AGM Information • Mar 16, 2017
AGM Information
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This document is important and requires your IMMEDIATE ATTENTION. If you are in any doubt as to the action you should take, you are advised to consult your stockbroker, solicitor, accountant or other professional adviser authorised pursuant to the Financial Services and Markets Act 2000 immediately. If you have sold or transferred all of your ordinary shares in Bunzl plc you should pass this document to the purchaser or transferee or to the person through whom the sale was effected for transmission to the purchaser or transferee.
45 Seymour Street
Registered in England No. 358948
To the holders of ordinary shares 13 March 2017
Dear Sir or Madam
The 2017 AGM of Bunzl plc (the 'Company') is to be held at 11.00 am on Wednesday 19 April 2017 in The Park Suite at The Dorchester, Park Lane, London W1K 1QA. You will see from the notice of meeting in Appendix 1 to this letter (the 'Notice of Meeting') that, in addition to the routine business to be dealt with at the meeting, there is one item of other business contained in Resolution 19. An explanation of Resolutions 3 to 19 inclusive is set out below and certain further information is given in Appendix 2 to this letter.
Under the Company's articles of association, at any AGM, any director who has been appointed by the Board of directors since the last AGM, any director who has held office at the time of the preceding two AGMs and who did not retire at either of them or any director who has held office with the Company, other than employment or executive office, for a continuous period of nine years or more at the date of the AGM, in each case, shall retire from office and may offer himself or herself for re-appointment. However, in accordance with the UK Corporate Governance Code (the 'Code') and in order to increase accountability, each of the directors will once again retire at this year's AGM and will stand for re-appointment by the shareholders, other than David Sleath who will be retiring from the Board of directors at the end of this year's AGM.
PricewaterhouseCoopers LLP ('PwC') were first appointed as the Company's auditors in May 2014 following a competitive tender process and have been re-appointed at each subsequent AGM. Following a review by the Audit Committee of PwC's independence and objectivity and of the effectiveness of the audit process, the Audit Committee recommended to the Board that PwC be re-appointed as the Company's auditors and, subject thereto, that such recommendation be put to shareholders for approval at this year's AGM. Resolution 11 therefore seeks approval for the re-appointment of PwC as the Company's auditors until the conclusion of the next general meeting at which accounts are laid before the Company. Resolution 12 seeks authorisation for the directors to set the auditors' remuneration.
The Companies Act 2006 provides that companies must offer (i) their forward-looking directors' remuneration policy (the directors' remuneration policy) to a binding shareholder vote at least once every three years; and (ii) a separate advisory vote on the implementation of the Company's existing remuneration policy (the directors' remuneration report) each year.
The directors' remuneration policy that is currently in force was first approved by shareholders at the Company's 2014 AGM. It has since been reviewed in light of current best practice with the proposed changes designed to provide further alignment of directors' remuneration with the long term future of the Company and the interests of shareholders. The proposed updated directors' remuneration policy (the 'Policy') can be found in the directors' remuneration report on pages 62 to 73 (inclusive) of the Annual Report for the year ended 31 December 2016.
The vote is binding and once the Policy is approved, the Company will only be able to make remuneration payments to directors and former directors in accordance with the Policy. Subject to such approval, the proposed effective date for the Policy (as set out on pages 62 to 73 (inclusive) of the Annual Report for the year ended 31 December 2016) is 19 April 2017, being the date of this year's AGM. If the Policy is approved and remains unchanged, it will be once again be valid for up to three financial years without new shareholder approval being required. If the Company wishes to change the approved Policy, it would need to put the revised policy to a vote again, before it could be implemented.
In addition, Resolution 14 seeks shareholder approval for the directors' remuneration report as set out on pages 60 to 87 (inclusive) (excluding the directors' remuneration policy as set out on pages 62 to 73 (inclusive)) of the Annual Report for the year ended 31 December 2016. The directors' remuneration report discloses how the Company's existing remuneration policy was implemented during 2016 and sets out details of each director's remuneration throughout the year. The vote is advisory and the directors' entitlement to remuneration is not conditional upon the resolution being passed.
The Company's external auditors, PwC, have audited those parts of the directors' remuneration report that are required to be audited and their report is set out on pages 140 to 145 (inclusive) of the Annual Report for the year ended 31 December 2016.
Shareholders' authority is required before the directors may allot ordinary shares in the Company. Resolution 15 replaces the authority granted at last year's AGM. Paragraph (a) of Resolution 15 would give the directors the authority to allot ordinary shares and to grant rights to subscribe for or to convert any securities into ordinary shares in the Company up to a maximum aggregate nominal amount equal to £35,959,000 which represents approximately one third of the Company's issued share capital as at 13 March 2017.
In addition, and in line with guidance issued by the Investment Association (the 'IA'), paragraph (b) of Resolution 15 would give the directors the authority to allot ordinary shares and to grant rights to subscribe for or convert any securities into shares in connection with a rights issue, up to an aggregate nominal amount equal to £71,918,000 which represents approximately two thirds of the Company's issued share capital as at 13 March 2017, as reduced by the nominal amount of any shares issued under paragraph (a) of Resolution 15. In line with the IA guidance, authority under paragraph (b) of Resolution 15 would only be used to allot shares pursuant to a fully pre-emptive rights issue.
The directors do not, however, have any present intention to issue new ordinary shares except under the Company's share option schemes and, if necessary, to satisfy the consideration payable for businesses to be acquired. The authorities supersede all previous authorities and will expire at the earlier of the conclusion of next year's AGM and the close of business on 19 July 2018 and the directors intend to seek to renew these authorities at next year's AGM.
Shareholders' authority is required before the directors may allot ordinary shares in the Company (including any ordinary shares which the Company has purchased and has elected to hold as treasury shares) for cash (unless the issue or sale takes place pro rata to existing ordinary shareholders). Such an authority has been sought annually by the Company. The existing authority will expire at this year's AGM. By proposing Resolution 16, the directors seek a renewal of such authority although, at present, there is no intention to exercise such authority.
Under the renewed authority, the directors may at any time, should appropriate circumstances arise, allot ordinary shares for cash in connection with pre-emptive offers or otherwise up to a maximum amount of 16,780,000 ordinary shares, being approximately 5% of the Company's issued share capital as at 13 March 2017. In respect of this maximum amount, the directors confirm their intention to follow the provisions of the Pre-Emption Group's Statement of Principles (the 'Principles') regarding cumulative usage of authorities within a rolling three year period, where the Principles provide that usage of such authorities in excess of 7.5% of issued ordinary share capital should not take place, except in connection with an acquisition or specified capital investment referred to in the Principles, without prior consultation with shareholders. This authority will expire at the earlier of the conclusion of next year's AGM and the close of business on 19 July 2018.
The Principles state that, in addition to the general authority to allot ordinary shares for cash up to a maximum equal to 5% of total issued ordinary share capital, as proposed in Resolution 16, the Pre-Emption Group is supportive of extending the general authority for certain purposes. Accordingly, and in line with the Principles, the directors are also seeking the authority to allot ordinary shares for cash on a non-preemptive basis up to an additional maximum aggregate nominal amount of £5,393,595, being approximately 5% of the Company's issued share capital as at 13 March 2017. The maximum nominal value of equity securities which could be allotted, if the authorities under both Resolutions 16 and 17 were used, would be £10,787,190, being approximately 10% of the total issued share capital of the Company as at 13 March 2017.
The additional authority proposed in Resolution 17 will only be used to fund one or more acquisitions or specified capital investments which are announced contemporaneously with the relevant issue, or which has taken place in the preceding six month period and is disclosed in the announcement of the issue, as referred to in the Principles. While the directors have no present intention of exercising this authority, the directors consider that the additional authority sought at this year's AGM will benefit the Company and its shareholders generally since there may be occasions in the future when the directors need the flexibility to finance acquisitions or capital investments by issuing shares for cash without a pre-emptive offer to existing shareholders. This authority will expire at the earlier of the conclusion of next year's AGM and the close of business on 19 July 2018.
Resolution 18 replaces a similar authority granted to the directors at last year's AGM which is valid until the conclusion of this year's AGM. No ordinary shares have been purchased under the current authority. The proposed authority will be exercised in the future only if the directors consider it to be in the best interests of the Company and its shareholders, given the market conditions and price prevailing at the time. For a further explanation of this proposal and a brief summary of its taxation consequences, please see Appendix 2 to this letter.
Resolution 19 also replaces a similar authority granted to the directors at last year's AGM to allow the Company to hold general meetings (other than AGMs) on 14 clear days' notice as required by the Companies (Shareholders' Rights) Regulations 2009 (the 'Shareholders' Rights Regulations'). The shorter notice period would not be used as a matter of routine for such meetings but only where the flexibility is merited by the business of the meeting and is thought to be to the advantage of shareholders as a whole. The Company will also need to meet certain requirements for electronic voting under the Shareholders' Rights Regulations before it can call a general meeting on 14 clear days' notice. The authority will be effective until next year's AGM, when it is intended that a similar resolution will be proposed.
The directors have again decided that voting on each of the Resolutions to be put to this year's AGM will be taken on a poll rather than on a show of hands. The directors believe a poll vote is more representative of the shareholders' voting intentions because shareholders' votes are counted according to the number of ordinary shares held and all votes tendered are taken into account. The results of the poll will be announced through a Regulatory Information Service and made available on the Company's website as soon as practicable following the closing of this year's AGM.
Unless otherwise stated, all references to the Company's issued share capital in this letter are to the Company's issued ordinary share capital as at 13 March 2017, being the latest practicable date prior to publication of this letter, which was 335,621,643 ordinary shares carrying one vote each. Therefore the total voting rights in the Company as at 13 March 2017 are 335,621,643. The Company does not currently hold any shares in treasury.
Shareholders are asked to complete the enclosed Form of Proxy and to post it to the Company's registrar, Computershare Investor Services PLC, The Pavilions, Bridgwater Road, Bristol BS99 6ZY as soon as possible, but in any event so as to arrive by no later than 11.00 am on Monday 17 April 2017. Completion and posting of the Form of Proxy will not preclude shareholders from attending and voting in person at this year's AGM, should they wish to do so. A user of the CREST system (including a CREST Personal Member) may appoint a proxy by having an appropriate CREST message transmitted so as to be received by no later than 11.00 am on Monday 17 April 2017. Alternatively, proxy votes can be submitted via the internet to be received by no later than 11.00 am on Monday 17 April 2017. Details of how to do this are set out on the enclosed Form of Proxy.
Copies of the directors' service agreements and letters of appointment will be available for inspection at any time during normal business hours on normal working days from and including the date of the Notice of Meeting up to and including 19 April 2017 at the Company's registered office, as will a copy of the Annual Report for the year ended 31 December 2016. All such documents will be available for inspection in The Park Suite at The Dorchester, Park Lane, London W1K 1QA from 10.45 am on 19 April 2017 until the conclusion of this year's AGM.
The directors are unanimously of the opinion that the proposals described in this letter are in the best interests of the Company and its shareholders as a whole. Accordingly, they recommend shareholders vote in favour of the Resolutions set out in the Notice of Meeting in Appendix 1 to this letter, including those referred to above, as they intend to do in respect of their own beneficial holdings.
The directors are proposing a final dividend of 29.0p per ordinary share in the Company for the year ended 31 December 2016 (the 'Final Dividend') for approval at this year's AGM. Pursuant to the DRP, shareholders will again be offered the opportunity to receive ordinary shares in the Company instead of any cash dividend to which they would otherwise have been entitled.
The DRP allows shareholders to increase their shareholdings in the Company in a simple and cost-effective way. Once a shareholder has elected to participate in the DRP, any cash dividend will be reinvested in ordinary shares in the Company bought on the London Stock Exchange through a specially arranged share dealing service. As the DRP does not require the creation of any new ordinary shares in the Company and therefore does not lead to dilution of the value of the existing ordinary shares in the Company, the directors believe that the DRP is beneficial to the shareholders as a whole.
If you have already joined, or choose to join the DRP, the Final Dividend will be used to buy ordinary shares in the Company. A dealing commission of 0.75% of the value of the ordinary shares purchased will be charged (subject to a minimum of £2.50) and deducted from the amount of the Final Dividend. Stamp duty reserve tax will also be charged at the prevailing rate (currently 0.5% of the value of the ordinary shares purchased) and deducted from the amount of the Final Dividend. If you have not already joined the DRP and wish to do so, you should either apply online at www.investorcentre.co.uk or, alternatively, contact the Company's registrar on 0370 889 3257 to request the terms and conditions of the DRP and a printed mandate form, which must be returned to them at Computershare Investor Services PLC, The Pavilions, Bridgwater Road, Bristol BS99 6ZZ, so as to arrive no later than 5.00 pm on 12 June 2017. If you have already joined the DRP and wish to continue receiving dividends in shares, or if you have not already joined the DRP and wish to continue receiving dividends in cash, you need take no further action.
Information about the timetable in relation to the Final Dividend, the terms and conditions of the DRP (which are incorporated by reference into this letter) and how to join the DRP can also be found in the Dividend information section of the Company's website at www.bunzl.com.
The timetable relating to the payment of the Final Dividend is as follows:
| Ordinary shares quoted ex-dividend | 25 May 2017 |
|---|---|
| Record date | 26 May 2017 |
| Payment date | 3 July 2017 |
Further copies of this letter may be obtained from the Company's registrar, Computershare Investor Services PLC, The Pavilions, Bridgwater Road, Bristol BS99 6ZZ, during normal business hours on normal working days from the date of this letter until 17 April 2017. Yours faithfully
Philip Rogerson Chairman
THAT the directors of the Company be authorised to allot ordinary shares in the Company and to grant rights to subscribe for or to convert any security into ordinary shares in the Company:
and so that the directors may impose any limits or restrictions and make any arrangements which they consider necessary or appropriate to deal with treasury shares, fractional entitlements, record dates, legal, regulatory or practical problems in, or under the laws of, any territory or any other matter,
such authority to apply until the end of next year's AGM (or, if earlier, until the close of business on 19 July 2018) but so that during this period the Company may make offers, and enter into agreements, which would, or might, require ordinary shares to be allotted or rights to subscribe for or to convert securities into ordinary shares to be granted after the authority ends and the directors may allot ordinary shares or grant rights to subscribe for or convert securities into ordinary shares under any such offer or agreement as if the authority had not ended.
THAT if Resolution 15 is passed, the directors of the Company be given power to allot equity securities (as defined in section 560(1) of the Companies Act 2006) for cash under the authority given by that Resolution and/or to sell ordinary shares held by the Company as treasury shares for cash as if section 561 of the Companies Act 2006 did not apply to any such allotment or sale, such power to be limited:
and so that the directors may impose any limits or restrictions and make any arrangements which they consider necessary or appropriate to deal with treasury shares, fractional entitlements, record dates, legal, regulatory or practical problems in, or under the laws of, any territory or any other matter; and
(b) to the allotment (otherwise than under paragraph (a) above) of equity securities or sale of treasury shares up to a nominal amount of £5,393,595, being approximately 5% of the nominal value of the Company's issued share capital as at 13 March 2017,
such power to apply until the end of next year's AGM (or, if earlier, until the close of business on 19 July 2018), but, in each case, during this period the Company may make any offers, and enter into any agreements, which would, or might, require any equity securities to be allotted (and any treasury shares to be sold) after the power ends and the directors may allot any equity securities (and/or sell any treasury shares) under any such offer or agreement as if the power had not ended.
(b) used only for the purposes of financing a transaction which the directors determine to be an acquisition or other capital investment of a kind contemplated by the Statement of Principles on Disapplying Pre-Emption Rights most recently published by the Pre-Emption Group prior to the date of this Notice of Meeting or for the purposes of refinancing such a transaction within six months of its taking place,
such power to apply until the end of next year's AGM (or, if earlier, until the close of business on 19 July 2018), but, in each case, during this period the Company may make any offers, and enter into any agreements, which would, or might, require any equity securities to be allotted (and any treasury shares to be sold) after the power ends and the directors may allot any equity securities (and/or sell any treasury shares) under any such offer or agreement as if the power had not ended.
THAT the Company be authorised, for the purposes of section 701 of the Companies Act 2006, to make one or more market purchases (as defined in section 693(4) of the Companies Act 2006) of its ordinary shares of 321 ⁄7p each ('Ordinary Shares'), such power to be limited:
such power to apply until the end of next year's AGM (or, if earlier, the close of business on 19 July 2018) but so that during this period the Company may enter into any contracts to purchase any Ordinary Shares which will or may be completed or executed wholly or partly after the power ends and the Company may purchase any Ordinary Shares pursuant to any such contract as if the power had not ended.
THAT a general meeting other than an AGM may be called on not less than 14 clear days' notice.
By Order of the Board
Secretary
13 March 2017
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 system provider(s), are referred, in particular, to those sections of the CREST Manual concerning practical limitations of the CREST system and timings.
Authority is sought for the Company to purchase up to 10% of its issued ordinary shares, renewing the authority granted by shareholders at last year's Annual General Meeting ('AGM').
The directors have no present intention of exercising the authority to make market purchases. However the authority provides the flexibility to allow them to do so in the future. The directors will exercise this authority only when to do so would be in the best interests of the Company, and of its shareholders generally, and could be expected to result in an increase in the earnings per share of the Company.
Ordinary shares purchased by the Company pursuant to this authority may be held in treasury or may be cancelled. The directors will consider holding any ordinary shares the Company may purchase as treasury shares. The Company does not currently hold any shares in treasury. The minimum price, exclusive of expenses, which may be paid for an ordinary share is 321 ⁄7p. The maximum price, exclusive of expenses, which may be paid for an ordinary share is the highest of: (i) an amount equal to 5% above the average market value of an ordinary share for the five business days immediately preceding the date of the purchase; and (ii) the higher of the price of the last independent trade and the highest current independent purchase bid at the time on the trading venue where the purchase is carried out.
The number of options to subscribe for ordinary shares outstanding at 13 March 2017, being the latest practicable date prior to the date of this letter, was 1,443,101, representing 0.4% of the Company's issued share capital as at that date. If the existing authority given at last year's AGM and the authority now being sought by Resolution 18 were to be fully used, these outstanding options would represent 0.5% of the Company's issued share capital.
The authority will expire at the earlier of the conclusion of next year's AGM and the close of business on 19 July 2018.
The main taxation consequences under current UK legislation in force on 13 March 2017 of a purchase of ordinary shares taking place on or after 6 April 2017 pursuant to the proposed authority would be broadly as follows:
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