Corporate Governance Statement

The Group applies the principles and provisions of The UK Corporate Governance Code (“the Code") as adopted by the Irish Stock Exchange (ISE) and the UK Financial Services Authority and of the Irish Corporate Governance Annex (“the Annex”) issued by the ISE.

Throughout the year ended 31 December 2015 and to date the Group has been in compliance with the provisions of the Code and the requirements set out in the Annex.

Board of Directors

The Board is collectively responsible for the long-term success of the Group through provision of leadership within a framework of prudent and effective controls which enables risk to be assessed and managed. Pursuant to the Articles of Association, the Directors of the Company are empowered to exercise all such powers as are necessary to manage and run the Company, subject to the provisions of the Companies Act 2014.

The Board comprises of two executive and four non-executive Directors. Details of the professional and educational backgrounds of each director encompassing the experience and expertise that they bring to the Board are set out here. The Board believes that it is of a size and structure and that, the Directors bring an appropriate balance of skills, experience, independence and knowledge to enable the Board to discharge its respective duties and responsibilities effectively, with no individual or group of individuals dominating the Board’s decision making. Each of the non-executive Directors has a broad range of business experience independent of the Group both domestically and internationally.

All of the non-executive Directors are considered by the Board to be independent of management and free of any relationships which could interfere with the exercise of their independent judgement. In considering their independence, the Board has taken into account a number of factors including their length of service on the Board, other directorships held and material business interests.

Mr McGuckian has served on the Board for more than nine years since his first appointment. Mr McGuckian has a wide range of interests and experience both domestically and internationally. The Board has considered the knowledge, skills and experience that he contributes and assesses him to be both independent in character and judgement and to be of continued significant benefit to the Board. Mr McGuckian was considered to be independent at the date of appointment as Chairman in 2004.

Catherine Duffy is a senior partner at law firm A&L Goodbody from whom the Company has received legal services in their capacity as legal advisors to the Company. Details of the expense incurred, which were on an arm’s length basis at standard commercial terms, are set out at Note 33 of the Financial Statements. The Board has considered the relationship and does not consider it to affect Catherine’s independence as a non-executive director of the Company.

All Directors are appointed by the Board, following a recommendation by the Nomination Committee, for an initial term not exceeding three years, subject to annual re-election at the Annual General Meeting. Non-executive Directors are deemed to be independent on appointment and this status is reviewed annually, prior to recommending the resolution for re-election. Under the Articles each director is subject to re-election at least every three years but in accordance with the Code the Board has agreed that each Director will be subject to annual re-election at the Annual General Meeting.

The terms and conditions of appointment of non-executive Directors appointed after 2002 are set out in their letters of appointment, which are available for inspection at the Company’s registered office during normal office hours and at the Annual General Meeting of the Company.

Board Procedures

The Board agrees a schedule of regular meetings each calendar year and also meets on other occasions if necessitated with contact between meetings as required in order to progress the Group’s business. Where a director is unable to attend a meeting, they may communicate their views to the Chairman. The Directors receive regular and timely information in a form and quality appropriate to enable the Board to discharge its duties. Non-executive Directors are expected to utilise their expertise and experience to constructively challenge proposals tabled at the meetings. The Board has direct access to the executive management who regularly brief the Board in relation to operational, financial and strategic matters concerning the Group.

The Board has a formal schedule of matters specifically reserved to it for decision, which covers key areas of the Group’s business including approval of financial statements, budgets (including capital expenditure), acquisitions or disposals, dividends and share redemptions, board appointments and setting the risk appetite. Certain additional matters are delegated to Board Committees, of which additional information is set out later in this report.

The roles of Chairman and Chief Executive are separate, set out in writing and approved by the Board. The Board has also delegated the management of the Group to the Executive Management, through the direction of the Chief Executive.

The Chairman holds meetings with the non-executive Directors without the executive Directors present and the non-executives also meet once a year, without the Chairman present, to appraise the Chairman’s performance.

There is a procedure for Directors in the furtherance of their duties to take independent professional advice, at the expense of the Group, if they consider this necessary. The Group carries director liability insurance which indemnifies Directors in respect of legal actions that may be taken against them in the course of discharging their duties as directors. 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 followed and that applicable rules and regulations are complied with.

The Board recognises the need for Directors to be aware of their legal responsibilities as Directors and it ensures that Directors are kept up to date on the latest corporate governance guidance, company law developments and best practice.

Board Committees

During the year ended 31 December 2015, there were three standing Board Committees with formal terms of reference; the Audit Committee, the Nomination Committee, and the Remuneration Committee. In addition the Board will establish ad-hoc sub-committees to deal with other matters as necessary. All Board committees have written terms of reference setting out their authorities and duties delegated by the Board.

The terms of reference are available, on request, from the Company Secretary and also the links below.

The Audit Committee


Composition

At 4 March 2016, the Audit Committee members were non-executive Directors John Sheehan (Chairman), Catherine Duffy and Brian O’Kelly. The Board has determined that all appointees are independent and that Brian O’Kelly and John Sheehan have recent and relevant financial experience. The Company Secretary acts as secretary to the Committee.

Meetings

The Committee meets at least three times during the course of each financial year, with each meeting agenda corresponding with the Group’s financial year.

The Committee invites the Chief Executive, Chief Financial Officer, other senior management, Internal Auditor and External Auditor to attend meetings from time to time. The Committee meets with the Internal Auditor and External Auditor alone at least once a year.

The scheduled meetings take place on the same day as Board meetings. The Chairman provides updates to the Board on key matters discussed and minutes are circulated to the Board.

Role and Responsibilities

The role, responsibilities and duties of the Audit Committee are set out in written terms of reference which were last reviewed by the Board on 4 March 2014. The terms of reference are available from click here.

The Committee supports the Board in fulfilling its responsibilities in relation to the integrity of financial reporting and advises whether the Annual Report and Financial Statements, taken as a whole, is fair, balanced and understandable and provides the information necessary for shareholders to assess the Group’s performance, business model and strategy. It keeps under review the effectiveness of the Company’s internal controls and financial risk management systems, including the internal audit function. It oversees the relationship with the External Auditor, including consideration of the appointment of the External Auditor, the level of audit fees, and any questions of independence, resignation or dismissal. The Committee discusses with the External Auditor the nature and scope of the audit and the findings and results. The Committee also formulates and oversees the operation of the Group’s whistleblowing procedures.

For further details on the Audit Committee including detail of work performed please refer to the Report of the Audit Committee included in the Annual Report.

The Nomination Committee


Composition

At 4 March 2016, the Nomination Committee members were non-executive Directors John B. McGuckian (Chairman), Catherine Duffy and executive Director Eamonn Rothwell. The Company Secretary acts as secretary to the Committee.

Meetings

The Committee meets as required but at least once during the course of each financial year. The Chairman provides updates to the Board on key matters discussed.

Role and Responsibilities

The role, responsibilities and duties of the Nomination Committee are set out in written terms of reference which were last reviewed by the Board on 4 March 2014. The terms of reference are available from click here.

Its duties are to regularly evaluate the balance of skills, knowledge, experience and diversity of the Board and Committees and make recommendations to the Board with regards to any changes. It is also charged with searching out, identifying and proposing to the Board new appointments of executive or non-executive Directors. The committee also considers the re-appointment of any non-executive Director on the expiry of their term of office. In discharging its duties the Committee is cognisant of the requirement to allow for orderly succession and refreshment of the Board.

For further details on the Nomination Committee including detail of work performed please refer to the Report of the Nomination Committee included in the Annual Report.

The Remuneration Committee


Composition

The Remuneration Committee comprises the non-executive Directors Brian O’Kelly (Chairman) and John Sheehan. Both Directors bring significant professional expertise to their roles on this Committee.

Meetings

The Committee meets as required but at least once during the course of each financial year. The Chairman provides updates to the Board on key matters discussed.

Role and Responsibilities

The role, responsibilities and duties of the Remuneration Committee are set out in written terms of reference which were last reviewed by the Board on 2 March 2016.

The terms of reference are available from click here.

The Committee’s duties are to approve the remuneration structures and levels, of the executive Directors and senior management. It ensures a remuneration policy framework such that individuals are appropriately rewarded and motivated to perform in the best interest of the shareholders. In framing remuneration policy the Remuneration Committee has regard to comparable companies in both size and complexity. The Remuneration policy is also designed to align remuneration with the financial results of the Group and with the longer term interests of the Group’s shareholders. Remuneration comprises salary, performance pay, other benefits, share option awards and restricted share awards.

For further details on the Remuneration Committee including detail of work performed, remuneration policy and details of Directors’ remuneration please refer to the Report of the Remuneration Committee included in the Annual Report.

Attendance at scheduled board meetings and board committee meetings during 2015:




Communications with Shareholders

The Board promotes good communications with shareholders and the Group commits resources to shareholder communication commensurate with its size. Other than during close periods and subject to the requirements of the Takeover Code, when applicable, the Chief Executive and the Chief Financial Officer have a regular dialogue with its major shareholders throughout the year and report on these meetings to the Board. The Senior Independent Director is also available on request to meet with major shareholders.

The Board encourages communications with shareholders and welcomes their participation at all general meetings of the Company.

Regular formal updates are provided to shareholders and are available on the Group’s website. During 2015 these included Interim Management Statements, the Half-Yearly Financial Report, and the Annual Report and Financial Statements together with investor presentations. Irish Continental Group’s website, www.icg.ie, also provides access to other corporate and financial information, including all regulatory announcements and a link to the current ICG Unit price.

Click here to view the investor Centre.

Arrangements will be made for the 2015 Annual Report and 2016 Annual General Meeting Notice to be available to shareholders 20 working days before the meeting and for the level of proxy votes cast for and against each resolution and the number of abstentions, to be announced at the meeting. Further details on the procedures applicable to general meetings are set out on page 41 of the 2015 annual report.

Internal Control

The Board has overall responsibility for the Group’s system of internal control and for reviewing its effectiveness. However, such a system is designed to manage rather than eliminate the risk of failure to achieve business objectives, and can only provide reasonable, and not absolute, assurance against material misstatement or loss.

In accordance with Guidance on Risk Management, Internal Control and Related Financial and Business Reporting (September 2014) issued by the FRC, the Board confirms that there is a continuous process for identifying, evaluating, and managing the significant risks faced by the Group, that it has been in place for the period under review and up to the date of approval of the financial statements, and that this process is regularly monitored by the Board.

The nature of the Group’s business, which is primarily the operation of ships and provision of related services, is such that operational safety is paramount. Significant risks include risks to operational safety as well as financial risks. Our Group Risk Management function therefore comprises an Operations Risk Manager and Safety, Security & Quality Systems Manager in the Ferries Division, in addition to the Internal Audit function.

The key risk management systems and internal control procedures, which are supported by detailed controls, processes and reporting to the Board, include:

  • The Group Risk Management function which reviews key business processes and controls;
  • An organisational structure with clearly defined lines of authority and accountability;
  • A skilled and experienced Group and divisional management;
  • A formally constituted Audit Committee which reviews the operation of the Group Risk Management function, the Internal Audit function, liaises with the External Auditor and reviews the Group’s internal control systems;
  • The Board of Directors which reviews and approves the annual budget each year which is used for comparison with monthly management accounts throughout the year;
  • A centralised treasury function which manages the financial risks of the Group;
  • A standardised consolidation system for the preparation of the Group’s monthly management accounts, interim and annual consolidated financial statements; and
  • The Board of Directors which reviews and monitors the capital expenditure programme on an on-going basis.

The Group maintains a risk register which identifies the nature and extent of the risks faced by each business unit and the Group overall, covering financial, operational, and compliance controls and risk management. These risks are prioritised in terms of likelihood of occurrence, estimated financial impact and the Group’s ability to reduce the incidence and impact on business operations should any risk materialise. The risk register is reviewed on a regular basis by management. Reporting by management on the identified principal risks is covered within the regular Board meeting agenda and this forms the basis of the continuous risk monitoring process. The Board separately conducts an annual assessment of the significant risks and uncertainties facing the Group (set out on page 20 to 21 of the 2015 annual report) and the adequacy of the monitoring and reporting system maintained by management. No material weaknesses were noted by the Board during the year.

Taking account of the Company’s current position and principal risks the Directors have set out in the Viability Statement on page 29 of the 2015 annual report their assessment of the prospects for the Company.

The Board has delegated the responsibility for reviewing the Group’s internal control and financial risk management systems and monitoring the integrity of the Group’s financial statements to the Audit Committee. A separate report of the Audit Committee is set out on pages 45 to 48 of the 2015 annual report.

Internal audit

The Committee meets with the Internal Auditor on a regular basis without the presence of management. It reviewed and approved the internal audit programme, ensured that the internal audit function is adequately resourced, and considered the major findings of investigations and management’s responsiveness to these findings and recommendations.

Performance Evaluation

The Board conducts an annual self-evaluation of the Board as a whole, the Board processes, its committees and individual Directors. The process led by the Chairman, is forward looking in nature and encompasses aspects including board effectiveness, the composition of the Board, the content and running of Board and Committee meetings, corporate governance, risk and crisis management, and succession planning. Within this process, the non-executive Directors, led by the Senior Independent Director, carry out an evaluation of the Chairman’s performance. The performance of individual directors is assessed by the Chairman following discussions, held by the Chairman, with directors on an individual basis. During the period the Group qualified to be treated as a smaller company under the Code and the process has not been externally facilitated. The process is continuous, with a follow up of previous recommendations at each review.

Directors' Remuneration

The report of the Remuneration Committee is set out in the Annual Report please download the pdf version here.

 

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