Directors’ interests and indemnities
The interests of the Directors of the Company in the issued share capital of the Company (including interests in share options and deferred shares) are shown in the Remuneration Report.
No Director had any material interest in a contract of significance (other than a service contract) with the Company or any subsidiary company during the year. Details of the Executive Directors’ service contracts and the letters of appointment for the Non-Executive Directors, their emoluments and share interests (including interests in share-based payments) are given in the Remuneration Report.
The Company’s practice has always been to indemnify its Directors in accordance with the Company’s Articles of Association and to the maximum extent permitted by law. As at the date of this report, indemnities are in force under which the Company has agreed to indemnify the Directors, in accordance with the Company’s Articles of Association and to the maximum extent permitted by law, in respect of all costs, charges, expenses or liabilities, which they may incur in or about the execution of their duties to the Company, or any entity which is an associated company (as defined in Section 256 of the Companies Act 2006), or as a result of duties performed by the Directors on behalf of the Company or any such associated company.
Directors’ responsibilities in relation to the financial statements
The following statement sets out the responsibilities of the Directors in relation to the financial statements of both the Group and the Company. The reports of the independent auditors for the Group and the Company set out their responsibilities in relation to those financial statements.
Company law requires the Directors to prepare financial statements for each financial year which give a true and fair view of the state of affairs of the Company and the Group as at the end of the financial year and of the profit or loss of the Group for the financial year. In preparing those financial statements, the Directors are required to:
- select appropriate accounting policies and apply them consistently;
- make judgements and estimates that are reasonable and prudent;
- state whether applicable accounting standards have been followed, subject to any material departures being disclosed and explained; and
- prepare the financial statements on the going concern basis, unless they consider that to be inappropriate.
The applicable accounting standards referred to in (3) above are: (a) United Kingdom Generally Accepted Accounting Principles (UK GAAP) for the Company; and (b) International Financial Reporting Standards (IFRS) as adopted by the European Union for the Group.
The Directors are responsible for ensuring that the Company keeps proper accounting records to disclose with reasonable accuracy at any time the financial position of the Group and the Company and to enable them to ensure that the Group financial statements comply with the Companies Act 1985 and Article 4 of the IAS Regulation and the Company financial statements and the Directors’ Remuneration Report comply with the Companies Act 1985. They are also responsible for taking reasonable steps to safeguard the assets of the Company and the Group and, in that context, having proper regard to the establishment of appropriate systems of internal control with a view to the prevention and detection of fraud and other irregularities.
The Directors are required to prepare financial statements and to provide the auditors with every opportunity to take whatever steps and undertake whatever inspections the auditors consider to be appropriate for the purpose of enabling them to give their audit report.
The Directors are responsible for the maintenance and integrity of the Annual Report and Accounts on bat.com in accordance with the UK legislation governing the preparation and dissemination of financial statements. Access to the website is available from outside the UK, where comparable legislation may be different.
The Directors consider that they have pursued the actions necessary to meet their responsibilities as set out in this Statement.
Directors’ declaration in relation to relevant audit information
Having made enquiries of fellow Directors and of the Company’s auditors, each of the Directors confirms that:
- to the best of his or her knowledge and belief, there is no relevant audit information of which the Company’s auditors are unaware; and
- he or she has taken all steps that a Director might reasonably be expected to have taken in order to make himself or herself aware of relevant audit information and to establish that the Company’s auditors are aware of that information.
After reviewing the Group’s annual budget and plans, the Directors consider that the Group has adequate resources to continue in operational existence for the foreseeable future and that it is therefore appropriate to continue to adopt the going concern basis in preparing the accounts.
Resolutions will be proposed at the Annual General Meeting to reappoint PricewaterhouseCoopers LLP as the Company’s auditors and to authorise the Directors to agree their remuneration. The Audit Committee will recommend the appropriate level of fees to the Board.
Interim dividend 2006 and related party transaction
In the Company’s Annual Report and Accounts for the year ended 31 December 2006, it was reported that, in December 2006, the Company had become aware of a technical issue concerning: (i) the payment of certain historical dividends by B.A.T Industries p.l.c. (a wholly owned subsidiary of the Company); (ii) the payment of the Company’s interim dividend in September 2006; and (iii) the repurchase by the Company (pursuant to its on-market share buy-back programme) of 6,927,790 ordinary shares of 25p each for an aggregate consideration of £100 million between 22 September 2006 and 4 December 2006 which caused such dividends and share repurchases to be unlawful and invalid.
These matters were drawn to shareholders’ attention at the Annual General Meeting in April 2007 and were ratified by way of a shareholders’ resolution. At the same general meeting, shareholders also approved entering into deeds of release in favour of Directors and certain former Directors of both the Company and B.A.T Industries p.l.c. Following that meeting the Company and B.A.T Industries p.l.c. entered into these deeds of release for no consideration in favour of the present and certain former Directors of both companies releasing them from liability arising from the aforementioned unlawful dividends and share repurchases. The invalidly repurchased shares were subsequently repurchased on 1 March 2007 from their holders, the Company’s brokers, at the same prices agreed between 22 September 2006 and 4 December 2006.