On behalf of the Board I am pleased to present the FY2022 Corporate Governance Report, which provides an overview of the Board’s activities during the year, along with our governance arrangements.
This will be my last report as your Chair, having served on the board for ten years by the time I step down in July 2022. It has been an absolute privilege to serve as Chair. C&C is a unique, agile and customer-centric business, driven by dedicated and passionate people. I am proud of how C&C has not only navigated the pandemic in such a resilient manner, but has adapted and built back even stronger leaving it extremely well positioned for the future. I am delighted to hand over to someone of Ralph Findlay’s calibre and passion for our industry. His deep understanding of the beverage and hospitality sector in the UK, one of our core markets, and extensive listed company board experience, will serve the Company well as it leads the recovery in the post-pandemic era, complementing and adding to the skills of the existing Board and leadership team.
Board Activities in the year
Our purpose at C&C is to play a role in every drinking occasion, delivering joy to our customers and consumers. Our ability to deliver this for large parts of the year, was heavily impacted by the unprecedented impact of COVID-19. As a Board, we have remained focused on guiding the Groupthrough this period of sustained uncertainty and ensuring we are well positioned for the recovery work, which has been underpinned by our robust governance framework.
A large part of the Board’s focus during the year has therefore remained on liquidity, with the completion of the £151.2m (€176.3m) rights issue in June 2021, in addition to a cost reduction programme. To better support management on this matter, a Rights Issue Sub-Committee was created, of which I was a member, to ensure that we were taking the most appropriate approach, for both C&C and our shareholders. The Board has acted decisively to make sure C&C navigated the impact of the pandemic with a view to ensure it is in a position to execute its proven long-term strategy that will deliver strong shareholder value in future.
We have needed to call on the extensive skills and experience of the entire Board when navigating the 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 for the most part. The Board and our company secretarial team during this time have worked tirelessly in order to ensure the safety of all our employees and the best outcome for all stakeholders.
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.
There have been a number of changes to the Board since the last Annual Report. Andrea Pozzi stepped down from the Board on 1 September 2021 and Jim Clerkin resigned as a director on 27 October 2021.Raplh Findlay joined us as an Independent Non-Executive Director and Chair designate on 1 March 2022 and will succeed me as Chair on 7 July 2022. I have been working closely with Ralph to ensure there is a smooth handover.
In 2021, we continued our structured and ambitious programme of improvement to ensure we meet our ESG vision of “Delivering to a better world!”. Key milestones in our sustainability journey over the last year include the achievement of our target of being out of single use plastic on our canned products, the switch to renewable sources for the electricity used at our main sites and the installation of the largest rooftop solar panel farm in Ireland at Clonmel. In 2021, we submitted our emission reduction targets to the Science Based Targets initiative (‘SBTi’) for validation. This will be secured by the end of 2023 at the latest.
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.
Ensuring that we have a culture which promotes and values diversity, and one which is maintained throughout the business, is a continual prime focus and is underpinned by our Diversity and Inclusion (‘D&I’) Policy, which sets out our objectives across the organisation. The importance of this area also forms the basis for Board diversity and succession planning as we consider the best constitution of the Board to successfully take the Company forward, and link to the Company’s strategy.
At the fiscal year-end, 33% of the Board’s membership was female. The Committee was fully aware that this level reduced with the appointment of Ralph Findlay and will go back to 33% once I step down from the Board in July 2022. Further details about our overall approach to diversity and inclusion can be found in the Nomination Committee Report on page 112.
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 93.
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 FY2022 was carried out on an internal basis as part of the FY2022 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 98.
UK Corporate Governance Code
The Corporate Governance Report, which incorporates by reference the Responsibility Report, the Audit Committee Report, the ESG Committee Report, the Nomination Committee Report (which contains the Diversity Report) and the Directors’ Remuneration Committee Report, describes how the Company has complied with the provisions of the Code. Further details on the Company’s compliance with the Code during FY2022 can be found below.
The following pages set out details of the composition of our Board, its corporate governance arrangements, processes and activities during the year, and reports from each of the Board’s Committees.
I wish all at C&C the very best success for the future.
Compliance with the UK Corporate Governance Code
The Board considers that the Company has, throughout FY2022 complied with the provisions of the Code with the exception of provision 19 of the Code. At the time of the announcement of David Forde’s appointment as CEO in November 2020, 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 110 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 hereeby 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 is set out on pages 24 to 25.
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 Group’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 FY2022, 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 95. Employee surveys formed the basis of questions raised with the Non-Executive Directors and views on what the Group 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 Group’s culture is based upon being open, humble, respectful, yet 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.
Transforming the GB business
In July 2021, the Board approved the simplification of the GB organisational structure, creating one GB business unit, simplifying and integrating the structure, aligning our three trading businesses in GB under one management team. The Board invested significant time to consider this decision, assessing a number of factors including: commercial implications; operational impact and people risk. In doing so, the Board’s decision focused on the strategic rationale for the changes, principally the overlap in terms of operational footprint and management between the three existing trading businesses and the need to simplify this to ensure the business remains competitive and position it for further future success.
The Board has given its full support to management with respect to the significant change programme that is being employed to simplify and integrate the combined GB businesses. The integration of the businesses is a strategic priority for the Group and through regular updates from management, the Board is satisfied that decisions made were in the best interests of employees and the needs of the Group’s other stakeholders. A key priority being that employees affected were treated with respect and sensitivity and where possible the Group took action to help mitigate the affect of any redundancies. The Board are satisfied that their decision to support management was in safeguarding the future success of the Group and believe the investment will be transformative for all stakeholders.
In view of lockdown measures then in force, to ensure that our shareholders were enfranchised with an opportunity to participate in and ask questions at the Company’s Annual General Meeting held in July 2021, the Board made appropriate arrangements to facilitate an online AGM. It is the Board’s intention to continue to provide facilities for shareholders to follow the AGM to be held in July 2022 online, and, if well subscribed to continue to offer online facilities in the future.
Disposal of the Vermont Hard Cider Company
In March 2021, the Board approved the sale of Vermont Hard Cider Company, for a total consideration of $20m. In deciding whether the disposal supported the long-term success of the Group, and with due regard to the interests of the Group’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 Vermont Hard Cider Company. It was determined, at the time the decision was made, that the employees of the Vermont Hard Cider Company 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 Group 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 Group’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 Group’s wider stakeholder community and was accordingly approved by the Board.
Division of Responsibilities
It is the Group’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).
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. Ralph Findlay will assume the role of Chair on 7 July 2022, at which point Stewart Gilliland will step down from the Board.
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 became of particular importance during the period that the Non-Executive Chair served 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 Audit Committee Report is on pages 100 to 105, the ESG Committee Report is on pages 106 to 107, the Nomination Committee Report is on pages 108 to 115 and the Directors’ Remuneration Committee Report is on pages 116 to 135.
The Board has appointed a Non-Executive Director to each business unit to understand employee’s views. The following are the units assigned to each of the Non-Executive Directors:
CoSec/Legal and Group Communications
Our Forum sessions were again held in November 2021 and February 2022. Hosted by Executive Committee members and Non-Executive Directors (‘NED’). These sessions provide a short business update, with the key focus being to answer any questions / concerns that colleagues have about C&C. Our Forums build on existing employee engagement opportunities and the Group’s continuing efforts to develop a culture of informality, transparency, and trust. The aim is to provide a further opportunity to increase two-way dialogue between the company and all staff. They also allow our NEDs to hear directly from colleagues and feedback to the C&C Board. Our Forum sessions will be held regularly (quarterly at a minimum) across our sites in UK and Ireland during FY2023.
Board Meetings in FY2022
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 10 Board meetings, 13 Audit Committee meetings, 6 ESG Committee meetings, 8 Nomination Committee meetings and 13 Remuneration Committee meetings held in the year under review. There were 15 Rights Issue sub-committee meetings to discuss, review and ultimately approve the Rights Issue. The Committee comprised Stewart Gilliland, Vincent Crowley, Emer Finnan, David Forde and Patrick McMahon.
All Directors holding office at the time attended the 2021 AGM.
Number of Meetings Attended*
Maximum Possible Meetings
% of Meetings Attended
1. Meetings attended by Andrea Pozzi and Jim Clerkin untill the date of their resignations from the Board.
2. Meetings attended by Vineet Bhalla from the date of his appointment. Vineet Bhalla was unable to attend one meeting due to a family bereavement.
3. Jill Caseberry was unable to attend two unscheduled meeting due to the meetings being called at short notice and her inability to re-arrange her schedule.
4. 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 and one other meeting due to a medical procedure.
Board activity during FY2022
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 on specific subject areas. A summary of the key activities covered during FY2022 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 sale of Vermont Hard Cider Company;
- Reviewed and approved the Group’s full year FY2021 and half year FY2022 results as well as trading updates;
- Approved the Group’s 2021 Annual Report (including a fair, balanced and understandable assessment) and 2021 AGM Notice;
- Received and reviewed updates from senior management on the Group’s sustainability strategy, related climate change issues and efforts to meet TCFD reporting requirements;
- Considered and approved the launch of the Rights Issue to facilitate and accelerate the Group’s recovery from the impact of COVID-19; and
- Discussed the activity around making the cost base more efficient through the move to a one GB business.
Leadership and People
- Continued to focus on the composition, balance and effectiveness of the Board, including the appointment of a Chair;
- Reviewed employee satisfaction survey results and monitored culture throughout the Group;
- Considered progress towards greater diversity in the workforce;
- Received reports on engagements with colleagues; and
- Monitored the ongoing impact of the COVID-19 pandemic on our colleagues.
- Received and discussed six monthly safety performance reports and updates presented by the 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; and
- Reviewed updates on the information and cyber security control environment in light of the IT security 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 external Board evaluation action plan;
- Conducted an internal Board evaluation covering the Board’s effectiveness, with the outcome discussed by the Board;
- Approved revisions to the Terms of Reference of the Committees;
- Received and reviewed whistleblowing reports and activities; and
- Received regular reports from the Chairs of the Audit, Nomination, Remuneration and ESG Committees.
Objectives and Controls
The Group’s strategic objectives are set out on pages 24 to 25 and a summary of performance against the Group’s KPIs is at pages 32 to 33. 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 34 to 45, to manage the key risks to the Group’s business.
Business Model and Risks
The Group’s Business model is set out on pages 26 to 29. The Risk Management Report on pages 34 to 45 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
The Board consists of the Non-Executive Chair, two Executive Directors and seven independent Non-Executive Directors including the Non-Executive Chair. This will reduce to six independent Non-Executive Directors when Stewart Gilliland steps down from the Board in July 2022.
Over half of the Board comprises independent Non-Executive Directors and the composition of all Board Committees complies with the Code, while also including longer serving and more recently appointed Directors. 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 88 and 89.
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 112 to 113.
Time Commitment and external appointments
Following the Board evaluation process, detailed further on page 98, 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 the Group to discharge his or her responsibilities effectively.
As evidenced by the attendance table earlier in the report, the attendance remained high and demonstrates the Directors’ ability to devote sufficient time
In line with the Code, Directors are required to seek Board approval prior to taking on any additional significant external appointments and the following were approved during the year in line with these requirements:
- Jill Caseberry’s appointment as a Non-Executive Director and member of the ESG, Nomination and Remuneration Committees of Bakkavor plc;
- Emer Finnan’s appointment as a Non-Executive Director and member of the Audit, Nomination and Remuneration Committees of Britvic plc; and
- Stewart Gilliland’s appointment as a Non-Executive Director and Chair designate of IG Design Group plc.
Prior to these appointments, the Board considered the time required, including whether it would impact their ability to devote sufficient time to their current role. The Board considered that the appointments would not interfere with their roles with the Group.
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, Company Secretary, Business Unit MDs 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 FY2022 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.
Progress was being made by the Board in better understanding how far desired cultures and values were embedded in the Group, as evidenced by Non-Executive Director (‘NED’) engagement. The engagement of the NEDs with a range of employees from each business unit has provided invaluable insight into the evolution of our culture and values and their link to strategy through a series of Our Forum meetings.
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 Board is focused on evolving ways of working to ensure Board time is used in a way that is strategic, appropriate and effective. The agenda has moved to a more focused, specific and strategic footing to reflect this way of working. The Board resumed meetings and engagement activities in person in the latter part of the year.
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.
The annual board and the audit committee meeting agendas have included a series of updates from executive risk owners in relation to both the Group’s principal risks and emerging risks having regard to the fact that the Group operates in a dynamic environment where risks continue to evolve, and the Group continues to develop mitigation measures to address them.
FY2022 Board and Committee internal evaluation
Similar to last year, in FY2022 the Board carried out an internal review of its own effectiveness and that of its Committees and Directors. The internal evaluation process was conducted through a questionnaire, which sought Directors feedback on a variety of matters including how they felt the Board had collectively responded to COVID-19 and the IT security incident, sustainability and diversity, 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 2022.
Our most recent externally facilitated Board evaluation was carried out by Independent Audit Limited in FY2020. In line with the recommendations of the Code, an independent formal external evaluation will be conducted in FY2023.
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 81 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 136 and a statement on the Group as a going concern and the Viability Statement are set out on pages 44 to 45.
Please refer to pages 34 to 45 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 page 103.
Details of the Internal Audit function are provided within the Audit Committee report on pages 103 to 104.
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 100 to 105.
For further information on the Group’s compliance with the Code provisions relating to remuneration, please refer to the Directors’ Remuneration Committee Report on pages 116 to 135 for the level and components of remuneration. Shareholders approved the Group’s current Remuneration Policy at the 2021 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 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 81 and throughout this Corporate Governance Report on pages 90 to 99. Our purpose and values are set out on page 6. Relations with shareholders are described on page 9. Our whistleblowing programme is described on page 79.
Division of Responsibilities
Composition, Succession and Evaluation
Audit, Risk and Internal Control
The Company’s Remuneration Policy can be found in the FY2021 Annual Report. The Directors’ Remuneration Committee Report can be found on pages 116 to 135.
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, ESG, 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.
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 17 May 2022.