C&C Group PLC - Corporate Governance

Directors

Committees

Communications

Control

Further Info

The following text is an extract from the C&C Group’s 2013 Annual Report.

Board of Directors

C&C Group plc is incorporated and resident in Ireland and is subject to Irish company law. It has a primary listing on the Irish Stock Exchange (‘ISE’) and a premium listing on the London Stock Exchange. C&C Group plc also has a Level 1 American Depository Receipt (ADR) programme.

The Directors are committed to maintaining the highest standards of corporate governance. The Listing Rules of the ISE require every company listed on the Main Securities Market of the ISE to state in its annual report how the principles of the UK Corporate Governance Code published by the Financial Reporting Council (the ‘UK Code’) have been applied and whether the company has complied with all relevant provisions of the UK Code and the Irish Corporate Governance Annex (the ‘Irish Annex’), which implements additional requirements for companies (such as C&C Group) with a primary equity listing on the Main Securities Market of the ISE. Where companies diverge from the provisions of the UK Code or the Irish Annex, the ISE expects them to include explanations that provide a rationale for the divergence. The text of the UK Code and the Irish Annex can be found on the ISE’s website: www.ise.ie. This Corporate Governance statement describes how the Group applied the principles of the UK Code (June 2010 edition) and the Irish Annex throughout the financial year ended 28 February 2013.

Role

The Board is responsible for the oversight, leadership and control of the Group and its long-term success. There is a formal schedule of matters reserved to the Board for decision. This includes approval of Group strategic plans, annual budgets, financial statements, significant capital expenditure items, major acquisitions and disposals, changes to capital structure, Board appointments, and the review of the Group’s corporate governance arrangements and system.

The roles of the Chairman and the Group Chief Executive Officer are separate with a clear division of responsibility between them, which is set out in writing and which has been approved by the Board. The Board delegates responsibility for the management of the Group through the Group Chief Executive Officer to executive management. The Board also delegates some of its responsibilities to Board Committees, details of which are set out below. The responsibilities of the Chairman are covered in detail on page 45.

The Group Chief Executive Officer has full day-to-day operational and profit responsibility for the Group and is accountable to the Board for all authority delegated to executive management. His overall brief is to execute agreed strategy, to co-ordinate and maintain the continued profitability of the Group and to oversee senior management responsible for the day-to-day running of the business.

Non-executive Directors are expected to constructively challenge management proposals and to examine and review management performance in meeting agreed objectives and targets. In addition, they are expected to draw on their experience and knowledge in respect of any challenges facing the Group and in relation to the development of proposals on strategy.

Individual Directors may seek independent professional advice at the Company’s expense, where they judge it necessary to discharge their responsibilities as Directors.

The Group has a policy in place which indemnifies the Directors in respect of certain legal actions taken against them.

Board Composition, Membership and Renewal

The Board considers that, between them, the Directors bring a range of skills, knowledge and experience so as to provide leadership, control and oversight of the Group and discharge their responsibility to all shareholders. The biographical details of the continuing directors are set out on pages 36 and 37. The Company’s Articles of Association require that the number of Directors shall be not less than two and not more than 14. The Board regards the number of non-executive Directors currently appointed to the Board as sufficient to ensure satisfactory oversight of the Group’s management and to enable its Committees to operate without undue reliance on individual non-executive Directors. As set out below the Board has an ongoing programme for Board refreshment and renewal, recognising the need for independence and diversity, including gender diversity, on the Board. The Board is, through the Nomination Committee, committed to achieving a greater level of gender diversity on the Board over time and recognises the importance and benefit of gender diversity throughout the Group.

At 28 February 2013, the Board comprised of ten Directors, of whom three were executive and seven non-executive Directors (including the Chairman). On 14 May 2013 John Burgess resigned as a Director.

Board Independence

In line with the UK Code, it is Board policy that at least half the Board, excluding the Chairman, shall consist of independent nonexecutive Directors. The Board has reviewed the composition of the Board and has determined that of the Directors as at 28 February 2013, John Burgess, John Hogan, Richard Holroyd, Breege O’Donoghue, Stewart Gilliland and Anthony Smurfit, were independent.

Consequently, as at 28 February 2013, excluding the Chairman, 66% of the C&C Group Board comprised of independent, non-executive Directors. As of the date of this report, excluding the Chairman, 62% of the Board comprised of independent, non-executive Directors. The independence of Board members is considered annually. In determining the independence of non-executive Directors, the Board considered the principles relating to independence contained in the UK Code and the guidance provided by a number of shareholder voting agencies. Those principles and guidance address a number of factors that might appear to affect the independence of Directors, including former service as an executive of the Group, extended service to the Board and cross-directorships. However, they also make clear that a Director may be considered independent notwithstanding the presence of one or more of these factors. This reflects the Board’s view that independence is determined by a Director’s character and judgement. The Board considers that each of the non-executive Directors brings independent judgement to bear. In the case of Richard Holroyd, Breege O’Donoghue and John Hogan, the Board has considered their length of service but is satisfied that their independence is not compromised. As part of this assessment, the Board considers that, while each of them has served on the Board of the Company since 2004, none of them has served for more than nine years concurrently with the same executive Directors. The Board has also noted that Anthony Smurfit is a shareholder and director of Smurfit Kappa Group plc, which provides packaging materials to the Group on normal commercial terms, and is satisfied that his independence is not compromised. In the case of Sir Brian Stewart, the Board was satisfied that he was independent on his appointment as referred to below.

Chairman

Sir Brian Stewart has been Chairman of the Group since August 2010. The Chairman is responsible for the efficient and effective working of the Board. He is responsible for ensuring that the Board considers the key strategic issues facing the Group and that the Directors receive accurate, timely, relevant and clear information. He also ensures that there is effective communication with shareholders and that the Board is apprised of the views of the Group’s shareholders. While the Board has determined that Sir Brian Stewart was independent on appointment to the Board, it recognises that previous working relationships with the Group’s senior executives is a consideration in determining independence as set out by the UK Code and by some shareholder voting agencies. Consequently, while the Board was satisfied as to Sir Brian’s independence, he stepped down from his position as a member of the Remuneration Committee on his appointment as Chairman. During the period under review there was no change in the other significant commitments of the Chairman.

Senior Independent Director

Richard Holroyd was appointed Senior Independent Director in July 2007. He is available to shareholders who have concerns for which contact through the normal channels of Chairman, Group Chief Executive Officer or Group Chief Financial Officer, has failed to resolve or for which such contact is inappropriate. He is also available to meet major shareholders on request.

Audit Committee Financial Expert

The Audit Committee has determined that John Hogan, who also chairs the Committee, is the Audit Committee financial expert. He is a qualified chartered accountant and was the managing partner of Ernst & Young in Ireland between 1994 and 2000. He was also a member of the Ernst & Young global board.

Company Secretary

Paul Walker is the Company Secretary. All Directors have access to the Company Secretary, who is responsible to the Board for ensuring that Board procedures are complied with. The appointment and removal of the Company Secretary is a matter for the Board.

Appointment, Retirement and Re-election

The non-executive Directors are engaged under the terms of letters of appointment, details of which are set out in the Report of the Remuneration Committee on Directors’ Remuneration. Copies of the letters of appointment are available on request from the Company Secretary.

The Company’s Articles of Association require that at least one-third of the Directors subject to rotation shall retire by rotation at the Annual General Meeting in every year. Directors appointed by the Board must also submit themselves for election at the first annual general meeting following their appointment. However, in accordance with the recommendations of the UK Code, the Directors have resolved that they will all retire and submit themselves for re-election by the shareholders at the Annual General Meeting this year.

Induction and Development

A comprehensive tailored induction programme is arranged for each new Director. The aim of the programme is to provide the Director with a detailed insight into the Group. The programme involves meeting with the Chairman, Group Chief Executive Officer, Group Chief Financial Officer, Company Secretary and key senior executives. It covers areas such as strategy and development, organisation structure, succession planning, financing, corporate responsibility and compliance, investor relations and risk management. The Board receives regular updates from the external legal and other advisers in relation to regulatory and accounting developments. Throughout the year, Directors meet with key executives and meet with local management teams, and a site visit for all Board Directors, to one of the Group’s production facilities, is usually scheduled annually.

Newly-appointed members of the Audit Committee will meet with the key members of the external audit, internal audit and finance teams. New members of the Remuneration Committee will meet with the Committee’s remuneration consultants in the year of their appointment to the Committee.

External non-executive directorships

The Board recognises that there can be benefit if executive Directors accept a non-executive directorship with other companies to broaden their skills, knowledge and experience. Joris Brams is currently a non-executive director at Democo NV, a Belgian construction company. Apart from him, currently none of the executive Directors has such an appointment. The Remuneration Committee determines whether Directors should be permitted to retain any fees paid in respect of such appointments. The Remuneration Committee has determined that Joris Brams is permitted to retain fees from his appointment.

Meetings

It is Board practice to meet not less than nine times a year. The Board will also meet at other times as it considers appropriate. The Board usually makes at least one visit a year to one of the operating subsidiaries. During the period under review there were eleven scheduled meetings of the Board. Details of Directors’ attendance at these scheduled meetings are set out in the table on page 49. Further meetings took place throughout the year. In addition, a meeting of members of the Board was held without the executive Directors present to provide an opportunity for non-executive Directors and the Chairman to assess their performance, and a further meeting of the non-executive Directors led by the Senior Independent Director was held without the Chairman being present to assess the Chairman’s performance.

The Chairman sets the agenda for each meeting in consultation with the Group Chief Executive Officer and the Company Secretary. The agenda and Board papers, which provide the Directors with relevant information to enable them to fully consider the agenda items in advance, are circulated prior to each meeting. Directors are encouraged to participate in debate and constructive challenge. While Directors are expected to attend all scheduled meetings, in the event a Director is unable to attend a meeting, his or her view on all agenda items is sought and conveyed to the Chairman in advance of the meeting. In addition, following the meeting, matters discussed and decisions made at the meeting are conveyed to the Director.

Performance evaluation

The Board recognises the importance of a formal and rigorous evaluation of the performance of the Board and its Committees. The Chairman conducts an annual review of corporate governance and the operation and performance of the Board and its Committees. In the year under review the Chairman has reviewed the performance of individual Directors and, within the remit of the Nomination Committee, succession planning, identifying in this process the experience and qualities required by the Group for the future implementation of its strategy.

The Chairman conducts one to one discussions each year with each Director to assess his or her individual performance. Performance is assessed against a number of criteria, including his or her contribution to Board and Committee meetings; time commitments; contribution to strategic developments; and relationships with other Directors and management.

The Senior Independent Director and the other non-executive Directors review the Chairman’s performance and the Board’s performance each year, the results being reported back to the Chairman with recommendations for improvement.

The Board also recognises the need for periodic external evaluation and the UK Code’s recommendation that such reviews be externally facilitated at least every three years. The Group intends to progress a formal policy and process for external evaluation including the involvement of an external facilitator.

Remuneration

Details of remuneration paid to Directors (executive and non-executive) are set out in the Report of the Remuneration Committee on Directors’ Remuneration on pages 53 to 61.

Non-executive Directors are remunerated by way of a Director’s fee. Additional fees are also payable to the Chairman of the Audit Committee, Chairman of the Remuneration Committee and to the Senior Independent Director. Non-executive Directors’ fees and additional fees payable to Committee Chairman and the Senior Independent Director have not been increased since 2008.

It is Board policy that non-executive Director remuneration does not comprise any performance-related element and, therefore, non-executive Directors are not eligible to participate in the Group’s bonus schemes, option plans or share award schemes. Nonexecutive Directors’ fees are not pensionable and non-executive Directors are not eligible to join any Group pension plans. Executive Directors’ remuneration is inclusive of any Director’s fee.

The current limit under the Articles on Directors’ ordinary remuneration (i.e. directors’ fees, not including executive remuneration) is €750,000. A resolution will be proposed at the 2013 Annual General Meeting to fix the annual ceiling at €1,000,000.

The report of the Remuneration Committee on Directors’ Remuneration will be presented to shareholders for the purposes of a non-binding advisory vote at the Annual General Meeting on 3 July 2013. While there is no legal obligation for the Group to put such a resolution to a vote of shareholders at the Annual General Meeting, the Board believes that such a resolution is good practice.

Share ownership and dealing

Details of Directors’ shareholdings are set out on page 60.

The Group has a policy on dealing in shares that applies to all Directors and senior management. This policy adopts the terms of the Model Code as set out in the Listing Rules published by the UK Listing Authority and the Irish Stock Exchange. Under this policy, Directors are required to obtain clearance from the Chairman (or in the case of the Chairman himself, from the Senior Independent Director) before dealing. Directors and senior management are prohibited from dealing in the Company’s shares during designated close periods and at any other time when the individual is in possession of Inside Information (as defined by the Market Abuse (Directive 2003/6/EC) Regulations 2005).

Committees

The Board has established three permanent committees to assist in the execution of its responsibilities. These are the Audit Committee, the Nomination Committee and the Remuneration Committee. The current membership of each committee is set out on page 36. Attendance at meetings held is set out in the table on page 49. Ad-hoc committees are formed from time to time to deal with specific matters.

Each of the permanent Board Committees has terms of reference under which authority is delegated to them by the Board. These terms of reference are available on the Company’s website www.candcgroupplc.com. Minutes of all Committee meetings are circulated to the entire Board.

The Chairman of each committee attends the Annual General Meeting and is available to answer questions from shareholders.

Audit Committee

The Audit Committee comprises only independent, non-executive Directors. The members during the year were John Hogan (Chairman), Richard Holroyd and Anthony Smurfit (appointed 17 April 2012).

As set out on page 45, the Audit Committee has determined that John Hogan, who also chairs the Committee, is the Audit Committee financial expert.

It meets a minimum of four times a year. During the period under review it met nine times. Attendance at meetings held is set out in the table on page 49.

The Group Chief Financial Officer attends Audit Committee meetings as appropriate, while the internal auditor and the external auditor attend as required and have direct access to the Audit Committee Chairman. The acting Head of Finance is the secretary of the Audit Committee.

The Audit Committee’s responsibilities include:

• monitoring the integrity, truth and fairness of the financial statements of the Group, including the annual report, interim report, interim management statements, preliminary results and other formal announcements relating to the Group’s financial performance;
• reviewing the adequacy and effectiveness of the Group’s internal financial controls and risk management systems;
• reviewing the effectiveness of the Group’s internal audit function;
• reviewing the adequacy and security of the Group’s arrangements for its employees raising concerns, its procedures for detecting fraud and the Group’s systems and controls for the prevention of bribery;
• making recommendations to the Board in relation to the appointment and removal of the Group’s external auditor;
• evaluating the performance of the external auditor including their independence and objectivity;
• reviewing the annual internal and external audit plans and reviewing the effectiveness and findings of the external audit with the external auditor;
• ensuring compliance with the Group’s policy on the provision of non-audit services by the external auditor.

The Audit Committee discharged its obligations during the year as follows:

• the Audit Committee reviewed the preliminary results announcement and the annual report and financial statements for the year ended 29 February 2012
• In particular the Committee addressed the going concern status of the Company and the matters referred to in the Financial Review contained in the 2012 annual report: it reviewed the post-audit report from the external auditor identifying any accounting or judgemental issues requiring its attention and noted that no significant issues had arisen;
• the Audit Committee reviewed the Financial Report for the six months ended 31 August 2012 prior to its release in October 2012;
• the Audit Committee reviewed the Interim Management Statements issued in June 2012 and January 2013;
• the Audit Committee considered whether or not to recommend the re-appointment of the external auditor;
• the Audit Committee reviewed the external audit plan presented by the external auditor in advance of the audit for the year ended 28 February 2013; in particular, it considered the accounting treatment of acquisitions and joint ventures and the categorisation of exceptional items and other matters referred to in the Financial Review set out on pages 22 to 27.
• the Audit Committee approved the annual internal audit plan and received and reviewed internal audit reports including the annual assessment of internal control and other work described below;
• the Audit Committee received an internal review of the pension schemes and reviewed the audited statements of the pension schemes;

The terms of reference of the Audit Committee require it to conduct an annual assessment of internal control. The risks facing the Group are reviewed regularly by the Audit Committee with the executive management. Specific annual reviews of the risks and fundamental controls of each business unit are undertaken on an ongoing basis, the results and recommendations of which are reported to and analysed by the Audit Committee with a programme for action agreed by the business units.

Accordingly through the process outlined above, the Board confirms that it has conducted a review of the internal control systems in operation.

The Group’s internal auditor reports to the Audit Committee and the Audit Committee has approved his terms of reference. He is engaged on a programme of work, which includes, inter alia, maintaining the Group’s risk register, examining the fundamental controls of the Group and assessing anti-bribery and corruption risk and business continuity risk.

The Group has a policy in place governing the conduct of non-audit work by the external auditor. Under this policy the auditor is prohibited from performing services where the auditor:

• may be required to audit his/her own work;
• would participate in activities that would normally be undertaken by management;
• is remunerated through a “success fee” structure;
• acts in an advocacy role for the Group.

Other than the above, the Group does not impose an automatic ban on the external auditor undertaking non-audit work. The external auditor is permitted to provide non-audit services that are not, or are not perceived to be, in conflict with auditor independence, provided it has the skill, competence and integrity to carry out the work and is considered by the Audit Committee to be the most appropriate to undertake such work in the best interests of the Group. The engagement of the external auditor in non-audit work must be pre-approved by the Audit Committee or entered into pursuant to pre-approved policies and procedures established by the Audit Committee.

Details of the amounts paid to the external auditor during the year for audit and other services are set out in note 2 to the financial statements on page 88. The Audit Committee has adopted a policy that except in exceptional circumstances with the prior approval of the Audit Committee nonaudit fees paid to the Group’s Auditor should be capped at a maximum of 100% of audit fees in any one year. During the year the Audit Committee gave approval to the auditor providing non-audit advisory services principally in relation to tax.

Nomination Committee

The Nomination Committee is chaired by the Group Chairman and its constitution requires it to consist of a majority of independent, nonexecutive Directors. The members during the year were Sir Brian Stewart (Chairman), John Burgess, Philip Lynch (resigned 30 November 2012) and Breege O’Donoghue. Richard Holroyd joined the Committee 14 May 2013 following the resignation of John Burgess on that day.

It meets a minimum of twice a year and met three times in the period under review. Attendance at meetings held is set out in the table on page 49.

The Nomination Committee’s responsibilities include:

• reviewing the structure, size and composition (including the skills, knowledge and experience) required of the Board and making recommendations regarding any changes in order to ensure that the composition of the Board and its Committees is appropriate to the Group’s needs;
• overseeing succession planning for the Board and senior management and the leadership needs of the organisation;
• establishing processes for the identification of suitable candidates for appointment to the Board;
• making recommendations to the Board on membership of Board Committees.

The Nomination Committee is empowered to use the services of independent consultants to facilitate the search for suitable candidates for appointment as non-executive Directors. In respect of the non-executive directors appointed in FY2013, Stewart Gilliland was recruited through an external consultancy and Anthony Smurfit was recruited through business associates. Both of them had significant relevant industry experience and in Mr. Smurfit’s case, international experience.

During the period under review the Nomination Committee met three times. The Nomination Committee considered:

• immediate succession requirements for non-executive directors. It finalised the appointments of two new independent, non-executive Directors, Stewart Gilliland and Anthony Smurfit. Stewart Gilliland was appointed a member of the Remuneration Committee and Anthony Smurfit was appointed a member of the Audit Committee.
• longer-term succession planning for non-executive directors recognising the need for ongoing Board refreshment and renewal and the need for independence and diversity on the Board.
• immediate succession requirements for executive directors. The Nomination Committee approved the appointment of Joris Brams, managing director of the International division, to the Board.
• the appointment of senior managers including the appointment of a Head of Corporate Affairs.

Remuneration Committee

The Remuneration Committee comprises solely of independent, non-executive Directors. The Chairman was Philip Lynch (resigned 30 November 2012) and, subsequently, Breege O’Donoghue. Other members were Richard Holroyd and Stewart Gilliland (appointed 17 April 2012).

The Remuneration Committee meets at least twice a year. During the period under review the Remuneration Committee met seven times. Attendance at meetings held is set out in the table below.

The Remuneration Committee’s responsibilities include:

• making recommendations to the Board on the Group’s policy for executive remuneration;
• determining the remuneration of the Chairman, the executive Directors, the Company Secretary and senior management;
• monitoring the level and structure of remuneration for senior management and trends across the Group;
• approving the design and targets of any performance-related pay schemes and the total annual payments made under such schemes;
• reviewing the design of all share incentive plans;
• approving any grant of options or awards under the Executive Share Option Scheme, the Long Term Incentive Plan (Part I), the Joint Share Ownership Plan and other share plans;
• overseeing any major changes in employee benefits structures throughout the Group;
• overseeing the preparation of the Report of the Remuneration Committee on Directors’ Remuneration.

During the year under review the Remuneration Committee considered

• the determination of whether performance conditions under share schemes and bonus schemes were achieved;
• the granting of share options under the C&C Executive Share Option Scheme;
• the granting of awards under the C&C Long Term Incentive Plan (Part I);
• the granting of awards and potential awards under the C&C Long Term Incentive Plan (Part II);
• the granting of awards under the C&C Recruitment and Retention Plan;
• the granting of shadow awards;
• amendments to the rules of the Long Term Incentive Plan I, the Approved Profit Sharing Scheme and Joint Share Ownership Plan;
• the remuneration of the managing director of the International division and the US managing director and other members of senior management.

Communications with shareholders

The Group attaches considerable importance to shareholder communications and has an established investor relations programme.

There is regular dialogue with institutional investors with presentations given to investors at the time of the release of the Group’s first half and full year financial results and when other significant announcements are made. Interim Management Statements were issued in June 2012 and January 2013. The Board is briefed regularly on the views and concerns of institutional shareholders.

An investor day for major shareholders was held in November 2012 at the Shepton Mallet cider mill, including presentations by management and a tour of the cider mill.

The Group’s website, www.candcgroupplc.com, provides the full text of the Annual Report and financial statements, the interim report and other releases. News releases are also made available immediately after release to the Stock Exchange. Presentations given to investors and at conferences are also made available on the Company’s website.

General Meetings

The Company operates under the Companies Acts 1963 to 2012. These Acts provide for two types of shareholder meetings: the annual general meeting (‘AGM’) with all other meetings being called extraordinary general meetings (‘EGM’).

The Company must hold a general meeting in each year as its AGM in addition to any other general meetings held in that year. Not more than 15 months may elapse between the date of one AGM and the next. An AGM was held on 27 June 2012, and this year’s AGM will be held on 3 July 2013. The Directors may at any time call an EGM. EGMs shall also be convened on the requisition of members holding not less than five per cent of the voting share capital of the Company.

The notice period for an AGM and an EGM to consider any special resolution (a resolution which requires a 75% majority vote, not a simple majority) is 21 days. The Company may call any other general meeting on 14 days’ notice subject to obtaining shareholder authority to do so. The Directors consider that it is in the interests of the Company to retain this flexibility, and intend to seek annually such authority. As a matter of policy, the 14 day notice period will only be utilised where the Directors believe that it is merited by the business of the meeting and the circumstances surrounding the business in question.

In accordance with UK Code recommendations, the annual report and the notice of annual general meeting are sent to shareholders at least 20 working days before the AGM.

No business shall be transacted at any general meeting unless a quorum is present at the time when the meeting proceeds to business. Three members present in person or by proxy and entitled to vote shall be a quorum.

Only those shareholders registered on the Company’s register of members at the prescribed record date, being a date not more than 48 hours before the general meeting to which it relates, are entitled to attend and vote at a general meeting.

The Acts require that resolutions of the general meeting be passed by the majority of votes cast (ordinary resolution) unless the Acts or the Company’s Articles of Association provide for 75% majority of votes cast (special resolution). The Company’s Articles of Association provide that the Chairman has a casting vote in the event of a tie.

Any shareholder who is entitled to attend, speak and vote at a general meeting is entitled to appoint a proxy to attend, speak and vote on his behalf. A proxy need not be a member of the Company.

At meetings, unless a poll is demanded, all resolutions are determined on a show of hands, with every shareholder who is present in person or by proxy having one vote. On a poll every shareholder who is present in person or by proxy shall have one vote for each share of which he/she is the holder. A shareholder need not cast all votes in the same way. At the meeting, after each resolution has been dealt with, details are given of the level of proxy votes lodged for and against that resolution and also the level of votes withheld on that resolution.

The Company’s AGM gives shareholders the opportunity to question the Directors. The Company must answer any question a member asks relating to the business being dealt with at the meeting unless answering the question would interfere unduly with the preparation for the general meeting or the confidentiality and business interests of the Company, or the answer has already been given on a website in the form of an answer to a question, or it appears to the Chairman of the meeting that it is undesirable in the interests of good order of the meeting that the question be answered.

The business of the Company is managed by the Directors who may exercise all the powers of the Company unless they are required to be exercised by the Company in general meeting. Matters reserved to shareholders in general meeting include the election of directors; the payment of dividends; the appointment of the external auditor; amendments to the articles of association; measures to increase or reduce the share capital; and the authority to issue shares.

Memorandum and Articles of Association

The Company’s Memorandum of Association sets out the objects and powers of the Company. The Articles of Association detail the rights attaching to each share class; the method by which the Company’s shares can be purchased or reissued; the provisions which apply to the holding of and voting at general meetings; and the rules relating to the Directors, including their appointment, retirement, re-election, duties and powers. Any amendment of the Company’s Articles of Association requires the passing of a special resolution.

Further details in relation to the purchase of the Company’s own shares are included in the Directors’ Report.

Internal control

The Board has overall responsibility for the Group’s system of internal control, for reviewing its effectiveness and for confirming that there is a process for identifying, evaluating and managing the significant risks affecting the achievement of the Group’s strategic objectives. The process which has been in place for the entire period accords with the Turnbull Guidance (revised guidance published in October 2005) and involves the Board considering the following:

• the nature and extent of the key risks facing the Group;
• the likelihood of these risks occurring;
• the impact on the Group should these risks occur;
• the actions being taken to manage these risks to the desired level.

The key elements of the internal control system in operation are as follows:

• clearly defined organisation structures and lines of authority;
• corporate policies for financial reporting, treasury and financial risk management, information technology and security, project appraisal and corporate governance;
• annual budgets for all operating units, identifying key risks and opportunities;
• monitoring of performance against budgets on a weekly basis and reporting thereon to the Board on a periodic basis;
• an internal audit function which reviews key business processes and controls; and
• an audit committee which approves plans and deals with significant control issues raised by internal or external audit.

This system of internal control can only provide reasonable, and not absolute, assurance against material misstatement or loss. The terms of reference of the Audit Committee require it to review the adequacy and effectiveness of the Group’s internal financial controls and risk management systems. The risks facing the Group are reviewed regularly by the Audit Committee with the executive management. Specific annual reviews of the risks and fundamental controls of each business unit are undertaken on an ongoing basis, the results and recommendations of which are reported to and analysed by the Audit Committee with a programme for action agreed by the business units.

The preparation and issue of financial reports, including consolidated annual financial statements is managed by Group Finance with oversight from the Audit Committee. The key features of the Group’s internal control procedures with regard to the preparation of consolidated financial statements are as follows:

• the review of each operating division’s period end reporting package by the Group finance function;
• the oversight, review and validation of consolidation journals by the Group Chief Financial Officer;
• the challenge and review of the financial results of each operating division with the management of that division by the Group Chief Financial Officer;
• the review of any internal control weaknesses highlighted by the external auditor, by the Group Chief Financial Officer, Head of Internal Audit and the Audit Committee; and the follow up of any critical weaknesses to ensure issues highlighted are addressed.

The Directors confirm that, in addition to the monitoring carried out by the Audit Committee under its terms of reference, they have reviewed the effectiveness of the Group’s risk management and internal control systems up to and including the date of approval of the financial statements. This had regard to all material controls, including financial, operational and compliance controls that could affect the Group’s business. The Directors considered the outcome of this review and found the systems satisfactory.

Corporate Responsibility

As part of its overall remit of ensuring that effective risk management policies and systems are in place, the Board examines the significance of environmental, social and governance (ESG) matters to the Group’s business and it has ensured that the Group has in place effective systems for managing and mitigating ESG risks. It also examines the impact that such risks may have on the Group’s short and long-term value, as well as the opportunities that ESG issues present to enhance value. The Board receives the necessary information to make this assessment in regular reports from the executive management.

Corporate responsibility is embedded throughout the Group. Group policies and activities are summarised on pages 28 to 35 and the Group’s corporate responsibility report is available on the Group’s website www.candcgroupplc.com.

Going concern

The principal risks and uncertainties facing the Group are set out in this report on pages 39 and 40. The financial position of the Group, its cash flows, liquidity position and borrowing facilities are set out in the Group Chief Financial Officer’s Review on pages 22 to 27. A description of the business of the Group is set out in the Group Chief Executive Officer’s Review and the Operations Review on pages 8 to 21.

An explanation of the basis on which the Group generates and preserves value over the longer term (the business model) and the strategy for delivering its objectives are set out in the Group Chief Executive Officer’s review on pages 8 to 11. A statement of the Group’s strategy is set out on pages 8 to 11. The Group’s long term strategy is to build a sustainable cider-led multi-beverage business through a combination of organic growth and selective acquisitions. The Group’s business model seeks growth through brand/market combination combining brand investment with a focus on local markets.

The Group has significant revenues, a large number of customers and suppliers across different geographies, and considerable financial resources. For these reasons, the Directors have a reasonable expectation that the Company, and the Group as a whole, have adequate resources to continue in operational existence for the foreseeable future. Consequently they continue to adopt the going concern basis in preparing the financial statements.

Compliance Statement

The Group has complied with the provisions of the UK Code and Irish Annex throughout the period under review.

Attendance at Meetings

Attendance at Board meetings and Board committee meetings during the year was as follows:

	Scheduled Board Meetings	Short Notice Board Meeting	Audit Committee Meetings	Nomination Committee Meetings	Remuneration Committee Meetings
Sir Brian Stewart	10/10	1/1		3/3
Joris Brams	4/4	1/1
John Burgess	7/10	1/1		2/3
Stewart Gilliland	9/9	0/1			5/5
Stephen Glancey	9/10	1/1
John Hogan	10/10	1/1	9/9
Richard Holroyd	10/10	1/1	9/9		7/7
Philip Lynch	7/8	1/1		3/3	6/6
Kenny Neison	10/10	1/1
Breege O’Donoghue	10/10	1/1		3/3	1/1
Anthony Smurfit	9/9	1/1	9/9

In the above table the numerator in each fraction represents the number of meetings actually attended by each Director in respect of the Board and each Board committee of which he or she was a member, whilst the denominator represents the number of such meetings that the Director was scheduled to attend.

In addition, the non-executive Directors including the Chairman met to evaluate the performance of the executive Directors, and the non-executive Directors, led by the Senior Independent Director, without the Chairman present, met to evaluate the performance of the Chairman. Several ad hoc meetings were held during the year for share allotment and other administrative matters in accordance with the Board’s procedures.