The Code recommends that all members of the Committee be Non-executive Directors, independent in character and judgement and free from any relationship or circumstance which may, could or would be likely to, or appear to, affect their judgement and that at least one such member has recent and relevant financial experience. Accordingly, the Committee comprises all three independent Non-executive Directors with me as Committee Chairman, considered by the Board to have recent and relevant financial experience due to my previous experience in senior financial roles. For the period between 17 October 2017 and 24 June 2018, Keith Edelman served as Executive Chairman during which period he continued to be a member of the Committee and, therefore the Company was not in compliance with the Code during this period. Given that the Committee comprises only three members and that the majority were independent Non-executive Directors during this period and given the issues under review by the Committee during this period, I as Committee Chairman was satisfied that this was in the best interests of the Company and its shareholders.
I have previously held senior finance positions in large leisure sector companies including finance director of Greene King plc and have been a non-executive director and audit committee chairman at Britvic plc, Spice plc (now EnServe Group Limited) and Domino’s Pizza Group plc.
I am, therefore, suitably experienced to perform the role of Audit Committee Chairman and have a good understanding of the sector in which the Group operates.
Regular Committee meetings are also normally attended by the Chief Financial Officer and the external auditor. The Chief Financial Officer, who is also the Company Secretary, acts as secretary to the Committee. Other members of management, particularly senior financial managers, are invited to attend depending on the matters under discussion.
The Committee meets at least twice a year at the appropriate times in the reporting and audit cycle and also at least twice per annum ensures that there is meeting time with the external auditor with no members of management present. The Committee was set up by the Board to assist it with its responsibilities in respect of financial reporting, including reviewing annual and half-year results, external auditing, internal controls, and advising on the independence and appointment of the external auditor. The Committee also routinely examines significant accounting treatments facing the Group and will focus on those matters raised by the external auditor which they consider to be of significant audit risk.
Following completion of the Group’s audit for the 52 weeks ended 30 June 2017 and the other associated formalities, the Committee reflected on the difficulties that the Group had experienced on its financial reporting (as reported in last year’s Committee report) which had given rise to a significant number of prior year adjustments. The Committee decided that a change of auditor was appropriate and accordingly a tender process was undertaken by the Committee resulting in the resignation of KPMG LLP and appointment of PricewaterhouseCoopers LLP (“PwC”) as the Group’s external auditor on 29 January 2018. The Committee is satisfied that, since the date of appointment, PwC has undertaken its responsibilities as the Group’s external auditor to a high standard and therefore the Committee will be recommending that PwC be formally appointed as auditor at the 2018 annual general meeting (“AGM”). The PwC audit partner responsible for the Group is Randal Casson.
During the year, the Directors continued to assess the following key areas:
Board governance, including the Committee and the procedure for assessing the Group’s key risks;
management accounting processes and the quality of information provided to the Board;
external financial reporting procedures and audit arrangements and reporting standards;
complex transactions, potential exposure and risk;
- information systems; and
budgeting and forecasting procedures and controls.
The Directors recognise the need to maintain the financial reporting procedures, review them on a continuing basis and adapt them to changing circumstances. Their review forms part of the Committee’s agenda going forward together with its wider role and responsibilities, which are set out in more detail in this report.
Chairman of the Audit Committee
2 October 2018