AGM Information • Dec 1, 2016
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 recommended to seek your own financial advice immediately from your stockbroker, bank manager, solicitor, accountant or other independent financial adviser authorised under the Financial Services and Markets Act 2000, as amended (''FSMA''), if you are resident in the United Kingdom or, if not, from another appropriately authorised independent financial adviser.
If you have sold or otherwise transferred all your Ordinary Shares in Domino's Pizza Group plc (the ''Company''), please send this document, together with the accompanying Form of Proxy, as soon as possible, to the purchaser or transferee, or to the stockbroker, bank or other agent through whom the sale or transfer was effected for delivery to the purchaser or transferee. If you have sold or otherwise transferred only part of your holding, you should retain these documents.
(Incorporated in England and Wales under the Companies Act 1985 with company number 03853545)
This document should be read as a whole. Your attention is drawn to the letter from the Chairman which is set out on pages 4 to 5 of this document.
Notice of a General Meeting of Domino's Pizza Group plc to be held at 10:00 a.m. on 10 January 2017 at the Company's registered offices at 1 Thornbury, West Ashland, Milton Keynes, Buckinghamshire MK6 4BB, United Kingdom is set out on pages 16 to 19 of this document. Details of the actions you are recommended to take are set out on page 5 of this document. Whether or not you plan to attend the General Meeting, please complete the enclosed Form of Proxy and return it in accordance with the instructions printed thereon as soon as possible, but in any event so as to be received by the Company's registrars, Equiniti Limited at Aspect House, Spencer Road, Lancing, West Sussex BN99 6DA, United Kingdom by no later than 10:00 a.m. on 8 January 2017 (or, in the case of any adjournment, not later than 48 hours before the time fixed for the holding of the adjourned meeting). Alternatively, if you hold Ordinary Shares in uncertificated form, you may also appoint a proxy by completing and transmitting a CREST proxy instruction in accordance with the procedures set out in the CREST Manual ensuring that it is received by Equiniti Limited (ID: RA19) by no later than 10:00 a.m. on 8 January 2017 (or in the case of any adjournment, not later than 48 hours before the time fixed for the holding of the adjourned meeting). The completion and return of a Form of Proxy or using the CREST electronic proxy appointment service will not prevent you from attending, speaking and voting at the General Meeting, or any adjournment thereof, in person should you wish to do so.
This document should be read in conjunction with the accompanying Form of Proxy and the definitions set out in this document. The whole of this document should be read and, in particular, your attention is drawn to the letter from the Chairman of the Company.
No person has been authorised to give any information or make any representation other than those contained in this document and, if given or made, such information or representation must not be relied on as having been so authorised. The delivery of this document shall not, under any circumstances, create any implication that there has been no change in the affairs of the Company since the date of this document or that the information in it is correct as at any subsequent time.
Numis Securities Limited (''Numis''), which is authorised and regulated by the Financial Conduct Authority (the ''FCA'') in the United Kingdom, is acting solely for the Company in relation to the matters set out or referred to in this document (the ''Transaction'') and nobody else and will not be responsible to anyone other than the Company for providing the protections afforded to clients of Numis nor for providing advice in relation to the Transaction. Apart from the responsibilities and liabilities, if any, which may be imposed upon Numis by FSMA or the regulatory regime established thereunder, Numis does not accept any responsibility whatsoever or make any representation or warranty, express or implied, concerning the contents of this document, including its accuracy, completeness or verification, or concerning any other statement made or purported to be made by it, or on its behalf, in connection with the Company or the Transaction and nothing in this document is, or shall be relied upon as, a promise or representation in this respect, whether as to the past or future. Numis accordingly disclaims, to the fullest extent permitted by law, all and any responsibility and liability whether arising in tort, contract or otherwise (save as referred to herein) which it might otherwise have in respect of this document or any such statement.
| Page | |
|---|---|
| Expected timetable of principal events | 3 |
| Directors, Company Secretary and advisers | 3 |
| Part I – Letter from the Chairman | 4 |
| Part II – Business of the General Meeting | 6 |
| Part III – Additional information | 10 |
| Part IV – Definitions | 14 |
| Part V – Notice of General Meeting | 16 |
Publication of this document 1 December 2016 Latest time for receipt of Forms of Proxy for General Meeting 10:00 a.m. 8 January 2017 Record date 6:30 p.m. 8 January 2017 General Meeting 10:00 a.m. 10 January 2017
Future times and dates are indicative only and are subject to change by the Company. If the expected timetable of events changes from the above, the Company will release an announcement to this effect.
References to time in this document are to London time (Greenwich Mean Time).
Stephen Hemsley (Non-Executive Chairman) Colin Halpern (Non-Executive Vice Chairman) David Wild (Chief Executive Officer) Rachel Osborne (Chief Financial Officer) Helen Keays (Non-Executive Director and Senior Independent Director) Steve Barber (Non-Executive Director) Kevin Higgins (Non-Executive Director) Ebbe Jacobsen (Non-Executive Director)
Adrian Bushnell
10 Paternoster Square London EC4M 7LT United Kingdom
3 More London Riverside London SE1 2AQ United Kingdom
Aspect House Spencer Road Lancing West Sussex BN99 6DA United Kingdom
Domino's Pizza Group plc 3
(Incorporated in England and Wales under the Companies Act 1985 with company number 03853545)
Stephen Hemsley (Non-Executive Chairman) Colin Halpern (Non-Executive Vice Chairman) David Wild (Chief Executive Officer) Rachel Osborne (Chief Financial Officer) Helen Keays (Non-Executive Director and Senior Independent Director) Steve Barber (Non-Executive Director) Kevin Higgins (Non-Executive Director) Ebbe Jacobsen (Non-Executive Director)
1 Thornbury West Ashland Milton Keynes Buckinghamshire MK6 4BB United Kingdom
1 December 2016
Dear Shareholder,
The Board has become aware of certain issues in respect of the Company's procedures for the payment of certain of its dividends and purchases of its own Ordinary Shares in certain Relevant Financial Periods, further details of which are set out in paragraph 1 of Part II of this document.
By way of background, under the Companies Act 2006 (or, where applicable, the Companies Act 1985) (the ''Act''), a public limited company may pay a dividend only out of its distributable profits as shown in the last accounts filed at Companies House. Similar requirements relate to the purchase by a public company of its own shares. In addition to having sufficient distributable profits, the Act provides that a public limited company may only pay a dividend: (i) if at the time the dividend is paid the amount of its net assets is not less than the aggregate of its called-up share capital and undistributable reserves; and (ii) if, and to the extent that, the dividend does not reduce the amount of those net assets to less than the aggregate amount of its called-up share capital and undistributable reserves.
Prior to paying any dividend and purchasing its own Ordinary Shares, the Company should have ensured that at all times it had the requisite level of distributable profits and, in the case of any dividend payments, the requisite level of net assets by reference in each case to relevant accounts (as defined in the Act). Furthermore, where a company's annual accounts show insufficient distributable profits to make a distribution, a company may make a distribution by reference to interim accounts (as defined in the Act). Where relevant, the Company should have prepared interim accounts showing the requisite level of distributable profits and, if appropriate, net assets and filed such interim accounts at Companies House prior to making the relevant Dividend and/or the Share Buy-back in order to satisfy the requirements of the Act.
The Board has also become aware that it gave assistance to its Employee Benefit Trust on a number of occasions which did not comply with the requirements of the Act. The Act provides that, where a public limited company gives assistance to its employee benefit trust, it is only permitted to give such assistance to the extent that the net assets of the company are not reduced by such assistance or, to the extent that the net assets are so reduced, the assistance is provided out of distributable profits. At the time of each of the EBT Payment and Liabilities, the Company should have had distributable profits (as shown in relevant accounts) equal to at least the amount of each of the EBT Payment and Liabilities. Further details of the assistance given by the Company is set out in paragraph 1 of Part II of this document.
At the time the Company made each Relevant Distribution, it either did not have sufficient distributable profits and/or the requisite level of net assets (as applicable) or it had such sufficient distributable profits and/or such net assets (as applicable) but it had not prepared and filed with Companies House interim accounts showing this. Accordingly, each of the Relevant Distributions were, regrettably, made by the Company otherwise than in accordance with the Act. The total amount of the Relevant Distributions was approximately £84.7 million.
The purpose of this document is to convene a general meeting to propose a resolution, which will, if passed, give the Board authority to enter the deeds of release described in Part II of this document and put all potentially affected parties so far as possible in the position in which they were always intended to be had the Relevant Distributions been made in accordance with the Act.
The Company has been advised that, as a consequence of each of the Relevant Distributions having been made otherwise than in accordance with the Act, it may have claims against past and present shareholders who were recipients of any of the Dividends and against persons who were directors of the Company at the time of payment of any of the Dividends, at the time of entry into each of the Share Buy-backs and at the time the Company incurred each of the EBT Liabilities and made the EBT Payment. Therefore, it is proposed that the Company enter into the Shareholders' Deed of Release and the Directors' Deed of Release. The consequence of the entry into of these deeds by the Company is that the Company will be unable to make any claims against:
(a) the Directors and Former Directors in respect of the Relevant Distributions; and
(b) past and present shareholders of the Company who were recipients of any of the Dividends,
in each case in respect of such payment being made or liability being incurred otherwise than in accordance with the Act.
In addition, the Company is proposing to enter into the Buy-back Deeds with each of Numis and Altium. The purpose of the entry into of the Buy-back Deeds, is, inter alia, to effect the lawful transfer of the Ordinary Shares that are the subject of the Share Buy-backs in accordance with the Act, thereby transferring legal and equitable title in the Ordinary Shares from the relevant Broker to the Company. For further details please see paragraph 6 of Part II of this document.
The Company also proposes to enter into the EBT Deed of Release which will waive and release the Employee Benefit Trust from any and all claims which the Company has or may have in respect of requiring the repayment of the EBT Payment and Liabilities. For further details please see paragraph 7 of Part II of this document.
The entry by the Company into each of the Directors' Deed of Release and Shareholders' Deed of Release constitute related party transactions for the purposes of the Listing Rules. Therefore, the Resolution will also seek the specific approval of the Company's shareholders to the entry into of each of the Directors' Deed of Release and the Shareholders' Deed of Release as related party transactions, in accordance with the requirements of the Listing Rules.
Notice of a General Meeting of the Company, which will be held at the Company's registered office at 1 Thornbury, West Ashland, Milton Keynes, Buckinghamshire MK6 4BB, United Kingdom at 10:00 a.m. on 10 January 2017, is set out in Part V of this document.
Whether or not you will be attending the General Meeting, I would urge you to complete, sign and return the accompanying Form of Proxy to the Company's registrars, Equiniti Limited at Aspect House, Spencer Road, Lancing, West Sussex BN99 6DA, United Kingdom as soon as possible and, in any event, so as to arrive by no later than 10:00 a.m. on 8 January 2017. Alternatively, you can register your proxy electronically in accordance with the instructions on the Form of Proxy. Further details are given in the notes to the Notice set out on page 19 of this document. Completion and return of the Form of Proxy will not preclude shareholders from attending and voting in person at the General Meeting, should they so wish. The attention of corporate shareholders wishing to appoint more than one corporate representative is drawn to note 9 of the Notice set out on page 19 of this document.
This document is also being sent to those who have been nominated to receive information rights under section 146 of the Act who do not themselves have a right to appoint a proxy or proxies. The attention of such nominated persons is drawn to note 2 of the Notice set out on page 19 of this document.
The Company intends to adopt FRS 101, a reduced disclosure regime, for its individual financial statements. Shareholders should refer to paragraph 10 of Part II of this document for further information.
The Board has not considered whether the Resolution is in the best interests of the Company, given the interests of each of the Directors in the Resolution. Accordingly, the Board cannot recommend that shareholders vote in favour of the Resolution, but recommends that shareholders vote on the Resolution. Notwithstanding this, the Board has been advised by Numis, in its capacity as the Company's sponsor, that: (i) the waiver of claims against the Directors and Former Directors in respect of the Relevant Distributions (pursuant to paragraph 1.4 of the Resolution); (ii) the entry into of the Directors' Deed of Release; (iii) the waiver of claims against the shareholders pursuant to paragraph 1.1 of the Resolution; and (iv) the entry into of the Shareholders' Deed of Release are fair and reasonable so far as the shareholders of the Company are concerned.
Given their interest in the Resolution, the Directors have undertaken to abstain, and to take all reasonable steps to ensure that their associates abstain, from voting on the Resolution. As at 24 November 2016 (being the latest practicable date prior to the publication of this document), the Directors were recorded in the Company's register of members as holding a total of 3,487,350 Ordinary Shares, representing approximately 0.670 per cent of the Company's existing ordinary share capital. In addition, each of Paul Doughty and OppenheimerFunds, Inc. are related parties (as defined in the Listing Rules) of the Company. Paul Doughty is a related party as he was a director of the Company in the twelve months prior to the date of this document and OppenheimerFunds, Inc. owns more than 10% of the share capital of the Company. OppenheimerFunds, Inc. has undertaken not to vote on, and to ensure that its associates abstain from voting on, the Resolution. Paul Doughty does not have any interests in Ordinary Shares and therefore cannot vote on the Resolution.
In accordance with current best practice and to ensure voting accurately reflects the views of shareholders, it will be proposed at the General Meeting that voting on the Resolution will be conducted by way of a poll vote rather than by a show of hands and the relevant procedures will be explained at the meeting.
The Board has taken steps (referred to in paragraph 11 of Part II) to ensure that, in future, the issues referred to in this document do not arise in relation to the payment of dividends, the purchase by the Company of its own shares, the incurring by the Company of any liability to the Employee Benefit Trust, or the making by the Company of any payment or gift to the Employee Benefit Trust. We are sorry that this has occurred and are grateful for shareholders' understanding in respect of the issues set out in this document. On behalf of the Board, thank you for your continued support of the Company.
Yours sincerely,
Stephen Hemsley Chairman
The Board has become aware of certain technical issues in respect of the Company's procedures for the payment of certain of its dividends and the purchases of certain of its Ordinary Shares and the funding by the Company of the Employee Benefit Trust in certain Relevant Financial Periods. These issues resulted in each of the Relevant Distributions being made otherwise than in accordance with the Act.
These issues did not affect all of the dividends paid by the Company and all of the purchases of Ordinary Shares made by the Company in the Relevant Financial Periods but did affect:
The Company has been advised that, as a consequence of the Relevant Distributions having been made otherwise than in accordance with the Act, it may have claims against past and present shareholders who were recipients of any of the Dividends and against persons who were directors of the Company at the time of payment of any of the Dividends, at the time of entry into the relevant Share Buy-backs and at the time the Company incurred each of the EBT Liabilities and made the EBT Payment.
The Board notes, however, that the Company has no intention of bringing any such claims.
The Company has been further advised that the relevant Broker is entitled to be reinstated on the Company's register of members in respect of the Ordinary Shares that were the subject of the relevant Share Buy-backs provided that, upon such reinstatement, the relevant Broker accounts to the Company for the monies originally paid to it for the relevant Ordinary Shares.
The Board also notes that at the time of each of the relevant Share Buy-backs, the relevant Broker was not aware that the relevant Ordinary Shares were purchased by the Company otherwise than in accordance with the Act.
In order to: (i) remedy the potential consequences of the Relevant Distributions having been made by the Company otherwise than in accordance with the Act; (ii) obtain the approval of shareholders for the related party transactions in accordance with the Listing Rules; and (iii) put all potentially affected parties so far as possible in the position in which they were always intended to be had the Relevant Distributions been made in accordance with the requirements of the Act, the Company is proposing the Resolution, the full text of which is set out in the Notice contained in Part V of this document.
If passed, the effect of the Resolution, which will be proposed as a special resolution, will be to:
The approach that the Company is proposing by way of the Resolution in respect of the Dividends and the Share Buy-backs is consistent with the approach taken by other listed companies that have, similarly, made such distributions otherwise than in accordance with the Act.
The approach that the Company is proposing involves the authorisation of the appropriation of the distributable profits of the Company to the payment of each of the Relevant Distributions. As a matter of common law, it is necessary for the appropriation of distributable profits to be approved by shareholders.
The Company has been advised that it is also preferable for shareholders to approve the Company's entry into of the Shareholders' Deed of Release, since the release of those past and present shareholders who appeared on the register of members on the record date for any of the Dividends (or their personal representatives (and their successors in title) if they are deceased) from any and all claims which the Company has or may have in respect of the payment of any of the Dividends will, insofar as those persons remain shareholders of the Company, comprise a shareholder distribution.
The entry by the Company into the Shareholders' Deed of Release and consequential waiver of any rights of the Company to make claims against shareholders in respect of the Dividends, constitutes a related party transaction (as defined in the Listing Rules), as OppenheimerFunds, Inc. owns Ordinary Shares totalling 10% or more of the total votes able to be cast at a general meeting of the Company. As a result, the Resolution must be approved by the Company's shareholders who are not interested related parties. Accordingly, OppenheimerFunds, Inc. which owns 10.524% of the total votes able to be cast at a general meeting of the Company (as at 24 November 2016 (being the latest practicable date prior to the publication of this document)) and its associates are precluded from voting on the Resolution. OppenheimerFunds, Inc. has undertaken to abstain, and to take all reasonable steps to ensure that its associates abstain, from voting on the Resolution.
The proposed authorisation of the appropriation of the Company's distributable profits to the payment of any of the Dividends and the entry by the Company into the Shareholders' Deed of Release will not, however, have any effect on the Company's financial position. This is because the aggregate amount of the Dividends is equal to and offset by the release of each Recipient Shareholder from the liability to repay the amount already paid and the Company will not be required to make any further payments to shareholders in respect of any of the Dividends.
In addition, the Company has not recorded or disclosed the potential right to make claims against past and present shareholders who were recipients of the Dividends as an asset or a contingent asset in its financial statements. This is because, under the Company's UK GAAP accounting policies, it could only record such a right as an asset when an inflow of economic benefits in favour of the Company as a result of such claim or claims being brought was virtually certain. The value of any economic benefit which the Company may derive from bringing claims against past and present shareholders is uncertain on the basis that it may be possible for past and present shareholders to establish defences to any such claims and there can be no certainty as to the amounts which could be recovered by the Company.
Furthermore, under UK GAAP, a contingent asset is required to be disclosed only when an inflow of economic benefits in favour of the Company is virtually certain. The Directors of the Company have concluded that any inflow of economic benefits as a result of such claims is not virtually certain. Accordingly, the Company's entry into of the Shareholders' Deed of Release will not result in any decrease in the Company's net assets or the level of its distributable reserves.
Under the Act and the Company's articles of association, it is necessary for shareholders to approve the Company's waiver and release of any rights of the Company to make claims against Directors and Former Directors in respect of the Relevant Distributions, since the Board would itself have a potential conflict of interest in approving such a waiver and release. This is because the members of the Board are named as beneficiaries of the waiver and release.
In addition, the entry by the Company into the Directors' Deed of Release and consequential waiver of any rights of the Company to make claims against past and present directors in respect of the Relevant Distributions, constitutes a related party transaction (as defined in the Listing Rules) as each of the Directors and Paul Doughty (who was a director of the Company in the twelve months prior to the date of the publication of this document) is a related party for the purposes of the Listing Rules. As a result, the Resolution must be approved by the Company's shareholders who are not interested related parties in the Directors' Deed of Release. Accordingly, each of the Directors and their respective associates are precluded from voting on the Resolution and the Directors have undertaken to abstain, and to take all reasonable steps to ensure that their respective associates abstain, from voting on the Resolution. Paul Doughty does not have any interests in Ordinary Shares and therefore cannot vote on the Resolution. As mentioned in paragraph 4 of this Part II, OppenheimerFunds, Inc. and its associates will also not vote on the Resolution.
The entry by the Company into the Directors' Deed of Release will not have any effect on the Company's financial position because, as with the position in relation to the Dividends and potential claims against past and present shareholders, the Company has not recorded or disclosed its right potentially to make claims against the Directors and Former Directors in respect of the Relevant Distributions as an asset or contingent asset of the Company.
Again, this is because, under the Company's UK GAAP accounting policies, it could only record such a right as an asset when an inflow of economic benefits in favour of the Company as a result of such claim or claims being brought was virtually certain. The value of any economic benefit which the Company may derive from bringing claims against the Directors and Former Directors is uncertain on the basis that the Directors and Former Directors would be entitled to seek the court's relief against such claims and there can be no certainty as to the amounts which could be recovered by the Company.
In addition, under UK GAAP, a contingent asset is required to be disclosed only when an inflow of economic benefits in favour of the Company is virtually certain. The Directors of the Company have concluded that any inflow of economic benefits as a result of such claims is not virtually certain. Therefore, the Company's entry into of the Directors' Deed of Release does not involve the disposition of any asset or contingent asset by the Company in favour of the Directors and Former Directors.
The Company's entry into of the Buy-back Deeds requires shareholder authorisation under section 694 of the Act. For the purposes of the Act, each Buy-back Deed constitutes an 'off-market' purchase contract, where the relevant Ordinary Shares will be purchased otherwise than on a recognised investment exchange. The authority to make the off-market purchases pursuant to the Buy-back Deeds (which are specific to the matters referred to in this document) will expire at the conclusion of the next annual general meeting of the Company, or on 30 June 2017, whichever is sooner. A total of 23,208,513 Ordinary Shares were bought back by the Company under the Share Buy-backs. Pursuant to the Share Buy-backs, the Company bought back the Ordinary Shares from Numis or, as the case may be, Altium. Of these, 22,068,513 Ordinary Shares which will be purchased by the Company from the Brokers pursuant to the Buy-back Deeds will be cancelled by the Company.
The purpose of the entry into of the Buy-back Deeds is to effect the lawful transfer of the Ordinary Shares that are the subject of the Share Buybacks, in accordance with the Act, thereby transferring legal and equitable title in the Ordinary Shares from the relevant Broker to the Company. The terms of each Buy-back Deed provides that on entry into of the deed, the name of the relevant Broker will be reinstated on the Company's register of members, evidencing the relevant Broker's legal title over the relevant Ordinary Shares that were repurchased by the Company otherwise than in accordance with the Act. Immediately following this reinstatement, the Company will then purchase the relevant Ordinary Shares from each Broker for the consideration of £1 payable to each Broker (and each Broker will not be required to account for the monies originally paid to it by the Company in respect of any of the relevant Share Buy-backs).
Pursuant to each Buy-back Deed, the Company will also waive any rights or claims which it has or may have against the relevant Broker in respect of the relevant Share Buy-backs and the monies paid by the Company to the relevant Broker in respect of the relevant Ordinary Shares. In addition, each Broker will acknowledge that its reinstatement on the Company's register of members in respect of the relevant Ordinary Shares will satisfy the Company's obligation to restore legal title in the relevant Ordinary Shares to it. The Company will also indemnify each Broker, each of its affiliated companies and their respective directors, officers, employees and agents (each an ''Indemnified Party'') from and against any and all claims, losses, damages, liabilities or expenses which the Indemnified Party may suffer or incur, or which may be made or threatened against an Indemnified Party in relation to the matters the subject of the Buy-back Deeds.
Each Broker will also waive any rights or claims it has or may have to dividends otherwise due in respect of the relevant Ordinary Shares, any rights or claims it has or may have to the current value of the relevant Ordinary Shares and any other rights, claims, interests or benefits which may have arisen in respect of the relevant Ordinary Shares prior to the date of the Buy-back Deeds.
The entry by the Company into the Buy-back Deeds will result in the Company's distributable reserves being reduced by an aggregate of £2. Otherwise, it will have no effect on the Company's financial position.
As mentioned in paragraph I of this Part II, the EBT Liabilities were subsequently satisfied by the Company making a gift to the Employee Benefit Trust by paying an amount equal to the EBT Liabilities to the third party bank as agent for the Employee Benefit Trust. In addition, the EBT Payment was a gift by the Company to the Employee Benefit Trust. Accordingly, the Company has no intention to assert any right to claim an amount equal to the EBT Liabilities and Payment from the Employee Benefit Trust as a result of these payments being made otherwise than in accordance with the Act. Pursuant to the EBT Deed of Release, the Company will waive any right or claim which it has against the Employee Benefit Trust for the repayment of an amount equal to the EBT Liabilities and Payment. The Company's entry into of the EBT Deed of Release will
not result in any decrease in the Company's net assets or the level of its distributable reserves and will therefore have no effect on its financial position.
The Company has drawn the attention of HM Revenue & Customs (''HMRC'') to the circumstances surrounding the payment of the Dividends and the Share Buy-backs and to the steps that are now proposed to rectify the position. HMRC has confirmed that the tax position of UK shareholders is not affected by any procedural irregularity in the Dividends or the Share Buy-backs. Therefore, the passing of the Resolution should have no effect on the UK tax position of such persons.
If any non-UK resident shareholder has any doubts about his or her tax position, they should consult with an independent professional adviser.
Having undertaken the Share Buy-backs otherwise than in accordance with the Act, those Ordinary Shares that were the subject of the Share Buybacks currently remain in issue. As such, the share capital of the Company as at 24 November 2016 (being the latest practicable date prior to the publication of this document) comprises 519,983,370 Ordinary Shares.
Immediately following entry into of the Buy-back Deeds, a total of 23,208,513 Ordinary Shares will be bought back by the Company. Of these, 22,068,513 of the Ordinary Shares which will be purchased by the Company pursuant to the terms of the Buy-back Deeds will be cancelled. Assuming no further Ordinary Shares are issued or repurchased between the date of this document and the date on which such cancellations occur, the share capital of the Company will comprise 497,914,857 Ordinary Shares (of which 4,072,590 Ordinary Shares will be held in treasury) at such a date.
The Company's individual financial statements for the 52 weeks ended 27 December 2015 were prepared in accordance with UK GAAP. The Company now wishes to notify you about certain proposed changes to the information that will be disclosed in the Company individual financial statements contained in the Company's subsequent accounts.
A new UK GAAP accounting framework introduced by the Financial Reporting Council (''FRC'') became mandatory for financial statements of UK companies with accounting periods commencing on or after 1 January 2015. Under this new framework, the Company is required to elect to prepare its individual financial statements on one of the bases permitted by the FRC. The consolidated financial statements of the Group will continue to be prepared in accordance with EU-adopted International Financial Reporting Standards as these are not affected by the new accounting framework.
The Company proposes to adopt FRS 101, a reduced disclosure regime, for its individual financial statements for the 52 weeks ending on 25 December 2016 and on an ongoing basis. This will continue until such time as the Company notifies shareholders of any change to its chosen accounting framework for the individual financial statements. After applying FRS 101, the Company expects the financial position and disclosures included in the Company's individual financial statements to be the same or very similar to those reported previously.
FRS 101 permits the individual financial statements of a parent entity to be prepared under a reduced disclosure framework if the company meets the definition of a qualifying entity. The Directors have considered the criteria required to apply the reduced disclosure framework and have satisfied themselves that the Company is eligible to adopt the reduced disclosure framework.
The Company's election to adopt FRS 101 for its individual financial statements does not require shareholder approval. However, under FRS 101, the Company is required to notify all shareholders of this election and accordingly this constitutes such notification. If the Company does not receive objections from any shareholder or shareholders holding in aggregate 5% or more of the total allotted shares in the Company, the proposed changes to the Company's individual financial statements will be made in the 2016 annual report and accounts. Accordingly, if a shareholder wishes to object to the adoption of FRS 101 it must notify the Company in writing of its objections, prior to the commencement of the General Meeting, at the Company's registered office (marked for the attention of the Company Secretary) at 1 Thornbury, West Ashland, Milton Keynes, Buckinghamshire MK6 47BB, United Kingdom.
To ensure that all future distributions comply with the Act, the Company proposes review procedures and processes at the financial year end ahead of the declaration of the final dividend and at the time of the preparation of the interim accounts ahead of the declaration of the interim dividend and at other times ahead of the approval by the Board of any share buyback programmes or any payment or assistance by the Company to the Employee Benefit Trust:
The Company was incorporated and registered in England and Wales on 5 October 1999 with company number 03853545 as a public limited company under the name Doublemeasure Public Limited Company. On 15 October 1999, the Company changed its name to Domino's Pizza plc. On 1 November 1999, the Company changed its name to Domino's Pizza UK & IRL Plc. On 23 May 2012, the Company changed its name to Domino's Pizza Group plc.
The Company's registered office is at 1 Thornbury, West Ashland, Milton Keynes, Buckinghamshire MK6 4BB, United Kingdom (Tel: +44 (0)1908 580000).
The principal legislation under which the Company operates is the laws of England and Wales.
The interests of the Directors and the Related Party Former Director in the Ordinary Shares as at 24 November 2016 (being the latest practicable date prior to the publication of this document) are as follows:
| Number of Ordinary Shares |
Percentage of Voting Rights(1) |
|
|---|---|---|
| Directors | ||
| Stephen Hemsley | 1,800,000(2) | 0.349% |
| Colin Halpern | 1,673,700(3) | 0.324% |
| David Wild | 13,650 | 0.003% |
| Rachel Osborne | NIL | NIL |
| Helen Keays | NIL | NIL |
| Steve Barber | NIL | NIL |
| Kevin Higgins | NIL | NIL |
| Ebbe Jacobsen | NIL | NIL |
| Related Party Former Director(4) | ||
| Paul Doughty | NIL | NIL |
(1) On the basis that the total number of voting rights as at 24 November 2016 (being the latest practicable date prior to the publication of this document) is
515,910,780 (assuming that 22,068,513 Ordinary Shares, the subject of the Share Buy-backs which are to be cancelled, are currently in issue).
(2) 1,800,000 Ordinary Shares are held by The Stephen Hemsley No. 5 Trust, a discretionary trust of which Stephen Hemsley and his family are potential beneficiaries. (3) 1,673,700 Ordinary Shares are held by HS Real LLC. HS Real LLC is owned by a discretionary trust, the beneficiaries of which are the adult children of Colin Halpern and Gail Halpern.
(4) Paul Doughty was a director of the Company until 31 December 2015 and therefore is a related party for the purposes of the Listing Rules. The other Former Directors' interests are not disclosed as such Former Directors do not constitute related parties for the purposes of the Listing Rules.
Awards under the 2012 LTIP and 2016 LTIP are made subject to performance measures set by the remuneration committee of the Company which are aligned with the Group's business strategy. The awards granted under the 2016 LTIP are structured as nil-cost options or conditional awards which vest in equal tranches after three, four and five years. A holding period applies which requires any vested awards (net of tax) to be held for at least five years from the date of grant.
| Date from which exercisable/ |
Number of Ordinary Shares |
Exercise price | ||
|---|---|---|---|---|
| Name | Date of grant | vest | under award | (pence) |
| 2012 LTIP | ||||
| David Wild | 30/05/14 | 30/05/17 | 947,652 | N/A |
| David Wild | 21/12/15 | 21/12/18 | 227,679 | N/A |
| Rachel Osborne | 13/10/16 | 13/10/19 | 68,953 | N/A |
| 2016 LTIP | ||||
| David Wild | 22/04/2016 | 22/04/19 | 1,602,000 | N/A |
Bonuses payable to executive Directors under the Company's Deferred Share Benefit Plan are settled two thirds in cash and one third in Ordinary Shares, the receipt of the latter being deferred for two years. These awards, which are structured as nil-cost options, vest subject to continuous employment and no other performance criteria.
| Number of Date from which Ordinary Shares |
||||||
|---|---|---|---|---|---|---|
| Name | Date of grant | exercisable/vest | under award | Exercise price | ||
| David Wild | 21/12/15 | 27/02/17 | 40,098 | N/A | ||
| David Wild | 11/03/16 | 11/03/18 | 67,239 | N/A |
The Company operates an HMRC-registered Savings-Related Share Option Plan open to all UK employees with the required period of service. Under this arrangement, employees enter into a three-year savings contract for a fixed monthly amount and are granted an option, with the accumulated savings being used to fund the option exercise cost. As permitted by HMRC rules, a discount of 20% to the market price at the date of invitation is offered. Vesting of the option is subject only to continued service.
| Number of | ||||
|---|---|---|---|---|
| Ordinary Shares | Date from which | Exercise Price | ||
| Name | Date of grant | under award | exercisable | (pence) |
| David Wild | 29/04/2015 | 8,448 | 01/06/18 | 213 |
On 13 October, 2016, Rachel Osborne received the grant of a conditional award over an aggregate of 45,968 Ordinary Shares. Of these, 37,482 Ordinary Shares are subject to continued service only and vest on 1 November 2017 and the remaining 8,486 Ordinary Shares are subject to performance and continued service and vest on 1 June 2018.
The annual salaries of the executive Directors are set out in the table below. The salaries are reviewed each year, save in the case of David Wild, whose annual salary is frozen at £510,000 until 2019.
| Effective Date of Service |
||||
|---|---|---|---|---|
| Directors | Position | Agreement | Annual Salary | |
| David Wild | Chief Executive Officer | 30/04/14 | £510,000 | |
| Rachel Osborne | Chief Financial Officer | 10/10/16 | £325,000 |
The executive Directors are expected to devote the whole of their time, attention and skills to the performance of their duties during their agreed working hours and in return the executive Directors will receive the following benefits under the terms of their service agreements:
David Wild, the Chief Executive Officer, has a contract dated 30 April 2014, which is terminable on six months' notice from either party. Rachel Osborne, the Chief Financial Officer, has a contract dated 10 October 2016, which is terminable on six months' notice from either party.
Should notice be served by either party, the relevant executive Director can continue to receive basic salary, benefits and pension for the duration of his or her notice period, during which time the relevant Group company may require the individual to continue to fulfil their current duties or may assign a period of garden leave. An executive Director's service contract may be terminated without notice and without any further payment or compensation, save for sums accrued up to the date of termination, on the occurrence of certain events of gross misconduct. If the Company terminates the employment of an executive Director in breach of contract, compensation is limited to salary due for any unexpired notice period and any amount assessed by the remuneration committee of the Company as representing the value of other contractual benefits which would have been received during the unexpired notice period.
Payments in lieu of notice are not pensionable. In the event of a change of control of the Company, there is no enhancement to contractual terms.
The table below sets out the treatment of outstanding elements of remuneration that would normally apply for executive Directors upon termination of their employment.
| Remuneration element | 'Bad' leaver (e.g. resignation) |
Departure on agreed terms | 'Good' leaver (e.g. ill health, retirement) |
|---|---|---|---|
| Salary in lieu of notice period. | Salary for proportion of notice period served. |
Up to a maximum of 100% of salary. | |
| Pension and benefits. | Provided for proportion of notice period served. |
Up to six months' worth of pension and benefits (e.g. redundancy). Possible payment of pension and insured benefits triggered by the leaver event (this would be governed by the terms of the benefits provided). |
|
| Bonus. | If resigns, reduced pro rata to reflect proportion of bonus year employed (provided performance conditions met) at the discretion of the remuneration committee of the Company. If dismissed for cause, none payable. |
Reduced pro rata to reflect proportion of bonus year elapsed (provided performance conditions met). |
|
| 2012 LTIP. | Lapse. | Treatment will normally fall between good leaver and bad leaver treatment, subject to the discretion of the remuneration committee of the Company and the terms of any termination agreement. |
Up to full vesting, based on performance tested over the full performance period (or to the date of cessation at the discretion of the remuneration committee of the Company) Where awards are granted as market value options, the award may also be reduced pro rata (at the discretion of the remuneration committee of the Company) to reflect the proportion of the performance period elapsed to the date of cessation. Where awards are granted as performance shares, awards will be subject to a pro rata reduction unless the remuneration committee of the Company determines otherwise. |
| 2016 LTIP. | Lapse. | Awards will normally continue to be capable of vesting subject to performance measured at the normal calculation date (or until the absolute total shareholder return condition has been satisfied prior to the award's expiry) and a pro rata reduction by reference to the proportion of the relevant three, four and five year performance periods that have expired, unless the remuneration committee of the Company determines otherwise, on an exceptional basis. |
|
| Other payments. | None. | Disbursements such as legal costs, outplacement, redundancy entitlements. |
The non-executive Directors are not employed under service contracts and do not receive compensation for loss of office. With the exception of Colin Halpern, whose services are provided through a service company to the Board, each of the non-executive Directors is appointed for a fixed term of three years, renewable for a further three-year term if agreed and subject to annual re-election by shareholders.
As at 24 November 2016 (being the latest practicable date prior to the publication of this document), the Company has been notified in accordance with the FCA's Disclosure Guidance and Transparency Rules of the following holdings of voting rights of 3% or more in the Company:
| Name | Number of Ordinary Shares |
Percentage of Voting Rights(1) |
|---|---|---|
| OppenheimerFunds, Inc. | 54,293,631 | 10.524% |
| MFS Investment Management | 25,011,405 | 4.848% |
(1) On the basis that the total number of voting rights as at 24 November 2016 (being the latest practicable date prior to the publication of this document) is 515,910,780 (assuming that 22,068,513 Ordinary Shares, the subject of the Share Buy-backs which are to be cancelled, are currently in issue).
The Company has not entered into any related party transactions with any of the Directors or Former Directors.
There has been no significant change in the financial or trading position of the Group since 26 June 2016, being the date to which the interim results of the Group for the 26 weeks ended 26 June 2016 were prepared.
Copies of the following documents will be available for inspection during normal business hours on any weekday (except for Saturdays, Sundays and public holidays) at the registered office of the Company and at the offices of Norton Rose Fulbright LLP, 3 More London Riverside, London SE1 2AQ, United Kingdom up to the time of the General Meeting:
Copies will also be available at the place of the General Meeting until the conclusion of the General Meeting.
The following definitions apply throughout this document unless the context otherwise requires:
''2012 LTIP'' means the Company's long term incentive plan adopted in 2012;
''2016 LTIP'' means the Company's long term incentive plan adopted in 2016;
''Act'' means the Companies Act 2006 (or, where applicable, the Companies Act 1985);
''Altium'' means GCA Altium Limited (formerly known as Altium Capital Limited) (company number 01072627);
''Board'' or ''Directors'' means the board of directors of the Company;
''Brokers'' means Altium and Numis and each shall be referred to as a ''Broker'';
''Buy-back Deeds'' means each of the buy-back deeds to be entered into by the Company with each Broker (as applicable) as further described in paragraph 6 of Part II of this document;
''Company'' means Domino's Pizza Group plc (company number 03853545);
''Directors' Deed of Release'' means the deed of release pursuant to which the Company waives any right to make claims against the Directors and Former Directors in respect of any of the Relevant Distributions;
''Dividends'' has the meaning given in paragraph 1 of Part II of this document and ''Dividend'' means any one of them;
''EBT Deed of Release'' means the deed of release in favour of the Employee Benefit Trust pursuant to which the Company waives any right to make claims against the Employee Benefit Trust in respect of the right to require repayment of the EBT Payment and Liabilities;
''EBT Liabilities'' has the meaning given in paragraph 1 of Part II of this document and ''EBT Liability'' means any one of them;
''EBT Payment'' has the meaning given in paragraph 1 of Part II of this document;
''EBT Payment and Liabilities'' has the meaning given in paragraph 1 of Part II of this document and ''EBT Payment and Liability'' shall mean any one of them;
''Employee Benefit Trust'' means Dominos Pizza UK & IRL Plc Employee Benefit Trust or, where the context requires, Elian Employee Benefit Trustee Limited as trustee for Dominos Pizza UK & IRL Plc Employee Benefit Trust;
''FCA Handbook'' means the FCA's Handbook of Rules and Guidance;
''Financial Conduct Authority'' or ''FCA'' means the Financial Conduct Authority of the United Kingdom;
''Form of Proxy'' means the form of proxy enclosed with this document for use by shareholders of the Company in connection with the General Meeting;
''Former Directors'' means Lance Batchelor, Paul Doughty, Lee Ginsberg, Yoav Gottesman, Gerry Halpern, John Hodson, Peter Klauber, Christopher Moore, Syl Saller, Michael Shallow, Dianne Thompson, Sean Wilkins and Nigel Wray and ''Former Director'' means any one of them;
''FSMA'' means the Financial Services and Markets Act 2000, as amended;
''General Meeting'' means the general meeting of the Company to be held at 10:00 a.m. on 10 January 2017 (or any adjournment thereof) at the Company's registered office at 1 Thornbury, West Ashland, Milton Keynes, Buckinghamshire MK6 4BB, United Kingdom, notice of which is set out in Part V of this document;
''Group'' means the Company and each of its subsidiaries and subsidiary undertakings from time to time;
''HMRC'' means Her Majesty's Revenue & Customs;
''Listing Rules'' means the listing rules made by the FCA under Part VI of the FSMA (as set out in the FCA Handbook), as amended;
''Notice'' means the Notice of General Meeting, details of which are set out in Part V of this document;
''Numis'' means Numis Securities Limited (company number 02285918);
''Ordinary Shares'' means the ordinary shares of 25/48 of a penny each in the capital of the Company except that any reference to Ordinary Shares prior to 8:00 a.m. on 27 April 2007 shall be to ordinary shares of 5 pence each in the capital of the Company and any reference to Ordinary Shares on or after 8:00 a.m. on 27 April 2007 but before 8:00 a.m. on 27 June 2016 shall mean ordinary shares of 1.5625 pence each in the capital of the Company;
''Recipient Shareholder'' means a shareholder of the Company who has received any of the Dividends;
''Related Party Former Director'' means Paul Doughty;
''Relevant Distributions'' means the Company's payment of each of the Dividends, the purchase of each of the Share Buy-backs, the incurrence of each of the EBT Liabilities and the making of the EBT Payment;
''Relevant Financial Periods'' means the following financial periods being:
(xiii) the current financial period commencing on 28 December 2015 for the 52 weeks ending on 25 December 2016;
''Resolution'' means the special resolution to be proposed at the General Meeting, the full text of which is set out in the Notice set out in Part V of this document;
''Share Buy-backs'' has the meaning given in paragraph 1 of Part II of this document and ''Share Buy-back'' means any one of them;
''Shareholders' Deed of Release'' means a deed of release in favour of all shareholders who appeared on the register of members on the record date for any of the Dividends from any and all claims which the Company has or may have in respect of the payment of any of the Dividends; and
''UK GAAP'' means generally accepted accounting principles in the United Kingdom, including Financial Reporting Standard 101 'Reduced Disclosure Framework'.
Notice is hereby given that a general meeting of Domino's Pizza Group plc will be held at the Company's registered office at 1 Thornbury, West Ashland, Milton Keynes, Buckinghamshire MK6 4BB, United Kingdom on 10 January 2017 at 10:00 a.m. to consider and, if thought fit, pass the following resolution as a special resolution (requiring a 75% majority). Voting on this resolution will be by way of poll.
THAT:
1.1 in relation to certain dividends paid by the Company, being the interim dividend for the 26 weeks ended 25 June 2000, the interim dividend for the 26 weeks ended 1 July 2001, the interim dividend for the 26 weeks ended 30 June 2002, the interim dividend for the 26 weeks ended 29 June 2003, the interim dividend for the 26 weeks ended 27 June 2004, the interim dividend for the 26 weeks ended 27 June 2010, the final dividend for the 52 weeks ended 29 December 2013, the interim dividend for the 26 weeks ended 29 June 2014, the final dividend for the 52 weeks ended 28 December 2014, the interim dividend for the 26 weeks ended 28 June 2015 and the interim dividend for the 26 weeks ended 26 June 2016:
(xi) the appropriation of distributable profits of the Company (as shown in the interim accounts of the Company for the 39 weeks to 25 September 2016 and filed with the Registrar of Companies on 15 November 2016) to the payment of the interim dividend, for the 26 weeks ended 26 June 2016, of 3.5 pence per ordinary share of 25/48 of a penny each in the share capital of the Company (the ''Ordinary Shares'' and each an ''Ordinary Share'') paid on 2 September 2016 be and is hereby authorised and confirmed by reference to the same record date as the original accounting entries for such dividend;
the dividends referred to in paragraphs 1.1(a)(i) to (xi) (inclusive) being the ''Dividends'' and each being a ''Dividend'';
the liabilities referred to in paragraphs 1.3(a) to (c) (inclusive) being the ''EBT Liabilities'' and each being an ''EBT Liability'' and together with the EBT Payment the ''EBT Payment and Liabilities'';
be waived and released and a deed of release in favour of such persons be entered into by the Company in the form produced to the General Meeting and initialled by the Chairman for the purposes of identification and any Director in the presence of a witness or any two Directors or any Director and the Company Secretary be authorised to execute the same as a deed poll for and on behalf of the Company.
1 December 2016
1 Thornbury West Ashland Milton Keynes Buckinghamshire MK6 4BB United Kingdom Registered in England and Wales with company number 03853545
of the CREST member concerned to take (or, if the CREST member is a CREST Personal Member or sponsored member or has appointed voting service providers, to procure that its CREST sponsors or voting service providers take) such action as shall be necessary to ensure that a message is transmitted by means of the CREST system by a particular time. In this connection, CREST members and, where applicable, their CREST sponsors or voting service providers are referred, in particular, to those sections of the CREST Manual concerning practical limitations of the CREST system and timings. The Company may treat as invalid a CREST Proxy Instruction in the circumstances set out in regulation 35(5)(a) of the Uncertificated Securities Regulations 2001.
Domino's Pizza Group plc 1 Thornbury, West Ashland, Milton Keynes MK6 4BB
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