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Corporate Governance Framework

The Corporate Governance report forms part of the Directors’ report from the annual report for the year end 31 December 2015.

Introduction

This report explains key features of the Company’s governance structure to provide a greater understanding of how the main principles of the UK Corporate Governance Code, published in 2014 by the Financial Reporting Council (‘the Code’), have been applied, and to highlight areas of focus during the year. The report also includes items required by the Disclosure and Transparency Rules. A copy of the Code can be obtained at www.frc.org.uk.

 

Compliance with the UK Corporate Governance Code

The Company has complied with the provisions of the Code in this financial year, except with Rule A.4.1 as the Company had no Senior Independent Director between May and November 2015 while the Board was being restructured after the former Chairman Jack Keenan retired.

Governance Overview

The Board is collectively responsible to the shareholders for the long-term success of the Company. The Board has delegated certain responsibilities to Board Committees to assist it with discharging its duties. The Board Committees play an essential role in supporting the Board to implement its vision and strategy, and to provide focused oversight of key aspects of the business. The full terms of reference for each committee are available on the Committees page.

Requirements of the Listing Rules

The following table provides references to where the information required by Listing Rule 9.8.4R is disclosed:

Listing Rule requirement Location
A statement of the amount of interest capitalised during the period under review, and details of any related tax relief. Not applicable
Publication of unaudited financial information, profit forecast and profit estimates. Directors' report pages 85 to 86
Details of any long-term incentive scheme established in the past year specifically to recruit or retain an individual Director. No such scheme
Details of any arrangements under which a Director has waived emoluments, or agreed to waive any future emoluments, from the company. No such waivers
Details of any non pre-emptive issues of equity for cash. No such share allotments
Details of any non pre-emptive issues of equity for cash by any unlisted major subsidiary undertaking. No such share allotments
Details of parent participation in a placing by a listed subsidiary. No such participations
Details of any contract of significance in which a Director is or was materially interested. No such contracts
Details of any contract of significance between the Company (or one of its subsidiaries) and a controlling shareholder. No such contracts
Details of waiver of dividends by a shareholder. Not applicable
Board statement in respect of relationship agreement with the controlling shareholder. No such agreements
   

How the Board Works

The Board

The Company is led and controlled by the Board. The names, responsibilities and details of the current Directors appointed to the Board are set out on the Management page. The Board agrees the strategic direction and governance structure that will help achieve the long-term success of the Company and deliver shareholder value. The Board takes the lead in areas such as strategy, financial policy and ensuring the Company maintains a sound system of internal control. The Board’s full responsibilities are set out in the Matters Reserved for the Board.

Role of the Chairman

The Board is chaired by David Maloney, a Non-Executive Director who met the independence criteria in the Code on his appointment. David Maloney replaces Jack Keenan, who retired on 18 May 2015. It is the Chairman’s duty to lead the Board and to ensure Directors have sufficient resources available to them to fulfil their statutory duties. The Chairman is responsible for setting the Board’s agenda, ensuring adequate time is available for discussion of all agenda items and ensuring a particular focus on strategic issues.

The Chairman promotes a culture of openness and debate by facilitating the effective contribution of Non-Executive Directors in particular, and by encouraging constructive relations between Executive and Non-Executive Directors.

Role of the Chief Executive Officer (CEO)

Chris Heath is the Group Chief Executive Officer (CEO). Through delegation from the Board, he is responsible for executive management of the Group, including the implementation of the Group’s strategic objectives. In fulfilling his duties, the Chief Executive Officer is supported by the Senior Management Team, whom he also leads (biographies for the Senior Management Team can be found on the Board and management page).

Interaction between the Chairman and the CEO

The roles of the Chairman and the CEO are separate, with a distinct division of responsibilities.

The partnership between David Maloney and Chris Heath is based on mutual trust and is facilitated by regular contact between the two. The separation of authority enhances independent oversight of the executive management by the Board and helps to ensure that no one individual on the Board has unfettered authority.

Role of the Senior Independent Director

Following David Maloney’s change in role to Chairman in May 2015, Andrew Cripps was appointed as the Senior Independent Director (SID) in November 2015. Andrew is available to shareholders if they have concerns that the normal channels of Chairman, CEO or other Executive Directors have failed to resolve, or for which such channels of communication are
inappropriate. The SID also acts as an internal sounding board for the Chairman, and serves as intermediary for the other Directors, with the Chairman, when necessary. While there were no requests from shareholders or Directors for access to the SID during the reporting period, the role of the SID is considered to be an important check and balance in the Group’s governance structure. In accordance with the Code, neither the Chairman nor the SID are employed as executives of the Group.

Non-Executive Director Independence

The Board considers and reviews each Non-Executive Director’s independence on an annual basis, as part of the Directors’ performance evaluation. In carrying out the review, consideration is given to factors such as their character, judgement, commitment and performance on the Board, and relevant committees, and their ability to provide objective challenge to management. The Board has considered the findings from the Board evaluation exercise and reviewed the independence of each Non-Executive Director. The Board is of the view that all were, and continue to be, independent in accordance with the provisions of the Code.

 

Board Meeting Attendance

Table of Board Attendance

During the year ended 31 December 2015, there were nine scheduled Board meetings. The table below summarises the attendance of the Directors.

Director Meetings eligible to attend Meetings attended
Jack Keenan* 5 5
Chris Heath 9 9
Lesley Jackson 9 9
David Maloney 9 9
Andrew Cripps 9 8
John Nicolson 9 9
Mirek Stachowicz** 2 2

* Retired as a Director on 18 May 2015.
** Appointed as a Director on 9 November 2015.

Where Directors are unable to attend meetings, they receive the papers scheduled for discussion at the relevant meetings, giving them the opportunity to raise any issues and give any comments to the Chairman in advance of the meeting.

The Board delegates authority to its Committees to carry out certain tasks on its behalf, so that it can operate efficiently and give the right level of attention and consideration to relevant matters. The composition and role of each Committee is summarised below.

Board Composition, Qualification and Independence

The Board is committed to high standards of corporate governance and, as such, its composition, members’ experience, balance of skills and effectiveness are regularly reviewed to ensure the right mix of people on the Board and its committees. Following the retirement of Jack Keenan on 18 May 2015 and the appointment of Mirek Stachowicz on 9 November 2015, the Board continues to comprise six Directors: a Chairman (who, for the purposes of the Code, was independent on appointment); a Senior Independent Non-Executive Director; two Independent Non-Executive Directors; and two Executive Directors. The Directors have a wide range of skills and experience including expertise in the food and drinks industry, within Europe and beyond.

Appointment & Tenure

All Non-Executive Directors, including the Chairman, serve on the basis of letters of appointment that are available for inspection at the Company’s registered office. The letters of appointment set out the expected time commitment of Non- Executive Directors who, on appointment, undertake that they will have sufficient time to meet what is expected of them.

The Executive Directors’ service contracts are also available for inspection at the Company’s registered office.

The Company does not place a term limit on a Director’s service, as all continuing Directors will present themselves for annual re-election by shareholders at the Company’s Annual General Meetings (AGMs).

Director Induction and Training

The Chairman, with the support of the Company Secretary, is responsible for the induction of new Directors and the ongoing development of all Directors. New Directors receive a full, formal and tailored induction on joining the Board, designed to provide an understanding of the Group’s business, governance and key stakeholders. The induction process includes site visits, meetings with key individuals, and briefings on key business, legal and regulatory issues facing the Group.

As the internal and external business environment changes, it is important to ensure the Directors’ skills and knowledge are refreshed and updated regularly. Accordingly, the Chairman, with the assistance of the Company Secretary, ensures that regular updates on corporate governance, regulatory and technical matters are provided to Directors at Board meetings. Operational site visits and meetings with senior management in local teams were also organised during the year. In this way, Directors keep their skills and knowledge relevant so as to enable them to continue to fulfil their duties effectively.

Information and support available to Directors

All Board Directors have access to the Company Secretary, who advises them on Board and governance matters.

The Chairman and the Company Secretary work together to ensure Board papers are clear, accurate, delivered in a timely manner to Directors, and of sufficient quality to enable the Board to discharge its duties. As well as the support of the Company Secretary, there is a procedure in place for any Director to take independent professional advice at the Company’s expense in the furtherance of their duties, where considered necessary.

Director re-election

In accordance with the Code and the Directors’ letters of appointment, the Directors will put themselves forward for annual re-election. Following recommendations from the Nomination Committee, the Board considers that all Directors continue to be effective, committed to their roles and to have sufficient time available to perform their duties. Accordingly, all Directors will seek re-election at the Company’s forthcoming AGM.

Directors’ Conflicts of Interest

Directors have a statutory duty to avoid situations in which they have, or may have, interests that conflict with those of the Board, unless that conflict is first authorised by the Board. This includes potential conflicts that may arise when a Director takes up a position with another company. The Company’s articles allow the Board to authorise such potential conflicts, and there is a procedure in place to deal with any actual or potential conflict of interest. The Board deals with each appointment on its individual merit, and takes into consideration all relevant circumstances. All potential conflicts approved by the Board are recorded in an Interests Register, which is reviewed by the Board at least quarterly to ensure the procedure is working effectively.

Board Evaluation and Effectiveness

The effectiveness and performance of the Board is vital to our continuing success. An internal evaluation of the performance of the Board, its Committees and the Chairman was carried out during the year. The process of evaluating the performance was undertaken by the Company Secretary under the direction of the Chairman. A tailored, high-level questionnaire was distributed for the Directors to complete. This was structured to provide Directors with an opportunity to express their views about:

  • the performance of the Board and its committees, including how the Directors work together as a whole;
  • the balance of skills, experience, independence and knowledge of the Directors; and
  • individual performance, and whether each Director continues to make an effective contribution.

Following evaluation, it was agreed that all Directors contribute effectively, demonstrate a high level of commitment to their role, and together provide the skills and experience that are relevant and necessary for the leadership and direction of the Company.

The responses to the evaluation of the Board and its Committees were reviewed with the Chairman and considered by the Board. The results of the evaluation indicated that the Board is working well and that there are no significant concerns among the Directors about its effectiveness. It was generally felt that the actions agreed as a result of the previous year’s evaluation had been progressed. These were as expected in a newly floated company such as non-executive knowledge of the business operations, quality and details of Board materials, greater emphasis on strategy, and increased focus on risk management and internal control. The actions arising from the 2015 evaluation followed a similar theme, but with no significant concerns.

The results of the evaluation of the Chairman’s performance were considered by the SID and were discussed with the Chairman at a separate one-to-one meeting. The performance of individual Directors was evaluated by the Chairman, with input from the Committee Chairmen and other Directors. For 2016, the Board will commission an independent external evaluation.

 

Shareholder Engagement

Primary responsibility for shareholder relations rests with the Chief Financial Officer, Lesley Jackson. She ensures there is effective communication with shareholders on matters such as governance and strategy, and is responsible for ensuring the Board understands the views of major shareholders on such matters.

As part of a comprehensive investor relations programme, formal meetings with investors are scheduled to discuss the Group’s interim and final results. In the intervening periods, the Company continues its dialogue with the investor community by meeting key investor representatives, attending investment conferences and holding investor roadshows.

During the year, the Chief Financial Officer, CEO and the Chairman have met with a number of shareholders and potential shareholders. External presentations are posted on the Company’s website in the Investors section.

The Chairman also met with the Company’s largest shareholders following his appointment, and again following the Company’s review of expectations in November; he is always available to meet individual shareholders on request. In addition, he is available to meet shareholders at the Company’s Annual General Meeting.

Annual General Meeting (“AGM”)

The Company’s AGM will take place at 11.00am on Tuesday, 17 May 2016 at the offices of Nomura at One Angel Lane, London, EC4R 3AB. All shareholders have the opportunity to attend and vote, in person or by proxy, at the AGM. The notice of the AGM can be found on the AGM page, and in a booklet that is being issued at the same time as this Report. The Notice of the AGM sets out the business of the meeting and an explanatory note on all resolutions. Separate resolutions are proposed in respect of each substantive issue.

The AGM is the Company’s principal forum for communication with private shareholders. In addition to the Chairman of the Board, the senior management will be available to answer shareholders’ questions at the AGM.

 

Committees

The Company has established an Audit Committee, a Nomination Committee, a Remuneration Committee and a Disclosure Committee. The Board delegated specific responsibilities to these Committees. The role and responsibilities of each Board Committee are set out in formal Terms of Reference, which are available on the Company’s website. The Board Committees make recommendations to the Board as they see fit, as contemplated by their Terms of Reference.

 

Disclosure Committee

The Committee is chaired by David Maloney (Chairman), and its members are Chris Heath (CEO), Lesley Jackson (CFO) and Elisa Gomez de Bonilla (General Counsel).

Role of the Disclosure Committee

The Disclosure Committee assists the Board in discharging its responsibilities for the identification of ‘inside information’ and makes recommendations about how and when the Group should disclose such information. In doing so, the Committee considers all relevant transactions, projects and other circumstances that could potentially give rise to insider information. The Committee is also responsible for analysing market expectations and rumours relating to the Group’s performance, and for monitoring the materiality of any variance between the Group’s performance and its own forecasts.

Activity of the Disclosure Committee

During the year ended 31 December 2015, the Disclosure Committee discussed matters by email, especially as regards share dealings of permanent insiders and persons discharging managerial responsibilities (PDMRs). No meeting as such was required during 2015 as the full Board was present when the necessary disclosures were issued in 2015.

 

Internal Controls

Risk Management and Internal Control

The Board recognises its responsibility to present a balanced and understandable assessment of the Group’s position and prospects, and has responsibility for ensuring that management maintain an effective system of risk management and internal control, and for reviewing its effectiveness. Such a system is designed to manage rather than eliminate the risk of failure to achieve business objectives, and can only provide reasonable, and not absolute, assurance against material misstatement or loss. As part of this process, the Board carried out a robust assessment of the principal risks facing the Group, including those that would threaten the Group's business model, future performance, solvency and liquidity.

Internal Control Framework

We have a clear framework for identifying, evaluating and managing risk faced by the Group on an ongoing basis, both at an operational and strategic level, which has been in place for the year under review and up to the date of this report, and which accords with ‘Guidance on Risk Management, Internal Control and Related Financial and Business Reporting’ issued by the Financial Reporting Council (FRC). Our risk identification and mitigation processes have been designed to be responsive to the constantly changing environment. Our internal control process starts with identifying risks, compliance matters and other issues at a local level in each of the Company’s markets, and then consolidates it at a Group level at the Board. We do this through routine reviews carried out by process owners and facilitated by relevant dedicated, specialist teams. We record risks in our risk registers, assess the implications and consequences for the Group, and determine the likelihood of occurrence. The Group’s risk register is subject to regular review and scrutiny by the Board, as well as by the Audit Committee as regards the financial risks. Appropriate action is taken to manage and mitigate the risks identified.

The main features of the Group’s internal control and risk management systems in relation to the process for preparing consolidated accounts include:

  • Organisational structure, delegations of authority and reporting lines
  • Group accounting and control procedures, with a centralised Group finance function that provides direction and support to market finance teams as well as managing the Group consolidation and reporting requirements
  • Budgetary process and financial review cycle, with a quarterly review of annual budget, business performance and assessment of risks
  • Risk management through monitoring and maintenance of a risk register for each business unit
  • Capital expenditure control
  • Internal Audit regular reports on controls
  • Competence and integrity of our personnel

Effectiveness of Internal Controls

The Board has reviewed the effectiveness of our risk management and internal control process, including financial reporting, to ensure it remains robust. The review covered all material controls, including financial, operational and compliance controls, in the financial period to 31 December 2015 and the period to the approval of this Annual Report & Accounts.

David Maloney

Chairman
10 March 2016