We have chosen to report against the 2018 UK Corporate Governance Code (the “Code”) and this report sets out in broad terms how we have complied with the Code as at 31 December 2020. During the year, we have applied the principles of, and complied with the provisions of, the Code, with the exception of matters which are explained in the Annual Report for the year to 30 June 2020 (the 2020 Annual Report).
A full version of the Code is available from the Financial Reporting Council website at www.frc.org.uk.
The Board is responsible for the long-term sustainable success of the Company, by ensuring that CVS Group plc, its subsidiaries and all its businesses (the Group) are managed for the long-term benefit of all shareholders, while having regard for employees, customers, suppliers, and our operational impact on the community and environment. It sets the Group’s purpose, strategy and values and is accountable to shareholders for ensuring that the Group is appropriately managed and achieves its objectives in a way that is supported by the right culture and behaviours. The Board sets the Group’s risk appetite, and reviews the controls applied to operate the business in line with that appetite. It determines, monitors and oversees risk management processes, financial controls and audit processes to ensure the Group operates effectively and sustainably in the long term.
The Board has overall responsibility for establishing the Group’s purpose, culture and strategy to deliver the long-term growth of the Group and generate value for shareholders. The Board is committed to the delivery of our clear strategy and our vision to be the veterinary company people most want to work for. Good corporate governance facilitates clear delegation of authority from the Board through to our Executive Committee and Senior Leadership Group, and beyond, to promote clear disciplined decision- making and ensure the effective execution of our strategic priorities. This is explained in the Strategic Report section of the 2020 Annual Report. The Board has overseen the strengthening of our organisational capabilities and enhanced the governance framework with the development of our Executive Committee through the appointments of a new HR Director and the addition of a Chief Technology Officer. These appointments have ensured that the Group has the right capabilities in terms of scale and complexity, as we continue to grow. Over the next year, the Board will be focused on ensuring we deliver on the strategic priorities that underpin our four key strategic pillars.
The Board acknowledges that it is accountable to stakeholders for ensuring that the Group is appropriately managed and achieves its objectives in a way that is supported by the right culture and behaviours. The Board is responsible for ensuring that its activities reflect the culture of the Group, set the tone from the top and drive the right behaviours with our employees.
CVS Group plc is committed to communicating openly with its shareholders to ensure that its strategy and performance are clearly understood. The Executive Directors hold regular meetings with institutional investors, private client brokers, individual investors, fund managers and analysts to discuss information made public. The Chairman and the Non-Executive Directors are available to shareholders on all matter relating to governance and strategy. They may be contacted through the Company Secretary at email@example.com.
The Board understands the importance of engaging with our stakeholders and we have continued to keep their interests at the forefront of our decision-making throughout the year. More information on how the Board engages with stakeholders can be found on pages 18 and 19 of the 2020 Annual Report.
The Board has delegated responsibility for overseeing the effectiveness of the Group’s internal controls and risk management systems to the Audit Committee. More information can be found in the Audit Committee Report on pages 61 and 62 of the 2020 Annual Report. Whistleblowing procedures are embedded throughout the business and more details are available in the Audit Committee Report. The Board has effective procedures in place to monitor and deal with conflicts of interest.
There is a clear division of responsibilities between the Chairman and the Chief Executive Officer. The Chairman was independent on appointment to the Board and is responsible for running the business of the Board, ensuring the effectiveness of the Board and appropriate strategic focus and direction, promoting high standards of corporate governance and promoting a culture of openness and debate. The Chief Executive is responsible for proposing the strategic focus to the Board, the implementation and execution of strategy and leading the engagement of the Group through the Executive Committee.
The Board is currently composed of the Chairman, three Executive Directors (the CEO, CFO and COO) and three Non- executive Directors, all of whom are considered to be independent. There was a change to the Board in July 2020, with the addition of an additional Non-executive Director, Richard Gary. More details are available at page 63 of the 2020 Annual Report.
The Board is satisfied that its Directors have an appropriate balance of skills and experience, and there is a suitable balance between independence of character and judgment, and knowledge of the Group, to enable it to discharge its duties and responsibilities effectively.
The Non-Executive directors scrutinise and constructively challenge the performance of management in the execution of our strategy, provide sound independent judgement to Board discussions and protect long-term shareholder value. Mike McCollum is the Senior Independent Director and is a trusted intermediary for other Non-executive Directors.
During the year, the Chairman met with the Non-executive Directors without the Executive Directors being present.
The Directors have access to the advice and services of the Company Secretary, who is responsible for ensuring that all Board procedures have been complied with. The appointment and removal of the Company Secretary is a matter reserved for the Board as a whole. Individual Directors are also able to take independent legal and financial advice at the Group’s expense when necessary to support the performance of their duties as directors.
The Board has established a Nomination Committee to lead the process of appointments, succession planning and diversity. The composition, responsibilities and activities of the Nomination Committee is set out in the separate Nomination Committee Report on pages 63 to 64 of the 2020 Annual Report.
All of our Directors stand for re-election annually at every AGM. The Board unanimously believes that the contributions of each Director standing for re-election continue to be effective.
The Board conducts regular evaluations of its performance, as well as that of its Committees and individual Directors, usually annually.
The Board has established an Audit Committee to monitor the integrity of the Financial Statements, review the effectiveness of the internal and external audit functions and review the effectiveness of the Group’s internal controls. The composition, responsibilities and activities of the Audit Committee is set out in the separate Audit Committee Report on pages 61 and 62 of the 2020 Annual Report.
A statement of the Directors’ responsibilities in respect of the Annual Report and financial statements is set out on page 76 of the 2020 Annual Report. The viability statement and statement of going concern can be found on page 38 of the 2020 Annual Report.
The external auditors, Deloitte LLP, were first appointed in the financial year to 30 June 2017. In line with its Terms of Reference, the Audit Committee undertakes a thorough assessment of the quality, effectiveness, value and independence of the audit provided by Deloitte LLP each year. The Board is satisfied that the Group has adequate policies and safeguards in place to ensure Deloitte LLP maintain their objectivity and independence. The external auditors report to the Audit Committee annually on their independence from the Group. The Board has a formal policy on the Group’s relationship with Deloitte LLP in respect of non-audit work. More information can be found in the Audit Committee Report on pages 61 to 62 of the 2020 Annual Report. The report of Deloitte LLP can be found on pages 78 to 82 of the 2020 Annual Report.
The Board has delegated responsibility for overseeing the effectiveness of the Group’s internal controls and risk management systems to the Audit Committee. The Group’s internal audit function provides independent assurance as to the adequacy and effectiveness of the Group’s internal controls and risk management systems. More information of our risk management and internal control procedures can be found on pages 42 to 53 of the 2020 Annual Report and in the Audit Committee Report on pages 61 to 62 of the 2020 Annual Report.
The Board has established a Remuneration Committee who are responsible for determining the Company’s remuneration policy. The composition, responsibilities and activities of the Remuneration Committee is set out in the Remuneration Committee Report on pages 64 to 73 of the 2020 Annual Report.
The Remuneration Committee determines Group policy on the remuneration of the Executive Directors. The principles that underpin this policy are designed to ensure that the Group achieves its potential and increases long-term shareholder value. With regard to basic salary, the objective is to ensure that the Group attracts and retains high calibre Executives with the skills, experience and motivation necessary to direct and manage the affairs of the Group.
Our purpose is to give the best possible care to animals.
Our vision is to be the veterinary company people most want to work for.
Our key strategic pillars are:
Group Company Secretary
17 December 2020