The directors present their report together with the audited consolidated financial statements for the year ended 31 March 2018.
As permitted by legislation, some of the matters normally included in this report have instead been included in the strategic report, as the board considers them to be of strategic importance. Specifically, these relate to the Company's business model and strategy, future business developments, research and development activities and risk (including financial risk) management.
The corporate governance report is incorporated in this report by reference.
There have been no significant events since the balance sheet date.
The present membership of the board is set out in our board of directors.
The other significant commitments of the chairman consist of acting as non-executive director of Newbury Racecourse plc.
The service agreements of the executive directors and the letters of appointment of the non-executive directors are available for inspection at the Company's registered office. Brief details are also included in the directors' remuneration report.
Appointment and replacement of directors
In accordance with the Company's articles, directors shall be no fewer than two and no more than 12 in number. Subject to applicable law, a director may be appointed by an ordinary resolution of shareholders in general meeting following nomination by the board or a member (or members) entitled to vote at such a meeting, or following retirement by rotation if the director chooses to seek re-election at a general meeting. In addition, the directors may appoint a director to fill a vacancy or as an additional director, provided that the individual retires at the next AGM. A director may be removed by the Company as provided for by applicable law, in certain circumstances set out in the Company's articles of association (for example bankruptcy or resignation), or by a special resolution of the Company. We have decided this year to continue to adopt voluntarily the practice that all directors stand for re-election on an annual basis, in line with the recommendations of the Code.
Powers of the directors
The business of the Company is managed by the board, who may exercise all the powers of the Company subject to the provisions of the Company's articles of association, the Companies Act 2006 ('the Act') and any ordinary resolution of the Company.
The articles entitle the directors of the Company to be indemnified, to the extent permitted by the Act and any other applicable legislation, out of the assets of the Company in the event that they suffer any loss or incur any liability in connection with the execution of their duties as directors.
In addition, and in common with many other companies, the Company had during the year, and continues to have in place, directors' and officers' insurance in favour of its directors and other officers in respect of certain losses or liabilities to which they may be exposed due to their office.
As at 1 June 2018, the Group had been notified of the following voting rights to the Company's shares in accordance with the Disclosure Rules and Transparency Rules of the UK Listing Authority:
|1. JO Hambro Capital Management||44,514,541||14.77|
|2. M&G Investments||41,374,845||13.73|
|3. Threadneedle Investments||24,063,792||7.99|
|4. Legal & General Investment Management||17,004,251||5.64|
|5. Artemis Investment Management||16,756,297||5.56|
|6. Invesco (including Perpetual & Trimark)||16,529,583||5.49|
The Company has a single class of share capital which is divided into ordinary shares of 2.5p each. No other securities have been issued by the Company. At 31 March 2018, there were 299,682,810 ordinary shares in issue and fully paid. Further details relating to share capital, including movements during the year, are set out in note 22 to the financial statements. During the period, shares in the Company were issued to satisfy awards under the Company's share incentive schemes. Further details regarding employee share-based payment schemes are set out in note 21. No shareholder holds shares in the Company which carry special rights with regard to control of the Company. There are no shares relating to an employee share scheme which have rights with regard to control of the Company that are not exercisable directly and solely by the employees.
Voting rights and restrictions on transfer of shares
All of the issued and outstanding ordinary shares of the Company have equal voting rights, with one vote per share. There are no special control rights attaching to them save that the control rights of any ordinary shares held in the EBT can be directed by the Company to satisfy the vesting of outstanding awards under its various employee share plans. In relation to the EBT and any unallocated Company shares held in it, the power to vote or not vote is at the absolute discretion of the trustee. The Company is not aware of any agreements or control rights between existing shareholders that may result in restrictions on the transfer of securities or on voting rights. The rights, including full details relating to voting of shareholders and any restrictions on transfer relating to the Company's ordinary shares, are set out in the articles and in the explanatory notes that accompany the Notice of the 2018 AGM. These documents are available on the Company's website at www.severfield.com.
Powers for the Company to buy back its shares and to issue its shares
At the Company's annual general meeting ('AGM') held on 6 September 2017, shareholders authorised the Company to make market purchases of ordinary shares representing up to 10 per cent of its issued share capital at that time and to allot shares within certain limits approved by shareholders. These authorities will expire at the 2018 AGM (see below) and a renewal will be sought. The Company did not purchase any of its ordinary shares during the year.
The Directors were granted authority at the previous annual general meeting on 6 September 2017, to allot shares in the Company: (i) up to one-third of the Company's issued share capital; and (ii) up to two-thirds of the Company's issued share capital in connection with a rights issue. These authorities apply until the end of the 2018 AGM (or, if earlier, until the close of business on 30 September 2018). During the period, the directors did not use their power to issue shares under the authorities but did issue shares to satisfy options and awards under the Company's share incentive schemes.
The directors were also granted authority at the previous annual general meeting on 6 September 2017, under two separate resolutions, to disapply pre-emption rights. These resolutions, which followed the Pre-emption Group's Statement of Principles (March 2015) on disapplying pre-emption rights applicable at that time, sought the authority to disapply pre-emption rights over 10 per cent of the Company's issued ordinary share capital. These authorities apply until the end of the 2018 AGM (or, if earlier, until the close of business on 30 September 2018). During the period, the directors did not use these powers.
The directors declared an interim dividend for the six months ended 30 September 2017 of 0.9p per ordinary share (2017: 0.7p). The directors have recommended a final dividend of 1.7p per ordinary share and a special dividend of 1.7p per ordinary share to be paid on 14 September 2018 to shareholders on the register at the close of business on 17 August 2018.
Change of control
There are no agreements between the Group and its directors or employees providing for compensation for loss of office or employment that occurs because of a takeover bid.
The Group's banking arrangements expire in July 2019 and can be terminated upon a change of control of the Group.
The Company's share plans contain provisions that take effect in such an event but do not entitle participants to a greater interest in the shares of the Company than created by the initial grant or award under the relevant plan.
Amendment of articles of association
Any amendments to the articles may be made in accordance with the provisions of the Act by way of special resolution.
No contributions were made to any political parties during the current or preceding year.
After making enquiries, the directors have formed a judgement at the time of approving the financial statements that there is a reasonable expectation that the Group has adequate resources to continue in operational existence for at least 12 months from the approval of the financial statements. For this reason, the directors continue to adopt the going concern basis in preparing the financial statements.
The key factors considered by the directors in making the statement are set out in the financial review.
Anti-corruption and bribery matters
The Group updated its anti-bribery policy during the year and prohibits all forms of bribery, both in giving and receiving, wherever it operates. This includes its own employees and any agent or business partner acting on its behalf. No concerns have arisen in relation to such matters during the year and the Group does not regard corruption or bribery as a principal risk. Part of our policy is to undertake due diligence on the risks associated with operating in any high-risk locations.
Additional information that is relevant to this report, and which is incorporated by reference into this report, including information required in accordance with the UK Companies Act 2006 and Listing Rule 9.8.4R, can be located by using the links below:
Disclosure of information to the external auditor
The directors who held office at the date of approval of this directors' report confirm that, so far as they are each aware, there is no relevant audit information of which the Company's auditor is unaware and each director has taken all the steps that 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 auditor is aware of that information.
This confirmation is given and should be interpreted in accordance with the provisions of section 418 of the Act.
KPMG LLP acted as the auditor for the Company for the year ended 31 March 2018. KPMG has expressed its willingness to continue in office as external auditor and a resolution to appoint it will be proposed at the forthcoming AGM.
Annual general meeting
The notice concerning the AGM to be held at Aldwark Manor Hotel, York at noon on Tuesday 4 September 2018, together with explanatory notes on the resolutions to be proposed and full details of the deadlines for exercising voting rights, is contained in a circular to be sent to shareholders with this report.
The directors' report was approved by the board and signed on its behalf by:
20 June 2018