The directors submit the one hundred and nineteenth annual report and audited financial statements of Avon Rubber p.l.c. ("the Company") and the Avon Rubber group of companies, (the Group") for the year ended 30 September 2009.

The company is registered in England and Wales with registration number 00032965

Principal activities and business review

The principal activities of the Group are the design and manufacture of respiratory protection products for defence, police, fire and other emergency services, together with the design and manufacture of a range of polymer based products for the dairy and defence industries. The Group sold its rubber mixing business in November 2008.

 

The business review, which includes information on the Group’s development and performance during the year and commentary on future developments is set out in the Business Review.

 

Financial results and dividend

The Group loss for the year after taxation amounts to £142,000 (2008: £19,469,000 loss). Full details are set out in the Consolidated Income Statement.

 

No interim dividend was paid in respect of the half year ending 31 March 2009 (2008: nil).

 

The Directors do not recommend that a final dividend should be paid (2008: nil) resulting in a nil dividend distribution per share for the year to 30 September 2009 (2008: nil).

 

Share capital

Details of the Company’s share capital, including rights and obligations attaching to the shares, are set out in note 20 of the financial statements. The issued share capital consists of ordinary shares with a nominal value of £1, all of which are fully paid up, rank equally in all respects and are listed on the Official List and traded on the London Stock Exchange. The rights and obligations attaching to the Company’s shares are set out in the Company’s Articles of Association (‘Articles’), copies of which can be obtained from Companies House or by writing to the Company Secretary. Shareholders are entitled to receive the Company’s reports and accounts and to attend, speak and exercise voting rights (including by proxy) at general meetings. There are no restrictions on the transfer of issued shares or on the exercise of voting rights attached to them, except where the Company has suspended their voting rights or prohibited their transfer following a failure to respond to a notice to shareholders under section 793 of the Companies Act 2006, or where the holder is precluded from transferring or voting by the Financial Services Authority’s Listing Rules or the City Code on Takeovers and Mergers. The 666,191 shares held in the name of the Employee Share Ownership Trust as a hedge against awards to be made pursuant to the Performance Share Plan are held on terms which provide voting rights to the Trustee.

 

The only significant agreements to which the Company is a party which take effect, alter or terminate upon a change of control of the Company following a takeover bid are the bank loan agreements and the Performance Share Plan. The agreements relating to the £5,000,000 and US$28,234,000 revolving credit facility made available to the Company would become repayable upon a change of control of the Company and are therefore considered significant in terms of potential impact on the business of the Group as a whole if there was a change of control. A change of control will be deemed to have occurred if any person or persons acting in concert (as defined in the City Code on Takeovers and Mergers) at any time is/are or become(s) interested in more than 50% of the issued ordinary share capital of the Company. Under the rules of the Performance Share Plan, on a takeover a proportion of each outstanding grant will vest. The number of shares that vest is to be determined by the Remuneration Committee, including by reference to the extent to which the performance condition has been satisfied and the number of months that have passed since the awards were made.

Substantial shareholdings

At 19 January 2010, the following shareholders held 3% or more of the Company’s issued ordinary share capital:-

	%
Schroder Investment Management	12.9
Gartmore Investment Management	12.3
Howson Tattersall Investment Counsel	8.7
M&G Investment Management	4.1
Henderson New Star	3.8
Barclays Stockbrokers Limited	3.7
Efs Harris Auday	3.2

 

Acquisition of own shares

The Directors have the power to make purchases of up to 4,371,000 of the Company’s own shares in issue as set out in the Explanation of Resolution 7 in the notice of the annual general meeting. No share purchases were made or funded by the Company during the year. The Directors also have the authority to allot shares up to an aggregate nominal value of £9,713,560 which was approved by shareholders at the 2008 annual general meeting. In addition, shareholders approved a resolution giving the Directors a limited authority to allot shares for cash other than pro rata to existing shareholders. These resolutions remain valid until the conclusion of this year’s annual general meeting when resolutions to renew these authorities will be proposed.

Directors 

For the names of the Directors as at 19 January 2010 click here.

 

The Company’s rules about the appointment and replacement of Directors, together with the powers of Directors, are contained in the Memorandum and Articles of Association. Changes to the Articles must be approved by special resolution of the shareholders.

 

During the year there have been no changes to the membership of the Board. None of the Directors have a beneficial interest in any contract to which the Company or any subsidiary was a party during the year. Beneficial interests of Directors, their families and trusts in ordinary shares of the Company can be found in the Remuneration Report.

 

The Board is satisfied that Sir Richard Needham, Mr. D.R. Evans and Mrs. S.J. Pirie are independent Non-Executive Directors. Each have service agreements and details of these are contained in the Remuneration Report.

 

Sir Richard Needham retires by rotation and, being eligible, offers himself for re-election.

 

The Board confirms that Sir Richard Needham has contributed substantially to the performance of the Board. Mrs. S. J Pirie, the Senior Independent Non-Executive Director gives full support to Sir Richard’s offer of re-election and draws the attention of shareholders to his profile by clicking here.

 

As part of the Board’s annual evaluation process, each Director undertook a performance evaluation which included considering the effective contribution of Board members.

 

All Executive Directors’ service contracts with the Company require one year’s notice of termination, subject to retirement, currently at age 60 for Mr. P.C. Slabbert and 65 for Mr. A.G. Lewis. Neither of the Executive Directors is currently appointed as a non-executive director of any limited company outside the Group.

 

Directors' and Officers' indemnity insurance

Subject to the provisions of the Companies Acts, the Articles provide for the Directors and Officers of the Company to be appropriately indemnified. In accordance with section 233 of the Companies Act 2006 the Company has arranged an appropriate Directors and Officers insurance policy to provide cover in respect of legal action against its Directors.

 

Research and development

The Group continues to utilise its materials expertise to further advance its products and remain at the forefront of technology in the field of polymer technology and materials engineering. The Group maintains its links to key Universities and continues to work with new and existing customers and suppliers to develop its knowledge and product range. Total Group expenditure on research and development in the year was £1,196,000 (2008: £1,895,000) further details of which are contained in the Business Review.

 

Through ARTIS the Group is recognised as a world leader in understanding the composition and use of polymer products.

 

Political and charitable contributions

No political contributions were made during the year or the prior year. Contributions for charitable purposes amounted to £9,839 (2008: £18,883) consisting exclusively of numerous small donations to various charities in Wiltshire, Michigan, Wisconsin, Georgia and Mississippi.

 

Financial instruments

An explanation of the Group policies on the use of financial instruments and financial risk management objectives are contained in note 19 of the financial statements.

 

Statement of Directors’ responsibility for preparing the financial statements

The directors are responsible for preparing the Annual Report, the Directors’ Remuneration Report and the financial statements in accordance with applicable law and regulations.

 

Company law requires the Directors to prepare financial statements for each financial year. Under that law the Directors have elected to prepare the Group financial statements in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union, and the Company financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). In preparing the Group financial statements, the Directors have also elected to comply with IFRSs, issued by the International Accounting Standards Board (IASB). 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 the Company and of the profit or loss of the Group for that period. In preparing these financial statements, the Directors are required to:

 

•    select suitable accounting policies and then apply them consistently;

•    make judgements and accounting estimates that are reasonable and prudent;

•    state whether IFRSs as adopted by the European Union and IFRSs issued by IASB and applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the Group and Company financial statements respectively;

•    prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business.

 

The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company’s transactions and disclose with reasonable accuracy at any time the financial position of the Company and the Group and enable them to ensure that the financial statements and the Directors’ Remuneration Report comply with the Companies Act 2006 and, as regards the Group financial statements, Article 4 of the IAS Regulation.  They are also responsible for safeguarding the assets of the Company and the Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

 

The Directors are responsible for the maintenance and integrity of the Company’s website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions. Each of the Directors in service at the date of approval of this report confirm that, to the best of their knowledge:

 

•     the Group financial statements, which have been prepared in accordance with IFRSs as adopted by the EU, give a true and fair view of the assets, liabilities, financial position and loss of the Group; and

•     the Business Review includes a fair review of the development and performance of the business and the position of the Group, together with a description of the principal risks and uncertainties that it faces.

 

Creditor payment policy

Operating businesses are responsible for agreeing the terms and conditions under which business transactions with their suppliers are conducted. It is Group policy that payments are made in accordance with these terms, provided that the supplier is also complying with all relevant terms and conditions. For the year ended 30 September 2009, the number of days purchases outstanding at the end of the financial year for the Group was 51 days (2008: 42 days) based on the ratio of trade creditors at the end of the year to the amounts invoiced during the year by trade creditors. On the same basis the number of days purchases outstanding for the parent company was 53 days (2008: 44 days).

 

Auditors

Each Director confirms that on the date that this report was approved so far as they are aware, there was no relevant audit information of which the auditors are unaware; and each Director has taken all the steps they ought to have taken as a Director in order to make themselves aware of any relevant audit information and to establish that the Company’s auditors are aware of that information.

 

The auditors, PricewaterhouseCoopers LLP, have indicated their willingness to continue in office and a resolution concerning their reappointment will be proposed at the annual general meeting.

 

Annual general meeting

The Company’s Annual General Meeting will be held for the first time at its Hampton Park West facility, Semington Road, Melksham, Wiltshire SN12 6NB on 2nd March 2010 at 10.30am. The Notice of Meeting can be found here. Registration will be from 10:00am.

 

Miles Ingrey-Counter

Company Secretary

19 January 2010

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