DIRECTORS' STATEMENT OF CORPORATE GOVERNANCE


C&C is incorporated in Ireland and is subject to Irish company law. It has a primary listing on the Irish Stock Exchange (‘ISE’). The Directors are committed to maintaining the highest standards of corporate governance. The Listing Rules of the ISE require every company listed on the Main Securities Market of the ISE to state in its annual report how the principles of the UK Corporate Governance Code published in June 2010 by the Financial Reporting Council (the ‘UK Code’) have been applied and whether the company has complied with all relevant provisions of the UK Code and the Irish Corporate Governance Annex (the ‘Irish Annex’), which implements additional requirements for companies (such as C&C Group) with a primary equity listing on the Main Securities Market of the ISE. Where companies diverge from the provisions of the UK Code or the Irish Annex, the ISE expects them to include explanations that provide a rationale for the divergence. The text of the UK Code and the Irish Annex can be found on the ISE’s website: www.ise.ie.

This Corporate Governance statement describes how the Group applied the principles of the UK Code and the Irish Annex throughout the financial year ended 29 February 2012.

BOARD OF DIRECTORS

Role
The Board is responsible for the oversight, leadership and control of the Group and its long-term success. There is a formal schedule of matters reserved to the Board for decision. This includes approval of Group strategic plans, annual budgets, financial statements, significant capital expenditure items, major acquisitions and disposals, changes to capital structure, Board appointments, and the review of the Group’s corporate governance arrangements and system of internal control. The Board is also responsible for instilling the appropriate culture, values and behaviour throughout the Group.

The roles of the Chairman and the Group Chief Executive Officer are separate with a clear division of responsibility between them, which is set out in writing and which has been approved by the Board. The Board delegates responsibility for the management of the Group through the Group Chief Executive Officer to executive management. The Board also delegates some of its responsibilities to Board Committees, details of which are set out below. The responsibilities of the Chairman are covered in detail on page 38.

The Group Chief Executive Officer has full day-to-day operational and profit responsibility for the Group and is accountable to the Board for all authority delegated to executive management. His overall brief is to execute agreed strategy, to co-ordinate and maintain the continued profitability of the Group and to oversee senior management responsible for the day-to-day running of the business.

Non-executive Directors are expected to constructively challenge management proposals and to examine and review management performance in meeting agreed objectives and targets. In addition, they are expected to draw on their experience and knowledge in respect of any challenges facing the Group and in relation to the development of proposals on strategy.

Individual Directors may seek independent professional advice at the Company’s expense, where they judge it necessary to discharge their responsibilities as Directors. No such professional advice was sought by any Director during the year.

The Group has a policy in place which indemnifies the Directors in respect of certain legal actions taken against them.

Board Composition, Membership and Renewal
The Board considers that, between them, the Directors bring a range of skills, knowledge and experience necessary to provide leadership, control and oversight of the Group and discharge their responsibility to all shareholders. The biographical details of the continuing directors are set out on pages 30 and 31. The Board regards the number of non-executive Directors appointed to the Board as sufficient to ensure satisfactory oversight of the Group’s management and that a Board size of ten Directors is not unwieldy, but at the same time is sufficiently large to enable its Committees to operate without undue reliance on individual nonexecutive Directors. As set out below the Board has an ongoing programme for Board refreshment and renewal, recognising the need for independence and diversity, including gender diversity, on the Board. The Board is, through the Nomination Committee, committed to achieving a greater level of gender diversity on the Board over time and recognises the importance and benefit of gender diversity throughout the Group.

At 29 February 2012, the Board comprised of ten Directors, of whom three were executive and seven non-executive Directors (including the Chairman). On 29 February 2012 John Dunsmore and Liam FitzGerald retired as Directors. Consistent with a commitment to Board refreshment and renewal, Stewart Gilliland and Tony Smurfit were appointed to the Board as non-executive Directors on 17 April, 2012. Consequently, as at the date of this report, the Board is comprised of ten Directors, two of whom are executive and eight of whom are non-executive Directors.

Board Independence
In line with the UK Code, it is Board policy that at least half the Board, excluding the Chairman, shall consist of independent non-executive Directors. The Board reviewed the composition of the Board and determined that John Burgess, Liam FitzGerald (resigned 29 February 2012), John Hogan, Richard Holroyd, Philip Lynch and Breege O’Donoghue were independent. Consequently, as at 29 February 2012, excluding the Chairman, 66% of the C&C Group Board comprised of independent, non-executive Directors. The Board has further determined that the non-executive Directors appointed in April 2012 are also independent. As of the date of this report, excluding the Chairman, 78% of the Board comprised of independent, non-executive Directors. In reaching that determination, the Board considered the principles relating to independence contained in the UK Code, together with the guidance provided by a number of shareholder voting agencies.

The independence of Board members is considered annually. In determining the independence of non-executive Directors, the Board considered the principles relating to independence contained in the UK Code and the guidance provided by a number of shareholder voting agencies. Those principles and guidance address a number of factors that might appear to affect the independence of Directors, including former service as an executive of the Group, extended service to the Board and crossdirectorships. However, they also make clear that a Director may be considered independent notwithstanding the presence of one or more of these factors. This reflects the Board’s view that independence is determined by a Director’s character and judgement. The Board considers that each of the non-executive Directors brings independent judgement to bear. In the case of John Burgess, the Board considered his length of service but was satisfied that his independence is not compromised. As part of this assessment, the Board considered that while John Burgess has served on the Board of the Company or its predecessors since 1999, he has not served for more than 9 years concurrently with the same executive Directors. In the case of Sir Brian Stewart, the Board was satisfied that he was independent on his appointment as referred to below.

Chairman
Sir Brian Stewart has been Chairman of the Group since August 2010. The Chairman is responsible for the efficient and effective working of the Board. He is responsible for ensuring that the Board considers the key strategic issues facing the Group and that the Directors receive accurate, timely, relevant and clear information. He also ensures that there is effective communication with shareholders and that the Board is apprised of the views of the Group’s shareholders. While the Board has determined that Sir Brian Stewart was independent on appointment to the Board, it recognises that previous working relationships with the Group’s senior executives is a consideration in determining independence as set out by the UK Code and by some shareholder voting agencies. Consequently, while the Board was satisfied as to Sir Brian’s independence, he stepped down from his position as a member of the Remuneration Committee on his appointment as Chairman. During the period under review there was no change in the other significant commitments of the Chairman.

Senior Independent Director
Richard Holroyd was appointed Senior Independent Director in July 2007. He is available to shareholders who have concerns for which contact through the normal channels of Chairman, Group Chief Executive Officer or Group Chief Financial Officer, has failed to resolve or for which such contact is inappropriate. He is also available to meet major shareholders on request.

Audit Committee Financial Expert
The Audit Committee has determined that John Hogan, who also chairs the Committee, is the Audit Committee financial expert. He is a qualified chartered accountant and was the managing partner of Ernst & Young in Ireland between 1994 and 2000. He was also a member of the Ernst & Young global board.

Company Secretary
All Directors have access to the Company Secretary, who is responsible to the Board for ensuring that Board procedures are complied with. The Company Secretary is Paul Walker who succeeded Sinead Gillen on 29 June 2011. The appointment and removal of the Company Secretary is a matter for the Board.

Appointment, Retirement and Re-election
The non-executive Directors are engaged under the terms of a letter of appointment, details of which are set out in the Report of the Remuneration Committee on Directors’ Remuneration. Copies of the letters of appointment are available on request from the Company Secretary.

The Company’s Articles of Association require that at least one-third of the Directors subject to rotation shall retire by rotation at the Annual General Meeting in every year. Directors appointed by the Board must also submit themselves for election at the first annual general meeting following their appointment. However, in accordance with the recommendations of the UK Code, the Directors have resolved that they will all retire and submit themselves for election or re-election by the shareholders at the Annual General Meeting this year.

Induction and Development
A comprehensive tailored induction programme is arranged for each new Director. The aim of the programme is to provide the Director with a detailed insight into the Group. The programme involves meeting with the Chairman, Group Chief Executive Officer, Group Chief Financial Officer, Company Secretary and key senior executives. It covers areas such as strategy and development, organisation structure, succession planning, financing, corporate responsibility and compliance, investor relations and risk management. The Board receives regular updates from the external legal and other advisers in relation to regulatory and accounting developments. Throughout the year, Directors meet with key executives and meet with local management teams, and a site visit for all Board Directors, to one of the Group’s production facilities, is usually scheduled annually.

Newly-appointed members of the Audit Committee will meet with the key members of the external audit, internal audit and finance teams. New members of the Remuneration Committee will meet with the Committee’s remuneration consultants in the year of their appointment to the Committee.

External non-executive directorships
The Board believes that there may be benefit if executive Directors accept a non-executive directorship with other companies to broaden their skills, knowledge and experience. The Remuneration Committee determines whether Directors should be permitted to retain any fees paid in respect of such appointments.

Meetings
It is Board policy to meet not less than nine times a year. The Board will also meet at other times as it considers appropriate. The Board usually makes at least one visit a year to one of the operating subsidiaries. During the period under review there were nine scheduled meetings of the Board. Details of Directors’ attendance at these scheduled meetings are set out in the table on page 46. Further meetings took place throughout the year. In addition, a meeting of members of the Board was held without the executive Directors present to provide an opportunity for non-executive Directors and the Chairman to assess their performance, and a further meeting of the non-executive Directors led by the Senior Independent Director was held without the Chairman being present to assess the Chairman’s performance.

The Chairman sets the agenda for each meeting in consultation with the Group Chief Executive Officer and the Company Secretary. The agenda and Board papers, which provide the Directors with relevant information to enable them to fully consider the agenda items in advance, are circulated prior to each meeting. Directors are encouraged to participate in debate and constructive challenge. While Directors are expected to attend all scheduled meetings, in the event a Director is unable to attend a meeting, their view on all agenda items is sought and conveyed to the Chairman in advance of the meeting. In addition, following the meeting, matters discussed and decisions made at the meeting are conveyed to the Director.

Performance evaluation
The Board recognises the importance of a formal and rigorous evaluation of the performance of the Board and its Committees. The Chairman conducts an annual review of corporate governance and the operation and performance of the Board and its Committees. In the year under review the Chairman has completed a detailed review of the operation of the Board, the performance of individual Directors and, within the remit of the Nomination Committee, succession planning, identifying in this process the experience and qualities required by the Group for the future implementation of its strategy.

The Chairman conducts one to one discussions each year with each Director to assess his or her individual performance. Performance is assessed against a number of criteria, including his or her contribution to Board and Committee meetings; time commitments; contribution to strategic developments; and relationships with other Directors and management.

The Senior Independent Director and the other non-executive Directors review the Chairman’s performance and the Board’s performance each year, the results being reported back to the Chairman with recommendations for improvement.

The Board also recognises the need for periodic external evaluation and the UK Code’s new recommendation that such reviews be externally facilitated at least every three years. The Group intends to establish a formal policy and process for external evaluation during the course of FY2013.

Remuneration
Details of remuneration paid to Directors (executive and non-executive) are set out in the Report of the Remuneration Committee on Directors’ Remuneration on pages 47 to 55.

Non-executive Directors are remunerated by way of a Director’s fee. Additional fees are also payable to the Chairman of the Audit Committee, Chairman of the Remuneration Committee and to the Senior Independent Director. Non-executive Directors fees and additional fees payable to Committee Chairman and the Senior Independent Director have not been increased since 2008.

It is Board policy that non-executive Director remuneration does not comprise any performance related element and, therefore, non-executive Directors are not eligible to participate in the Group’s bonus schemes, option plans or share award schemes. Non-executive Directors’ fees are not pensionable and non-executive Directors are not eligible to join any Group pension plans. Executive Directors’ remuneration is inclusive of any Director’s fee.

The report of the Remuneration Committee on Directors’ Remuneration will be presented to shareholders for the purposes of a nonbinding advisory vote at the Annual General Meeting on 27 June 2012. While there is no legal obligation for the Group to put such a resolution to a vote of shareholders at the Annual General Meeting, the Board believes that such a resolution is good practice.

Share ownership and dealing
Details of Directors’ shareholdings are set out on page 54.

The Group has a policy on dealing in shares that applies to all Directors and senior management. This policy adopts the terms of the Model Code as set out in the Listing Rules published by the UK Listing Authority and the Irish Stock Exchange. Under this policy, Directors are required to obtain clearance from the Chairman (or in the case of the Chairman himself, from the Senior Independent Director) before dealing. Directors and senior management are prohibited from dealing in the Company’s shares during designated close periods and at any other time when the individual is in possession of Inside Information (as defined by the Market Abuse (Directive 2003/6/EC) Regulations 2005).

COMMITTEES

The Board has established three permanent committees to assist in the execution of its responsibilities. These are the Audit Committee, the Nomination Committee and the Remuneration Committee. The current membership of each committee is set out on page 30. Attendance at meetings held is set out in the table on page 46. Ad-hoc committees are formed from time to time to deal with specific matters.

Each of the permanent Board Committees has terms of reference under which authority is delegated to them by the Board. These terms of reference are available on the Company’s website www.candcgroupplc.com. Minutes of all Committee meetings are circulated to the entire Board.

The Chairman of each committee attends the Annual General Meeting and is available to answer questions from shareholders.

Audit Committee
The Audit Committee comprises only independent, non-executive Directors. The members during the year were John Hogan (Chairman), Liam FitzGerald and Richard Holroyd. Mr FitzGerald ceased to be a member of the committee upon his resignation as a Director on 29 February 2012. Tony Smurfit joined the Committee on 17 April 2012.

As set out on page 38, the Audit Committee has determined that John Hogan, who also chairs the Committee, is the Audit Committee financial expert.

It meets a minimum of four times a year. During the period under review it met eight times. Attendance at meetings held is set out in the table on page 46.

The Group Chief Financial Officer attends Audit Committee meetings as appropriate, while the internal auditor and the external auditor attend as required and have direct access to the Audit Committee Chairman. The Head of Finance is the secretary of the Audit Committee.

The Audit Committee’s responsibilities include:

  • monitoring the integrity, truth and fairness of the financial statements of the Group, including the annual report, interim report, interim management statements, preliminary results and other formal announcements relating to the Group’s financial performance;
  • reviewing the adequacy and effectiveness of the Group’s internal financial controls and risk management systems;
  • reviewing the effectiveness of the Group’s internal audit function;
  • reviewing the adequacy and security of the Group’s arrangements for its employees raising concerns, its procedures for detecting fraud and the Group’s systems and controls for the prevention of bribery
  • making recommendations to the Board in relation to the appointment and removal of the Group’s external auditor;
  • evaluating the performance of the external auditor including their independence and objectivity;
  • reviewing the annual internal and external audit plans and reviewing the effectiveness and findings of the external audit with the external auditor;
  • ensuring compliance with the Group’s policy on the provision of non-audit services by the external auditor.


The Audit Committee discharged its obligations during the year as follows:

  • the Audit Committee reviewed the preliminary results announcement and the annual report and financial statements for the year ended 28 February 2011 and reviewed the post-audit report from the external auditor identifying any accounting or judgemental issues requiring its attention;
  • the Audit Committee reviewed the Financial Report for the six months ended 31 August 2011 prior to its release in October 2011;
  • the Audit Committee reviewed the Interim Management Statements issued in June 2011 and January 2012;
  • the Audit Committee considered whether or not to recommend the re-appointment of the external auditor;
  • the Audit Committee reviewed the external audit plan presented by the external auditor in advance of the audit for the year ended 29 February 2012;
  • the Audit Committee approved the annual internal audit plan and received and reviewed internal audit reports including the annual assessment of internal control and other work described below;
  • the Audit Committee received an external review of the pensions schemes;
  • the Audit Committee adopted updated Terms of Reference in line with the recommendations of the UK Code.


The terms of reference of the Audit Committee require it to conduct an annual assessment of internal control. The risks facing the Group are reviewed regularly by the Audit Committee with the executive management. 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.

Accordingly through the process outlined above, the Board confirms that it has conducted a review of the internal control systems in operation.

The Group’s internal auditor reports to the Audit Committee and the Audit Committee has approved his terms of reference. He is engaged on a programme of work, which includes, inter alia, maintaining the Group’s risk register, examining the fundamental controls of the Group assessing anti-bribery and corruption risk and business continuity risk.

The Group has a policy in place governing the conduct of non-audit work by the external auditor. Under this policy the auditor is prohibited from performing services where the auditor:

  • may be required to audit his/her own work;
  • would participate in activities that would normally be undertaken by management;
  • is remunerated through a “success fee” structure;
  • acts in an advocacy role for the Group.


Other than the above, the Group does not impose an automatic ban on the external auditor undertaking non-audit work. The external auditor is permitted to provide non-audit services that are not, or are not perceived to be, in conflict with auditor independence, provided it has the skill, competence and integrity to carry out the work and are 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 in non-audit work must be pre-approved by the Audit Committee or entered into pursuant to pre-approved policies and procedures established by the Audit Committee.

Details of the amounts paid to the external auditor during the year for audit and other services are set out in note 2 to the financial statements on pages 80 and 81. 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 be capped at a maximum of 100% of audit fees in any one year. During the year the Audit Committee gave approval to the auditor providing non-audit advisory services principally in relation to tax.

Nomination Committee
The Nomination Committee is chaired by the Group Chairman and its constitution requires it to consist of a majority of independent, non-executive Directors. The members during the year were Sir Brian Stewart (Chairman), John Burgess, Philip Lynch and Breege O’Donoghue.

It meets a minimum of twice a year and met three times in the period under review. Attendance at meetings held is set out in the table on page 46.

The Nomination Committee’s responsibilities include:

  • reviewing the structure, size and composition (including the skills, knowledge and experience) required of the Board and making recommendations regarding any changes in order to ensure that the composition of the Board and its Committees is appropriate to the Group’s needs;
  • overseeing succession planning for the Board and senior management and the leadership needs of the organisation;
  • establishing processes for the identification of suitable candidates for appointment to the Board;
  • making recommendations to the Board on membership of Board Committees.


The Nomination Committee is empowered to use the services of independent consultants to facilitate the search for suitable candidates for appointment as non-executive Directors.

During the period under review the Nomination Committee met three times. The Nomination Committee considered:

  • immediate succession requirements for non-executive directors. The Nomination Committee approved the appointment of two non-executive directors as described below.
  • immediate succession requirements for executive directors. The Nomination Committee approved the appointment of Stephen Glancey as Group Chief Executive Officer and the appointment of Kenny Neison as Group Chief Financial Officer.
  • the appointment of senior managers including the appointment of a managing director of the International Division.
  • further succession planning in respect of non-executives, recognising the need for ongoing Board refreshment and renewal and the need for independence and diversity on the Board.
  • the strength of the leadership qualities amongst the team supporting the executive Directors.
  • the adoption of updated Terms of Reference in line with the recommendations of the UK Code.


During the period under review the Nomination Committee approved the appointment of two new independent, non-executive Directors. Candidates were identified through a variety of methods. The Nomination Committee, via the Chairman and the Group HR Director, engaged Spencer Stuart, external search and recruitment agents, to identify potential candidates and to assist in selecting and recommending candidates. Informal industry contacts were also used. The shortlisted candidates met with the Chairman and the Group Chief Executive Officer prior to appointment. The candidates were appointed on the strength of their experience in the beverage and FMCG sectors and their international experience.

Remuneration Committee
The Remuneration Committee comprises solely of independent, non-executive Directors. The members during the year were Philip Lynch (Chairman), Liam FitzGerald and Richard Holroyd. Mr FitzGerald ceased to be a member of the Remuneration Committee upon his resignation as a Director on 29 February 2012. Stewart Gilliland joined the Remuneration Committee on 17 April 2012.

The Remuneration Committee meets at least twice a year. During the period under review the Remuneration Committee met seven times. Attendance at meetings held is set out in the table on page 46.

The Remuneration Committee’s responsibilities include:

  • making recommendations to the Board on the Group’s policy for executive remuneration;
  • determining the remuneration of the Chairman, the executive Directors, the Company Secretary and senior management;
  • monitoring the level and structure of remuneration for senior management and trends across the Group;
  • approving the design and targets of any performance-related pay schemes and the total annual payments made under such schemes;
  • reviewing the design of all share incentive plans;
  • approving any grant of options or awards under the Executive Share Option Scheme, the Long Term Incentive Plan (Part I), the Joint Share Ownership Plan and other share plans;
  • overseeing any major changes in employee benefits structures throughout the Group;
  • overseeing the preparation of the Report of the Remuneration Committee on Directors’ Remuneration.


The Remuneration Committee considered

  • the determination of whether performance conditions under share schemes and bonus scheme were achieved;
  • the granting of share options under the C&C Executive Share Option Schemes;
  • the adoption of new performance conditions under the Long Term Incentive Plan (Part I) and the recommencing of awards under the Plan;
  • the adoption of a deferred bonus scheme under the Long Term Incentive Plan (Part II);
  • the introduction of Irish and UK partnership and matching share schemes under the C&C All Employee Profit Sharing Scheme and the introduction of a related overseas scheme;
  • the granting of awards under the C&C Recruitment and Retention Plan;
  • the remuneration of the executive directors following the directorate change;
  • the remuneration of members of senior management;
  • the adoption of updated Terms of Reference in line with the recommendations of the UK Code.

COMMUNICATIONS WITH SHAREHOLDERS

The Group attaches considerable importance to shareholder communications and has an established investor relations programme.

There is regular dialogue with institutional investors with presentations given to investors at the time of the release of Group first half and full year financial results and when other significant announcements are made. Interim Management Statements were issued in June 2011 and January 2012. The Board is briefed regularly on the views and concerns of institutional shareholders.

The Group’s website, www.candcgroupplc.com, provides the full text of the Annual Report and financial statements, the interim report and other releases. News releases are also made available immediately after release to the Stock Exchange. Presentations given to investors and at conferences are also made available on the website.

General Meetings
The Company operates under the Companies Acts 1963 to 2009. These Acts provide for two types of shareholder meetings: the annual general meeting (‘AGM’) with all other meetings being called extraordinary general meetings (‘EGM’).

The Company must hold a general meeting in each year as its AGM in addition to any other general meetings held in that year. Not more than 15 months may elapse between the date of one AGM and the next. An AGM was held on 29 June 2011, and this year’s AGM will be held on 27 June 2012. The Directors may at any time call an EGM. EGMs shall also be convened on the requisition of members holding not less than five per cent of the voting share capital of the Company.

The notice period for an AGM and an EGM to consider any special resolution (a resolution which requires a 75% majority vote, not a simple majority) is 21 days. The Company may call any other general meeting on 14 days’ notice subject to obtaining shareholder authority to do so. The Directors consider that it is in the interests of the Company to retain this flexibility, and intend to seek annually such authority. As a matter of policy, the 14 day notice period will only be utilised where the Directors believe that it is merited by the business of the meeting and the circumstances surrounding the business in question.

In accordance with UK Code recommendations, the annual report (if required) and the notice of annual general meeting are sent to shareholders at least 20 working days before the AGM.

No business shall be transacted at any general meeting unless a quorum is present at the time when the meeting proceeds to business. Three members present in person or by proxy and entitled to vote shall be a quorum.

Only those shareholders registered on the Company’s register of members at the prescribed record date, being a date not more than 48 hours before the general meeting to which it relates, are entitled to attend and vote at a general meeting.

The Acts require that resolutions of the general meeting be passed by the majority of votes cast (ordinary resolution) unless the Acts or the Company’s Articles of Association provide for 75% majority of votes cast (special resolution). The Company’s Articles of Association provide that the Chairman has a casting vote in the event of a tie.

Any shareholder who is entitled to attend, speak and vote at a general meeting is entitled to appoint a proxy to attend, speak and vote on his behalf. A proxy need not be a member of the Company.

At meetings, unless a poll is demanded, all resolutions are determined on a show of hands, with every shareholder who is present in person or by proxy having one vote. On a poll every shareholder who is present in person or by proxy shall have one vote for each share of which he/she is the holder. A shareholder need not cast all votes in the same way. At the meeting, after each resolution has been dealt with, details are given of the level of proxy votes lodged for and against that resolution and also the level of votes withheld on that resolution.

The Company’s AGM gives shareholders the opportunity to question the Directors. The Company must answer any question a member asks relating to the business being dealt with at the meeting unless: answering the question would interfere unduly with the preparation for the general meeting or the confidentiality and business interests of the Company; the answer has already been given on a website in the form of an answer to a question; or it appears to the Chairman of the meeting that it is undesirable in the interests of good order of the meeting that the question be answered.

The business of the Company is managed by the Directors who may exercise all the powers of the Company unless they are required to be exercised by the Company in general meeting. Matters reserved to shareholders in general meeting include the election of directors; the payment of dividends; the appointment of the external auditor; amendments to the articles of association; measures to increase or reduce the share capital; and the authority to issue shares.

MEMORANDUM AND ARTICLES OF ASSOCIATION

The Company’s Memorandum of Association sets out the objects and powers of the Company. The Articles of Association detail the rights attaching to each share class; the method by which the Company’s shares can be purchased or reissued; the provisions which apply to the holding of and voting at general meetings; and the rules relating to the Directors, including their appointment, retirement, re-election, duties and powers. Further details in relation to the purchase of the Company’s own shares are included in the Directors’ Report.

CORPORATE RESPONSIBILITY

As part of its overall remit of ensuring that effective risk management policies and systems are in place, the Board examines the significance of environmental, social and governance (ESG) matters to the Group’s business and it has ensured that the Group has in place effective systems for managing and mitigating ESG risks. It also examines the impact that such risks may have on the Group’s short and long-term value, as well as the opportunities that ESG issues present to enhance value. The Board receives the necessary information to make this assessment in regular reports from the executive management.

Corporate responsibility is embedded throughout the Group. Group policies and activities are summarised on pages 24 to 29 and the Group’s corporate responsibility report is available on the Group’s website www.candcgroupplc.com.

INTERNAL CONTROL

The Board has overall responsibility for the Group’s system of internal control, for reviewing its effectiveness and for confirming that there is a process for identifying, evaluating and managing the significant risks affecting the achievement of the Group’s strategic objectives. The process which has been in place for the entire period accords with the Turnbull Guidance (revised guidance published in October 2005) and involves the Board considering the following:

  • the nature and extent of the key risks facing the Group;
  • the likelihood of these risks occurring;
  • the impact on the Group should these risks occur;
  • the actions being taken to manage these risks to the desired level.


The key elements of the internal control system in operation are as follows:

  • clearly defined organisation structures and lines of authority;
  • corporate policies for financial reporting, treasury and financial risk management, information technology and security, project appraisal and corporate governance;
  • annual budgets for all operating units, identifying key risks and opportunities;
  • monitoring of performance against budgets on a weekly basis and reporting thereon to the Board on a periodic basis;
  • an internal audit function which reviews key business processes and controls; and
  • an audit committee which approves plans and deals with significant control issues raised by internal or external audit.


This system of internal control can only provide reasonable, and not absolute, assurance against material misstatement or loss.

The terms of reference of the Audit Committee require it to review the adequacy and effectiveness of the Group’s internal financial controls and risk management systems. The risks facing the Group are reviewed regularly by the Audit Committee with the executive management. 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 Group Finance with oversight from the Audit Committee. The key features of the Group’s internal control procedures with regard to the preparation of consolidated financial statements are as follows:

  • the review of each operating division’s period end reporting package by the Group finance function;
  • the oversight, review and validation of consolidation journals by the Group Chief Financial Officer;
  • the challenge and review of the financial results of each operating division with the management of that division by the Group Chief Financial Officer;
  • the review of any internal control weaknesses highlighted by the external auditor, by the Group Chief Financial Officer, Head of Internal Audit and the Audit Committee; and the follow up of any critical weaknesses to ensure issues highlighted are addressed.

The Directors confirm that, in addition to the monitoring carried out by the Audit Committee under its terms of reference, they have reviewed the effectiveness of the Group’s risk management and internal control systems up to and including the date of approval of the financial statements. This 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.

GOING CONCERN

The principal risks and uncertainties facing the Group are set out in this report on pages 33 and 34. The financial position of the Group, its cash flows, liquidity position and borrowing facilities are set out are set out in the Group Chief Financial Officer’s Review on pages 18 to 23. A description of the business of the Group is set out in the Group Chief Executive Officer’s Review and the Operations Review on pages 6 to 17.

An explanation of the basis on which the Group generates and preserves value over the longer term (the business model) and the strategy for delivering its objectives are set out in the Group Chief Executive Officer’s review on pages 6 to 9. A statement of the Group’s strategy is set out on pages 6 to 9. The Group’s long term strategy is to build a sustainable cider-led multi-beverage business through a combination of organic growth and selective acquisitions. The Group’s business model seeks growth through brand-market combination combining brand investment with a focus on local markets.

The Group has significant revenues, a large number of customers and suppliers across different geographies, and considerable financial resources. For these reasons, the Directors have a reasonable expectation that the Company, and the Group as a whole, have adequate resources to continue in operational existence for the foreseeable future. Consequently they continue to adopt the going concern basis in preparing the financial statements.

ATTENDANCE AT MEETINGS


Attendance at scheduled Board meetings and Board committee meetings during the year was as follows:

Scheduled
Board
Meetings
Audit
Committee
Meetings
Nomination
Committee
Meetings
Remuneration
Committee
Meetings
Sir Brian Stewart 9/9 3/3
John Burgess 7/9 2/3
John Dunsmore 9/9
Liam FitzGerald 6/9 5/8 5/7
Stephen Glancey 9/9
John Hogan 9/9 8/8
Richard Holroyd 9/9 8/8 7/7
Philip Lynch 9/9 3/3 7/7
Kenny Neison 9/9
Breege O’Donoghue 7/9 2/3


In the above table the numerator in each fraction represents the number of meetings actually attended by each Director in respect of the Board and each Board committee of which he or she was a member, whilst the denominator represents the number of such meetings that the Director was scheduled to attend.

In addition, the non-executive Directors including the Chairman met to evaluate the performance of the executive Directors, and the non-executive Directors, led by the Senior Independent Director, without the Chairman present, met to evaluate the performance of the Chairman. Several ad hoc meetings were held during the year for share allotment and other administrative matters in accordance with the Board’s rules and procedures, which were attended by a quorum of the Board.

COMPLIANCE STATEMENT

The Group has complied with the provisions of the UK Code and Irish Annex throughout the period under review.


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