This is the Directors' Report from the 2012 Annual Report
The Directors present their Annual Report on the affairs of the Group, together with the financial statements and auditors’ report for the period ended 29 December 2012. The Corporate Governance report set out on pages 32 to 38 of the Annual Report forms part of this report.
Principal Activities
The Group’s main activities are the publishing of local and regional weekly, evening and morning newspapers; both paid-for and free in both in print and digital format, together with specialist publications in print, online or via mobile technologies, and related services in the United Kingdom and Republic of Ireland.
Review of Business
The results for the year 2012 are set out in the Group Income Statement on page 59 of the Annual Report. The Group loss for the period before taxation was £6,765,000 (2011: loss of £143,803,000) which results in a net profit after tax for the period of £5,611,000 (2011: loss of £88,937,000). Details of the business activities during the year, the financial results, the financial position and the principal risks and uncertainties facing the Group are set out in the Business Review on pages 12 to 29 of the Annual Report.
The subsidiary undertakings principally affecting the profit and net assets of the Group are disclosed in Note 35 to the financial statements of the Annual Report.
Dividends
No interim dividend was paid and the Directors recommend no final dividend for the period. The preference dividend was paid on 29 June and 29 December 2012.
Share Capital
Details of share capital are shown in Note 27 in the Annual Report.
Environmental Policy
The Board acknowledges that environmental protection is one of the Group’s business responsibilities. It aims for a continuous improvement in the Group’s environmental performance and to comply with all relevant regulations. A documented environmental policy to monitor performance and to take action where appropriate is in force.
Donations
Charitable donations amounted to £2,000, principally to local charities serving the communities in which the Group operates (2011: £27,000). There were no payments for political purposes.
Supplier Payment Policy
The Group’s policy is to settle terms of payment with suppliers when agreeing the terms of each transaction, ensuring that suppliers are made aware of the terms of payment, and to abide by the terms of payment. Trade creditors of the Group at the end of the period were equivalent to 33 days purchases (2011: 30 days), based on the average daily amount invoiced by suppliers during the period.
Financing Policy and Derivatives
The Group’s policies are set out in Notes 21 to 23 and Note 32 in the Annual Report. These also include details of financial instruments and derivatives.
Auditor
Each of the persons who is a Director at the date of approval of this report confirms that:
- so far as the Director is aware, there is no relevant audit information of which the Company’s auditor is unaware; and
- the Director has taken all the steps that he/she ought to have taken as a Director in order to make himself/herself 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 s.418 of the Companies Act 2006.
Forward-looking Statements
Where the Directors’ Report (including the Performance Highlights, Business Review, Operational Review, Performance Review and Corporate Governance Report) contains forward-looking statements these are made by the Directors in good faith based on the information available to them at the time of their approval of this report. These statements will not be updated or reported upon further. Consequently such statements should be treated with caution due to the inherent uncertainties including both economic and business risk factors underlying such forward looking statements or information.
Directors and Their Interests
Under the Company’s Articles of Association, each Director is subject to retirement every three years and to election at the first Annual General Meeting after their appointment. In addition, in 2013, all Directors who wish to continue in office will offer himself/herself for re-election at the forthcoming Annual General Meeting.
As a consequence, Ian Russell, Ashley Highfield, Grant Murray, Mark Pain, Camilla Rhodes, Ralph Marshall, Geoff Iddison and Kjell Aamot will offer themselves for re-election.
The Directors who held office at 29 December 2012 had the following interests in the ordinary share capital of the Company:
| Ordinary Shares of 10p each | % of Share capital | 29 December 2012 |
| Ian Russell | 0.6% | 3,916,163 |
| Ashley Highfield | 0.2% | 1,016,270 |
| Grant Murray | - | - |
| Danny Cammiade | 0.2% | 1,321,037 |
| Ralph Marshall | 0.1% | 624,848 |
| Mark Pain | 0.1% | 603,272 |
| Camilla Rhodes | 0.1% | 396,807 |
| Geoff Iddison | 0.1% | 607,245 |
| Kjell Aamot | 0.1% | 556,666 |
In addition to the shareholdings shown above, which are all held beneficially, and the share options as shown on page 48 of the Annual Report, Ashley Highfield, Danny Cammiade and Grant Murray held interests in 16,198,517 (2011: 11,958,165) shares at 29 December 2012 by virtue of their status as potential beneficiaries of the Johnston Press plc Employee Share Trust.
Since 29 December 2012, Danny Cammiade has purchased 1,923 shares through the Share Incentive Plan.
No Director had any material interest in any contract, other than a service contract, with the Company or any subsidiary at any time during the year.
Structure of Shares
Details of the issued share capital, together with details of the movements in the Company’s issued share capital during the period are shown in Note 27 in the Annual Report. The Company’s issued ordinary share capital was 639,746,083 shares at 29 December 2012. As part of the refinancing completed on 28 August 2009, the Company issued warrants over 5.0% of its issued share capital to the Group’s lenders, exercisable at any time over the 5 year period ending 27 August 2014 (the ‘First Issue Warrants’). As part of the refinancing completed on 24 April 2012 (i) the exercise period for the First Issue Warrants was extended to 30 September 2017 (the ‘Warrant Expiry Date’), (ii) the Company issued further warrants over just under 2.5% of its issued share capital to the Group’s lenders (the ‘Second Issue Warrants’) and (iii) the Company undertook that on or before 30 September 2012, and subject to receiving all necessary shareholder approvals, authorisations and powers, it would issue further warrants over just under an additional 5.0% of its issued share capital as at 23 April 2012 to the Group’s lenders (the ‘Third Issue Warrants’). The Third Issue Warrants were subsequently issued on 25 September 2012. Each of the First Issue Warrants, Second Issue Warrants and Third Issue Warrants (together the ‘Warrants’) are exercisable at 10p each at any time prior to the Warrant Expiry Date. No Warrants were exercised during the 52 week period ended 29 December 2012.
The Company has one class of ordinary shares which carry no right to fixed income. Each share carries the right to one vote at general meetings of the Company. The redeemable cumulative preference shares carry 13.75% interest but do not carry voting rights. The percentage of the issued nominal value of the ordinary shares is 98.3% of the total issued nominal value of all share capital.
There are no specific restrictions on the size of a holding or on the transfer of shares, which are both governed by the general provisions of the Articles of Association and prevailing legislation. The Directors are not aware of any agreements between holders of the Company’s shares that may result in restrictions on the transfer of securities or on voting rights.
Details of employee share schemes are set out in Note 30 in the Annual Report.
No person has any special rights of control over the Company’s share capital and all issued shares are fully paid. With regard to the appointment and replacement of Directors, the Company is governed by its Articles of Association, the United Kingdom Corporate Governance Code issued by the Financial Reporting Council, the Companies Acts and related legislation. The Articles themselves may be amended by special resolution of the shareholders. The powers of Directors are described in a schedule of matters reserved for approval of the Board, and the Corporate Governance Statement on pages 32 to 38 of the Annual Report.
Substantial Shareholdings
So far as the Directors are aware the only holders of 3% or more of the Ordinary Share Capital of the Company and any other major shareholders, other than Directors, as at the date of this report are as follows:
| Ordinary Shares of 10p each | % Holding | Number |
| PanOcean Management Ltd (on behalf of Usaha Tegas) | 20.0 | 127,947,952 |
| Orbis Investment Management Ltd | 11.6 | 73,933,670 |
| Tindle Newspapers Ltd | 8.0 | 51,179,698 |
| Cazenove Capital Management Ltd | 5.6 | 35,934,743 |
Employee Involvement
It is the policy of the Group to encourage and develop all members of staff to realise their maximum potential. Wherever possible, vacancies are filled from within the Group and adequate opportunities for internal promotion are created. The Board is committed to a systematic training policy and the Company has a comprehensive training and development programme creating the opportunity for employees to maintain and improve their performance and to develop their potential to a maximum level of attainment. In this way, staff will make their best possible contribution to the organisation’s success. The Group supports the principle of equal opportunities in employment and opposes all forms of unlawful or unfair discrimination on the grounds of race, age, nationality, religion, ethnic or national origin, sexual orientation, gender or gender reassignment, marital status or disability. It is also the policy of the Group, where possible, to give sympathetic consideration to disabled persons in their application for employment with the Group and to protect the interests of existing members of the staff who are disabled.
Close Company Status
So far as the Directors are aware the Company is not a close company for taxation purposes.
Change of Control
In the event of a change of control the Group’s lenders (private placement loan note holders and various banks) have the option to declare all amounts outstanding repayable on demand.
Directors’ Liability
As permitted by the Companies Act 2006 (the ‘Act’), the Company has insurance cover for the Directors against liabilities in relation to the Group.
Electronic Voting
The Company has made provision for shareholders to vote electronically on the Resolutions to be considered at the Annual General Meeting and full instructions are included on the Form of Proxy, issued to shareholders with the Annual Report.
Special Business
Five resolutions (resolutions 13 to 17) are set out under special business in the notice of this year’s Annual General Meeting. The first two of these resolutions will be proposed as ordinary resolutions and the others as special resolutions.
The first resolution, Resolution 13, concerns a proposal to amend the Johnston Press Employee Share Trust (the “Trust”) to increase the maximum number of shares which may be held by the Trust at any time from 5.0% to 7.5% (excluding shares under the Company’s Share Incentive Plan or unconditionally allocated to and held on behalf of the beneficiaries of the Trust). This is proposed in order to increase the Board’s ability to use certain share schemes to provide suitable incentives to the Company’s management.
The purpose of the next resolution is to renew the Directors’ authority to allot shares in the Company. Part (i) of Resolution 14 seeks authority to allot shares, and to grant rights to subscribe for or convert any security into shares in the Company up to a maximum nominal amount representing 33.33% of the existing issued ordinary share capital of the Company. The second part of Resolution 14 seeks additional authority to allot equity securities equivalent to a further 33.33% of the existing ordinary share capital of the Company. In accordance with recommended best practice, this additional authority will be applied to fully pre-emptive rights issues only and the authorisation will be valid for one year only. The Directors have no current intention to allot shares or grant rights to subscribe for or convert any security into shares except in connection with employee share schemes or on conversion of existing warrants, and the authority, if approved, will expire at the end of the Annual General Meeting in 2014.
The third resolution, Resolution 15 (which is the first of the three special resolutions), relates to the power given to the Directors to allot equity securities for cash without the statutory pre-emption provisions of the Act applying. In accordance with best practice guidelines, this authority is limited to allotments representing in total up to 5% of the existing issued ordinary share capital and to allotments in connection with a rights issue. This power, which accords with normal practice, currently expires on the date of this year’s Annual General Meeting. The purpose of the resolution is to renew this power for a further year.
The fourth item of special business is the renewal of the authority of the Company to purchase its own ordinary shares as permitted under its Articles of Association and the Act. Resolution 16 will, if passed, give authority to make such purchases in the market. The Directors have no immediate intention of using such authority and would do so only if they consider it to be in the best interests of shareholders generally and that an improvement in earnings per share would result. This Resolution specifies the maximum number of ordinary shares which may be purchased (representing approximately 10% of the Company’s existing issued ordinary share capital) and the minimum and maximum prices at which they may be bought, reflecting the requirements of the Act and the Financial Services Authority.
The final resolution to be proposed is to permit the Company to call General Meetings (other than Annual General Meetings) on not less than 14 days notice as permitted by the Act. Although no such meetings are currently planned, the Directors believe that having authority to do so may, in some circumstances, assist with the efficient discharge of the Company’s business. The Company intends to continue to provide as much notice as practicable of General Meetings and would normally use this authority only where it would be to the advantage of shareholders as a whole.
Auditor
Ordinary resolutions to re-appoint Deloitte LLP as the Company’s auditor and to authorise the Directors to fix their remuneration will be proposed at the forthcoming Annual General Meeting.
By Order of the Board
P McCall
Secretary
108 Holyrood Road
Edinburgh
EH8 8AS
19 March 2013