Governance and Framework
The Code of Practice for the Governance of State Bodies, issued by the Department of Finance, sets out the principles of corporate governance that apply to the Company and the Directors support the principles and provisions of the code.
ABOUT THE BOARD
During the financial year 2021, the Board consisted of a non-executive Chair, six non-executive Directors and one worker representative Director. Mr Jerry Houlihan resigned as a Director in May 2021. Ms Imelda Hurley (CEO) and Mr Frank Hayes were appointed as Directors in January 2022.
The Chairman and the majority of the non-executive board members (with the exception of the worker representative Director) are independent of the Chief Executive and senior management. All the Directors are appointed to the Board by the Minister for Agriculture, Food and the Marine for a period not to exceed five financial years and their terms of office are set out in writing. The level of remuneration for the Board of Directors is also determined by the Minister and remuneration of non-executive Directors is not linked to performance.
The Board meets formally on a regular basis, it met on twelve occasions during 2021. It has a schedule of matters specifically reserved to it for decision and is satisfied that the direction and control of the Group is firmly in its hands. The Group’s annual budget and rolling five year financial plan are reviewed and approved by the Board. The Board receives the latest management accounts in advance of each meeting, with detailed comparison of actual to budget included in these accounts. Significant contracts, not in the normal course of business, major investments and capital expenditure are also subject to review by the Board. Each non-executive Director brings independent judgement to bear on all matters dealt with by the Board including those relating to strategy, performance, resources and standards of conduct.
All members of the Board have access to the Company Secretary and the Company’s professional advisors as required. This ensures that Board procedures are followed and that applicable rules and regulations are complied with. Each Director received appropriate briefing on being appointed to the Board.
AUDIT AND RISK COMMITTEE
Members: Gerry Gray (Chair) Gerard Murphy , Eleanor O’Neill and Kevin McCarthy.
The Audit and Risk Committee comprises non-executive Directors and the worker representative Director and operates under formal terms of reference. It met on four occasions in 2021. The role of the Audit and Risk Committee is to support the Board in relation to its responsibilities for issues of risk, control and governance and associated assurance. The Audit and Risk Committee is independent from the financial management of the organisation. In particular the Audit and Risk Committee ensures that the internal control systems, including internal audit activities, are monitored actively and independently. The Audit and Risk Committee reports formally to the Board after each meeting. The Committee may review any matters relating to the financial affairs of the Group, in particular, the annual financial statements, the financial control framework, the Assurance and Compliance function (including internal audit), reports of the external and internal auditors and proposed changes to accounting policies. The Chief Executive, Chief Financial Officer, the Assurance and Compliance Director and other senior managers are normally invited to attend these meetings as appropriate. The Committee oversees the selection process for the appointment of the external auditors (which includes agreeing fees) and makes a recommendation to the Board in this regard. The Audit and Risk Committee meets with the external auditors to plan and subsequently review the results of the annual audit. The external auditors also meet privately with the Committee. The Assurance and Compliance Director reports directly to the Committee and the Committee is responsible for approval of the internal audit plan. The Assurance and Compliance Director also meets privately with the Committee.
A framework to formally identify risk and assess the effectiveness of internal controls has been established. Assurance and Compliance function monitors the Group’s control systems by examining financial reports, by testing the accuracy of the reporting of transactions and by otherwise obtaining assurances that the systems are operating in accordance with the Group’s objectives. Management’s response to significant risks identified and their reporting procedures are also evaluated.
The role of the Remuneration Committee is to advise the Board with regard to policy on executive remuneration in the Group and to give guidance and advice to the Chief Executive regarding the implementation of the Board’s policy as applied to the senior management.
The members of the Committee during 2021 were Julie Murphy-O’Connor (Chair), Bernie Gray and Patrick Eamon King. It met on five occasions in 2021.
The role of the Investment Committee is to advise the Board with regard to the status of existing strategic projects across the Group against project milestones, to recommend and advise on new projects of scale and to review the risk assessment of each Strategic Project.
The members of the Committee during 2021 were Patrick Eamon King (Chair), Gerry Gray, Gerard Murphy and Jerry Houlihan (resigned 23 May 2021). It met on six occasions in 2021.
The Board is responsible for ensuring that an effective system of internal control is maintained along with having overall responsibility for risk management. The Board ensures that the Group’s risk exposure remains proportional to the pursuit of its strategic objectives and to its longer term goal of creating shareholder value. This responsibility takes account of the requirements of the Code of Practice for the Governance of State Bodies (2016).
Management is responsible for the identification and evaluation of significant risks applicable to their areas of business, together with the implementation of suitable internal controls. These risks are assessed on a continuous basis and may arise because of control failures, disruption to IT systems, legal and regulatory issues, market conditions and natural catastrophes.
Management also reports to the Board on major changes in the business and external environment which affect risk. Where areas of improvement in the system are identified, the Board considers the recommendations of management and the Audit and Risk Committee.
The system of internal control is designed to manage risk to a tolerable level rather than to eliminate it. The system can therefore provide only reasonable and not absolute assurance that assets are safeguarded, transactions authorised and properly recorded and that material errors or irregularities are either prevented or detected in a timely way.
Processes have been implemented on financial controls, business forecasting, health & safety, training, employee welfare, contractor and stakeholder management to identify and manage risks at a local level and ensure that material risks are notified and highlighted to the Board and the Operating Executive.
The Audit and Risk Committee reviews the risk register as a standing meeting agenda item. This provides a challenge to Executive management on how risks are being mitigated and sets the tone from Board to management on risk management matters.
The internal audit function plays a key role, providing additional oversight and reporting on how risks are being managed to the Audit and Risk Committee. This process of bottom-up and top-down analysis and oversight provides the basis for the monitoring and assessment of risks, including the identification of emerging risks.
Coillte maintains a risk register at Group and divisional levels. Risk is assessed in a systematic and collaborative way, drawing on the knowledge and views of stakeholders. Group risks are reviewed quarterly by the Board.
The risk assessment process is forward looking and uses the best available information to identify risks, evaluate risks and develop mitigating actions. The key steps in the risk assessment stage are:
- Risk identification,
- Risk analysis,
- Risk evaluation,
- Risk mitigations and
- Monitoring and review.
Formal procedures have been established for monitoring control processes and control deficiencies are communicated to those responsible for taking corrective action and to management and the Board, where relevant, in a timely way. The following ongoing monitoring systems are in place:
- key risks and related controls have been identified and processes have been put in place to monitor the operation of those key controls and report any identified deficiencies,
- reporting arrangements have been established at all levels where responsibility for financial management has been assigned, and
- there are regular reviews by senior management of periodic and annual performance and financial reports which indicate performance against budgets/ forecasts.
The Board confirms that Coillte CGA has put in place appropriate procedures to monitor the effectiveness of its risk management and control procedures.
The measures taken by the Directors to secure compliance with the Group and Company’s obligation to keep adequate accounting records are the use of appropriate systems and procedures and employment of competent persons. The accounting records are kept at the Group’s head office at Dublin Road, Newtownmountkennedy, Co. Wicklow.
RESEARCH AND DEVELOPMENT
During the financial year, the Group continued its research and development programme in relation to its forestry activities and in expanding the application of its panel board products.
PROMPT PAYMENTS REGULATION
The Directors acknowledge their responsibility for ensuring compliance, in all material respects, with the provisions of the Prompt Payment of Accounts Act, 1997 as amended by the European Communities (Late Payment in Commercial Transactions) (S.I. No. 580 of 2012) (‘the Regulations’). Procedures have been implemented to identify the dates upon which invoices fall due for payment and for payments to be made by such dates.
Accordingly, the Directors are satisfied that the Company has complied with the requirements of the Regulations.
SUBSIDIARY, JOINT VENTURE AND ASSOCIATE UNDERTAKINGS
A list of subsidiary , joint venture and associate undertakings as at 31 December 2021 is set out in note 18 of the 2021 Annual Report.
There were no political contributions which require disclosure under the Electoral Act, 1997.
REPORT UNDER SECTION 22 OF THE PROTECTED DISCLOSURES ACT 2014
Section 22 of the Protected Disclosures Act 2014 requires Coillte to publish an annual report relating to protected disclosures made under the Protected Disclosures Act 2014. In accordance with this requirement, Coillte confirms that there were no protected disclosures made during the full year ending 31 December 2021.
EVENTS SINCE THE END OF THE FINANCIAL YEAR
There have been no events between the balance sheet date and the date on which the financial statements were approved by the Board, which require adjustment to the financial statements or any additional disclosure in the financial statements.
The Auditor, KPMG, have indicated their willingness to continue in office.