The Directors present their report together with the audited financial statements for the period ended 30 June 2018.
Where reference is made to other sections of the Annual Report and Accounts, these sections are incorporated into this report by reference.
The Group's Strategic Report contains an indication of likely future developments in the business of the Company and the Group.
Results and Dividends
The consolidated profit for the year after taxation was £73.3m (2017: £73.1m). The results are discussed in greater detail in the Financial Review.
A final dividend of 19.5p per share (2017: 19.5p) is proposed in respect of the period ended 30 June 2018, to add to an interim dividend of 7.0p per share paid on 13 April 2018 (2017: 6.5p). The final dividend will be paid on 7 December 2018 to shareholders on the register at 16 November 2018.
Shareholder and Voting Rights
All members who hold Ordinary Shares are entitled to attend and vote at the Annual General Meeting. On a show of hands at a general meeting every member present in person shall have one vote and on a poll, every member present in person or by proxy shall have one vote for every Ordinary Share held.
On 2 October 2006, Jean Adderley, Bill Adderley and Will Adderley (all shareholders) entered into a Relationship Agreement with the Company, pursuant to which each of Jean Adderley, Bill Adderley and Will Adderley undertook to the Company that, for so long as, individually or together, they are entitled to exercise, or to control the exercise of, 30% or more of the rights to vote at general meetings of the Company or they are able to control the appointment of Directors who are able to exercise a majority of votes at Board meetings of the Company, they will:
- Conduct all transactions and relationships with any member of the Group on arm's length terms and on a normal commercial basis
- Not take any action which precludes or inhibits any member of the Group from carrying on its business independently of Jean and Bill Adderley and their associates (as defined in the Listing Rules)
- Not exercise any of their voting rights or other powers to procure any amendment to the Articles of Association of the Company which would be inconsistent with or undermine any of the provisions of the Relationship Agreement
- Abstain from voting on any resolution to which LR11.7.R(4) of the Listing Rules applies involving Jean Adderley, Bill Adderley or Will Adderley or any of their associates as the related party
- Not carry on (other than through their holding of securities of the Company) or have any financial interest (other than a financial interest in securities which are held for investment purposes only) in any person who carries on a business as a homewares retailer, to the extent that it would be inconsistent with or undermine any provisions of the Relationship Agreement
- Only enter into, amend or terminate any transaction, agreement or relationship between themselves or any of their associates and any member of the Group with the approval of a majority of the independent Non-Executive Directors
WA Capital Limited and Nadine Adderley, to whom Will Adderley transferred shares by way of a gift, have subsequently become party to this agreement.
In July 2014, the Relationship Agreement was amended so as to comply with Listing Rule LR 9.2.2A(2)(a), which came into effect on 16 May 2014. The following additional undertakings were given by the parties:
- No action will be taken that would have the effect of preventing the Company from complying with its obligations under the Listing Rules
- No resolution will be proposed, or procured to be proposed, which is intended to, or appears to be intended to circumvent the proper application of the Listing Rules
In addition, the Articles of Association of the Company provide that the election and re-election of independent Directors must be conducted in accordance with the election provisions set out in LR 9.2.2ER and LR 9.2.2FR. This means that the election or re-election of each independent Director at the Annual General Meeting will be subject to an additional separate resolution upon which parties controlling 30% or more of the voting shares of the Company are not eligible to vote.
The Company confirms that it has complied with its obligations under the Relationship Agreement during the financial period under review, and that so far as it is aware, all other parties to that agreement have complied with it.
The Company confirms that there are no contracts of significance between any member of the Group and any of the parties to the Relationship Agreement, with the exception of Will Adderley's service agreement as a Director of the Company, the terms of which are outlined in the Remuneration Report.
There are no restrictions on the transfer of Ordinary Shares in the Company other than certain restrictions imposed by laws and regulations (such as insider trading and marketing requirements relating to closed periods) and requirements of the Listing Rules whereby Directors and certain employees of the Company require Board approval to deal in the Company's securities.
UK Listing Authority Listing Rules (LR) – compliance with LR 9.8.4C
The majority of the disclosures required under LR 9.8.4 are not applicable to Dunelm. The table below sets out the location of those requirements that are applicable:
|Applicable sub-paragraph within LR 9.8.4||Disclosure provided|
|(14) A statement made by the Board that the Company has entered into an agreement under LR 9.2.2A, that the Company has, and as far as it is aware, the other parties to the agreement have, complied with the agreement.||See above section headed 'Shareholder and Voting Rights'.|
Change of Control
The Company is not party to any significant agreements which take effect, alter or terminate solely on a change of control of the Company following a takeover bid.
There are no agreements between the Company and its Directors or employees providing for additional compensation for loss of office or employment (whether through resignation, redundancy or otherwise) that occurs because of a takeover bid.
Details of the rights of employees to exercise options on a change of control of the Company are set out in the Remuneration Policy section of this report.
Share Capital and Treasury Shares
The Company has only one class of shares, Ordinary Shares of 1p each.
The issued Ordinary Share capital of the Company has not changed during the period.
At 30 June 2018, the Company held 914,635 Ordinary Shares in treasury (2017: 1,150,642).
During the period the Company did not purchase any Ordinary Shares into treasury. 236,007 shares were transferred to employees who exercised options under a share incentive scheme or Directors under the LTIP scheme. Details of option exercises by Directors are set out in the Remuneration Report.
Since the financial year end, nil Ordinary Shares have been moved out of treasury to employees who exercised options under a share incentive scheme.
At 30 June 2018 the following had notified the Company of a disclosable interest in 3% or more of the nominal value of the Company's Ordinary Shares:
|Royal London Asset Management Limited||10,612,144||5.26|
|Standard Life Aberdeen plc||10,274,359||5.09|
Will Adderley is also deemed to hold a legal interest in 967,250 Ordinary Shares held by The Stoneygate Trust (formerly known as The Leicester Foundation) and 172,750 Ordinary Shares held by the Paddocks Discretionary Trust, by virtue of the fact that he is a trustee of those trusts.
Since the period end date, we have been notified by Royal London Asset Management Limited that their holding is now 9,907,809 Ordinary shares, 4.9% of the issued share capital.
There have been no other changes in the holdings of substantial shareholders between the period end date and 12 September 2018.
Details of the Directors of the Company who served on the Board during the year, and the biographies of those on the Board at the date of this report are set out in the Directors and Officers. Details of changes to the Board during the period are set out in the Directors and Officers.
Powers of Directors
Specific powers of the Directors in relation to shares and the Company's Articles of Association are referred to in the Corporate Governance report.
Information relating to employees of the Group, including our approach to disabled persons, is set out in the "People" section of the Sustainability report.
Share incentive schemes in which employees participate are described in the Remuneration Report.
The Group does not make any political donations.
Greenhouse Gas Emissions
The Sustainability report sets out the greenhouse gas emissions disclosures required by the Companies Act 2006 (Strategic Report and Directors' Report) Regulations 2013.
Treasury and Risk Management
The Group's approach to treasury and financial risk management, including its use of hedging instruments, is explained in the Principal Risks and Uncertainties section and note 18 to the annual financial statements.
In accordance with section 489 of the Companies Act 2006 and the recommendation of the Audit and Risk Committee, a resolution is to be proposed at the AGM for the reappointment of PricewaterhouseCoopers LLP as auditor of the Group.
This Directors' Report, Strategic Report and the Financial Statements contain certain forward-looking statements with respect to the financial condition, results, operations and business of Dunelm Group plc. These statements and forecasts involve risk and uncertainty because they relate to events and depend upon circumstances that will occur in the future. There are a number of factors that could cause actual results or developments to differ materially from those expressed or implied by these forward-looking statements and forecasts. Nothing in this Directors' Report and Strategic Report or in these Financial Statements should be construed as a profit forecast.
Annual General Meeting
The Annual General Meeting will be held at 11.00am on Thursday 29 November 2018 at the Dunelm Store Support Centre, Watermead Business Park, Syston, Leicester, LE7 1AD. A formal notice of meeting, explanatory circular and a form of proxy will accompany this annual report and financial statements.
This report was reviewed and signed by order of the Board on 12 September 2018.