Pre-Annual General Meeting Information • Oct 21, 2022
Pre-Annual General Meeting Information
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If you are in any doubt about the contents of this document or the action you should take, you should consult your stockbroker, bank manager, solicitor, accountant or other independent financial adviser authorised under the Financial Services and Markets Act 2000 immediately.
If you sell or otherwise transfer or have sold or otherwise transferred all of your Ordinary Shares you should send this document and the accompanying Annual Report (except any personalised form of proxy, if applicable) 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 transmission to the purchaser or transferee. However, such documents should not be distributed, forwarded or transmitted into any jurisdiction in which to do so would constitute a breach of the relevant laws and regulations of such jurisdiction. If you sell or have sold or otherwise transferred only part of your holding, you should retain these documents and consult the stockbroker, bank or other agent through whom the sale or transfer was effected.
(Incorporated and registered in England and Wales with No. 4708277)
Notice of Annual General Meeting
This document should be read as a whole. Your attention is drawn to the letter from the Chairman of Dunelm set out in Part 1 of this document which contains the recommendation by the Directors (excluding Sir Will Adderley for the purposes of the Waiver Resolution) to Shareholders to vote in favour of the Resolutions to be proposed at the Annual General Meeting, notice of which is set out in Part 4 of this document. Shareholders should read the whole of this document and not rely just on the summarised information set out in the Chairman's letter.
Barclays Bank PLC, acting through its Investment Bank ("Barclays"), which is authorised by the Prudential Regulation Authority and regulated in the United Kingdom by the Financial Conduct Authority and the Prudential Regulation Authority, is acting exclusively for Dunelm and no one else in connection with the Waiver Resolution and will not be responsible to anyone other than Dunelm for providing the protections afforded to clients of Barclays nor for providing advice in relation to the Waiver Resolution or any other matter referred to in this document. Persons other than Dunelm are recommended to seek their own financial and other professional advice.
This document includes forward-looking statements concerning the Group. Forward-looking statements are based on current expectations and projections about future events. These forward-looking statements are subject to risks, uncertainties and assumptions about the Group. The Group undertakes no obligation to update publicly or revise any forward-looking statements, whether as a result of new information, future events or otherwise save to the extent required in accordance with the Company's continuing obligations under the Listing Rules, the Disclosure Guidance and Transparency Rules and applicable laws and regulations.
Notice of the Annual General Meeting of Dunelm to be held at Dunelm Store Support Centre, Watermead Business Park, Syston LE7 1AD at 11.30 am on 30 November 2022 is set out at the end of this document. The Form of Proxy for use at the Annual General Meeting accompanies this document and, to be valid, should be completed and returned in accordance with the instructions set out thereon as soon as possible but, in any event, so as to reach Equiniti Limited, Aspect House, Spencer Road, Lancing, West Sussex BN99 6DA, not later than 11.30 am on 28 November 2022. Shareholders who hold their Ordinary Shares in CREST may appoint a proxy by completing and transmitting a CREST Proxy Instruction to Equiniti so that it is received no later than 11.30 am on 28 November 2022. Completion and return of the Form of Proxy or the transmission of a CREST Proxy Instruction will not preclude Shareholders from attending and voting in person at the Annual General Meeting, should they so wish. If you are an institutional investor, you may be able to appoint a proxy electronically via the Proximity platform.
| Part 1 | Letter from the Chairman | 2 | |
|---|---|---|---|
| Part 2 | Additional information | 8 | |
| Part 3 | Definitions | 13 | |
| Part 4 | Notice of Annual General Meeting | 15 | |
Your attention is drawn to the Definitions in Part 3 which apply throughout this document and the Form of Proxy unless the context requires otherwise.
All times referred to are London times unless otherwise stated.
(incorporated and registered in England and Wales with No. 4708277)
Sir Will Adderley (Deputy Chairman) Alison Brittain (Independent Non-Executive Director) Ian Bull (Independent Non-Executive Director) Kelly Devine (Independent Non-Executive Director) Andy Harrison (Chairman) William Reeve (Independent Non-Executive Director) Peter Ruis (Independent Non-Executive Director) Marion Sears (Non-Executive Director) Arja Taaveniku (Independent Non-Executive Director) Vijay Talwar (Independent Non-Executive Director) Nick Wilkinson (Chief Executive Officer) Karen Witts (Chief Financial Officer)
| Watermead Business Park |
|---|
| Syston |
| Leicester |
| Leicestershire |
| LE7 1AD |
The purpose of this letter is to provide you with an explanation of the Resolutions to be proposed at the Annual General Meeting of the Company which will be held at Dunelm Store Support Centre, Watermead Business Park, Syston LE7 1AD at 11.30 am on 30 November 2022 and to seek your approval of them. The notice of Annual General Meeting is set out at Part 4 of this document and definitions which apply throughout this document are set out in Part 3.
The Directors believe that the Resolutions to be proposed at the Annual General Meeting are in the best interests of the Company and Shareholders as a whole and accordingly they recommend that you vote in favour of each of the Resolutions at the Annual General Meeting, save that Sir Will Adderley makes no recommendation with regard to the Waiver Resolution (being Resolution 31) as, in accordance with the provisions of the Takeover Code, Sir Will Adderley is considered to be interested in the outcome of the Waiver Resolution.
All the Resolutions to be proposed at the Annual General Meeting are explained in further detail below.
The ordinary business of the Annual General Meeting comprises Resolutions 1 to 26 inclusive.
The Directors are required to lay the Directors' Report, the audited annual accounts of the Company and the independent Auditor's Report before Shareholders at the Annual General Meeting. Accordingly, Resolution 1 presents the accounts for the year ended 2 July 2022 and, although not a statutory requirement, proposes the accounts for adoption. A copy of the Annual Report accompanies this document and is available to download from the Dunelm website: corporate.dunelm.com.
Shareholder approval is required for the payment of a final dividend as recommended by the Board. Subject to Shareholder approval, this dividend will be paid on 5 December 2022 to Shareholders on the register of members of the Company at the close of business on 11 November 2022.
In accordance with the provisions of the UK Corporate Governance Code, all directors will be retiring and will offer themselves for re-election at the Annual General Meeting.
In accordance with Listing Rule 9.2.2E R, there will be an ordinary resolution and a separate resolution of the Non-Concert Party Shareholders in respect of the appointment of each of the Independent Directors of the Company. The Board considers that the following Directors are independent for the purposes of Listing Rule 9.2.2E R: Andy Harrison, William Reeve, Ian Bull, Arja Taaveniku, Peter Ruis, Vijay Talwar, Kelly Devine, and Alison Brittain. Although no longer considered by the Board to be an Independent Director due to her tenure of over nine years, Marion Sears will also put herself forward for reappointment by Non-Concert Party Shareholders. No Controlling Shareholder or Associate of a Controlling Shareholder will be eligible to vote in respect of these additional resolutions.
At the date of this document Sir Will Adderley and the other members of the Concert Party are the only Controlling Shareholders, and are precluded from voting on Resolutions 7, 9, 11, 13, 15, 17, 19, 21 and 23.
Biographies of each of the Directors are contained on pages 84 to 87 of the Annual Report, a copy of which accompanies this document and can also be found at corporate.dunelm.com and the National Storage Mechanism of the FCA at https://data.fca.org.uk/#/nsm/nationalstoragemechanism. Further hard copies of the Annual Report are available on request from Dawn Durrant at [email protected] or Dunelm (Soft Furnishings) Ltd, Watermead Business Park, Syston, Leicester, LE7 1AD (Tel: 0116 264 4400).
The Board believes, following the completion of the annual performance evaluation and appraisal exercise, that the performance of the Directors seeking re-election continues to be effective and that these Directors demonstrate commitment to their roles.
Further information is given below in relation to the independence of the Independent Directors named on the opposite page:
Under Schedule 8 of the Large and Medium-sized Companies and Groups (Accounts and Reports) (Amendment) Regulations 2013 (the "Regulations"), the Directors must prepare an annual report which sets out how the Remuneration Policy that has been in force during the financial year has been applied during the year, and how the policy will be applied in the coming year. The Annual Report on Remuneration must also be put to Shareholders for approval at the Annual General meeting, although this vote is advisory. If this vote is not passed, the Company would consult with Shareholders and will be obliged to put the Remuneration Policy back to Shareholders for approval at the Annual General Meeting of the Company in 2023.
This is the resolution to approve the Company's Annual Report on Remuneration, which is set out on pages 147 to 162 of the Annual Report.
The Company's auditors must offer themselves for reappointment at each general meeting at which the accounts are presented. The Company proposes that PricewaterhouseCoopers LLP, who have been the Company's auditors since January 2014, be appointed as auditors of the Company.
This resolution, which is conditional on the passing of Resolution 25, gives authority to the Directors to agree the auditors' remuneration.
The special business to be considered at the Annual General Meeting comprises Resolutions 27 to 33 inclusive.
This Resolution gives the Directors authority to allot share capital with a nominal value of up to £671,339, which, as at the Latest Practicable Date, represented approximately 33.3 per cent. of the Company's issued Ordinary Share capital (excluding treasury shares). As at the date of this document, the Company holds 2,025,139 Ordinary Shares in treasury representing approximately 1.01 per cent. of the Company's issued Ordinary Share capital (excluding treasury shares) as at the Latest Practicable Date.
The Directors have no present intention of allotting new ordinary shares other than in relation to the Company's employee share scheme, however, the Directors wish to ensure that the Company has maximum flexibility in managing the Group's capital resources. This authority will expire at the conclusion of the next annual general meeting of the Company after the passing of this Resolution or, if earlier, on 31 December 2023 unless it is previously renewed, varied or revoked.
These Resolutions (which will be proposed as special resolutions) give the Directors authority to allot equity securities of the Company (including any Ordinary Shares which the Company has purchased and elected to hold as treasury shares) for cash other than on a pre-emptive basis as provided by the CA 2006. Other than in connection with a rights or other pre-emptive issue, the authorities contained in these Resolutions will be limited to issues of Ordinary Shares representing an aggregate nominal value of £201,402, which in turn represents approximately 10 per cent. of the issued Ordinary Shares of the Company (excluding treasury shares) as at the Latest Practicable Date.
The Directors intend to adhere to the provisions in the Pre-Emption Group's Statement of Principles most recently published prior to the date of this Notice of Annual General Meeting, not to allot shares for cash on a non-pre-emptive basis pursuant to the authority in Resolution 28: (i) in excess of an amount equivalent to 5 per cent. of the total issued Ordinary Share capital of the Company; or (ii) in excess of an amount equal to 7.5 per cent. of the total issued Ordinary Share capital of the Company in a rolling three-year period, without prior consultation with Shareholders, in each case other than in connection with an acquisition or specified capital investment which is announced contemporaneously with the allotment or which has taken place in the preceding six-month period and is disclosed in the announcement of the allotment.
In accordance with the Pre-Emption Group's 2016 statement, separate Resolutions are being proposed to (a) disapply pre-emption rights on up to five per cent. of the issued share capital (Resolution 28) and (b) disapply pre-emption rights for an additional five per cent. for transactions which the Board determines to be an acquisition or other capital investment as defined by the Statement of Principles (Resolution 29).
In relation to Resolutions 28 and 29, the Directors consider that it is in the best interests of the Company and its Shareholders generally that the Company should have the flexibility conferred by the above authorities. This is in line with corporate governance guidelines. However, the Directors have no present intention of exercising any of these authorities or to issue any unissued Ordinary Shares in the Company, other than in respect of the exercise of Share Options by employees under the Employee Share Schemes. If Resolutions 28 and 29 are passed, both authorities will expire on the earlier of either the conclusion of the annual general meeting to be held in 2023 or on 31 December 2023.
This Resolution (which will be proposed as a special resolution) seeks authority for the Company to buy back its own Ordinary Shares in the market as permitted by the CA 2006 (the "2022/2023 Market Purchase Authority"). The authority, if granted, limits the number of Ordinary Shares that could be purchased to a maximum of 5,000,000 Ordinary Shares, representing approximately 2.5 per cent. of the Company's issued Ordinary Share capital as at the Latest Practicable Date. Resolution 30 specifies the minimum and maximum prices which may be paid for any Ordinary Shares purchased under this authority, reflecting the requirements of the Listing Rules.
If Resolution 30 is passed, the 2022/2023 Market Purchase Authority will expire on the earlier of either the conclusion of the annual general meeting to be held in 2023 or on 31 December 2023. The Company may either retain any of its own Ordinary Shares which it has purchased as treasury shares with a possible re-issue at a future date or cancel them.
Since the Company started a buyback programme of its Ordinary Shares in 2007, it has not cancelled any of the Ordinary Shares that it has bought. The Company has bought back 7,404,999 Ordinary Shares since starting the buyback programme and has transferred 5,379,860 of such Ordinary Shares out of treasury to employees exercising Share Options under the Employee Share Schemes. As at the Latest Practicable Date, the Company held 2,025,139 Ordinary Shares in treasury.
The Directors currently intend to utilise the 2021/2022 Market Purchase Authority up to the date of the Annual General Meeting and the 2022/2023 Market Purchase Authority only to the extent necessary to satisfy future exercises of Share Options under the Employee Share Schemes and, as such, the Company intends to hold any Ordinary Shares that it purchases pursuant to the 2021/2022 Market Purchase Authority and the 2022/2023 Market Purchase Authority as treasury shares for re-issue to employees exercising Share Options under the Employee Share Schemes, because the Board believes that this gives the Company the ability to costeffectively fulfill Share Option entitlements, and provides the Company with additional flexibility in the management of its capital base. The Company does not currently intend to reissue for sale or cancel any Ordinary Shares that it purchases pursuant to the 2021/2022 Market Purchase Authority or the 2022/2023 Market Purchase Authority.
The Company intends on an annual basis to grant Share Options to executive Directors and senior employees pursuant to the LTIP and to employees pursuant to the Dunelm 2020 Share plan and the Dunelm Sharesave Scheme. The total number of Share Options outstanding as at the Latest Practicable Date was 2,450,102, representing approximately 1.22 per cent. of the issued Ordinary Share capital of the Company (excluding treasury shares) as at that date. If the 2021/2022 Market Purchase Authority and the 2022/2023 Market Purchase Authority were to be utilised in full, the total number of Share Options outstanding as at the Latest Practicable Date would, assuming no further Ordinary Shares are issued and no further Share Options granted, represent approximately 1.25 per cent. of the Ordinary Share capital of the Company (excluding treasury shares).
A purchase of Ordinary Shares by the Company pursuant to the 2021/2022 Market Purchase Authority and/or the 2022/2023 Market Purchase Authority could increase the percentage of voting rights held by the Concert Party. In certain circumstances (described below) such an increase using the 2022/2023 Market Purchase Authority could trigger an obligation on the Concert Party to make a mandatory offer for the whole of the issued share capital of the Company pursuant to the Takeover Code. Non-Concert Party Shareholders will be asked, under Resolution 31, to approve the waiver by the Panel of the mandatory offer provisions such that the 2022/2023 Market Purchase Authority will not trigger a requirement for the Concert Party to make a mandatory offer for the entire issued share capital of the Company. Further details of this waiver are set out below.
The Waiver Resolution, which will be proposed as an ordinary resolution to be taken by poll, seeks Non-Concert Party Shareholders' approval of a waiver of the obligation that could arise on the Concert Party to make a general offer for the entire issued share capital of the Company as a result of purchases by the Company of Ordinary Shares pursuant to the 2022/2023 Market Purchase Authority.
As an English company with its shares admitted to listing on the premium listing segment of the Official List and admitted to trading on the Main Market of the London Stock Exchange, the Company is subject to the Takeover Code. Under Rule 9 of the Takeover Code, when (i) any person acquires, whether by a series of transactions over a period of time or not, an interest (as defined in the Takeover Code) in shares which, taken together with shares in which he and persons acting in concert with him are interested, carry 30 per cent. or more of the voting rights of a company subject to the Takeover Code, or (ii) any person who, together with persons acting in concert with him, is interested in shares which in aggregate carry not less than 30 per cent. of the voting rights of a company but does not hold shares carrying more than 50 per cent. of such voting rights, and such person, or any person acting in concert with him, acquires an interest in any other shares which increases the percentage of the shares carrying voting rights in which he is interested, then, in either case, that person is normally required to make a general offer to all other shareholders to acquire their shares. An offer under Rule 9 must be made in cash and at the highest price paid by the person required to make the offer, or any persons acting in concert with him, for any interest in shares in the company during the twelve months prior to the announcement of the general offer.
Where members of a concert party hold more than 50 per cent. of the voting rights in a company, no obligations under Rule 9 normally arise from acquisitions by any member of the concert party. They may accordingly increase their aggregate interests in shares without incurring any obligation under Rule 9 to make a general offer, although individual members of a concert party will not be able to increase their percentage interests in shares through or between a Rule 9 threshold without Panel consent.
Under Rule 37 of the Takeover Code, when a company purchases its own voting shares, any resulting increase in the percentage of shares carrying voting rights in which a person or group of persons acting in concert is interested will be treated as an acquisition for the purposes of Rule 9 of the Takeover Code (although a shareholder who is neither a director nor acting in concert with a director will not normally incur an obligation to make a Rule 9 offer). Accordingly, if the Concert Party's aggregate shareholding increased as a result of the exercise of the 2022/2023 Market Purchase Authority, the Concert Party would be required to make a mandatory offer for the remainder of the issued share capital of the Company.
The Company has applied to the Panel for a waiver of Rule 9 of the Takeover Code in order to permit the 2022/2023 Market Purchase Authority to be exercised by the Board (if such authority is approved by Shareholders) without triggering an obligation on the part of the Concert Party to make a general offer to Shareholders. The Panel has agreed, subject to Non-Concert Party Shareholders' approval on a poll, to waive the requirement for the Concert Party to make a general offer to all Shareholders where such an obligation would arise as a result of purchases by the Company of up to 5,000,000 Ordinary Shares pursuant to the 2022/2023 Market Purchase Authority.
Accordingly, the Waiver Resolution is being proposed as an ordinary resolution to be taken on a poll, and, to pass, will require more than 50 per cent. of votes cast by Non-Concert Party Shareholders at the Annual General Meeting present in person or by proxy and voting at the Annual General Meeting.
The members of the Concert Party will not be entitled to vote on the Waiver Resolution and have undertaken not to vote on the Waiver Resolution. No other Shareholder is considered to be acting in concert with the Concert Party.
Sir Will Adderley joined the business in 1992. He has worked in and is familiar with all major areas of the business and took over the running of the Group as Chief Executive from his father in 1996. In February 2011, he relinquished the role of Chief Executive to Nick Wharton, and became Deputy Chairman. Following the resignation of Nick Wharton, Sir Will Adderley was re-appointed Chief Executive on 11 September 2014. He resumed his previous role as Deputy Chairman in January 2016. He continues to hold an executive role to support the business in matters agreed with the current Chief Executive, Nick Wilkinson, as required.
Sir Will Adderley is currently beneficially interested in an aggregate of 75,231,779 Ordinary Shares, representing 36.98 per cent. of the issued share capital of the Company and 37.35 per cent. of the voting rights in the Company as at the Latest Practicable Date, held by himself directly and through WA Capital Limited (a private company established by Sir Will Adderley to act as a long-term holding company for his beneficial shareholding in the Company) and WA Capital Investments Limited (a wholly owned subsidiary of WA Capital Limited).
Sir Will Adderley, his wife, Lady Nadine Adderley and his mother, Jean Adderley, are considered to be acting in concert for the purposes of Rule 9 of the Takeover Code. The Stoneygate Trust (a private charitable trust of which Sir Will Adderley and Lady Nadine Adderley are trustees) and the Paddocks Discretionary Trust (a private trust relating to the Adderley family), WA Capital Limited and WA Capital Investments Limited are also members of the Concert Party. The Concert Party holds and/or is presumed to be interested in 86,340,279 Ordinary Shares representing 42.44 per cent. of the issued share capital of the Company and 42.87 per cent. of the voting rights in the Company as at the Latest Practicable Date.
Pursuant to the Relationship Agreement, each of Jean Adderley, Bill Adderley and Sir Will Adderley accepted certain restrictions relating, inter alia, to their relationship with the Group and their voting rights for so long as, individually or together, they are entitled to exercise, or to control the exercise of, 30 per cent. or more of the rights to vote at general meetings of the Company or they are able to control the appointment of directors who are able to exercise a majority of votes at board meetings of the Company. Bill Adderley, Sir Will Adderley's father is no longer considered to be a member of the Concert Party as he transferred his entire shareholding to Sir Will Adderley and Jean Adderley in 2018 and has no further involvement with the business.
Further information on the Concert Party is set out in Part 2 of this document. Shareholders should, in particular, note the commentary around any further increases in the aggregate interests in shares in the Company of the Concert Party.
If the Company were to repurchase from persons other than Sir Will Adderley all the Ordinary Shares for which it is seeking authority pursuant to the 2022/2023 Market Purchase Authority but did not repurchase any Ordinary Shares using the remaining balance of the 2021/2022 Market Purchase Authority, Sir Will Adderley's interest in shares carrying voting rights would (assuming no other allotments of Ordinary Shares) increase to 38.31 per cent. of the shares carrying voting rights in the Company by virtue of such action. If the Company were to repurchase from persons other than members of the Concert Party all the Ordinary Shares for which it is seeking authority pursuant to the 2022/2023 Market Purchase Authority but did not repurchase any Ordinary Shares using the remaining balance of the 2021/2022 Market Purchase Authority, the interests of the Concert Party in shares carrying voting rights would similarly increase to 43.96 per cent. of the shares carrying voting rights in the Company.
Furthermore, if the Company were to repurchase from persons other than Sir Will Adderley all the Ordinary Shares for which it is seeking authority pursuant to the 2022/2023 Market Purchase Authority and repurchased 1,964,514 Ordinary Shares using the remaining balance of the 2021/2022 Market Purchase Authority, Sir Will Adderley's interest in shares carrying voting rights would (assuming no other allotments of Ordinary Shares) increase to 38.69 per cent. of the shares carrying voting rights in the Company by virtue of such action. If the Company were to repurchase from persons other than members of the Concert Party all the Ordinary Shares for which it is seeking authority pursuant to the 2022/2023 Market Purchase Authority and repurchased 1,964,514 Ordinary Shares using the remaining balance of the 2021/2022 Market Purchase Authority, the interests of the Concert Party in shares carrying voting rights would similarly increase to 44.41 per cent. of the shares carrying voting rights in the Company.
Following exercise of the 2022/2023 Market Purchase Authority (either in whole or in part) and/or exercise of the remaining balance of the 2021/2022 Market Purchase Authority, Sir Will Adderley and separately the Concert Party will continue to be interested in shares which carry more than 30 per cent. but not more than 50 per cent. of the Company's voting rights, and any further increase in the number of shares and/or voting rights in which he or they are interested (other than pursuant to a further exercise of either the 2021/2022 Market Purchase Authority or 2022/2023 Market Purchase Authority) will be subject to the provisions of Rule 9 of the Takeover Code.
Apart from supporting the Board's process for continually refreshing its membership, and the Board changes announced, being (i) the appointment of Vijay Talwar on 1 October 2021; (ii) the appointment of Kelly Devine on 1 March 2022; (iii) the resignation of Laura Carr on 8 June 2022; (iv) the appointment of Karen Witts on 9 June 2022; and (v) the appointment of Alison Brittain on 7 September 2022, each member of the Concert Party has confirmed to the Company that no member of the Concert Party has any present intention to change the Company's plans with respect to (a) the future business of the Company, including any research and development functions; (b) the continued employment of the employees and management of the Company and of its subsidiaries, including any material change in conditions of employment or balance of skills and functions of the employees and management; (c) its strategic plans for the Company, or their likely repercussions on employment and on the locations of the Company's places of business, including on the location of the Company's headquarters and headquarters functions; (d) employer contributions into the Company's pension scheme(s) (including with regard to current arrangements for the funding of any scheme deficit), the accrual of benefits for existing members, or the admission of new members; (e) the redeployment of the fixed assets of the Company; and/or (f) the maintenance of the Company's listing on the London Stock Exchange, as a result of the proposals set out in Resolution 31.
No member of the Concert Party is intending to purchase any additional Ordinary Shares during the period covered by the 2022/2023 Market Purchase Authority.
If the Waiver Resolution is passed, the Concert Party will not be restricted from making an offer for the Company.
Intentions of the Directors
The Directors intend to maintain the listing of the Ordinary Shares on the Official List for the foreseeable future.
The Independent Directors anticipate that they will continue to seek Shareholder approval on an annual basis of the waiver of any Rule 9 obligation which may arise as a result of the exercise of a renewed buy back authority.
This Resolution, which will be proposed as a special resolution, relates to the CA 2006 which increases the notice period for general meetings of traded companies to 21 days unless certain conditions are met. One of the conditions is that a shareholder resolution, such as Resolution 32, reducing the notice period to 14 clear days, is passed on an annual basis. The shorter notice period will, if approved by Shareholders, not be used as a matter of routine for such meetings, but only where the flexibility is merited by the business of the meeting and is thought to be in the best interests of Shareholders as a whole.
Resolution 33, which will be proposed as a special resolution, is to adopt new articles of association. The directors propose, as provided for in the New Articles, the following amendment to the Existing Articles:
Directors' fees (Article 60). Under the Existing Articles, the Company may pay fees to the non-executive directors of up to £750,000 in aggregate each year. The Board has temporarily expanded in number of members due to succession planning and, while the Board has no plans for material increases of the base fees for NEDs, the Board considers it appropriate to seek shareholder approval to increase the annual limit to £1,000,000 to provide flexibility and headroom for possible market increases, to accommodate its recent increase in size and to enable the Board to execute any future succession plans. Any increases in the fees that are paid to Non-Executive Directors under this limit will be in line with the latest remuneration policy which is approved by Shareholders.
A copy of the Existing Articles marked to show the changes, and of the proposed New Articles, are available on the Company's website at corporate.dunelm.com and the National Storage Mechanism of the FCA at https://data.fca.org.uk/#/nsm/nationalstoragemechanism, and will be made available for inspection at the Company's registered office at Watermead Business Park, Syston, Leicester, LE7 1AD during normal business hours until the conclusion of the Annual General Meeting, and at the place of the Annual General Meeting from at least 15 minutes prior to the Annual General Meeting until its conclusion.
The audited consolidated accounts for the periods to 26 June 2021 and 2 July 2022 can be found at corporate. dunelm.com, and are incorporated into this document by reference. For the avoidance of doubt, the content of the website is not incorporated into and does not form part of this document.
If you require a hard copy of any of the audited consolidated accounts for 2021 or 2022 or the trading update dated 20 October 2022 referred to below, a request should be sent to Dawn Durrant at [email protected] or Dunelm (Soft Furnishings) Ltd, Watermead Business Park, Syston, Leicester, LE7 1AD (Tel 0116 264 4400).
The Directors are not aware of any significant change in the financial or trading position of the Group since 20 October 2022, being the date upon which its latest trading update was published.
A Form of Proxy for use in connection with the Annual General Meeting is enclosed. Whether or not you intend to be present at the meeting, you are requested to complete, sign, and return the Form of Proxy by one of the following methods:
and in each case must be received by the Company's registrars, Equiniti Limited, as soon as possible and in any event so that it is received not later than 11.30 am on 28 November 2022.
Completion and return of the Form of Proxy or the transmission of a CREST Proxy Instruction will not preclude Shareholders from attending and voting in person at the Annual General Meeting, should they so wish.
Your attention is drawn to the Annual Report and to Part 2 of this document which contain certain additional information in respect of the Company, including Directors' interests. Shareholders are advised to read the whole of this document and the Annual Report and not rely solely on the summary information set out in this letter.
In the opinion of the Board, each of the Resolutions to be proposed at the Annual General Meeting is in the best interests of the Company and Shareholders as a whole, save that Sir Will Adderley makes no recommendation with regard to the Waiver Resolution (being Resolution 31) as, in accordance with the provisions of the Takeover Code, Sir Will Adderley is considered to be interested in the outcome of the Waiver Resolution.
Accordingly, the Board, excluding Sir Will Adderley for the purposes of the Waiver Resolution (on the grounds that he is interested in the outcome of the Waiver Resolution), recommends that Shareholders vote in favour of the Resolutions at the Annual General Meeting, as the Directors intend to do in respect of their own beneficial holdings of Ordinary Shares, which amount to 37.46 per cent. of the issued Ordinary Shares, save that Sir Will Adderley will not vote in respect of his beneficial holdings of Ordinary Shares, which amount to 36.98 per cent. of the issued Ordinary Shares, on the Waiver Resolution, in which he is considered to be interested.
The Independent Directors, who have been so advised by Barclays, consider the Waiver Resolution to be fair and reasonable and to be in the best interests of the Non-Concert Party Shareholders and the Company as a whole. In providing its advice to the Independent Directors, Barclays has taken account of the Independent Directors' commercial assessments.
Accordingly, the Independent Directors unanimously recommend that Non-Concert Party Shareholders vote in favour of the Waiver Resolution to be proposed at the Annual General Meeting, as the Independent Directors intend to do in respect of their own beneficial holdings of Ordinary Shares, which amount to approximately 0.28 per cent. of the issued Ordinary Shares.
Yours sincerely
Andy Harrison Chairman
and the only responsibility accepted by the Directors in respect of the information in this document relating to the Concert Party has been to ensure that such information has been correctly and fairly reproduced or presented as notified to the Company (and no steps have been taken by the Directors to verify this information).
To the best of the knowledge and belief of the Directors (who have taken all reasonable care to ensure that this is the case), such information is in accordance with the facts and does not omit anything likely to affect the import of such information.
| Director | Ordinary Shares |
|---|---|
| Sir Will Adderley | 75,231,7791 |
| Alison Brittain | 37,500 |
| Ian Bull | 11,000 |
| Kelly Devine | — |
| Andy Harrison | 488,017 |
| William Reeve | 22,000 |
| Peter Ruis | — |
| Marion Sears | 105,000 |
| Arja Taaveniku | 6,000 |
| Vijay Talwar | 9,670 |
| Nick Wilkinson | 266,409 |
| Karen Witts | 24,918 |
Note
| Date of award | Nature of award | Share options at Latest Practicable Date |
End of performance period |
Option price | |
|---|---|---|---|---|---|
| Sir Will Adderley | — | — | Nil | — | — |
| Nick Wilkinson | October 2019 | 2020-22 LTIP | 152,025 | June 2022 | Nil |
| November 2020 | 2021-23 LTIP | 94,846 | June 2023 | Nil | |
| October 2021 | 2022-2024 LTIP | 89,078 | June 2024 | Nil | |
| November 2021 | Sharesave | 1,720 | December 2024 | 1,046p | |
| Karen Witts | June 2022 | 2022-2024 LTIP | 73,979 | June 2024 | Nil |
4.3 As at the close of business on the Latest Practicable Date the interests, rights to subscribe and short positions (all of which are beneficial unless otherwise stated) of each member of the Concert Party in the Ordinary Share capital of the Company as notified to the Company were as follows:
| Concert Party member | Number of Ordinary Shares |
Per cent. of the issued Ordinary Share capital |
|---|---|---|
| Sir Will Adderley | 36,070,000 | 17.73 |
| Lady Nadine Adderley | Nil | — |
| WA Capital Limited | 3,161,779 | 1.55 |
| WA Capital Investments Limited | 36,000,000 | 17.70 |
| Jean Adderley | 9,968,500 | 4.9 |
| The Stoneygate Trust | 967,250 | 0.48 |
| The Paddocks Discretionary Trust | 172,750 | 0.08 |
| Total | 86,340,279 | 42.44 |
4.4 During the period of 12 months preceding the date of this document, there have been no dealings in relevant securities by members of the Concert Party.
4.5 If the Company were to repurchase from persons other than Sir Will Adderley, all the Ordinary Shares for which it is seeking authority pursuant to the 2022/2023 Market Purchase Authority but did not repurchase any Ordinary Shares using the remaining balance of the 2021/2022 Market Purchase Authority, Sir Will Adderley's interest in shares carrying voting rights would (assuming no other allotments of Ordinary Shares) increase to 38.31 per cent. of the shares carrying voting rights in the Company by virtue of such action.
The middle market quotations for the Ordinary Shares of the Company, as derived from the London Stock Exchange Daily Official List, on the first Business Day of each of the six months immediately preceding the date of this document and on the Latest Practicable Date, were:
| Date | Price per Ordinary Share (p) |
|---|---|
| Latest Practicable Date | 805.5 |
| 3 October 2022 | 749.0 |
| 1 September 2022 | 670.5 |
| 1 August 2022 | 852.5 |
| 1 July 2022 | 830.0 |
| 1 June 2022 | 872.5 |
| 3 May 2022 | 979.5 |
No ratings agency has publicly accorded the Company with any current credit rating or outlook.
owns or controls, has a short position, or has borrowed or lent (or entered into any financial collateral arrangement of the kind referred to in Note 4 on Rule 4.6 of the Takeover Code), or has any interest in, right to subscribe in respect of or short position in relation to, or any arrangement concerning, directly or indirectly, any relevant securities of the Company;
| Name | Contract date | Base salary/Fee (2021/2022) | Notice period |
|---|---|---|---|
| Sir Will Adderley | 28 September 2016 | £1 | 12 months |
| Nick Wilkinson | 1 February 2018 | £582,125 | 6 months |
| Karen Witts | 9 June 2022 | £450,000 | 6 months |
| Marion Sears | 22 July 2004 | £55,747 | 1 month |
| Andy Harrison | 1 September 2014 | £216,487 | 3 months |
| William Reeve | 1 July 2015 | £73,384 | 1 month |
| Peter Ruis | 10 September 2015 | £55,747 | 1 month |
| Ian Bull | 10 July 2019 | £66,532 | 1 month |
| Arja Taaveniku | 15 February 2021 | £55,747 | 1 month |
| Vijay Talwar | 1 October 2021 | £55,747 | 1 month |
| Kelly Devine | 1 March 2022 | £55,735 | 1 month |
| Alison Brittain* | 7 September 2022 | £45,363 | 1 month |
10.3 Further details of each service contract or letter of appointment are set out below:
* Should Alison Brittain succeed Andy Harrison as Chair, her base salary will increase to £322,400 per annum, pro rated from the date of appointment as Chair and her notice period will increase to 3 months.
10.4 Other than as described above, no service contract or letter of appointment has been entered into or amended within 6 months of the date of this document.
10.5 There are no commission or profit-sharing arrangements between the Company and any of the Directors. On termination of any Director's service contract or letter of appointment, the maximum amount payable by the Company is the value of salary and benefits or fees and expenses (as relevant) for the notice period.
Dated 21 October 2022
| "2021 AGM" | the annual general meeting of the Company held at 11.30 am on 16 November 2021 |
"CREST Manual" | the current version of the CREST Manual which at the date of this document is |
|---|---|---|---|
| "2021/2022 Market Purchase Authority" |
the authority for the Company to make market purchases of up to 5,000,000 Ordinary Shares approved at the Company's |
"Crest Proxy Instruction" |
available on www.euroclear.com has the meaning in the CREST Manual |
| previous annual general meeting held on 16 November 2021 |
"CREST Regulations" |
the Uncertificated Securities Regulations 2001 (SI 2001/3755) (as amended) |
|
| "2022/2023 Market Purchase Authority" |
the authority for the Company to make market purchases of Ordinary Shares to be proposed to Shareholders in the terms of Resolution 30 set out in the notice of Annual General Meeting set out in Part 4 of this document |
"dealing" or "dealt" |
in the context of the Takeover Code means: (a) acquiring or disposing of relevant securities, of the right (whether conditional or absolute) to exercise or direct the exercise of the voting rights attaching to relevant securities, or of general control of relevant |
| "Annual General Meeting" or "AGM" |
the annual general meeting of the Company to be held at Dunelm Store Support Centre, Watermead Business Park, Syston LE7 1AD at 11.30 am on 30 November 2022, notice of which is set out at Part 4 of this document |
securities; (b) taking, granting, acquiring, disposing of, entering into, closing out, terminating, exercising (by either party) or varying an option (including a traded option contract) in |
|
| "Annual Report" | the annual report and accounts of the Company for the year ended 2 July 2022 a copy of which accompanies this document |
respect of any relevant securities; (c) subscribing or agreeing to subscribe for relevant securities; |
|
| "Associate" | in relation to a Controlling Shareholder has the meaning set out in the Listing Rules |
(d) exercising or converting, whether in respect of new or existing relevant securities, any securities carrying conversion or |
|
| "associated company" |
in the context of the Takeover Code means in relation to any company, that company's parent, subsidiaries and fellow subsidiaries, and their associated companies, and companies of which such companies are associated companies, all with each other. For these purposes, ownership or control of 20 per cent. or more of the equity share capital of a company is regarded as the test of associated company status |
subscription rights, (e) acquiring, disposing of, entering into, closing out, exercising (by either party) of any rights under, or varying, a derivative referenced, directly or indirectly, to securities; (f) entering into, terminating or varying the terms of any agreement to purchase or sell securities; (g) redeeming or purchasing, or taking or |
|
| "Board" or "Directors" |
the board of directors of the Company | exercising an option over, any of its own relevant securities by the offeree company or |
|
| "Business Day" | any date on which banks are generally open in England and Wales for the transaction of normal banking business other than a Saturday, Sunday or public holiday |
an offeror; and (h) any other action resulting, or which may result, in an increase or decrease in the number of relevant securities in which a |
|
| "CA 2006" | the Companies Act 2006, as amended | person is interested or in respect of which he has a short position |
|
| "Company" or "Dunelm" |
Dunelm Group plc | "derivatives" | include any financial product whose value in whole or in part is determined directly or |
| "Concert Party" | together, Sir Will Adderley, Jean Adderley, Bill Adderley, Lady Nadine Adderley, The |
indirectly by reference to the price of an underlying security |
|
| Stoneygate Trust, the Paddocks Discretionary Trust, WA Capital Limited and WA Capital Investments Limited |
"Directors' Remuneration Report" |
the Directors' Remuneration Report set out in the Annual Report, comprising the Letter from the Chair of the Remuneration |
|
| "connected adviser" |
has the meaning set out in the Takeover Code | Committee, the Policy Report and the Annual Report on Implementation |
|
| "control" | in the context of the Takeover Code means an interest, or interests, in shares carrying in aggregate 30 per cent. or more of the voting rights attributable to the share capital of a |
"Disclosure Guidance and Transparency Rules" |
the disclosure guidance and transparency rules made by the FCA in exercise of its functions as competent authority pursuant to Part VI of FSMA |
| company which are exercisable at a general meeting, irrespective of whether such interest or interests give de facto control; |
"Dunelm 2020 Share Plan" |
the Dunelm 2020 Share Plan | |
| "Controlling Shareholder" |
has the meaning set out in the Listing Rules | "Dunelm Group Company Share Option Scheme" |
the Dunelm Group Company Share Option Scheme, under the 2003 or 2013 rules as the case may be |
| "CREST" | the system for the paperless settlement of trades in securities operated by Euroclear in accordance with the CREST Regulations |
The following definitions apply throughout this document, unless the context otherwise requires:
| "Dunelm Group 2014 Sharesave Plan" |
the Dunelm Group 2014 Sharesave Plan |
|---|---|
| "Dunelm SAYE Scheme" or "Dunelm Sharesave Scheme" |
the Dunelm Group Savings Related Share Option Plan 2005, and / or the Dunelm Group 2014 Sharesave Plan as the case may be |
| "Employee Share Schemes" |
the LTIP, the Dunelm SAYE Scheme, the Dunelm Group Company Share Option Scheme and the Dunelm 2020 Share Plan |
| "Euroclear" | Euroclear UK & International Limited, the operator of CREST |
| "Existing Articles" |
the articles of association of the Company in force at the date of this document |
| "Form of Proxy" | the form of proxy enclosed with this document for use by Shareholders in connection with the Annual General Meeting |
| "FCA" | the Financial Conduct Authority |
| "FSMA" | the Financial Services and Markets Act 2000 (as amended) |
| "Group" | the Company and its subsidiary undertakings |
| "Independent Directors" |
the directors of the Company other than Sir Will Adderley, who are presumed not to be interested in the Waiver Resolution or the directors of the Company considered to be "independent" for the purposes of the UK Corporate Governance Code (as relevant) |
| "Independent Shareholders" |
Shareholders other than a Controlling Shareholder and its or their Associates |
| "interest" | in the context of the Takeover Code, a person will be treated as having an interest in relevant securities, in particular, where a person: (a) owns securities; (b) has the right (whether conditional or absolute) to exercise or direct the exercise of the voting rights attaching to securities or has general control of them; (c) by virtue of any agreement to purchase, option or derivative, has the right or option to acquire securities or call for their delivery or is under an obligation to take delivery of them, whether the right, option or obligation is conditional or absolute and whether it is in the money or otherwise; or (d) is party to any derivative whose value is determined by reference to the prices of securities and which results, or may result, in his having a long position in them |
| "Latest | 19 October 2022 |
| Practicable Date" |
|
| "Listing Rules" | the listing rules made by the FCA in exercise of its functions as competent authority pursuant to Part VI of FSMA |
| "London Stock Exchange" |
London Stock Exchange pIc or its successor |
| "LTIP" | the Dunelm Group Long-Term Incentive Plan, under the 2005 or the 2014 rules as the case may be |
| "Main Market" | the main market for listed securities of the London Stock Exchange |
| "New Articles" | the Articles of Association produced to the AGM and for the purpose of identification initialled by the chairman of the AGM be adopted as the Articles of Association of the Company |
|---|---|
| "Non-Concert Party Shareholders" |
Shareholders other than members of the Concert Party |
| "Non- Executive Directors" |
the Directors of the Company who do not hold an executive office |
| "Official List" | the official list maintained by the FCA for the purposes of Part VI of FSMA |
| "Ordinary Shares" |
ordinary shares of one penny each in the capital of the Company |
| "Panel" | the Panel on Takeovers and Mergers |
| "Registrars" or "Equiniti" |
Equiniti Limited, the registrars of the Company |
| "Relationship Agreement" |
the relationship agreement dated 2 October 2006 and entered into between Jean Adderley (1), Bill Adderley (2), Sir Will Adderley (3) and the Company (4), to which Lady Nadine Adderley and WA Capital Limited have become a party, as amended on 10 July 2014; |
| "relevant securities" |
in the context of the Takeover Code, means Ordinary Shares, or any securities convertible into, or exchangeable for, and rights to subscribe for, any Ordinary Shares (including Share Options) |
| "Resolution" or "Resolutions" |
the resolutions set out in the notice of Annual General Meeting at Part 4 of this document |
| "Shareholder(s)" (a) holder(s) of Ordinary Shares | |
| "Share Options" | options to subscribe for Ordinary Shares pursuant to an award made under the Employee Share Schemes |
| "short position" | in the context of the Takeover Code, means any short position (whether conditional or absolute and whether in the money or otherwise) including any short position under a derivative, any agreement to sell or any delivery obligation or right to require another person to purchase or take delivery |
| "subsidiary undertaking" |
shall, unless otherwise stated, be construed in accordance with the CA 2006 (but for these purposes ignoring paragraph 19(1)(b) of Part 1 of Schedule 6A to the Large and Medium sized Companies and Groups (Accounts and Reports) Regulations 2008) |
| "Takeover Code" the City Code on Takeovers and Mergers | |
| "United Kingdom" or "UK" |
the United Kingdom of Great Britain and Northern Ireland |
| UK Corporate Governance Code |
the 2018 version of the corporate governance code which sets out standards of good practice for UK listed companies published by the Financial Reporting Council |
| "Waiver Resolution" |
Resolution 31 in the form set out in the notice of Annual General Meeting at Part 4 of this document approving a waiver of the mandatory offer provisions set out in Rule 9 and Rule 37 of the Takeover Code |
(Incorporated and registered in England and Wales with No. 4708277)
NOTICE IS HEREBY GIVEN that the 2022 Annual General Meeting of the Company will be held at Dunelm Store Support Centre, Watermead Business Park, Syston LE7 1AD at 11.30 am on 30 November 2022 for the purpose of considering and, if thought fit, passing the following resolutions, which, in the case of resolutions 28, 29, 30, 32 and 33 will be proposed as special resolutions and, in the case of the other resolutions, will be proposed as ordinary resolutions.
Resolutions 7, 9, 11, 13, 15, 17, 19, 21 and 23 will be voted on only by Independent Shareholders as required by the Listing Rules.
Resolution 31 will be voted on only by the Non-Concert Party Shareholders of the Company and will be taken by poll. As Sir Will Adderley is interested in the outcome of Resolution 31, he, and all other members of the Concert Party of which he is a member, will be precluded from voting on that resolution.
8 That Marion Sears, who is retiring as a Director of the Company, and being eligible, is offering herself for re-election, be reappointed as a Non-Executive Director of the Company.
9 That Marion Sears, who is retiring as a Director of the Company, and being eligible, is offering herself for re-election, be reappointed as a Non-Executive Director of the Company (Independent Shareholder vote).
21 That Kelly Devine, who is retiring as a Director of the Company, and being eligible, is offering herself for election, be appointed as a Non-Executive Director of the Company (Independent Shareholder vote).
22 That Alison Brittain who is retiring as a Director of the Company, and being eligible, is offering herself for election, be appointed as a Non-Executive Director of the Company.
(b) this authority shall expire at the conclusion of the next annual general meeting of the Company after the passing of this resolution or, if earlier, on 31 December 2023 although the Directors may exercise this authority after this date in respect of an offer or agreement made while this authority was in force; and
(c) all previous unutilised authorities under section 570 of the Companies Act 2006 shall cease to have effect (save to the extent that the same are exercisable pursuant to section 570(4) of the Companies Act 2006 by reason of any offer or agreement made prior to the date of this resolution which would or might require equity securities to be allotted on or after that date).
(c) the minimum price (not including expenses) which may be paid for each Ordinary Share is 1 penny.
This authority shall, unless previously varied, revoked or renewed, expire at the conclusion of the next annual general meeting of the Company or, if earlier, on 31 December 2023, except in relation to a purchase of Ordinary Shares the contract for which was concluded before such time and which will or may be executed wholly or partly after such time.
Dated: 21 October 2022
Watermead Business Park Syston Leicester Leicestershire LE7 1AD
By order of the board
Secretary
and in each case must be received by the Company's registrars, Equiniti Limited, not less than 48 hours (excluding non-working days) before the time of the Annual General Meeting.
of CREST Proxy Instructions. It is the responsibility of the CREST member concerned to take (or, if the CREST member is a CREST personal member or sponsored member or has appointed (a) voting service provider(s), to procure that his or her CREST sponsor or voting service provider(s) take(s)) such action as shall be necessary to ensure that a message is transmitted by means of the CREST system by any particular time. In this connection, CREST members and, where applicable, their CREST sponsors or voting service provider(s) are referred, in particular, to those sections of the CREST Manual concerning practical limitations of the CREST system and timings.
13 A corporation that is a shareholder can appoint one or more corporate representatives who may exercise, on its behalf, all its powers as a shareholder provided that they do not do so in relation to the same shares. Representatives of shareholders that are corporations will have to produce evidence of their proper appointment when attending the Annual General Meeting. Please contact the Company's registrars, Equiniti Limited, Aspect House, Spencer Road, Lancing, West Sussex BN99 6DA if you need any further guidance on this.
14 Pursuant to Regulation 41 of the Uncertificated Securities Regulations 2001, in order to be able to attend and vote at the Annual General Meeting or any adjourned meeting (and also for the purpose of calculating how many votes a person may cast), a person must have his/ her name entered on the register of members of the Company at 6.30 pm on 28 November 2022 (or 6.30 pm on the date two business days before any adjourned meeting). Changes to entries on the register of members after this time shall be disregarded in determining the rights of any person to attend, speak or vote at the Annual General Meeting.
The revocation notice must be received by Equiniti Limited, Aspect House, Spencer Road, Lancing, West Sussex BN99 6DA no less than 48 hours (excluding non-working days) before the time of the Annual General Meeting.
If you attempt to revoke your proxy appointment but the revocation is received after the time specified then your proxy appointment will remain valid.
24 Pursuant to Chapter 5 of Part 16 of the Companies Act 2006 (sections 527 to 531), where requested by either: (a) a member or members having a right to vote at the Annual General Meeting and holding at least 5 per cent. of total voting rights of the Company; or (b) at least 100 members having a right to vote at the Annual General Meeting and holding, on average, at least £100 of paid up share capital, the Company must publish on its website a statement setting out any matter that such members propose to raise at the Annual General Meeting relating to the audit of the Company's accounts (including the Auditor's Report and the conduct of the audit) that are to be laid before the Annual General Meeting.
Where the Company is required to publish such a statement on its website: (a) it may not require the members making the request to pay any expenses incurred by the Company in complying with the request; (b) it must forward the statement to the Company's auditors no later than the time the statement is made available on the Company's website; and (c) the statement may be dealt with as part of the business of the Annual General Meeting.
A member wishing to request publication of such a statement on the Company's website must send the request to the Company using one of the following methods:
Whichever form of communication is chosen, the request must either set out the statement in full or, if supporting a statement sent by another member, clearly identify the statement which is being supported, and be received by the Company at least one week before the Annual General Meeting.
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