On behalf of the Board I am pleased to present the FY2021 Corporate Governance Report. This provides an overview of the Board’s activities during the year, along with our governance arrangements.
Throughout FY2021, we have focused our efforts on implementing and delivering the strategy through Board agendas, cognisant of our purpose to play a role in every drinking occasion, delivering joy to our customers and consumers. For almost the whole of the year, the Group’s key markets have been heavily impacted by the unprecedented impact of COVID-19. As a Board, we have been focused on taking the necessary steps to successfully guide the Company through this period of uncertainty and ensure we are well positioned for the recovery, work which has been underpinned by our robust governance framework.
Board Activities and Response to COVID-19
The COVID-19 pandemic has created one of the most challenging operating environments for the Group in its long history, with unprecedented levels of disruption across the Group’s key markets. The duration of the pandemic’s impact has been greater than initially expected. However, in these unpredictable conditions, the Group has been able to demonstrate its resilience, strength and agility. Since the pandemic emerged in early 2020, the Group has adapted quickly and taken significant, prudent actions to protect the business and its liquidity position, focusing on factors within its control with the aim of navigating the pandemic as safely as possible and positioning its business as well as possible for a future normalisation. Throughout this time, the Board’s primary concern has been the welfare and health and safety of the Group’s employees, their families and the communities in which the Group operates. To that end, the Group has followed the advice from the respective governments and relevant authorities and sought to comply with applicable regulations at all times and will continue to do so to protect its people and operations.
The Group has taken a series of proactive steps to mitigate, where possible, the negative financial and operational impacts of the COVID-19 pandemic, including:
- obtaining waivers of the existing financial covenants under its financing arrangements;
- cancelling all discretionary expenditure;
- placing a significant number of employees on a temporary furlough and reducing salaries across the Group including senior management and the Board in the first half of the financial year ended 28 February 2021;
- postponing the majority of non-committed capital expenditure;
- re-deployment of resources to capture growth opportunities in the off-trade channel;
- rationalising the Group structure, reflecting the Group’s focus on its core brand-led distribution model, through the disposal of certain non-core assets, including the disposal of the Tipperary Water Cooler business in October 2020 for an initial cash consideration of €7.4 million and the disposal of the Vermont Hard Cider Company in April 2021 for a consideration of USD 20 million;
- implementing various working capital initiatives, including the negotiation of temporary extensions to supplier payments terms and agreeing tax deferrals with the UK and Irish tax authorities;
- continuing to progress with restructuring and optimisation of work streams across the Group, including the integration of the Group’s distribution platforms in Scotland and England;
- pausing the payment of dividends; and
- further optimising its brand-led distribution model in the first quarter of the financial year ending 28 February 2022 by implementing significant cost reduction and optimisation programmes that will enhance margins post recovery.
We have needed to call on the extensive skills and experience of the entire Board when navigating the uncertain period and our robust governance framework has been fundamental to our ability to do this successfully. We have met more frequently than usual, both as a full Board, but also within our various Committees, and with the added challenge of doing so remotely. The Board and our company secretarial team during this time have worked tirelessly in order to ensure the best outcome for all stakeholders.
We have sought to balance the needs of our numerous stakeholders throughout the year, be they employees, communities, consumers, customers, suppliers, shareholders or regulators, while taking steps to secure the Group’s longer term success. There has been a constant dialogue with all of the main stakeholder groups, and on behalf of the Board, I would like to take this opportunity to thank them all for their partnership during this very challenging period. Working together has been vital and will continue to be so as we seek a sustainable future together.
Details of the methods we have used to engage with stakeholders to understand their views can be found on pages 8 to 9. A statement on how the Directors have had regard to the matters set out in section 172 of the Companies Act 2006 can be found on page 79.
Our proposed Remuneration Policy, which is intended to apply for the coming three years, will be put to shareholders for their approval at this year’s AGM. The proposed policy has been designed so that there continues to be close alignment between executive reward and the delivery of our business strategy. Details of the proposed policy, the outcome of the shareholder consultation process that has been undertaken and the implementation of the current policy during the year can be found in the Directors Remuneration Report on pages 102 to 132.
As a people focused business, our strength comes from an inclusive and welcoming environment, where we recognise that the experiences and perspectives which make us unique come together in our shared values and vision. We strongly believe that the more our people reflect the diversity of our clients and consumers, the better equipped we are to service their needs.
As part of its remit the Nomination Committee (‘the Committee’) reviews the Group’s policies on workforce diversity and inclusion, their objectives, and link to the Company’s strategy. The Group has always operated open and inclusive hiring and staff management practices.
During the year, the Committee recommended, and the Board endorsed, the adoption of a new Diversity and Inclusion Policy, which is published on the Company’s website. In reviewing the Group’s policy, the Committee was satisfied it supported the development of a more diverse workforce within the business and were consistent with the Group’s inclusive and welcoming culture. The policy equally applies to our Board members and all of our employees, regardless of their contract, location or role in the business. We aim to ensure our inclusivity applies to all aspects of their careers, including recruitment, selection, benefits and opportunities for training and promotion. More details on workforce diversity can be found on pages 99 to 100.
At the fiscal year-end, 30% of the Board’s membership was female. The Committee was fully aware, however, that this level reduced with the appointment of Vineet Bhalla, which was an important step to deepen the skills and diversify the ethnicity of the Board. While at the date of this report, we have a stronger and more diverse Board overall, we recognise that the gender composition of the Board is below the level expected and it is our intention to address that as soon as practicable and by no later than the end of February 2022. Further details can be found in the Nomination Committee Report on page 100.
Changes to the Board
The Board plans for its own succession, with the support of the Nomination Committee. The Committee remains focused, on behalf of the Board, on Board succession planning for both Executive and Non-Executive Directors.
The Committee aims to ensure that:
- the succession pipeline for senior executive and business critical roles in the organisation is strong and diverse;
- processes are in place to identify potential successors and manage succession actively;
- there is a structured approach to developing and preparing possible successors; and
- processes are in place to identify “at risk” posts.
On 9 July 2020, we announced that David Forde would be joining the Company as our new CEO and that Patrick McMahon would become CFO in succession to Jonathan Solesbury, who informed the Board of his intention to retire. We are very grateful to Jonathan for his significant contribution to C&C, particularly his support in helping manage the Company through the unparalleled challenges of COVID-19, in which he played a critical role. I am delighted that we have been able to attract a candidate of the calibre of David Forde to the role of CEO and that through succession planning, we had a candidate of the quality of Patrick McMahon internally for the role of CFO. These appointments represent an exciting new era for C&C, which we believe will deliver long term value for all of our stakeholders.
We also announced that Vineet Bhalla would be joining the Board on 26 April 2021. The result is a strengthened Board, with broader and more diverse skills, ethnicity and gender.
To ensure that the Board and its Committees continue to operate effectively, we evaluate the performance of the Board on an annual basis. During FY2020, an external evaluation was carried out, meaning that the evaluation in FY2021 was carried out on an internal basis as part of the FY2021 internal Board evaluation process. An explanation of how this process was conducted, the conclusions arising from it and the outcome of that review can be found on page 84.
UK Corporate Governance Code
The Corporate Governance Report, which incorporates by reference the Responsibility Report, the Audit Committee Report, the Nomination Committee Report (which contains the Diversity Report) and the Remuneration Report, describes how the Company has complied with the provisions of the Code. Further details on the Company’s compliance with the Code during FY2021 can be found on page 78.
As Stewart was an interim Executive Chair for a large part of the year, the Board determined it appropriate that I would author the introduction to the Corporate Governance report for FY2021.
Senior Independent Director
Compliance with the UK Corporate Governance Code
The Board considers that the Company has, throughout FY2021 complied with the provisions of the Code with the exception of the period when the Company was non-compliant with provision 9 of the Code whereby the roles of chair and chief executive should not be exercised by the same individual. This was due to the appointment of Stewart Gilliland as interim Executive Chair following the retirement of Stephen Glancey as CEO, reflecting the circumstances of the CEO’s departure and the need to ensure an orderly and successful transition. Upon David Forde joining the Company on 2 November 2020, Stewart Gilliland reverted to the role of Non-Executive Chair. At that time of the announcement of David Forde’s appointment, the Board extended Stewart Gilliland’s role as Non-Executive Chair by an additional 12 months until the AGM in 2022. At the date of publication of this Report, Stewart Gilliland will have been in post as a Director longer than nine years from the date of his appointment in April 2012, resulting in a non-compliance with provision 19 of the Code. Further details can be found on page 98 of the Nomination Committee Report.
Leadership and Company Purpose
Role of the Board
The Company is led and controlled by the Board of Directors (‘the Board’) chaired by Stewart Gilliland.
The core responsibility of the Board is to ensure the Group is appropriately managed to achieve its long term objectives, generating value for shareholders and contributing to wider society. The Board’s objective is to do this in a way that is supported by the right culture and behaviours.
The Board has adopted a formal schedule of matters specifically reserved for decision by it, thus ensuring that it exercises control over appropriate strategic, financial, operational and regulatory issues (a copy of the schedule of reserved matters is available on our website). Matters not specifically reserved for the Board and its Committees under its schedule of matters and the Committees’ terms of reference, or for shareholders in general meeting, are delegated to members of the Executive Committee.
The balance of skills, background and diversity of the Board contributes to the effective leadership of the business and the development of strategy. The Board’s composition is central to ensuring all directors contribute to discussions. As a means to foster challenge and director engagement, led by the Senior Independent Director, the Non-Executive Directors meet without the Chair present at least annually. Likewise, the Chair holds meetings with the Non-Executive Directors without the executives present. In each of these settings, there is a collegiate atmosphere that also lends itself to a level of scrutiny, discussion and challenge.
The Company has procedures whereby Directors (including Non-Executive Directors) receive formal induction and familiarisation with the Group’s business operations and systems on appointment, including trips to manufacturing sites with in-depth explanations of the processes involved at the site.
Our Purpose and Strategy
C&C is a leading, vertically integrated premium drinks company, which manufactures, markets and distributes branded beer, cider, wine, spirits and soft drinks across the UK and Ireland. The Board considers C&C’s purpose is to play a role in every drinking occasion, delivering joy to our customers and consumers with remarkable brands and service. Further detail on the Group’s purpose can be found on page 6. Information on our strategy on pages 22 to 23.
Our Culture and Values
C&C has an open, humble, respectful, but competitive culture, underpinned by certain values and behaviours, namely:-
- We respect people and the planet
- We bring joy to life
- Quality is at our core
- We put safety first
- We are customer centric
- We collaborate through trust
- We keep it simple and remain agile
- We are fact based, data and insight driven
- We learn to improve
The Board recognises the importance of communication and engagement with the wider workforce as a means of assessing and monitoring culture. The role and effectiveness of the Board and the culture it promotes are essential to a successfully run company. The Board has appointed a Non-Executive Director to each business unit to provide a link between the Board and the Company’s workforce, so that employees’ views are heard in the boardroom, as well as facilitating a better understanding of business units and functions, within the organisation.
During FY2021, the engagement of the Non-Executive Directors with employees from each business area through a series of forum meetings has provided invaluable insight into the evolution of our culture and values, and their link to strategy. The assignment between each Non-Executive Director and their corresponding business area can be found on page 81. Employee surveys formed the basis of questions raised with the Non-Executive Directors, including the Company’s response to the COVID-19 pandemic, and views on what the Company could improve in its response to help the business and its employees. Participants were also invited to raise matters for direct feedback to and from Non-Executive Directors. The format of engagement proved successful and was endorsed by the Board as an extremely useful feedback mechanism.
The Company’s culture is based upon being open, humble, respectful, but competitive. The Board with support from its committees, monitors the alignment of the Group’s culture with our purpose, values and strategy, through a variety of mechanisms, cultural indicators and reporting lines, including those summarised below:-
Health and Safety
Ethics and Compliance
Customers and Suppliers
Engagement with Shareholders
Information on relations with shareholders is provided as part of the Stakeholder engagement section of the Strategic Report on pages 8 to 9.
In fulfilling their responsibilities, the Directors believe that they govern the Group in the best interests of shareholders, whilst having due regard to the interests of other stakeholders in the Group including customers, employees and suppliers.
The Code encourages a dialogue with institutional shareholders with a view to ensuring a mutual understanding of objectives. The Executive Directors have regular and ongoing communication with major shareholders throughout the year, by participating in investor roadshows and presentations to shareholders. Feedback from these visits is reported to the Board. The Executive Directors also have regular contact with analysts and brokers. The Chair, Senior Independent Non-Executive Director and other Non-Executive Directors receive feedback on matters raised at the meetings with shareholders and are offered the opportunity to attend meetings with major shareholders. As a result of these procedures, the Non-Executive Directors believe that they are aware of shareholders’ views. In addition, Vincent Crowley, the Senior Independent Non-Executive Director, is available to meet with major shareholders.
Arrangements can also be made through the Company Secretary for major shareholders to meet with newly appointed Directors.
The Group maintains a website at www.candcgroup.com which is regularly updated and contains information about the Group.
The Code provides that the Board should understand the views of the Company’s key stakeholders other than shareholders and describe how their interests and the matters set out in section 172 of the UK Companies Act 2006 (‘s.172’) have been considered in Board discussions and decision making.
Whilst s.172 is a provision of UK company law, the Board acknowledges that as a premium listed issuer, it is important to address the spirit intended by these provisions.
Section 172 Statement
A director of a company must act in a way they consider, in good faith, would most likely promote the success of the company for the benefit of its members as a whole, taking into account the factors as listed in s. 172. This is not a new requirement, and the Board has always considered the impact of its decisions on stakeholders. We set out below some examples of how the Board has done so in relation to four decisions during the year. Details of who the Board considers the main stakeholders are, how we have engaged with them during the year and the outcomes of the process are set out on pages 8 to 9 and forms part of the s.172 statement.
In May 2020, the Company announced that the Board had decided not to recommend an interim or a final dividend for the year under review. In reaching this decision, the Board considered the importance of a dividend to the Company’s shareholders, the need to preserve the Company’s liquidity and the exceptional circumstances that COVID-19 represented. The Board will keep future dividends under review and will restart payments when it is appropriate to do so.
Board Director and Executive Committee salary reduction
During the year, a range of actions to mitigate risks was implemented. As a result of the COVID-19 pandemic, a significant proportion of the workforce was affected by a range of cost mitigation measures, which included reduced salary, reduced working hours, furloughing arrangements and, in some cases, redundancy. Mindful of the wider employee context and in support of the Company’s culture, which is rooted in fair and equitable treatment for all stakeholders, the interim Executive Chair, the Executive and Non-Executive Directors and the Executive Committee all agreed to take temporary reductions in their fees and base salaries. Reductions remained in place for a period of 5 months.
Disposal of the Tipperary Water Cooler business
In October 2020, the Board approved the sale of our Tipperary Water Cooler business, receiving an initial €7.4 million in respect of disposal proceeds. In deciding whether the disposal supported the long term success of the Company, and with due regard to the interests of the Company’s stakeholders, the Board evaluated the contribution of the business, its growth prospects and fit with the overall strategy of the Group. In consideration of these matters, the Board considered the potential impact of the sale on the Company’s stakeholders, and in particular, the impact on the employees of the Tipperary Water Cooler business. It was determined, at the time the decision was made, that the employees of the Tipperary Water Cooler business would not be materially disadvantaged by the change in ownership, and jobs would be protected as part of the sale. Following evaluation of these factors, it was determined that the sale of the business was in the best interests of the Company and its stakeholders as a whole.
As part of risk mitigation measures in response to COVID-19, the Board approved the decision to fundraise through a rights issue. In formulating its decision, the directors took into account the views of the investor community regarding potential investment, the short and long term requirements of the business which could impact on employees and suppliers, and the protection of the interests of stakeholders as a whole. The merits of the rights issue were considered, including that it would reduce leverage, enhance liquidity and strengthen the Company’s position, ensuring that C&C remains resilient in the event of further negative developments in COVID-19. Recognising the value C&C places on its retail investors and providing them with an opportunity to participate in the equity raise alongside institutional investors, the Board concluded that it was in the best interests of shareholders, as well as the Company’s wider stakeholder community and was accordingly approved by the Board.
Division of Responsibilities
It is the Company’s policy that the roles of the Chair and Group Chief Executive Officer are separate, with their roles and responsibilities clearly divided and set out in writing (available on our website). In January 2020, the Chair became the interim Executive Chair for a temporary period. Upon the appointment of a new Chief Executive Officer, David Forde on 2 November 2020, the Chair, Stewart Gilliland reverted back to a Non-Executive role.
The Chair, Stewart Gilliland is responsible for the leadership of the Board and ensuring effectiveness in all aspects of its role. The Chair is responsible for ensuring, through the Company Secretary that Directors receive accurate, timely and clear information. He is responsible for setting the Board’s agenda and ensuring adequate time is available for Board discussion and to enable informed decision making. He is responsible for encouraging and facilitating the effective contribution of Non-Executive Directors and constructive relations between Executive and Non-Executive Directors.
Senior Independent Director
Vincent Crowley is the Senior Independent Non-Executive Director. In addition to his role and responsibilities as an Independent Non-Executive Director, the Senior Independent Director is available to shareholders where concerns have not been resolved through the normal channels of communication and for when such contact would be inappropriate, which is of particular importance during the period that the Non-Executive Chair is serving as interim Executive Chair. He acts as a sounding board for the Chair and acts as an intermediary for the Directors when necessary. He is responsible for annually evaluating the performance of the Chair in consultation with the other Non-Executive Directors.
The Non-Executive Directors provide an external perspective, sound judgement and objectivity to the Board’s deliberations and decision making. With their diverse range of skills and expertise, they support and constructively challenge the Executive Directors and monitor and scrutinise the Group’s performance against agreed goals and objectives. The Non-Executive Directors together with the Chair meet regularly without any Executive Directors being present. The Non-Executive Directors provide a conduit from the workforce to the Board for workforce engagement and have sufficient time to meet their board responsibilities.
Chief Executive Officer
The Group Chief Executive Officer is responsible for the leadership and day-to-day management of the Group. This includes formulating and recommending the Group’s strategy for Board approval in addition to executing the approved strategy.
Mark Chilton, as Company Secretary, supports the Chair, the Group Chief Executive Officer and the Board Committee Chairs in setting agendas for meetings of the Board and its Committees. He is available to all Directors for advice and support. He is responsible for information flows to and from the Board and the Board Committees and between Directors and senior management. In addition, he supports the Chair in respect of training and the Board and Committee performance evaluations. He also advises the Board on regulatory compliance and corporate governance matters.
The Board has established an Audit Committee, an ESG Committee, a Nomination Committee and a Remuneration Committee to oversee and debate relevant issues and policies outside main Board meetings. Throughout the year, the Chair of each Committee provided the Board with a summary of key issues considered at the Committee meetings. Board Committees are authorised to make enquiries of the Executive Directors and other executives across the Group as they feel appropriate and to engage the services of external advisers as they deem necessary in the furtherance of their duties at the Company’s expense.
The Board has appointed a Non-Executive Director to each business unit to understand employee’s views. The following are the areas assigned to each of the Non-Executive Directors:
Board Meetings in FY2021
The Directors’ attendance at Board meetings during the year is shown below. The core activities of the Board and its Committees are covered in scheduled meetings held during the year. Additional ad hoc meetings are also held to consider and decide matters outside scheduled meetings. There were 16 Board meetings, 11 Audit Committee meetings, 11 Nomination Committee meetings and 10 Remuneration Committee meetings held in the year under review.
All Directors holding office at the time attended the 2020 AGM.
Number of Meetings Attended*
Maximum Possible Meetings
% of Meetings Attended
1. Meetings attended by David Forde and Patrick McMahon from date of their appointment.
2. Andrea Pozzi was unable to attend a meeting due to a urgent business meeting.
3. Jim Clerkin was unable to attend one unscheduled meeting due to the meetings being called at short notice and his inability to re-arrange his schedule.
4. Helen Pitcher was unable to attend a meeting due to a prior commitment made before joining the Board.
5. Jim Thompson was unable to attend one unscheduled meeting due to the meeting being called at short notice and his inability to re-arrange his schedule.
Board activity during FY2021
Each Board meeting follows a carefully tailored agenda agreed in advance by the Chair, Group Chief Executive Officer and Company Secretary. A typical meeting will comprise reports on current trading and financial performance from the CEO and CFO, investor relations updates, monitoring strategy, examining investment and acquisition opportunities and presentations/reports upon areas on specific subject areas. A summary of the key activities covered during FY2021 is set out in the table below.
Strategy, Operations and Finance
- Approved the Group’s Viability Statement;
- Received presentations from the COO and management on brand marketing plans;
- Received presentations from the CEO and CFO and senior management on strategic initiatives and trading performance;
- Approved the annual budget plan and KPIs;
- Reviewed and approved the Group’s full year FY2020 and half year FY2021 results as well as trading updates;
- Approved the Group’s 2020 Annual Report (including a fair, balanced and understandable assessment) and 2020 AGM Notice;
- Received updates from the COO and senior management on the Group’s sustainability framework;
- Reviewed the Group’s debt, capital and funding arrangements and approved the private placement;
Leadership and People
- Continued to focus on the composition, balance and effectiveness of the Board, including the appointment of a new CEO, CFO and Independent Non-Executive Director.
- Appointed Spencer Stuart to lead the search for the recruitment of a new Chair;
- Considered progress towards greater diversity in the workforce;
- Received and discussed six monthly safety performance reports and updates presented by the COO and Group Health and Safety Manager;
Internal Control and Risk Management
- Reviewed the Group’s risk management framework and principal risks and uncertainties;
- Reviewed and confirmed the Group’s Viability Statement and going concern status;
- Reviewed and validated the effectiveness of the Group’s systems of internal controls and risk management;
- Reviewed updates on the information and cyber security control environment in light of incident in April 2021;
Governance and Legal
- Reviewed regular briefings on corporate governance developments and legal and regulatory issues;
- Approved the Group’s Modern Slavery Statement for publication;
- Received reports on engagement with institutional shareholders, investors and other stakeholders throughout the year;
- Reviewed progress against the 2020 Board evaluation action plan;
- Conducted an internal Board evaluation covering the Board’s effectiveness, with the outcome discussed by the Board;
- Received regular reports from the Chairs of the Audit, Nomination, Remuneration and ESG Committees; and
- Approved the Group’s updated competition policy.
Objectives and Controls
The Group’s strategic objectives are set out on pages 22 to 23 and a summary of performance against the Group’s KPIs is at pages 30 to 31. The Board also receives regular updates across a broad range of internal KPIs and performance metrics. The Group has a clear risk management framework in place, as set out on pages 32 to 42, to manage the key risks to the Group’s business.
Business Model and Risks
The Group’s Business model is set out on pages 24 to 27. The Risk Management Report on pages 32 to 42 contains an overview of the principal risks facing the Group and a description of how they are managed.
All employees have access to a confidential whistleblowing service which provides an effective channel to raise concerns. The Audit Committee and the Board receives updates detailing all notifications and subsequent action taken.
Composition, Succession and Evaluation
Following the appointment of David Forde as Group Chief Executive Officer and Patrick McMahon as Group Chief Financial Officer, the Board consists of the Chair, three Executive Directors and seven independent Non-Executive Directors.
Over half of the Board comprises independent Non-Executive Directors and the composition of all Board Committees complies with the Code. Additionally, the Chair was considered independent on his appointment. Details of the skills and experience of the Directors are contained in the Directors’ biographies on pages 74 and 75.
The independence of Non-Executive Directors is considered by the Board and reviewed at least annually, based on the criteria suggested in the Code. Non-Executive Directors do not participate in any of the Company’s share option or bonus schemes.
Following this year’s review, the Board concluded that all the Non-Executive Directors continue to remain independent in character and judgement and are free from any business or other relationship that could materially interfere with the exercise of their independent judgement in accordance with the Code.
Appointments to the Board
Recommendations for appointments to the Board are made by the Nomination Committee. The Committee follows Board approved procedures (available on our website together with a copy of the terms of reference for the Nomination Committee) which provide a framework for the different types of Board appointments on which the Committee may be expected to make recommendations. Appointments are made on merit and against objective criteria with due regard to diversity (including skills, knowledge, experience and gender).
All Board appointments are subject to continued satisfactory performance followings the Board’s annual effectiveness review. The Nomination Committee leads the process for Board appointments and makes recommendations to the Board. The activities of the Nomination Committee and a description of the Board’s policy on diversity are on pages 99 to 100.
Following the Board evaluation process, detailed further on page 84, the Board has considered the individual Directors attendance, their contribution and their external appointments and is satisfied that each of the Directors is able to allocate sufficient time to devote to the role.
On appointment, 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 meetings with the Chair, Group Chief Executive Officer, Group Chief Financial Officer, Group Chief Operating Officer, Company Secretary and key senior executives as appropriate. It covers areas such as:
- the business of the Group;
- their legal and regulatory responsibilities as Directors of the Company;
- briefings and presentations from Executive Directors and other senior executives; and
- opportunities to visit business operations.
To update the Directors’ skills, knowledge and familiarity with the Group and its stakeholders, visits to Group business locations are organised for the Board periodically, as well as trade visits with members of senior management to assist Directors’ understanding of the operational issues that the business faces. Non-executive Directors are also encouraged to visit Group operations throughout their tenure to increase their exposure to the business. Directors are continually updated on the Group’s businesses, the markets in which they operate and changes to the competitive and regulatory environment through briefings to the Board and meetings with senior executives.
Training opportunities are provided through internal meetings, presentations and briefings by internal advisers and business heads, as well as external advisers.
Information and Support
All members of the Board are supplied with appropriate, clear and accurate information in a timely manner covering matters which are to be considered at forthcoming Board and Committee meetings.
Should Directors judge it necessary to seek independent legal advice about the performance of their duties with the Group, they are entitled to do so at the Group’s expense. Directors also have access to the advice and services of the Company Secretary, who is responsible for advising the Board on all governance matters and ensuring that Board procedures are followed.
The appointment and removal of the Company Secretary is a matter requiring Board approval.
Re-election of Directors
All Directors are required by the Company’s Articles of Association to submit themselves to shareholders for re-election at the first Annual General Meeting after their appointment and thereafter by rotation at least once every three years. In accordance with the Code, all Directors will, however, stand for re-election annually.
FY2020 Board and Committee external evaluation
As reported in the FY2020 Annual Report, an external evaluation was undertaken in 2020. Overall the results of the evaluation were positive and showed that the Board was running effectively. The Board was seen as being cohesive and comprising the appropriate balance of experience, skills and knowledge. Board meetings operated in a spirit of openness, fostered by the Chair, in which Directors were able to challenge and discuss openly ideas of importance to the Group, its strategy and risk.
While the outcome of the evaluation clearly indicated that the Board and individual Directors continued to operate to a high standard, the Board developed an action plan based on the feedback from the evaluation, designed to further enhance Board effectiveness. Ensuring the Board maintains the high standards it has always set was and is of significant importance.
The key areas identified in the 2020 external evaluation for increased focus and development during FY2021 are set out below:
Area of Focus
The evaluation found a strong desire from the Board to develop a deeper understanding of organisational culture. As part of this focus Directors are eager to develop workforce engagement and greater oversight of reward practices throughout the organisation.
Board logistics and information
In light of the challenges of remote Board meetings, Directors communicated that there may need to be refinement to Board agendas, including ensuring there is a balance struck between insight and excessive detail.
The Directors voiced satisfaction with the strength of work done on developing and communicating the updated risk framework in recent years. Feedback indicated that this risk picture needs to be further developed, particularly in relation to emerging non-financial risks and wider economic developments.
FY2021 Board and Committee internal evaluation
As set out earlier in this report, the Board’s activities during the year were dominated by the unique challenges posed by the pandemic. As a result, a shorter and more targeted evaluation was undertaken for 2021, seeking feedback from Board members on how they felt the Board had collectively responded to these challenges and how it should evolve its approach in future, in addition to consideration of progress against the Board action plan.
Board and Committee Evaluation Process
The review was conducted through a questionnaire, which sought Directors feedback on a variety of matters including COVID-19, the composition of the Board and Committees, understanding stakeholders, Board dynamics, strategic oversight, risk management and internal control, succession planning, the advice and support provided, the focus of meetings and priorities for change.
The results of the questionnaires were collated and a summary provided to the Chair and the Chairs of each of the Committees. The results were presented and discussed by the Board and each of its committees at their respective meetings in April/May 2021.
FY2020 External Board Effectiveness Evaluation Outcomes
Evaluation of the Chair and Non-Executive Directors
A questionnaire was issued to each Board member (excluding the Chair) and the result was unanimous support for the Chair. The Senior Independent Director shared the feedback with the Chair.
The Chair held one to one meetings with each Director to assess their effectiveness and to agree any areas of improvement or training and development, including on environmental, social and governance matters based on the outcomes of the questionnaires each of them had completed on themselves. There were no issues of any substance arising from this review.
Audit, Risk and Internal Control
Financial and Business Reporting
The Strategic Report on pages 2 to 67 explains the Group’s business model and the strategy for delivering the objectives of the Group.
A Statement on Directors’ Responsibilities on the Annual Report and Accounts being fair, balanced and understandable can be found on page 133 and a statement on the Group as a going concern and the Viability Statement are set out on pages 41 to 42.
Please refer to pages 32 to 42 for information on the risk management process and the Group’s principal risks and uncertainties.
Details on the Group’s internal control systems are set out on pages 89 to 90.
Details of the Internal Audit function are provided within the Audit Committee report on page 90.
Audit Committee and Auditors
For further information on the Group’s compliance with the Code and provisions relating to the Audit Committee and auditors, please refer to the Audit Committee Report on pages 86 to 91.
For further information on the Group’s compliance with the Code provisions relating to remuneration, please refer to the Directors’ Remuneration Report on pages 102 to 132 for the level and components of remuneration. Shareholders approved the Group’s current Remuneration Policy at the 2018 AGM. The Policy is designed to promote the long term success of the Group.
The following is a table of reference that provides an overview of where to find disclosures relating to the sections of the 2018 UK Code:
Board Leadership and Purpose
Details on how the Board promotes the long-term success of the Company are set out in our Strategic Report on pages 2 to 67 and throughout this Corporate Governance Report on pages 76 to 85. Our purpose and values are set out on pages 6 to 7. Relations with shareholders are described on page 9. Our whistleblowing programme is described on page 66.
Division of Responsibilities
Composition, Succession and Evaluation
Audit, Risk and Internal Control
The Company’s Remuneration Policy can be found in the FY2018 Annual Report. The Remuneration Committee Report can be found on pages 102 to 132.
Constructive Use of the Annual General Meeting
The Code encourages boards to use the Annual General Meeting to communicate with investors and to encourage their participation. In compliance with the Code, under normal circumstances, the Board welcomes as many shareholders as possible to attend the Annual General Meeting to discuss any interest or concern, including performance, governance or strategy, with the Directors. All Directors are also usually expected to attend the Annual General Meeting. The Chairs of the Audit, Nomination and Remuneration Committees would be expected to be available at the Annual General Meeting to answer shareholder questions, through the Chair of the Board, on the responsibilities and activities of their Committees. Shareholders also have the opportunity to meet with the Directors following the conclusion of the formal part of the meeting.
For the 2021 Annual General Meeting, your attention is drawn to details set out in the notice of meeting. While the company was obliged to hold a virtual AGM in 2020, it is hoped that Government and Public Health restrictions will allow the hosting of an in-person AGM this year. The Company believes an in-person AGM is important to allow shareholders meet with and engagement with the Board and other shareholders. Given government and health authority guidance on COVID-19 is still evolving, shareholders are encouraged to monitor the Company’s website and regulatory news for updates in relation to the AGM.
In compliance with the Code, at the Annual General Meeting, the Chair of the meeting will announce the level of proxies lodged on each resolution, the balance for and against and abstentions, and such details will be placed on the Group’s website following the meeting. A separate resolution will be proposed at the Annual General Meeting in respect of each substantially separate issue.
This report was approved by the Board of Directors on 26 May 2021.