Directors' Report

Company Number: 07063562

The directors present their Annual Report together with the audited Financial Statements of the company and its subsidiaries (together "the Group") for the 52 weeks ended 29 April 2012 ("the year"). The Corporate Governance Statement forms part of this report. The company is incorporated and domiciled in the UK.

Business review and future developments

SuperGroup Plc is required to set out in this report a fair review of the business of the Group during the year to 29 April 2012 and of the position of the Group at the end of the financial year and a description of the principal risks and uncertainties facing the Group (known as the "Business Review"). The Business Review and the Financial Review can be found here. Their purpose is to enable shareholders to form a view as to how well the directors have performed their duties as set out in the Companies Act 2006 (in particular, the duty to promote the success of the Group). A table of key performance indicators is set out in the Financial Review. A description of the principal risks and uncertainties facing the Group is included in Risk. The report on Operating Responsibly is set out here. The sections of the Annual Report referred to above fulfil the requirements of the Business Review, and are incorporated by reference and shall be deemed to form part of this report.

Principal activities

SuperGroup Plc is a UK based designer of branded premium quality clothing and accessories selling through multiple routes to market including retail, wholesale and online. At the year-end, the Group had 103 standalone retail stores, 71 concessions and a growing number of wholesale relationships. Superdry is sold in 101 countries worldwide via its websites and in 54 overseas countries through a well established network of distributors, licensees, agents and franchisees.

The company, SuperGroup Plc, is the holding company for the Group (the "Group"). Details of the principal operating subsidiaries are set out here.

Results and dividends

The audited Financial Statements of the Group for the 52 weeks ending 29 April 2012 are set out here. The Group's reported profit before taxation for the 52 weeks was £51.4m (2011: £47.3m).

The board of directors has concluded that the Group is best served by retaining current cash reserves to support growth. Consequently, a recommendation will be made to the AGM that no dividend is payable for 2012 (2011: £nil).

Banking facility

The Group has a bank facility with Barclays Bank Plc as set out in Notes to the Group and Company Financial Statements. These facilities expire in January 2013 and at this point in time the Group has not committed to extending them. The Group constantly monitors its funding requirements and will extend these as and when required.

Financial instruments

The Group occasionally uses financial instruments to minimise potential adverse effects on the Group's financial performance. In particular, forward contracts relating to foreign exchange have been used. See note 31 to the Financial Statements for details of the Group's financial risk management objectives and policies.

Directors

A brief résumé of each director, in office at the date of this report, is set out in the Board of Directors. Diane Savory resigned as a director on 6 May 2011, and Chas Howes resigned as a director on 23 April 2012.

Susanne Given was appointed as a director on 10 April 2012 and Shaun Wills as a director on 23 April 2012. At the 2012 AGM, both these directors will be put forward for election.

At the 2012 AGM, the other directors will retire and being eligible, will offer themselves for re-election. This is in accordance with the Code which replaces the Combined Code for financial years starting on or after 29 June 2010.

The notice of this year's AGM sets out why the board believes the directors should be re-elected. Details of the directors' service agreements and letters of appointment are given in the Directors' Remuneration Report.

Share capital

Details of the issued share capital, together with details of movements in the issued share capital of the company during the year are shown in note 32 which is deemed to be part of this 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 29 April 2012, the company had 80,234,588 ordinary shares in issue.

Substantial shareholdings

At 30 June 2012, the Group had been notified, in accordance with the Disclosure and Transparency Rules (DTR5), of the following substantial interests in the ordinary share capital of the company (see table below):

Name of holderNumber% held
Julian Dunkerton26,088,94432.52
Theo Karpathios11,850,00314.77
James Holder11,850,00314.77
Oppenheimer Funds Inc8,065,47010.05
FMR LLC4,000,3274.99

Share capital, control and restriction on voting rights

As at 29 April 2012, the company's issued share capital was 80,234,588 ordinary shares of five pence each in nominal value. Details of the company's share capital are shown in note 32 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 statement. Changes to the Articles of Association must be approved by shareholders in accordance with the relevant legislation. Powers relating to the issuing and buying back of shares are included in the company's Articles of Association and such authorities are renewed by shareholders each year at the AGM.

Pursuant to the terms of an agreement entered into between the company and Julian Dunkerton dated 12 March 2010, 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 his connected persons 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.

Change of control

In the event of a change of the control structure, the Group's banking facilities with Barclays Bank Plc could become repayable or be withdrawn if the Bank does not consent to the change of control.

The provisions of the company's employee share plans may cause options and awards granted under such plans to vest upon a change of control.

Directors' share interests

The interests of the directors holding office at 29 April 2012 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 the period 29 April 2012 and 11 July 2012.

Directors' indemnity insurance

The company maintains directors' and officers' liability insurance which gives appropriate cover for any legal action brought against its directors. In accordance with section 236 of the Companies Act 2006, qualifying third-party indemnity provisions are in place for the directors in respect of liabilities incurred as a result of their office, as far as is permitted by law. Both the insurance and indemnities applied throughout the financial year ended 29 April 2012 and through to the date of this report.

The Takeover Directive

The issued share capital of the company, as at 29 April 2012, consisted of 80,234,588 ordinary shares of five pence nominal value. The rights and obligations attached to these shares are as set out in the Articles of Association available on our website www.supergroup.co.uk. At the AGM in 2011, shareholders approved resolutions to allot shares up to an aggregate nominal value of £1,337,243 (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 2012 in respect of shares with a nominal value of £1,337,243 (again, representing one third of the issued share capital as at 29 April 2012).

The disapplication of pre-emption rights for cash issues of shares was approved at the AGM in 2011 in respect of ordinary shares with a nominal value of £200,586 representing approximately 5% of the issued share capital. This disapplication will be renewed at the AGM in September 2012 in respect of ordinary shares with a nominal value of £200,586 (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 Statement, 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 occur because of a takeover bid.

Share buy backs

At the AGM in 2011, shareholders approved a resolution to grant the directors authority to repurchase a maximum number of 8,023,459 ordinary shares (representing 10% of the company's issued share capital) as shares become available. During the reporting year to 29 April 2012, 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 2012 in respect of 8,023,459 ordinary shares (again, representing 10% of the issued share capital as at 29 April 2012). Further details are set out in the notice of the AGM.

Going concern

The Group's business activities and growth strategy, together with factors likely to affect the future development, performance and position of the Group, are set out in the Business Review and Financial Review.

The directors have reviewed the Group's forecasts and projections. These include assumptions around the Group's products, expenditure commitments, expected cash flows and the existing bank facilities. Taking into account possible changes in trading performance and after making enquiries, the directors have a reasonable expectation that the company and the Group have adequate resources to continue their operations for the foreseeable future. For this reason, they have continued to adopt the going concern basis in preparing the Financial Statements.

Creditor payment policy

The Group's policy, in relation to all of its suppliers, is to agree terms of payment when negotiating the terms of a transaction and to abide by those terms, provided that the Group is satisfied that the supplier has provided the goods and services in accordance with the agreed terms and conditions. At the year-end, the Group had creditor days of 95 (2011: 93 days). The company has nil creditor days (2011: nil) as the company is not a trading entity.

Donation

There was a charitable donation during the year to 29 April 2012 of £7,500 (2011: £25,000). There were no political donations.

Since the end of the financial period a donation of £25,000 was made to a Gloucestershire charity that helps young people to develop skills so that they are better equipped to find employment (see Operating Responsibly).

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.

Employee practices

The success of the Group is a direct result of the knowledge, skills, drive, passion and enthusiasm of its people. From its earliest days, the culture of the Group has been to create and maintain an environment where individuals can flourish in order to fulfil their potential.

The board has introduced a Long Term Incentive Plan for certain executives as a way of encouraging involvement and association with the long term success of the Group. At the AGM 2011, the Group obtained shareholder approval for the introduction of a Save As You Earn ("SAYE") scheme to give employees the chance to buy shares in the company at a discounted value. Following this approval the Group introduced a SAYE scheme in September 2011 and it is intended to launch another one in October 2012.

The Group has in place a whistleblowing policy so that employees are able to raise concerns without fear of reprisal.

Equality and diversity are fundamental values supported by SuperGroup. The Group has an equal opportunities policy and takes its responsibilities under that policy very seriously. In addition, the company and the Group give full and fair consideration to applications for employment by disabled people. In the event of members of staff becoming disabled, every effort is made to ensure that their employment with the Group continues and that the appropriate training is arranged as necessary. It is the policy of the Group that the training, career development and promotion of a disabled person should, as far as possible, be identical to that of a person who does not suffer from a disability.

The Group strives to keep employees closely informed about matters of importance to them, whether financial or business, through an open culture of trust and two-way communication. This is complemented by a mix of informal briefings and electronic media.

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 on-going 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.

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 himself or herself aware of any relevant audit information and to establish that the company's auditors are aware of that information.

Independent auditors

The directors will put a resolution before the AGM to reappoint PricewaterhouseCoopers LLP as auditors for the ensuing year.

Annual General Meeting

The AGM of the company will be held at The Cheltenham Ladies' College, Bayshill Road, Cheltenham, Gloucestershire, GL50 3EP on 20 September 2012 commencing at 11.30am. The Notice of this year's AGM is included in a separate circular to shareholders, and will be sent out at least 20 working days before the meeting. This Notice is available to view under the 'Investor Centre' section of the company's website www.supergroup.co.uk. In accordance with provision E.2.2 of the Code all valid proxy appointments are properly recorded and counted and made available at the AGM and published on our website after the meeting.

The directors consider that each of the proposed resolutions to be considered at the AGM are in the best interests of the company and its shareholders as a whole and are most likely to promote the success of the company for the benefit of its shareholders as a whole. The directors unanimously recommend that shareholders vote in favour of each of the proposed resolutions, as the directors intend to do in respect of their own shareholdings.

By order of the board

Wendy Edwards
Company Secretary
11 July 2012
Registered Office:
Unit 60
The Runnings
Cheltenham
Gloucestershire
GL51 9NW

Registered Number: 07063562

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