We believe that effective governance is the foundation of a successful and sustainable organisation and should be based upon an appropriate level of oversight, clear communication and a commitment to transparency.
Our corporate governance is described in our Annual Report and Corporate Governance Report, which are available to download below.
The following text is an extract from our 2019 Annual Report:
The Company is led and controlled by the Board of Directors (the ‘Board’) chaired by Stewart Gilliland.
All the non-executive Directors are considered by the Board to be independent of management and free from any business or other relationship that could materially interfere with the exercise of their independent judgement in accordance with the UK Corporate Governance Code 2016 and the Irish Corporate Governance Annex (together the ‘Code’). The independence of non-executive Directors is considered at least annually and is based on the criteria suggested in the Code. The non-executive Directors provide constructive challenge and bring independence to the Board and its decision making process.
The Board believes that it is appropriate to have a Senior Independent non-executive Director and Richard Holroyd has fulfilled this role and will continue to do so until he retires on 31 May 2019, when he will be succeeded by Vincent Crowley. The Senior Independent non-executive Director is available to shareholders where concerns have not been resolved through the normal channels and for when such contact would be inappropriate.
The Board believes that it has sufficient members to contain a balance of skills and experience, but it is not so large as to be unwieldy. The Board contains a balance of executive and nonexecutive Directors such that no individual, or group of individuals can dominate the Board’s decision making. No one individual has unfettered powers to make decisions.
Details of the skills and experience of the Directors are contained in the Directors’ biographies on pages 50 and 51 of the 2019 Annual Report and Accounts.
The Board meets regularly on at least eight scheduled occasions during each year and more frequently, if necessary. There were 11 Board meetings, 5 Audit Committee meetings, 3 Nomination Committee meetings and 6 Remuneration Committee meetings held in the ending 28 February 2019.
The Board is responsible to shareholders for ensuring that the Group is appropriately managed and that it achieves its objectives. 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). At its meetings, the Board reviews trading performance, ensures adequate financing, monitors strategy, examines investment and acquisition opportunities and discusses reports to shareholders. 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.
It is the Company’s policy that the roles of the Chairman and Group Chief Executive Officer are separate, with their roles and responsibilities clearly divided and set out in writing (available on our website). The Chairman’s main responsibility is the leadership and management of the Board and its governance. The Chairman’s commitment to the Company is usually 50 days per annum. His other significant commitments are disclosed in his biography on page 50 of the 2019 Annual Report and Accounts. The Board considers that these commitments do not hinder his ability to discharge his responsibilities to the Company effectively.
The Group Chief Executive Officer, Stephen Glancey, 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.
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). Non-Executive appointees are also required to demonstrate that they have sufficient time to devote to the role.
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. Board visits to Group business locations enable the Directors to meet with local management and employees and to update and maintain their knowledge and familiarity with the Group’s operations.
Non-executive Directors are also encouraged to visit Group operations throughout their tenure to increase their exposure to the business.
The Chairman is responsible for ensuring that Directors receive accurate, timely and clear information. The provision of information to the Board was reviewed during the year as part of the performance evaluation exercise referred to below. To ensure that adequate time is available for Board discussion and to enable informed decision making, briefing papers are prepared and circulated to Directors in the week prior to scheduled Board meetings. All non-executive Directors are encouraged to make further enquiries as they feel appropriate of the Executive Directors and other executives. In addition, Board Committees are provided with sufficient resources and the power to co-opt such additional support as they may require from time to time, to undertake their duties.
All Directors are entitled to receive independent professional advice at the Company’s expense and have access to the services of a professionally qualified and experienced Company Secretary, who is responsible for information flows to the Board and advising the Board on corporate governance matters. This ensures compliance with Board procedures and applicable laws and regulation. The Board has responsibility for the appointment and removal of the Company Secretary.
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 Chairman, 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:
During the year ending 28 February 2019, the Board conducted an evaluation of its own performance and that of its three principal committees – the Audit Committee, the Nomination Committee and the Remuneration Committee. The individual performance of each of the non-executive Directors was also evaluated through one to one interviews with the Chairman. In March 2019, each Director completed a questionnaire prepared by the Chairman and Company Secretary to evaluate the collective performance of the Board and its committees. The Company Secretary collated the evaluation results and the Chairman then reviewed an unattributed executive summary, highlighting key outcomes. A report of the findings was then presented to and discussed by the Board. The evaluation process confirmed that the Board is operating effectively and has led to a programme of regular training sessions being formalised for Directors. No other actions were considered necessary as a result of these evaluations and the Chairman confirms that each Director continues to make a valuable contribution to the Board and, where relevant, its committees and devotes sufficient time to his/her role. The effectiveness of the Board and its committees will be kept under review in accordance with corporate governance best practice.
As reported in the 2018 Annual Report and Accounts, the Board undertook an externally facilitated evaluation in 2015. The next independent evaluation was due to have been held in 2018, however, as there had been a significant number of changes to the Board, it was decided that it would be more appropriate to wait until later in 2018 to conduct the external evaluation. In light of the further changes announced in the Board composition during the course of the year, it was considered appropriate to delay the independent evaluation until the end of this financial year. The results of the external evaluation will be detailed in the 2020 Annual Report and Accounts.
During the year ending 28 February 2019, the Chairman and the non-executive Directors met without the Executive Directors being present. There was also one meeting of the non-executive Directors chaired by the Senior Independent non-executive Director at which the Chairman was not present in order to appraise the Chairman’s performance. The Senior Independent Director provided feedback to the Chairman based on this review.
The Board has established an Audit Committee, a Nomination Committee and a Remuneration Committee to oversee and debate relevant issues and policies outside main Board meetings. Throughout the year, the Chairman 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.
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.
In accordance with the Company’s Articles of Association and section 231 of the Companies Act 2014, formal procedures for the notification and authorisation of potential and actual conflicts of interest have been approved by the Board.
These procedures, which enable the Directors to impose limits or conditions when giving or reviewing any such authorisation, ensure that only Directors who have no interest in the matter being considered can authorise conflicts, and require the Board to review the register of Directors’ conflicts annually and on an ad-hoc basis when necessary. Any potential conflicts of interest in relation to newly appointed Directors are considered by the Board prior to appointment. These procedures have operated effectively throughout the current financial period.
The Board has established an Audit Committee, a Nomination Committee and a Remuneration Committee to oversee and debate relevant issues and policies outside main Board meetings. Throughout the year, the Chairman 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 supports the Board in fulfilling its responsibilities in relation to financial reporting, monitoring the integrity of the financial statements and other announcements of financial results published by the Group; and reviewing and challenging any significant financial reporting issues, judgements and actions of management in relation to the financial statements. The Audit Committee reviews the effectiveness of the Group’s internal financial control and internal control and risk management systems and the effectiveness of the Group’s Internal Audit function. On behalf of the Board, the Committee manages the appointment and remuneration of the External Auditor and monitors its performance and independence. The Group supports an independent and confidential whistleblowing procedure and the Committee monitors the operation of this facility.
In accordance with the Code, the Board requested that the Audit Committee advise it whether it believes the Annual Report and Accounts, taken as a whole, is fair, balanced and understandable and provides the information necessary for shareholders to assess the Company’s position and performance, business model and strategy.
The Audit Committee’s Terms of Reference reflect this requirement and can be found in Group’s website. A copy may be obtained from the Company Secretary.
The Committee members have been selected to provide the wide range of financial and commercial expertise necessary to fulfil the Committee’s duties and responsibilities. As a qualified chartered accountant, Emer Finnan is considered by the Board to have recent and relevant financial experience, as required by the Code. The Committee is considered by the Board as a whole to have competence relevant to the sector in which the Group operates. Details of the skills and experience of the Directors are contained in the Directors’ biographies on pages 50 and 51 of the 2019Annual Report and Accounts.
The Audit Committee has access to the Group’s finance team, to its Internal Audit function and to its External Auditor and can seek further professional training and advice, at the Group’s cost, as appropriate.
The quorum necessary for the transaction of business by the Committee is two, each of whom must be a non-executive Director. Only members of the Committee have the right to attend Committee meetings, however, during the year to 28 February 2019, Sir Brian Stewart, as a non executive Director (and in his capacity as Chairman until 5 July 2018), Stewart Gilliland, as a non-executive Director (and in his capacity as Chairman from 5 July 2018), Stephen Glancey, Group Chief Executive Officer, Jonathan Solesbury, Group Chief Financial Officer, Richard Holroyd and Jim Clerkin, non-executive Directors, the Head of Internal Audit, Group Finance Director, Group Strategy and Finance Director and representatives from Ernst & Young (“EY”), the External Auditor, were invited to attend meetings. The Committee also meets separately with the Head of Internal Audit and the External Auditor without management being present.
The Company Secretary is Secretary to the Audit Committee.
The Committee is responsible, on behalf of the Board, for reviewing the effectiveness of the Group’s internal controls and risk management systems, including financial, operational and compliance controls.
In order to keep the Committee abreast with latest developments, the Head of Internal Audit reported to each meeting on developments and emerging risks to internal control systems and on the evolution of major risks. In addition, the Committee reviewed reports issued by both Internal Audit and the External Auditor and held regular discussions with the Group Chief Financial Officer, the Head of Internal Audit and representatives of the External Auditor. During the course of these reviews, the Committee has not identified nor been advised of any failings or weaknesses which it has determined to be significant.
The Committee is responsible for monitoring and reviewing the operation and effectiveness of the Internal Audit function including its focus, work plan, activities and resources.
At the beginning of FY2019, the Committee reviewed and approved the Internal Audit plan for the year having considered the principal areas of risk in the business and the adequacy of staffing levels and expertise within the function. During the year, the Committee received regular verbal and written reports from the Head of Internal Audit summarising findings from the work of Internal Audit and the responses from management to deal with the findings.
The Committee monitors progress on the implementation of any action plans arising on significant findings to ensure these are completed satisfactorily and meets with the Head of Internal Audit in the absence of management.
It is the responsibility of the Audit Committee to monitor the performance, objectivity and independence of EY, the External Auditor. In December 2018, the Committee met with EY to agree the audit plan for the year end, highlighting the key financial statement and audit risks, to ensure that the audit was appropriately focused. In addition, EY’s letter of engagement and independence was reviewed by the Committee in advance of the audit.
In May 2019, in advance of the finalisation of the financial statements, the Audit Committee received a report from EY on their key audit findings, which included the key areas of risk and significant judgements referred to above, and discussed the issues with them in order for the Committee to form a judgement on the financial statements. In addition, the Committee considered the Letter of Representation that the External Auditor requires from the Board.
The Committee meets with the External Auditor privately at least once a year to discuss any matters they may wish to raise without management being present.
The Committee obtained feedback on the effectiveness and efficiency of the external audit process from completion of a short questionnaire by each member of the Committee, the Group Chief Financial Officer, the Director of Group Finance, the Group Strategy and Finance Director and applicable senior finance executives across the business. The results were reviewed by the Committee and the Committee concluded that the external audit process had been effective, with areas identified for improvement communicated to EY for action.
The Group has a policy in place governing the provision of non-audit 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:
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.
Details of the amounts paid to Ernst & Young during the year for audit and other services are set out in note 2 to the financial statements in the 2019 Annual Report and Accounts.
The Group has a whistleblowing programme in all of its operations whereby employees can, in confidence, report on matters where they feel a malpractice has taken or is taking place, or if health and safety standards have been or are being compromised. Additional areas that are addressed by this procedure include criminal activities, improper or unethical behaviour and risks to the environment.
The programme allows employees to raise their concerns with their line manager or, if that is inappropriate, to raise them on a confidential basis. An externally facilitated confidential helpline and confidential email facility are provided to protect the identity of employees in these circumstances. Any concerns are investigated on a confidential basis by the Human Resources Department and/or the Company Secretary and feedback is given to the person making the complaint as appropriate via the confidential email facility. An official written record is kept of each stage of the procedure and results are summarised for the Committee.
The Audit Committee is also responsible for ensuring that arrangements are in place for the proportionate independent investigation and appropriate follow up of any concerns which might be raised. In FY2019, no incidences of concern were uncovered.
The Committee has defined Terms of Reference which can be found in the Investor Centre section of the Group’s website at www. candcgroupplc.com.
All members of the Committee are and were, throughout the year under review, considered by the Board to be independent.
No member of the Committee nor any other Director participates in discussions concerning or votes on his or her own re-election or evaluation of his own performance. Details of the skills and experience of the Directors are contained in the Directors’ biographies on pages 50 and 51. Their remuneration is set out in the Remuneration Report.
The quorum necessary for the transaction of business by the Committee is two, each of whom must be a non-executive Director. Only members of the Committee have the right to attend Committee meetings, however, during the year, Stephen Glancey (Chief Executive) and Vincent Crowley, non-executive Director were invited to attend meetings.
The Company Secretary is Secretary to the Committee.
The Board plans for its own succession, with the support of the Committee. The Committee remains focused, on behalf of the Board, on Board succession planning for both Executive and nonexecutive Directors.
The Committee aims to ensure that:
On at least an annual basis each Director’s intentions are discussed with regard to continued service on the Board and their succession is considered in the context of the composition of the overall Board and the corporate governance guidance on non-executive tenure. This transparency allows for an open discussion about succession for each individual, both for short term emergency absences as well as longer terms plans.
During the year, the Committee also considered the composition of the Board and each of its Committees. The Committee continues to actively review the long term succession planning process for Directors to ensure the structure, size and composition (including the balance of skills, experience, independence, knowledge and diversity (including gender, ethnic and social backgrounds)) of the Board and its Committees continues to be effective, thus ensuring appropriate levels of corporate governance and best practice and support for the Company as it pursues its strategy.
As part of its review, the Committee considered the performance and independence of Stewart Gilliland, Jim Clerkin, Vincent Crowley and Emer Finnan, each of them having confirmed their willingness to stand for re-election at the forthcoming AGM.
Having undertaken a performance evaluation, the Committee considered that the performance of each of the non-executive Directors proposed for re-election, being Stewart Gilliland, Jim Clerkin, Vincent Crowley and Emer Finnan, was effective and that they had each demonstrated a strong commitment to their role. The Committee had also undertaken a review of each of Business & Strategy Corporate Governance Financial Statements 61 the non-executive Directors’ other interests and external time commitments, such review being particularly rigorous in the case of Stewart Gilliland as he has served seven years on the Board, and has concluded that each of them is independent in character and judgement and that there are no relationships or circumstances likely to affect (or which appear to affect) his or her judgement. The Committee is also satisfied that each of them continues to be able to devote sufficient time to their role. Stewart Gilliland and Emer Finnan did not participate in the evaluation of his/her own performance or time commitments.
The Committee were satisfied that each of the Directors proposed for re-election had the appropriate balance of skills, experience, independence and knowledge of the Company to enable him or her to discharge the duties and responsibilities of a Director effectively. Accordingly, the Committee recommended to the Board that they each be proposed for re-election as a Director at the forthcoming AGM.
The Board recognises the benefits of diversity. Our Directors come from different backgrounds, nationalities, a wide range of professions and each brings unique capabilities and perspectives to our Board discussions.
We are committed to maintaining a diverse Board. Appointments to the Board and throughout the Company will continue to be made on merit and overall suitability for the role against objective criteria with due regard to the benefits of diversity (including, but not limited to, ethnicity, experience, gender, nationality, age and educational and social backgrounds as well as individual characteristics such as broad life experience).
When recruiting, we require any search agency to have signed up to the “Voluntary Code of Conduct for Executive Search Firms” developed in response to the Davies Report covering Board appointments.
Any future appointments will continue to be made to the Board on merit and with the aim of recruiting Directors who offer the right skills and who can complement the rest of the Board with a view to achieve effective diversity, in its widest sense.
The Committee and the 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 and that all employees get an equal opportunity to achieve their full potential.
Statistical gender diversity employment data for the Company can be found in the Corporate Social Responsibility Report on page 42 of the 2019 Annual Report and Accounts.
The Board additionally undertook an annual review of the Committee’s performance and effectiveness and concluded that the Committee operated effectively.
The Remuneration Committee comprises solely of independent, non-executive Directors. The Chairman is Stewart Gilliland.
The Remuneration Committee meets at least twice a year. During the period under review the Remuneration Committee met six times.
The Remuneration Committee’s terms of reference, which are available on the C&C website, include:
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 Chairman, 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 nonexecutive Directors believe that they are aware of shareholders’ views. In addition, Vincent Crowley, the Senior Independent non-executive Director, from 1 June 2019, will be 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 encourages boards to use the Annual General Meeting to communicate with investors and to encourage their participation. In compliance with the Code, 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.
In compliance with the Code, at the Annual General Meeting, the Chairman 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.
All Directors are expected to attend the Annual General Meeting. The Chairs of the Audit, Nomination and Remuneration Committees are available at the Annual General Meeting to answer shareholder questions, through the Chairman 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.
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 key elements of the internal control system in operation are as follows:
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 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.
