Georgia Healthcare Group PLC Annual Report 2018 Governance Directors’ Report continued right to make such exclusions or other arrangements as they may deem necessary or expedient in relation to treasury shares, fractional entitlements, record dates or legal, regulatory or practical problems in, or under the laws of, any territory. These authorities will expire at the conclusion of the 2019 AGM (or, if earlier, at the close of business on 30 July 2019) and approval will be sought at that meeting to renew a similar authority for a further year. None of the ordinary shares carry any special rights with regard to control of GHG. These are no restrictions on transfers of shares other than: • certain restrictions which may from time to time be imposed by laws or regulations such as those relating to insider dealing or pursuant to the Group’s Inside Information Disclosure Policy; • pursuant to the Group Securities Dealing Policy and Code, whereby the Directors and designated employees require approval to deal in GHG’s shares or cannot deal in certain periods; and • where a person with an interest in GHG’s shares has been served with a disclosure notice and has failed to provide GHG with information concerning interests in those shares. There are no restrictions on exercising voting rights save in situations where GHG is legally entitled to impose such a restriction (for example, under the Articles of Association where amounts remain unpaid in the shares after request, or the holder is otherwise in default of an obligation to GHG). GHG is not aware of any arrangements between shareholders that may result in restrictions on the transfer of securities or voting rights. Sanne Fiduciary Services Limited, acting as trustee of the Employee Benefit Trust, has waived its right to receive any dividends. This waiver will remain in place indefinitely, unless otherwise instructed by GHG. Results The Group made a profit before taxation of GEL 53.9 million (year ended 31 December 2017: GEL 46.3 million). The Group’s profit after taxation for the year was GEL 53.2 million (year ended 31 December 2017: GEL 45.9 million). Dividend Policy GHG may by ordinary resolution declare dividends provided that no such dividend shall exceed the amount recommended by GHG’s Directors. The Directors may also pay such interim dividends as appear to be justified by the profits of GHG available for distribution. As GHG is a holding company, GHG relies primarily on dividends and other statutorily (if any) and contractually permissible payments from its subsidiaries to generate the funds necessary to meet its obligations and pay dividends to its shareholders. In November 2018 to March 2019, the Company performed a review of the Company’s expected cash generation, considering the performance potential of its businesses, growth opportunities and risks. The objective of the review was to ensure that the Company maintains a capital structure and dividend policy that is consistent with sustainable value creation. Following careful consideration of the outcomes of that review, and as announced on 26 March 2019, the Board has decided to: • recommend to shareholders at the 2019 Annual General Meeting, a final dividend of GEL 0.053 per share, to be paid in respect of the 2018 financial year. This represents a payout of 20% of 2018 earnings. • adopt a new dividend policy, beginning with 2019 earnings and until further notice, reflecting our intent that 20% to 30% of annual profit available to shareholders will be distributed as dividends. Equity settled option plan (“ESOP”) The Company operates an employee benefit trust EBT (the “ESOP”), which holds ordinary shares on trust for the benefit of employees and former employees of the Group, and their dependents, and which is used in conjunction with the Group’s employee Share Schemes. Whilst ordinary shares are held in the EBT, the voting rights in respect of these ordinary shares are exercised by the trustees of the EBT. In accordance with the ESOP documentation, Sanne Fiduciary Services Limited has waived its right to receive any dividends. This waiver will remain in place indefinitely, unless otherwise instructed by GHG. The Group previously committed that new shares issued in satisfaction of deferred share compensation from the time of the Company’s listing on the premium segment of the LSE will not exceed 10% of GHG’s ordinary share capital over any ten-year period. Powers of Directors The Directors may exercise all powers of GHG subject to applicable legislation and regulations and GHG’s Articles of Association. Conflicts of interest In accordance with the Companies Act 2006, the Directors have adopted a policy and procedure for the disclosure and authorisation (if appropriate) of conflicts of interest, and these have been followed during 2018. GHG’s Articles of Association also contain provisions to allow the Directors to authorise potential conflicts of interest so that a Director is not in breach of his or her duty under company law. Directors’ remuneration Directors’ fees are determined by the Remuneration Committee from time to time. The remuneration of Directors must be in accordance with the Directors’ Remuneration Policy, which was last approved by shareholders in 2016 and is subject to review and approval at the forthcoming AGM. 110