This quotation is from the QCA Corporate Governance Code which is the recognised code adopted by our Board. Details on how compliance with this code has been achieved during the year are contained in this corporate Governance Statement. Further details on how the Board have taken the needs of all stakeholders into account when making significant decisions during the year are included in the S172 statement on pages 39 to 40. Details of how the directors have been remunerated in the year are contained in the Directors’ Remuneration Report on pages 48 to 53.
Dear Shareholder, On behalf of the Board, I am pleased to present our Corporate Governance Statement for the year ending 31 October 2020.
As a Board we place the highest value on our ESG framework order to deliver long-term shareholder value and our governance strategy is supported by the QCA Corporate Governance Code for Small and Mid-size Quoted Companies, published in April 2018 (“the Code”). I am pleased to report that the Group remained in compliance throughout the year, and this report describes how this was achieved. Where relevant information is contained elsewhere in this document, references are given.
Principle 1: Long term value creation is at the heart of our business; our goal is to help farmers feed the country in a more sustainable way. This year has brought unprecedented operational challenges as a result of the Coronavirus global pandemic and a very poor harvest for UK cereal crops. The resilience of the Group’ balanced business model is demonstrated in this year’s financial results. More detail on how we adapted to the unfolding environment whilst maintaining the safety of our colleagues, customers, communities and suppliers is contained in the Strategic Report and within our S172 statement on page 39. An overview of the Group’s business model is provided on page 3 and the principal risks and uncertainties are described on page 26 to 28. Our strong balance sheet and liquidity position provides a stable platform for further growth.
Principle 2: The Board appreciates that the diverse shareholder base of the Group may have differing objectives from their investment in the business, and therefore the importance of ensuring that the Board, and non-executive directors (“NED”) in particular, have an up to date understanding of these perspectives is well recognised.
Directors will therefore proactively engage with both institutional and private investors and will seek out opinions on unusual or potentially controversial matters before adopting policy changes or tabling shareholder resolutions. The Board will always review written feedback reports from investors following financial results “roadshows” and will also always consider information received from institutional voter advisory firms. Philip Kirkham is the nominated independent NED who makes himself available to shareholders who may require independent Board contact, in addition to the regular investor meetings hosted by the Group Chief Executive and the Group Finance Director.
Details on how the Board have taken the views of all stakeholders into consideration when making significant decisions in the year are contained within the S172 statement on page 39 to 40.
Principle 3: We create value by operating in a sustainable way, to help livestock and arable farmers grow food that is profitable, sustainable and environmentally friendly. The Directors recognise the importance of managing the business in a responsible, fair and ethical manner, and strive to engender such values in every aspect of the Group’s operations. More detail on how the Group engages with sustainable farming practices is contained in the Sustainability report on page 29 to 31 and in our business snapshot on supporting Animal Health and Welfare on page 24.
Customer feedback is sought via both sales colleagues and senior management, and also by market research. We regularly review customer sales related metrics using our CRM tool.
We have recently focused efforts on increasing the communication between directors and colleagues through a number of mechanisms, including results Roadshows led by the Executive Team, newsletters, Colleague Forums, and opportunities for all Colleagues to put questions directly to the Chief Executive.
Principle 4: The Board’s risk appetite is explained within the Principal Risk and Uncertainties on page 26 to 27, which also includes an analysis of significant risks and mitigations. The Board retains ultimate responsibility for determining our risk appetite and overseeing management strategies, with the support of the Audit Committee which discusses internal controls and risk management at its regular meetings. The Group does not currently have a formal internal audit function and at present the Board believes that existing management resource is sufficient to adequately control the Group in its current size, however this matter continues to be actively reviewed.
The key procedures within the control structure include:
- Managers at all levels in the Group have clear lines of reporting responsibility within a clearly defined organisational structure;
- comprehensive financial reporting procedures exist, with budgets covering profits, cash flows, balance sheet and capital expenditure being prepared and adopted by the Board annually. Actual results are reported monthly to the Board and results compared with budgets and last year’s actual. Revised forecasts and associated actions are prepared as appropriate; and
- there is a structured process for appraising and authorising capital projects. With clearly defined authorisation levels
Maintain a Dynamic Management Framework
Principle 5: The current Board composition is shown below. During the period, the Board has reviewed the Group’s organisational structure and subsequently decided that the Group Board would no longer include the position of Agricultural Director, reducing the number of Executive Directors by 1. The role of Chairman is elected by the whole Board on an annual basis. Jim McCarthy was elected Chairman in November 2013 and has been re-elected each year to date. All members are able to take independent professional advice on matters associated with the Company at the Company’s expense. We confirm that all the non-executive directors are considered to be suitably independent and the Board is satisfied that it has an appropriate mix of capabilities, skills and personal qualities and is not dominated by one person or group of people.
A formal schedule of matters requiring Board approval is maintained and regularly reviewed and covers items such as Group strategy, approval of budgets and financial results, dividend policy, major capital expenditure, corporate governance and Board appointments and comprehensive briefing papers are circulated prior to each meeting. The Board usually meets once per month with additional meetings when necessary. The Board met each month during the year and all members attended each meeting, which were held remotely via video conference during the Coronavirus outbreak. The Board and its sub-committees are supported by external advisors as required.
Principle 6: Biographical details and key skills of the Directors and their skills are included on pages 42 to 43. The executive directors all have considerable experience in the agricultural supply industry and have spent much of their careers with the Group, providing a significant degree of management continuity. The non-executives bring a range of business and commercial expertise to the Board, including direct agriculture and specialist merchanting experience. Steve Ellwood is Audit Committee Chair and has relevant financial oversight experience through his roles at HSBC and Smith & Williamson. The Board is satisfied that it has an appropriate balance of sector, financial and public markets skills and experience and is not dominated by any one person or group of people.
Principle 7: The Chairman is responsible for the periodic performance reviews of the Board, its sub-committees and non-executive directors. Stakeholder feedback is sought and acted upon. An appraisal of performance of the Board and each Executive Director and Company Secretary has been undertaken during the year. The Board approves annual objectives for the Executive Directors and Company Secretary and measures performance against these objectives when deciding whether to award a performance related bonus. During 2020 the Board carried out an internal review of effectiveness which commenced with discussions between the Chairman and Company Secretary and an appropriate questionnaire was developed. The Company Secretary collated the detailed responses, along with verbatim comments, and analysed the results; considering whether there were common themes and the degree of consensus of the responses. The output was anonymised and, in the first place, reviewed by the Chairman, which will be followed by discussions with the whole Board.
Principle 8: During the year, the Group launched Wynnstay THRIVE, our corporate values which are described on pages 32 to 33. Wynnstay THRIVE involved collaboration throughout the companies within our Group structure and colleagues at all levels. The Board supports THRIVE as it facilitates our corporate culture which is based on ethical values and behaviours. The Group also has a number of policies and procedures designed to safeguard our ethical values, including Whistleblowing, Equal Opportunities, Training and continuing professional development and, where possible, colleague internal promotions.
Principle 9: The Board is supported by Shore Capital and Corporate Limited (our NOMAD) who are consulted on matters when appropriate. The Board is supported by three sub-committees, membership of which is shown on pages 42 to 43.
a) Audit and Risk
The committee meets to provide oversight of the financial reporting process, the external audit process including maintaining auditor objectivity and independence in relation to non-audit services, the Group’s system of internal controls, compliance with laws and regulations and risk management. The Committee met four times during the year and all members attended.
The committee meets to consider remuneration policy for executive directors and senior managers and the supervision of employee benefit structures throughout the Group. The Committee met four times during the year and all members attended.
Meets to consider senior appointments, and the composition, structure and size of the Board. The Committee monitors whether the Board has the right skills, experience and knowledge to operate effectively, taking into account changes to the business needs of the Group. The Committee also oversees succession planning for senior appointments, along with monitoring diversity and inclusion. There were two meetings during the year.
The Board is satisfied that the Group’s governance structures and processes are appropriate to its size, complexity and appetite and tolerance to risk and keeps these structures under review as the Group develops over time. The Board regularly monitors developments to Corporate Governance regulations and processes and will regularly review the continuing suitability of the QCA code.
Principle 10: Details of how the Group’s financial performance and position, including cashflow and net cash are included in the Finance Review on page 20 to 23. Details on how key judgements relating to the coronavirus pandemic and Brexit are on page 64 in the Financial Statements. Under the exceptional and challenging trading circumstances through the year, the Board are pleased with the financial performance. The Board believes this highlights the success of the balanced business model, which has to some extent sheltered the Group from the difficulties experienced in the arable sector. Consequently, the directors have a reasonable expectation that the Group has adequate resources to continue trading for the foreseeable future and continue to adopt the going concern basis in the preparation of the Financial Statements.
The Group utilises a risk register to record, mitigate and monitor risks. Arrangements for how the Group uses Financial Instruments to manage some risks are contained in the Financial statements note on pages 85 to 87.
The Directors’ Remuneration report is contained on pages 48 to 53.
Arrangements for maintaining a dialogue with shareholders and other relevant stakeholders are described under Principles 2 and 3.
26 January 2021