The following text is an extract from the C&C Group’s 2016 Annual Report.
Board of Directors
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 contracts and capital expenditure items,
major acquisitions and disposals, changes to capital structure,
circulars, Board appointments, and the review of the Group’s
corporate governance arrangements and system of internal
control, and approval of policies including corporate responsibility
and health and safety. The Board is also responsible for instilling
the appropriate culture, values and behaviour throughout the
Group. The Directors acknowledge that they are responsible for
the proper stewardship of the Group’s affairs, both on an individual
and collective basis. The matters and agenda reserved for Board
consideration reflect this responsibility.
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 Chairman has responsibility for the management
of the Board, the performance of Directors and their induction,
development and performance evaluation, ensuring there are
effective relations with shareholders and for the AGM. The Chief
Executive is responsible, within the authority limits delegated by
the Board, for business strategy and management, investment
and financing, risk management and controls, timely reporting,
making recommendations on remuneration policy and on the
appointment of executive directors, setting Group HR policies and
leading the communications programme with shareholders.
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 below.
The Chief Executive 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 own specific 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 current Directors are set out on pages 54 and 55. 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. 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 comprised of ten Directors, of whom three are
executive and seven are non-executive Directors (including the
Chairman). Consistent with our commitment to Board refreshment
and development, John Hogan retired from the Board during the
year and Vincent Crowley and Rory Macnamara were appointed
as Directors. Anthony Smurfit retired in March 2016. John was
succeeded as Chairman of the Audit Committee by Emer Finnan.
Emer is a qualified chartered accountant and brings considerable
financial expertise to the role of Audit Committee Chairman.
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 its composition and
has determined that of the Directors as at 29 February 2016, Emer
Finnan, Richard Holroyd, Breege O’Donoghue, Stewart Gilliland,
Rory Macnamara and Vincent Crowley are independent.
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 and Breege O’Donoghue, the
Board has considered their length of service but is satisfied
that their independence is not compromised. The Board also
recognises that their professional experience and long-term
perspective on the Group’s business is very important to the work
of the Board. 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. As set out in the
table below, each has served on the Board concurrently with the
Group’s Chief Executive Officer, the longest serving executive
Director, for 7.5 years. The Board recognises the principles of the
Code and guidelines on tenure but is satisfied that the objectivity,
judgements and independence of each of the Directors is not
compromised by tenure on the Board. The Board also has an
ongoing programme of Board refreshment and renewal and has
appointed three new Directors in the past two years, with two
Directors also having retired in 2016.
|
Independent/Non-Independent |
Tenure(Years) |
Concurrent Tenure* (Years) |
|---|
| Sir Brian Stewart |
Independent
(Chairman) |
6 |
6 |
| Vincent Crowley |
Independent |
0.5 |
0.5 |
| Joris Brams |
Non-Independent
(Executive) |
3.5 |
3.5 |
| Emer Finnan |
Independent |
2 |
2 |
| Stewart Gilliland |
Independent |
4 |
4 |
| Stephen Glancey |
Non-Independent
(Executive |
7.5 |
7.5 |
| Richard Holroyd |
Independent |
12 |
7.5 |
| Rory Macnamara |
Independent |
0.5 |
0.5 |
| Kenny Neison |
Non-Independent
(Executive) |
6.5 |
6.5 |
| Breege O’Donoghue |
Independent |
12 |
7.5 |
*Note: Concurrent tenure means tenure on the Board concurrently with the Group’s
Chief Executive Officer, the longest serving executive Director.
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. As part of this process, the Chairman
recently completed a series of meetings, focused solely on
corporate governance, with a number of the Group’s largest
institutional shareholders.
Senior Independent Director
Richard Holroyd is the Group’s Senior Independent Director. 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
shareholders on request.
Audit Committee Financial Expert
The Audit Committee has determined that Emer Finnan, who also
chairs the Committee, is the Audit Committee financial expert.
Emer is a qualified chartered accountant and has recent and
relevant financial expertise.
Company Secretary
David Johnston 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 onethird
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 its 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
normally 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
During the period under review there were seven scheduled
meetings of the Board and a further four short notice meetings.
Details of Directors’ attendance at these meetings are set out in
the table on page 69. Several ad hoc meetings without notice were
held during the year for share allotment and other administrative
matters in accordance with the Board’s procedures. In addition,
the members of the Board met 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 any recommendations.
In 2015 the Board also engaged an external advisor to complete
an independent evaluation of the performance and effectiveness
of the Board and each of the Committees. This evaluation is in
line with the recommendations of the UK Code which requires an
external Board evaluation to be conducted at least once every
three years. The company engaged to perform the evaluation has
no business connection or relationship with the Group, its directors
or senior management.
Remuneration
Details of remuneration paid to Directors (executive and nonexecutive)
are set out in the Report of the Remuneration
Committee on Directors’ Remuneration on pages 72 to 90.
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 Chairmen 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.
Non-executive Directors’ fees are not pensionable and nonexecutive
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 €1,000,000, pursuant to a resolution passed at
the 2013 Annual General Meeting.
The report of the Remuneration Committee will be presented to
shareholders for the purposes of a non-binding advisory vote at
the Annual General Meeting on 7 July 2016. 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 recognises
that such resolutions are now considered good governance
practice.
Share ownership and dealing
The Company has share ownership guidelines for the executive
Directors to ensure the interests of executive Directors are
aligned with those of shareholders. In summary, the guidelines
are that the current market value of shares in the Company held
by the relevant Director should be at least two times salary for
the Group Chief Executive Officer and one times salary for other
executive Directors. If share ownership guidelines are not met,
then individuals must retain up to 50% of vested share awards
(net of tax). Further information including details of Directors’
shareholdings is set out on page 80.
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 close periods and at any other time when the individual is in
possession of inside information.
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 page 54. Attendance at meetings held is set out in the table on page 69.
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.
The Board has also established a Disclosure Committee
comprising the Chairman, the Group Chief Executive Officer, the
Group Chief Financial Officer and the Company Secretary. The
Head of Investor Relations may also participate where required.
The main responsibilities of the Disclosure Committee include:
- determining whether information constitutes inside information;
- determining a consistent approach and policy to disclosure;
- reviewing and approving material announcements;
- monitoring leaks, rumours, speculation and market expectations,
and taking appropriate action;
- monitoring the materiality of any variance between the Group’s
performance and its own forecasts;
- maintaining a record of C&C’s regulatory disclosures.
Ad hoc committees are formed from time to time to deal with other
specific matters.
Audit Committee
Composition and Meetings
The constitution of the Audit Committee requires that its
membership shall consist only of independent, non-executive
Directors. The members are Emer Finnan (Chairman), Richard
Holroyd, Vincent Crowley and Rory Macnamara. John Hogan and
Anthony Smurfit retired as Directors and members of the Audit
Committee in February and March 2016 respectively. As set out on
page 62, the Audit Committee has determined that Emer Finnan,
who also chairs the Committee, is the Audit Committee financial
expert.
The Committee meets a minimum of four times a year. During the
period under review it met five times. Attendance at meetings held
is set out in the table on page 60.
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 Group Head of Finance is the secretary
of the Audit Committee.
Constitution and terms of reference
The role, responsibilities, authority and duties of the Audit
Committee are set out in written terms of reference. The current
terms of reference are available under the Board Committees
section of the Group’s website at www.candcgroupplc.com.
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, and reviewing significant financial reporting
judgements contained in them;
- ensuring that the information presented in the financial
statements of the Group and other announcements is fair,
balanced and understandable and provides the information
necessary for the Company’s shareholders to assess the
Group’s performance, business model and strategy and advising
the Board accordingly;
- monitoring the statutory audit of the annual and consolidated
accounts;
- 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, the Group’s systems and controls for
the prevention of bribery, and the Group’s whistleblowing
arrangements;
- making recommendations to the Board in relation to the
appointment and removal of the Group’s external auditor, their
remuneration and terms of engagement;
- 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;
- reporting to the Board on how it has discharged its
responsibilities; and
- reviewing the annual financial statements of the pension funds
where not reviewed by the Board as a whole.
Internal control and risk management systems
The Group’s system of internal control and risk management is
described below.
The terms of reference of the Audit Committee require it to
conduct an annual assessment of internal financial controls
and financial risk management systems. The risks facing the
Group are reviewed regularly by the Audit Committee with
executive management. Specific annual reviews of the risks and
fundamental controls of each business unit are undertaken. The
results and recommendations are reported to and analysed by
the Audit Committee and a programme for action agreed with
the business units. In carrying out these responsibilities
during the year, the Committee reviewed reports issued by both the
internal audit function and the external auditor and held regular
discussions with the Head of Internal Audit and representatives of
the external auditor. The Committee also reviewed the outcome of
an assessment of the Group’s internal financial controls which had
been coordinated by the internal audit function.
Internal Audit
The Committee is responsible for monitoring and reviewing the
operation and effectiveness of the internal audit function including
its focus, plans, activities and resources.
The Group’s internal audit function reports to the Audit Committee
and the Audit Committee has approved its terms of reference.
The Group’s internal auditor is engaged on a programme of work,
which includes, inter alia, maintaining the Group’s risk register and
examining the fundamental controls of the Group. During the year,
the Committee reviewed and approved the internal audit plan for
the year.
The Committee received regular reports from the Head of Internal
Audit summarising findings of the team’s work and the responses
from management to deal with the findings. The Committee
monitors progress on the implementation of the action plans on
significant findings to ensure these are completed satisfactorily.
External Auditor
The Committee manages the relationship with the Group’s external
auditors on behalf of the Board. The Committee carries out an
annual assessment of the external auditor including a review of the
external auditor’s internal policies and procedures for maintaining
independence and objectivity and consideration of their approach
to audit quality. The external auditor is professionally required to
rotate the audit partner responsible for the Group audit every five
years. The current audit partner has been in place since 2012 and
therefore partner rotation will take place during FY2017.
External audit process
The Committee also reviewed and approved the external audit
plan as presented by the external auditor and assessed the
qualifications and expertise of their resources. The Committee
also reviewed the external auditor’s engagement letter and
recommended the level of remuneration of the external auditor
to the Board having reviewed the scope and nature of the work
to be performed. The Committee assessed the effectiveness of
the external audit process by monitoring performance against the
agreed audit plan and noting the results of post-audit interviews
with management and the Audit Committee Chairman.
Length of service of auditors
KPMG have been the external auditor of the Company since
the Company’s formation and flotation in 2004. The UK Code
recommends that listed companies of the size of the Group
should put the external audit contract out to tender at least every
ten years. The external audit contract was put out to tender in
FY2014. The Committee concluded that KPMG continued to
provide an effective audit service and there were no compelling
reasons for change that would outweigh the advantages of
continuity and consequently recommended the re-appointment of
KPMG. The recommendation was accepted by the Board.
Hiring of former employees of auditor
In order to ensure the independence and objectivity of the external
auditor, the prior approval of the Audit Committee is required
before any individual is appointed to a senior managerial position
in the Group, if such individual has within three years prior to such
proposed appointment been employed by the external auditor.
Non-Audit Services by auditor
The Group has a policy in place governing the provision of nonaudit
services by the external auditor in order to ensure that the
external auditor’s objectivity and independence is safeguarded.
Under this policy the auditor is prohibited from providing non-audit
services if the auditor:
- may, as a result, be required to audit its own firm’s work;
- would participate in activities that would normally be undertaken
by management;
- would be remunerated through a “success fee” structure or have
some other mutual financial interest with the Group;
- would be acting in an advocacy role for the Group.
Other than above, the Company does not impose an automatic
ban on the external auditor providing non-audit services. However,
the external auditor is only permitted to provide non-audit services
that are not, or are not perceived to be, in conflict with auditor
independence and objectivity, if it has the skill, competence
and integrity to carry out the work and it 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 to provide non-audit services must be approved
in advance by the Audit Committee or entered into pursuant to
pre-approved policies and procedures established by the Audit
Committee and approved by the Board.
The nature, extent and scope of non-audit services provided to
the Group by the external auditor and the economic importance
of the Group to the external auditor are also monitored to ensure
that the external auditor’s independence and objectivity is not
impaired. The Audit Committee has adopted a policy that, except
in exceptional circumstances with the prior approval of the Audit
Committee, non-audit fees paid to the Group’s auditor should not
exceed 100% of audit fees in any one financial year.
During the year, KPMG provided non-audit advisory services,
being advice on taxation and other related matters. In approving
KPMG to provide these services the Committee was of the opinion
that KPMG’s knowledge of the Group was an important factor. The
Committee was also satisfied that the fees paid to KPMG for nonaudit
work did not compromise their independence or integrity.
Details of the amounts paid to KPMG during the year for audit and
other services are set out in note 2 to the financial statements.
Whistle-blowing procedures
In line with best practice, the Group supports an independent and
confidential whistle-blowing service which allows all employees
to raise any concerns about business practice in a confidential
manner.
The Nomination Committee
Composition and Meetings
The Nomination Committee is chaired by the Group Chairman and
its constitution requires it to consist of a majority of independent,
non-executive Directors. The members during the year were
Sir Brian Stewart (Chairman), Breege O’Donoghue and Richard
Holroyd.
The Committee meets a minimum of twice a year and met twice
in the year ended 29 February 2016. Attendance at meetings
held is set out in the table on page 69. In addition, several ad hoc
meetings were held to progress initiatives.
Constitution and terms of reference
The Nomination Committee’s current terms of reference are
available under the Board Committees section of the Group’s
website at www.candcgroupplc.com. The Nomination
Committee’s responsibilities include:
- reviewing the structure, size and composition of the Board
(including the balance of skills, experience, independence,
knowledge and diversity (including gender)) and making
recommendations regarding any changes;
- overseeing succession planning for the Board and senior
management and the leadership needs of the organisation;
- responsibility for the identification of suitable candidates for
appointment to the Board;
- making recommendations to the Board on membership of Board
Committees.
Diversity
The Nomination Committee and the Board recognise the
importance of ensuring diversity and the key role that a diversified
Board plays in ensuring effectiveness. Suitable candidates are
selected on the basis of their relevant experience, employment
background, skills, knowledge and insight, having due regard for
the benefits of diversity to the Board.
The Committee and Board further realise that diversity extends
beyond the Board and in this regard seeks to ensure that all
recruitment decisions are fair and non-discriminatory.
Independent consultants
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.
During the year, the Committee appointed Spencer Stuart, an
independent executive search firm, to assist in a search process
for non-executive Director candidates with relevant experience and
skills. Spencer Stuart has no other connection with the Group.
The Remuneration Committee
The Remuneration Committee comprises solely of independent,
non-executive Directors. The Chairman was Breege O’Donoghue,
and the other members were Richard Holroyd and Stewart
Gilliland.
The Remuneration Committee meets at least twice a year. During
the period under review the Remuneration Committee met five
times. Attendance at meetings held is set out in the table on page
69.
The Remuneration Committee’s terms of reference, which are
available on the C&C website www.candcgroupplc.com, include:
- determining and agreeing with the Board the framework or
broad policy for the remuneration packages of the Chairman,
Group Chief Executive Officer and other executive Directors, the
Company Secretary and any other designated members of the
executive management.
- within the terms of the agreed policy and in consultation with the
Chairman and/or Group Chief Executive Officer, as appropriate,
determining the total individual remuneration package of each of
the above persons, including bonuses, incentive payments and
share options or other share awards;
- reviewing and having regard to the remuneration trends across
the Group;
- approving the design of, and determining targets for, any
performance related pay schemes and the total annual
payments made under such schemes;
- reviewing the design of all share incentive plans and the
performance targets to be used;
- ensuring that contractual terms on termination, and any
payments made, are fair, that failure is not rewarded and that the
duty to mitigate loss is fully recognised;
- overseeing any major changes in employee benefits structures
throughout the Group.
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. An Interim Management
Statement was issued in July 2015 and a trading statement was
issued in March 2016. The Group also held a Capital Markets Day
in March 2016. The Board is briefed regularly on the views and
concerns of institutional shareholders. The Chairman has recently
completed a series of meetings, focused solely on corporate
governance, with a number of the Group’s largest institutional
shareholders.
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 Companies Act, 2014 provides 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 2 July 2015, and this
year’s AGM will be held on 7 July 2016. The Directors may at any
time call an EGM. EGMs may also be convened on the requisition
of members holding not less than five per cent of the voting share
capital of the Company.
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.
Resolutions of the general meeting must be passed by the majority
of votes cast (ordinary resolution) unless the Companies Act,
2014 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 or her 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.
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 and up to the date the financial statements were approved
accords with the FRC Guidance published in September 2014
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 business 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
monitor the effectiveness of the Group’s internal financial controls
and risk management systems and at least annually carry out a
review of the effectiveness of these systems. The risks facing the
Group are reviewed regularly by the Audit Committee with the
executive management team. 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 the Group
Finance function 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 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 review 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.
The Directors also confirm that they have carried out a robust
assessment of the principal risks facing the company, including
those that would threaten its business model, future performance,
solvency or liquidity. As description of the Principal Risks and
Uncertainties faced by the Group and how these risks are being
managed and mitigated is set out on pages 24 and 26.
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 36 to 44
and the Group’s corporate responsibility report is available on the
Group’s website www.candcgroupplc.com.
Viability Statement
For the purposes of assessing the future prospects of the Group,
the Directors have selected a three year timeframe and have
carried out a forward looking assessment of the Group’s viability
based on this timeframe. The assessment has been made
with reference to the Group’s current position and prospects,
the Group’s strategy, the Board’s risk appetite and the Group’s
Principal Risks and Uncertainties and how these are identified,
managed and mitigated.
This assessment is based on a number of cautious assumptions
concerning macro growth and stability in our key markets
particularly in the context of forecasted volume growth and
margins. It will be reviewed regularly by the Board through
presentations from senior management on the performance of the
respective business units, the assessment of market opportunities
and the consideration by the Board of its ability to fund its strategic
ambitions.
In making this assessment, the Directors have considered the
resilience of the Group, taking account of its current position and
the Group’s Principal Risks and Uncertainties and the Group’s
ability to manage those risks. The risks have been identified using
a top down and bottom up approach, and their potential impact
was assessed having regard to the effectiveness of controls in
place to manage each risk.
Based on this assessment the Directors have a reasonable
expectation that the Group will be able to continue in operation
and meet its liabilities as they fall due over the three year period of
their assessment.
Going Concern
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 38 to 43. A description of the business
of the Group is set out in the Group Chief Executive Officer’s
Review on page 10 to 17 and the Operations Review on pages 28
to 37. The principal risks and uncertainties facing the Group are
set out in this report on pages 24 and 26.
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 38 to 43. A statement of the
Group’s strategy is set out on pages 18 and 19. The Group’s longterm
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, being twelve months from
the date of approval of the financial statements. Consequently
they continue to adopt the going concern basis in preparing the
financial statements.
Compliance Statement
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 listing in the Premium Listing
segment of the Official List of the United Kingdom Listing Authority
(‘UKLA’) and its shares are quoted on the ISE and the London
Stock Exchange (‘LSE’). C&C Group plc also has a Level 1
American Depository Receipt (ADR) programme.
The Directors are committed to maintaining high standards of
corporate governance and to reviewing governance best-practice
on a continuing basis to ensure that we adapt and evolve in what
is an environment of constant change.
The Group has complied with the provisions of the UK Code and
Irish Annex throughout the period under review. This Corporate
Governance statement describes the Group’s policy on corporate
governance during the financial year ended 29 February 2016.
Attendance At Meetings Of the Board And Its Committees
Attendance at Board meetings and Board committee meetings
during the year was as set out in the table below.
In the attendance table below 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 administrative matters in accordance with the
Board’s procedures.
|
Scheduled Board Meetings |
Short Notice Board Meeetings |
Audit Committee Meetings |
Nomination Committee Meetings |
Remuneration Committee Meetings |
|---|
| Sir Brian Stewart |
7/7 |
4/4 |
|
2/2 |
|
| Joris Brams |
7/7 |
4/4 |
|
|
|
| Vincent Crowley |
1/1 |
|
|
|
|
| Emer Finnan |
7/7 |
4/4 |
5/5 |
|
|
| Stewart Gilliland |
6/7 |
4/4 |
|
|
4/5 |
| Stephen Glancey |
7/7 |
4/4 |
|
|
|
| John Hogan |
7/7 |
3/4 |
4/5 |
|
|
| Richard Holroyd |
7/7 |
3/4 |
5/5 |
2/2 |
5/5 |
| Rory Macnamara |
1/1 |
|
|
|
|
| Kenny Neison |
7/7 |
4/4 |
|
|
|
| Breege O’Donoghue |
7/7 |
3/4 |
|
2/2 |
5/5 |
| Anthony Smurfit |
7/7 |
2/4 |
4/5 |
|
|
