7 Apr 2014 17:11
British Polythene Industries PLC
7 April 2014
2013 Annual Report and Accounts and Notice of 2014 AGM
The following documents have today been posted or otherwise made available to shareholders:
- Annual Report and Accounts for the year ended 31 December 2013 (the "2013 Annual Report")
- Notice of the 2014 Annual General Meeting ("AGM") and a circular with explanatory notes for shareholders about the resolutions to be proposed at the AGM ("AGM Circular and Notice")
- Form of Proxy for the 2014 AGM
In accordance with Listing Rules, following the announcement on 3 March 2014 of the Company's preliminary results for the year ended 31 December 2013, copies of each of those documents have today been submitted to the National Storage Mechanism, and will shortly be available for inspection at the National Storage Mechanism at www.hemscott.com/nsm.do
The 2013 Annual Report and AGM Circular and Notice are also available on the Company's website at www.bpipoly.com.
The Annual General Meeting will be held at 12 noon on Thursday 8 May 2014 at the Company's Head Office, 96 Port Glasgow Road, Greenock, PA15 2UL.
In accordance with DTR 6.3.5, this announcement contains in the attached appendix information on the principal risk factors, a responsibility statement and details of certain related party transactions, all of which has been extracted from the 2013 Annual Report. However, these extracts should be read in conjunction with the full 2013 Annual Report and is not a substitute for reading the full 2013 Annual Report. A condensed set of audited financial statements were appended to British Polythene Industries PLC's preliminary results announcement on 3 March 2014 together with a management report. References to page numbers and notes in the extracts are to page numbers and notes in the 2013 Annual Report.
Enquiries:
British Polythene Industries PLC
Hilary Kane, Company Secretary & Legal Counsel Tel: 01475 501055
Appendix:
Unedited extracts from Annual Report and Accounts for the year 2013
Principal risks
A description of the principal risks that the Group faces is extracted from pages 16 and 17 of the 2013 Annual Report.
"Risk Factors
BPI may be affected by a number of risks, not all of which are within our control. Outlined below is a description of some of the most significant factors that may affect our business. There may be additional factors, in addition to those listed below, which are not currently known to the Group, or which we currently deem immaterial, which may also have an adverse effect on our business. The processes that BPI has in place for managing these risks are described in the Corporate Governance Report on page 52.
Risk | Description | Mitigation |
Poor Economic Conditions
| The Group is exposed to a variety of market sectors which may be affected, to a greater or lesser extent, by adverse economic conditions.
Whilst the broader economic situation is showing signs of improvement, conditions remain challenging and there remains a risk of conditions deteriorating in specific geographical or product markets.
More than two thirds of the business is in the retail food chain, agriculture and horticulture, healthcare and waste services sectors which, so far, have proven more resilient to the economic downturn. The remainder of the business is in the construction, industrial and non-food retail sectors.
Reduced demand leads to lost contribution, but can also put pressure on margins as competitors fight for remaining volumes.
For analysis of sales by market and geographical sector, see Note 3 to the financial statements. | >> The Group has a diverse business portfolio with a large number of customers operating in a range of market sectors and locations. >> Our European operations are located in Belgium and Holland with more than 50% of sales into the agricultural and food sectors. The main European markets are France, Benelux, Germany and Scandinavia with minimal sales into countries such as Greece, Italy and Spain. >> Outwith Mainland Europe our major geographical markets are the UK, Ireland and North America. >> In the event of adverse trading conditions steps can be taken to restructure the business and reduce costs. Most recently this had been undertaken in the UK Consumer Packaging operations during 2013. >> The cost base of all operations is continually reviewed and further savings were achieved in 2013.
|
Credit Risk
| As the economic climate remains challenging, there is always a risk of customer insolvency.
Further details of the Group's evaluation and management of this risk are contained in the Financial Review on pages 28 to 33 and in Note 16 to the Financial Statements.
| >> Continued focus on credit assessment and prompt action on overdue accounts. >> Some accounts are credit insured, particularly in Europe and in the agricultural sector. >> The Group's largest customer accounts for less than 3% of Group turnover. |
Raw Material Prices
| The Group's main raw material, polymer, is subject to volatility on a month by month basis due to fluctuating prices for ethylene and, to a lesser extent naptha and oil. Supplier actions can also influence prices due to maintenance periods and breakdowns at their production plants. This creates a risk of erosion in margins if price increases cannot be passed through immediately to customers. Recent years have seen exceptional levels of volatility and unprecedented price levels. This trend has continued in 2013 with average prices remaining high and continuing volatility. | >> Centralised Group purchasing arrangements to ensure the best purchase price. >> Coordinated instructions to sales teams on forward pricing. >> Some linkage of customer pricing to polymer price indices. >> Management of stock levels depending on anticipated price movements. |
Energy Costs
| As a process business and a significant user of energy, our results can be affected by major price movements.
| >> Monitor energy prices and buy forward when advantageous. >> Group energy saving programme implemented on each manufacturing site. |
Weather Conditions
| A number of our products are dependent on seasonal weather conditions and certain weather conditions could lead to reduced volumes. | >> Geographical spread of markets. >> Diversification of product portfolio. >> Controlled stock build for seasonal products. |
Foreign Exchange Risk
| As we operate in several non-UK countries, have considerable exports from the UK and our main competitors are based in Europe, we are exposed to medium term movements in exchange rates, particularly the Euro and the US dollar. | >> Hedging of known currency exposures. >> Transfer production among Group sites in UK, Europe, North America and China, where possible.
|
Perceived Environmental Issues
| While polythene film is the most lightweight and durable packaging medium, perceptions continue to exist that it is environmentally unfriendly which, together with adverse comments on plastic and packaging, could lead to changes in customer preference. | >> In 2013 less than 58% of Group sales were packaging and, with continued investment in agricultural films and recycling, this may reduce in future years. Further explanation of the Group's environmental policy and procedures is contained in the Corporate Social Responsibility Review on page 36. >> Communication and education efforts with staff, customers and regulators to dispel some of the myths. |
Legal and Regulatory Risk
| The Group's operations expose it to different legal and regulatory requirements and standards in each of the countries in which it operates. The Group is also exposed to the risk of litigation from third parties which may arise.
| >> The Directors take any and all claims and litigation seriously and, where appropriate, take independent legal advice to help protect the Group against material financial loss. >> New and existing legislation is monitored and policies and staff training are implemented as necessary. >> The Group's resources dedicated to legal and regulatory compliance have been enhanced by the appointment of in-house legal counsel. >> The Group Ethical Policy sets out the required standards of conduct for all employees and key employees are given training on the Policy. |
Pension Risk
| The Group is exposed to a number of financial and demographic risks arising from the defined benefit pension schemes. These risks include financial markets risk relating to the value of the schemes' assets, demographic risk relating to the life expectancy of the schemes' members and inflation and interest rate risk relating to the valuation of the scheme's liabilities. The impact of these risks on the Group relates to the future contributions it is required to make to the schemes to repair any funding deficit.
A triennial actuarial review of the main UK defined benefit scheme was carried out at 6 April 2011 and the actuary certified a deficit at that date of £54 million. A funding plan designed to address this deficit was agreed with the scheme trustee at that time. Further details of the funding plan can be found in the Financial Review on pages 28 to 33 and in Note 29 to the financial statements. The next triennial actuarial review is due to be carried out at 6 April 2014.
Further analysis of the risks and the sensitivity of the main fund to changes in circumstances are provided in Note 29 to the financial statements. | >> A number of measures have been taken to manage the risks relating to the UK defined benefit pension scheme. The scheme was closed to new members in 2000; steps were taken in subsequent years to restrict the benefits accrued by scheme members and the scheme closed to future accrual in September 2010. >> The scheme Trustee in conjunction with their investment advisors and the Company have reviewed the investment strategy and increased the level of active management and inflation hedging whilst reducing the level of interest rate hedging. >> The Company will review options to manage the scheme's liabilities and implement those which are considered appropriate.
|
There is further analysis of the Group's exposure to liquidity risk, market risk and currency risk in the Financial Review on pages 28 to 33 and in Note 16 to the financial statements."
Responsibility statement of the Directors in respect of the 2013 Annual Report
The following statement is repeated here solely for the purpose of complying with DTR 6.3.5. This statement relates to the 2013 Annual Report and is extracted from page 84 of the 2013 Annual Report and signed for and on behalf of the Board by John Langlands, Chief Executive, and David Harris, Group Finance Director. Responsibility is for the full 2013 Annual Report and not the extracted information presented in this announcement or the preliminary results announcement on 3 March 2014.
"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 in accordance with UK Accounting Standards.
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 their profit or loss for that period. In preparing each of the Group and parent company financial statements, the Directors are required to:
• Select suitable accounting policies and then apply them consistently;
• make judgements and estimates that are reasonable and prudent;
• for the Group financial statements, state whether they have been prepared in accordance with IFRSs as adopted by the EU;
• for the parent company financial statements, state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the parent company financial statements; and
• prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group 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 Group and to prevent and detect fraud and other irregularities.
Under applicable law and regulations, the Directors are also responsible for preparing a Strategic Report, a Directors' Report, a Directors' Remuneration Report and a Corporate Governance Report that complies with that law and those regulations.
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.
Responsibility Statement in respect of Annual Report
On behalf of the Directors of the Company, we confirm that to the best of our knowledge:
• The financial statements, prepared in accordance with the applicable set of accounting standards, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company and the undertakings included in the consolidation taken as a whole;
• the Directors' Report and Business Review includes a fair review of the development and performance of the business and the position of the Company and the undertakings included in the consolidation taken as a whole, together with a description of the principal risks and uncertainties that they face; and
• the annual report and financial statements, taken as a whole, provides the information necessary to assess the Company's performance, business model and strategy and is fair, balanced and understandable."
Related Party Transactions
The following statement regarding related parties transactions are set out in Note 30 to the consolidated financial statements in the 2013 Annual Report. The following is extracted from the 2013 Annual Report.
"The Group has a related party relationship with its subsidiaries (see Note 12), with its Directors and executive officers including key management personnel, and with the British Polythene Pension Scheme. Disclosures relating to Directors are shown on pages 61 to 81.
Transactions between the Company and its subsidiaries, which are related parties, have been eliminated on consolidation and are not disclosed in this note. There were no trading transactions with related parties who are not members of the Group in the year ended 31 December 2013. Transactions with the Group's pension schemes, which are related parties, are disclosed in Note 29."