

Corporate Governance

Accounts

Funkin brand
development

Our Funkin brand delivered a very
successful innovation programme
across the year, responding with
speed and agility to meet fast-evolving
consumer tastes in the cocktail market.
A total of 10 new products were
launched in 2016, a new digital platform
went live and Funkin products were
included in excess of 85 million
individual cocktails across the year.

NEW IRN-BRU
brand identity

April 2016 saw the new IRN-BRU
identity revealed with a 3 month
outdoor advertising campaign reaching
over 8 million adults, ﬁrmly establishing
the new iconic design.

NEW Rubicon
Light & Fruity

Our core Rubicon brand was a key
area of focus across 2016 with exciting
innovation at the core of our plans.
Rubicon Light & Fruity brings 3 reduced
sugar variants to the market, packed
with exotic fruit ﬂavour but with 50%
less sugar.

18 Strategic Report

Strategy in Action continued

Understanding
Understanding
our our our our our our our
our customers
our

We have taken a number of actions across the year
to facilitate and enhance our customer relationships,
working with our customers to develop winning
strategies and to ensure the highest possible levels
of service.

These actions, combined with our pride in our in-market
execution and a genuine desire to work in partnership
with our customers, are essential components in our
objective to deliver shared success and to be a key
partner and supplier.

£12m

Business Process Redesign
project now delivering
improved customer service.

c.250

strong sales team now more
closely aligned to changing
customer dynamics.

A.G. BARR p.l.c. Annual Report and Accounts 2017

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Accounts

Sales team
reorganisation

As the UK retail landscape has
continued to undergo a considerable
amount of change, we made some
signiﬁcant changes to our sales team
structures across the year as part of
our Fit for the Future Company-wide
reorganisation. Our c.250 strong sales
team is now more closely aligned to
changing customer dynamics across
our channels, providing greater
ﬂexibility and agility, and allowing
us to better deliver shared success
with our customers.

A.G. BARR p.l.c. Annual Report and Accounts 2017

Improved customer
service

Following the delivery of our £12m
Business Process Redesign project in
2015 and the associated implementation
of a new ERP system, we have made
signiﬁcant progress in realising some
of the beneﬁts the improved platform
and processes provide. Customer
service in particular has been optimised
with signiﬁcant improvements delivered
across the year.

20 Strategic Report

Strategy in Action continued

Developing
partnerships
partnerships
partnerships
partnerships
partnerships
partnerships
partnerships
partnerships
partnerships
partnerships
partnerships
partnerships
partnerships
partnerships

We have further developed and enhanced our
partnerships across 2016, working collaboratively
to deliver shared success. Our key partnerships
with Rockstar and Dr Pepper Snapple Group
continued to progress, complementing our own
portfolio both in the UK and increasingly on an
international basis, where we have delivered further
growth, extending our international footprint and
our franchise territory agreements.

Snapple sales grew by over

Rockstar agreement to include
a further seven territories

20%

A.G. BARR p.l.c. Annual Report and Accounts 2017

Strategic Report

Corporate Governance

Accounts

Snapple success

Snapple sales grew by over 20% across
the year with a number of key brand
developments delivered. The brand
artwork was updated for the ﬁrst time
in 10 years, Iced Tea was reformulated
to contain no sugar and we launched a
new “on the go” resealable carton. The
sugar content of the Snapple juice range
is now being reduced and production
has been brought in-house following the
installation of new glass ﬁlling capability
at our Cumbernauld factory.

Rockstar innovation and territory expansion

Innovation continues to play an
important role in the energy drink
category, with consumers energised and
engaged by new and exciting product
development. Rockstar continues to
more than meet this demand with its
strong innovation programme launching
great new products including Rockstar
Pure Zero Guava, that offers all the
great Rockstar Punched Guava taste
but with zero sugar and zero carbs.

In September 2016 we signed an
extension to our Rockstar agreement
to include a further seven territories,
including the Russian Federation,
which will see Rockstar entering
new international territories for the
ﬁrst time.

A.G. BARR p.l.c. Annual Report and Accounts 2017

22 Strategic Report

Strategy in Action continued

Driving
efficiency
efficiency
efficiency
efficiency
efficiency
efficiency
efficiency
efficiency
efficiency
efficiency
efficiency
efficiency
efficiency
efficiency
efficiency
efficiency
efficiency
efficiency
efficiency
efficiency
efficiency
efficiency
efficiency
efficiency
efficiency
efficiency
efficiency
efficiency
efficiency
efficiency
efficiency
efficiency
efficiency
efficiency
efficiency
efficiency
efficiency
efficiency
efficiency
efficiency

Our drive for operational efficiency and continuous
improvement continued across 2016, delivered through
a series of business improvement projects. Our capital
investment programme continued across the year with the
installation of a £5m new glass ﬁlling line at Cumbernauld
and the announcement that we are investing a further £10m
in new PET capability at Milton Keynes. Across our Fit for the
Future enabling programme we began to see many of the
efficiency beneﬁts ﬁltering through as planned, including
signiﬁcantly better customer service and tighter inventory
control and, as the programme entered its ﬁnal phase, we
successfully implemented a Company-wide reorganisation
that has both enhanced our organisational capability and
reduced our overhead base.

Investment in new high
speed glass ﬁlling line

Reorganisation and efficiencies are
reducing overhead base by around

£5m

£3m

A.G. BARR p.l.c. Annual Report and Accounts 2017

Strategic Report

Corporate Governance

Accounts

Business
reorganisation

NEW Glass filling
capability

Our Fit for the Future business
improvement programme entered
its ﬁnal phase in the second half
of 2016 culminating in the successful
implementation of a Company-wide
business reorganisation that has both
enhanced our organisational capability
and is reducing our overhead base by
around £3m. Our Commercial teams
are now more closely aligned to the
changing retail landscape, our Supply
Chain resources have been rebalanced
across all of our factories and our
Central teams are now better structured
to further realise the beneﬁts of our
Business Process Redesign investment.

We have invested over £5m in new glass
ﬁlling capability at our Cumbernauld
facility. Faster and more ﬂexible, the fully
installed and commissioned new glass
line produces our iconic 750ml glass
range, provides us with additional “hot
ﬁll” technology for fruit based products,
and has facilitated the in-house
production of our partnership brand,
Snapple. This signiﬁcant investment also
offers exciting opportunities to support
our innovation programme and offer
new glass formats.

A.G. BARR p.l.c. Annual Report and Accounts 2017

24 Strategic Report

Strategy in Action continued

Acting
responsibly
responsibly
responsibly
responsibly
responsibly
responsibly
responsibly
responsibly
responsibly
responsibly
responsibly
responsibly
responsibly
responsibly
responsibly
responsibly
responsibly
responsibly
responsibly
responsibly
responsibly

Our responsibility agenda is not a standalone
area of focus, it is integral to how we do business.

We have always been driven to do the right thing,
whether for our consumers, our people, our environment
or our communities, a value ﬁrmly embedded in all our
activities. Some highlights across our 2016 responsibility
agenda include:

90%

of our Company owned brands will
contain less than 5g of total sugars
per 100ml by the autumn of 2017.

3-year

partnership with Macmillan Cancer Support.

A.G. BARR p.l.c. Annual Report and Accounts 2017

Strategic Report

Corporate Governance

Accounts

Consumers

People

90% of our Company owned brands
will contain less than 5g of total sugars
per 100ml by the autumn of 2017 – an
extremely positive demonstration of
how the business is responding with both
pace and commitment to consumers’
changing tastes and preference.

Living Wage accreditation conﬁrmed.

New occupational health provision
for employees..

Gender split

Board and
Company
Secretary

Senior
Managers

All
Employees

Male

Female

Total

668

259

927

Environment

Community

New employee chosen charity 3-year
partnership agreed with Macmillan
Cancer Support, already generating
high levels of employee fundraising
activity and engagement.

The installation of a brand new
glass ﬁlling production line at our
Cumbernauld site allowed us to
decommission the returnable glass
line bottle washing equipment which
accounted for more than 80% of the
previous glass line’s carbon footprint.

A.G. BARR GHC Emissions
in tonnes CO2e

Scope 1

Scope 2

Intensity ratio

(Note 1)

2015/16
(Note 2)

5,419

10,676

2016/17

5,420

8,947

36.15

33.78

Note 1: Intensity ratio is kg of CO2e per 1,000
litres of product produced.
Note 2: The 2015/16 ﬁgures have been
corrected and restated.

A.G. BARR p.l.c. Annual Report and Accounts 2017

Strategic Report
Financial Review

Underlying
resilience

The following is based on results for the 52 weeks
ended 28 January 2017. Comparatives, unless otherwise
stated, are for the 53 weeks ended 30 January 2016.

Overview

Revenue
Revenue (underlying basis)*
Gross margin*
Operating margin before exceptional items*
Proﬁt before tax before exceptional items*
Proﬁt before tax before exceptional items
(underlying basis)*
Free cash ﬂow*
Net cash
Basic earnings per share (EPS)

down (0.6)% to £257.1m
up 1.5% to £257.1m
up 10 bps to 46.9%
up 50 bps to 16.8%
up 2.7% to £42.4m
up 7.1% to £42.4m

up £15.0m to £43.2m
up £21.0m to £9.7m
up 3.9% to 30.78p

Proposed ﬁnal dividend of 10.87p per share (2016: 9.97p) to give a proposed total
dividend for the year of 14.40p per share, an increase of 8% over the prior year.

Reconciliation of underlying measures
52 weeks to 28 January 2017

Revenue
£m

Gross proﬁt
£m

Operating
proﬁt
£m

Proﬁt
before tax
£m

257.1

120.7

–

257.1

120.7

43.8

(0.7)

43.1

(0.7)

42.4

Revenue
£m

Gross proﬁt
£m

Operating
proﬁt
£m

Proﬁt
before tax
£m

258.6

(4.2)
(1.2)
–

121.1

(2.2)
(0.3)
–

42.1

(2.2)
(0.3)
0.8

41.3

(2.2)
(0.3)
0.8

253.2

118.6

40.4

39.6

2016/17 as reported
52 week period ended 28 January 2017

Exceptional items

Underlying

53 weeks to 30 January 2016

2015/16 as reported
53 week period ended 30 January 2016

Week 53
Orangina franchise
Corporate development

Underlying

A.G. BARR p.l.c. Annual Report and Accounts 2017

This is a positive set of results in a
challenging environment and reﬂects
the combined beneﬁts of strong brands,
successful innovation and much
improved customer service. It is
particularly pleasing to recognise that
we have put behind us the supply chain
and system implementation challenges
that constrained performance in
2015/16. The strong second half, which
recorded both top and bottom line
growth, followed a period of soft drinks
market volatility in the ﬁrst half and
provides conﬁdence that we enter
2017/18 with positive momentum.

Reported revenue declined (0.6)%,
the result of a 53 week prior year
comparator. Our underlying revenue*
from the business improved 1.5%, driven
by growth from innovation across two of
our key brands (IRN-BRU and Rubicon)
and an operating margin improvement
beneﬁt from the impact of the
organisational review that we
announced in September 2016.

The year was not without its challenges.
The commercial environment, while
always competitive, was particularly
testing this year with customer range
rationalisations and deﬂationary pricing
pressures impacting the business, most
evidently across Rockstar and our
regional brands. These customer
challenges were compounded by the
reappearance of inﬂationary headwinds
from the commodity and currency
markets during the second half of
2016/17. While the increased levels

Strategic Report

Corporate Governance

Accounts

“This is a positive set of results
in a challenging environment.”

Stuart Lorimer, Finance Director

A.G. BARR p.l.c. Annual Report and Accounts 2017

Strategic Report
Financial Review continued

of volatility and uncertainty were
unhelpful, we took decisive management
action which beneﬁted us in the second
half, and we expect will continue to
underpin our performance going forward.

On an underlying basis* our business
delivered revenue growth (+1.5%),
gross and operating margin* expansion
(+10bps and +80bps respectively),
increased proﬁt before tax and
exceptional items (+7.1%) and improved
overall free cash ﬂow (+£15.0m). We
continue to drive for improved efficiency
in all aspects of the business, whether
it is through zero-based budgeting,
promotional evaluation or our
programme of supply chain excellence.
We believe this committed approach
to growth, productivity and cash
generation will drive further sustainable
value creation for shareholders.

We have accomplished much in the year:
– The investment in our Business
Process Redesign programme is
now entering its second year of
operation and tangible progress in
efficiency and ﬂexibility is being
made across the network. This is
already delivering improved
customer service and will provide a
solid platform for future proﬁtability.

– A Company-wide reorganisation

was announced in September 2016.
Our employee base reduces by
around 100 at a one-off cost of
£3.3m and will generate ongoing
savings in the region of c.£3m
per annum. The majority of the
employee changes have taken
place and an element of the savings
has been delivered in 2016/17.
– Our Deﬁned Beneﬁt (“DB”)

pension scheme was closed to
future accrual during the year.
We continue to offer our
employees market-leading
pension arrangements, however
the DB closure to future accrual
has provided us with signiﬁcant
pension de-risking.

– Our banking arrangements were
successfully renegotiated in
February 2017 to provide longer
term more cost effective revolving
credit facilities: £40m over 3 years
and £20m over 5 years.

A.G. BARR p.l.c. Annual Report and Accounts 2017

– We undertook a competitive

tender process for our external
audit mandate. As a result we will
be recommending to shareholders
at the AGM in May 2017 that we
appoint Deloitte LLP as our Group
external auditors for the year
2017/18.

Segment performance
We have successfully maintained market
share in a challenging market environment.

Our core carbonates business has
performed well, with both our IRN-BRU
and Rubicon brands growing through
a combination of innovation and
distribution gains. Our portfolio
carbonates, including Barr Flavours,
Tizer and KA have been impacted
by retailer range reduction activity.
The Rockstar brand delivered lower
revenues as we maintained our focus
on margin and value in the face of
competitor deep discounting and
distribution reductions in several of
the supermarkets. The second year
of our Snapple partnership has seen
considerable success both in the UK
and internationally, with our new
branding and reduced sugar offerings
being well received by consumers.

Our stills and water business performed
well, led by our new lower sugar Rubicon
Light & Fruity range. Our continued
focus on value over volume improved
margins, however there were continued
market-wide challenges in fruit juices
and fruit drinks, with water remaining
a very price competitive subcategory.

The international business has delivered
double digit revenue growth* through
brand development in our established
core markets, new distributor
arrangements in existing markets and
the opening up of new markets.

Our Funkin business has performed
very strongly, with sales growth of 27%
(reported within our “Other” segment).
The key on-trade business has grown in
each of its product segments (syrups,
mixers and purees) and the Funkin team
is on track to launch the ﬁrst Funkin
branded consumer retail product in
spring 2017. On the basis of the audited

results, and the achievement of agreed
ﬁnancial performance targets, there
will be an associated cash “earn-out”
payment in 2017/18 which has been
fully provided for at the year end.

Margins
Modest price deﬂation impacted
carbonates gross margins*, slightly
down (30bps), however a combination
of tight cost control and favourable
mix limited the impact. Stills and water
delivered gross margin improvement
as growth was driven from the higher
margin core brands and innovation.

Operating expenses beneﬁted from
a net £0.7m exceptional credit and a
continued focus on cost control, supply
chain efficiencies and some early
beneﬁts from the organisational
review which has been successfully
implemented slightly ahead of plan.

Financial performance beneﬁted from
the stabilisation of our infrastructure
and systems, the continued growth
in both our international business and
Funkin partially offset by negative
movements on foreign exchange and
the return to a 52 week year (2015/16
– 53 weeks). Operating margin before
exceptional items* increased from
16.3% to 16.8%.

Interest
Net ﬁnance charges, totalling £0.7m,
largely comprise the notional interest
on the pension deﬁcit. Debt interest
charges continued to reduce, reﬂecting
our improved debt proﬁle as we
successfully paid down our debt and
transitioned to a net cash position.

The constituent elements of the interest
charge comprised:

Finance income
Finance costs

Interest related to

Group borrowings
Finance costs related

to pension

Net ﬁnance costs

2016/17
£m

2015/16
£m

–
(0.2)

0.1
(0.2)

(0.2)

(0.1)

(0.5)

(0.7)

(0.8)

Strategic Report

Corporate Governance

Accounts

Taxation
The tax charge of £7.5m is £0.5m higher
than the prior year and represents an
effective tax rate of 17.4%. This is an
increase of 0.3% from the prior year and
primarily reﬂects the impact of the
reduction in the deferred tax rate from
18% to 17% this year compared to the
reduction from 20% to 18% included in
the charge last year.

Balance sheet and cash ﬂow
The Group’s balance sheet continues
to strengthen, with net asset growth*
of £1.7m to £181.8m over the 52 weeks
ended 28 January 2017 despite a
£14.5m increase in the pension deﬁcit
under IAS19.

The key balance sheet highlights can be
summarised as:
– Non-current assets increased slightly

–

to £195.4m (up £2.6m) after several
years of sustained investment in
assets and infrastructure. We are now
in the favourable position of having
a modern, well-invested asset base
capable of accommodating growth.
Inventories have increased by £1.7m,
driven by the deliberate decision to
secure favourable mango pricing
following a good 2016 harvest by
purchasing much of our 2017/18
requirements in advance. Finished
goods inventories are down in
volume, value and days.

– Trade payables have, as expected,
increased substantially due to the
timing of the year end and the
phasing of monthly payment runs.
Trade payables, at £15.8m, were up
£7.4m on the prior year.

– Trade and other receivables were
broadly ﬂat at £51.4m (2015/16:
£52.7m). We continue to beneﬁt
from good customer relationships
and strong credit controls and, as a
result, have modest aged debt and
experienced no bad debts during
the ﬁnancial year.

– ROCE* improved from 18.8% in

2015/16 to 20.2% in 2016/17 largely
driven by working capital phasing.

The movement from a net debt position
as at January 2016 (£11.3m) to a net cash
position as at January 2017 (£9.7m)
reﬂects the strong cash generative
nature of our business, working capital

Free cash ﬂow statement

Operating proﬁt before exceptional items
Depreciation and amortisation
EBITDA

(Increase)/Decrease in inventories
Decrease in receivables
Increase/(Decrease) in payables
Movement in pension liability
Share-based payment costs
Exceptional cash items
Loss on sale of property, plant and equipment
Net operating cash ﬂow

Net interest
Taxation
Cash ﬂow from operations

Maintenance capex
Capex proceeds

Free cash ﬂow

Expansionary capex*
Dividends
Acquisition of subsidiary (net of cash acquired)
Acquisition of intangible assets
Net sale/(purchases) of shares by employee beneﬁt trusts
Loans (repaid)/received (incl arrangement fees)
Cash ﬂow from ﬁnancing

2016/17
£m

2015/16
£m

43.1
8.6
51.7

(1.7)
1.3
10.2
(2.2)
0.9
(4.2)
–
56.0

(0.2)
(7.2)
48.6

(5.5)
0.1

43.2

(6.9)
(15.6)
–
–
0.3
(17.5)
(39.7)

3.5

6.2
9.7
–

9.7

42.1
8.4
50.5

1.8
0.6
(15.8)
(0.7)
0.5
(1.0)
0.2
36.1

(0.2)
(6.8)
29.1

(1.8)
0.9

28.2

(12.9)
(14.3)
(15.7)
(4.8)
(2.0)
2.4
(47.3)

(19.1)

25.3
6.2
(17.5)

(11.3)

Net increase/(decrease) in cash

Opening cash and cash equivalents
Closing cash and cash equivalents
Borrowings

Closing net cash/(debt)

phasing and lower capital expenditure
requirements as we come out of a
period of sustained capital investment.

In the year ahead we will continue to
invest in the fabric of the business and
to support our growth agenda. Capital
expenditure* in 2017/18 is anticipated to
be at a slightly higher level than in
2016/17 primarily driven by the phasing
of our new £10m PET bottling line at
Milton Keynes. This expansionary capital
will deliver logistics cost savings and
provide production ﬂexibility to support
our innovation pipeline.

A strong balance sheet and accessibility
to cost effective and ﬂexible debt
facilities provide optionality and ensure
we have the ability and the agility to take
advantage of any opportunities that may
be identiﬁed. Our recently renegotiated
banking facilities ensure that we have

sufficient headroom at our disposal to
meet expected future requirements.

The business remains highly cash
generative. Operating cash ﬂow before
movements in working capital has
increased £2.1m to £53.3m.

We believe that EBITDA* and Free Cash
Flow* permit a more meaningful analysis
of the underlying performance of the
Group. EBITDA* increased to £51.7m (up
2.4%), representing an EBITDA margin*
of 20.1% and a strong cash generating
performance, with EBITDA to free cash
ﬂow conversion* of 83.6%.

The Group utilises its cash appropriately
and with care. More than £12m was
invested in long-term assets and almost
£16m was distributed in dividends to
our shareholders.

A.G. BARR p.l.c. Annual Report and Accounts 2017

Strategic Report
Financial Review continued

Shares with a net value of £0.3m
were disposed of on behalf of various
employee beneﬁt trusts to satisfy the
ongoing requirements of the Group’s
employee share schemes.

Given the current net cash position, the
relatively benign outlook for short-term
interest rates and the expectation of
continued strong free cash generation,
no interest rate hedging activity has
taken place during the year.

Exceptional items
We have undergone signiﬁcant
reorganisation during 2016/17, the scale
and nature of which made it appropriate
that the related costs be recognised
as exceptional items for reporting
purposes. We believe that this permits
a more meaningful analysis of the
underlying performance of the Group.

A net credit of £0.7m pre-tax (£0.6m
post tax) for exceptional items included:

Net gain arising on closure
of DB pension scheme to
future accrual

£(5.5)m

Reorganisation and capability
refresh programme

£ 3.3m

Redundancy costs relating to
direct sales reorganisation

£ 0.6m

Costs in relation to a
strategic review of
e-commerce capabilities

Professional fees relating
to corporate development

Net exceptional credit

£ 0.5m

£ 0.4m

£(0.7)m

UK referendum and exit from
the European Union
The level of uncertainty and volatility in the
external environment is unprecedented.
Given the largely UK focus of our
commercial activities, our current
assessment is that the speciﬁc issue of
the UK’s future exit from the European
Union will not have a signiﬁcant impact
on our business other than through
its effects on foreign exchange. The
current value of sterling has created an
inﬂationary pressure on our commodity
cost base, primarily Euro or US dollar

denominated. We have a well developed
risk management framework in place
at both functional and corporate levels
of the business and we will continue to
closely monitor political and commercial
developments and react accordingly
to these.

Post balance sheet events
Certain events and decisions have taken
place between the ﬁnancial year end
and the approval of these accounts that
merit highlighting.

Debt ﬁnance
During the ﬁnancial year we entered into
discussions on our longer term debt
cover. These discussions concluded in
February 2017, with the Board approving
three revolving credit facilities over
periods of 3 to 5 years with Royal Bank
of Scotland plc, Bank of Scotland plc
and HSBC Bank plc. These facilities
provide £60m of sterling debt facilities
to 2020, reducing to £20m for the
period to 2022. Our long-term ﬁnancial
modelling indicates signiﬁcant ﬁnancial
headroom with these facilities in place.

Share repurchase programme
The Board has approved a share
repurchase programme of up to £30m,
as part of the Group’s approach to
capital allocation and under the
authority to repurchase up to 10% of its
own shares granted at the AGM in June
2016. This programme is anticipated to
commence in the spring of 2017 and
complete within 24 months. The AGM
in May 2017 will be requested to approve
the renewal of the authority for the
Board to repurchase up to 10% of the
Company’s own shares. We do not
believe that the repurchase programme
will have any material impact on our
ability to secure acquisition opportunities
should these be identiﬁed.

Asset sale
The disposal of our Walthamstow site
(sale proceeds £3.8m; gain on sale
£2.5m) was concluded in February 2017.
We have entered into a short term lease
of the premises as we ﬁnalise our
long-term plans for direct customer
deliveries in the area.

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 (“the
scheme”) has been closed to new
entrants since 5 April 2002 (and to
new executive entrants since 14 August
2003). During the year, after employee
consultation, and with the support of
the Pension Trustee, the scheme was
closed to future accrual. Despite these
actions, the scheme deﬁcit continued to
grow during the year as gilt yields and
interest discount rates remained low.
The deﬁcit (on an IAS19 valuation basis)
increased from £12.9m at the end of
2015/16 to £27.4m at the balance sheet
date. The increase in the deﬁcit in the
current ﬁnancial year is primarily as a
result of a lower net discount rate being
used to value the scheme’s liabilities in
the year. The Company 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
is comfortable that the overall pension
deﬁcit is supportable.

Share price and market
capitalisation
At 28 January 2017, the closing share
price for A.G. BARR p.l.c. was £5.02,
a reduction of 4.9% on the closing
January 2016 position. The Group is a
member of the FTSE 250, with a market
capitalisation* of £586m at the year end.

Stuart Lorimer
Finance Director

* Items marked with an asterisk are non-

GAAP measures. Deﬁnitions and relevant
reconciliations are provided in the Glossary
on pages 130 to 132.

A.G. BARR p.l.c. Annual Report and Accounts 2017

Risk management

Strategic Report

Corporate Governance

Accounts

Identifying,
evaluating and
managing risk

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

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

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

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

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

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

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

A.G. BARR p.l.c. Annual Report and Accounts 2017

Strategic Report
Risk management continued

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

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

Principal risks and uncertainties
Risks relating to the Group

Risk

Impact

Mitigating actions

Changes in 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.

Changing consumer
attitudes towards sugar/
further government
intervention
on sugar

Consumers may decide
to purchase and consume
alternative brands or
spend less on sugared
soft drinks.

The Group offers a broad range of branded products, many of which
are low sugar or sugar free. We announced on 1 March 2017 that we
will accelerate our long-standing sugar reduction programme so that
over 90% of our Company owned soft drinks portfolio by volume will
contain less than 5g of total sugars per 100ml by the autumn of 2017.

Our new product development activity is focused on development
of lower calorie products and our marketing programmes incorporate
our lower calorie choices.

We are working constructively with the government in relation to the
proposed sugar tax, with the aim of ensuring the optimal outcome for
the Group.

A.G. BARR p.l.c. Annual Report and Accounts 2017

Strategic Report

Corporate Governance

Accounts

Risk

Impact

Mitigating actions

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.

We liaise with relevant industry bodies who work with government
and policy makers.

Nutritional information is shown on all of our products and we have
signed up to the UK Government’s voluntary front-of-pack nutritional
labelling scheme.

Processes are in place to ensure compliance with health and
safety legislation and ethical working standards and these are
regularly reviewed by the Board and management committee.
Quality standards are well deﬁned, implemented and monitored.
A Corporate Social Responsibility Committee is in place, with a
clearly deﬁned and communicated Corporate Social Responsibility
Policy. The Group maintains and develops ISO 9001 and 14001
systems and BRC standards which are subject to annual external
audits, with any non-conformances addressed in a timely manner.

Failure to 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 management
committee by trade channel and customer as appropriate. This
includes monitoring of metrics which review brand equity strength,
ﬁnancial and operational performance.

Inability to protect
the Group’s intellectual
property rights

Failure of the
Group’s operational
infrastructure

Failure to protect
the Group’s intellectual
property rights could
result in a loss of
brand value.

A catastrophic failure
of the Group’s major
production or distribution
facilities could lead to a
sustained loss in capacity
or capability.

The Group focuses on delivering high quality products and invests
heavily in building brand equity. We work closely in partnership
with our customers on an ongoing basis. Members of the senior
management team meet with key customers throughout the year.

The 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.

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.

A.G. BARR p.l.c. Annual Report and Accounts 2017

Strategic Report
Risk management continued

Principal risks and uncertainties continued
Risks relating to the Group continued

Risk

Impact

Mitigating actions

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.

Loss of product integrity A loss of product integrity

Failure of critical
IT systems

Financial risks

in the manufacturing
supply chain could lead
to a product withdrawal
or recall.

A failure of critical IT
systems could result
in a loss of key systems,
business interruption, lost
sales or lost production.

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.

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.

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. Product recall procedures are tested regularly.

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.

Our underlying objective is to secure budgeted exchange rates and
thereby reduce the 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.

A.G. BARR p.l.c. Annual Report and Accounts 2017

Strategic Report

Corporate Governance

Accounts

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

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

The Board selected the period of three years as an appropriate period for the Company’s viability statement for the following reasons:
–
– management currently use three year forecasts as part of the business planning process and capital investment cycle.

the Company operates on a three year business cycle; and

By order of the Board

J.A. Barr
Company Secretary
28 March 2017

A.G. BARR p.l.c. Annual Report and Accounts 2017

36 Corporate Governance

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

John’s career was spent with ICI,
Unilever, Fosters Brewing Group,
Scottish & Newcastle PLC, and
latterly as President Americas
for Heineken NV and Deputy
Chairman of CCU SA (Chile). He
held various positions in Marketing
and Sales before moving into
Corporate Development and
then General Management.

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 University of
Edinburgh 2014.

Term of Office
Joined the Company in 2013
as a Non-Executive Director.
Appointed Chairman January 2015.

Term of Office
Joined the Company in 2002 as
Managing Director. Appointed
Chief Executive in 2004.

Stuart was with Diageo for 22
years in a range of roles and
countries, ultimately as the FD for
Diageo’s Global Supply Operation.

Jonathan has had a successful
career in various commercial roles
within Procter and Gamble.

Term of Office
Joined the Company as Finance
Director in January 2015.

External Appointments
Trustee Community Integrated
Care.

Term of Office
Joined the Company in 2003
as Commercial Director.

External Appointments
Non-Executive Director
Cricket Scotland.

External Appointments
Non-Executive Director of
Troy Income & Growth Trust.

External Appointments
Non-Executive Director of
Stocks Spirits Group PLC,
Non-Executive Director of North
American Breweries Inc and
Non-Executive Director of PZ
Cussons PLC.

Committee Membership
Nomination Committee (Chair)
Remuneration Committee.

A.G. BARR p.l.c. Annual Report and Accounts 2017

Andrew L. Memmott
BSc, MSc.
Supply Chain Director

Andrew joined the
Company following three
years with Cooperative
Wholesale Society.

Term of Office
Joined the Company’s
Project Engineering Team
in June 1990. Appointed
Operations Director
in 2008.

External Appointments
None.

Strategic Report

Corporate Governance

Accounts

Martin A. Griffiths
L.L.B. (Hons), C.A.
Senior Independent
Non-Executive Director

W. Robin G. Barr
C.A.
Non-Executive
Director

Pamela Powell
B.A., M.B.A.
Non-Executive
Director

David J. Ritchie
B.A. (Hons), A.C.A.
Non-Executive
Director

Robin is a past President
of the British Soft
Drinks Association.

Term of Office
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
None.

Committee Membership
Audit Committee
Nomination Committee
Remuneration Committee.

Pam was formerly Group
Director of Strategy and
Innovation at SABMiller plc,
SVP Global Personal Care
at Coty Beauty Inc, and
VP Skincare and Global
Brand Director Dove at
Unilever plc.

Term of Office
Joined the Company in
2013 as a Non-Executive
Director.

External Appointments
Non-Executive Director
of Premier Foods plc.

Committee Membership
Audit Committee
Nomination Committee
Remuneration Committee.

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.

Term of Office
Joined the Company
in April 2015 as Non-
Executive Director.

External Appointments
None.

Committee Membership
Audit Committee
Nomination Committee
Remuneration
Committee (Chair).

A Chartered Accountant,
Martin is a former
Chairman of the Scottish
Finance Directors Group
and a former Director of
Troy Income & Growth
Trust plc, Trainline Holdings
Limited, RoadKing
Infrastructure (HK) Limited
and Citybus (HK) Limited.
He is also a former Senior
Independent Non-
Executive Director
of Robert Walters plc and
past Chairman of Rail
Delivery Group Limited
and was young Scottish
Finance Director of the
year in 2004.

Term of Office
Joined the Company in
2010 as a Non-Executive
Director.

External Appointments
CEO of Stagecoach Group,
Co-Chairman of Virgin Rail
Group Holdings Limited and
Virgin Trains East Coast.

Committee Membership
Audit Committee (Chair)
Nomination Committee
Remuneration Committee.

A.G. BARR p.l.c. Annual Report and Accounts 2017

Directors’ Report

The directors present their report and the audited consolidated financial statements of the Group for the 52 weeks (2016: 53
weeks) ended 28 January 2017.

Strategic Report
The Companies Act 2006 requires the directors to present a review of the business during the year to 28 January 2017 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 01 to 35 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 43 to 47 and is incorporated by reference into this Directors’ Report.

Results and dividends
The Group’s profit after tax for the financial year ended 28 January 2017 attributable to equity shareholders amounted to
£35.6m (2016: £34.3m).

An interim dividend for the current year of 3.53p (2016: 3.36p) per ordinary share was paid on 21 October 2016.
The final proposed dividend of 10.87p (2016 final dividend: 9.97p) per ordinary share will be paid on 9 June 2017 if approved
at the Company’s annual general meeting on 31 May 2017 (“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 £25.7m (2016: £22.8m).

J.R. Nicolson

Directors
The following were directors of the Company during the financial year ended 28 January 2017:
–
– R.A. White
– S. Lorimer
–
J.D. Kemp
– A.L. Memmott
– W.R.G. Barr
– M.A. Griffiths
– P. Powell
– D.J. Ritchie

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 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 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 will submit themselves for
re-election at the AGM. Biographical details of the Board are set out on pages 36 and 37 of this report.

Directors’ interests
Information regarding the directors’ interests in ordinary shares of the Company is provided in the Directors’ Remuneration
Report on page 51. 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 28 January 2017 and 28 March 2017:
S. Lorimer an increase in beneficial holding of 74 shares and a decrease in non-beneficial holding of 8,699 shares, R.A. White an
increase in beneficial holding of 76 shares, A.L. Memmott an increase in beneficial holding of 75 shares, J.D. Kemp an increase
in beneficial holding of 75 shares and W.R.G. Barr an increase in beneficial holding of 75 shares.

A.G. BARR p.l.c. Annual Report and Accounts 2017Corporate GovernanceStrategic Report

Corporate Governance

Accounts

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 £1.1m (2016: £1.1m).

Political donations and political expenditure
No Group company made any political donations or incurred any political expenditure in the year (2016: £nil).

Post balance sheet events
Relevant post balance sheet events requiring disclosure are included in note 33 to the accounts.

Employee involvement
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.
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. In addition to this, the Group’s intranet site provides up-to-date
information regarding the Group’s activities.

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.

The partnership share element provides that for every three 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 the 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.

A.G. BARR p.l.c. Annual Report and Accounts 2017

Directors’ Report continued

SAYE
The SAYE is HMRC approved and is available to all qualifying employees, including executive directors. It is based on a five year
savings contract which provides the participant with an option to purchase shares after five 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
Applications for employment by disabled persons are always fully considered bearing in mind the qualifications and abilities of
the applicants concerned. In the event of employees becoming disabled every effort is made to ensure that their employment
will continue. The Group’s policy is that the training, career development and promotion of disabled persons are, as far as
possible, identical to those of other employees.

Substantial shareholdings
As at 28 January 2017, 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:

Lindsell Train Limited (discretionary clients)

Caledonia Investments plc

Troy Asset Management

Number of
shares

% of voting
rights

Type of holding

15,115,319

8,157,500

6,553,311

12.94

6.99

5.61

Indirect

Direct

The position remains the same as at 28 March 2017 as it did at 28 January 2017.

Relations with shareholders
The Company has regular discussions with and briefings for analysts, investors and institutional shareholders. The Chief
Executive and Finance Director normally meet with major shareholders twice annually in order to develop an understanding of
their views and brief the next Board meeting on their discussions. All directors have the opportunity to attend these meetings.
At the AGM, all shareholders, including private investors, have an opportunity to participate in questions and answers with the
Board on matters relating to the Company’s operation and performance.

Share capital
As at 28 January 2017 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 28 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 gives 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 Listing Rules of the Financial Conduct Authority, whereby certain directors and employees of the Company
require the approval of the Company to deal in the Company’s ordinary shares and are prohibited from dealing during
closed periods.

At 28 January 2017 the Company had authority, pursuant to the shareholders’ resolution of 1 June 2016, to purchase up to 10%
of its issued ordinary share capital. This authority will expire at the conclusion of the 2017 AGM. It is proposed that this authority
be renewed at the 2017 AGM, as detailed in the Notice of AGM.

A.G. BARR p.l.c. Annual Report and Accounts 2017Corporate GovernanceStrategic Report

Corporate Governance

Accounts

At 28 January 2017 Robert Barr Limited, as trustee of the General Employee Beneﬁt Trust, the Savings Related Beneﬁt Trust
and the All-Employee Share Ownership Plan Trust (the “RBL Trustee”), held 0.88% of the issued share capital of the Company in
trust for the beneﬁt of the executive directors and employees of the Group. As at 28 January 2017, Equiniti Share Plan Trustees
Limited (the “AESOP Trustee”) held 1.23% 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.

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 75.

The Company is not aware of any agreements between shareholders that may result in restrictions on the transfer of securities
or on voting rights.

Change of control
As disclosed in the Directors’ Remuneration Report, under certain conditions the notice period for R.A. White, J.D. Kemp and
A.L. Memmott 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 2017 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 25. This information is incorporated by reference into this
Directors’ Report.

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 26.

Contracts of signiﬁcance
There were no contracts of signiﬁcance as deﬁned by Listing Rule 9.8 in existence during the ﬁnancial year.

Disclosure of information under Listing Rule 9.4.3R
The information required under Listing Rule 9.4.3R is provided in the Directors’ Remuneration Report on page 68 and 69.

A.G. BARR p.l.c. Annual Report and Accounts 2017

Directors’ Report continued

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 01 to 35. The financial position of the Group, its cash flows, liquidity position
and borrowing facilities are described in the financial review on pages 26 to 30.

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 page 35 of the Strategic Report.

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 Committee has responsibility delegated from the Board for making recommendations on the appointment,
reappointment, removal and remuneration of the external auditor.

Following a competitive tender for the external audit, KPMG LLP has indicated its intention to resign as auditor and Deloitte
LLP will be appointed to fill the casual vacancy arising. A resolution to appoint Deloitte LLP as auditor of the Company and its
subsidiaries, and to authorise the Audit Committee to fix their remuneration, will be proposed at the 2017 AGM.

Annual General Meeting
The Company’s AGM will be held at 11.00am on 31 May 2017 at the offices of Deloitte LLP, 110 Queen Street, Glasgow, G1 3BX.
The Notice of the AGM is set out on pages 133 to 135 of this report. A description and explanation of the resolutions to be
considered at the 2017 AGM is set out on pages 136 to 141 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

J.A. Barr
Company Secretary
28 March 2017

A.G. BARR p.l.c. Annual Report and Accounts 2017Corporate GovernanceCorporate Governance Report

Strategic Report

Corporate Governance

Accounts

Chairman’s Introduction

Dear Shareholder
I am pleased to present our Corporate Governance Report, which describes how
the main principles of the 2014 UK Corporate Governance Code have been applied
during the year. Information about the Board, its members and committees, and an
overview of the Company’s system of internal controls are also included.

There were no changes to the Board during the year. Details of the Board’s
composition are given on pages 36 and 37.

John R. Nicolson
Chairman
28 March 2017

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 has an appropriate balance of skills, experience and knowledge of the
Group to enable it to discharge its responsibilities effectively. The Board currently has nine members, comprising four executive
directors, the non-executive Chairman, three independent non-executive directors and one non-independent non-executive
director. Biographical details of the directors are set out on pages 36 and 37.

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 also ensures that Board meetings are underpinned by a culture of openness and challenge, with sufficient time
made available to debate issues arising. The Chief Executive has responsibility for all Group businesses and acts in accordance
with the authority delegated from the Board. The senior independent non-executive director, M.A. Griffiths, 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.A. Griffiths, P. Powell and D.J. Ritchie are independent for the purposes of provision B.1.1 of
the UK Corporate Governance Code, issued by the Financial Reporting Council in September 2014 (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, on appointment, the Chairman was independent for the purposes of provision A.3.1 of the
Code. M.A. Griffiths fulﬁlled the role of senior independent director during the year to 28 January 2017. In addition to his role as
Chairman of the Company, J.R. Nicolson is a director of Stocks Spirits Group plc, director of North American Breweries Inc and
director of PZ Cussons 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.

The Articles require directors to retire and submit 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 Code, all directors will submit themselves for re-election at the AGM.

A.G. BARR p.l.c. Annual Report and Accounts 2017

Corporate Governance
Corporate Governance Report continued

Details of directors’ remuneration and interests in shares of the Company are given in the Directors’ Remuneration Report on
pages 51 to 76.

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, including 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 management committee. Responsibility for the development of policy and strategy and operational
management is delegated to the executive directors and a management committee, which as at the date of this report
includes the executive directors and nine senior managers.

Board performance evaluation
Every year the performance and effectiveness of the Board, its committees and individual directors is evaluated. In line with the
Code, during the year Independent Audit Limited (“Independent Audit”) conducted a formal, externally-facilitated review of the
effectiveness of the Board and its committees. Independent Audit is an independent adviser with no other connection to the
Company. The evaluation was conducted by the completion by all Board members of detailed and comprehensive written
survey questionnaires. Independent Audit agreed the questionnaires with the Company Secretary and the Chairman. 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. Independent Audit
provided a full, written report based on the responses to the survey, which they discussed with the Chairman. The full report
was shared with and discussed by the Board and each of the committees. Overall, the review found that the Board and its
committees were functioning in an effective manner and performing satisfactorily, with no major issues identiﬁed.

The non-executive directors, led by the senior independent director, carried out a performance evaluation of the Chairman,
taking into account the views of the executive directors. 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.

Independent professional advice
Directors can obtain independent professional advice at the Company’s expense in the performance of their duties as directors.
None of the directors obtained independent professional advice in the period under review. All directors have access to the advice
and the services of the Company Secretary. The non-executive directors have access to senior management of the business.

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. 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.

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.

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.

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The attendance of directors at scheduled Board and committee meetings in the year to 28 January 2017 was as follows:

Executive

R.A. White*

S. Lorimer**

J.D. Kemp

A.L. Memmott

Non-executive

J.R. Nicolson

W.R.G. Barr

M.A. Griffiths

D.J. Ritchie

P. Powell

Board

Maximum 8

Audit
Committee
Maximum 4

Remuneration
Committee
Maximum 5

Nomination
Committee
Maximum 4

–

* R.A. White attended Board committee meetings during the year by invitation.
** S. Lorimer attended Audit Committee meetings during the year by invitation.

Conﬂicts of interest
The Articles 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.

Committees of the Board
The terms of reference of the principal committees of the Board – Audit, Remuneration and Nomination – 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 Committee is
described within the Audit Committee’s Report on pages 48 to 50. The work carried out by the Remuneration Committee is
described within the Directors’ Remuneration Report on pages 51 to 76.

The Board has established a Market Disclosure Committee which comprises 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.

Nomination Committee
The Nomination Committee comprises J.R. Nicolson, W.R.G. Barr, M.A. Griffiths, P. Powell and D.J. Ritchie. 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.
The Nomination Committee also makes recommendations to the Board on the membership of its committees.

The Nomination Committee is required, in accordance with its terms of reference, to meet at least once per year. The
Nomination Committee met four times during the year and, amongst other matters, considered the recruitment of an additional
non-executive director.

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Corporate Governance
Corporate Governance Report continued

The Board recognises the importance of diversity to the success of the business and is ﬁrmly committed to giving due
consideration to all aspects of diversity, including gender diversity. Appointments to the Board are made on merit, against
objective criteria, and with due regard for the beneﬁts of diversity on the Board. Whilst no formal measurable objectives
have been set for female representation at Board level, the Board remains committed to the principles of gender diversity.

The disclosure relating to gender diversity within the Company is included in the Strategic Report on page 25.

Treasury Committee
The Treasury Committee consists of R.A. White, S. Lorimer and senior members of the ﬁnance, legal and procurement
departments. The Treasury 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 Committee’s remit also includes the
ability to utilise certain ﬁnancial instruments in order to hedge the Group’s exposure to interest rate ﬂuctuations.

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 31 January 2016 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 remedy them.

At the Audit Committee meeting on 18 January 2017, following a review and evaluation of the Group’s risk management and
internal control systems in place, the Audit Committee concluded that the Group has a sound system of risk management
and internal controls in place.

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 28 January 2017 and up to the date of the approval of this
annual report. 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. Information on
the Group’s risk management framework is set out in the Strategic Report on pages 31 to 35.

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 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, is reported.

The Board and the management committee review their business and ﬁnancial performance against the prior year and against
annual plans approved by the Board.

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Accounts

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 Company.

The review of the internal auditors’ work by the Audit 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 the year.

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 28 January 2017 with the provisions of the
Code, except as set out below.

During the year the Board comprised four executive directors, the non-executive Chairman and three independent non-
executive directors. In addition, W.R.G. Barr was a non-executive director during the year although he is not considered by the
Board to be independent. Accordingly, during the year to 28 January 2017 the composition of the Board did not, at any time,
comply with provision B.1.2 of the Code. The Board considers that, despite this non-compliance, the Board has an appropriate
balance of skills, knowledge and experience to enable it to discharge its duties and responsibilities effectively. No concerns
regarding the Board’s non-independent majority were raised as part of the Board performance evaluation carried out during
the year and referred to above.

Provision D.1.5 of the Code recommends that executive directors’ contracts contain a maximum notice period of one year. As
disclosed in the Directors’ Remuneration Report, the service contracts with R.A. White, J.D. Kemp and A.L. Memmott 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.

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
28 March 2017

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Corporate Governance
Audit Committee Report

Composition
The Audit Committee comprises four non-executive directors: M.A. Griffiths, W.R.G. Barr, P. Powell and D.J. Ritchie. The Audit
Committee is chaired by M.A. Griffiths. The Board is satisﬁed that M.A. Griffiths has recent and relevant ﬁnancial experience as
required by provision C.3.1 of the Code. The Board has determined that the current composition of the Audit Committee as a
whole has competence relevant to the sector in which the Company operates. Biographical details relating to each of the
Committee members are shown on page 37.

Meetings
The Audit Committee met four times during the year. The meetings are attended by the Committee members and, by invitation,
the Finance Director, the Central Financial Controller, the Company Secretary and representatives from the external and internal
auditors. The Audit Committee regularly meets with executive directors and management, as well as privately with the external
and internal auditors.

Role and responsibilities
The primary role of the Audit Committee is to assist the Board in fulﬁlling its oversight responsibilities. This includes:
– 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;
reporting to the Board on the appropriateness of the Group’s accounting policies and practices;
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 and management’s responsiveness to any ﬁndings
and recommendations;
approving the appointment and removal of the internal auditor;
reviewing and monitoring the appropriateness of the Group’s whistle-blowing and anti-bribery procedures;

–
–
– 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 Committee
During the year the Audit Committee has:
–

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 30 July 2016;
reviewed and agreed the external auditor’s audit strategy memorandum in advance of its audit for the year ended
28 January 2017;

–

– discussed the report received from the external auditor regarding its audit in respect of the year ended 28 January 2017,
which report included comments on its ﬁndings on internal control and on the disclosure of 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;
received reports on the operation of the Group’s Risk Committee;
reviewed the Group’s risk register and the Group’s principal risks, together with the systems and processes for mitigating
those risks;

–
–
–

– discussed and agreed the nature and scope of the work to be performed by the external and internal auditors;
–
–

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);
reviewed the appropriateness of the Group’s whistle-blowing procedures;
reviewed the effectiveness of the Group’s anti-bribery systems and controls;
received reports from internal audit covering various aspects of the Group’s operations, controls and processes;
reviewed the Group’s delegated authority limits;
approved the reappointment of the internal auditor;
conducted a competitive tender process for the external audit for 2017/18 onwards, made recommendations to the Board
on the appointment and remuneration of the external auditor and monitored the performance of the incumbent auditor;
– monitored and reviewed the performance of the 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;

–
–
–
–
–
–

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–

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 Audit Committee and its terms of reference.

At the request of the Board, the Audit Committee also considered whether the Annual Report and Accounts for the year
ended 28 January 2017, 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 Audit Committee
recommended to the Board that it could make the required disclosure as set out in the Directors’ Responsibilities Statement
on page 77.

Signiﬁcant areas
The signiﬁcant matters and key accounting judgements considered by the Audit Committee during the year were:
– The carrying value of brand support accruals: judgement is required when ascertaining the level of accrual required in

relation to promotions and brand support campaigns that span the year end, or where settlement has not been fully and
ﬁnally settled by the year end, or which relate to prior years. During the year the Audit Committee received a report from
the management team on the commercial investment process. It also received and considered reports from management
on the level of accruals at the half year and at the year end. The Audit Committee was content that there were no issues
arising.

– The valuation of inventory: the valuation of inventory is judgemental due to the volatile nature of raw material commodity

prices and, as the Group uses standard costing, changes in production levels can lead to purchase price variances which
require to be accounted for correctly. During the year the Audit Committee considered and was satisﬁed with reports from
the internal auditor and management regarding the controls operating in relation to inventory management at the Milton
Keynes site. The Audit Committee discussed and challenged management’s judgements in relation to inventory valuation
and considered reports from the external auditor on this area and were satisﬁed that inventory valuations were reasonable.

Other areas
Other matters considered by the Audit Committee during the year were:
– Exceptional items: the Audit Committee considered reports received from management in relation to the classiﬁcation and
presentation of certain items as exceptional and was satisﬁed with the treatment and presentation of various items which
arose during the year as exceptional, the majority of which related to the closure of the deﬁned beneﬁt pension scheme to
future accrual and the Company-wide reorganisation.

– Deﬁned beneﬁt pension scheme: during the year the Audit Committee considered and was satisﬁed with reports received

from the Group’s external auditor and management relating to the accounting for the closure of the deﬁned beneﬁt pension
scheme to future accrual.

– The presentation of adjusted performance measures.
– Accounting for the Funkin acquisition: during the year the Audit Committee considered and was satisﬁed with the

Company’s approach to accounting for the Funkin acquisition.

The Audit Committee receives regular presentations from members of the senior management team. During the year, the
Audit Committee has considered presentations from representatives of the management team on the Company’s franchise
arrangements, the purchase to pay process and the Finance Service Centre.

External audit
The Group’s external auditor is KPMG LLP. The Audit Committee reviews the external auditor’s performance, independence and
objectivity annually. The Audit Committee ensures that procedures are in place to safeguard the external auditor’s independence
and objectivity. The external auditor reports regularly to the Audit Committee 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. Where fees for any non-audit project are expected to exceed £50,000, the prior
approval of the Chairman of the Audit Committee and the Finance Director is required. Where fees for non-audit projects are
in aggregate expected to exceed £150,000, the prior approval of the Audit Committee is required. This policy was complied
with during the year. The Audit Committee has reviewed and amended this policy in preparation for the new EU regulation on
non-audit services. The revised policy states that the external auditor should not be engaged in respect of services prohibited
by the FRC’s Ethical Standard 2016. Any other non-trivial non-audit services provided must be pre-approved by the Audit
Committee, unless the engagement is urgent, in which case the Finance Director can agree the work with the Chairman of
the Audit Committee and report to the next Audit Committee meeting.

A.G. BARR p.l.c. Annual Report and Accounts 2017

Corporate Governance
Audit Committee Report continued

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 2.6:1. The
Audit Committee 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. A signiﬁcant proportion of the
non-audit fees during the year were for pension advisory services, and the remainder related to the provision of tax advisory,
tax compliance and corporate ﬁnance transaction services. The level of fees for non-audit services was considered by KPMG
who concluded that they did not present a threat to KPMG’s independence.

KPMG Audit Plc was appointed as the Group’s external auditor in May 2009 following a competitive tender process. A
resolution proposing the appointment of KPMG LLP, KPMG Audit Plc’s parent entity, as the Group’s external auditor was
approved by shareholders at the 2014 AGM. There are no contractual obligations which restrict the Audit Committee’s choice
of external auditor. The senior statutory auditor rotates every ﬁve years to ensure independence; an audit partner rotation took
place at the end of the 2013/14 ﬁnancial year and the Audit Committee took steps to ensure that a new appropriately qualiﬁed
and independent senior statutory auditor became responsible for the audit of the Group’s ﬁnancial statements with effect from
2014/15. The Audit Committee acknowledges the requirement under the Code to tender the external audit contract at least
every ten years. Following the introduction of the new EU regulation on non-audit services, the Audit Committee has taken
the opportunity to re-assess the role of various providers of such services to ensure full compliance with the new regulation
in relation to the provision of such services going forward. As a consequence, during the year, the Audit Committee conducted
a competitive tender process for the audit for 2017/18 onwards. Three audit ﬁrms (not including the incumbent auditor KPMG
LLP) were invited to tender by the Audit Committee. Each ﬁrm prepared a formal written proposal which was considered by
the Audit Committee. The proposed audit partners and key members of the audit teams of each of the tendering ﬁrms attended
a meeting with the Chairman of the Audit Committee, the Finance Director and certain members of senior management where
they presented their proposals and answered questions thereon. The Audit Committee considered the proposals and
recommended the appointment of Deloitte LLP. The Board approved the Audit Committee’s preferred ﬁrm for recommendation
to shareholders. The Company will seek shareholder approval of the appointment of Deloitte LLP at the Company’s 2017 AGM.
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 under review.

The Audit Committee carried out a review of the effectiveness of the external audit process during the year. This review
included an externally facilitated detailed and comprehensive evaluation of the Group’s external auditor by means of a written
survey questionnaire completed by Audit Committee members and certain members of senior management, including the
executive directors. The results of the evaluation were shared with the Group’s external auditor. The Audit Committee reviewed
comprehensive papers from both management and the Group’s external auditor, which set out the planning and execution of
the conduct of the audit. The Audit Committee held a meeting with the Group’s external auditor in the absence of management
to discuss further. Following this review, the Audit Committee was satisﬁed with KPMG LLP’s performance during the year, that
it was objective and independent, and that the external audit process was effective.

Internal audit
At the beginning of each year, an internal control 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 Audit Committee receives updates on progress against the internal control plan throughout the year.

Martin A. Griffiths
Chairman of the Audit Committee
28 March 2017

A.G. BARR p.l.c. Annual Report and Accounts 2017

Directors’ Remuneration Report

Strategic Report

Corporate Governance

Accounts

Remuneration Committee – Chairman’s Statement
On behalf of the Board, I am pleased to present the Directors’ Remuneration Report for the year ended 28 January 2017,
which sets out the future Directors’ Remuneration Policy intended to take effect from the close of the 2017 AGM, and the
Annual Report on Remuneration. Our previous Policy was approved by a binding vote at the 2014 AGM and became effective
for three years from the close of that meeting. The future Policy will be subject to a binding vote and the Annual Report on
Remuneration will be subject to an advisory vote at the 2017 AGM.

I am delighted to report on the strong level of support received from shareholders, as evidenced by the voting outcome at the 2016
AGM. The resolution seeking approval of the Annual Report on Remuneration was supported by over 99.8% of the votes cast.

Directors’ Remuneration Policy
The Remuneration Committee considers that the Company’s current remuneration framework continues to effectively support
the delivery of our business strategy (as set out in the Strategic Report on pages 01 to 35) and the creation of shareholder
value. Consequently, the Remuneration Committee has decided to make minor changes only to the Policy to take account
of developments in best practice and to ensure that the Policy continues to provide sufficient ﬂexibility to support potential
changes to business needs over the next three years. A summary of the minor changes to the Policy are set out on page 52.

2016/17 key decisions and pay outcomes
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 performance targets. As described in the Strategic Report, against
challenging soft drinks market conditions, the Group delivered revenue for the year ended 28 January 2017 of £257.1m, a
decrease of 0.6% on the prior year. The UK soft drinks market grew by 1.2% in value over the same period of time. Pre-tax proﬁt
increased by 4.4% on the prior year. Against this background and taking into account executive directors’ performance against
strategic objectives, an annual bonus of 23% was earned by R.A. White and S. Lorimer and an annual bonus of 18% was earned
by J.D. Kemp and A.L. Memmott. Average EPS for the three years ended 28 January 2017 exceeded the average EPS for the
three years preceding that period (both being adjusted for Consumer Price Index) by 15.6%. As a result, the Long Term Incentive
Plan (“LTIP”) awards granted in June 2014 vested at 40.02%. Further details in relation to the annual bonus and LTIP vesting are
included on pages 67 to 69.

Director remuneration for 2017/18
In line with the range of salary increases across the Group, an increase of 1.8% will be made to the executive directors’ base
salaries with effect from 1 April 2017. An increase of 1.8% will also be made to the Chairman’s fee and the other non-executive
directors’ basic fee with effect from 1 April 2017.

No changes are proposed to the annual bonus for the year ending 27 January 2018, with awards continuing to be subject to a
combination of proﬁt before tax and strategic performance measures. Details of bonus award levels and performance measure
weightings are provided on page 67. Performance targets for these bonus awards will be disclosed in the Annual Report on
Remuneration for the year ending 27 January 2018.

No changes are proposed to the LTIP for the year ending 27 January 2018, with awards continuing to be subject to an EPS
performance measure. EPS is a key performance indicator for the Company and shareholders, and remains a highly credible
measure of long term performance. The EPS targets for the next LTIP awards are still to be determined given ongoing
assessment of the anticipated impact of the new Soft Drinks Industry Levy which will inﬂuence EPS during the vesting period.
Details of the LTIP awards, which will be subject to a maximum of 125% of salary, and the EPS targets will be disclosed at the
time the LTIP awards are granted and in next year’s Annual Report on Remuneration. The Remuneration Committee keeps long
term performance metrics under review.

The terms of reference of the Remuneration Committee are available on the Company’s website, www.agbarr.co.uk.

David J. Ritchie
Chairman of the Remuneration Committee
28 March 2017

A.G. BARR p.l.c. Annual Report and Accounts 2017

Corporate Governance
Directors’ Remuneration Report continued

Directors’ Remuneration Policy
This part of the report sets out the Company’s Directors’ Remuneration Policy which, subject to shareholder approval at the
2017 AGM, shall take binding effect from the date of that meeting. The Policy for the executive directors has been determined
by the Remuneration Committee.

The Directors’ Remuneration Policy was ﬁrst approved at the 2014 AGM. No signiﬁcant changes have been made to the
Remuneration Policy. Minor amendments have been made to ensure that the Remuneration Policy is appropriate for the next
three years. In summary the changes made to the proposed Remuneration Policy as compared to the Remuneration Policy
approved at the 2014 AGM are as follows:

Minimum shareholding guidelines: In line with best practice, the minimum shareholding guidelines are included in the
Remuneration Policy. Shareholding guidelines were previously included in the Annual Report on Remuneration.

Clawback: In line with best practice, clawback provisions in respect of annual bonus and LTIP awards are included in the
Remuneration Policy. Clawback provisions were previously included in the Annual Report on Remuneration.

Pension: The Company’s maximum contribution under the URBS for R.A. White has been redeﬁned for clarity. For the
avoidance of doubt, the Company’s maximum contribution under the URBS for R.A. White is consistent with the maximum
contribution under the Remuneration Policy approved at the 2014 AGM.

Recruitment: The ability for the Company to pay appropriate relocation, travel and subsistence costs for newly appointed
directors where necessary has been clariﬁed.

Executive directors
The table below describes each of the elements of the remuneration package for the executive directors.

Maximum opportunity

Performance measures

Not applicable.

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.

Element

Purpose and
link to strategy

Operation

Base salary Core element

Usually reviewed annually.

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.

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.

–

A.G. BARR p.l.c. Annual Report and Accounts 2017

Element

Beneﬁts

Annual
bonus

Strategic Report

Corporate Governance

Accounts

Purpose and
link to strategy

Operation

Maximum opportunity

Performance measures

Ensures the
overall package
is competitive.

Purpose is to
recruit and
retain directors
of the calibre
required for the
Company.

Rewards
performance
against annual
targets which
support the
strategic
direction of
the Group.

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.

Awards based on annual
performance against key ﬁnancial
and/or strategic targets and/or the
delivery of personal objectives.

Maximum bonus
opportunity is 100%
of base salary.

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.

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 guilty
of misconduct.

Not applicable.

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.

A.G. BARR p.l.c. Annual Report and Accounts 2017

Corporate Governance
Directors’ Remuneration Report continued
Directors’ Remuneration Report continued

Element

Long Term
Incentive
Plan 2014
(“LTIP”)

Purpose and
link to strategy

Operation

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 62, 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
guilty of misconduct.

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 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.

Maximum opportunity

Performance measures

The normal maximum
award is 125% 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. These limits
do not include the value
of shares subject to any
tax-advantaged option
granted as part of an
ALTIP award.

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.

Where a tax-advantaged
option is granted as part
of an ALTIP award, the
same performance
conditions will apply to the
tax-advantaged option as
apply to the LTIP award.

A.G. BARR p.l.c. Annual Report and Accounts 2017

Strategic Report

Corporate Governance

Accounts

Purpose and
link to strategy

Operation

Maximum opportunity

Performance measures

Element

Long Term
Incentive
Plan 2014
(“LTIP”)
continued

All
employee
share
schemes

To encourage all
employees to
make a long-
term investment
in the
Company’s
shares in a tax
efficient way.

The Remuneration Committee may
at its discretion structure awards as
Approved Long Term Incentive Plan
(“ALTIP”) awards comprising both
a HMRC tax-advantaged option
granted under the Executive Share
Option Scheme (“ESOS”) and an
LTIP award. ALTIP awards enable the
participant and Company to beneﬁt
from HMRC tax-advantaged option
tax treatment in respect of part of
the award, without increasing the
pre-tax value delivered to
participants. ALTIP awards would
be structured as a tax-advantaged
option and a LTIP award, with the
vesting of the LTIP award scaled
back to take account of any gain
made on exercise of the tax-
advantaged option.

Other than to enable the grant of
ALTIP awards, the Company will not
grant awards to executive directors
under the ESOS.

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 both sections of the AESOP, being
the partnership and matching
section and the free 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.

A.G. BARR p.l.c. Annual Report and Accounts 2017

Corporate Governance
Directors’ Remuneration Report continued

Element

Retirement
beneﬁts

Purpose and
link to strategy

Operation

Maximum opportunity

Performance measures

Not applicable.

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 70. The contributions
paid to the deﬁned contribution
section in respect of three executive
directors are disclosed on pages 69
and 70. Details of accruals under the
URBS are disclosed on page 71.

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.

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 26% 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 maximum combined
Company contribution
under the deﬁned
contribution section and
the URBS in respect of
the remaining executive
directors is 19% of salary
(as deﬁned in the
Scheme rules) rising
to 26% of salary
following the executive’s
50th birthday.

The Remuneration
Committee has
discretion to vary the
delivery mechanism for
retirement beneﬁts,
however the exercise
of this discretion will
not exceed the above
limits for the provision
of executive directors’
retirement beneﬁts.

The Company has closed
the deﬁned beneﬁt
section of the Scheme
to new members but the
two executive directors
who are deferred
members will continue
to receive beneﬁts in
accordance with the
terms of the Scheme,
subject to separately
agreed contractual
arrangements, including
those summarised below:

A.G. BARR p.l.c. Annual Report and Accounts 2017

Element

Retirement
beneﬁts
continued

Strategic Report

Corporate Governance

Accounts

Purpose and
link to strategy

Operation

Maximum opportunity

Performance measures

R.A. White’s deferred
pension will be re-valued
in line with RPI until his
normal retirement date.
In addition, 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.

A.L. Memmott’s accrued
beneﬁts retain a link to
his ﬁnal pensionable
salary.

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.

A.G. BARR p.l.c. Annual Report and Accounts 2017

Corporate Governance
Directors’ Remuneration Report continued

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.

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 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. LTIP performance is currently based solely on Earnings Per Share,
which is a key measure of the Company’s proﬁtability.

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 measures are no longer appropriate and that amendment is
required 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 ESOS and the LTIP, certain managers are eligible to participate in the ESOS and the LTIP; however
there has been no such participation to date and there is no current intention to invite managers to do so. 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.

A.G. BARR p.l.c. Annual Report and Accounts 2017

Strategic Report

Corporate Governance

Accounts

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 300% 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 300% 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”).

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.

A.G. BARR p.l.c. Annual Report and Accounts 2017

Corporate Governance
Directors’ Remuneration Report continued

Illustrations of application of Remuneration Policy
The charts below set out an illustration of the Remuneration Policy for 2017/18 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 (£000)

S. Lorimer total remuneration (£000)

1,618.3
35%

28%

37%

939.6

12%

24%

64%

600.2
100%

341.2

100%

541.7
12%
25%

63%

942.8
35%

28%

37%

Minimum
performance

Performance
in line with expectations

Maximum
performance

Minimum
performance

Performance
in line with expectations

Maximum
performance

J.D. Kemp total remuneration (£000)

A.L. Memmott total remuneration (£000)

305.4
100%

483.3
12%
25%

63%

839.3
35%

28%

37%

289.3
100%

447.8
12%
24%

64%

764.8
35%

28%

37%

Minimum
performance

Performance
in line with expectations

Maximum
performance

Minimum
performance

Performance
in line with expectations

Maximum
performance

Base salary, beneﬁts and pension
Annual bonus
LTIP

A.G. BARR p.l.c. Annual Report and Accounts 2017

Strategic Report

Corporate Governance

Accounts

Three scenarios have been illustrated for each executive director:

Minimum performance

Performance in line with
expectations

Maximum performance

Fixed pay

Fixed elements of
remuneration – base salary,
beneﬁts and pension only.

Base salary is the latest
known salary (i.e. the salary
effective from 1 April 2017)
and the value for beneﬁts
has been calculated as per
the single ﬁgure table on
page 64.

Annual Bonus

No bonus.

50% of salary awarded
for achieving target
performance.

100% of salary awarded
for achieving maximum
performance.

LTIP

No LTIP vesting.

20% of maximum award
vesting (i.e. 25% of salary
for achieving target
performance).

100% of maximum award
vesting (i.e. 125% of salary
for achieving maximum
performance).

LTIP awards are included in the scenarios above at face value with no share price movement included.

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. Service contracts for new 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.

A.G. BARR p.l.c. Annual Report and Accounts 2017

Corporate Governance
Directors’ Remuneration Report continued

Payments for loss of office
The principles on which the determination of payments for loss of office will be approached are set out below:

Payment in lieu of notice

Annual Bonus

Policy

Payments to executive directors upon termination of their service contracts will be equal
to 12 months base salary or the highest annual rate 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).

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.

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.

The executive directors’ service contracts do not provide for any reduction in payments for
mitigation or for early payment.

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.

Change of control

Mitigation

Other payments

Where a buy-out award is made under the Listing Rules then the leaver provisions would be determined at the time of the award.

A.G. BARR p.l.c. Annual Report and Accounts 2017

Strategic Report

Corporate Governance

Accounts

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.

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.

Shareholder guidelines
In order to further align the executive directors’ long term interests with those of shareholders, the Remuneration Committee
has updated its share ownership guidelines applicable from 2017/18. The guidelines require that, with effect from 2017/18,
executive directors 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 125% of gross basic salary. Until this
shareholding is acquired, the executive directors may not, without Remuneration Committee approval, sell shares other than
to ﬁnance any tax liabilities arising from the vesting of LTIP awards.

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.

A.G. BARR p.l.c. Annual Report and Accounts 2017

Corporate Governance
Directors’ Remuneration Report continued

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 2017/18.

Single ﬁgure table – audited information
The aggregate remuneration provided to directors who have served as directors in the year ended 28 January 2017 is set out
below, along with the aggregate remuneration provided to such directors for the year ended 30 January 2016.

Year ended 28 January 2017

Director

Executive

R.A. White

S. Lorimer

J.D. Kemp

A.L. Memmott

Non-executive

J.R. Nicolson

W.R.G. Barr

M.A. Griffiths

P. Powell

D.J. Ritchie*

Total

Year ended 30 January 2016

Director

Executive

R.A. White

S. Lorimer

J.D. Kemp

A.L. Memmott

Non-executive

J.R. Nicolson

W.R.G. Barr

M.A. Griffiths

P. Powell

D.J. Ritchie*

Total

Salary/fees
£000

Beneﬁts
£000

Bonus
£000

Long term
incentives

£000

Pension
£000

Total
remuneration
£000

443

262

232

207

136

–

102

–

183

–

157

–

915

445

443

428

136

1,482

241

408

339

2,569

Salary/fees
£000

Beneﬁts
£000

Bonus
£000

Long term‡
incentives

£000

Pension
£000

Total
remuneration
£000

434

256

227

203

133

–

1,442

130

–

152

–

212

–

839

343

387

362

133

323

358

2,253

The total long term incentives ﬁgure of £323,000 for the year ended 30 January 2016 is the gain made by directors in the year
ended 28 January 2017 on the LTIP awards that vested on 9 April 2016. No other long term incentive schemes were in place for
the year to 28 January 2017.

* D.J. Ritchie was appointed as a non-executive director on 1 April 2015.
‡

The long term incentives ﬁgure for the year ended 30 January 2016 has been restated to reﬂect the market value of the shares that vested
on 9 April 2016 as at that date. The long term incentives ﬁgure for the year ended 30 January 2016 set out in the Annual Report 2015/16 used
the average closing share price for the three months ended 30 January 2016 as an estimate of the market value of those shares.

A.G. BARR p.l.c. Annual Report and Accounts 2017

Strategic Report

Corporate Governance

Accounts

The ﬁgures in the single ﬁgure table above 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
schemes but receive a lower taxable salary. Directors’ salaries are shown gross of salary sacriﬁce
pension contributions.

(b) Beneﬁts

The value of beneﬁts received in the year. These include car allowance, fuel beneﬁt, 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 76.

A description of the annual bonus in respect of the year and Group performance against which the
bonus pay-out was determined is provided on page 67.

(d) Long term incentives The value of LTIP awards that vest in respect of the year.

LTIP: the shares which will vest in respect of the year have been valued based on the average
market value of the shares over the three month period ended 28 January 2017. The value
of the shares which vested in respect of the prior year was the market value of the shares
on the vesting date.

Details of the executive directors’ interests in the LTIP are set out on page 75.

(e) Pension

The pension ﬁgure includes:
–

for individuals in the A.G. BARR p.l.c. (2008) Pension and Life Assurance Scheme (the
“Scheme”) deﬁned contribution section, the Company’s contributions to the deﬁned
contribution section, excluding any pension contributions made in respect of an individual
under the Company’s salary sacriﬁce arrangement;
for individuals in the Scheme’s deﬁned beneﬁt section, the additional value achieved 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 URBS.

–

Further details of pension beneﬁts are set out on pages 69 to 71.

Individual elements of remuneration
Base salary and fees
Base salaries for individual executive directors for the year ended 28 January 2017 and for the following year are set out in the
table below:

Executive director

R.A. White

S. Lorimer

J.D. Kemp

A.L. Memmott

Base salary for
year ended
28 January 2017
£000

Base salary for
year ending
27 January 2018
£000

443

262

232

207

451

267

237

211

Increase

1.8%

A.G. BARR p.l.c. Annual Report and Accounts 2017

Corporate Governance
Directors’ Remuneration Report continued

Details of non-executive directors’ fees for the year ended 28 January 2017 and for the following year are set out in the table
below:

Non-executive director fee

Chairman of the Company

Basic fee

Additional fee for chairing Audit Committee

Additional fee for chairing Remuneration Committee

Additional fee for Senior Independent Director

Beneﬁts – audited information
The beneﬁts ﬁgure for each of the executive directors is detailed as follows:

Year ended 28 January 2017

Year ended
28 January 2017
£000

Year ending
27 January 2018
£000

Increase
%

137

139

Executive Director

R.A. White

S. Lorimer

J.D. Kemp

A.L. Memmott

Total

Year ended 30 January 2016

Executive Director

R.A. White

S. Lorimer

J.D. Kemp

A.L. Memmott

Total

Car and fuel
beneﬁt
£000

SAYE
£000

AESOP
awards
£000

–

Car and fuel
beneﬁt
£000

SAYE
£000

AESOP
awards
£000

–

The value of the AESOP awards are the sum of the AESOP free and matching shares awarded to the directors in the year.

A.G. BARR p.l.c. Annual Report and Accounts 2017

1.8%

Total
£000

130

Strategic Report

Corporate Governance

Accounts

Annual bonus
The maximum annual bonus award opportunity for each executive director in respect of the year ended 28 January 2017
was 100% of salary, with 80% of the bonus assessed against the achievement of proﬁt before tax, excluding exceptional items,
compared against a set of proﬁt targets including a threshold and maximum level, and 20% based on non-ﬁnancial strategic
measures. The executive directors earned a total of £241,000 as annual bonus for the year, representing 23% of R.A. White’s
and S. Lorimer’s salary and 18% of J.D. Kemp’s and A.L. Memmott’s salary.

The target for the proportion of 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 linear scale through to full payment of this element of the bonus for performance at or above the
maximum target.

Proﬁt before tax excluding exceptional items £42.0m

Threshold
target

On target

£44.0m

Maximum

target

Actual
performance

Maximum
percentage of
bonus

Actual
percentage of
bonus

£46.0m

£42.4m

80%

Non-ﬁnancial strategic measure targets were set around the Company’s key areas of strategic focus. For R.A. White, these
targets focused on business reaction to the Soft Drinks Industry Levy, brand innovation and distribution, plus leading the
signiﬁcant change programmes in the year. Following strong progress across these targets, the Remuneration Committee
considered it appropriate to pay a bonus equal to 15% of salary to R.A. White. For the other executive directors, their non-
ﬁnancial strategic measure targets focused on areas including optimisation of the new Business Process Redesign systems
launched in the second half of 2015, brand innovation, enhanced operational effectiveness, improved supply chain efficiency
and further development of the Group’s governance and reporting processes. The Remuneration Committee assessed progress
against the strategic targets for each of the other executive directors and considered it appropriate to pay a bonus of 15% of
salary to S. Lorimer and 10% of salary to J.D. Kemp and A.L. Memmott.

Annual bonus for 2017/18
For the 2017/18 ﬁnancial year, an element of the annual bonus (20% of basic salary) will continue to be assessed against
strategic measures 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 remainder of the annual bonus will continue to be assessed
against growth in Group proﬁt before tax. Performance targets will be set at challenging levels in a similar manner to those
of previous years, with 50% of this element of the annual bonus being earned for on-target performance. 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. No changes are proposed to the maximum annual bonus opportunity
which will remain at 100% of salary.

Long term incentives – audited information
Awards vesting in respect of the ﬁnancial period
LTIP awards granted in June 2014 were subject to the achievement of an average EPS growth performance condition over a
three year period ended 28 January 2017.

Three year average EPS growth in excess of CPI

Threshold
vesting at 20%
of the maximum
award

Maximum
vesting at 100%
of the maximum
award

10%

32.5%

% linked to
award

100%

There is straight-line vesting between the points and no reward below threshold performance.

A.G. BARR p.l.c. Annual Report and Accounts 2017

Corporate Governance
Directors’ Remuneration Report continued

Details of LTIP awards vesting in respect of the ﬁnancial period are set out below:

Year ended 28 January 2017

Executive Director

R.A. White

S. Lorimer

J.D. Kemp

A.L. Memmott

Total

Total shares
Number

Award rate
%

Shares awarded*
Number‡

Share price**
£

LTIP value
£000

84,354

20,325

44,234

39,399

188,312

40.02%

36,426

8,727

19,101

17,013

81,267

5.02

183

408

Shares vesting under the LTIP for the year ended 28 January 2017 include dividend equivalents from the award date for each Director.

*
** The long term incentives ﬁgure for the year ended 28 January 2017 has been valued using the average closing share price for the three
months ended 28 January 2017 as an estimate of the value of the incentive as the actual value of the award will not be ﬁnalised until the
closing share price is known when the incentive vests in June 2017.

‡ With the exception of S. Lorimer, executive directors were granted ESOS awards in the form of market value options under the HMRC

tax-efficient section of the ESOS. These ESOS awards were subject to the same performance measures as the LTIP awards and therefore
1,914 of the 4,784 ESOS awards granted will vest for each of the executive directors. If the ESOS awards are exercised at a gain then the LTIP
awards will be scaled back to the same value to ensure that the total pre-tax value delivered to participants remains unchanged.

Year ended 30 January 2016

Executive Director

R.A. White

S. Lorimer

J.D. Kemp

A.L. Memmott

Total

Total shares
Number

Award rate
%

Shares awarded
Number

Share price at
vesting*
£

LTIP value
£000

75,645

10,162

39,667

35,332

160,806

37.89%

28,662

3,850

15,030

13,387

60,929

5.29

152

323

The long term incentives ﬁgure for the year ended 30 January 2016 has been restated to reﬂect the market value of the shares that vested
on 9 April 2016 as at that date. The long term incentives ﬁgure for the year ended 30 January 2016 set out in the Annual Report 2015/16
used the average closing share price for the three months ended 30 January 2016 as an estimate of the market value of those shares.

Awards granted during the ﬁnancial period
During the year ended 28 January 2017 the following LTIP awards were granted equating to 125% of salary.

Executive Director

R.A. White

S. Lorimer

J.D. Kemp

A.L. Memmott

Type of award

Number of
shares

Market value
at grant
£000

LTIP award

105,636

LTIP award

ESOS award*

LTIP award

62,416

5,703

55,394

49,339

557

329

292

260

% of award
vesting at
threshold

20.0

Performance
period
Years

* ESOS awards were granted in the form of market value options under the HMRC tax-efficient section of the ESOS and are subject to the

same performance measures as apply to the LTIP awards. If the ESOS awards are exercised at a gain then the LTIP awards will be scaled back
to the same value to ensure that the total pre-tax value delivered to participants remains unchanged.

A.G. BARR p.l.c. Annual Report and Accounts 2017

Strategic Report

Corporate Governance

Accounts

The LTIP awards are subject to the following EPS performance measure:

Cumulative EPS for 2016/17, 2017/18 and 2018/19

Threshold
vesting at 20%
of the maximum
award

Maximum
vesting at 100%
of the maximum
award

90p

100.5p

% linked to
award

100%

There is straight-line vesting between the points and no reward below threshold performance.

The salary used in the calculation of the award is the individual director’s salary at 1 April 2016.

Long term incentives for 2017/18
LTIP awards granted in 2017 will be subject to cumulative EPS performance for 2017/18, 2018/19 and 2019/20. 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.

The EPS targets for these LTIP awards are still to be determined given ongoing assessment of the anticipated impact of the new
Soft Drinks Industry Levy which will inﬂuence EPS during the vesting period. Details of the LTIP awards and the EPS targets will
be disclosed at the time the LTIP awards are granted and in next year’s Annual Report on Remuneration.

Awards made to the executive directors in 2017 will be subject to a maximum of 125% of salary.

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 “Scheme”).
The 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. R.A. White and A.L. Memmott are members of the
deﬁned beneﬁt section.

Company contributions (which exclude any pension contributions made in respect of an individual under the Company’s salary
sacriﬁce arrangement) are detailed in the following table:

Year ended 28 January 2017

Director

R.A. White

S. Lorimer

J.D. Kemp

A.L. Memmott

Total

Deﬁned
beneﬁt
£000

Deﬁned
contribution
£000

URBS
£000

Investment
return on URBS
£000

–

130

263

(2)

–

(2)

Total
£000

157

339

A.G. BARR p.l.c. Annual Report and Accounts 2017

Corporate Governance
Directors’ Remuneration Report continued

Year ended 30 January 2016

Director

R.A. White

S. Lorimer

J.D. Kemp

A.L. Memmott

Total

Deﬁned
beneﬁt
£000

Deﬁned
contribution
£000

URBS
£000

Investment
return on URBS
£000

–

149

198

–

Total
£000

212

358

The URBS is the A.G. BARR p.l.c. Unfunded Retirement Beneﬁt Scheme for executive directors. Please see below for further details.

Details of the entitlements accruing to the two directors who are deferred members of the deﬁned beneﬁt section are detailed
in the table below:

R.A. White

A.L. Memmott

Accrued
pension at
28 January 2017
£000

Normal
Retirement Age

63*

The normal retirement age speciﬁed in the Scheme rules for R.A. White and A.L. Memmott is age 63, however both are also entitled under
the Scheme rules to retire at age 60 without an actuarial reduction to their pension beneﬁts and without any consent required.

Early retirement can be taken at age 55 subject to Company 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 re-valuation of his deferred beneﬁts in line with RPI until his normal retirement date. The rules of the 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 Scheme. To enable R.A. White to continue to beneﬁt from Fixed Protection 2012, his deferred
beneﬁts are revalued in line with CPI and, to the extent that RPI exceeds CPI in any year, a corresponding additional contribution
is made to his URBS. In the year ended 28 January 2017 this has resulted in an additional accrual of £14,680 being included in
R.A. White’s URBS for that year and forms part of the £130,000 URBS ﬁgure included in the pension table above. In addition,
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”. A.L. Memmott ceased his accrual under the deﬁned beneﬁt plan on 1 March 2008.
His accrued beneﬁts retain a link to his ﬁnal pensionable salary.

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 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 four or eight times pensionable salary dependent
upon the date of joining the Scheme.

A.G. BARR p.l.c. Annual Report and Accounts 2017

Strategic Report

Corporate Governance

Accounts

The Company paid contributions to the deﬁned contribution section of the Scheme during the year in respect of J.D. Kemp,
A.L. Memmott and S. Lorimer. These are shown in the Deﬁned Contribution column in the total pension entitlements table above.

During the year ended 28 January 2017, R.A. White, J.D. Kemp, A.L. Memmott and S. Lorimer participated in the A.G. BARR
p.l.c. Unfunded Retirement Beneﬁt Scheme (“URBS”) with the agreement of the Company. 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.

The maximum Company contribution under the URBS in respect of R.A. White is 26% of his salary.

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 or 26% of salary following the executive’s 50th birthday.

The URBS ﬁgure for the directors represents a Company contribution only.

An accrued liability of £1,317,323 (2015/16: £982,272) is included in the closing balance sheet for the URBS. The liability has been
accrued in respect of the directors as follows:

Executive Director

R.A. White

S. Lorimer

J.D. Kemp

A.L. Memmott

Total URBS liability

Accrual at
28 January 2017
£

Accrual at
30 January 2016
£

1,068,701

900,972

79,057

87,135

82,430

20,312

35,998

24,990

1,317,323

982,272

Payments to past directors
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
No payments for loss of office were made during the year.

Statement of directors’ shareholding and share interests – audited information
The Remuneration Committee has updated its share ownership guidelines applicable from 2017/18 and these are disclosed
in the Remuneration Policy on page 63. Prior to 2017/18, executive directors were required to retain all shares acquired under
Company sponsored share plans until the value of their shareholding is equal to 100% of gross basic salary. At the year end,
R.A. White, J.D. Kemp and A.L. Memmott met the 100% of gross basic salary requirement applicable for the year ended
28 January 2017. S. Lorimer was appointed to the Board on 5 January 2015 and is to build up a shareholding equal to 100%
of his gross basic salary.

A.G. BARR p.l.c. Annual Report and Accounts 2017

Corporate Governance
Directors’ Remuneration Report continued

The interests of each executive director of the Company as at 28 January 2017 (including those held by their connected
persons) were as set out below.

Exercised
during the
year

Vested but
unexercised
during the
year

Owned
outright

Subject to
performance
conditions

Not subject to
performance
conditions

Total as at
28 January
2017

Unvested

Director

Type

Executive

R.A. White

372,755

–

LTIP shares

ESOS shares

SAYE options

AESOP free shares

AESOP matching shares

–

S. Lorimer

4,294

LTIP shares

ESOS shares

SAYE options

AESOP free shares

AESOP matching shares

Shares – non-beneﬁcial holding*

–

J.D. Kemp

151,249

ESOS shares

LTIP shares

SAYE options

AESOP free shares

AESOP matching shares

–

A.L. Memmott

115,602

LTIP shares

ESOS shares

SAYE options

AESOP free shares

AESOP matching shares

Non-executive

W.R.G. Barr

Shares – non-beneﬁcial holding**

M.A. Griffiths

J.R. Nicolson

P. Powell

D.J. Ritchie

–

12,468,965

–

5,400

5,500

–

1,000

28,662

–

701

116

–

3,850

–

701

117

–

15,030

–

701

116

–

13,387

–

701

116

–

278,569

4,784

–

135,078

5,703

–

4,784

146,077

–

130,109

4,784

–

4,771

–

492

–

372,755

278,569

4,784

4,771

–

492

4,294

135,078

–

4,232

–

135

–

135

1,032,233

151,249

4,784

146,077

4,564

–

492

–

4,771

–

494

–

492

115,602

130,109

4,784

4,771

–

494

– 12,468,965

– 10,128,708

–

5,400

5,500

–

1,000

S. Lorimer’s non-beneﬁcial shareholding represents his position as director of Robert Barr Ltd, the trustee of various employee beneﬁt trusts.

*
** W.R.G. Barr’s non-beneﬁcial shareholding represents 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.

A.G. BARR p.l.c. Annual Report and Accounts 2017

Strategic Report

Corporate Governance

Accounts

The number of AESOP free shares awarded and share options exercised under the LTIP in the year are included in the
“Exercised during the year” column.

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 eight 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 constituent member.

Total shareholder return

400

350

300

250

200

150

100

2009

2010

2011

2012

2013

2014

2015

2016

2017

¢ A.G. BARR ¢ FTSE 250 Ex.Investment Trusts

Year to January

CEO remuneration for previous eight years
The table below shows details of the total remuneration, annual bonus and LTIP paid out for R.A. White over the last eight
ﬁnancial years.

Year ended 28 January 2017

Year ended 30 January 2016

Year ended 25 January 2015

Year ended 26 January 2014

Year ended 26 January 2013

Year ended 28 January 2012

Year ended 29 January 2011

Year ended 30 January 2010

Total
remuneration
£000

915

839

1,075

989

1,086

1,070

1,204

951

Annual bonus as
a % of maximum
opportunity

LTIP as a % of
maximum
opportunity

23.0%

75.5%

57.8%

50.0%

46.0%

75.0%

73.4%

40.02%

37.89%

31.9%

38.2%

68.5%

99.3%

92.9%

45.0%

Percentage change in CEO remuneration
The table below sets out, in relation to salary, taxable beneﬁts (car allowance, fuel beneﬁt and AESOP awards only) and
annual bonus, the increase between the pay for the year ended 30 January 2016 and the pay for the year ended 28 January
2017 for R.A. White 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 28 January 2017 but excludes executive and
non-executive directors.

A.G. BARR p.l.c. Annual Report and Accounts 2017

Corporate Governance
Directors’ Remuneration Report continued

Percentage change

Salary

Beneﬁts

Annual bonus*

CEO

2.1%

0.0%

N/a

Wider

workforce

2.3%

7.3%

N/a

* No annual bonus was paid out in respect of the year ended 30 January 2016. This has meant that there is no comparative ﬁgure against

which an increase can be measured.

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).

Dividends

Overall expenditure on pay

Year ended
30 January 2016
£000

Year ended
28 January 2017
£000

15,565*

16,815**

% change

8.0%

43,600

35,500***

(18.6)%

* Dividends payable in respect of the year ended 30 January 2016.
** Dividends payable in respect of the year ended 28 January 2017.
*** Overall expenditure on pay for the year ended 28 January 2017 includes the effect of the closure of the deﬁned beneﬁt pension scheme to

future accrual on 1 May 2016 and the subsequent reduction in pension costs for the remainder of the year. A full breakdown of staff costs for
the Group for the year can be found in note 4 to the accounts.

Consideration by the Directors of matters relating to Directors’ Remuneration
The following directors were members of the Remuneration Committee during the year: D.J. Ritchie (Chairman), W.R.G. Barr,
M.A. Griffiths, J.R. Nicolson and P. Powell.

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 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 recommending the remuneration of the Chairman of the Company
to the Board.

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 Committee, and from other
members of management, who may attend meetings by invitation, except when matters relating to their own remuneration are
being discussed.

External adviser
During the year, the Remuneration Committee was assisted in its work by the following external consultant:

Adviser

Details of appointment

Deloitte LLP (Deloitte) Appointed by

the Remuneration
Committee in
January 2014
following a competitive
tender process.

Services provided
by the Adviser

Review of LTIP metrics
and calibration of
performance targets.

Assistance with the
preparation of the
Directors’ Remuneration
Policy and Annual Report
on Remuneration.

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
28 January 2017

£20,100

Share schemes advice.

Charged on a time/cost
basis or ﬁxed fee
dependent on nature
of project.

Consulting services
in relation to the
implementation of the
Enterprise Resource
Planning system and
Business Process
Redesign.

A.G. BARR p.l.c. Annual Report and Accounts 2017

Attendance at
Remuneration
Committee meetings.

Strategic Report

Corporate Governance

Accounts

The Remuneration Committee is satisﬁed that all advice received was objective and independent. Deloitte is a member
of the Remuneration Consultants Group and, as such, voluntarily operates under the Code of Conduct in relation to executive
remuneration consulting in the UK.

Statement of voting at last AGM
The following table sets out actual voting in respect of the resolutions to approve the 2015/16 Annual Report on Remuneration
at the Company’s AGM on 1 June 2016 and the 2013/14 Remuneration Policy at the Company’s AGM on 27 May 2014.

Resolution

Votes for

% of vote

Votes against

% of vote

Votes withheld

Approve 2015/16 Annual Report on Remuneration

73,218,572

Approve 2013/14 Remuneration Policy

73,348,375

99.88

96.83

88,075

2,401,469

0.12

3.17

2,353,086

34,666

Additional information
Executive directors’ interests in the LTIP
The individual interests of the executive directors under the LTIP are as follows:

LTIP Director

R.A. White

S. Lorimer

J.D. Kemp

A.L. Memmott

Awarded
Number

Vested
Number

Lapsed
Number

At
28 January
2017
Number

Exercisable from

At
30 January
2016
Number

Date of award

09 April 2013

75,645

03 June 2014

84,354

15 April 2015

88,579

–

07 April 2016

–

105,636

15 April 2015

10,162

15 April 2015

20,325

15 April 2015

52,337

–

07 April 2016

–

62,416

09 April 2013

39,667

03 June 2014

44,234

15 April 2015

46,449

–

07 April 2016

–

55,394

09 April 2013

35,332

03 June 2014

39,399

15 April 2015

41,371

–

07 April 2016

–

49,339

(28,662)

(46,983)

–

09 April 2016

–

84,354

03 June 2017

88,579

15 April 2018

105,636

07 April 2019

(3,850)

(6,312)

–

09 April 2016

–

20,325

52,337

03 June 2017

15 April 2018

62,416

07 April 2019

(15,030)

(24,637)

–

09 April 2016

–

44,234

03 June 2017

46,449

15 April 2018

55,394

07 April 2019

(13,387)

(21,945)

–

09 April 2016

–

39,399

03 June 2017

41,371

15 April 2018

49,339

07 April 2019

Executive directors’ interests in the ESOS
The individual interests of the executive directors under the ESOS are as follows:

ESOS Director

R.A. White

S. Lorimer

J.D. Kemp

A.L. Memmott

At
30 January
2016
Number

Date of award

Awarded
Number

Vested
Number

Lapsed
Number

03 June 2014

4,784

–

07 April 2016

–

5,703

03 June 2014

4,784

–

At
28 January
2017
Number

4,784

5,703

4,784

Exercisable from

03 June 2017

07 April 2019

03 June 2017

A.G. BARR p.l.c. Annual Report and Accounts 2017

Corporate Governance
Directors’ Remuneration Report continued

Executive directors’ interests in the SAYE
The individual interests of the executive directors under the SAYE scheme are as follows:

SAYE Director

R.A. White

S. Lorimer

J.D. Kemp

A.L. Memmott

At
30 January
2016
Number

1,089

3,682

4,232

670

3,894

1,089

3,682

Granted
Number

Exercised
Number

Lapsed
Number

At
28 January
2017
Number

Option
price

Pence

Exercisable from

–

1,089

3,682

4,232

670

3,894

1,089

3,682

358 01 January 2018

567 01 October 2020

358 01 January 2018

567 01 October 2020

358 01 January 2018

567 01 October 2020

AESOP free shares
The following free share awards were made to the executive directors under the AESOP scheme:

R.A. White

S. Lorimer

A.L. Memmott

J.D. Kemp

Date of award
and vesting date

15 June 2016

Share price
on date of
award
Pence

At
30 January
2016
Number

Shares
awarded
Number

Shares
vested
Number

Shares
lapsed
Number

At
28 January
2017
Number

Value
vested
£000

513

–

701

(701)

–

Approval
This Report was approved by the Board and signed on its behalf by:

David J. Ritchie
Chairman of the Remuneration Committee
28 March 2017

A.G. BARR p.l.c. Annual Report and Accounts 2017

Statement of Directors’ responsibilities
in respect of the annual report and the ﬁnancial statements

Strategic Report

Corporate Governance

Accounts

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 as adopted by the
EU and applicable law and have elected to prepare the parent Company ﬁnancial statements on the same basis.

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:
–
– make judgements and estimates that are reasonable and prudent;
–
– prepare the ﬁnancial statements on the going concern basis unless it is inappropriate to presume that the Group

state whether they have been prepared in accordance with IFRSs as adopted by the EU; and

select suitable accounting policies and then apply them consistently;

and the parent Company will continue in business.

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 36 to 37 of this report, conﬁrm that, to the best
of their knowledge:
–

the ﬁnancial statements, prepared in accordance with IFRSs as adopted by the EU, give a true and fair view of the assets,
liabilities and ﬁnancial position of the Group and parent Company and of the consolidated proﬁt;
the Annual Report and Accounts includes a fair review of the development and performance of the business and the
position of the Group and the undertakings included in the consolidation taken as a whole, together with a description
of the principal risks and uncertainties faced by the Group; and
they consider the Annual Report and Accounts, taken as a whole, is fair, balanced and understandable and provides the
information necessary for shareholders to assess the Company’s performance, business model and strategy.

–

By order of the Board

R.A. White
Chief Executive
28 March 2017

S. Lorimer
Finance Director

A.G. BARR p.l.c. Annual Report and Accounts 2017

Independent Auditor’s Report to the Members of A.G. BARR p.l.c. only

Opinions and conclusions arising from our audit
1 Our opinion on the financial statements is unmodified
We have audited the financial statements of A.G. BARR p.l.c. for the year ended 28 January 2017 set out on pages 81 to 128.
In our opinion:
–

the financial statements give a true and fair view of the state of the group’s and of the parent company’s affairs as at
28 January 2017 and of the group’s profit for the year then ended;
the group financial statements have been properly prepared in accordance with International Financial Reporting Standards
as adopted by the European Union (IFRSs as adopted by the EU);
the parent company financial statements have been properly prepared in accordance with IFRSs as adopted by the EU
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 and,
as regards the group financial statements, Article 4 of the IAS Regulation.

–

2 Overview

Audit coverage:
100% of pbt before exceptionals

A summary of our approach:
– Our audit covered 100% of the Group’s total revenue, profit before tax and total assets and

was completed at Cumbernauld and in London.

Materiality:
3% pbt (before exceptionals)

Signiﬁcant areas:
inventory and brand
support accruals

– Overall group materiality: £1.4m which represents 3% of profit before tax before exceptionals

this year.

– The accounting for the brand support accruals is a judgemental area.
–

Inventory is significant and raw materials are subject to price volatility so that is also a
judgemental area.

– There is no movement in the risk direction in either of these areas year on year. There has

been no change in our assessment of significant risks year on year.

3 Our assessment of risks of material misstatement
In arriving at our audit opinion above on the financial statements the risks of material misstatement that had the greatest effect
on our audit were as follows (unchanged from 2016):

The area of focus

Brand support discounts and costs accrual (£14.7 million,
2016: £13.0 million):
Refer to page 49 (Audit Committee Report), pages 88 and 94
(accounting policy) and page 115 (financial disclosures)

Our approach

Risk direction:

(unchanged)

The group agrees sales discounts and other payments with
certain of its customers and incurs costs in supporting and
developing its brands. Accounting for such sales discounts
and costs is judgmental where promotion and brand support
campaigns either span the year end (where settlement has not
been fully and finally agreed by the year end) or where prior
year claims arise, as the year end accrual can depend on
information not yet made available by the customer.

Our procedures in relation to accounting for brand
support discounts and costs included testing the group’s
authorisation controls over such discounts and costs and
inspecting the detail of such discounts and costs. In addition
we agreed samples of specific items within accruals at
the year end to supporting documentation to assess the
accuracy of brand support discounts and costs and to ensure
they are reflected in the correct period; we agreed a sample
of post year end claims relating to the period prior to the year
end to accruals at the year end, to give us comfort over the
completeness of the year end accrual; and we considered
and challenged the judgements formed by management
in relation to any prior year claims from customers that
remained within accruals at the year end or claims prior to
the year end where there may not be an accrual for costs.

A.G. BARR p.l.c. Annual Report and Accounts 2017

Accounts79

The area of focus

Valuation of inventories (£17.3 million): (2016: £15.6 million)
Refer to page 49 (Audit Committee Report), pages 92 and 94
(accounting policy) and page 111 (financial disclosures)

Our approach

Risk direction:

(unchanged)

Inventory is a significant balance and the group’s main raw
materials are commodities which are subject to price volatility.
As the group uses a standard cost as its basis of inventory
valuation, changes in price and production levels lead to
purchase price or manufacturing variances which, if not
accounted for correctly, may lead to the valuation of
inventories being misstated.

In this area, our procedures included testing of the controls in
relation to purchases, comparing the valuation of inventories
for a sample of items to supporting documentation (e.g.,
purchase invoices) and considering for reasonableness (by
reference to historical data and commodity price movements)
the variances arising from the group’s standard costing system
and challenging management’s calculations as appropriate.

In addition our procedures included testing whether the
standard costs which form the basis of the inventory valuation
were set appropriately (e.g., by comparing standard costs
back to supporting purchase invoices and other supporting
costings) and reflected normal production levels, having been
adjusted appropriately for any capacity underutilisation; and
agreeing the calculation of overheads absorbed into inventory
to supporting analyses of production costs incurred during
the time of production of year-end inventory.

4 Our application of materiality and an overview of the scope of our audit
Materiality for the group financial statements as a whole was set at £1.4m (2016: £1.4m). Materiality is determined with reference to
a benchmark of group profit before tax, normalised to exclude exceptional items. Materiality this year is based on profit before tax,
normalized to exclude exceptional items, of £43.1 million, of which it represents 3% (2016: 3% of profit before tax). We have chosen
profit before tax excluding exceptional items because it removes the non-recurring distorting impact of exceptional items.

We report to the Audit Committee any corrected or uncorrected misstatements identified exceeding £250,000 (2016:
£250,000), in addition to other identified misstatements that warranted reporting on qualitative grounds. This level was selected
and agreed with the Audit Committee as, given the nature and scale of operations, adjustments under this level were not deemed
to be of specific interest to them.

Audits for group reporting purposes were performed for all three components by the group audit team in Cumbernauld and in
London. These audits covered 100% of group turnover, profit before tax and total assets. The audits performed for group reporting
purposes were all performed to materiality levels set individually for each component and ranged from £10,000 to £1.1 million.

Materiality

Group materiallity

£1.4m

£1.1m

Component materiality
range £10,000 to £1.1m

£1.4m
(3%)

£43.1m

Group materiallity

PBT before exceptional items

5 Our opinion on other matters prescribed by the Companies Act 2006 is unmodified
In our opinion:
–

the part of the Directors’ Remuneration Report to be audited has been properly prepared in accordance with the
Companies Act 2006; and
the information given in the Strategic Report and the Directors’ Report for the financial year is consistent with the
financial statements.

–

A.G. BARR p.l.c. Annual Report and Accounts 2017

AccountsStrategic ReportCorporate Governance80

Independent Auditor’s Report to the Members of A.G. BARR p.l.c. only continued

5 Our opinion on other matters prescribed by the Companies Act 2006 is unmodified continued
Based solely on the work required to be undertaken in the course of the audit of the financial statements and from reading the
Strategic report and the Directors’ report:
– we have not identified material misstatements in those reports; and
–

in our opinion, those reports have been prepared in accordance with the Companies Act 2006.

6 We have nothing to report on the disclosures of principal risks
Based on the knowledge we acquired during our audit, we have nothing material to add or draw attention to in relation to:
–

the directors’ statement of risk factors that could affect financial performance on pages 31 to 34, concerning the principal
risks, their management, and, based on that, the directors’ assessment and expectations of the group’s continuing in
operation over the three years to 2020; or
the disclosures in note 31 of the financial statements concerning the use of the going concern basis of accounting.

–

7 We have nothing to report in respect of the matters on which we are required to report by exception
Under ISAs (UK and Ireland) we are required to report to you if, based on the knowledge we acquired during our audit, we have
identified other information in the annual report that contains a material inconsistency with either that knowledge or the
financial statements, a material misstatement of fact, or that is otherwise misleading.

In particular, we are required to report to you if:
– we have identified material inconsistencies between the knowledge we acquired during our audit and the directors’
statement that they consider that the annual report and financial statements taken as a whole is fair, balanced and
understandable and provides the information necessary for shareholders to assess the group’s position and performance,
business model and strategy; or
the Audit Committee Report does not appropriately address matters communicated by us to the audit committee.

–

Under the Companies Act 2006 we are required to report to you if, in our opinion:
–

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 and the part of the Directors’ Remuneration Report to be audited are not in
agreement with the accounting records and returns; or
–
certain disclosures of directors’ remuneration specified by law are not made; or
– we have not received all the information and explanations we require for our audit.

–

Under the Listing Rules we are required to review:
–
–

the directors’ statements, set out on pages 35 and 42, in relation to going concern and longer-term viability; and
the part of the Corporate Governance Statement on pages 43 to 47 relating to the company’s compliance with the eleven
provisions of the 2014 UK Corporate Governance Code specified for our review.

We have nothing to report in respect of the above responsibilities.

Scope and responsibilities
As explained more fully in the Directors’ Responsibilities Statement set out on page 77, the directors are responsible for the
preparation of the financial statements and for being satisfied that they give a true and fair view. A description of the scope of an
audit of financial statements is provided on the Financial Reporting Council’s website at www.frc.org.uk/auditscopeukprivate. This
report is made solely to the company’s members as a body and is subject to important explanations and disclaimers regarding our
responsibilities, published on our website at www.kpmg.com/uk/auditscopeukco2014a, which are incorporated into this report as
if set out in full and should be read to provide an understanding of the purpose of this report, the work we have undertaken and
the basis of our opinions.

Alex Sanderson (Senior Statutory Auditor)
for and on behalf of KPMG LLP, Statutory Auditor
Chartered Accountants
319 St Vincent Street
Glasgow G2 5AS
28 March 2017

A.G. BARR p.l.c. Annual Report and Accounts 2017

AccountsConsolidated Income Statement
for the year ended 28 January 2017

Revenue
Cost of sales

Gross profit

Other income
Operating expenses

Operating profit

Finance income
Finance costs

Profit before tax

Tax on profit

Profit attributable to equity holders

Earnings per share (p)

Basic earnings per share
Diluted earnings per share

2017

Exceptional
items
£m

2016

Total
£m

–
–

–

–
0.7

0.7

–
–

0.7

(0.1)

257.1
(136.4)

120.7

0.7
(77.6)

43.8

–
(0.7)

43.1

(7.5)

258.6
(137.5)

121.1

–
(79.0)

42.1

0.1
(0.9)

41.3

(7.0)

Adjusted
£m

257.1
(136.4)

120.7

0.7
(78.3)

43.1

–
(0.7)

42.4

(7.4)

35.0

0.6

35.6

34.3

30.78
30.57

29.63
29.51

Note

5
6,7

8
8

10
10

A.G. BARR p.l.c. Annual Report and Accounts 2017

AccountsStrategic ReportCorporate Governance82

Statement of Comprehensive Income
for the year ended 28 January 2017

Profit after tax

Other comprehensive income
Items that will not be reclassified to profit or loss
Remeasurements on defined benefit pension plans
Deferred tax movements on items above
Current tax movements on items above

Items that will be or have been reclassified to profit or loss
Effective portion of changes in fair value of cash flow hedges
Deferred tax movements on items above

Other comprehensive income for the year, net of tax

Note

27
24
9

16
24

Group

Company

2017
£m

35.6

(21.9)
2.7
1.0

(1.4)
0.2

(19.4)

2016
£m

34.3

5.4
(2.5)
1.3

1.7
(0.3)

5.6

2017
£m

25.7

(21.9)
2.7
1.0

(1.4)
0.2

(19.4)

2016
£m

22.8

5.4
(2.5)
1.3

1.7
(0.3)

5.6

Total comprehensive income attributable to equity

holders of the parent

16.2

39.9

6.3

28.4

A.G. BARR p.l.c. Annual Report and Accounts 2017

AccountsStatement of Changes in Equity
for the year ended 28 January 2017

Group

Share
capital
£m

Share
premium
account
£m

Share
options
reserve
£m

Cash flow
hedge
reserve
£m

Retained
earnings
£m

Total
£m

At 30 January 2016

4.9

0.9

1.4

Profit for the year
Other comprehensive income

Total comprehensive income for the year

Company shares purchased for use by

employee benefit trusts

Proceeds on disposal of shares by

employee benefit trusts

Recognition of share-based payment

costs

Transfer of reserve on share award
Deferred tax on items taken direct to

reserves

Dividends paid

At 28 January 2017

At 25 January 2015

Profit for the year
Other comprehensive income

Total comprehensive income for the year

Company shares purchased for use by

employee benefit trusts

Proceeds on disposal of shares by

employee benefit trusts

Recognition of share-based payment

costs

Transfer of reserve on share award
Deferred tax on items taken direct to

reserves

Dividends paid

At 30 January 2016

–
–

–

–
–

–

–
–

4.9

0.9

–
–

–

–
–

–

–
–

4.9

0.9

1.0

–
(1.2)

(1.2)

–

–
–

(0.2)

171.9

180.1

35.6
(18.2)

17.4

35.6
(19.4)

16.2

(1.0)

1.3

–
0.4

–
(15.6)

174.4

1.3

0.9
–

(0.1)
(15.6)

181.8

–
–

–

0.9
(0.4)

(0.1)
–

1.8

2.3

(0.4)

148.8

156.5

–
–

–

0.5
(0.9)

(0.5)
–

1.4

–
1.4

1.4

–

–
–

1.0

34.3
4.2

38.5

34.3
5.6

39.9

(5.1)

3.1

–
0.9

–
(14.3)

171.9

3.1

0.5
–

(0.5)
(14.3)

180.1

A.G. BARR p.l.c. Annual Report and Accounts 2017

AccountsStrategic ReportCorporate Governance84

Statement of Changes in Equity
for the year ended 28 January 2017

Company

Share
capital
£m

Share
premium
account
£m

Share
options
reserve
£m

Cash flow
hedge
reserve
£m

Retained
earnings
£m

Total
£m

1.0

–
(1.2)

(1.2)

–

–
–
–
–
–

112.2

120.4

25.7
(18.2)

7.5

25.7
(19.4)

6.3

(1.0)

1.3
–
0.4
–
(15.6)

1.3
0.9
–
(0.1)
(15.6)

112.2

(0.2)

104.8

(0.4)

100.6

108.3

–
1.4

1.4

–

–
–
–
–
–

1.0

22.8
4.2

27.0

(5.1)

3.1
–
0.9
–
(14.3)

112.2

22.8
5.6

28.4

(5.1)

3.1
0.5
–
(0.5)
(14.3)

120.4

At 30 January 2016

4.9

0.9

1.4

Profit for the year
Other comprehensive income

Total comprehensive income for the year

Company shares purchased for use by

employee benefit trusts

Proceeds on disposal of shares by employee

benefit trusts

Recognition of share-based payment costs
Transfer of reserve on share award
Deferred tax on items taken direct to reserves
Dividends paid

At 28 January 2017

At 25 January 2015

Profit for the year
Other comprehensive income

Total comprehensive income for the year

Company shares purchased for use by

employee benefit trusts

Proceeds on disposal of shares by employee

benefit trusts

Recognition of share-based payment costs
Transfer of reserve on share award
Deferred tax on items taken direct to reserves
Dividends paid

–
–

–

–
–
–
–
–

4.9

–
–

–

–
–
–
–
–

–
–

–

–
–
–
–
–

0.9

–
–

–

–
–
–
–
–

At 30 January 2016

4.9

0.9

–
–

–

–
0.9
(0.4)
(0.1)
–

1.8

2.3

–
–

–

–
0.5
(0.9)
(0.5)
–

1.4

A.G. BARR p.l.c. Annual Report and Accounts 2017

Accounts85

Company

2017
£m

2016
£m

Statements of Financial Position
as at 28 January 2017

Non-current assets
Intangible assets
Property, plant and equipment
Pension prepayments
Investment in subsidiary undertakings

Current assets
Inventories
Trade and other receivables
Derivative financial instruments
Assets classified as held for sale
Cash and cash equivalents

Total assets

Current liabilities
Loans and other borrowings
Trade and other payables
Derivative financial instruments
Provisions
Current tax liabilities

Non-current liabilities
Loans and other borrowings
Trade and other payables
Deferred tax liabilities
Retirement benefit obligations

Capital and reserves attributable to equity holders
Share capital
Share premium account
Share options reserve
Cash flow hedge reserve
Retained earnings

Total equity and liabilities

Note

Group

2017
£m

13
14
15
17

19
20
16
14
18

21
22
16
23

21
22
24
27

106.0
89.4
–
–

195.4

17.3
51.4
0.1
1.3
10.1

80.2

275.6

0.5
52.3
0.3
0.9
2.7

56.7

0.1
–
9.6
27.4

37.1

4.9
0.9
1.8
(0.2)
174.4

181.8

275.6

2016
£m

107.5
85.3
–
–

192.8

15.6
52.7
1.1
–
6.8

76.2

18.8
89.2
17.9
84.3

210.2

16.7
52.4
0.1
1.3
6.0

76.5

269.0

286.7

0.7
37.4
–
0.1
3.6

41.8

17.5
4.5
12.2
12.9

47.1

4.9
0.9
1.4
1.0
171.9

180.1

269.0

1.7
123.7
0.3
0.9
0.1

126.7

19.5
–
0.9
27.4

47.8

4.9
0.9
1.8
(0.2)
104.8

112.2

286.7

20.0
85.3
18.3
84.3

207.9

15.2
54.1
1.1
–
4.4

74.8

282.7

1.9
101.9
–
0.1
0.9

104.8

37.2
4.5
2.9
12.9

57.5

4.9
0.9
1.4
1.0
112.2

120.4

282.7

Company Number: SC005653
The financial statements on pages 81 to 128 were approved by the Board of directors and authorised for issue on 28 March 2017
and were signed on its behalf by:

Roger White
Chief Executive

Stuart Lorimer
Finance Director

A.G. BARR p.l.c. Annual Report and Accounts 2017

AccountsStrategic ReportCorporate Governance

Cash Flow Statements
for the year ended 28 January 2017

Note

8
8
14
13

Operating activities
Profit before tax
Adjustments for:
Interest receivable
Interest payable
Depreciation of property, plant and equipment
Amortisation of intangible assets
Share-based payment costs
Loss on sale of property, plant and equipment

Operating cash flows before movements in working capital

(Increase)/Decrease in inventories
Decrease in receivables
Increase/(Decrease) in payables
Difference between employer pension contributions and

amounts recognised in the income statement

Cash generated by operations

Tax on profit paid

Net cash from operating activities

Investing activities
Acquisition of subsidiary (net of cash acquired)
Acquisition of intangible assets
Purchase of property, plant and equipment
Proceeds on sale of property, plant and equipment
Interest received

Net cash used in investing activities

Financing activities
New loans received
Loans repaid
Bank arrangement fees paid
Movement in finance lease
Purchase of Company shares by employee benefit trusts
Proceeds from disposal of Company shares by employee

benefit trusts
Dividends paid
Interest paid

Net cash used in financing activities

Net increase/(decrease) in cash and cash equivalents

Cash and cash equivalents at beginning of year

Cash and cash equivalents at end of year

A.G. BARR p.l.c. Annual Report and Accounts 2017

Group

2017
£m

43.1

–
0.7
7.1
1.5
0.9
–

53.3

(1.7)
1.3
11.0

(7.9)

56.0

(7.2)

48.8

–
–
(12.4)
0.1
–

(12.3)

25.5
(43.0)
–
–
(1.0)

1.3
(15.6)
(0.2)

(33.0)

3.5

6.2

9.7

2016
£m

41.3

(0.1)
0.9
7.3
1.1
0.5
0.2

51.2

1.8
0.6
(16.8)

(0.7)

36.1

(6.8)

29.3

(15.7)
(4.8)
(14.7)
0.9
0.1

(34.2)

34.0
(31.5)
(0.1)
–
(5.1)

3.1
(14.3)
(0.3)

(14.2)

(19.1)

25.3

6.2

Company

2017
£m

31.0

(0.8)
1.5
7.1
1.2
0.9
–

40.9

(1.5)
1.7
18.3

(7.9)

51.5

(4.3)

47.2

–
–
(12.2)
0.1
0.8

(11.3)

25.5
(43.0)
–
(0.3)
(1.0)

1.3
(15.6)
(1.0)

(34.1)

1.8

3.8

5.6

2016
£m

28.1

(0.8)
1.7
7.3
0.8
0.5
0.2

37.8

–
0.1
(4.5)

(0.7)

32.7

(3.9)

28.8

(17.5)
(4.8)
(14.7)
1.4
0.1

(35.5)

34.0
(31.5)
(0.1)
0.8
(5.1)

3.1
(14.3)
(1.7)

(14.8)

(21.5)

25.3

3.8

AccountsNotes to the Accounts

1. Accounting policies
General information
A.G. BARR p.l.c. (“the Company”) and its subsidiaries (together “the Group”) manufacture, distribute and sell soft drinks.
The Group has manufacturing sites in the UK and sells mainly to customers in the UK with some international sales.

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 52 weeks ended 28 January 2017 (prior financial year 53 weeks ended 30 January 2016).

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”) as adopted by the European Union. 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 for the reasons set out in note 31.

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 page 94.

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.

Changes in accounting policy and disclosures
(a) New and amended standards adopted by the Group
The following revised IFRSs have been adopted in this consolidated financial information. The application of these revised IFRSs
has not had any material impact on the amounts reported for the current and prior periods.
– Disclosure Initiative – Amendments to IAS 1
– Clarification of Acceptable Methods of Depreciation and Amortisation (Amendments to IAS 16 and IAS 38)
– Annual Improvements to IFRSs 2012–2014 Cycle – IFRS 5, IFRS 7, IAS 19 and IAS 34

(b) New standards, amendments and interpretations issued but not effective for the financial year beginning 31 January 2016
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. Note this
list is limited to those standards which are expected to impact the Group.

International Accounting Standards and Interpretations

Disclosure Initiative – Amendments to IAS 7 Statement of Cash Flows
Recognition of Deferred Tax Assets for Unrealised Losses (Amendments to IAS 12)
Classification and Measurement of Share-based Payment Transactions (Amendments to IFRS 2)
IFRS 15 Revenue from Contracts with Customers
IFRS 16 Leases*
IFRS 9 Financial Instruments*

Standards not yet endorsed by the EU.

Financial year
beginning which
standard becomes
effective

29 January 2017
29 January 2017
28 January 2018
28 January 2018
27 January 2019
28 January 2018

Management have considered the potential impact of the implementation of IFRS 9, IFRS 15 and IFRS 16. It is expected that
neither IFRS 9 nor IFRS 15 will have a material impact on the consolidated financial statements of the Group.

A.G. BARR p.l.c. Annual Report and Accounts 2017

AccountsStrategic ReportCorporate Governance88

Notes to the Accounts continued

1. Accounting policies continued
Changes in accounting policy and disclosures continued
(b) New standards, amendments and interpretations issued but not effective for the financial year beginning 31 January 2016
and not adopted early continued
It is expected that IFRS 16 will materially affect the consolidated financial statements. As at the reporting date, the Group
has non-cancellable operating lease commitments of £9.8m (refer to note 25), the vast majority of which relate to production
equipment held at the Milton Keynes facility. Management have performed an analysis of these leases to assess the expected
impact of IFRS 16. If IFRS 16 was implemented in the year to 28 January 2017, its effect would be to increase the net book value
of property, plant and equipment by £9.6m, with a corresponding finance lease liability of £11.2m. The net impact on the income
statement for the year ended 28 January 2017 would be immaterial. To date, £6.6m of operating lease rentals have been
recognised in respect of the assessed leases. Under IFRS 16, £5.8m of depreciation would have been charged, plus a further
£1.7m of interest charges.

Consolidation – subsidiaries
Subsidiaries are entities controlled by the Company. The Company controls an entity when it is exposed to, 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 control ceases.

The Group applies the acquisition method to account for business combinations. The consideration transferred for the acquisition
of a subsidiary is the fair values of the assets transferred, the liabilities incurred to the former owners of the acquiree and the
equity interests issued by the Group (and for acquisitions prior to 1 July 2009 costs directly attributable to the acquisition).
Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at
their fair values at the acquisition date. Currently, there are no non-controlling interests in any of the entities within the Group.

Goodwill is initially measured as the excess of the aggregate of the consideration transferred and the fair value of non-controlling
interest over the net identifiable assets acquired less liabilities assumed. If this consideration is lower than the fair value of the
net assets of the subsidiary acquired, the difference is recognised as a credit in profit or loss.

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 the net invoiced sales value, after deducting promotional sales related discounts invoiced by customers, including
brand support costs, 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.

Revenue is recognised when the goods have passed to the buyer and the amount can be measured reliably. 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. Brand support accruals are included in the statement of financial position in respect
of these.

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 management committee
(as chief operating decision maker) include items directly attributable to a segment as well as those which can be allocated
on a consistent basis.

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.

A.G. BARR p.l.c. Annual Report and Accounts 2017

Accounts89

(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
and scale and is of such significance that separate disclosure is required for the financial statements to be properly understood.

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.

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 closing balance in the current year represents the carrying value of the customer relationships acquired during the
acquisitions of Groupe Rubicon Limited and Funkin Limited.

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 of 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 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.

A.G. BARR p.l.c. Annual Report and Accounts 2017

AccountsStrategic ReportCorporate Governance90

Notes to the Accounts continued

1. Accounting policies continued
Property, plant and equipment continued
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%
Computer hardware – 20%

The assets’ 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.

Leases
Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating
leases. The Group has two heritable properties held under operating leases. Payments made under operating leases (net of any
incentives received from the lessor) are charged to the income statement on a straight-line basis over the period of the lease.

Leases of property, plant and equipment where the Group has substantially all the risks and rewards of ownership are classified
as finance leases. Finance leases are capitalised at the lease’s commencement at the lower of the fair value of the leased
property and the present value of the minimum lease payments.

Each lease payment is allocated between the liability and finance charges. The corresponding rental obligations, net of finance
charges, are included in other long term payables. The interest element of 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. The property, plant and equipment acquired under finance leases is depreciated over the shorter of the useful life of the
asset and the lease term.

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 be recoverable.

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 pre-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.G. BARR p.l.c. Annual Report and Accounts 2017

Accounts91

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, trade and other receivables, cash and
cash equivalents, loans and borrowings, and trade payables.

Trade and other receivables
Trade and other receivables are recognised initially at fair value. Subsequent to initial recognition they are measured at
amortised cost using the effective interest method, less any impairment losses. A provision for impairment of trade receivables
is established when there is objective evidence that the Group will not be able to collect all amounts due according to the
original terms of the receivables. The amount of the provision is the difference between the asset’s carrying amount and the
estimated cash flows. The carrying amount of the asset is reduced through the use of a bad debt provision account and the
amount of the loss is recognised in the income statement within administration costs. When a trade receivable becomes
uncollectable it is written off against the bad debt provision.

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.

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. Bank overdrafts that are repayable on demand and form
an integral part of the Group’s cash management are included as a component of cash and cash equivalents for the purpose
only of the cash flow statement.

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
Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently remeasured
at their fair value. The gain or loss on re-measurement to fair value is recognised immediately in the income statement. However,
where derivatives qualify for hedge accounting, recognition of any resultant gain or loss depends on the nature of the item
being hedged.

At the inception of the transaction, the Group documents the relationship between hedging instruments and hedged items,
as well as its risk management objectives and strategy for undertaking various hedging transactions. The Group also
documents its assessment, both at hedge inception and on an ongoing basis, of whether the derivatives that are used in
hedging transactions are highly effective in offsetting changes in fair values or cash flows of hedged items.

The fair values of the derivative instruments used for hedging purposes are disclosed in note 16. Movements on the hedging
reserve in shareholders’ equity are shown in the statement of changes in equity. The full fair value of a hedging derivative is
classified as non-current when the remaining maturity of the hedged item is more than 12 months from the statement of
financial position date and as current when the remaining maturity of the hedged item is less than 12 months from the statement
of financial position date.

A.G. BARR p.l.c. Annual Report and Accounts 2017

AccountsStrategic ReportCorporate Governance92

Notes to the Accounts continued

1. Accounting policies continued
Cash flow hedges
The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges are
recognised in equity. 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 periods when the hedged item affects profit
or loss. The gain or loss relating to the effective portion of forward foreign currency contracts hedging overseas purchases is
recognised in equity. The gain or loss relating to the ineffective portion is recognised in the income statement within
administration costs. When a hedging instrument expires or is sold, or when a hedge no longer meets the criteria for hedge
accounting, any cumulative gain or loss existing in equity at that time remains in equity and is recognised within the income
statement when the forecast transaction is ultimately recognised in the income statement.

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 to equity.

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:
–
– differences relating to investments in subsidiaries to the extent that they will probably not reverse in the foreseeable future.

the initial recognition of goodwill; and

Where the carrying value of an asset is to be recovered through both use and subsequent disposal, a single tax base is
attributed to that asset resulting in a single temporary difference being recognised. 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 27. The schemes are generally funded through payments to
trustee-administered funds. The Group has both defined benefit and defined contribution plans.

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.

A.G. BARR p.l.c. Annual Report and Accounts 2017

Accounts93

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 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. Refer to note 27.

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.

The Group recognises a provision where there is a contractual obligation or where there is a past practice that has created a
constructive obligation.

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.

A.G. BARR p.l.c. Annual Report and Accounts 2017

AccountsStrategic ReportCorporate Governance94

Notes to the Accounts continued

1. Accounting policies continued
Key judgements and sources of estimation uncertainty
The preparation of financial statements requires management to make judgements, estimates and assumptions 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 principal estimates and judgements that have a significant effect on the carrying amounts of assets and liabilities are
discussed below:

Valuation of inventory judgement
Inventory is a significant balance in the consolidated statement of financial position. The Group purchases commodities for use
in the manufacture of soft drinks and these purchases are subject to price volatility. As the Group uses standard costing to value
its inventory, management review price variances arising from the purchases of commodities to ensure that the closing
inventory correctly reflects the costs incurred in bringing the inventory to its current state and location.

Carrying value of brand support accruals judgement and estimation uncertainty
The Group incurs significant costs in the support and development of the Group’s brands. Judgement is required in determining
the level of closing accrual required at a year end for promotions and brand support campaigns that either span two financial
years or where the costs have not been fully settled by the year end date. This includes sales related discounts which are
included within revenue as disclosed in the revenue recognition policy above. At 28 January 2017 the closing brand support
accrual was £14.7m (30 January 2016: £13.0m).

In addition the following area of judgement had an effect on the carrying value of assets and liabilities:

Retirement benefit obligations estimation uncertainty
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.

2. Segment reporting
The Group’s management committee has been identified as the chief operating decision maker. The management committee
reviews the Group’s internal reporting in order to assess performance and allocate resources. The management committee has
determined the operating segments based on these reports.

The management committee considers the business from a product perspective. This has led to the operating segments
identified in the table below: there has been no change to the segments during the year (after aggregation). The performance
of the operating segments is assessed by reference to their gross profit before exceptional items.

The operating segments disclosed have been aggregated by the nature of the products and the production processes that they
share in addition to similar long-term average gross margins for the operating segments.

Year ended 28 January 2017

Total revenue
Gross profit before exceptional items

Year ended 30 January 2016

Total revenue
Gross profit

There are no intersegment sales. All revenue is from external customers.

A.G. BARR p.l.c. Annual Report and Accounts 2017

Carbonates
£m

Still drinks
and water
£m

188.3
97.3

56.0
17.0

Carbonates
£m

Still drinks
and water
£m

189.7
98.6

57.1
16.9

Other
£m

12.8
6.4

Other
£m

11.8
5.6

Total
£m

257.1
120.7

Total
£m

258.6
121.1

Accounts95

“Other” segments represent income from the sale of Funkin cocktail solutions, the sale of ice cream and other soft drink
related items.

The gross profit from the segment reporting is stated before exceptional costs. There are no exceptional costs included within
gross profit for either year presented.

The gross profit from the segment reporting is reconciled to the total profit before income tax, as shown in the consolidated
income statement.

All of the assets and liabilities of the Group are managed by the management committee 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 periods presented.

All of the segments included within “Carbonates” and “Still drinks and water” meet the aggregation criteria set out in IFRS 8
Operating Segments.

Geographical information
The Group operates predominately in the UK with some worldwide sales. All of the operations of the Group are based in the UK.

Revenue

UK
Rest of the world

The Rest of the world revenue includes sales to Ireland and wholesale export houses.

All of the assets of the Group are located in the UK.

Major customers
No single customer accounted for 10% or more of the Group’s revenue in either of the years presented.

3. Profit before tax
The following items have been included in arriving at profit before tax:

Depreciation of property, plant and equipment
Loss on disposal of property, plant and equipment
Research and development costs
Impairment of inventories
Amortisation of intangible assets
Cost of inventories charged in cost of sales
Operating lease rentals payable – property
Operating lease rentals payable – motor vehicles
Operating lease rentals payable – plant
Trade receivables impairment movement
Acquisition costs (note 12)
Share-based payment costs

2017
£m

246.6
10.5

257.1

2016
£m

249.4
9.2

258.6

2017
£m

7.1
–
1.1
0.6
1.5
136.4
0.4
1.1
2.0
(0.2)
–
0.9

2016
£m

7.3
0.2
1.1
0.4
1.1
137.5
0.4
1.1
1.8
(0.4)
0.7
0.5

A.G. BARR p.l.c. Annual Report and Accounts 2017

AccountsStrategic ReportCorporate Governance96

Notes to the Accounts continued

3. Profit before tax continued
Included within administration costs (note 6) is the auditor’s remuneration, including expenses for audit and non-audit services.
The cost includes services from the Company’s auditor and its associates:

Statutory audit services
Fees payable to the auditor of the parent Company and consolidated accounts
Fees payable to the auditor for other services:
Audit of the Company’s subsidiaries pursuant to legislation

Non-audit services
Audit related assurance services
Other assurance services
Pension advisory services
Tax compliance services
Tax advisory services

Fees in respect of the Group’s pension plans

Audit

4. Employees and directors

Average monthly number of people employed by the Group (including executive directors)
Production and distribution
Administration

Staff costs for the Group for the year

Wages and salaries
Social security costs
Share-based payments
Pension costs – defined contribution plans
Pension costs – defined benefit plans
Redundancy payments

5. Other income

2017

Exceptional
items
£m

Adjusted
£m

2017
£000

2016
£000

21
152
–
68
15

20
97
–
22
22

2017

2016

743
258

1,001

2017
£m

36.3
3.8
0.9
3.1
(4.8)
1.9

41.2

Total
£m

745
287

1,032

2016
£m

37.9
4.0
0.5
2.8
2.4
–

47.6

2016

Total
£m

–

Compensation received in respect of termination of

distribution contract

0.7

–

0.7

Compensation of £0.7m was received by the Group during the year from a third party distributor who terminated their
distribution arrangement before the contract was set to end.

A.G. BARR p.l.c. Annual Report and Accounts 2017

Accounts2017

Exceptional
items
£m

2.3
(3.0)

(0.7)

Adjusted
£m

57.6
20.7

78.3

6. Net operating expenses before exceptional items

Distribution costs (including selling costs)
Administration costs

7. Exceptional items

Abortive acquisition costs
Investigation of online sales capabilities
Redundancy costs – reorganisation of direct sales routes
Redundancy costs for business reorganisation
Other costs relating to business reorganisation
Curtailment gain on closure of pension scheme to future accrual
Other costs relating to pension scheme closure to future accrual

Total exceptional net credit

Items included in selling and distribution costs
Redundancy costs – reorganisation of direct sales routes
Costs relating to closure of pension scheme to future accrual
Redundancy costs for business reorganisation
Other costs relating to business reorganisation

Total included in selling and distribution costs

Items included in administration costs
Abortive acquisition costs
Investigation of online sales capabilities
Curtailment gain
Other costs relating to pension scheme closure to future accrual
Redundancy costs for business reorganisation
Other costs relating to business reorganisation

Total included in administration costs

Total exceptional net credit

2016

Total
£m

59.9
17.7

77.6

2017
£m

0.4
0.5
0.6
2.7
0.6
(7.0)
1.5

(0.7)

2017
£m

0.6
0.2
1.2
0.3

2.3

0.4
0.5
(7.0)
1.3
1.5
0.3

(3.0)

(0.7)

Total
£m

57.3
21.7

79.0

2016
£m

–
–
–
–
–
–
–

–

2016
£m

–
–
–
–

–

–
–
–
–
–
–

–

During the period, £0.4m of acquisition fees were incurred in relation to an unsuccessful acquisition. These costs included
advisory and legal fees.

£0.5m of advisory costs have been incurred as part of a strategic review of the market threats posed by new and emerging
digital trading models.

£0.6m of redundancy costs have been incurred, arising from a reorganisation of direct sales routes that was completed in the
six months ended 30 July 2016. A further £2.7m of redundancy costs were incurred in the six months ended 28 January 2017,
following the announcement of a Company restructuring in September 2016.

A.G. BARR p.l.c. Annual Report and Accounts 2017

AccountsStrategic ReportCorporate Governance98

Notes to the Accounts continued

7. Exceptional items continued
Following the announcement of the business restructuring and reorganisation, a further £0.6m of costs were incurred, being
mainly recruitment costs, accrual for unpaid holiday entitlement, business development consultancy fees, legal fees and
termination costs for employee vehicles and mobile phone contracts.

The Group’s defined benefit pension scheme closed to future accrual in May 2016. This resulted in a £7.0m curtailment gain.
Offsetting the curtailment gain is a further £1.5m of costs incurred in relation to the closure of the defined benefit pension
scheme. This includes the cost of £1.3m past service cost for one year’s additional service negotiated with the active members
of the scheme and £0.2m of further costs relating to the closure of the scheme to future accrual.

8. Finance income and finance costs
Finance income

Interest receivable

Finance costs

Interest payable
Finance costs relating to defined benefit pension plans (note 27)
Amortisation of loan arrangement fees

9. Taxation

Group

Current tax
Current tax on profits for the year
Adjustments in respect of prior years

Total current tax expense/(credit)

Deferred tax
Origination and reversal of:
Temporary differences
Adjustment for change in deferred tax rate
Adjustments in respect of prior years

Total deferred tax (credit)/expense (note 24)

Total tax expense

2017
£m

–

2017
£m

(0.1)
(0.5)
(0.1)

(0.7)

Total
£m

7.7
(0.4)

7.3

1.2
(0.9)
(0.1)

0.2

7.5

2016
£m

0.1

2016
£m

(0.1)
(0.7)
(0.1)

(0.9)

2016

Total
£m

9.0
(0.7)

8.3

0.3
(1.6)
–

(1.3)

7.0

2017

Exceptional
items
£m

Adjusted
£m

8.6
(0.4)

8.2

0.2
(0.9)
(0.1)

(0.8)

7.4

(0.9)
–

(0.9)

1.0
–
–

1.0

0.1

In addition to the above movements in deferred tax, a deferred tax credit of £2.9m (2016: charge of £2.8m) has been recognised
in other comprehensive income and a charge of £0.1m (2016: a charge of £0.5m) has been taken direct to reserves (note 24).

A current tax credit of £1.0m (2016: a credit of £1.3m) has been recognised in other comprehensive income.

A.G. BARR p.l.c. Annual Report and Accounts 2017

Accounts99

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:

Profit before tax

Tax at 20.0% (2016: 20.2%)
Tax effects of:
Items that are not deductible in determining taxable profit
Current tax adjustment in respect of prior years
Deferred tax adjustment in respect of prior years
Deferred tax adjustment in respect of change of deferred tax rate

Total tax expense

The weighted average tax rate was 17.4% (2016: 17.1%).

2017
£m

43.1

8.6

0.3
(0.4)
(0.1)
(0.9)

7.5

2017
%

20.0

0.7
(0.9)
(0.2)
(2.1)

17.4

2016
£m

41.3

8.3

1.0
(0.7)
–
(1.6)

7.0

2016
%

20.2

2.4
(1.7)
–
(3.9)

17.1

The Chancellor announced in his Autumn Budget on 23 November 2016 that the main rate of corporation tax will be reduced to
19% from 1 April 2017 and 17% from 1 April 2020 and the future charges will reduce accordingly. Finance No.2 Bill 2016 became
substantively enacted on 23 November 2016. The deferred tax liability at 28 January 2017 has therefore been calculated having
regard to the rate of 17% substantively enacted at the balance sheet date.

10 . Earnings per share
Basic earnings per share have 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.

Profit attributable to equity holders of the Company (£m)
Weighted average number of ordinary shares in issue

Basic earnings per share (pence)

2017

2016

35.6
115,664,757

34.3
115,714,487

30.78

29.63

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 calculated as above is
compared with the number of shares that would have been issued assuming the exercise of the share options.

Profit attributable to equity holders of the Company (£m)

Weighted average number of ordinary shares in issue
Adjustment for dilutive effect of share options

Diluted weighted average number of ordinary shares in issue

Diluted earnings per share (pence)

2017

2016

35.6

34.3

115,664,757
781,074

115,714,487
505,871

116,445,831

116,220,358

30.57

29.51

A.G. BARR p.l.c. Annual Report and Accounts 2017

AccountsStrategic ReportCorporate Governance100

Notes to the Accounts continued

10. Earnings per share continued
The underlying EPS figure is calculated by using Profit attributable to equity holders before exceptional items:

Profit attributable to equity holders of the Company before exceptional items (£m)
Weighted average number of ordinary shares in issue

Underlying earnings per share (pence)

2017

2016

35.0
115,664,757

34.3
115,714,487

30.26

29.63

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.

11. Dividends

Final dividend
Interim dividend

2017
per share

2016
per share

9.97p
3.53p

13.50p

9.01p
3.36p

12.37p

2017
£m

11.5
4.1

15.6

2016
£m

10.4
3.9

14.3

The directors have proposed a final dividend in respect of the year ended 28 January 2017 of 10.87p per share, amounting to a
dividend of £12.7m. It will be paid on 9 June 2017 to all shareholders who are on the Register of Members on 12 May 2017.

Dividends payable in respect of the financial year were as follows:

Final dividend proposed in respect of financial year
Interim dividend paid

2017
per share

2016
per share

10.87p
3.53p

14.40p

9.97p
3.36p

13.33p

12. Acquisition of subsidiary
On 2 February 2015, the Group acquired 100% of the share capital of Funkin Limited (“Funkin”), a company which offers a broad
range of premium cocktail solutions including fruit purées, cocktail mixers and syrups.

Consideration transferred
The following table summarises the acquisition-date fair value of each major class of consideration transferred:

Cash paid in the year ended 30 January 2016
Contingent consideration payable in the year ending 27 January 2018

Total consideration

£m

17.5
4.5

22.0

The fair value of the contingent consideration arrangement of £4.5m was estimated by assessing the expected growth
of Funkin over the two years trading post acquisition. No discount rate has been applied to the fair value estimate of the
contingent consideration due to the short time period the effect of discounting has a negligible effect on the fair value.

Management believe that Funkin has achieved the financial targets and that the contingent consideration of £4.5m will be paid
to the former owners before 29 July 2017. This will be subject to the audit of the Funkin statutory accounts for the year ended
31 January 2017, and completion of the necessary legal documentation relating to the acquisition.

A.G. BARR p.l.c. Annual Report and Accounts 2017

Accounts101

13. Intangible assets

Group

Cost
At 25 January 2015
Acquisitions through business combinations
Acquisitions

At 30 January 2016

At 30 January 2016
Acquisitions

At 28 January 2017

Amortisation and impairment losses
At 25 January 2015
Amortisation for the year

At 30 January 2016
Amortisation for the year

At 28 January 2017

Carrying amounts
At 28 January 2017

At 30 January 2016

Goodwill
£m

Brands
£m

Customer
relationships
£m

Water
rights
£m

Software
development
costs
£m

23.3
15.7
–

39.0

39.0
–

39.0

0.4
–

0.4

38.6

50.3
6.8
–

57.1

57.1
–

57.1

0.3
–

0.3

56.8

3.5
0.4
–

3.9

3.9
–

3.9

2.6
0.3

2.9
0.3

3.2

0.7

1.0

0.7
–
–

0.7

0.7
–

0.7

0.7
–

0.7

–

7.1
–
4.8

11.9

11.9
–

11.9

–
0.8

0.8
1.2

2.0

9.9

11.1

Total
£m

84.9
22.9
4.8

112.6

112.6
–

112.6

4.0
1.1

5.1
1.5

6.6

106.0

107.5

The acquisitions through business combinations for the year to 30 January 2016 represent the goodwill, brands and customer
relationships obtained in the acquisition of Funkin Limited.

Software development costs were incurred in the year to 30 January 2016, which represented internally generated software
development costs and third party consultancy costs incurred in relation to the Business Process Redesign project. This project
introduced a more effective, modern and robust Enterprise Resource Planning software. This project was completed during the
year to 30 January 2016.

The opening customer relationships balance represents intangible assets recognised on the acquisition of the Strathmore Water
business and Groupe Rubicon Limited. The amortisation charge represents the spreading of the cost over the assets’ expected
useful lives: the Strathmore customer relationships are fully amortised. The Rubicon asset has two years remaining and the
Funkin asset has eight years remaining.

These periods have been reviewed at the statement of financial position date and remain appropriate.

The amortisation costs for the year ended 28 January 2017 have been included in the income statement as administration costs.

A.G. BARR p.l.c. Annual Report and Accounts 2017

AccountsStrategic ReportCorporate Governance102

Notes to the Accounts continued

13. Intangible assets continued

Company

Cost
At 25 January 2015
Acquisitions

At 30 January 2016

At 28 January 2017

Amortisation and impairment losses
At 25 January 2015
Amortisation for the year

At 30 January 2016
Amortisation for the year

At 28 January 2017

Carrying amounts
At 28 January 2017

At 30 January 2016

Goodwill
£m

Brands
£m

Customer
relationships
£m

Water
rights
£m

Software
development
costs
£m

1.9
–

1.9

–
–

–

1.9

7.3
–

7.3

0.3
–

0.3

7.0

1.0
–

1.0

1.0
–

1.0

–

0.7
–

0.7

0.7
–

0.7

–

7.1
4.8

11.9

–
0.8

0.8
1.2

2.0

9.9

11.1

Total
£m

18.0
4.8

22.8

2.0
0.8

2.8
1.2

4.0

18.8

20.0

All intangible assets noted above were either recognised on the acquisition of the Strathmore Water business or represent
internally generated software development costs and third party consultancy costs incurred in relation to the Business Process
Redesign project.

At 28 January 2017, the Group and the Company had entered into contractual commitments for the acquisition of intangible
assets amounting to £nil (2016: £nil).

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 aggregate carrying amounts of goodwill allocated to each CGU are:

At 28 January 2017

Rubicon operating unit
Funkin operating unit
Strathmore operating unit

Total

Goodwill
£m

Brands
£m

Customer
relationships
£m

21.0
15.7
1.9

38.6

43.0
6.8
7.0

56.8

0.4
0.3
–

0.7

Total
£m

64.4
22.8
8.9

96.1

A.G. BARR p.l.c. Annual Report and Accounts 2017

Accounts103

At 30 January 2016

Rubicon operating unit
Funkin operating unit
Strathmore operating unit

Total

Goodwill
£m

Brands
£m

Customer
relationships
£m

21.0
15.7
1.9

38.6

43.0
6.8
7.0

56.8

0.7
0.3
–

1.0

Total
£m

64.7
22.8
8.9

96.4

The recoverable amount of a CGU is determined based on value in use calculations. These calculations use pre-tax cash flow
projections based on financial budgets approved by management which cover a three year period. Cash flows beyond the three
years are extrapolated using the growth rates and other key assumptions as stated below:

Key assumptions

Rubicon operating unit
Funkin operating unit
Strathmore operating unit

2017

2016

Gross margin
%

Growth rate
%

Discount rate
%

Gross margin
%

Growth rate
%

Discount rate
%

30.2
48.5
37.3

2.25
2.25
2.25

10.25
10.25
10.25

38.5
52.4
30.2

2.25
2.25
2.25

11.00
11.00
11.00

The budgeted gross margin is based on past performance and management's expectation of market development. The
weighted average growth rates used are consistent with the forecasts included in industry reports. The discount rates used
are pre-tax.

The discount rate reflects management's estimate of pre-tax cost of capital adjusted for the specific risks impacting on each
operating unit. The estimated pre-tax cost of capital is a benchmark for the Group provided by an independent third party.

Advertising and promotional costs are included in the analysis, using latest annual budgets for the year to 27 January 2018
and projected costs thereafter.

Sensitivity analysis was carried out on the above calculations to review possible levels of impairment after adjusting discount
rates. At a pre-tax rate of 15%, none of the CGUs were impaired. Whilst cash flow projections used within the impairment
reviews are subject to inherent uncertainty, changes within reason to the key assumptions applied in assessing the value
in use calculation would not result in a change in the impairment conclusions reached.

A.G. BARR p.l.c. Annual Report and Accounts 2017

AccountsStrategic ReportCorporate Governance104

Notes to the Accounts continued

14. Property, plant and equipment

Group

Cost or deemed cost
At 25 January 2015
Additions
Transfer from assets under construction
Disposals

At 30 January 2016

Additions
Transfer from assets under construction
Disposals
Reclassified as held for sale

Land and buildings

Freehold
£m

Long
leasehold
£m

Plant,
equipment
and vehicles
£m

Assets under
construction
£m

55.1
5.8
0.5
(2.4)

59.0

0.8
4.5
–
(2.0)

0.5
–
–
(0.1)

0.4

–
–
–
–

76.1
3.8
5.2
(2.0)

83.1

4.1
5.0
(1.3)
–

Total
£m

138.4
14.1
–
(4.5)

6.7
4.5
(5.7)
–

5.5

148.0

7.7
(9.5)
–
–

12.6
–
(1.3)
(2.0)

At 28 January 2017

62.3

0.4

90.9

3.7

157.3

Depreciation
At 25 January 2015
Amount charged for year
Disposals

At 30 January 2016

Amount charged for year
Disposals
On assets reclassified as held for sale

5.7
1.0
(1.3)

5.4

0.6
–
(0.7)

0.5
–
(0.1)

0.4

–
–
–

52.6
6.3
(2.0)

56.9

6.5
(1.2)
–

At 28 January 2017

5.3

0.4

62.2

Net book value

As at 28 January 2017

As at 30 January 2016

57.0

53.6

–

28.7

26.2

–
–
–

–

–
–
–

–

3.7

5.5

58.8
7.3
(3.4)

62.7

7.1
(1.2)
(0.7)

67.9

89.4

85.3

The Walthamstow distribution site has been classified as held for sale at 28 January 2017. The site was sold on 1 February 2017
for £3.8m. The Group has entered into a 3 year operating lease to continue to operate from the site for the short term. The cost
and accumulated depreciation in relation to the asset is detailed below:

Cost
Accumulated depreciation

Net book value

A.G. BARR p.l.c. Annual Report and Accounts 2017

2017
£m

2.0
(0.7)

1.3

AccountsProperty, plant and equipment includes the following amounts where the Group and Company is a lessee under a finance lease:

105

Cost-capitalised finance lease
Accumulated depreciation

Net book value

Company

Cost or deemed cost
At 25 January 2015
Additions
Transfer from assets under construction
Transfer of assets from other Group companies
Disposals

At 30 January 2016

Additions
Transfer from assets under construction
Disposals
Reclassified as held for sale

2017
£m

0.3
(0.1)

0.2

Land and buildings

Freehold
£m

Long
leasehold
£m

Plant,
equipment and
vehicles
£m

Assets under
construction
£m

54.7
5.8
0.5
0.1
(2.4)

58.7

0.8
4.5
–
(2.0)

0.4
–
–
–
(0.1)

0.3

–
–
–
–

74.5
3.8
5.2
0.8
(2.0)

6.7
4.5
(5.7)
–
–

82.3

5.5

146.8

3.8
5.0
(0.8)
–

7.7
(9.5)
–
–

12.3
–
(0.8)
(2.0)

2016
£m

0.2
–

0.2

Total
£m

136.3
14.1
–
0.9
(4.5)

At 28 January 2017

62.0

0.3

90.3

3.7

156.3

Depreciation
At 25 January 2015
Amount charged for year
Disposals

At 30 January 2016

Amount charged for year
Disposals
On assets reclassified as held for sale

5.4
1.0
(1.3)

5.1

0.6
–
(0.7)

0.4
–
(0.1)

0.3

–
–
–

51.3
6.3
(1.5)

56.1

6.5
(0.8)
–

At 28 January 2017

5.0

0.3

61.8

Net book value

As at 28 January 2017

As at 30 January 2016

57.0

53.6

–

28.5

26.2

–
–
–

–

–
–
–

–

3.7

5.5

57.1
7.3
(2.9)

61.5

7.1
(0.8)
(0.7)

67.1

89.2

85.3

At 28 January 2017, the Group and the Company had entered into contractual commitments for the acquisition of property,
plant and equipment amounting to £6.0m (2016: £6.1m).

A.G. BARR p.l.c. Annual Report and Accounts 2017

AccountsStrategic ReportCorporate Governance106

Notes to the Accounts continued

14. Property, plant and equipment continued
Property, plant and equipment includes the following amounts where the Group and Company is a lessee under a finance lease:

Cost-capitalised finance lease
Accumulated depreciation

Net book value

2017
£m

23.5
(3.1)

20.4

2016
£m

23.3
(2.7)

20.6

15. Pension prepayment
The Company established the A.G. BARR p.l.c. (2008) Scottish Limited Partnership (“the Partnership”) in the year to 26 January
2014 and through the Partnership has entered into a long term pension funding arrangement with the A.G. BARR p.l.c. (2008)
Pension and Life Assurance Scheme.

Non-current
Current

Prepayment of pension contributions

Company

2017
£m

17.9
1.2

19.1

2016
£m

18.3
1.2

19.5

The element of the prepayment classified as current is included within the prepayments figure of £4.1m (2016: £3.8m), as set out
in note 20.

The Partnership is controlled by A.G. BARR p.l.c. and its results are consolidated by the Group.

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 in note 27, 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 the profits of 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 continued 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 this is treated as a prepayment of pension contributions. Further information on the asset backed
funding arrangement is included within note 27. As the Partnership results are consolidated within the Group results no
prepayment is recognised in the consolidated statement of financial position.

A.G. BARR p.l.c. Annual Report and Accounts 2017

Accounts107

16. Derivative financial instruments
Group and Company
Fair value hierarchy
IFRS 7 requires all financial instruments carried at fair value to be analysed under the following levels:
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, including their levels in
the fair value hierarchy. 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 fair value.

Group
At 28 January 2017

Financial assets not measured at fair value
Foreign exchange contracts used for hedging
Trade receivables
Cash and cash equivalents

Financial liabilities measured at fair value

Contingent consideration (note 12)

Financial liabilities not measured at fair value
Foreign exchange contracts used for hedging
Finance lease liabilities
Unsecured bank borrowings
Trade payables

Carrying amount

Fair value

Fair value –
hedging
instruments
£m

Loans and
receivables
£m

Other financial
liabilities at
amortised cost
£m

Total
£m

Level 2
£m

0.1
–
–

0.1

–

0.3
–
–
–

0.3

–
48.3
10.1

58.4

–

–
–
–
–

–

–
–
–

–

4.5

–
0.2
0.4
15.8

16.4

0.1
48.3
10.1

58.5

4.5

0.3
0.2
0.4
15.8

16.7

0.1
48.3
10.1

58.5

4.5

0.3
0.2
0.4
15.8

16.7

A.G. BARR p.l.c. Annual Report and Accounts 2017

AccountsStrategic ReportCorporate Governance
108

Notes to the Accounts continued

16. Derivative financial instruments continued
Group and Company continued

Group
At 30 January 2016

Financial assets not measured at fair value
Foreign exchange contracts used for hedging
Trade receivables
Cash and cash equivalents

Financial liabilities measured at fair value
Contingent consideration (note 12)

Financial liabilities not measured at fair value
Finance lease liabilities
Unsecured bank borrowings
Trade payables

Company
At 28 January 2017

Financial assets not measured at fair value
Foreign exchange contracts used for hedging
Trade and other receivables and amounts due from

subsidiary companies
Cash and cash equivalents

Financial liabilities measured at fair value
Contingent consideration (note 12)

Financial liabilities not measured at fair value
Foreign exchange contracts used for hedging
Unsecured bank borrowings
Finance lease liabilities
Trade payables and amounts due to other subsidiary

companies

Carrying amount

Fair value

Fair value –
hedging
instruments
£m

Loans and
receivables
£m

Other financial
liabilities at
amortised cost
£m

Total
£m

Level 2
£m

1.1
–
–

1.1

–

–
–
–

–

–
50.0
6.8

56.8

–

–
–
–

–

–
–
–

–

4.5

0.2
18.0
8.4

26.6

1.1
50.0
6.8

57.9

4.5

0.2
18.0
8.4

26.6

1.1
50.0
6.8

57.9

4.5

0.2
18.0
8.4

26.6

Carrying amount

Fair value

Fair value –
hedging
instruments
£m

Loans and
receivables
£m

Other financial
liabilities at
amortised cost
£m

Total
£m

Level 2
£m

0.1

–
–

0.1

–

0.3
–
–

–

0.3

–

48.3
6.0

54.3

–

–
–
–

–

–
–

–

4.5

–
0.4
20.8

88.4

109.6

0.1

48.3
6.0

54.4

4.5

0.3
0.4
20.8

88.4

109.9

0.1

48.3
6.0

54.4

4.5

0.3
0.4
20.8

88.4

109.9

A.G. BARR p.l.c. Annual Report and Accounts 2017

Accounts109

Company
At 30 January 2016

Financial assets not measured at fair value
Foreign exchange contracts used for hedging
Trade and other receivables and amounts due from

subsidiary companies
Cash and cash equivalents

Financial liabilities measured at fair value
Contingent consideration (note 12)

Financial liabilities not measured at fair value
Unsecured bank borrowings
Finance lease liabilities
Trade payables and amounts due to other subsidiary

companies

Carrying amount

Fair value

Fair value –
hedging
instruments
£m

Loans and
receivables
£m

Other financial
liabilities at
amortised cost
£m

Total
£m

Level 2
£m

1.1

–
–

1.1

–

–
–

–

50.3
4.4

54.7

–

–
–

–

–
–

–

4.5

18.0
21.1

73.6

112.7

1.1

50.3
4.4

55.8

4.5

18.0
21.1

73.6

112.7

1.1

50.3
4.4

55.8

4.5

18.0
19.7

73.6

111.3

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.

For the current borrowings, the impact of discounting is not significant as the borrowings will be paid within 12 months of the
year end date. The carrying amount approximates their fair value.

The fair value of the non-current borrowings is based on cash flows discounted using the current variable interest rate charged
on the borrowings of 1.5%, a discount rate of 1.5% and are within level 2 of the fair value hierarchy.

Contingent consideration
The Group has agreed to pay the former owners of Funkin a contingent consideration based on the achievement of certain
financial targets by Funkin in the two years from the date of its acquisition by the Group. The potential undiscounted amount
of all future payments that the Group could make under the acquisition agreement is between £nil and £4.5m.

The fair value of the contingent consideration arrangement of £4.5m was estimated by assessing the expected growth
of Funkin over the two years trading post acquisition. No discount rate has been applied to the fair value estimate of the
contingent consideration as due to the short time period the effect of discounting has a negligible effect on the fair value.

The Group expects to make a payment of £4.5m within 6 months of the year ended 28 January 2017 (note 12).

A.G. BARR p.l.c. Annual Report and Accounts 2017

AccountsStrategic ReportCorporate Governance110

Notes to the Accounts continued

17. Investment in subsidiaries

Opening investment in subsidiaries
Investment in year

Closing investment in subsidiaries

2017
£m

84.3
–

84.3

2016
£m

62.3
22.0

84.3

During the year the following dormant subsidiary companies were dissolved:

Hampshire Mineral Water Company Limited
Barr Leasing Limited
Rubicon Beverages Limited
Rubicon Products Limited
St Clements (UK) Limited
Funkin France Limited

The investment made by the Company in the year to 30 January 2016 was in relation to the acquisition of Funkin Limited.

The carrying value of the investment represents the fair value of the consideration paid at the date the investments
were acquired.

The principal subsidiaries are as follows:

Principal subsidiary

Principal activity

Funkin Limited
Funkin USA Limited
Rubicon Drinks Limited

Distribution and selling of cocktail solutions
Distribution and selling of cocktail solutions
Manufacture, distribution and selling of soft drinks

Country of
incorporation

England
England
England

Country of
principal
operations

UK
USA
UK

A.G. BARR p.l.c. holds 100% of the equity and votes of the subsidiaries. The subsidiaries have the same year end as A.G. BARR
p.l.c. 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.

18. Cash and cash equivalents

Cash and cash equivalents

Group

Company

2017
£m

10.1

2016
£m

6.8

2017
£m

6.0

Cash and cash equivalents include the following for the purposes of the cash flow statements:

Cash and cash equivalents
Bank overdrafts (note 21)

Group

Company

2017
£m

10.1
(0.4)

9.7

2016
£m

6.8
(0.6)

6.2

2017
£m

6.0
(0.4)

5.6

2016
£m

4.4

2016
£m

4.4
(0.6)

3.8

The credit quality of the holder of the Cash at bank is A3 rated (2016: AA(-) rated).

A.G. BARR p.l.c. Annual Report and Accounts 2017

Accounts19. Inventories

Materials
Finished goods

20. Trade and other receivables

Trade receivables
Less: provision for impairment of receivables

Trade receivables – net
Prepayments
Amounts due by subsidiary companies

111

Group

Company

2017
£m

7.1
10.2

17.3

2016
£m

4.8
10.8

15.6

2017
£m

7.1
9.6

16.7

Group

Company

2017
£m

48.7
(0.4)

48.3
3.1
–

51.4

2016
£m

50.6
(0.6)

50.0
2.7
–

52.7

2017
£m

46.9
(0.3)

46.6
4.1
1.7

52.4

2016
£m

4.7
10.5

15.2

2016
£m

49.2
(0.6)

48.6
3.8
1.7

54.1

The fair values of the trade and other receivables are taken to be their book values less any provision for impairment, as there
are no interest bearing receivables. The amounts due from subsidiary companies are considered to be fully recoverable.

The Group’s and Company’s most significant customer, a UK major customer, accounts for £6.1m of the trade receivables
carrying amount at 28 January 2017 (30 January 2016: £7.3m).

The ageing of the Group and Company’s trade receivables and their related impairment at the reporting date was:

Group

Not past due
Past due 1 to 30 days
Past due 31 to 60 days
Past due 61+ days

Total

Company

Not past due
Past due 1 to 30 days
Past due 31 to 60 days
Past due 61+ days

Total

Trade receivables overdue in excess of 30 days

Gross
2017
£m

43.2
3.6
0.6
1.3

48.7

Gross
2017
£m

42.4
2.8
0.4
1.3

46.9

Impairment
2017
£m

–
(0.1)
(0.2)
(0.1)

(0.4)

Impairment
2017
£m

–
(0.1)
(0.1)
(0.1)

(0.3)

Gross
2016
£m

44.9
3.4
0.3
2.0

50.6

Gross
2016
£m

44.4
2.7
0.3
1.8

49.2

Group

Company

2017

3.9%

2016

4.6%

2017

3.6%

Impairment
2016
£m

(0.1)
(0.1)
(0.1)
(0.3)

(0.6)

Impairment
2016
£m

(0.1)
(0.1)
(0.1)
(0.3)

(0.6)

2016

4.4%

A.G. BARR p.l.c. Annual Report and Accounts 2017

AccountsStrategic ReportCorporate Governance112

Notes to the Accounts continued

20. Trade and other receivables continued
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:

Major customers
Direct to store customers

Total

Group

Company

2017
£m

46.1
2.6

48.7

2016
£m

48.6
2.0

50.6

2017
£m

44.3
2.6

46.9

2016
£m

47.2
2.0

49.2

The carrying amount of the Group and Company’s external trade and other receivables are denominated in the following currencies:

UK Sterling
Euro

Group

Company

2017
£m

50.7
0.7

51.4

2016
£m

51.7
1.0

52.7

2017
£m

50.0
0.7

50.7

Movements in the Group and Company’s provisions for impairment of trade receivables were as follows:

Group and Company

At start of year
Net provision released during the year

At end of year

Group

Company

2017
£m

0.6
(0.2)

0.4

2016
£m

1.0
(0.4)

0.6

2017
£m

0.6
(0.3)

0.3

2016
£m

51.4
1.0

52.4

2016
£m

1.0
(0.4)

0.6

The provision allowance in respect of trade receivables is used to record impairment losses unless the Group and Company are
satisfied that no recovery of the amount owing is possible. At that point, the amounts are considered irrecoverable and are
written off against the trade receivable directly, with a corresponding charge being recorded in administration costs. Where
trade receivables are past due, an assessment is made of individual customers and the outstanding balance. No provision is
required in respect of amounts owed by subsidiary companies.

The creation and release of the trade receivables provision has been included within administration costs in the income statement.

The other classes within trade and other receivables do not contain impaired assets.

21. Borrowings

Current
Bank borrowings
Finance lease liabilities

Non-current
Bank borrowings
Finance lease liabilities

Total borrowings

All of the Group’s borrowings are denominated in UK Sterling.

A.G. BARR p.l.c. Annual Report and Accounts 2017

Group

Company

2017
£m

0.4
0.1

–
0.1

0.6

2016
£m

0.6
0.1

17.5
0.1

18.3

2017
£m

0.4
1.3

–
19.5

21.2

2016
£m

0.6
1.3

17.5
19.8

39.2

Accounts113

During the year to 30 January 2016, the Group renegotiated a £35m revolving credit facility. A total arrangement fee of £0.1m
was incurred and is being amortised over the life of the loan facility. The revolving credit facility was due to expire in January
2018, but has been replaced by a £20m revolving credit facility that will expire in January 2022 (see note 33). A further £10m
revolving credit facility was arranged in the year to 26 January 2014 and expired in March 2017.

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 27.

The amortisation charge is included in the finance costs line in the income statement.

Current bank borrowings
Finance lease liability payable within one year

Current loans and other borrowings disclosed in the statement

of financial position

Group

Company

2017
£m

0.4
0.1

0.5

2016
£m

0.6
0.1

0.7

2017
£m

0.4
1.3

1.7

Group

Company

Non-current bank borrowings
Unamortised arrangement fee
Finance lease liability payable after more than one year

Non-current loans and other borrowings disclosed in the statement

of financial position

The movements in the Group borrowings are analysed as follows:

2017
£m

–
–
0.1

0.1

2016
£m

17.5
(0.1)
0.1

17.5

Opening borrowings balance
Borrowings made
Repayments of borrowings
Bank overdrafts (repaid)/drawn

Closing borrowings balance

Reconciliation to net funds/(debt):

Closing borrowings balance
Cash and cash equivalents (note 18)

Net funds/(debt)

2017
£m

–
–
19.5

19.5

2017
£m

18.1
25.5
(43.0)
(0.2)

0.4

2017
£m

(0.4)
10.1

9.7

2016
£m

0.6
1.3

1.9

2016
£m

17.5
(0.1)
19.8

37.2

2016
£m

15.1
34.0
(31.5)
0.5

18.1

2016
£m

(18.1)
6.8

(11.3)

A.G. BARR p.l.c. Annual Report and Accounts 2017

AccountsStrategic ReportCorporate Governance114

Notes to the Accounts continued

21. Borrowings continued
The undrawn facilities at 28 January 2017 were as follows:

Revolving credit facility – three years, expires January 2018
Revolving credit facility – three years, expires February 2017
Overdraft

The undrawn facilities as at 30 January 2016 were as follows:

Revolving credit facility – three years, expires January 2018
Revolving credit facility – three years, expires February 2017
Overdraft

The maturity profile of the borrowings is as follows:

Less than one year
One to two years
Two to five years

The gross value of finance lease liabilities for the Group is as follows:

Gross finance lease liabilities – minimum lease payments:
Less than one year
Two to five years
Later than five years

Future finance charges on finance lease liabilities

Present value of finance lease liabilities

The present value of finance lease liabilities for the Group is as follows:

Less than one year
Two to five years
Later than five years

Total facility
£m

35.0
10.0
5.0

50.0

Total facility
£m

35.0
10.0
5.0

50.0

Drawn
£m

–
–
0.4

0.4

Drawn
£m

17.5
–
0.6

18.1

2017
£m

0.4
–
–

0.4

2017
£m

0.1
0.1
–

0.2
–

0.2

2017
£m

0.1
0.1
–

0.2

Undrawn
£m

35.0
10.0
4.6

49.6

Undrawn
£m

17.5
10.0
4.4

31.9

2016
£m

0.6
–
17.5

18.1

2016
£m

0.1
0.1
–

0.2
–

0.2

2016
£m

0.1
0.1
–

0.2

The Group leases certain IT assets under a finance lease agreement. The lease term is 5 years.

A.G. BARR p.l.c. Annual Report and Accounts 2017

AccountsThe gross value of finance lease liabilities for the Company is as follows:

Gross finance lease liabilities – minimum lease payments:
Less than one year
Two to five years
Later than five years

Future finance charges on finance lease liabilities

Present value of finance lease liabilities

The present value of finance lease liabilities for the Company is as follows:

Less than one year
Two to five years
Later than five years

115

2017
£m

1.3
5.3
23.8

30.4
(9.6)

20.8

2017
£m

1.3
4.9
14.6

20.8

2016
£m

1.3
5.2
24.1

30.6
(9.5)

21.1

2016
£m

1.3
4.8
15.0

21.1

As well as the IT assets noted within the Group, the Company leases certain property assets under a finance lease agreement.
The lease term is 21 years and further details can be found within note 27.

22. Trade and other payables

Trade payables
Other taxes and social security costs
Accruals
Contingent consideration (note 12)
Amounts due to subsidiary companies

Non-current
Current

Group

Company

2017
£m

15.8
5.1
26.9
4.5
–

52.3

–
52.3

52.3

2016
£m

8.4
5.3
23.7
4.5
–

41.9

4.5
37.4

41.9

2017
£m

14.5
5.1
25.7
4.5
73.9

123.7

–
123.7

123.7

2016
£m

7.4
4.8
23.5
4.5
66.2

106.4

4.5
101.9

106.4

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
At 28 January 2017

0 to 6 months
7 to 12 months
1 to 2 years
2 to 5 years
5+ years

Borrowings
£m

Finance lease
liabilities
£m

Trade
payables
£m

Financial
instruments
£m

0.4
–
–
–
–

0.4

–
0.1
0.1
–
–

0.2

15.8
–
–
–
–

15.8

4.5
–
–
–
–

4.5

Total
£m

20.7
0.1
0.1
–
–

20.9

A.G. BARR p.l.c. Annual Report and Accounts 2017

AccountsStrategic ReportCorporate Governance116

Notes to the Accounts continued

22. Trade and other payables continued

At 30 January 2016

0 to 6 months
7 to 12 months
1 to 2 years
2 to 5 years
5+ years

Borrowings
£m

Finance lease
liabilities
£m

Trade
payables
£m

Financial
instruments
£m

0.7
0.1
0.2
17.5
–

18.5

–
–
0.1
0.1
–

0.2

8.4
–
–
–
–

8.4

–
–
4.5
–
–

4.5

Total
£m

9.1
0.1
4.8
17.6
–

31.6

As trade payables are not interest bearing, their fair value is taken to be the book value.

The movement in the borrowings analysis from 30 January 2016 to 28 January 2017 reflects the repayments of the revolving
credit facility that was outstanding at 30 January 2016.

Disclosures relating to borrowings are included in note 21.

Company
At 28 January 2017

0 to 6 months
7 to 12 months
1 to 2 years
2 to 5 years
5+ years

At 30 January 2016

0 to 6 months
7 to 12 months
1 to 2 years
2 to 5 years
5+ years

Borrowings
£m

Finance lease
liabilities
£m

Trade
payables
£m

Financial
instruments
£m

0.4
–
–
–
–

0.4

0.6
0.7
1.3
4.0
23.8

30.4

14.5
–
–
–
–

14.5

4.5
–
–
–
–

4.5

Borrowings
£m

Finance lease
liabilities
£m

Trade
payables
£m

Financial
instruments
£m

0.7
0.1
0.2
17.5
–

18.5

0.6
0.6
1.3
4.0
24.1

30.6

7.4
–
–
–
–

7.4

–
–
4.5
–
–

4.5

Total
£m

20.0
0.7
1.3
4.0
23.8

49.8

Total
£m

8.7
0.7
6.0
21.5
24.1

61.0

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 21.

A.G. BARR p.l.c. Annual Report and Accounts 2017

Accounts23. Provisions

Group and Company

Opening provision
Provision created during the year
Provision utilised during the year

Closing provision

117

2017
£m

0.1
0.9
(0.1)

0.9

2016
£m

1.0
–
(0.9)

0.1

The closing provision relates to the redundancy costs associated with the business reorganisation that has taken place in
the year.

During the prior year, provisions related to redundancy costs associated with the closure of the Tredegar manufacturing facility.

24. Deferred tax assets and liabilities

Group

At 25 January 2015
Credit to the income
statement (note 9)

Charge to other

comprehensive income

Deferred tax arising on

acquisition

Transfer between asset and

liability categories

Charge to other reserves

At 30 January 2016

(Charge)/credit to the income

statement (note 9)

Credit to other comprehensive

income

Transfer between asset and

liability categories

Charge to other reserves

At 28 January 2017

Retirement
benefit
obligations
£m

Share-
based
payments
£m

2.6

0.4

(2.5)

–

(0.5)
–

–

1.2
–

1.2

0.7

0.1

–

–
(0.5)

0.3

(0.2)

–

–
(0.1)

–

Foreign
exchange
contract
hedge
£m

0.1

–

0.2
–

–

–
–

–

Total
deferred
tax asset
£m

Retirement
benefit
obligations
£m

Foreign
exchange
contract
hedge
£m

Accelerated
tax
depreciation
£m

Total
deferred
tax liability
£m

Net
deferred
tax liability
£m

(11.1)

(12.1)

(8.7)

0.8

–

0.8

1.3

–

(2.8)

(1.5)

(1.0)

–

0.5
–

(0.5)

(0.2)
–

(0.2)

–
–

0.3
–

(11.8)

(12.5)

–
(0.5)

(12.2)

3.4

0.5

–

(0.3)
(0.5)

0.3

(0.3)

(2.8)

(0.2)

(1.0)

–

1.0

–

(0.2)

–

2.7

0.2

1.2
(0.1)

1.2

(1.2)
–

–

–
–

–

–
–

2.9

(1.2)
–

–
(0.1)

(9.6)

(10.8)

A.G. BARR p.l.c. Annual Report and Accounts 2017

AccountsStrategic ReportCorporate Governance118

Notes to the Accounts continued

24. Deferred tax assets and liabilities continued

Company

At 25 January 2015
Credit/(charge) to the income

statement (note 9)

Charge to other

comprehensive income

Transfer between asset and

liability categories

Charge to other reserves

At 30 January 2016
(Charge)/credit to the income

statement

Credit to other comprehensive

income

Transfer between asset and

liability categories

Charge to other reserves

At 28 January 2017

Retirement
benefit
obligations
£m

Share-
based
payments
£m

2.6

0.4

(2.5)

(0.5)
–

–

1.2
–

1.2

0.7

0.1

–

–
(0.5)

0.3

(0.2)

–

–
(0.1)

–

Foreign
exchange
contract
hedge
£m

0.1

–

0.2
–

–

–
–

–

Total
deferred
tax asset
£m

Retirement
benefit
obligations
£m

Foreign
exchange
contract
hedge
£m

Accelerated
tax
depreciation
£m

Total
deferred
tax liability
£m

Net
deferred
tax
(liability)/
asset
£m

3.4

0.5

(0.3)
(0.5)

0.3

(1.0)

–

0.5
–

(0.5)

–

(0.2)
–

(0.2)

(2.4)

(3.4)

–

(0.1)

0.4

–

–
–

–

(2.8)

0.3
–

–
(0.5)

(2.9)

(2.5)

(3.2)

(0.2)

(1.0)

–

0.4

(0.6)

(0.8)

–

2.7

0.2

1.2
(0.1)

1.2

(1.2)
–

–

–
–

–

–
–

(2.1)

2.9

(1.2)
–

(2.1)

–
(0.1)

(0.9)

(0.3)

(2.8)

No deferred tax asset is recognised in the statement of financial position for unused capital losses of £4.0m (2016: £2.4m).

25. Lease commitments
The total future minimum lease payments under non-cancellable operating leases are as follows for the Group and Company:

No later than one year
More than one year but not more than five years
Due beyond five years

Total lease commitments

2017
£m

3.1
6.7
–

9.8

2016
£m

3.1
9.1
2.7

14.9

26. 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 Group’s overall risk management 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.

Risk management is carried out in accordance with policies approved by the board of directors. Management identifies,
evaluates and manages financial risks in close co-operation 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, treasury matters are dealt with by the Treasury Committee.

A.G. BARR p.l.c. Annual Report and Accounts 2017

Accounts
119

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 US Dollars and Euros. Due to the hedging arrangements that have been in place for the year ended 28 January
2017, 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 30 January 2016: immaterial impact on post-tax profit).

The Group periodically enters into forward option contracts to purchase foreign currencies for known purchases where the
value and volume of trading purchases is known. The Treasury 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 management policies and is continually monitored by the Treasury 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 IAS 39, 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.

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 28 January 2017, 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 30 January 2016: immaterial impact).

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 the management committee 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.

A.G. BARR p.l.c. Annual Report and Accounts 2017

AccountsStrategic ReportCorporate Governance120

Notes to the Accounts continued

26. Financial risk management continued
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.

Capital risk management
The Group defines “capital” as being net cash/(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 current environment.

The Group monitors existing equity in issuance on the basis of the (net cash/(debt))/EBITDA ratio. Net cash/(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 26 to 30. The (net cash/(debt))/EBITDA 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 cash/(debt))/EBITDA ratio together with existing shares in issuance provides an efficient capital
structure and an acceptable level of financial flexibility.

For the year ended 28 January 2017, there was a net cash surplus of £9.7m (year ended 30 January 2016: net debt of £11.3m).

The Group monitors capital efficiency on the basis of the return on capital employed ratio (“ROCE”). In the financial year ended
28 January 2017, ROCE increased to 20.2% from 18.8%.

27. 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 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.

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 2014 using the attained age method.

A surplus of £12.2m was determined at the valuation 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
as set out in the plan’s rules.

A.G. BARR p.l.c. Annual Report and Accounts 2017

Accounts121

Defined benefit scheme: IAS 19 information
The full actuarial valuation carried out at 5 April 2014 was updated to 28 January 2017 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 and Company

Present value of funded obligations
Fair value of scheme assets

Deficit recognised in the statement of financial position

The movement in the defined benefit obligation over the year is as follows:

Group and Company

At 30 January 2016

Current service cost
Past service cost
Curtailment gain
Interest income/(expense)

Total cost recognised in income statement

Remeasurements
– changes in financial assumptions
– actuarial return on assets excluding amounts recognised in net interest

Total remeasurements recognised in other comprehensive income

Cashflows
Employer contributions
Benefits paid
Premiums paid

Total cash outflow

As at 28 January 2017

2017
£m

(139.2)
111.8

(27.4)

2016
£m

(120.2)
107.3

(12.9)

Fair value of
plan assets
£m

Present value of
obligation
£m

Total
£m

107.3

(120.2)

(12.9)

–
–
–
3.9

3.9

–
3.5

3.5

2.6
(5.5)
–

(2.9)

(0.4)
(1.3)
7.0
(4.4)

0.9

(25.4)
–

(25.4)

–
5.5
–

5.5

(0.4)
(1.3)
7.0
(0.5)

4.8

(25.4)
3.5

(21.9)

2.6
–
–

2.6

111.8

(139.2)

(27.4)

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. A curtailment gain of £7.0m arose on the closure to future accrual.
A past service cost of £1.3m has also been recognised as active members were awarded one year’s further service as part of the
negotiated closure. Following the closure the Company incurred a further £0.2m of costs in relation to the closure of the Scheme
to future accrual. These three items have been treated as exceptional items in the year to 28 January 2017 (note 7).

The Company made a £1.0m contribution to the scheme in May 2016 and will make a further £1.0m contribution to the scheme
in May 2017.

A.G. BARR p.l.c. Annual Report and Accounts 2017

AccountsStrategic ReportCorporate Governance122

Notes to the Accounts continued

27. Retirement benefit obligations continued
Defined benefit scheme: IAS 19 information continued
The movement in the defined benefit obligation in the year to 30 January 2016 was as follows:

Group and Company

At 25 January 2015

Current service cost
Curtailment gain
Interest income/(expense)

Total cost recognised in income statement

Remeasurements
– changes in financial assumptions
– actuarial return on assets excluding amounts recognised in net interest

Total remeasurements recognised in other comprehensive income

Cashflows
Employer contributions
Benefits paid
Premiums paid

Total cash outflow

As at 30 January 2016

Fair value of
plan assets
£m

Present value of
obligation
£m

112.7

(131.0)

–
–
3.6

3.6

–
(7.3)

(7.3)

2.4
(4.0)
(0.1)

(1.7)

(1.9)
0.2
(4.3)

(6.0)

12.7
–

12.7

–
4.0
0.1

4.1

Total
£m

(18.3)

(1.9)
0.2
(0.7)

(2.4)

12.7
(7.3)

5.4

2.4
–
–

2.4

107.3

(120.2)

(12.9)

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.

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.

Financial assumptions

Discount rate
Future salary increases
Inflation assumption

2017

3.0%
4.7%
3.7%

2016

3.7%
4.2%
3.2%

A.G. BARR p.l.c. Annual Report and Accounts 2017

Accounts123

Mortality assumptions

Average future life expectancy (in years) for a male pensioner aged 65
Average future life expectancy (in years) for a female pensioner aged 65
Average future life expectancy (in years) at age 65 for a male non-pensioner aged 45
Average future life expectancy (in years) at age 65 for a female non-pensioner aged 45

2017

25
25
27
27

2016

25
24
27
27

The mortality tables adopted in finalising the fair value of the liabilities are the 2013 VITA tables based on the member’s year
of birth. This assumes that the expected age at death for both males and females is 90 to 92 depending on their age at
28 January 2017.

The fair value of scheme assets at the year end dates is analysed as follows:

Equities
Bonds
Property
Cash
Buy-in policy

Total market value of scheme assets

2017
£m

46.4
28.2
0.5
5.2
31.5

111.8

2016
£m

41.6
60.7
0.4
4.6
–

107.3

2015
£m

46.8
59.9
0.3
5.7
–

112.7

2014
£m

49.5
43.1
–
4.6
–

97.2

2013
£m

56.8
25.9
–
4.2
–

86.9

Sensitivity review
The sensitivity of the overall pension liability to changes in the weighted principle assumptions is:

Change in assumption

Year to 28 January 2017

Year to 30 January 2016

Impact on overall liabilities

Discount rate
Increase/decrease by 0.1% Decreases/increases liabilities by £2.3m Decreases/increases liabilities by £2.2m
Rate of inflation Increase/decrease by 0.1% Increases/decreases liabilities by £2.0m Increases/decreases liabilities by £1.5m
Life expectancy Increase/decrease by 1 year Increases/decreases liabilities by £5.6m Increases/decreases liabilities by £4.3m

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 over the last 12 months.
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. The Trustees will continue to review the risk exposures
in light of the longer term objectives of the Scheme.

A.G. BARR p.l.c. Annual Report and Accounts 2017

AccountsStrategic ReportCorporate Governance124

Notes to the Accounts continued

27. Retirement benefit obligations continued
Risks to which the Scheme exposes the Company 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 Trustees’ current investment strategy, having consulted with the Company, is to invest circa 40% of the Scheme’s assets
in a mix of equities and diversifying return seeking assets, with the balance in an annuity policy, 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 9 January 2015 sets out the current contributions payable by the Company to the
Scheme. This was revised based on the actuarial valuation performed as at 5 April 2014 to allow for the rental income stream
from the asset backed funding arrangement effectively being a commitment which will offset the requirement for future
deficit contributions.

Expected contributions over the next accounting period
A.G. BARR p.l.c. expects to contribute approximately £1.0m to the A.G. BARR p.l.c. (2008) Pension and Life Assurance Scheme
in the period ending 28 January 2017, and the Scheme expects to receive further contributions of approximately £1.2m from the
asset backed funding arrangement in which the Scheme holds an interest.

The weighted average duration of the defined benefit obligation is 20 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 2016
Proportion of total pension benefits to be paid as at 5 April 2015

1%
1%

Defined contribution scheme
The pension costs for the defined contribution schemes are as follows:

Defined contribution costs

3%
3%

2017
£m

3.1

95%
95%

2016
£m

2.8

A.G. BARR p.l.c. Annual Report and Accounts 2017

Accounts125

28. Share capital

Group and Company

Issued and fully paid

2017

116,768,778

2016

116,768,778

£m

4.9

£m

4.9

The Company has one class of ordinary shares which carry no right to fixed income.

During the year to 28 January 2017 the Company’s employee benefit trusts purchased 203,410 (2016: 913,724) shares. The total
amount paid to acquire the shares has been deducted from shareholders’ equity and is included within retained earnings. At
28 January 2017 the shares held by the Company’s employee benefit trusts represented 1,103,160 (2016: 1,254,095) shares at
a purchased cost of £6.3m (2016: £8.9m).

29. 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 executive directors
– AESOP awards that are available to all employees

Savings Related Share Option Scheme (“SAYE”)
All SAYEs outstanding at 28 January 2017 and 30 January 2016 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 five 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.

The movements in the number of share options outstanding and their related weighted average exercise prices are as follows:

At start of the year
Granted in the year
Forfeited
Exercised

At end of the year

2017

2016

Options

1,413,428
–
(163,567)
(46,468)

1,203,393

Average
exercise price in
pence per share

471p
–
332p
326p

469p

Options

1,418,930
819,858
(98,477)
(726,883)

1,413,428

Average
exercise price in
pence per share

305p
567p
449p
256p

471p

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 £3.58 and £5.67 (2016: £2.54, £3.58 and £5.67).

The weighted average share price on the dates that options were exercised in the year to 28 January 2017 was £5.11.

The weighted average remaining contractual life of the outstanding share options at the year end is 2 years (2016: 3 years).

A.G. BARR p.l.c. Annual Report and Accounts 2017

AccountsStrategic ReportCorporate Governance

126

Notes to the Accounts continued

29. Share-based payments continued
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. The significant inputs to the model were as follows:

Date of grant

Number of share awards granted
Share price at date of grant
Contractual life in years
Dividend yield
Expected outcome of meeting performance criteria (at grant date)

Fair value determined at grant date

7 April 2016

272,785
527p
3
2.19%
50%

493p

AESOP
As described in the Directors’ Remuneration Report, there are two elements to the AESOP.

The partnership share element provides that for every three 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.

30. 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:

Rubicon Drinks Limited
Funkin Limited

Sales of goods and services

Purchase of goods and services

2017
£m

41.1
–

2016
£m

40.3
0.5

2017
£m

53.4
–

2016
£m

52.4
–

The amounts disclosed in the table below are the amounts owed to and due from subsidiary companies that are trading
subsidiaries. The difference between the total of these balances and the amounts disclosed as amounts due by (note 20) and to
subsidiary companies (note 22) are balances due by and due to dormant subsidiary companies.

Rubicon Drinks Limited
Funkin Limited
Findlay's Limited

Amounts owed by related parties

Amounts due to related parties

2017
£m

–
0.5
–

2016
£m

–
0.5
–

2017
£m

72.0
–
2.9

2016
£m

62.2
–
2.9

A.G. BARR p.l.c. Annual Report and Accounts 2017

Accounts127

Compensation of key management personnel
The remuneration of the executive directors and other members of key management (the management committee) during the
year was as follows:

Salaries and short term benefits
Pension and other costs
Share-based payments

2017
£m

3.2
0.5
–

3.7

2016
£m

3.3
0.5
0.1

3.9

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

Retirement benefit plans
The Group’s retirement benefit plans are administered by an independent third party service provider. During the year the
service provider charged the Group £0.4m (2016: £0.3m) for administration services in respect of the retirement benefit plans.
At the year end £nil (2016: £nil) was outstanding to the service provider on behalf of the retirement benefit plans.

31. Going concern
The directors are confident that it is appropriate for the going concern basis to be adopted in preparing the financial statements.
The statement of financial position shows consolidated net assets of £181.8m (2016: £180.1m) and the Company has sufficient
reserves to continue making dividend payments. Further the Group’s net cash position has increased from a deficit of £11.3m
at 30 January 2016 to a surplus of £9.7m at 28 January 2017.

32. Subsidiaries
The Group’s subsidiaries at 28 January 2017 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

Findlay's Limited
Funkin Limited

Funkin USA Limited

Rubicon Drinks Limited

UK
A.G. BARR Capital Partner Limited
UK
A.G. BARR General Partner Limited
A.G. BARR Pension Trustee Limited
UK
A.G. BARR Scottish Limited Partnership UK
UK
Robert Barr Limited
UK
Mandora St Clements Limited
UK
Taut (UK) Ltd
UK
Tizer Limited
Jersey
Groupe Rubicon Limited

Place of business/
country of
incorporation

Address

UK
UK

USA

Ownership interest held by
the Group

2017
%

100
100

100

100
100
100
100
100
100
100
100
100

2016
%

Principal activities

100 Non-trading entity
100 Distribution and selling
of cocktail solutions
100 Distribution and selling
of cocktail solutions

100 Manufacturing, distribution and
selling of exotic soft drinks

100 Investment holding company
100 Investment holding company
100 Investment holding company
100 Investment holding company
100 Non-trading entity
100 Non-trading entity
100 Non-trading entity
100 Non-trading entity
100 Non-trading entity

Cumbernauld
Milton Keynes

Milton Keynes

Milton Keynes
Cumbernauld
Cumbernauld
Cumbernauld
Cumbernauld
Milton Keynes
Milton Keynes
Milton Keynes
Jersey

The full address for Cumbernauld is: Westfield House, 4 Mollins Road, Cumbernauld, G68 9HD.

The full address for Milton Keynes is: Crossley Drive, Magna Park, Milton Keynes, England, MK17 8FL.

The full address for Jersey is: PO Box 87, 22 Grenville Street, St Helier, Jersey, JE4 9PX.

A.G. BARR p.l.c. Annual Report and Accounts 2017

AccountsStrategic ReportCorporate Governance128

Notes to the Accounts continued

33. Subsequent events
In February 2017 the Group entered into three revolving credit facilities over periods of 3-5 years with Royal Bank of Scotland
plc, Bank of Scotland plc and HSBC Bank plc. These facilities provide £60m of Sterling debt facilities to 2019/20, reducing to
£20m for the period to 2021/22.

On 1 February 2017 the Group completed on the sale of the Walthamstow distribution site. The asset was held for sale at
28 January 2017 (refer to note 14). Total proceeds of £3.8m were received against a net book value of £1.3m, giving rise to a gain
on sale of £2.5m, which will be recognised in the year to 27 January 2018. The Group has entered into a 3 year operating lease
to continue to operate from the site for the short term.

The Board has approved a share repurchase programme of up to £30m, as part of the Group’s approach to capital allocation
and under the authority to repurchase up to 10% of its own shares granted at the AGM in May 2016. This programme is
anticipated to commence in the spring of 2017 and complete within 24 months. The AGM in May 2017 will be requested to
approve the renewal of the authority for the Board to repurchase up to 10% of the Company’s own shares. The Directors do not
believe that the repurchase programme will have any material impact on the Group’s ability to secure acquisition opportunities
should these be identified.

A.G. BARR p.l.c. Annual Report and Accounts 2017

AccountsReview of Trading Results

129

Revenue
Cost of sales

Gross profit

Other income

Distribution costs (including selling costs)
Administration costs

Operating expenses

Operating profit before exceptional items

Exceptional items

Operating profit after exceptional items

Finance income
Finance expense

Net finance expense

Profit before tax

Tax on profit

Profit after tax

2017
£m

2016
£m

2015
£m
Restated

2014
£m
Not restated

2013
£m
Not restated

257.1
(136.4)

120.7

0.7

(57.6)
(20.7)

(77.6)

43.1

0.7

43.8

–
(0.7)

(0.7)

43.1

(7.5)

35.6

258.6
(137.5)

121.1

260.9
(141.0)

119.9

254.1
(137.9)

116.2

237.6
(129.6)

108.0

–

0.7

–

(57.3)
(21.7)

(79.0)

42.1

–

42.1

0.1
(0.9)

(0.8)

41.3

(7.0)

34.3

(57.2)
(21.3)

(77.8)

42.1

(3.3)

38.8

0.1
(0.3)

(0.2)

38.6

(8.6)

30.0

(50.2)
(27.4)

(77.6)

38.6

(3.8)

34.8

0.2
(0.5)

(0.3)

34.5

(6.1)

28.4

(47.4)
(25.7)

(73.1)

34.9

(3.2)

31.7

0.2
(0.4)

(0.2)

31.5

(6.2)

25.3

Earnings per share on issued share capital (pence)

30.49

29.37

25.69

24.13

21.74

Dividends recognised as an appropriation in the

year (pence)

Closing share price

13.50

5.02

12.37

5.28

11.30

6.25

2.83

16.90

6.05

5.50

The results to 25 January 2015 were restated in the year to 30 January 2016 to reflect the change in accounting policy for the
recognition of some logistics and warehouse related costs within cost of sales, which more accurately reflected the costs
incurred in manufacturing products.

A.G. BARR p.l.c. Annual Report and Accounts 2017

AccountsStrategic ReportCorporate Governance130

Glossary

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.

The term “underlying” has been used to improve comparability between the 52 week reporting period ended 28 January 2017
and the 53 weeks ended 30 January 2016. In the 53 week reporting period ended 30 January 2016 the Group received non-
recurring income associated to the termination of the Orangina franchise and incurred one-off transaction fees associated to
corporate development activities including Funkin Limited.

The underlying figures for the 53 week reporting period ended 30 January 2016 have been adjusted for the revenue and
profit associated to week 53 and the non-recurring Orangina franchise and one-off corporate development transaction fees.
The underlying figures for the period ended 28 January 2017 are the reported figures before exceptional items as disclosed
in the consolidated income statement.

Capital expenditure is a non-GAAP measure and defined as the cash purchases of property, plant and equipment as disclosed
in the consolidated cash flow statement.

Carbonates gross margin is a non-GAAP measure calculated by dividing the gross profit for carbonates by the revenue for
carbonates using the values disclosed in the segment reporting note.

EBITDA is a non-GAAP measure defined as operating profit before exceptional items, depreciation and amortisation.
It is reconciled in the free cash flow statement.

EBITDA margin is a non-GAAP measure and calculated as EBITDA divided by revenue.

EBITDA to free cash flow conversion is a non-GAAP measure and calculated as free cash flow divided by EBITDA.

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 per share is a non-GAAP measure calculated as the sum of all interim dividends declared during the
reporting period plus any proposed dividend payable in respect of that reporting period.

Gross margin is a non-GAAP measure calculated by dividing gross profit by revenue.

Market capitalisation is a non-GAAP measure and 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 asset growth is a non-GAAP measure and defined as the increase in net assets from one reporting period to another.
Net assets is a non-GAAP measure and defined as total assets less current liabilities less non-current 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 by revenue.

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.

A.G. BARR p.l.c. Annual Report and Accounts 2017

Accounts131

Revenue (underlying basis) adjusts the reported revenue for the 53 weeks ended 30 January 2016 by the revenue in the final
week and non-recurring revenue related to the terminated Orangina franchise, to provide a comparable 52 week period.

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.

ROCE is a non-GAAP measure and defined as operating profit before 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.

Reconciliation of underlying measures
52 weeks to 28 January 2017

2016/17 as reported
52 week period ended 28 January 2017

Exceptional items

Underlying

53 weeks to 30 January 2016

2015/16 as reported
53 week period ended 30 January 2016

Week 53
Orangina franchise
Corporate development

Underlying

Reconciliations of non-GAAP measures
Free cash flow

Net increase/(decrease) in cash and cash equivalents
Expansionary capex*
Dividends
Acquisition of subsidiary (net of cash acquired)
Acquisition of intangible assets
Purchase of Company shares by employee benefit trusts
Proceeds from disposal of Company shares by employee benefit trusts
New loans received
Loans repaid
Bank arrangement fees paid

Free cash flow

Revenue
£m

Gross profit
£m

Operating
profit
£m

Profit
before tax
£m

257.1

120.7

–

257.1

120.7

43.8

(0.7)

43.1

(0.7)

42.4

Revenue
£m

Gross profit
£m

Operating
profit
£m

Profit
before tax
£m

258.6

(4.2)
(1.2)
–

121.1

(2.2)
(0.3)
–

42.1

(2.2)
(0.3)
0.8

41.3

(2.2)
(0.3)
0.8

253.2

118.6

40.4

39.6

2016/17

2015/16

£m

3.5
6.9
15.6
–
–
1.0
(1.3)
(25.5)
43.0
–

(19.1)
12.9
14.3
15.7
4.8
5.1
(3.1)
(34.0)
31.5
0.1

43.2

28.2

A.G. BARR p.l.c. Annual Report and Accounts 2017

AccountsStrategic ReportCorporate Governance132

Glossary continued

Reconciliations of non-GAAP measures continued
ROCE

Profit before tax
Exceptional items
Profit before tax and exceptional items
Intangible assets
Property, plant and equipment
Inventories
Trade and other receivables
Current tax
Assets held for sale
Trade and other payables
Capital employed

ROCE

2016/17

2015/16

43.1
(0.7)
42.4
106.0
89.4
17.3
51.4
(2.7)
1.3
(52.3)
210.4

41.3
–
41.3
107.5
85.3
15.6
52.7
(3.6)
–
(37.4)
220.1

20.2%

18.8%

A.G. BARR p.l.c. Annual Report and Accounts 2017

AccountsNotice of Annual General Meeting

133

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, 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 thirteenth annual general meeting of A.G. BARR p.l.c. (the “Company”) will be
held at the offices of Deloitte LLP, 110 Queen Street, Glasgow, G1 3BX on Wednesday 31 May 2017 at 11.00 a.m. 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.

1. To receive and approve the audited accounts of the Group and the Company for the year ended 28 January 2017 together

with the directors’ and auditor’s reports thereon.

2. To approve the directors’ remuneration policy set out on pages 52 to 63 of the Company’s annual report and accounts for

the year ended 28 January 2017.

3. To receive and approve the annual statement by the chairman of the remuneration committee and the Directors’

Remuneration Report as set out on page 51 and pages 51 to 76 of the Company’s annual report and accounts for the year
ended 28 January 2017.

4. To declare a final dividend of 10.87 pence per ordinary share of 4 1/6 pence for the year ended 28 January 2017.

5. To re-elect Mr John Ross Nicolson as a director of the Company.

6. To re-elect Mr Roger Alexander White as a director of the Company.

7. To re-elect Mr Stuart Lorimer as a director of the Company.

8. To re-elect Mr Jonathan David Kemp as a director of the Company.

9. To re-elect Mr Andrew Lewis Memmott as a director of the Company.

10. To re-elect Mr William Robin Graham Barr as a director of the Company.

11. To re-elect Mr Martin Andrew Griffiths as a director of the Company.

12. To re-elect Ms Pamela Powell as a director of the Company.

13. To re-elect Mr David James Ritchie as a director of the Company.

14. To 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 committee of the board of directors of the Company to fix their remuneration.

15. 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 £1,621,788.50; and

(b) up to a further aggregate nominal amount of £1,621,788.50 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

A.G. BARR p.l.c. Annual Report and Accounts 2017

AccountsStrategic ReportCorporate Governance134

Notice of Annual General Meeting continued

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 deem necessary or expedient to deal with: (a) equity
securities representing fractional entitlements; (b) treasury shares; or (c) 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 27 July 2018 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.

16. THAT, subject to the passing of resolution 15 set out in the notice of the annual general meeting of the Company

convened for 31 May 2017 (“Resolution 15”), the board of directors of the Company (the “Board”) be and 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 15 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; 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 £243,268.00.

provided that this authority shall expire on the earlier of 27 July 2018 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.

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 11,676,877;

(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 of an Ordinary Share and the highest current
independent bid for an Ordinary Share on the trading venue where the purchase is carried out;

exclusive of associated expenses);

(d) unless previously renewed, varied or revoked, the authority hereby conferred shall expire on the earlier of 27 July 2018

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

A.G. BARR p.l.c. Annual Report and Accounts 2017

Accounts

(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.

135

By order of the Board

Julie A. Barr
Company Secretary
27 April 2017

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 136 to 141
of this report. Those notes provide further information about shareholders’ entitlement to attend, speak and vote at the
Annual General Meeting (or appoint another person to do so on their behalf).

A.G. BARR p.l.c. Annual Report and Accounts 2017

AccountsStrategic ReportCorporate Governance
136

Notice of Annual General Meeting continued

Explanatory Notes
The following notes provide an explanation of the resolutions to be considered at the one hundred and thirteenth annual
general meeting (the “AGM”) of A.G. BARR p.l.c. (the “Company”).

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
KPMG LLP) for the year ended 28 January 2017 together with the associated reports of the directors and auditor.

Resolutions 2 and 3 – Directors’ remuneration
The directors’ remuneration report is now 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 page 51 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 52 to 63 of this report) sets out the Company’s future policy

on directors’ remuneration.

– The Directors’ Remuneration Report (which is set out on pages 51 to 76 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
28 January 2017. It also details how the Company’s policy on directors’ remuneration will be operated in 2017.

Resolution 2 invites shareholders to approve the directors’ remuneration policy. This is a binding policy and, after it takes
effect, the directors will not be entitled to remuneration unless such remuneration is consistent with the approved policy or
shareholders otherwise approve the remuneration. If Resolution 2 is approved, the policy will take effect from the conclusion
of the AGM. Shareholders will be given a binding vote on the directors’ remuneration policy at least every three years.

Resolution 3 invites shareholders to approve the annual statement by the chairman of the remuneration committee and
the Directors’ Remuneration Report (other than the directors’ remuneration policy) for the year ended 28 January 2017.
Resolution 3 is an advisory vote and will not affect the way in which the Company’s pay 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 4 – Final dividend
Shareholders are being asked to approve a final dividend of 10.87 pence per ordinary share of 4 1/6 pence for the year ended
28 January 2017. If shareholders approve the recommended final dividend, it will be paid on 9 June 2017 to all shareholders
on the Company’s register of members on 12 May 2017.

Resolutions 5 to 13 inclusive – Re-election of directors
The board of directors of the Company (the “Board”) complies with the provisions of the UK Corporate Governance Code
whereby all directors are subject to annual re-election. Accordingly, all directors of the Company are retiring and offering
themselves for re-election.

Biographical details of the directors are set out on pages 36 and 37 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 of the directors.

Resolution 14 – Appointment of auditor
The Company is required to appoint an auditor at each general meeting at which accounts are presented to shareholders.
Following a competitive tender process, the Board recommends that Deloitte LLP is appointed as the Company’s new auditor
for the financial year commencing 29 January 2017. More information in respect of the audit tender can be found in the Audit
Committee report on page 50 of this report. In accordance with the Companies Act 2006, KPMG LLP has provided
a “Statement of Circumstances” in connection with their resignation from office, which is set out on page 142.

A.G. BARR p.l.c. Annual Report and Accounts 2017

Accounts137

Resolution 15 – 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 15, if passed, will authorise the directors to allot shares having an aggregate nominal value of up
to £1,621,788.50, representing approximately one third of the Company’s issued share capital as at 26 April 2017 (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 15, if passed, will authorise the
directors to allot additional shares in connection with a rights issue having an aggregate nominal value of up to £1,621,788.50,
representing approximately one third of the Company’s issued share capital as at 26 April 2017 (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 15. 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 15 will expire on the earlier of 27 July 2018 (being the latest date by which the Company
must hold its annual general meeting in 2018) and the conclusion of the annual general meeting of the Company held in 2018.

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.

Sub-paragraph (a) of Resolution 16 would 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 would 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 £243,268.00, representing approximately 5% of the Company’s issued share capital as at 26 April 2017 (being the latest
practicable date prior to the publication of this report).

The authority sought under Resolution 16 will expire on the earlier of 27 July 2018 (being the latest date by which the Company
must hold an annual general meeting in 2018) and the conclusion of the annual general meeting of the Company held in 2018.

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, would 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 11,676,877 ordinary shares, representing 10% of the Company’s
issued ordinary share capital as at the date of the AGM, and will expire on the earlier of 27 July 2018 (being the latest date by
which the Company must hold an annual general meeting in 2018) and the conclusion of the annual general meeting of the
Company held in 2018.

On 28 March 2017, the Company announced that the Board has decided to return up to £30 million to shareholders via an
on-market share repurchase programme. Accordingly, the directors intend to use the authority granted by this resolution to
make market purchases of the Company’s ordinary shares under the repurchase programme. The directors will only exercise
the authority to purchase ordinary shares where they consider that such purchases will be in the best interests of shareholders

A.G. BARR p.l.c. Annual Report and Accounts 2017

AccountsStrategic ReportCorporate Governance138

Notice of Annual General Meeting continued

generally and will result in an increase in earnings per ordinary share. Purchases are expected to be financed out of distributable
profits and shares purchased will 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 1 April 2017 (being the latest practicable date prior to the publication of this report), options had been granted over
1,158,143 ordinary shares (the “Option Shares”) representing approximately 0.99% 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 were exercised in full, the Option
Shares would have represented approximately 1.10% of the Company’s issued share capital as at 1 April 2017. As at 1 April 2017,
the Company did not hold any treasury shares.

A.G. BARR p.l.c. Annual Report and Accounts 2017

Accounts139

Notes
1. Attending the annual general meeting (the “AGM”) in person

If you wish to attend the 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 proxies
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 or through CREST.

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 any proxies under the procedures set out in these notes and should read note 8 below.

3. Appointment of a proxy using a proxy form
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 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 or proxies 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.

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 proxies appointed through CREST should be communicated to the appointee through other means.

A.G. BARR p.l.c. Annual Report and Accounts 2017

AccountsStrategic ReportCorporate Governance

140

Notice of Annual General Meeting continued

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 by joint holders

In the case of joint holders, where more than one of the joint holders purports to appoint one or more proxies, 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).

6. 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).

7. 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 Monday 29 May 2017 (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 attend and vote at the AGM.

8. 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.

9. 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.

10. 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.

11. Voting rights
As at 26 April 2017 (being the latest practicable date prior to the publication of this notice), the Company’s issued share
capital consisted of 116,768,778 ordinary shares of 4 1/6 pence each, carrying one vote each. As at 26 April 2017, the
Company did not hold any treasury shares. Therefore, the total voting rights in the Company as at 26 April 2017 were
116,768,778 votes.

A.G. BARR p.l.c. Annual Report and Accounts 2017

Accounts

141

12. 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 Rules and Transparency Rules.

13. 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.

14. Documents available for inspection

The following documents will be available for inspection on the day of the AGM at the offices of Deloitte LLP, 110 Queen
Street, Glasgow, G1 3BX from 9.15 a.m. until the conclusion of the AGM:

14.1 copies of the service contracts of the Company’s executive directors; and
14.2 copies of the letters of appointment of the Company’s non-executive directors.

A.G. BARR p.l.c. Annual Report and Accounts 2017

AccountsStrategic ReportCorporate Governance

142

Private & confidential
The Directors
A.G. BARR plc
Westfield House
4 Mollins Road
Westfield
Cumbernauld
G68 9HD

14 April 2017

Dear Directors

KPMG LLP
319 St Vincent Street
Glasgow G2 5AS
United Kingdom

Tel +44 (0) 141 226 5511
Fax +44 (0) 141 204 1584

Our ref

as/mm/gch

Statement to A.G. BARR plc (no. SC005653) on ceasing to hold office as auditors
pursuant to section 519 of the Companies Act 2006

The reason connected with our ceasing to hold office is the holding of a competitive
tender for the audit, in which we were not invited to participate.

Yours faithfully

KPMG LLP

Audit registration number: 9188307
Audit registration address:
15 Canada Square
Canary Wharf, London E14 5GL

KPMG LLP, a UK limited liability partnership and a member firm
of the KPMG network of independent member firms affiliated
with KPMG International Cooperative (“KPMG International”),
a Swiss entity.

Registered in England No OC301540
Registered office: 15 Canada Square, London, E14 5GL
For full details of our professional regulation please refer
to ‘Regulatory Information’ under ‘About/About KPMG’
at www.kpmg.com/uk

Document Classification - KPMG Confidential

A.G. BARR p.l.c. Annual Report and Accounts 2017

A.G. BARR p.l.c.
Westﬁeld House
4 Mollins Road
Cumbernauld
G68 9HD
01236 852 400
www.agbarr.co.uk

Registered Office
Westﬁeld House
4 Mollins Road
Cumbernauld
G68 9HD

Secretary
Julie A. Barr, M.A. (Hons.),
L.L.B. (Dip.), M.B.A.

Auditors
KPMG LLP
319 St Vincent Street
Glasgow
G2 5AS

Registrars
Equiniti Ltd
Aspect House
Spencer Road
Lancing
West Sussex
BN99 6DA

Registered Number
SC005653

agbarr.co.uk