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Corporate Governance

Dear Shareholders

On behalf of the Board, I am pleased to present our Corporate Governance report for the period ended 30 September 2018. The Board is firmly committ ed to ensuring that our corporate governance arrangements continue to evolve and are effective and complied with in all jurisdictions in which the Group operates. We are convinced that strong corporate governance is good for our business and underpins the delivery of shareholder value. During 2018 we continued to comply with the 2016 UK Corporate Governance Code.

At the Company’s last Annual General Meeting (AGM) held in May 2018, a significant number of votes were cast against the resolution proposing the re-election of a number of the Directors. Having discussed with shareholders, it is apparent that this was due in part to the lack of gender diversity on the Board, so I am pleased to explain the recent Board recruitment process which is outlined on page 70 of the Nomination Committee Report. A statement was also issued on 9 October 2018 and can be found on our website: http://www.stockspirits.com/ investors/agm.aspx. I am always available to meet or speak with shareholders at any time during the year. As Chairman, I want to ensure I am fully aware of any concerns or issues they may have.

Ahead of the upcoming AGM in February, I have specifically contacted the top 20 shareholders, representing 77% of our register, seeking a meeting or call. Of these, I was able to speak to 9, representing 49% of the register.

As previously indicated, the Board and Nominati on Committee supports diversity for both internal and external appointments and the most important area when recruiting will continue to be appointing the best person for the role. In May 2018, a process was put in place to search for an additional Non-Executive Director (NED) which led to the appointment of Kate Allum who joined the Board on 1 November 2018. More details can be found on page 69. This appointment will enhance the diversity and independence on the Board.

Any future appointments will be made in line with the Board Diversity Policy and will continue to be made on merit and take into account diversity, in terms of gender and ethnicity, as well as the appropriate mix of skills, background, knowledge, international and industry experience. As stated on page 42 the Board will work towards the voluntary 33% target for female representation on the Board.

As Chairman of the Board, I work with the Company Secretary to set the agenda for Board meetings. These are structured to ensure that sufficient time is spent on important matters and all Directors have the opportunity to contribute. During the year, the Board discussed the Group’s refreshed strategy focussing on the four pillars: increased focus on premiumisation of our products, attracting more millennials to our brands, increasing the use of digital communications with our consumers and reviewing M&A opportunities. The Board also regularly reviews, among other things, the performance of each of the markets and in particular Poland, our largest market; considers the principal risks and associated procedures and processes to mitigate them; an ongoing focus on people including analysing the results of the annual employee survey; and health and safety across the markets. Further detail on the principal risks can be found on pages 20 to 25.

Another area of focus for the Board was succession planning including actions to strengthen the pipeline through the development of the leadership framework. Management continued to work on the pool of emerging talent within the Group, providing bespoke training and development plans to create a strong pipeline of internal candidates.

In the second half of the year, an internal evaluation of the Board was carried out to review the performance of the Board, its Committees and the individual Directors, including the Chairman. The exercise was facilitated by the Company Secretary under my direction and details of the process and outcomes are shown on page 62. In 2019 we will carry out an external evaluation.

Your Board regularly meets with Group Management, both at Board and Board Committee meetings and in other routine meetings, which enables the NEDs to gain a good understanding of the business and what is happening on the ground. We believe that this is an essential requirement for Directors. We have set out in the following pages, details of how the Company has applied the main principles of the 2016 version of the UK Corporate Governance Code and its compliance with the various provisions.

David Maloney
Chairman

5 December 2018