Franchise Brands plc Annual Report and Accounts 2018 41 Strategic Report Financial Statements Governance Scope of this report The Directors’ biographies on pages 32 and 33, the discussion of corporate governance matters on pages 35 to 37 and the Remuneration report on pages 39 and 40 are hereby incorporated by reference to form part of this Directors’ Report. As permitted under the Companies Act, certain matters which would otherwise need to be included in this Directors’ Report have instead been discussed in the Strategic Report. These matters are the discussion of the performance and likely future developments in the business of the Company and its subsidiaries. Disclosures relating to financial risk management are included in Note 3 to the financial statements. Principal activities The principal activity of the Group is the acquisition, development and brand marketing of multiple franchised businesses. The principal activity of the Company is to act as a holding company and to provide management services to its subsidiary companies. Research and development The Group did not have any material activities in the field of research and development during the year. Directors Names, biographical details and appointment dates of the Directors of the Company at the date of this report are shown on pages 32 and 33. In addition, Robin Auld served as an Executive Director until 25 April 2018. Directors’ interests The following table shows the interests of the Directors (and their spouses and minor children) in the shares of the Company. Director At 31 December 2018 At 31 December 2017 Stephen Hemsley1 20,640,117 20,640,117 Chris Dent 15,000 15,000 Julia Choudhury2 1,204,258 1,204,258 Tim Harris3 1,059,284 1,059,284 Peter Molloy 33,582 33,582 Colin Rees 298,507 298,507 Nigel Wray4 21,720,120 21,720,120 David Poutney5 3,310,791 2,260,791 Rob Bellhouse 82,768 82,768 DIRECTORS’ REPORT Notes: 1. Included in the holding of Stephen Hemsley are 1,616,431 Ordinary shares held by his wife, 7,477,612 Ordinary shares held by CTG Investment Limited, a company owned by a discretionary trust of which Mr Hemsley and his family are potential beneficiaries, and 1,492,537 Ordinary shares held by his Self-Invested Personal Pension (SIPP). 2. Included in the holding of Julia Choudhury are 381,819 Ordinary shares held jointly with her husband, 411,985 Ordinary shares held by her SIPP and 37,313 Ordinary shares held by Winsham Capital Partners Ltd, a Company controlled by Julia Choudhury and her husband. 3. Included in the holding of Tim Harris are 59,522 shares held by his SIPP. 4. Included in the holding of Nigel Wray are 14,026,380 Ordinary shares held by Damor Investments Limited, acting as nominee for RBC Trustees (Jersey) Limited as trustee of Mr Wray’s family trust. Also included are 3,731,343 Ordinary shares and 3,684,463 Ordinary shares held by Euroblue Investments Limited and Glengrace Limited, respectively, companies wholly owned by Nigel Wray. Also included in Nigel Wray’s interest are 223,880 Ordinary shares owned by The Priory Foundation, a charitable trust of which he is the settlor and a trustee. Nigel Wray controls this interest but is not the beneficial owner of these shares. 5. Included in the holding of David Poutney are 2,574,627 Ordinary shares held by his SIPP and an interest in 676,164 Ordinary shares held by his wife and adult daughters. David Poutney controls the interest held by his wife and adult daughters but is not the beneficial owner of these shares. In addition, Chris Dent, Julia Choudhury, Tim Harris, Peter Molloy and Colin Rees held or hold options over shares of the Company through their participation in the Company’s LTIP, which are detailed in the Remuneration Report on pages 39 and 40. Major shareholders Insofar as is known to the Company and in addition to the holdings of the Directors above, the following persons hold, as at the date of this document, and are expected (based on the information available as at the date of this document), to hold directly or indirectly 3% or more of the Share Capital: Shareholder Current Number of Ordinary shares Percentage of existing share capital Netcap Limited 3,373,134 4.3% Hargreave Hale 3,351,033 4.3% Going concern The Directors have made appropriate enquiries and consider that the Group has adequate resources to continue in operational existence for the foreseeable future. Accordingly, the Directors continue to adopt the going concern basis in preparing the financial statements. Directors’ and Officers’ liability insurance and indemnification of Directors The Company maintains Directors’ and Officers’ liability insurance which gives appropriate cover for any legal action brought against its Directors. The Company has also granted indemnities to each of its Directors to the extent permitted by law. Qualifying third party indemnity provisions (as defined in Section 324 of the Companies Act 2006) have been given in favour of all Directors on the Board. These indemnities remain in force and relate to certain losses and liabilities which the Directors may incur to third parties in the course of acting as Directors of the Company. Directors’ obligations to the auditors The Directors confirm that: • so far as each of the Directors is aware, there is no relevant audit information of which the Company’s auditor is unaware; and • they have each taken all the steps that they ought to have taken as Directors to make themselves aware of any relevant audit information and to establish that the auditors are aware of that information.