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Notice of Annual General Meeting
for the year ended 30 September 2009
Notice is hereby given that the annual general meeting of shareholders will be held at Hampton Park West, Semington Road, Melksham, Wiltshire on 2 March 2010 at 10.30 a.m. for the following purposes:-
1. To receive a presentation by the Chief Executive on aspects of the Company’s business.
2. To receive and consider the report of the Directors and the financial statements for the year ended 30 September 2009 (Resolution No.1).
3. To approve the remuneration report of the Directors (as set out in the Remuneration Report of the annual report) for the year ended 30 September 2009 (Resolution No. 2).
4. To re-elect Director Sir Richard Needham, who retires by rotation and, being eligible, offers himself for re-election (Resolution No. 3)
5. To approve the re-appointment of PricewaterhouseCoopers LLP as auditors of the Company, to hold office until the conclusion of the next general meeting at which accounts are laid before the Company and that their remuneration be fixed by the Directors (Resolution No. 4).
6. To transact any other routine business.
7. As special business to consider and if thought fit pass the following resolution which will be proposed as an Ordinary Resolution (Resolution No. 5):
"That in accordance with section 551 of the Companies Act 2006 (‘2006 Act’) the Directors be generally and unconditionally authorised to allot Relevant Securities (as defined in the notes to this resolution) comprising equity securities (as defined by section 560 of the 2006 Act up to an aggregate nominal amount of £9,713,560 but subject to such exclusions or other arrangements as the Directors may deem necessary or expedient in relation to treasury shares, fractional entitlements, record dates, legal or practical problems in or under the laws of any territory or the requirements of any regulatory body or stock exchange, provided that this authority shall, unless renewed, varied or revoked by the Company, expire on 22 April 2011 or, if earlier, the date of the annual general meeting of the Company in 2011 save that the Company may, before such expiry, make offers or agreements which would or might require Relevant Securities to be allotted and the Directors may allot Relevant Securities in pursuance of such offer or agreement notwithstanding that the authority conferred by this resolution has expired.
This resolution revokes and replaces all unexercised authorities previously granted to the Directors to allot Relevant Securities but without prejudice to any allotment of shares or grant of rights already made, offered or agreed to be made pursuant to such authorities."
8. As special business to consider and if thought fit pass the following resolution which will be proposed as a Special Resolution (Resolution No. 6):
"That, subject to the passing of Resolution No. 5 and in accordance with section 570 of the 2006 Act, the Directors be generally empowered to allot Relevant Securities pursuant to the authority conferred by Resolution No. 5, as if section 561(1) of the 2006 Act did not apply to any such allotment, provided that this power shall:
(a) Be limited to the allotment of equity securities up to an aggregate nominal amount of £1,456,240; and
(b) Expire on 22 April 2011 or, if earlier, the date of the annual general meeting of the Company in 2011 (unless renewed, varied or revoked by the Company prior to or on that date) save that the Company may, before such expiry make an offer or agreement which would or might require Relevant Securities to be allotted after such expiry and the Directors may allot Relevant Securities in pursuance of any such offer or agreement notwithstanding that the power conferred by this resolution has expired.”
9. As special business to consider and if thought fit pass the following resolution which will be proposed as a Special Resolution (Resolution No. 7):
“That the Company be and is hereby unconditionally and generally authorised for the purpose of section 701 of the 2006 Act to make market purchases (within the meaning of 693(4) of the 2006 Act) of ordinary shares of £1 each in the capital of the Company provided that:
(a) the maximum number of shares which may be purchased is 4,371,100;
(b) the minimum price which may be paid for each share is 1p;
(c) the maximum price which may be paid for a share is an amount equal to 105% (one hundred and five percent) of the average of the middle market quotations of the Company's ordinary shares as derived from the London Stock Exchange London official list for the 5 (five) business days immediately preceding the day on which such share is contracted to be purchased; and
(d) this authority shall expire at the conclusion of the annual general meeting of the Company held in 2011 or, if earlier, on 22 July 2011 (except in relation to the purchase of shares the contract for which was concluded before the expiry of such authority and which might be executed wholly or partly after such expiry) unless such authority is renewed prior to such time.”
10. As special business to consider and if thought fit pass the following resolution which will be proposed as an Ordinary Resolution (Resolution No. 8):
“That:
(a) the Avon Rubber p.l.c. Performance Share Plan 2010 (‘the 2010 Plan’) (the principal features of which are summarised in Appendix 1 to the Notice of this Meeting and which is to be constituted by the rules produced in draft to this Meeting and initialled by the Chairman for the purposes of identification) be approved and the Directors be authorised to do all acts and things necessary to operate the 2010 Plan including making such modifications as the Directors consider necessary or appropriate to take account of the UK Listing Authority and best practice; and
(b) the Directors be authorised to establish such further plans for the benefit of employees located in countries other than the UK based on the Plan subject to such modifications as may be necessary or desirable to take account of overseas securities laws, exchange control and tax legislation provided that any Ordinary Shares of the Company made available under such further plans are treated as counting against any limits on individual participation, or overall participation, in the Plan.”
11. As special business to consider and it thought fit pass the following resolution which will be proposed as an Ordinary Resolution (Resolution No.9):
“That the proposed amendments to the trust deed governing the Avon Rubber p.l.c Employee Share Ownership Trust (the “Trust”) (which are summarised in Appendix 1 to the Notice of this Meeting and are set out in the draft deed of amendment produced to this Meeting and initialled by the Chairman for the purposes of identification) be approved and the Directors be authorised to do all acts and things necessary or appropriate to give effect to the proposed amendments.”
By order of the Board
M. Ingrey-Counter, Company Secretary
Melksham, Wiltshire
19 January 2010
(1) Information regarding the Meeting including the information required by section 311A of the 2006 Act, is available at www.avon-rubber.com.
(2) A form of proxy is enclosed for use by shareholders and, if appropriate, must be deposited with the Company’s registrars, Capita Registrars, Proxy Department, The Registry, 34 Beckenham Road, Beckenham, Kent BR3 4TU not less than 48 hours before the time of the annual general meeting (‘AGM’). Appointment of a proxy does not preclude a shareholder from attending the AGM and voting in person.
(3) A member entitled to attend and vote at the AGM may appoint one or more proxies (who need not be a member of the Company) to attend and to speak and to vote on his or her behalf whether by show of hands or on a poll. A member can appoint more than one proxy in relation to the meeting, provided that each proxy is appointed to exercise the rights attaching to different shares held by him. In order to be valid an appointment of proxy (together with any authority under which it is executed or a copy of the authority certified notarially) must be returned by one of the following methods:
– in hard copy form by post, by courier or by hand to the Company’s registrars, Capita Registrars, Proxy Department, The Registry, 34 Beckenham Road, Beckenham, Kent BR3 4TU;
– via www.capitashareportal.com; or
– in the case of CREST members, by utilising the CREST electronic proxy appointment service in accordance with the procedures set out below and in each case must be received by the Company not less than 48 hours before the time of the meeting.
CREST members who wish to appoint a proxy or proxies through the CREST electronic proxy appointment service may do so for the AGM and any adjournment thereof by using the procedures described in the CREST Manual. 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 by means of CREST to be valid, the appropriate CREST message (a “CREST Proxy Instruction”) must be properly authenticated in accordance with Euroclear UK & Ireland Limited’s (‘EUI’) specifications and must contain the information required for such instructions, as described in the CREST Manual. The message regardless of whether it relates to the appointment of a proxy or to 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 issuer’s agent (ID RA 10) by the latest time(s) for receipt of proxy appointments specified in the Notice of 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 Applications Host) from which the issuer’s agent is able to retrieve the message by enquiry to CREST in the manner prescribed by CREST. The Company may treat as invalid a CREST Proxy Instruction in the circumstances set out in Regulation 35(5) of the Uncertificated Securities Regulations 2001. CREST members and where applicable, their CREST sponsors or voting service providers should note that EUI does not make available special procedures in CREST for any particular messages. Normal system timings and limitations will therefore apply in relation to the input of CREST Proxy instructions. It is therefore 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 or 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 connection, CREST members and, where applicable, their CREST sponsors or voting service providers are referred, in particular, to those sections of the CREST Manual concerning practical limitations of the CREST system and timings.
(4) The right to appoint a proxy does not apply to persons whose shares are held on their behalf by another person and who have been nominated to receive communication from the Company in accordance with Section 146 of the 2006 Act (‘nominated persons’). Nominated persons may have a right under an agreement with the registered shareholder who holds shares on their behalf to be appointed (or to have someone else appointed) as a proxy. Alternatively, if nominated persons do not have such a right, or do not wish to exercise it, they may have a right under such an agreement to given instructions to the person holding the shares as to the exercise of voting rights.
(5) In order to be able to attend and vote at the AGM or any adjourned meeting (and also for the purpose of calculating how many votes a person may cast), a person must have his/her name entered on the register of members of the Company by 6.00 pm on 18 January 2010 (or 6.00 pm on the date two days before any adjourned meeting, ignoring non-working days). Changes to entries on the register of members after this time shall be disregarded in determining the rights of any person to attend or vote at the meeting.
(6) To change your proxy instructions simply submit a new proxy appointment using the methods set out above. Note that the cut-off time for receipt of proxy appointments (see above) also apply in relation to amended instructions; any amended proxy appointment received after the relevant cut-off time will be disregarded.
(7) A corporation which is a member can appoint one or more corporate representatives who may exercise, on its behalf, all its powers as a member provided that no more than one corporate representative exercises powers over the same share.
(8) Under section 319A of the 2006 Act, the Company must answer any question you ask relating to the business being dealt with at the meeting unless:
(i) answering the question would interfere unduly with the preparation for the meeting or involve the disclosure of confidential information;
(ii) the answer has already been given on a website in the form of an answer to a question; or
(iii)it is undesirable in the interests of the Company or the good order of the meeting that the question be answered.
(9) Biographical details of the Directors are shown here.
(10) The issued share capital of the Company as at 19 January 2010 was 29,140,681 ordinary shares, carrying one vote each and representing the total number of voting rights in the Company.
(11) The following documents are available for inspection at the registered office of the Company during normal business hours on any weekday and will be available at the place of the AGM from 15 minutes before the meeting until it ends:
(i) the Register of Directors’ interest showing any transactions of Directors and their family interests in the share capital of the Company; and
(ii) copies of all Contracts of Service under which the Executive Directors of the Company are employed by the Company or any of its subsidiaries; and
(iii) copies of the letters of appointment of the Non-Executive Directors of the Company.
(12) Please note that the Company takes all reasonable precautions to ensure no viruses are present in any electronic communication it sends out but the Company cannot accept responsibility for loss or damage arising from the opening or use of any email or attachments from the Company and recommends that the members subject all messages to virus checking procedures prior to use. Any electronic communication received by the Company, including the lodgement of an electronic proxy form, that is found to contain any virus will not be accepted.
(13) Pursuant to Chapter 5 of Part 16 of the 2006 Act (sections 527 to 531), where requested by a members or members meeting the qualification criteria set out below, the Company must publish on its website, a statement setting out any matter that such members propose to raise at the AGM relating to 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 Meeting. Where the Company is required to publish such a statement on its website:
(i) it may not require the members making the request to pay any expenses incurred by the Company in complying with the request;
(ii) it must forward the statement to the Company's auditors no later than the time the statement is made available on the Company's website; and
(iii) the statement may be dealt with as part of the business of the Meeting.
The request:
(i) may be in hard copy form or in electronic form (see below);
(ii) either set out the statement in full or, if supporting a statement sent by another member, clearly identify the statement which is being supported;
(iii) must be authenticated by the person or persons making it (see below); and
(iv) must be received by the Company at least one week before the Meeting.
In order to be able to exercise the members' right to require the Company to publish audit concerns the relevant request must be made by:
(i) a member or members having a right to vote at the AGM and holding at least 5% of total voting rights of the Company; or
(ii) at least 100 members having a right to vote at the AGM and holding, on average, at least £100 of paid up share capital and may be made by:
(iii) a hard copy request which is signed by you, states your full name and address and is sent to Hampton Park West, Semington Road, Melksham, Wiltshire, SN12 6NB.
(iv) a request which is signed by you, states your full name and address and is sent by fax to 01225 896899 marked for the attention of the Company Secretary.
(v) a request which states your full name and address sent by email to miles.ingrey-counter@avon-rubber.com.
Explanation of Resolutions 5 and 6
Resolutions 5 and 6 authorise your board to allot shares and disapply shareholders’ pre-emption rights, with authority given on an annual renewable basis. Shareholders may recall that this authority has previously been given for the maximum amounts permitted by the Investment Committees of the Association of British Insurers and the National Association of Pension Funds (‘the Investment Committees’).
The authorities referred to above were renewed at the annual general meeting in 2009 and will, unless again renewed by the shareholders, expire at the end of the forthcoming annual general meeting. The authorisation for the allotment of shares and for the disapplication of pre-emption rights can be renewed by way of a relatively simple ordinary resolution and special resolution respectively. It is therefore proposed as Resolution No. 5 to renew the authority of the Directors to allot shares up to an aggregate nominal amount of £9,713,560 (‘the section 546 amount’), being an amount equal to one third of the existing issued ordinary share capital, so that the Directors are empowered pursuant to and within that authority to issue shares (including in connection with a rights issue). It is additionally proposed as Resolution No. 6 to provide that the authority to issue shares for cash to persons other than existing shareholders (and not by way of a rights issue) will be limited to issues representing no more than £1,457,034 (‘the section 561 amount’) being 5% of the issued ordinary share capital as shown in the latest audited financial statements.
The proposed section 546 amount and the proposed section 561 amount are the same as last year as there has been no increase in the issued share capital during the year. In connection with the section 546 amount the Investment Committees require that the amount should be the lesser of the authorised but unissued share capital and an amount equal to one third of the existing issued ordinary share capital; as in previous years one third of the existing issued ordinary share capital is the lesser amount and the section 546 amount has been calculated accordingly.
The authorities sought in Resolutions 5 and 6 comply with the guidelines of the Investment Committees and will, unless subsequently renewed by shareholders, expire at the end of the annual general meeting to be held in 2011 or on 22 April 2011 if earlier.
‘Relevant Securities’ means:
(i) Shares in the Company other than shares allotted pursuant to:
- an employee share scheme (as defined by section 1166 of the 2006 Act);
- a right to subscribe for shares in the Company where the grant of the right itself constituted a Relevant Security; or
- a right to convert securities into shares in the Company where the grant of the right itself constituted a Relevant Security.
(ii) Any right to subscribe for or to convert any security into shares in the Company other than rights to subscribe for or convert any security into shares allotted pursuant to an employee share scheme (as defined by section 1166 of the 2006 Act). References to the allotment of Relevant Securities in the resolutions include the grant of such rights.
No issue of shares (apart from issues in respect of the exercise of options granted or to be granted to employees or Directors under option schemes approved by shareholders, including the Avon Rubber p.l.c. Sharesave Option Scheme 1992, the Avon Rubber p.l.c. Executive Share Option Scheme 1986, The Avon Rubber Sharesave Option Scheme 2002, the Avon Rubber p.l.c. Performance Share Plan 2002 and, if approved, the Avon Rubber p.l.c. Performance Share Plan 2010), is currently contemplated and none will be made which will effectively alter the control of the Company without the prior approval of the Company in general meeting.
Explanation of Resolution 7
It is proposed, by way of Resolution 7, to renew the Company’s power to buy back its own shares. Although the Company’s Articles of Association give the Company the relevant power, the Company is only permitted to buy back its shares pursuant to that power if it is additionally authorised to do so by a relevant resolution of the Company.
Resolution 7 would grant the Company authority to make purchases on the London Stock Exchange of up to 4,371,100 ordinary shares of £1 each of the Company, subject to the limitations on the minimum and maximum prices set out in the Resolution, for a period up to the conclusion of the annual general meeting of the Company held in 2011 or, if earlier, 22 July 2011. The maximum number of ordinary shares for which authority to purchase is being sought represents nearly 15% (fifteen percent) of the Company’s issued ordinary share capital.
As of 19 January 2010 there were options to subscribe outstanding over 1,325,124 ordinary shares, representing 4.55% of the Company’s ordinary issued share capital. If the authority given by Resolution No.7 were to be fully exercised, these options would represent 5.34% of the Company’s ordinary issued share capital. As of 19 January 2010 there were no warrants outstanding over ordinary shares.
The Directors intend to exercise the power given by Resolution 7 only when, in the light of market conditions prevailing at the time, they believe that the effect of such purchases will be to increase the underlying value per share having regard to the intent of the guidelines of institutional investors and that such purchases are in the best interests of shareholders generally. Other investment opportunities, appropriate gearing levels and the overall position of the Company will be taken into account before deciding upon this course of action. Any shares purchased in this way will be cancelled and the number of shares in issue will be reduced accordingly.
Bonus and incentive scheme targets for Executive Directors would not be affected by any enhancement of earnings per share following a share re-purchase.
In the opinion of the Directors, Resolution 7 is in the best interests of the shareholders as a whole and the Directors intend to seek renewal of these powers at subsequent annual general meetings.
Explanation of Resolutions 8 and 9
Resolution 8 seeks shareholders' approval for the introduction of the Avon Rubber p.l.c. Performance Share Plan 2010 ("the 2010 Plan") to replace the existing Performance Share Plan adopted in 2002 and expiring on 4 February 2012.
The Remuneration Committee continues to believe that executives should be motivated to achieve performance superior to the Company's competitors and to deliver sustainable improvements in shareholder value.
The 2010 Plan will be very similar in all respects to the existing Performance Share Plan save that a participant under the 2010 Plan will now be eligible for the grant of a nil-cost option, conditional award or joint ownership award (or a combination of any two of the above) subject to the same individual limits as apply under the existing Performance Share Plan.
The joint ownership award element of the 2010 Plan will be used to deliver the future growth in value of the Company’s shares to executives. A participant who is granted a joint ownership award will acquire a beneficial interest in each share with a trustee as joint owners. If performance conditions are met, the participant will then benefit from any growth in the market value of the share from the date of acquisition above a small 'carry cost' (e.g. 5% p.a.). All other value in the shares at vesting will be delivered to the executive through a nil-cost option or conditional award.
The Committee believes that it is important to ensure that the Company’s discretionary share plan arrangements take into account developments in market practice. The use of joint ownership awards within the 2010 Plan should improve the tax efficiency of the arrangement for participants as well as reducing the employer’s national insurance costs for the Company.
For the purposes of the 2010 Plan, the 5% share capital dilution limit applicable under the existing Performance Share Plan will be removed. Dilution under the 2010 Plan and all other employee share schemes will be capped at 10% of the issued share capital over any ten year period. The Committee believe that removing the 5% limit will provide greater flexibility in respect of future awards under the 2010 Plan and avoid the need for future awards to be solely sourced through market purchase shares, which would result in an undesirable restriction on working capital.
Resolution 9 seeks shareholders’ approval to the amendment of the Avon Rubber p.l.c Employee Share Ownership Trust which will support the 2010 Plan in conjunction with, if required, a newly established employee share ownership trust established on identical terms and with the sole purpose of acting as co-owner with participants under the joint ownership award element of the 2010 Plan. The amendments proposed are required to facilitate the operation of the 2010 Plan.
It is proposed to operate the 2010 Plan, subject to shareholder approval, in the financial year 2009/2010 and thereafter it is intended to make grants annually. The Remuneration Committee has considered which measure of performance is appropriate and has concluded that the performance conditions used under the 2002 Plan remain appropriate for the first awards under the 2010 Plan.
A summary of the main terms of the 2010 Plan and the consequential amendments to the employee trust are set out in Appendix 1.
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