The Company has complied with the provisions of the Code in this financial year, with the exception of Rule B1.2, as the Company did not have at least half the Board comprising of Independent NEDs between April and October 2016; and C3.1 and D3.1 as the Company did not have at least three Independent NEDs on the Audit Committee and Remuneration Committee between April and October 2016. The number of independent NEDs decreased from three to two in April 2016, when Mirek Stachowicz (formerly Independent NED) began service as Interim CEO. The company commenced a process of recruiting independent NEDs and Tomasz Blawat, Diego Bevilacqua and Mike Butterworth were appointed in October 2016.

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.

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

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 NED who met the independence criteria in the Code on his appointment. 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 NEDs in particular, and by encouraging constructive relations between Executive Directors and NEDs.

Role of the Chief Executive Officer (CEO)

Mirek Stachowicz is the CEO. Mirek replaced Chris Heath, who retired in April 2016. 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 CEO 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 Mirek Stachowicz 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 (SID)

Following Andrew Cripps’ resignation in October 2016, John Nicolson was appointed as the SID in October 2016. John 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 (NED) Independence

The Board considers and reviews each NED’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 external Board evaluation exercise and reviewed the independence of each NED. The Board is of the view that all were and continue to be, independent in accordance with the provisions of the Code, with the exception of Randy Pankevicz, who is considered non-independent. His status does not preclude him from making a full contribution to the Board. He has participated in all Board and Board Committee meetings.

Table of Board Attendance

During the year ended 31 December 2016, there were nine scheduled Board meetings. The table below summarises the attendance of the Directors.

¹Retired as a Director on 19 April 2016
²Resigned as a Director on 24 October 2016
³Appointed as a Director on 23 May 2016
⁴Appointed as a Director on 23 May 2016, passed away on 21 January 2017
⁵Appointed as a Director on 24 October 2016

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 Chris Heath on 18 April 2016 and the appointment of Mirek Stachowicz as CEO on 10 August 2016 (having acted as Interim CEO since April 2016); the appointment of Alberto da Ponte (passed away on 21 January 2017) and Randy Pankevicz on 23 May 2016; the resignation of Andrew Cripps and the appointment of Mike Butterworth, Diego Bevilacqua and Tomasz Blawat on 24 October 2016, the Board now comprises eight Directors: a Chairman (who, for the purposes of the Code, was independent on appointment); a SID; three Independent NEDs; one Non-Independent NED 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.

All NEDs, 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 NEDs 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 Company, 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.

In the second half of the year, the Company commissioned Seamus Gillen of Value Alpha Limited to conduct an independent, external evaluation of its Board. The evaluation was conducted according to the guidance in the UK Corporate Governance Code. Neither Seamus Gillen nor Value Alpha Limited have any other connection with the Company.

The evaluation process consisted of face-to-face interviews with Board members, Senior Management and the Company’s brokers, and a Board (and Audit Committee) observation. The interviews were conducted by means of a questionnaire, involving both quantitative and qualitative data collection and were conducted on a confidenti al and anonymous basis.

The evaluation took place following a recent history of Board and Executive changes. Since then, the Board had embarked on a series of steps – including Board refreshment and Executive Management renewal – to improve the operations of both the Board and the business. The analysis confirmed that the Board was technically and behaviourally strong and was on a trajectory of continual improvement.

Following the completion of the exercise, the Board had expressed its determination to build on the progress already made, focusing on the areas the evaluation considered a priority for performance improvement. These included strengthening the Board’s capability in relation to management succession planning and promoting a stronger culture of value creation in the Board and throughout the company.

For 2017, an internal evaluation of the performance of the Board, its Committees and the Chairman will take place. The process of evaluation will be undertaken by the Company Secretary under the direction of the Chairman.

Primary responsibility for shareholder relations rests with the CFO, 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 and attending investor conferences.

During the year, the CFO, 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 met with the Company’s largest shareholders and he is always available to meet individual shareholders on request. In addition, he is available to meet shareholders at the Company’s AGM.

The Company notes that, at the 2016 AGM, a significant number of votes were cast against the following resolutions: to re-elect Mr David Maloney as a director; to authorise the directors to allot ordinary shares; to dis-apply pre-emption rights (which was not passed); and to authorise the Company to buy back its own shares. The Company discussed these resolutions with shareholders and understands the reasons for the votes cast against them.

The Company also notes that a significant number of votes were cast against the three resolutions that were requisitioned by Western Gate Private Investments Limited: to elect Alberto da Ponte as a director; to elect Randy Pankevicz as a director; and to conduct a further board level review of M&A strategy and not implement any M&A projects until such strategy is presented to and approved by the shareholders (which was not passed).

Annual General Meeting (AGM)

The Company’s AGM will take place at 11.30am on Tuesday, 23 May 2017 at the offices of Numis at The London Stock Exchange Building, 10 Paternoster Square, London, EC4M 7LT. 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. The Chairman of the Board and Directors will be available to answer shareholders’ questions at the AGM.

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.

The Committee consists of the Chief Executive Officer, Chief Financial Officer, General Counsel and at least one NED.

Role of the Disclosure Committee

The Disclosure Committee assists the Board in discharging its responsibilities for the identificati on 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 inside 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 2016, the Disclosure Committee discussed matters by email, especially with regards to share dealings of permanent insiders and persons discharging managerial responsibilities (PDMRs). No meeting was required during 2016 as the full Board was present when the necessary disclosures were issued in 2016.

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 with regards to 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 2016 and the period to the approval of this Annual Report & Accounts (ARA). 

David Maloney
Chairman

8 March 2017