Section 172 Statement

J. & J. Denholm Limited

Section 172(1) Statement

For the year ended 31 December 2024

Section 172(1) of Companies Act 2006 requires directors to act in a way that they consider, in good faith, will be most likely to promote the success of the Group for the benefit of its members as a whole and in doing so (amongst other matters) to have regard to:
(a) the likely consequences of any decision in the long term,
(b) the interests of the Group’s employees,
(c) the need to foster the Group’s business relationships with suppliers, customers and others,
(d) the impact of the Group’s operations on the community and the environment,
(e) the desirability of the Group maintaining a reputation for high standards of business conduct, and
(f) the need to act fairly as between members of the Group.

The Group sets out below how it has conducted its business, evaluated and made decisions to ensure compliance with the Section 172 (1) Companies Act.

Stakeholder Engagement

The Directors believe that engaging with the Group’s stakeholders is important to the success of the business. They have identified the main stakeholders as the shareholders, employees, customers, suppliers, the government, financiers, regulators and the communities within which the Group operates.

When reviewing matters of strategic importance to the Group, the Directors consider how the relevant issues impact its main stakeholders. All Group companies are required by the Directors to consider each stakeholder group from the outset of projects by assessing and recording the manner in which the stakeholder groups may be impacted by the planned strategic project. Underpinning these stakeholder relationships is a culture which promotes high standards of business ethics, focuses on a long-term sustainable strategy, and recognises our responsibility to the environment.

Various mechanisms exist for how these stakeholders are engaged with by each of the individual businesses as well as at Group and Board level. Further information on how we engage with our key stakeholders is detailed below:

Stakeholder: Shareholders

Engagement

The Group has well established communication with all shareholders through the publicly available Annual Report, Group and subsidiary company websites, and the half yearly newsletter (The Denholm News) which sets out developments and any major issues facing the Group. These all provide regular updates on the Group’s overall performance, significant developments and can indicate future strategic and operational matters and highlight potential issues, where appropriate.

The Group communicates with shareholders at the Annual General Meeting, where a trading update is provided, and where shareholders also have the opportunity to meet with and ask questions of the Directors. A copy of the trading update given at the meeting is also issued to each shareholder following the meeting.

The Group’s Family Council meets twice yearly in the spring and autumn. The Family Council meetings provide a forum for the Group’s Executive Directors to meet with the Council and provide them with an update on the Group’s trading performance, outlook, major developments and issues. The Chairman and Executive Directors attending the Family Council meetings feedback the views of the shareholders to the Board, and the Board considers the shareholders’ views where necessary.

The Chairman, Chief Executive Officer, Chief Financial Officer and the Company Secretary additionally communicate with shareholders during the year, as required.

How this Stakeholder group influenced Board and Committee discussions and decisions

The Chairman and the Chief Executive Officer brief the Board on discussions with shareholders whose views are considered in the discussions and decision-making of the Board.

The Board considers the strategic aims of the shareholders, which is to prioritise dividends as a return on the shareholders’ investment. During 2024, the Board approved two M&A opportunities and the replacement of one of the Shipping division’s vessels with a newer and more efficient vessel, both of which demonstrate the Groups’ commitment to sustainable growth that will deliver increased profit generation and dividend growth.

The Board was pleased to approve a dividend of 332p per share in December 2024, with interim dividends of 83p each to be paid in January, April and July 2025, and a final dividend to be approved by the shareholders at the AGM held on 20th June 2025.

The Board discussed and approved the implementation of a training scheme which, from 2025, will provide an opportunity for selected fifth generation family member shareholders to undertake training and practical experience across the Group with the intention that they may become effective Non-Executive Directors in the future.

Stakeholder: Employees

Engagement

The Group considers its employees to be its most valuable asset. The Group takes a positive view of employee communications and has maintained its established system of keeping employees informed of performance, development and progress by way of management briefings. These briefings are tailored to consider the audience plus the nature, extent and importance of the information being made available to employees. For example, communications can take the form of one to one meetings or telephone calls  with employees; collective meetings of wider teams with  their line manager, or email notices to distribute briefings across the Group’s workforce. For manual labour sites,  notices are attached to notice boards in communal areas within the premises. 

The Group has continued to invest in its IT systems to implement new technologies and tools to enable employees to stay connected with each other and their management team, even when working remotely or from a Group location that is not their normal place of work. The Group has enhanced its intranet system which serves as a central hub for information, news, support and employee engagement. This platform facilitates seamless remote working by ensuring employees can easily access resources and stay informed. The intranet will continue to evolve to remain an effective and user-friendly  tool for collaboration and communication across the Group. 

The Group operates an annual Performance Development and Review (“PDR”) programme for employees. Each employee meets on an annual basis with their line manager to discuss their development over the previous 12 months and to set goals for their future development, training and job targets. In between these formal meetings, informal feedback discussions are encouraged at all levels. During 2024, work completed on the automation of the PDR process with the process now initiated through the Group’s online training platform, which allows line managers more regular interaction with employees to assess the progress made in regard to the employees’ development plans.  

The Group is committed to developing its workforce and providing opportunity for career progression within the Group. To aid employee development the Group’s online training platform provides employees with access to both mandatory and voluntary training modules across a wide range of topics including corporate governance, cyber security, compliance, HR, Health & Safety, management and leadership skills and finance. 

The Group also communicates with its employees through the Denholm News, which is a half yearly publication that is issued to all employees in either electronic form or hard copy. The Denholm News provides employees with an update on the performance of the Group’s business as well as Group wide projects and initiatives. 

Safety of its employees is paramount to the Group, with the main Board, divisional and subsidiary boards all committed to ensuring a strong culture of health and safety on all sites where the Group operates by requiring that the health and safety functions across the Group operate to best industry practices and maintain strong health and safety procedures to keep our workforce safe. Employees and other members of the workforce are encouraged, and enabled through technology, to notify management of any health and safety matter (including Near Misses or Safety Observations) that they identify as requiring consideration or action. New health and safety initiatives and refreshers for each Group company are communicated to all relevant employees and workers by the health and safety manager for the respective company. The Group provides its employees with a mental health first aider who can be contacted by any employee from across the Group to provide initial support and to assist an employee in gaining access to wider support for them in both their professional and personal lives. 

The Group has put in place a management structure to ensure that management teams are closely in touch with the employees who work for them. The philosophy of the executive directors of the Company is to manage the business by being out and about and regularly visiting operating sites, thereby bringing them into contact with employees. This is overlaid by having one of the main Board non-executive directors and two executive directors sit on each divisional board, where they meet the directors of the operating subsidiaries at least four times a year, and from time to time combining a Company Board meeting with a visit to one or more of the operational sites. The Directors seek to reward employees with a competitive remuneration package.  

How this Stakeholder group influenced Board and Committee discussions and decisions

HR Reports and H&S Reports submitted at each Company and Divisional Board meeting enable the respective Boards to discuss HR and H&S data and issues, and to decide on actions to improve existing processes and initiatives.

During 2024, the Board considered plans to purchase a new site for the Logistics division, which would enable the consolidation of two existing sites into one. Prior to approving the plans, the Board assessed the impact of the site consolidation on employee well-being, productivity and job satisfaction.

When considering M&A proposals, the Board assesses the potential impact on employee roles, personal development opportunities and career progression post-completion.

Where appropriate, updates on the outcome of employee satisfaction surveys are provided to Boards to enable discussions on the results of the surveys, with appropriate action plans developed to improve employees’ experience and job satisfaction.

Boards assess career development initiatives for existing and prospective employees, to support the Group’s strategy of sustainable growth aided by internal promotion, succession planning and attracting talented individuals into the Group.

Succession planning for senior management and Director roles is considered on a regular basis at board meetings across the Group.

Stakeholder: Customers

Engagement

The Directors recognise that customers are fundamental to the Group’s long-term success. The Group is committed to maintaining strong customer relationships through regular engagement, enabling a deeper understanding of both customers’ current and future requirements. This ensures that the Group continues to deliver a market leading, first-class service aligned with its core values, safety commitments and quality standards.

Ongoing dialogue with customers supports continuous improvement in performance and operational delivery. Engagement with key and prospective customers also informs the Group’s long-term strategic planning, ensuring its services evolve to meet the needs of its customer base.

How this Stakeholder group influenced Board and Committee discussions and decisions

Customer reports and business development plans are discussed in each Company and Divisional Board meeting.

Where appropriate, customers are engaged by the Chief Executive Officer, the Chief Financial Officer, the Chief Operating Officer and Divisional Directors as a key element of customer account management and relationship building.

Stakeholder: Communities

Engagement

The Group recognises its responsibility as a long-term investor in the communities in which it operates and is committed to a strategic approach to community engagement and support.

Where possible the Group recruits from and develop the local workforce, contributing to sustainable employment opportunities. In addition, the Group supports local charities and, at a national level, continues to partner with the King’s Trust, a charity which provides employment and training opportunities to young people across the UK. The Group’s marketing and communication teams lead on the development and publication of initiatives aimed at supporting all charities the Group engages with.

How this Stakeholder group influenced Board and Committee discussions and decisions

The Chief Executive Officer briefs the Board on ongoing discussions between Group companies and local community representatives, including MPs and MSPs, regarding community projects.

The Board assesses proposed M&A and capex investments into Group companies and how such investments would benefit the local economy through job creation and security, economic development and community relationships.

Stakeholder: Suppliers

Engagement

A strong and sustainable supply chain is essential to the Group’s success and the Group is committed to fair and ethical treatment, and payment to contracted terms.

The Group requires that its suppliers adhere to the Group’s Supplier Code of Conduct which sets out the values and standard which the Group operate to, and which are expected of parties providing services to the Group. The Code of Conduct is communicated to suppliers at the outset of an arrangement.

The Executive directors are actively involved in overseeing supplier engagement and new projects with suppliers, ensuring that the supplier relationships align with the Group’s core values, ethical standards, and strategic objectives. Where appropriate, Directors actively participate in discussions and negotiations with major suppliers to ensure the supply terms meet the Group’s risk management tolerances and support the Group’s long-term success.

How this Stakeholder group influenced Board and Committee discussions and decisions

Updates on supply chain activities and issues are presented to Board meetings and are considered and discussed by the Directors.

Engagement with key suppliers is reported on by the Chief Executive Officer as a fundamental aspect of the Boards’ consideration and approval of Budget and Forecast proposals.

The Board and the Audit Committee review and assess the Group’s risk registers to discuss geo-political and other risks that could impact the Group’s supply chain, with mitigating action decided on as appropriate.

Stakeholder: Government and Regulatory

Engagement

The Group engages with both local and national government and regulatory stakeholders to assist the Group companies in navigating regulatory environments, influencing policy decisions, and maintaining positive relationships with authorities. The Group engages with such stakeholders through managing existing, and developing new, communication channels with local and national government members, regular contact with regulatory/government body account managers and trade association membership enabling the Group’s ability to participate in lobbying and advocacy.

How this Stakeholder group influenced Board and Committee discussions and decisions

The Group actively monitors changes to law and regulation, so that its operations comply with applicable laws and regulations.

The Chief Executive Officer, the Chief Financial Officer, the Chief Operating Officer, and the Company Secretary brief the Board on the details and expected impact of legislative and regulatory changes. The Board discuss and assess the Group’s action plans for complying with legislation and regulation.

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Throughout the year the Board has considered the wider stakeholder group and Section 172(1) requirements during Board discussions, when making decisions and setting the Group’s strategic direction, all of which is reflected in the papers presented and the meeting minutes.