Corporate Governance

Principles of Corporate Governance

The Company and the Group is committed to high standards of corporate governance. This statement, together with the Remuneration Report of the Annual Report and Accounts 2011 ("the Annual Report"), describes how the Company has applied the provisions and principles set out in section 1 of the Combined Code on Corporate Governance (the ‘Code’). Except as detailed below in relation to provision A.3.2 of the Code in respect of the balance of Executive and Non-Executive Directors, the Company complied fully with the Code.

In June 2010, the Financial Reporting Council (FRC) published The UK Corporate Governance Code (the ‘revised Code’) which supersedes the Code and is applicable for companies with accounting periods beginning on or after 29 June 2010.

Although the Company’s reporting period began on 27 March 2010, a number of the provisions of the revised Code have already been addressed during the year. The Board will report on compliance against the revised Code in its annual report for the year ending 30 March 2012.

This report also includes the information required by paragraph 7.2 of the Disclosure and Transparency Rules (DTR) to be contained in the Company’s corporate governance statement, with the exception of the information required by DTR 7.2.6, which is located in the Directors’ Report.

The workings of the Board and its committees

The Board

The Company is led and controlled by the Board of Directors (the ‘Board’) chaired by Richard Rose. The Board currently consists of five Executive Directors and five Non-Executive Directors.

The Code requires that at least half the Board, excluding the Chairman, should comprise independent Non-Executive Directors as determined by the Board. For operational reasons the Company was not compliant with this provision of the Code throughout the year. From 25 March 2011, when Bryan Drew, Executive Director, resigned, until the resignation on 18 May 2011 of Richard Farr, the Company was compliant with this provision of the Code. Richard Farr decided to retire from the Board on 18 May 2011 for business reasons and a recruitment process to identify a new Non-Executive Director to replace him was started immediately. An announcement confirming the outcome of this process will be made in due course. The Board is content that the independent judgement of the Non-Executive Directors has not been adversely impacted during the periods of non-compliance.

The independence of Non-Executive Directors is considered at least annually and is based on the criteria suggested in the Code.

Richard Rose was an Executive Director and Chairman of Blueheath Holdings Plc immediately prior to the reverse acquisition of Blueheath by the Booker Group in 2007 and became Non-Executive Chairman of the Company upon completion of the merger. The Group’s combined business is significantly different to and larger than Blueheath and there is a division of responsibilities between Richard and the Executive Directors and, in particular, Charles Wilson as Chief Executive, such that his current and former roles can be considered incomparable. Both Richard Rose and Andrew Cripps serve as directors of Helphire Group plc. Having regard to all the circumstances, including the independence Richard has demonstrated as Chairman and Andrew as Chairman of the Audit Committee of the Company, the Board is satisfied and has determined that Richard and Andrew are both independent.

Consequently, all the Non-Executive Directors are considered by the Board to be independent of management and free from any business or other relationship that could materially interfere with the exercise of their independent judgement in accordance with the Code. The Non-Executive Directors provide constructive challenge and bring independence to the Board and its decision making process.

The Board believes that it is appropriate to have a Senior Independent Non-Executive Director and Lord Bilimoria fulfils this role. He is available to shareholders where concerns have not been resolved through the normal channels and for when such contact would be inappropriate.

Changes to Board composition during the year are set out below:

• On 14 October 2010 Guy Farrant joined the Company to become Managing Director of the Group’s UK cash and carry business. Guy has a wealth of food experience having worked in the food industry for 25 years rising to be Director of Food and, latterly, Operations and Retail Director at Marks and Spencer plc;
• On 8 December 2010 Stewart Gilliland was appointed a Non-Executive Director for an initial term of 3 years. Stewart recently retired as Chief Executive of Muller Dairies UK and Ireland after a long career spent in senior roles with leading consumer facing companies, including Whitbread and Interbrew. His current roles include Non-Executive Directorships of Sutton and East Surrey Water Plc and Brulines Group plc, which provides volume and revenue protection systems for the licensed on-trade.
• On 25 March 2011 Bryan Drew retired from the Board after 5 years service as Commercial Director.

Subsequent to the year end, Richard Farr resigned from the Board for business reasons.

The Board believes that it has sufficient members to contain a balance of skills and experience, but it is not so large as to be unwieldy. The Board contains a balance of Executive and Non-Executive Directors such that no individual, or group of individuals can dominate the Board’s decision making. No one individual has unfettered powers of decision.

Details of the skills and experience of the Directors are contained in the Directors’ and Officers section of the Group's website.

The Board meets regularly on at least twelve scheduled occasions during each year and more frequently if necessary. There were thirteen Board meetings, three Audit Committee meetings, four Remuneration Committee meetings and two Nomination Committee meetings held in the year under review and the attendance by Directors was as follows:

	Board	Audit	Remuneration	Nomination
Executive
Charles Wilson1 2 3	13/13	3/3	4/4	2/2
Jonathan Prentis1	13/13	3/3
Mark Aylwin	13/13
Guy Farrant4	5/5
Bryan Drew5 a	11/13
Bryn Satherley	13/13
Non-Executive
Richard Rose2 6	13/13		4/4	2/2
Lord Bilimoria6 b	12/13		4/4	2/2
Andrew Cripps6 c	12/13	3/3	4/4	2/2
Richard Farr3 6 d	10/13	3/3	2/4	2/2
Stewart Gilliland6 7 8	3/3	1/1
Karen Jones6 9 10	13/13	2/2	1/1

1. Not a member of the Audit Committee but attended by invitation
2. Not a member of the Remuneration Committee but attended by invitation
3. Not a member of the Nomination Committee but attended by invitation
4. Guy Farrant was appointed to the Board on 14 October 2010
5. Bryan Drew resigned from the Board on 25 March 2011
6. Independent Non-Executive Director
7. Stewart Gilliland was appointed to the Board on 8 December 2010
8. Stewart Gilliland was appointed to the Audit Committee on 18 January 2011 to replace Karen Jones
9. Karen Jones was appointed to the Remuneration Committee on 18 January 2011
10. Karen Jones ceased to be a member of the Audit Committee on 18 January 2011

(a)	Bryan Drew was unable to attend the February and March 2011 Board meetings due to personal commitments;
(b)	Lord Bilimoria was unable to attend the March 2010 Board meeting due to a prior business commitment;
(c)	Andrew Cripps was unable to attend the Board meeting in April 2010 due to a prior business commitment to attend the AGM and board meeting with Swedish Match AB of which he is Non-Executive Deputy Chairman;
(d)	Richard Farr was unable to attend the Board meetings in June, September and October 2010 and the Remuneration meetings in June and October 2010 due to prior business commitments with BDO LLP of which he is a partner.

The Board keeps the membership of committees under review to ensure gradual refreshing of skills and experience. Accordingly on 18 January 2011 Stewart Gilliland was appointed to the Audit Committee. On 18 January 2011 Karen Jones stepped down from the Audit Committee and was appointed to the Remuneration Committee. Additionally Karen Jones was asked to chair the Remuneration Committee. The Board is satisfied that all Directors have sufficient time to devote to their roles and that it is not placing undue reliance on key individuals.

The Board is responsible to shareholders for ensuring that the Group is appropriately managed and that it achieves its objectives. The Board has adopted a formal schedule of matters specifically reserved for decision by it, thus ensuring that it exercises control over appropriate strategic, financial, operational and regulatory issues. At its meetings, the Board reviews trading performance, ensures adequate financing, sets and monitors strategy, examines investment and acquisition opportunities and discusses reports to shareholders. Matters not specifically reserved for the Board and its committees under its schedule of matters and the committees’ terms of reference, or for shareholders in general meeting, are delegated to members of the Executive Committee.

It is the Company’s policy that the roles of the Chairman and Chief Executive are separate, with their roles and responsibilities clearly divided and set out in writing. The Chairman’s main responsibility is the leadership and management of the Board and its governance. The Chairman’s commitment to the Company is usually 2 days per month. His other significant commitments are disclosed in his biography on the Director's and Officers section of the Group's website. The Board considers that these commitments do not hinder his ability to discharge his responsibilities to the Company effectively.

The Chief Executive is responsible for the leadership and day-to-day management of the Group. This includes formulating and recommending the Group’s strategy for Board approval in addition to executing the approved strategy.

Recommendations for appointments to the Board are made by the Nominations Committee. The Committee follows Board approved procedures (available in the Legal Documents section of the website) which provide a framework for the different types of Board appointments on which the Committee may be expected to make recommendations. Appointments are made on merit and against objective criteria with due regard to diversity (including skills, experience and gender). Non-Executive appointees are also required to demonstrate that they have sufficient time to devote to the role.

These procedures were used by the Nominations Committee in recommending to the Board the appointment of Guy Farrant as an Executive Director and Stewart Gilliland as a Non-Executive Director. The Committee did not engage the services of an external search consultant in relation to their appointments, nor did it conduct open advertising, being aware of both appointees’ significant experience and expertise in their respective fields.

Information and professional development

Directors are continually updated on the Group’s businesses, the markets in which they operate and changes to the competitive and regulatory environment through briefings to the Board and meetings with senior executives. Board visits to Group business locations enable the Directors to meet with local management and employees and to update and maintain their knowledge and familiarity with the Group’s operations.

Non-Executive Directors are also encouraged to visit Group operations throughout their tenure to increase their exposure to the business.

The Chairman is responsible for ensuring that Directors receive accurate, timely and clear information. The provision of information to the Board was reviewed during the year as part of the performance evaluation exercise referred to below. To ensure that adequate time is available for Board discussion and to enable informed decision making, briefing papers are prepared and circulated to Directors in the week prior to scheduled Board meetings. All Non-Executive Directors are encouraged to make further enquiries as they feel appropriate of the Executive Directors and senior executives. In addition, Board committees are provided with sufficient resources and the power to co-opt such additional support as they may require from time to time, to undertake their duties.

All Directors are entitled to receive independent professional advice at the Company’s expense and have access to the services of a professionally qualified and experienced Company Secretary, who is responsible for information flows to the Board and advising the Board on corporate governance matters. This ensures compliance with Board procedures and applicable laws and regulation. The Board has responsibility for the appointment and removal of the Company Secretary.

On appointment, individual Directors undergo an induction programme covering, amongst other matters:

• the business of the Group;
• their legal and regulatory responsibilities as directors of the Company;
• briefings and presentations from Executive Directors and senior executives;
• opportunities to visit business operations.

Performance evaluation

During the year, the Board conducted an evaluation of its own performance and that of its three principal committees. The individual performance of the Non-Executive Directors was also evaluated through one to one interviews with the Chairman. In April 2011, each Director completed a questionnaire prepared by the Chairman and the Company Secretary to rate the collective performance of the Board and its committees. The Company Secretary collated the evaluation results and the Chairman then reviewed an unattributed executive summary, highlighting key outcomes. A report of the findings was then presented to and discussed by the Board. No actions were considered necessary as a result of these evaluations and the Chairman confirms that each Director continues to make a valuable contribution to the Board and, where relevant, its Committees and devotes sufficient time to the role.

During the year, the Chairman and the Non-Executive Directors met in the absence of the Executive Directors. There was also one meeting of the Non-Executive Directors chaired by the Senior Independent Non-Executive Director at which the Chairman was not present in order to appraise the Chairman’s performance.

The Board decided in 2010 to undertake an externally facilitated evaluation process every three years, which has since become a requirement within the revised Code. The first externally facilitated evaluation will be undertaken in 2013.

Committees

The Board has established an Audit Committee, a Nomination Committee and a Remuneration Committee to oversee and debate issues of policy outside main Board meetings. Throughout the year, the Chairman of each committee provided the Board with a summary of key issues considered at the committee meetings. Board committees are authorised to engage the services of external advisers as they deem necessary in the furtherance of their duties at the Company’s expense.

Audit Committee

Chaired by Andrew Cripps, Non-Executive Director, the Audit Committee during the year comprised until 18 January 2011 Andrew Cripps and two other Non-Executives; Richard Farr and Karen Jones. From 18 January 2011, the Audit Committee comprised Andrew Cripps and two other Non-Executives; Richard Farr and Stewart Gilliland. Since 18 May 2011, the Audit Committee comprised Andrew Cripps and Stewart Gilliland. All members of the Audit Committee are considered by the Board to be independent. The Board considers Andrew Cripps to have recent and relevant financial experience including his role as Chairman and member of the Audit Committee at a number of fully listed companies and previous executive experience at a FTSE 100 listed company. The Company Secretary is secretary to the Audit Committee.

The Audit Committee has defined terms of reference which were reviewed in May 2011 and are published on the Group’s website. Charles Wilson (Chief Executive), Jonathan Prentis (Group Finance Director), the Head of Internal Audit and the external auditor attend meetings of the Audit Committee by invitation. The Audit Committee is primarily responsible for:

• ensuring that the financial performance of the Group is properly monitored and reported on;
• reviewing and monitoring the independence of the external auditor and the effectiveness of the audit process;
• meeting with the external auditor and reviewing reports from the external auditor relating to the Group’s accounting and internal controls;
• agreeing the terms of appointment and remuneration of the external auditor;
• reviewing the effectiveness of the Group’s systems of financial control;
• agreeing the scope and reviewing the work of the Group’s internal audit team.

The Audit Committee and KPMG Audit Plc, the external auditor, operate procedures to ensure that the external auditor remains objective and independent. These procedures include the pre-approval of the scope of the audit by the Audit Committee. The Audit Committee conducts a formal annual review of the independence of the external auditor, looking carefully at the level of non-audit work conducted by the external auditor and the detailed safeguards which they have in place. The fees paid to the external auditor during the year are set out in note 4 to the Financial Statements on page 40 within the Annual Report. The non-audit fees relate primarily to taxation, the streamlining of the group corporate structure and fees in connection with the acquisition of Ritter and Classic. The Audit Committee believes that there are sound commercial and practical reasons for this work being conducted by the external auditor.

The Audit Committee additionally addressed the following main issues during the year:

• reviewing the operation and effectiveness of the Group’s system of internal controls;
• consideration of the proposed IFRS on leases; and
• the disclosures in the Annual Report and Accounts.

The Group has adopted a whistleblowing programme in all of its operations whereby employees can, in confidence, report on matters where they feel a malpractice is taking place, or if health and safety standards are being compromised. Additional areas that are addressed by this procedure include criminal activities, improper or unethical behaviour and risks to the environment.

The procedures allow employees to raise their concerns with line management or, if this is inappropriate, to raise them on a confidential basis. An externally facilitated confidential helpline and confidential e-mail facility are provided to protect the identity of employees in these circumstances. Any concerns will be investigated in a confidential manner by the Human Resources Department and/or the Company Secretary and, after a decision has been made as to what (if any) further steps should be taken, feedback will be given to the person making the complaint. An official written record will be kept of each stage of the procedure. This policy and related procedures are monitored by the Audit Committee.

Nomination Committee

The Nomination Committee is chaired by Richard Rose, the Chairman, and comprises Richard Rose and two other Non-Executive Directors; Lord Bilimoria and Andrew Cripps. It has defined terms of reference which were reviewed in May 2011 and published on the Group’s website. Charles Wilson, Chief Executive, attends by invitation. During the year, Richard Farr was invited to attend two meetings. The Nomination Committee is responsible for making recommendations to the Board on the appointment of additional Directors and for reviewing the size, structure and composition of the Board and the membership of Board committees. Appointments are made on merit and against objective criteria with due regard to diversity (including, skills, experience and gender).

During the year, in accordance with the plans for the orderly succession for appointments to the Board, the Nomination Committee recommended the appointment of Guy Farrant, as an Executive Director, and Stewart Gilliland, as an Non-Executive Director. Prior to recommending each appointment, the candidates were interviewed by committee members and other Directors.

Remuneration Committee

The Remuneration Committee is chaired by Karen Jones, Non-Executive Director, since 18 January 2011 and prior to that date by Lord Bilimoria, the Senior Independent Non-Executive Director. The Remuneration Committee during the year comprised until 18 January 2011 Lord Bilimoria, Andrew Cripps and Richard Farr. From 18 January 2011 until 18 May 2011 the Remuneration Committee comprised Karen Jones, Lord Bilimoria, Andrew Cripps and Richard Farr. Since 18 May 2011 the Remuneration Committee comprised Karen Jones, Lord Bilimoria and Andrew Cripps. Richard Rose (Chairman) and Charles Wilson (Chief Executive) attend by invitation. The Remuneration Committee has defined terms of reference which were reviewed in May 2011 and are published on the Group’s website.

The Remuneration Committee is responsible for setting the remuneration and other terms of employment of the Company’s executive officers and senior executives and determining and reviewing any share incentive plans.

The Remuneration Report, which includes details of the Remuneration Committee’s role, Directors’ remuneration and pension entitlements, together with information on service contracts, is set out on pages 19 to 25 of the Annual Report. Details of Directors’ interests in the Ordinary Shares of the Company are shown in the Directors’ Report on page 27 of the Annual Report.

Re-election of Directors

All Directors are required by the Company’s Articles of Association to submit themselves to shareholders for re-election at the first Annual General Meeting after their appointment and thereafter by rotation at least once every three years. In accordance with the revised Code all directors will, however, stand for re-election at the 2011 Annual General Meeting. Those appointed during the preceding year will stand for election in accordance with the Articles of Association.

Relations with shareholders

In fulfilling their responsibilities, the Directors believe that they govern the Group in the best interests of shareholders, whilst having due regard to the interests of other stakeholders in the Group including customers, employees and suppliers.

The Code encourages a dialogue with institutional shareholders based on the mutual understanding of objectives. The Executive Directors have regular and ongoing communication with major shareholders throughout the year, by participating in investor roadshows and presentations to shareholders. Feedback from these visits is reported to the Board. The Directors also have regular contact with analysts and brokers. The Chairman, Senior Independent Non-Executive Director and other Non-Executive Directors receive reports on matters raised at the meetings with shareholders and are offered the opportunity to attend meetings with major shareholders. As a result of these procedures, the Non-Executive Directors believe that they are aware of shareholders’ views. In addition, Lord Bilimoria, the Senior Independent Non-Executive Director, is available to meet with major shareholders. No shareholders asked to meet with him during the year.

Arrangements can also be made through the Company Secretary for major shareholders to meet with newly appointed Directors.

The Code encourages boards to use the Annual General Meeting to communicate with investors and to encourage their participation. In compliance with the Code, the Board welcomes as many shareholders as possible to attend the Annual General Meeting to discuss any interest or concern, including performance, governance or strategy, with the Directors.

All Directors are expected to attend the Annual General Meeting. The Chairs of the Audit, Remuneration and Nomination Committees are available at the Annual General Meeting to answer shareholder questions, through the Chairman of the Board, on the responsibilities and activities of their Committees. Shareholders also have the opportunity to meet with the Directors following the conclusion of the formal part of the meeting.

In compliance with the Code, at the Annual General Meeting, the Chairman will announce the level of proxies lodged on each resolution, the balance for and against and abstentions, after it has been dealt with on a show of hands and such details will be placed on the Group’s website following the meeting. A separate resolution will be proposed at the Annual General Meeting in respect of each substantially separate issue.

Directors’ conflicts of interest

Following the changes made to the Company’s Articles of Association at the Annual General Meeting in 2008 and the subsequent introduction of section 175 of the Companies Act 2006 on 1 October 2008, which allows the Directors to authorise potential and actual conflicts of interest, formal procedures for the notification and authorisation of such conflicts have been approved by the Board.

These procedures, which enable the Directors to impose limits or conditions when giving or reviewing authorisation, ensure that only Directors who have no interest in the matter being considered can authorise conflicts, and require the Board to review the register of Directors’ conflicts annually and on an ad hoc basis when necessary. Any potential conflicts of interest in relation to newly appointed Directors are considered by the Board prior to appointment. These procedures have operated effectively throughout the current financial period.

Internal controls and risk management

The Board attaches considerable importance to, and acknowledges its responsibility for, the Group’s systems of internal control and risk management and receives regular reports on such matters. The Board’s policy is to have systems in place which optimise the Group’s ability to manage risk in an effective and appropriate manner. The Board has delegated to the Executive Committee responsibility for identifying, evaluating and monitoring the risks facing the Group and for deciding how these are to be managed. In addition to formal reviews of risk management by the Executive Committee, members are expected to report to the Committee as necessary the occurrence of any material control issues, serious accidents or events that have had a major commercial impact, or any significant new risks which have been identified. Such matters are reported to the next Board meeting and/or Audit Committee meeting as appropriate.

The Group also has in place systems and procedures for exercising control and managing risk in respect of financial reporting and the preparation of consolidated accounts. These include:

• the formulation and deployment of Group accounting policies and procedures;
• Group policies governing the maintenance of accounting records, transaction reporting and key financial control procedures;
• monthly operational review meetings which include, as necessary, reviews of internal financial reporting issues and financial control monitoring; and
• ongoing training and development of financial reporting personnel.

The Group’s systems and procedures are designed to identify, manage and, where practicable, reduce and mitigate the effects of the risk of failure to achieve business objectives. They are not designed to eliminate such risk, recognising that any system can only provide reasonable and not absolute assurance against material misstatement or loss.

The Board formally reviews the operation and effectiveness of the Group’s system of internal controls on an annual basis. The latest review covered the financial year to 25 March 2011. No significant failings or weaknesses were identified from this review.

The Board has a process for identifying, evaluating and managing the risks faced by the Group. This process is continual and has been in place for the year under review up to the date of this report, and is regularly reviewed by the Board in accordance with relevant guidance. There is an established framework of internal controls, which is set out in procedures approved by the Board and which include financial, operational and compliance controls and risk management.

These procedures are readily accessible to staff, who follow their guidance.

The more important elements of this framework are as follows:

Management structure

The Board has overall responsibility for the Company and the Executive Committee has responsibility for specific aspects of the Group’s affairs. The Board and each of its committees operate under a schedule of matters or terms of reference and the Board determines how the Chief Executive and the Executive Committee may operate within a framework of delegated authorities and reserved powers which seek to ensure that certain transactions which are significant in terms of their size or type, are undertaken only after Board review.

The Executive Committee is chaired by Charles Wilson (Chief Executive) and comprises Jonathan Prentis (Group Finance Director), Mark Aylwin (Managing Director - Booker Direct) , Guy Farrant (Managing Director – UK Cash and Carry), Bryn Satherley (Operations Director), Mark Chilton (Company Secretary and General Counsel) and other senior executives representing the operational functions within the Group. It meets twice a month to discuss operational matters, compliance, health and safety and trading performance.

Corporate accounting and procedures

Responsibility levels are communicated throughout the Group as part of the corporate communication procedure. Accounting, delegation of authority and authorisation levels, segregation of duties and other control procedures, together with the general ethos of the Group are included in these communications, and standardised accounting policies are in place reflecting this policy. These procedures are subject to review to ensure that improvements to enhance controls can be made.

Quality and integrity of personnel

The integrity and competence of personnel is ensured through high recruitment standards and subsequent training. Quality personnel are seen as an essential part of the control environment and the ethical standards expected are communicated through senior members of staff.

Budgetary process

Each year the Board approves the annual budget, which includes an assessment of key risk areas. Performance is monitored and relevant action taken throughout the year by regular reporting to the Board of updated forecasts together with information on key risk areas.

Risk management

The Board assesses risk management throughout the Group aided by detailed reviews of internal controls and risk management procedures.

Investment appraisal

Capital expenditure is regulated by the use of authorisation levels. For all expenditure beyond specified levels, Board approval is required.

Internal audit

The Group’s internal audit function, which reports to the Group Finance Director and Chairman of the Audit Committee, monitors the effectiveness of key internal controls and the adequacy of these controls to manage business risk and to safeguard the Group’s assets and resources, in accordance with a work plan approved and monitored by the Audit Committee. Its conclusions are communicated to the relevant level of management and the function has a direct reporting responsibility to the Audit Committee.

Risks and Uncertainties

The list below sets out the most significant risks to the achievement of the Group’s business goals. The list does not include all risks that the Group faces and it does not list the risks in any order of priority.

• Economic environment
  The economy is expected to remain difficult in the year ahead with potential tax rises and the public reducing their levels of discretionary spend. Customers will seek to obtain ‘best’ value from products and the Group aims to provide a wide range of products that meet this requirement.
• Competition
  The industry is extremely competitive with the market being served by numerous competitors, ranging from national multiple retailers to regional independent wholesalers. The Group competes by closely monitoring the activities of competitors and ensuring it continues to improve the choice, price and service to its customers.
• Regulation
  The Group operates in an environment governed by strict regulations to ensure the safety and protection of customers, shareholders, staff and other stakeholders and the operation of an open and competitive market. These regulations include food hygiene, health and safety, data protection, the rules of the London Stock Exchange and competition law. In all cases, the Board takes its responsibilities very seriously, and recognises that any breach of regulation could cause reputational and financial damage to the Group.
• Product quality and safety
  The quality and safety of our products is of critical importance and any failure in this regard would affect the confidence of our customers in us. We work with our suppliers to ensure the integrity of the products supplied. Food hygiene practices are taken very seriously throughout the Group, and are monitored both through internal audit procedures and by external bodies such as environmental health departments. We have well prepared procedures for crisis management in order to act quickly when required. We are aware that if we fail, or are perceived to have failed, to deliver to our customers’ satisfaction the expected standards of quality and safety in our products their loyalty to us may be potentially impacted. This in turn could adversely impact on our market share and our financial results.
• Employee engagement and retention
  The continued success of the Group relies heavily on the investment in the training and development of our employees. The Group’s employment policies, remuneration and benefits packages are designed to be competitive, as well as providing colleagues with fulfilling career opportunities. The Group continually engages with colleagues across the business to ensure that we keep strengthening our team at every level.
• Supplier credit
  Availability of supplier credit is essential for the Group’s financial performance. Any reduction in the availability of supplier credit could adversely impact the Group. The Group regularly meets key credit insurers to ensure that they have an up to date view of the Group’s financial position.
• Financial and treasury
  The Group’s financial results may be subject to volatility arising from movements in commodity prices, foreign currencies, interest rates and the availability of sources of funding.
• Pensions
  The Group operates a closed defined benefit scheme, where judgements are required to determine the assumptions for future salary and pension increases, discount rate, inflation, investment returns and member longevity. There is a risk of underestimating this liability. This risk is mitigated by maintaining a relatively strong funding position over time, taking advice from independent qualified actuaries, agreeing appropriate investment policies with the Trustees and closely monitoring the funding position with the Trustees.
• Information technology (IT)
  The Group is exposed to the risk that the IT systems upon which it relies fail. The Group has appropriate controls in place to mitigate the risk of systems failure, including systems back up procedures and disaster recovery plans, and also has appropriate virus protection and network security controls.