annual report and financial statements 2009

Directors' report

The Directors have pleasure in presenting the Annual Report and the audited Financial Statements for the year ended 31 December 2009.

PRINCIPAL ACTIVITIES OF THE GROUP

The principal activities of the Group during the financial year were:

  • Property – property development and property investment
  • Land – land development
  • Construction – construction, civil engineering, road maintenance under a PFI contract and plant hire
  • Other – central services, head office administration and in-house leasing

RESULTS FOR THE YEAR AND DIVIDENDS

The results are set out in the Consolidated Statement of Comprehensive Income. The principal active subsidiary companies affecting the profit or net assets of the Group in the year are listed in note 30 to the Financial Statements.

As announced on 12 February 2010, a second interim dividend of 1.25p per ordinary share is to be paid on 31 March 2010 to ordinary shareholders on the register at the close of business on 5 March 2010. This, together with the interim dividend of 1.25p per ordinary share paid on 22 October 2009, will make a total dividend of 2.5p per ordinary share for the year ended 31 December 2009.

BUSINESS REVIEW

The review of the development and performance of the business of the Group during the year and the future outlook of the Group is set out in the Chairman’s Statement and the Business Review.

The Group’s policy in respect of financial instruments is set out within the Accounting Policies and details of credit risk, liquidity risk, capital risk management and cash flow risk are given respectively in notes 15, 21, 20 and 22 to the Financial Statements.

SHARE CAPITAL

Details of the Company’s issued share capital during the year are set out in note 27 to the Financial Statements.

The Notice of the Annual General Meeting (AGM) includes the following resolutions:

  • an ordinary resolution (Resolution 6) to renew the authority of the Directors to allot shares up to a maximum nominal amount of £4,341,479 being 33.33% of the Company’s issued ordinary share capital at 22 March 2010. The authority will expire on 27 August 2011 or until the next AGM whichever is the shorter but it is the present intention of the Directors to seek annual renewal of this authority. The Directors do not have any present intention of exercising the authority;
  • a special resolution (Resolution 7) to enable the Directors to continue to allot equity securities for cash in connection with a rights or other issue pro rata to the rights of the existing shareholders but subject to certain exceptions, and for any other purpose provided that the aggregate value of such allotments does not exceed £650,000 (4.99% of the Company’s issued ordinary share capital at 22 March 2010). The authority will expire on 27 August 2011 or until the next AGM whichever is the shorter but it is the present intention of the Directors to seek annual renewal of this authority; and
  • a special resolution (Resolution 8) to renew the authority of the Company to make market purchases of up to 11,055,000 of its own issued ordinary shares (8.48% of the Company’s issued share capital at 22 March 2010). The minimum price that may be paid under the authority for an ordinary share is 10p and the maximum price is limited to not more than 5% above the average of the middle market quotations for an ordinary share as derived from the London Stock Exchange Daily Official List for the five business days before the purchase is made. The Directors will exercise the authority only if they are satisfied that it would be likely to result in an increase in expected earnings per share of the ordinary share capital in issue and that any purchase will be in the best interests of shareholders generally. If the Directors do decide to exercise the authority, ordinary shares so acquired will either be cancelled or held as treasury shares, depending upon the circumstances prevailing at the time.

DIRECTORS

J S Reis, E J Boot, D Greaves, J T Sutcliffe, J E Brown and M I Gunston held office as Directors throughout 2009. Their biographical details are shown within the Board of Directors section.

In accordance with the Articles of Association of the Company, J S Reis and E J Boot will retire by rotation at the forthcoming AGM and offer themselves for re-appointment.

At no time during the year has any Director had any interest in any significant contract with the Company.

DIRECTORS’ INTERESTS

The interests of Directors in the share capital of the Company, other than with respect to options to acquire ordinary shares, were:

Between 31 December 2009 and 22 March 2010, being a date not more than one month prior to the date of the Notice of the AGM, there have been no changes in the beneficial and non-beneficial interests of any Director.

Details of Directors’ long-term incentive awards and share options are provided in the Directors’ Remuneration Report.

DIRECTORS’ INDEMNITY

Subject to the provisions of and to the extent permitted by relevant statutes, under the Articles of Association of the Company, the Directors and other officers throughout the year were indemnified out of the assets of the Company against liabilities incurred by them in the course of carrying out their duties or the exercise of their powers.

MAJOR SHAREHOLDER NOTIFICATIONS

Excluding Directors, at 22 March 2010, being a date not more than one month prior to the date of the Notice of the AGM, the following information had been disclosed to the Company in accordance with the requirements of Chapter 5 of the Disclosure Rules and Transparency Rules:

*  Notified as indirect voting rights.

Rysaffe Nominees and J J Sykes are joint registered holders on behalf of various Reis family trusts, whose holdings are also included under the beneficial and non-beneficial interests of J S Reis.

The holding of The Fulmer Charitable Trust, a registered charity, is also included under the non-beneficial interests of J S Reis in his capacity as a trustee.

GOING CONCERN

The Company’s business activities, together with the factors likely to affect its future development, performance and position, are set out in the Operations Review. The financial position of the Company, its cash flows, liquidity position and borrowing facilities are described in the Financial Review.

As highlighted in note 21 to the Financial Statements, the Company meets its day-to-day working capital requirements through a secured loan facility,which includes an overdraft facility, which is due for renewal on 7 May 2012. The current economic conditions create uncertainty for all businesses over a number of risk areas. As part of their regular going concern review the Directors specifically address all the risk areas that they consider material to the assessment of going concern. The report arising from these discussions is made available to the auditors and the conclusion is that the Directors have a reasonable expectation that the Company has adequate resources to continue in operational existence for the foreseeable future, and thus they continue to adopt the going concern basis of accounting in preparing the annual Financial Statements.

EMPLOYEES

Details of the Company’s policy on equal opportunities for disabled employees and on employee involvement are set out in the ‘Our Employees’ section of the Corporate Social Responsibility Report.

The Company continues to encourage employee share ownership through participation in its savings related share option scheme. The Henry Boot PLC 2000 Sharesave Scheme will expire on 26 May 2010 and accordingly an ordinary resolution (Resolution 11) will be proposed at the forthcoming AGM to enable a replacement scheme, to be known as The Henry Boot PLC 2010 Sharesave Plan, to be approved and adopted. In addition, an ordinary resolution (Resolution 10) will also be proposed at the AGM to approve and adopt a Company share option plan, to be known as The Henry Boot PLC 2010 Approved Company Share Option Plan. Details of both these plans are set out below.

SHARE PLANS

The Company proposes to establish a new approved Company share option plan (‘Approved Plan’) and sharesave plan to replace the Henry Boot PLC 2000 Sharesave Scheme (‘Sharesave Plan’) (together, ‘the Plans’) under which Directors and employees of the Henry Boot PLC group of companies can be offered options (‘Approved Options’ and ‘Sharesave Options’ respectively) to acquire ordinary shares.

Application has been made for HM Revenue & Customs’ approval for the Plans. It is anticipated that approval will be obtained shortly following the AGM.

The Approved Plan shall be administered by the Remuneration Committee of the Board (‘Remuneration Committee’) and the Sharesave Plan shall be administered by the Board.

Set out below is a summary of the principal features of both Plans. This summary assumes that Resolutions 10 and 11 set out in the Notice of AGM have been passed by Shareholders. The principal features of each Plan are as follows:

1. APPROVED PLAN

  • 1.1. PARTICIPATION
    • 1.1.1. ELIGIBILITY
    • Any full-time director or employee (full-time or part-time) of any company within the Group is eligible to participate. Actual participation is at the discretion of the Remuneration Committee. Approved Options are personal to the participant and not capable of assignment except that, on death, the Approved Option holder’s personal representatives may exercise the Approved Option within twelve months following the Approved Option holder’s death. Approved Options shall be granted by deed with no consideration payable by the participant.
    • 1.1.2. INDIVIDUAL PARTICIPATION LIMIT
    • (a) The aggregate subscription price (at the date of grant) of all outstanding Approved Options granted to any one participant under the Approved Plan and under any other approved share option scheme adopted or operated by the Company (but excluding options granted under any savings related share option scheme) may not exceed £30,000.
    • (b) The aggregate market value (at the date of grant) of ordinary shares over which Approved Options may be granted to any one participant in any one financial year of the Company under the Approved Plan shall not normally exceed two times the amount of that participant’s remuneration for that financial year.
  • 1.2. EXERCISE
    • 1.2.1. EXERCISE PRICE
    • The exercise price for each ordinary share under Approved Option under the Approved Plan will be the higher of the nominal value of an ordinary share at the date of grant and the market value of an ordinary share at the date of grant.
    • 1.2.2. EXERCISE OF APPROVED OPTIONS
    • An Approved Option will normally be exercisable only within the period of three to ten years after the date of grant.
    • Approved Options may also be exercised (even if this is within the period of three years from the date of grant) where employment ceases due to the participant’s death, ill-health, injury, disability, redundancy, retirement at normal retirement age, on the participant’s employing company or business ceasing to be within the Group or, at the discretion of the Remuneration Committee and to the extent specified by the Remuneration Committee, on the participant in question leaving employment for any other reason. In each of these situations (other than on death), the Approved Option must be exercised, if at all, by the expiry of the period of six months following the cessation of employment. In the case of death, the participant’s personal representatives may exercise the Approved Option within twelve months following the death. If the employment ceases for any other reason, the Approved Option will lapse. Where, in these circumstances, exercise is permitted within three years of the date of grant of an Approved Option, there shall be no requirement for any performance target to be met but the Approved Option may not be exercised in full, but on a pro rata basis taking into account the period of time which has elapsed since the date of grant other than where exercise if permitted at the Remuneration Committee’s discretion, in which case the Remuneration Committee shall specify the extent to which the Approved Option shall be capable of exercise.
  • 1.3. PERFORMANCE TARGET
  • The Remuneration Committee may impose objective conditions as to the performance of the Group which must normally be satisfied before Approved Options can be exercised.
  • 1.4. APPROVED PLAN LIMITS
  • The Approved Plan imposes limits on the numbers of ordinary shares over which Approved Options may be granted as follows:
    • 1.4.1. the total number of ordinary shares over which options to subscribe may be granted under all share option schemes of the Company (including the Approved Plan and Sharesave Plan), whether on a discretionary basis or on any other basis, and issued or issuable under all other share schemes of the Company shall not, in any consecutive ten-year period, exceed 10% of the ordinary shares in issue from time to time. Lapsed and surrendered options and ordinary shares transferred from treasury to satisfy Approved Options shall be disregarded for this purpose; and
    • 1.4.2. the total number of ordinary shares over which options to subscribe may be granted under all share option or other share schemes of the Company on a discretionary basis (including the Approved Plan but not the Sharesave Plan) shall not, in any consecutive ten year period, exceed 5% of the ordinary shares in issue from time to time. Lapsed and surrendered options but not ordinary shares transferred from treasury to satisfy options shall be disregarded for this purpose.
  • 1.5. INCOME TAX AND NATIONAL INSURANCE CONTRIBUTIONS
  • The Approved Plan contains provisions that will ensure that any income tax and employee’s national insurance contributions that arise as a result of the exercise of any Options will be payable by the participant. The Remuneration Committee may determine that the participant shall also be liable for any employer’s national insurance contributions which arise.
  • 1.6. TAKEOVERS
  • In the event of a takeover, amalgamation or reconstruction of the Company, Approved Options may be exercised under the Approved Plan to the extent determined by the Remuneration Committee, having regard to all the circumstances, within six months of such event. Alternatively, with the agreement of the acquiring company, Approved Options may be exchanged for Options over shares in the acquiring company or in a company associated with the acquiring company.

2. SHARESAVE PLAN

  • 2.1. ELIGIBILITY
  • Any full-time director and any employee (full-time or part-time) of any company within the Group who has been with the Group for a period determined by the Board (not exceeding 430 days) is eligible to participate (‘Participant’). Invitations to participate, as well as the Sharesave Options themselves, are personal to the Participant and may not be assigned.
  • 2.2. SAVINGS CONTRACT
  • Each Participant who applies for an Sharesave Option must enter into a savings contract (‘Contract’) approved by the Board for a period of three or five years. The Participant will make monthly savings to the Contract of an amount, decided by the Participant, up to the maximum specified by the Board. This will not exceed the maximum from time to time permitted by the legislation. No other payment is required for the grant of a Sharesave Option.
  • 2.3. APPLICATION FOR SHARESAVE OPTIONS
  • If the Board receives applications for Sharesave Options over more ordinary shares than are available, the applications shall be scaled down on a pro rata basis as specified in the rules of the Sharesave Plan to the minimum savings level. If there are still insufficient ordinary shares available after such scaling down, then successful applicants will be chosen by lot.
  • 2.4. EXERCISE OF SHARESAVE OPTIONS
  • The exercise price will be the higher of the nominal value of the ordinary shares and the market value of the ordinary shares as agreed with HM Revenue & Customs. The Board has discretion to offer a discount of up to 20% of the middle market value as so agreed, or such other percentage as may from time to time be permitted by the legislation.
  • The number of ordinary shares over which a Participant will be granted a Sharesave Option will be the number of ordinary shares which, taking into account the price payable on exercise of the Sharesave Option, can be purchased with the amount saved under the Contract (which will normally include a bonus payable under the Contract).
  • Except in the event of the Participant’s death, no Sharesave Option may be exercised later than six months after the maturity date of the Contract (‘Maturity Date’). In the event of death, the Sharesave Option may be exercised by the Participant’s personal representatives within twelve months of the Participant’s death but no later than twelve months after the Maturity Date.
  • Sharesave Options will lapse if the Participant ceases to be employed within the Group. Exceptionally, if the reason for ceasing to be so employed is the injury, disability or redundancy of the Participant or his retirement at normal retirement age, Sharesave Options may be exercised within six months after such cessation. In addition, if the Participant’s employing company or business ceases to be within the Group, Sharesave Options may generally be exercised within six months after such event (or, if the Participant ceases to be an employee of that company or business by reason of death, injury, disability, redundancy or retirement at normal retirement age, within six months of such cessation of employment, if later). Except as mentioned above, Sharesave Options may not be exercised later than six months after the Maturity Date.
  • If a Participant retires early by agreement with his employer and this occurs more than three years after the grant of the Sharesave Option, the Sharesave Option may be exercised within six months of his retirement.
  • If a Participant ceases to be employed within the Group for any other reason, that Sharesave Option shall lapse.
  • If a Participant reaches age 65 but continues to be employed within the Group, he may exercise his Sharesave Option within six months of reaching that age.
  • 2.5. SHARESAVE PLAN LIMITS
  • The Sharesave Plan imposes limits on the number of ordinary shares over which Sharesave Options may be granted. The total number of ordinary shares over which options to subscribe may be granted under all share option schemes of the Company (including the Approved Plan and Sharesave Plan), whether on a discretionary basis or on any other basis, and issued or issuable under all other share schemes of the Company shall not, in any consecutive ten year period, exceed 10% of the ordinary shares in issue from time to time. Lapsed and surrendered options but not ordinary shares transferred from treasury to satisfy options shall be disregarded for this purpose.
  • 2.6. TAKEOVERS
  • In the event of a takeover, amalgamation or reconstruction of the Company, Sharesave Options may be exercised under the Sharesave Plan within six months of such event. Alternatively, with the agreement of the acquiring company, Sharesave Options may be exchanged for options over shares in the acquiring company or in a company associated with the acquiring company.

3. FEATURES COMMON TO BOTH PLANS

  • 3.1. GRANT OF OPTIONS
  • Approved Options and Sharesave Options may initially be granted under each Plan after adoption of each Plan and approval by HM Revenue & Customs and, after that, normally within 42 days after the announcement by the Company of its half-yearly or final results or of its results for any other period. Without further shareholder approval, Approved Options and Sharesave Options may only be granted within ten years of shareholder approval of the Plans.
  • 3.2. SHARES ISSUED ON EXERCISE OF APPROVED OPTIONS AND SHARESAVE OPTIONS
  • Ordinary shares allotted under each Plan will rank equally with the Company’s existing issued ordinary shares (save that they will not qualify for any dividends or other distributions by reference to a record date prior to the date of exercise of the Approved Option or Sharesave Option).
  • 3.3. VARIATION OF SHARE CAPITAL
  • In the event of a variation of share capital by way of capitalisation, rights issue, sub-division, consolidation or reduction of share capital or otherwise, then the number of ordinary shares subject to a subsisting Approved Option or Sharesave Option and the price payable on exercise may be adjusted. Except in the case of a capitalisation issue, no adjustment may be made without the prior confirmation in writing of the auditors of the Company that the adjustment is in their opinion fair and reasonable. No adjustment can be made under the Plans without the prior approval of HM Revenue & Customs at any time whilst that Plan is an approved plan.
  • 3.4. ALTERATIONS TO THE PLANS
  • The Board or Remuneration Committee, as appropriate, may alter each Plan but certain amendments cannot take effect without shareholder approval, unless they are amendments to comply with or to take account of applicable legislation or statutory regulations or any change in them or to maintain favourable taxation treatment for the Company or Participants or potential Participants under the Plans. The amendments which will generally require shareholder approval are amendments to the limits on the number of ordinary shares which can be offered under the Plans, the category of persons who may participate, the exercise price of Approved Options or Sharesave Options, the number of ordinary shares over which a Participant may hold an Option, the period during which Approved Options or Sharesave Options may be granted and exercised, the rights attaching to ordinary shares subject to an Approved Option or Sharesave Option, the provisions for altering share capital and for altering the terms of the Plans and the provisions which apply on a winding up of the Company.
  • No alteration to a key feature of the Plans may be made without prior HM Revenue & Customs’ approval at any time whilst that plan is an approved plan.
  • 3.5. PENSION RIGHTS
  • None of the benefits which may be received under the Plans shall be pensionable.

HEALTH AND SAFETY

The Group recognises the importance of its employees working in a healthy and safe environment and its responsibilities to clients, visitors, contractors, tenants, members of the public and anyone who comes into contact with our operations. Further information is provided in the Corporate Social Responsibility Report.

SUPPLIER PAYMENT POLICY

The Group’s policy is for all companies within the Group to agree terms and conditions with their suppliers and subcontractors. Payments are then generally made on the basis of this agreement, providing the suppliers and subcontractors conform with the terms and conditions stipulated. At 31 December 2009 the Company had an average of 32 days’ (2008: 30 days’) purchases outstanding in trade creditors.

CHARITABLE DONATIONS

Donations for charitable purposes totalled £28,300 (2008: £56,818). Details of some of the charities supported are set out in the Corporate Social Responsibility Report. There were no political donations in either year.

CLOSE COMPANY STATUS

So far as the Directors are aware, the close company provisions of the Income and Corporation Taxes Act 1988 do not apply to the Company.

STATEMENT OF DISCLOSURE OF INFORMATION TO AUDITORS

The Directors of the Company who held office at the date of approval of this Annual Report each confirm that:

  • so far as they are aware, there is no relevant audit information (information needed by the Company’s auditors in connection with preparing their report) of which the Company’s auditors are unaware; and
  • they have taken all the steps that they ought to have taken as Directors in order to make themselves aware of any relevant audit information and to establish that the Company’s auditors are aware of that information.

ADDITIONAL INFORMATION FOR SHAREHOLDERS

Following the implementation of the EU Takeover Directive in the UK, the following description provides the required relevant information for shareholders where not already provided elsewhere in these Financial Statements. This description summarises certain provisions of the current Articles of Association of the Company (as adopted by special resolution on 22 May 1992 and amended by special resolution on 19 May 2006 and by special resolution on 21 May 2009) (‘the Articles’) and applicable English law concerning companies (the Companies Act 2006). This is a summary only and the relevant provisions of the Companies Act 2006 or the Articles should be consulted if further information is required.

SHARE CAPITAL

The Company’s issued share capital comprises two classes of shares being, respectively, ordinary shares of 10p each (‘ordinary shares’) and cumulative preference shares of £1 each (‘preference shares’). Further details of the share capital of the Company are set out in note 27 to the Financial Statements. As at 22 March 2010, the ordinary shares represent approximately 97% of the total issued share capital of the Company by nominal value and the preference shares represent approximately 3% of such total issued share capital. The ordinary shares and the preference shares are in registered form. Both classes of share are admitted to the Official List of The Listing Rules of The Financial Services Authority. With effect from 6 April 2010, a new listing regime comes into effect and will result in the Company’s ordinary shares being categorised as ‘Premium Listed’ and its preference shares as ‘Standard Listed’. Premium Listing will replace what is currently known as ‘Full Listing’ and Standard Listing replaces ‘Secondary Listing’ (which is currently only available to non-UK companies). A Standard Listing is based on EU minimum standards for floating a company on a public market whereas a Premium Listing demands higher standards and imposes more extensive disclosure requirements.

RIGHTS AND OBLIGATIONS ATTACHING TO SHARES

Subject to the Companies Act 2006 and other shareholders’ rights, any share may be issued with such rights and restrictions as the Company may by ordinary resolution decide or, if no such resolution has been passed or so far as the resolution does not make specific provision, as the Board of Directors for the time being of the Company (‘Board’) may decide. Subject to the Companies Act 2006, the Articles and any resolution of the Company, the Board may deal with any unissued shares as the Board may decide.

RIGHTS OF PREFERENCE SHARES

The preference shares carry the following rights in priority to the ordinary shares but carry no further right to participate in profits or assets:

  • the right to receive out of the profits of the Company a fixed cumulative preferential dividend at the rate of 5.25% per annum on the capital paid up thereon;
  • the right on a return of assets on a winding up to payment of the capital paid up thereon together with a sum calculated at the rate of 6.00% per annum in respect of any period up to the commencement of the winding up for which such preferential dividend as referred to above has not been paid; and
  • the right on a return of assets in a reduction of capital to repayment of the capital paid up thereon together with a sum equal to all arrears (if any) of such preferential dividend as referred to above.

The preference shares shall not confer on the holders of them any right to receive notice of or to be present or to vote at any general meeting (as defined in the Articles) unless either:

  • a resolution is proposed directly affecting the rights or privileges of the holders of the preference shares as a separate class; or
  • at the date of the notice convening the general meeting the fixed cumulative preferential dividend provided in the Articles shall be in arrears for more than six months.

VOTING

Under and subject to the provisions of the Articles and subject to any special rights or restrictions as to voting attached to any shares, on a show of hands every member present in person shall have one vote and on a poll every member who was present in person or by proxy shall have one vote for every share of which he is the holder. Under the Companies Act 2006, members are entitled to appoint a proxy to exercise all or any of their rights to attend and to speak and vote on their behalf at a general meeting or class meeting.

RESTRICTIONS ON VOTING

A member shall not be entitled to vote at any general meeting or class meeting in respect of any shares held by him unless all calls and other sums presently payable by him in respect of that share have been paid. In addition, holders of default shares (as defined in the Articles) shall not be entitled to vote during the continuance of a default in providing the Company with information concerning interests in those shares required to be provided (following relevant notification) under the Companies Act 2006.

DEADLINES FOR VOTING RIGHTS

Full details of the deadlines for exercising voting rights in respect of the resolutions to be considered at the AGM to be held on 28 May 2010 are set out in the Notice of AGM section of this Annual Report and Financial Statements.

DIVIDENDS AND DISTRIBUTIONS

The Company may, by ordinary resolution, declare a dividend to be paid to the members but no dividend shall exceed the amount recommended by the Board. The Board may pay interim dividends, and also any fixed rate dividend, whenever the financial position of the Company justifies its payment in the opinion of the Board. If the Board acts in good faith, none of the Directors shall incur any liability to the holders of shares with preferred rights for any loss they may suffer in consequence of the payment of an interim dividend on other shares.

WINDING UP

Under the Articles, if the Company is in liquidation, the liquidator may, with the sanction of an extraordinary resolution of the Company and any other authority required by the Statutes (as defined in the Articles):

  • divide among the members in specie the whole or any part of the assets of the Company and, for that purpose, value any assets and determine how the division shall be carried out as between the members or different classes of members; or
  • vest the whole or any part of the assets in trustees upon such trusts for the benefit of members as the liquidator with the like sanction, shall think fit.
VARIATION OF RIGHTS

The Articles specify that the special rights attached to any class of shares may either with the consent in writing of holders of three-fourths of the issued shares of that class, or with the sanction of an extraordinary resolution passed at a separate meeting of such holders (but not otherwise) be modified or abrogated.

TRANSFER OF SHARES

Under and subject to the restrictions in the Articles, any member may transfer all or any of his shares by an instrument of transfer in any usual form or in any other form which the Board may approve. The Board may, in its absolute discretion and without giving any reason, refuse to register any transfer of a share not fully paid up or any transfer of a share on which the Company has a lien. The Board may also refuse to register any transfer unless it is:

  • in respect of only one class of shares;
  • in favour of no more than four transferees;
  • left at the office or at such other place as the Board may decide for registration; and
  • accompanied by the certificate for the shares to be transferred and such other evidence (if any) as the Board may reasonably require to prove the title of the intending transferor or his right to transfer the shares.

The Articles also provide that nothing in them shall preclude title to any securities of the Company being recorded other than in writing in accordance with such arrangements as made from time to time be permitted by the Statutes and approved by the Board.

REPURCHASE OF SHARES

Subject to the provisions of the Statutes and to any rights conferred on the holders of any class of shares, the Company may purchase all or any of its shares of any class, including any redeemable shares.

AMENDMENT TO ARTICLES OF ASSOCIATION

Any amendments to the Articles may be made in accordance with the provisions of the Companies Act 2006 by way of special resolution.

APPOINTMENT AND REPLACEMENT OF DIRECTORS

The Directors shall not, unless otherwise determined by an ordinary resolution of the Company, be less than three nor more than 15 in number. Directors may be appointed by the Company by ordinary resolution or by the Board. A Director appointed by the Board shall retire from office at the next AGM of the Company but shall then be eligible for re-appointment. The Board may appoint one or more Directors to hold any office or employment under the Company for such period (subject to the Statutes) and on such terms as it may decide and may revoke or terminate any such appointment. At each AGM any Director who has been appointed by the Board since the previous AGM and any Director selected to retire by rotation shall retire from office. At each AGM one-third of the Directors who are subject to retirement by rotation or, if the number is not an integral multiple of three, the number nearest to one-third but not exceeding one-third, shall retire from office. In addition, there shall also be required to retire by rotation any Director who at any AGM of the Company shall have been a Director at each of the preceding two AGMs of the Company, provided that he was not appointed or re-appointed at either such AGM and he has not otherwise ceased to be a Director and been re-appointed by general meeting of the Company at or since either such AGM.

The Company may by extraordinary resolution, or by ordinary resolution of which special notice has been given in accordance with the Statutes, remove any Director before his period of office has expired notwithstanding anything in the Articles or in any agreement between him and the Company. A Director may also be removed from office by the service on him of a notice to that effect signed by or on behalf of all the other Directors, being not less than three in number. The office of a Director shall be vacated if:

  1. he is prohibited by law from being a Director; or
  2. he becomes bankrupt or makes any arrangement or composition with his creditors generally; or
  3. he is or may be suffering from mental disorder as referred to in the Articles; or
  4. for more than six months he is absent, without special leave of absence from the Board, from meetings of the Board held during that period and the Board resolves that his office be vacated; or
  5. he serves on the Company notice of his wish to resign.
POWERS OF THE DIRECTORS

The business of the Company shall be managed by the Board which may exercise all the powers of the Company, subject to the provisions of the Statutes, the Memorandum of Association of the Company, the Articles and any ordinary resolution of the Company. The Articles specify that the Board may exercise all the powers of the Company to borrow money and to mortgage or charge all or any part of its undertaking, property and assets and uncalled capital and to issue debentures and other securities, subject to the provisions of the Articles.

TAKEOVERS AND SIGNIFICANT AGREEMENTS

There are no significant agreements to which the Company is a party that take effect, alter or terminate on a change of control of the Company following a takeover bid with the exception of:

  • share plans as set out in the Directors’ Report; and
  • bank facilities which upon the occurrence of a takeover the lenders shall consult with the Company for a period of not greater than 30 days to determine whether and on what basis the lenders are prepared to continue the facilities.

There are no persons, with whom the Company has contractual or other arrangements, who are deemed by the Directors to be essential to the business of the Company.

INFORMATION RIGHTS

Beneficial owners of shares who have been nominated by the registered holder of those shares to receive information rights under Section 146 of the Companies Act 2006 are required to direct all communications to the registered holder of their shares, rather than to the Company’s registrar, Capita Registrars, or to the Company directly.

INDEPENDENT AUDITORS

As a result of the outcome of a tender process for the provision of audit services, resolutions appointing PricewaterhouseCoopers LLP as auditors and authorising the Directors to fix their remuneration will be proposed at the AGM (Resolutions 4 and 5). The current auditors, Hawsons, have confirmed that they will not seek re-appointment as auditors of the Company at the AGM and that they will therefore cease to hold office at the conclusion of the AGM.

On behalf of the Board


J T SUTCLIFFE

COMPANY SECRETARY

1 April 2010

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