Corporate governance statement
The Board recognises the importance of strong corporate governance and that a good governance framework should evolve as the Company’s businesses, and the environment in which those businesses operate, develop.
We have elected to adopt the Quoted Companies Alliance Corporate Governance Code (the ‘QCA Code’) which we believe has been constructed in a simple, practical and effective style and that meaningful compliance with its 10 main principles should provide shareholders with confidence in how the Company operates.
On behalf of the Board, I am pleased to present NWF Group plc’s Corporate Governance Statement for the year ended 31 May 2021. This statement provides details of our current governance framework and practices and how we discharge our governance duties.
The Board recognises the importance of strong corporate governance and that a good governance framework should evolve as the Company’s businesses, and the environment in which those businesses operate, develop. In my role as Chair, I am responsible for the Board including its effective leadership and composition, assessing and improving its performance, and leading the Company’s corporate governance culture to ensure that an appropriate governance framework is embedded within the Company and its businesses.
The Company has adopted the Quoted Companies Alliance Corporate Governance Code (‘the QCA Code’) as the basis of its governance structure and has complied with all principles of the QCA Code throughout the year.
Given the Group’s size, we also endeavour to have regard to the provisions of the UK Corporate Governance Code to the extent that we believe this is appropriate. As such, all Board Directors are required to stand for annual re-election and our Non-Executive Directors are unable to serve for more than nine years in accordance with our independence policy.
Our corporate governance arrangements are regularly reviewed and measured against the QCA Code fundamentals. During the year, we formed a standing Nomination Committee comprising our Non-Executive Directors. The Nomination Committee’s role is to develop and maintain a rigorous and transparent procedure for making recommendations on Board, and material subsidiary company board, appointments and reviewing the succession plans for Board and senior management positions. As the Nomination Committee did not meet until July 2021, a Nomination Committee Report is not included in the Annual Report and Accounts 2021 but will be provided next year.
In line with our evolving governance framework, the role of the Audit Committee has been reviewed during the year which has led to the Committee having an increased focus on compliance and risk management. Further details can be found in the Audit Committee Report on pages 38 and 39 of the Annual Report and Accounts 2021. The evaluation of our governance framework based upon the Company’s plans for growth will continue throughout the forthcoming year.
The Board acknowledges that a prerequisite of a strong corporate governance framework is a healthy corporate culture. Whilst the culture within each of the Company’s businesses is different, reflecting the diverse environments in which each business operates, those cultures are predicated upon ethical values, integrity and transparency.
For our strategy and business model to succeed in creating sustainable value in the long term, and to enable the mitigation of our principal risks and uncertainties (as detailed on pages 19 to 21 of the Annual Report and Accounts 2021), positive relationships with the Company’s various stakeholders must be cultivated. This will only be achieved through integrity and transparency. The Board monitors the Company’s culture through engagement with the Company’s stakeholders (further details on how we engage can be found on pages 27 to 29 of the Annual Report and Accounts 2021) and the regular review of the Company’s consolidated risk register and any changes to the principal risks and uncertainties.
In order to promote a healthy corporate culture, the Company operates a whistleblowing policy which allows concerns regarding unethical or unsafe behaviours to be raised in confidence and promptly investigated. To ensure ethical values and behaviours are recognised and respected, the Company has a suite of policies in place covering areas such as anti-corruption and bribery, equal opportunities and modern slavery. The Board is satisfied at this time that an ethical culture exists within the Company.
The Company’s strategy is to consolidate and optimise its operations to deliver long-term sustainable value for its shareholders and stakeholders. This is achieved by the implementation of the Company’s acquisition strategy, focused on the consolidation of the highly fragmented fuel market (further details can be found on pages 7 to 9 of the Annual Report and Accounts 2021), and investing in the Company’s people, businesses and product development to create innovative products and services. The Group’s business model is set out on pages 14 and 15 of the Annual Report and Accounts 2021.
Effective risk management and internal control
The achievement of the Company’s strategy is dependent upon the effective identification and management of new and existing risks. The Board recognises though that the risks faced by the Company also present opportunities for innovation and growth. The principal risks and uncertainties affecting the Company, and how these risks are identified, assessed, managed and reviewed, are explained on pages 19 to 21 of the Annual Report and Accounts 2021.
The Board has overall responsibility for ensuring that the Company maintains an effective system of internal control which directs the Company’s activities in order to ensure the safeguarding of assets, to assist in the delivery of the Company’s strategic, financial and operational ambitions and to provide it with reasonable assurance regarding the reliability of financial information that is used within the business.
There are, however, inherent limitations in any system of internal control and accordingly even the most effective system can provide only reasonable, and not absolute, assurance against material misstatement or loss.
The Board obtains assurance that the risk management and related control systems in place are effective in a number of ways. During the year a rolling programme of risk and controls testing has been undertaken across the Group with a focus on various key areas of risk identified. This programme was undertaken through a combination of internal and external resource and the results were reported to the Board. The Group’s risk management programme, which assesses key risks and the required internal controls that are delegated to Directors and managers at all levels in the Group, is reviewed regularly in order to ensure that it continues to meet the Board’s requirements. Although the Company does not have a formal internal audit function, targeted reviews and visits to operations are conducted by the Head Office team and professional advisors. The results of these reviews are communicated back to the Audit Committee. An internal control update is provided to the Audit Committee at each meeting. Further details can be found on pages 38 and 39 of the Annual Report and Accounts 2021.
Engagement with our shareholders and stakeholders
The Board is committed to open and honest two-way dialogue with the Company’s shareholders and stakeholders in order to both understand their views, needs and expectations and provide a fair and understandable assessment of the Company’s position which will allow shareholders and other stakeholders to make informed decisions about the Company.
Whilst the Company has a diverse range of shareholders, they can be broadly categorised as follows:
- three independent pension funds registered in Iceland (each holding c.5% of the issued share capital) as set out on page 46 of the Annual Report and Accounts 2021;
- other institutional investors;
- private individuals; and
- employees and ex-employees.
The Board has a proactive approach to shareholder liaison, led by the Chief Executive, and feedback is provided regularly to the Board. This approach includes our AGM (where votes in favour are consistently over 75%), open days, biannual investor roadshows and annual meetings with significant shareholders.
The Chair and the Non-Executive Directors will always make themselves available to meet with shareholders. Each AGM is a particular opportunity for this. Normal relationships with shareholders are maintained by the Executive Directors, who brief the Board on shareholder issues and who relay the views of the Group’s advisors to the Board.
The Investors section of our website, found here, includes historical Annual Reports, Notices of AGMs and voting history (where there have been no significant votes against) for a minimum of five years.
Details of how we engage with our other stakeholders and the outcomes of this engagement can be found on pages 27 to 29 of the Annual Report and Accounts 2021.
Details of the Board’s response to the cyber incident can be found within our Section 172 statement on page 27 of the Annual Report and Accounts 2021.
Matters reserved for the Board
- Setting the Company’s values, standards, strategic aims and objectives.
- Approval of budgets and reviewing performance in line with these.
- Extension or cessation of the Company’s activities.
- Approval of financial reports and policies, dividends and the dividend policy.
- Ensuring maintenance of a sound system of internal control and risk management.
- Approval of major capital projects, material contracts and major investments.
- Changes to the structure, size and composition of the Board, membership of Board Committees and succession planning.
- Approval of remuneration policies.
Its remit is to:
- determine appropriate short and long-term total reward packages for the Executive Directors; and
- satisfy itself that good practices apply to all Group employees through the relevant management structures.
Its remit is to:
- monitor the integrity of financial reporting; and
- keep under review the Company's internal control and risk management systems.
Its remit is to:
- develop and maintain a rigorous and transparent procedure for making recommendations on Board, and material subsidiary company board, appointments; and
- ensure plans are in place for orderly succession to Board and senior management positions.
Its remit is to:
- consider whether announcements are required to be made in relation to inside information.
Executive Directors and senior management
Their remit is to:
- implement the strategy agreed by the Board; and
- manage the Company on a day-to-day basis.
A clearly defined Board structure
The principal roles of the Board are to provide effective leadership, ensure an ethical corporate culture and effective risk management system is embedded throughout the Company, oversee external reporting and set the Company’s strategy in order to deliver shareholder value.
A formal schedule of matters requiring Group Board approval, which is available in its entirety here, is maintained and regularly reviewed to ensure sufficient separation between the responsibilities of the Board and the operation of the Company’s business.
There are currently four Board Committees to which the Board delegates specific responsibilities: the Audit Committee, Remuneration Committee, Nomination Committee and Disclosure Committee. The responsibilities of each Committee are detailed in its terms of reference which are reviewed annually and are available here. Further details on the activities of the Audit Committee and the Remuneration Committee can be found on pages 38 to 39 and pages 40 to 44 respectively of the Annual Report and Accounts 2021. The Chair of each Committee formally reports to the Board in respect of the Committee’s activities and recommendations
Following a review of the Company’s governance arrangements, a standing Nomination Committee has been formed whose main responsibilities include developing and maintaining a rigorous and transparent procedure for making recommendations on Board, and material subsidiary company board, appointments and ensuring plans are in place for orderly succession to Board and senior management positions. Succession planning will be an area of focus for the Nomination Committee in the 2021/22 financial year, with a review of the existing succession plans for Board and senior management positions being undertaken. The process by which Board and other senior management appointments are determined is detailed in the Nomination Committee’s terms of reference which are available here. The results of the appraisals undertaken by the Board, its Committees and in respect of the Chair (as detailed on page 37 of the Annual Report and Accounts 2021) will inform the development of the existing succession plans and the determination of the skills and capability requirements for Board and other senior management appointments.
The Disclosure Committee met twice during the financial year to consider whether announcements were required to be made in relation to inside information. The members of the Disclosure Committee are the Non-Executive Chair, Chief Executive and Group Finance Director.
Executive Directors and senior management
The implementation of the strategy agreed by the Board and day-to-day management of the Company is delegated to the Executive Directors and senior management. This structure allows for decisions to be made in an efficient manner by the most appropriate people. Each division’s senior management team has a monthly meeting with the Executive Directors to report on the division’s progress and any challenges. Senior management also regularly attends Board meetings to brief the Board on business opportunities and developments.
In order for the Board to be effective, there needs to be clearly defined roles for Board members, an appropriate balance of Executive and Non-Executive Directors, sufficient time committed by Directors to their roles and the provision of quality information in a timely manner. The Board must comprise an appropriate balance of skills, experience and personal qualities.
The Board currently comprises a Non-Executive Chair, a Senior Independent Non-Executive Director, an independent Non-Executive Director and two Executive Directors. The biographical details of the Directors, including their skills and experience, are set out on pages 30 and 31 of the Annual Report and Accounts 2021. The biographical details of the senior management team are set out on page 32 of the Annual Report and Accounts 2021. Richard Armitage joined the Board as Non-Executive Director on 5 July 2020. On 24 September 2020, Yvonne Monaghan stepped down as Senior Independent Non-Executive Director after seven years on the Board.
The roles of Chair and Chief Executive are separated and clearly understood and have been agreed by the Board. The Chair is responsible for the Board including its effective leadership and composition, assessing and improving its performance, and leading the Company’s corporate governance culture. The Chief Executive is responsible for developing the Company’s strategy and the operating performance of the Company.
The Senior Independent Non-Executive Director conducts the Chair’s annual appraisal and acts as a sounding board for the other Directors.
Further information on the role of the Senior Independent Director can be found here. The Company Secretary has specific responsibility to assist the Chair and the rest of the Board to uphold the best corporate governance standards. A full role description for the Company Secretary is available here.
The Board normally meets eleven times a year with additional meetings being called when required.
The number of Board and Committee meetings held in the year ended 31 May 2021, together with the attendance record for each Director, is detailed below.
Comprehensive briefing papers are circulated to Directors one week in advance of each scheduled meeting to allow sufficient time for the consideration of the papers provided.
All Directors and senior management are able to access the advice and services of the Company Secretary. Furthermore, all Directors have access to the Company’s advisors and are able, if necessary, to take independent professional advice in the furtherance of their duties at the Company’s expense.
The Board and the Committees to the Board are supported by external advisors on a regular basis in respect of matters such as pensions, taxation, property and health and safety. During the year, in response to the cyber incident, the Board sought external IT security advice and assistance from Grant Thornton and CMS to mitigate the effects of this incident and develop the Group’s IT resilience. As a result of this, Grant Thornton has been appointed as the Group’s chief information security officer. Deloitte LLP continued to act as professional advisors to the Remuneration Committee during the year.
The Board has adopted a formal time commitments (overboarding) policy which provides that when making new appointments, and considering additional appointments for existing Directors, the Board shall take into account other demands on the Director’s time. Significant commitments shall be disclosed with an indication of the time involved and additional external appointments shall not be undertaken without prior approval of the Board.
Full-time Executive Directors are permitted to take a maximum of one non-executive directorship or other significant appointment, subject to prior approval of the Board.
Non-Executive Directors are required to limit their number of board appointments to a total of five public company board roles. An independent board chair role will count as two board roles.
Non-Executive Directors’ time commitments are reviewed annually to ensure each Director has sufficient time to fulfil their role.
- R J Armitage was appointed on 5 July 2020.
- Y M Monaghan resigned as of 24 September 2020.
- R J Armitage is not a member of the Disclosure Committee but normally attends Disclosure Committee meetings by invitation.
- R A Whiting and C J Belsham are not members of the Audit Committee but attend Audit Committee meetings by invitation.
- R A Whiting is not a member of the Remuneration Committee but attends Remuneration Committee meetings by invitation.
The Board annually conducts an appraisal, led by the Chair, of its performance consisting of individual assessments using comprehensive questionnaires that are completed by all Directors. An appraisal of the Chair’s performance is conducted at the same time by the Senior Independent Non-Executive Director. The Audit and Remuneration Committees also annually consider their own performance using prescribed questionnaires. All questionnaires are prepared following consideration of the QCA Code, the QCA Audit Committee Guide, the QCA Remuneration Committee Guide and the UK Corporate Governance Code, as applicable. The Board appraisal questionnaire in 2021 covered topics such as building trust, delivering growth and disclosures.
Following completion of the appraisals, the results are reviewed, and feedback is given to the Board by the Senior Independent Non-Executive Director in respect of the assessment of the Chair, and by the Chair in respect of the assessment of the Board as a whole. Feedback from the Committee appraisals is provided by the Committee Chairs to the Board. External facilitation of the Board appraisal has not been used to date, although this is kept under review, but does include an external view from the Company’s Nominated Advisor.
Following the appraisal conducted in 2020, a number of actions were identified, and an action tracker was developed which is reviewed at each Board meeting in order to monitor progress. The results of the appraisal conducted in 2021 have been incorporated into the action tracker and progress will continue to be monitored at each Board meeting. Areas identified for further development were:
- ESG – Further work is to be undertaken to ensure full integration of the Company’s ESG strategic objectives throughout the Group and to determine the position of the ESG framework in relation to the Company’s strategy; and
- Board, Committee and Director objectives – Clear and relevant objectives to enable Board, Committee and each Director’s performance to be evaluated will be set on an annual basis.
Following the appraisals, the Board is satisfied that it has the appropriate balance of skills, knowledge and experience needed to deliver the Company’s strategy.