Statement of compliance with the UK Corporate Governance Code (the "Code").
The board remains committed to the achievement of high standards of corporate governance which it considers to be central to the effective management of the Group. Further progress has been made during the reporting year to continue to develop appropriate and adequate corporate governance arrangements. The following, together with the Directors' Remuneration Report, the Directors' Report, the Directors' Biographies, and the Audit Committee Report provide an explanation of how the principles of the Code have been applied and of areas of non-compliance during the period in which compliance with the Code was required.
The board is responsible collectively for promoting the success of the Group and for implementing the business model as set out in the Business Review. The board provides leadership for the Group and concentrates its efforts on strategy, performance, governance and internal control, as set out in the schedule of matters reserved for the board.
As at the date of this report, the board has nine members: the non-executive Chairman, the Chief Executive Officer, three executive directors and four non-executive directors. Biographies of these directors appear in the Board of Directors. At the start of the reporting period the board was not compliant with the ratio of non-executive directors to executive directors. From 14 August 2012, following the resignation of Theo Karpathios as an executive director, the board became compliant with this part of the Code.
During the financial year ended 28 April 2013, SuperGroup complied with the relevant provisions set out in the Code, in all areas apart from those set in the Corporate Governance Statement out on page 41 under nomination committee and as set out above.
Keith Edelman is the Group's Senior Independent Director. A summary of the responsibilities of the Senior Independent Director is available on the corporate website. In his role as Senior Independent Director, he has met with shareholders to listen to their views.
Non-executive director independence
The independence of the non-executive directors is considered at least annually along with their commitment and performance on the board and relevant committees. During the year the Senior Independent Director took on an additional external role and there has been no impact to SuperGroup Plc.
All the non-executive directors are considered by the board to be independent of management and free from any relationship that could materially interfere with the exercise of their independent judgement.
The board meets regularly to consider issues relating to the overall performance, strategy and future development of the Group. In accordance with the Code, the schedule of matters reserved to it for decisions has been reviewed and approved by the board.
The principal matters reserved for the board are:
- Setting and managing Group strategy;
- Changes relating to the Group's capital structure including share issues and buy-backs;
- Financial reporting and controls;
- Ensuring maintenance of sound internal controls and risk management;
- Capital expenditure and long-term commitments;
- Board membership and appointment;
- Remuneration policy;
- Delegation of authority; and
- Corporate governance and company policies.
The requirement for board approval on these matters is understood.
The board receives appropriate and timely information to enable it to discharge its duties.
The division of responsibilities between Chairman and Chief Executive Officer is set out in writing and agreed by the board.
The non-executive directors meet with the Chairman separately from time to time, without the executive directors present. During the year of reporting, the non-executive directors have each spoken to the Senior Independent Director to appraise the performance of the Chairman.
All members of the board of directors, and the sub-committees, have sufficient resources and a budget set aside to allow access to independent advice as required. For non-executive directors, a relevant clause is included in their letters of appointment setting out their required time commitment.
All directors have access to the advice and services of the Company Secretary, who is responsible to the board for ensuring that board procedures are complied with. The appointment of the Company Secretary is a matter for the board.
Operational matters, trading performance and the development of proposals for the board, where required under the schedule of matters reserved for the board, are controlled by an executive committee that consists of the Chief Executive Officer, the Chief Operating Officer, the Chief Financial Officer, the Brand and Design Director, the Director of e-commerce, the Director of Europe, Director of HR, Director of IT and the recently appointed Managing Director, International and Wholesale.
The board has appointed committees to carry out certain duties, and these are detailed below. Each of these committees is chaired by a separate chairman and has written terms of reference, available on the website, www.supergroup.co.uk.
Minutes are prepared for each of these meetings by the Company Secretary and presented at the following respective meetings for approval. All committees have sufficient resources to undertake their duties.
|Audit committee:||Minnow Powell (Chairman)|
(Chairman from 5 February 2013, member of the committee from 1 December 2012)
(from 1 December 2012)
(Chairman and member until 4 February 2013)
(until 11 February 2013)
|Remuneration committee:||Keith Edelman (Chairman)|
(from 1 December 2012)
(from 1 December 2012)
(until 4 February 2013)
(until 11 February 2013)
|Nomination committee:||Peter Bamford (Chairman)|
The annual board evaluation to assess the performance of the board, its non-executive directors and committees was carried out in May 2013, to assess performance for the financial period ending 28 April 2013. This year this took the form of an externally facilitated review using the services of an external consultant, Mark Goodridge of OECam LLP, in accordance with the Code. This review covered a range of issues around board and committee processes, board roles and responsibilities. In addition, a process of continued assessment has been undertaken during the financial period with the Chairman conducting meetings with the directors. The performance of the executive directors during the period of reporting was monitored by the Chief Executive Officer and the Chairman.
The evaluation has highlighted how the changes to board composition over the last year have improved the effectiveness of the board and confirms that the board operating process and practices are appropriate for a fast growing entrepreneurial company at this stage of development. A number of areas have been identified for further improvement to include: the balance between the roles of executive and non-executive directors, strategy formulation and board administration.
Re-election of directors
At the AGM in 2012, all directors offered themselves for election or re-election. At the AGM in 2013, all of the directors will again retire and will offer themselves for re-election, with the exception of Minnow Powell and Euan Sutherland who, having been appointed during the period, will offer themselves for election. The board considers the directors offering themselves for election or re-election continue to be effective, committed to their roles and have sufficient time available to perform their duties.
A description of the work of the remuneration committee is set out in the Directors' Remuneration Report.
Board and committee attendance
The table below gives details of directors' attendance at scheduled board and committee meetings during the financial year ended 28 April 2013:
During the year, additional ad hoc board meetings were held as required to respond to the needs of the Group.
From time to time, committee meetings are attended by non-members by invitation from the relevant chairman. Attendance is set out in the various committee reports.
Directors' conflicts of interest
The company's Articles of Association permit the directors to consider and, if thought fit, to authorise situations where a director has an interest that conflicts, or may possibly conflict, with the interests of the Group. In deciding whether to authorise a conflict or potential conflict, the non-conflicted directors must act in a way they consider would be most likely to promote the success of the Group, and they may impose limits or conditions when giving their authorisation, or subsequently, if they think it is appropriate. Any authorisation given is recorded in the board minutes. As disclosed in prior years Julian Dunkerton's brother-in-law was a director of Tokyo Retail Limited until this company was acquired by the Group (see note 5). In accordance with the Companies Act 2006, the board has considered and authorised any director's reported potential conflicts to date. The board will continue to monitor and review potential conflicts of interest on a regular basis.
Peter Bamford is chairman of the nomination committee and the other committee members are Keith Edelman and Julian Dunkerton. The board is satisfied that the chairman was independent on appointment and Keith Edelman is an independent non-executive director. The board is aware that currently the majority of the committee are not independent. The board will continue to monitor this situation. The nomination committee is responsible for nominating candidates for appointment to the board, having assessed the skills and experience required by the Group, and role descriptions are drawn up accordingly.
The Chairman and all non-executive directors have declared their other significant commitments, including all other board positions, to the board prior to being appointed. The Chairman and the non-executive directors are aware of their ongoing obligation to disclose any changes to their other commitments as they arise, and have adhered to this during the financial period. In accordance with the provisions of the Code, a broad indication of the time involved with other significant commitments is disclosed by the non-executive directors.
Their expected time commitment to SuperGroup is included in the terms and conditions of appointment which are available for inspection at the Registered Office of SuperGroup Plc.
During the year of reporting, the nomination committee held four meetings. Following a review of the skills and composition of the board of directors at the start of the reporting period it was decided to add additional expertise in the areas of senior operational capability and financial control. Job specifications for two additional non-executive directors were developed and the nomination committee appointed an external search company to assist with the recruitment of suitable candidates for these roles.
The search for these two positions was based on merit and a set of objective criteria, resulting in the appointments of Minnow Powell and Euan Sutherland to the board on 1 December 2012 as non-executive directors. This coincided with the decision by Steven Glew and Indira Thambiah not to serve for a further three year term, on the expiry of their initial three year terms in February 2013.
The principal functions of the nomination committee include the following:
- To review the structure, size and composition of the board and recommend changes when appropriate;
- To consider and recommend succession planning for executive and non-executive directors;
- To identify and nominate candidates for the approval of the board to fill board vacancies or new positions as and when they arise; and
- To evaluate the skills, experience and knowledge of board members.
The terms of reference of the nomination committee are available on our website at www.supergroup.co.uk.
During the financial year, Minnow Powell and Euan Sutherland were appointed to the board and were given a full induction.
None of the existing executive directors holds non-executive directorships.
We support the principle of boardroom diversity, to include gender. However, all board appointments are made on merit against objective criteria rather than aiming to achieve an externally prescribed target. At the start of the year 20% of the board was composed of women, but this is now at 11%, with the resignation of Indira Thambiah in February.
A number of women have been appointed to senior management positions during the year, including Head of UK and Ireland Retail, Director of HR, Design Studio Manager and Head of Women's Design. The executive committee is currently composed of 22% of women, having started the year at 16%.
Information and professional development
Non-executive directors meet regularly with members of the executive committee and members of the senior management team to gain first-hand experience of the business. Senior managers regularly attend board meetings to make presentations to the directors. This year, these presentations have included such topics as: sourcing, logistics, IT strategy, international franchise roll-out and product development. In addition, the non-executive directors make site visits to ensure that they are kept up to date with developments across the Group. To date, all directors have received instruction on their responsibilities as a director from the Group's legal advisors and company's stockbrokers.
Communication with shareholders
The company and the Group recognise the importance of communicating with shareholders. Communication with institutional shareholders is undertaken as part of SuperGroup's investor relations programme, in which non-executive directors are encouraged to participate. The Chief Executive Officer, Chief Operating Officer and the Chief Financial Officer have continued to make presentations such as after the preliminary and interim results and communicate regularly on developments. The non-executive directors attend some of these meetings to hear feedback from shareholders.
The Chairman and Senior Independent Director have arranged meetings with institutional shareholders to gain a balanced understanding of their views and concerns and discuss strategy development and corporate governance. In addition, in view of the market updates made during the previous financial period, there has been a need for a proactive approach to communicating with shareholders. The Chairman has led this and ensured that the views of shareholders are communicated to the board as a whole.
The Chairman and the Senior Independent Director are in regular communication with the significant private shareholders (this includes two of the original executive directors), who sit on the board.
The company's AGM will be held on 10 September 2013, at which time shareholders will have the opportunity to ask questions. The chairmen of the audit, remuneration and nomination committees, together with all other members of the board of directors, will be present to answer shareholder questions.
Shareholders will have the opportunity to meet non-executive directors at additional times in the year.
The full Annual Report and Financial Statements are made available to all shareholders and potential investors. Other information about the company and Group is made available on the website at www.supergroup.co.uk.
The board is ultimately responsible for approving the Annual Report and Financial Statements and half year report.
The board is ultimately responsible for the Group's systems of internal control and for reviewing its effectiveness annually. Following the market update on 20 April 2012, a full and comprehensive review of the adequacy of the existing internal controls was undertaken, led by the Chief Operating Officer and the Chief Financial Officer. As a result of this exercise a number of initiatives were identified to ensure that the internal systems were improved and made more robust. This has resulted in the need for significant investment in additional resource, to include people and information systems.
In accordance with the revised guidance for directors on internal control (the "Revised Turnbull Guidance"), the board confirms that there is a process for identifying, evaluating and managing the risks faced by the Group. This process was put in place prior to the IPO in March 2010 and has continued to be developed during the year. This process was in place throughout the year under review and up to the date of approval of the Annual Report and Financial Statements. These systems are there to manage rather than eliminate risk, and can provide only reasonable and not complete assurance against material misstatement or loss.
The report was approved by the board of directors on 10 July 2013 and signed on its order:
10 July 2013