The Company has complied with the provisions of the Code in this financial year.

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 including ensuring that appropriate processes are in place to manage risk and monitor the Company’s financial and operational performance. 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 Board composition and qualification

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 biographies illustrate that the NEDs have a range of skills and experience including expertise in the food and drinks industry within Europe and beyond, that is relevant to the management of the Company.

The Board believes that there is an appropriate balance between the Executives and NEDs and that this balance is enhanced by the varying lengths of service, diversity and expertise of the Non-Executive Directors.

The Board composition, experience, balance of skills and effectiveness are regularly reviewed to ensure the right mix of people are on the Board and its Committees. Following the appointment of Kate Allum in November 2018, the Board comprises eight Directors: a Chairman (who, for the purposes of the Code, was independent on appointment); a Senior Independent Director (SID); four Independent NEDs; and two Executive Directors.

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, operational performance 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. 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)

John Nicolson is the SID and 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. 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 internal 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.

In the 9 months to 30 September 2018, there were six scheduled Board meetings, plus two additional ad hoc meetings held by telephone. In the months when there is not a Board meeting, a Board call will be held to review the latest performance and cover any other matters requiring our attention. Attendance at the formal pre-scheduled Board and Committee meetings was as follows:

¹  Mr Nicolson was unable to attend one Nomination Committee meeting due to ill health
²  Resigned as a Director on 6 March 2018

During 2018, certain Executive and Non-Executive Directors who are not Committee members attended Committee meetings by invitation (other than meetings where there would be a conflict). These details have not been included in the table.

Board meetings are structured in an open atmosphere, conducive to challenge and debate and all Directors are expected to attend. In the event that a Director is unable to attend a meeting, they will receive the papers scheduled for discussion at the relevant meeting, and are encouraged to provide comments to the Chairman or CEO on key items in advance of the meeting, so their views and opinions can be shared and taken into account at the meeting.

Generally on the evening before the Board meeting, a dinner is held for Directors to discuss strategic matters and matters to be covered the next day in a more informal environment. Senior management who are presenting to the Board may be invited to attend the dinner if appropriate.

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 in each of the respective Committee Reports.

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 training and 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.

During the year, operational site visits for the Board were arranged in Poland and Slovakia which included a deep dive presentation on the market, meetings with the local senior management team and a town hall meeting with the whole team followed by lunch. In this way, Directors keep their skills and knowledge relevant so as to enable them to continue to fulfil their duties effectively and employees are able to meet the Directors and ask questions in an informal environment.

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

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 were discussed individually between the Chairman and each Director. The outcome of these meetings and the overall Board discussion on the results, indicated that the Board is working well and that there were no significant concerns among the Directors about its effectiveness. It was generally felt that the actions agreed from the previous year’s internal evaluation had been progressed. These actions included succession planning; more focus on engagement with the management teams; and improving management information. For the year ahead, the Board will continue to focus on improving management information, focus on supporting the Executives as they embed culture, values and behaviours across the Group, and focus more on strategic options and plans at Board meetings.

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 2019, an external evaluation of the performance of the Board, its Committees and the Chairman will take place.

The Company’s AGM will take place at 10am on Thursday, 14 February 2019 at the offices of Numis Securities Limited 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 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 Company has a comprehensive investor relations programme including meetings with institutional shareholders, buy and sell-side analysts and potential shareholders. Primary responsibility for shareholder relations rests with Mirek Stachowicz, CEO and Paul Bal, CFO. They ensure there is effective communication with shareholders on matters such as governance and strategy. David Maloney offers calls and meetings to institutional shareholders regularly throughout the year. Regular presentations take place at the time of the interim and final results, as well as during the rest of the year. An active programme of communication with potential shareholders is also maintained. All of the Directors make themselves available for meetings with shareholders as required and will be available at the AGM.

The Board receives regular updates from the CFO including feedback from meetings held and analyst reports are circulated to the Directors when available. During the year, roadshows were held in London, Poland and North America with institutional investors as well as attending various conferences. Following the interim results in August 2018, a strategy update was presented to sell-side analysts followed by a tasting session of our products. One-to-one investor meetings were held throughout the year with the CEO and CFO.

Ahead of the AGM being held in February 2019, governance meetings were offered to the top 20 shareholders with myself and the Company Secretary. We met or had a call with nine shareholders (representing 49% of the register) and discussed topics such as diversity, the change in the year end, succession planning, the Group’s strategy including M&A, the dividend policy and our relationship with our largest shareholder.

The dedicated Investor section provides an easily accessible communication channel for existing and potential investors. Private shareholders are encouraged to attend the Company’s AGM or to submit questions via the website. The website also provides the latest news, historical financial information, details about forthcoming events and other information regarding Stock Spirits.