The directors present their Directors' Report together with the audited Financial Statements of the Company and its subsidiaries (together the "Group") for the Period audited. The Corporate Governance Statement forms part of this Directors' Report. The Company is UK domiciled but has a number of overseas subsidiaries and a branch in Portugal.
The Directors' Report and Strategic Report comprises the 'management report' for the purposes of the Financial Conduct Authority's Disclosure and Transparency Rules (DTR 4.1.8.R).
Please refer to the Board of Directors for a full list of the directors.
The Group's and Company's Financial Statements for the year.
Post Balance Sheet Events
There have been no balance sheet events that either require adjustment to the Financial Statements or are important in the understanding of the Company's current position other than the purchase of the SMAC group (its successful and long-term Scandinavian distributor which consists of SMAC A/S, SMAC Retail A/S and SMAC Norge A/S) which completed on 20 June 2014. This purchase returns to SuperGroup the rights to trade the Superdry brand in Denmark, Norway and Finland. The acquisition of the distribution rights will assist the Group in meeting its ambitious plans for the region, by freeing it to invest its own capital in the store roll-out, improve margins on the wholesale operation and retain local operational and management expertise. Based in Aarhus, Denmark, SMAC has a footprint of four owned retail stores, eight franchise stores and a thriving wholesale business.
The Group's Approach to Tax
The Group's approach to tax matters is to comply with all relevant tax laws and regulations, whichever country it operates in, whilst effectively managing the overall tax burden. The Group will pay the right and fair amount of tax in each territory it trades from in accordance with the letter and spirit of local laws and regimes. The Group understands that taxes it pays to governments are an important source of revenue for them in providing a stable infrastructure and environment in which the business operates.
The Group's businesses operate in a growing number of countries, which leads to increasing complexity in its tax affairs, and it is well documented that tax authorities around the world are subjecting the tax affairs of large companies to ever-greater scrutiny. The Group looks to manage its tax affairs in a manner to support business operations with the aim of ensuring that the tax consequences match the economic and commercial consequences of those operations. Naturally, management looks to ensure that the same profits are not taxed twice by different jurisdictions and that transactions between subsidiary and associate companies are conducted on an arm's length basis and in line with the Group's transfer pricing agreements.
Where a tax rule, regulation or incentive exists that may convey a tax advantage to the business, for example, using losses incurred in prior years, the Group will use that rule, regulation or incentive to support the businesses as permitted by local law.
The Group uses the services of external, expert tax advisors to provide input into its tax affairs, such as the management of compliance in some overseas jurisdictions and the impact of changes in tax legislation on the Group.
The Group's tax strategy is determined by the Board of directors as a sub-set of the Group's overall business strategy and is overseen by the Audit Committee. Operational responsibility for the execution of the Group's tax strategy rests with the Chief Financial Officer, who reports the Group's tax position to the Audit Committee on a regular basis.
The Audit Committee considers tax risks that may arise as a result of business operations through the Group's risk management framework. The consideration of such tax risks includes actions to mitigate the risks or to prevent their occurrence or recurrence.
As a clothing brand with international retail and wholesale operations, the Group naturally has a presence in some countries with lower tax rates than the UK. It also operates in a number of countries with much higher rates and all territories are chosen for their strategic importance to the growth of the business rather than their tax regimes. Importantly, the Group has a full retail or wholesale trading business and pays appropriate taxes in all of the countries where it has a presence.
Related Party Transactions
Other than in respect of arrangements set out in note 5 to the Financial Statements and in relation to the employment of directors, details of which are provided in the Directors' Remuneration Report, there is no material indebtedness owed to or by the Company or the Group to any employee or any other person or entity considered to be a related party.
Details of related party transactions are set out in note 5 to the Financial Statements.
Details of the issued share capital, together with details of movements in the issued share capital of the Company during the Period, are shown in note 32 which is deemed to be part of this Directors' Report. The Company has one class of ordinary shares which carries no right to fixed income. Each share carries the right to one vote at general meetings of the Company. The ordinary shares are listed on the Official List and traded on the London Stock Exchange. As at 26 April 2014, the Company had 80,961,378 ordinary shares in issue.
Share Capital, Control and Restriction on Voting Rights
As at 26 April 2014, the Company's issued share capital was 80,961,378 ordinary shares of 5 pence each in nominal value (the "issued share capital"). Details of the Company's share capital are shown in note 17 to the Financial Statements.
The rules about the appointment and replacement of directors are contained in the Company's Articles of Association. Specific rules regarding the re-election of directors are referred to in the Corporate Governance Report. Changes to the Articles of Association must be approved by the Company's shareholders.
Powers relating to the issue and buy back of shares are included in the Company's Articles of Association and such authorities are renewed by shareholders each year at the Annual General Meeting ("AGM").
Pursuant to the terms of an agreement entered into between the Company and Julian Dunkerton dated 12 March 2010 as amended on 9 July 2014, Julian Dunkerton has undertaken to ensure that the Company is able to operate independently of him as a shareholder for as long as he and persons with whom he is acting in concert together hold not less than 30% of the voting rights attached to the ordinary shares. He is restricted from exercising his voting rights in certain circumstances, including the requisition of a general meeting to appoint or remove a director.
At the AGM in 2013, shareholders approved a resolution to grant the directors authority to repurchase a maximum number of 8,045,555 ordinary shares (representing 10% of the Company's issued share capital) as shares become available. During the reporting year to 26 April 2014, there were no purchases by the Company of its own shares. It is intended to renew this authority from shareholders at the AGM in September 2014 in respect of 8,096,137 ordinary shares (again, representing 10% of the issued share capital as at 26 April 2014). Further details are set out in the notice of the AGM.
Directors' Share Interests
The interests of the directors holding office at 26 April 2014 in the shares of the Company are shown in the Directors' Remuneration Report. There were no changes to the beneficial interests of the directors between 26 April 2014 and 1 July 2014.
UK Corporate Governance Code
The Company's statement on corporate governance and compliance with the Code can be found in the Corporate Governance Report and is incorporated by reference.
The Takeover Directive
The rights and obligations attached to the issued share capital are set out in the Articles of Association available on the Company's website www.supergroup.co.uk. At the AGM in 2013, shareholders approved resolutions to allot shares up to an aggregate nominal value of £1,341,200 (representing, at that time, one-third of the Company's issued share capital). It is intended to renew this authority at the AGM in September 2014 in respect of shares with a nominal value of £1,349,356 (again, representing one-third of the issued share capital as at 26 April 2014).
The disapplication of pre-emption rights for cash issues of shares was approved at the AGM in 2013 in respect of ordinary shares with a nominal value of £201,180, representing approximately 5% of the issued share capital at that date. This disapplication will be renewed at the AGM in September 2014 in respect of ordinary shares with a nominal value of £202,403 (again representing approximately 5% of the issued share capital).
Other relevant disclosure requirements from the Takeover Directive are included elsewhere in the Directors' Report, the Corporate Governance Report, the Directors' Remuneration Report and the Notes to the Group and Company Financial Statements.
There are no agreements in place between the Group and its employees or directors for compensation for loss of office or employment that trigger as a result of a takeover bid.
Financial Risk Management
Please refer to note 31 of the accounts.
Legal and Regulatory Compliance
The legal team is responsible for identifying and carrying out audits of those areas of the business where material legal and regulatory risks may be present. In the last year, the team has worked with external advisers to audit the Company's compliance with the UK Bribery Act 2010, the Data Protection Act 1998, competition laws and risks in relation to the Company's intellectual property portfolio. Where issues are identified, mitigating actions are built into an action plan involving the drafting and communication of policies and the delivery of training. The progress against set targets is monitored by the Board and/or Audit Committee.
In order to ensure that the Company's suppliers behave in a moral and ethical manner, the Company introduced a comprehensive supplier manual which includes contractual terms, codes of conduct and an ethical trading policy which has been reviewed and updated during the Period. Compliance with the manual is monitored by audits carried out in accordance with an agreed plan, and a report is presented to the Board annually.
Whistleblowing hotlines are now in place internationally and are managed through a third party provider. These cover all countries in which the Group operates. All matters arising from the use of the whistleblowing hotline are referred to the company secretarial team and investigated as appropriate. The Audit Committee receives a summary of all matters arising through the whistleblowing hotline.
Health and Safety
The Group is committed to providing a safe place for employees to work and customers to shop. Group policies are reviewed on an ongoing basis to ensure that the policies regarding training, risk assessments, safe systems of working and accident management are appropriate. As part of this process, a rolling audit programme is in place to ensure that health, safety, environmental and security risks are stringently assessed and that robust control measures are in place to limit these risks.
For further information, please refer to the Strategic Report.
Greenhouse Gas Emissions
The Group has measured its operational and wider carbon footprint for the past four years, providing insight into where the largest climate impacts are and to prioritise resources accordingly.
The section of the Corporate Responsibility report headed "Carbon Emissions" is incorporated into the Director's Report by reference.
Disclosure of Information to Auditors
Each director who held office on the date of approval of this Directors' Report confirms that, so far as he or she is aware, there is no relevant audit information of which the Company's auditors are unaware. Furthermore, each director has taken all the steps that he or she ought to have taken as a director to make him or herself aware of any relevant audit information and to establish that the Company's auditor is aware of that information.
Approved and signed on behalf of the Board.
Lindsay BeardsellCompany Secretary 9 July 2014
Registered office: Unit 60