5th Apr 2013 17:00
5 April 2013
British Polythene Industries PLC
2012 Annual Report and Accounts and Notice of 2013 AGM
The following documents have today been posted or otherwise made available to shareholders:
- Annual Report and Accounts for the year ended 31 December 2012 (the "2012 Annual Report")
- Notice of the 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 2013 AGM
In accordance with Listing Rules, following the announcement on 4 March 2013 of British Polythene Industries' preliminary results for the year ended 31 December 2012, 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 2012 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 9 May 2013 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 related party transactions which has been extracted in full unedited text from the 2012 Annual Report. However, these extracts should be read in conjunction with the full 2012 Annual Report and is not a substitute for reading the full 2012 Annual Report. A condensed set of audited financial statements were appended to British Polythene Industries PLC's preliminary results announcement on 4 March 2013 together with a management report. References to page numbers and notes in the extracts are to page numbers and notes in the 2012 Annual Report.
Enquiries:
British Polythene Industries PLC
Hilary Kane, Company Secretary & Legal Counsel Tel: 01475 501055
Appendix:
Unedited extract from Annual Report and Accounts for the year 2012
Principal risks
A description of the principal risks that the Group faces is extracted from pages 14 and 15 of the 2012 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 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 56.
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 the continuing adverse economic conditions. 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 construction, industrial and non-food retail.
There are risks associated with the current situation in the Eurozone countries. Whilst it is impossible to identify the eventual outcome, there is clearly the possibility of a further recession in the Eurozone.
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.
| >>Our European operations are located in Belgium and Holland with more than 40% 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. >> The Group has undertaken considerable restructuring of its UK operations, most recently the closure of the Swansea site which was completed early in 2012. These changes have better aligned the Group's capacity with demand. >> The cost base of all operations is continually reviewed and further savings were achieved in 2012. >> The Group has a diverse business portfolio with a large number of customers operating in a range of market sectors and locations.
|
Credit Risk In the current challenging economic climate, the risk of customer insolvency is increased.
Further details of the Group's evaluation and management of this risk are contained in the Financial Review on pages 32 to 37 and in note 14 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.
|
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 2012 with increased volatility and average prices remaining high.
| >> 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.
|
Risk Description | Mitigation |
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 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.
| >> Communication and education efforts with customers and others to dispel some of the myths. >> In 2012 less than 58% of Group sales were of 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 40. |
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 has been agreed with the scheme trustee. Further details of the funding plan can be found in the Financial Review on pages 32 to 37 and in note 29 to the financial statements.
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 trustees 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 32 to 37 and note 16 to the financial statements."
Responsibility statement of the Directors in respect of the 2012 Annual Report
The following statement is repeated here solely for the purpose of complying with DTR 6.3.5. This statement relates to the 2012 Annual Report and is extracted from page 69 of the 2012 Annual Report and signed for and on behalf of the Board by John Langlands, CEO. Responsibility is for the full 2012 Annual Report and not the extracted information presented in this announcement or the preliminary results announcement on 4 March 2013.
"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 and applicable law (UK Generally Accepted Accounting Practice).
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 Directors' Report, Directors' Remuneration Report and 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; and
• 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."
Related Party Transactions
The following statement regarding related parties transactions are set out in note 30 of the 2012 Annual Report. The following is extracted in full and unedited form from the 2012 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 63 to 68.
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 2012. Transactions with the Group's pension schemes, which are related parties, are disclosed in note 29.
Remuneration of key management personnel
The remuneration of the key management personnel of the Group is set out below in aggregate for each of the categories specified in IAS 24 "Related Party Disclosures":
2012 | 2011 | |
£m | £m | |
Short term employee benefits |
3.0 |
3.4 |
Share based payments |
0.5 |
0.4 |
Post-employment benefits |
0.2 |
0.1 |
3.7 | 3.9 " |
Further details of the Board of Directors' remuneration can be found in the Directors' Remuneration Report on pages 63 to 68 of the 2012 Annual Report.
Related Shares:
BPI.L