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 2018 the Board consisted of a non-executive Chair and six non-executive Directors, as well as the Chief Executive and a Worker Director. Gerry Gray and Patrick Eamon King were appointed as non-executive Directors in February 2018. Mr John Moloney retired as Chair in December 2018. In 2019 Ms. Bernie Gray was appointed as Chair of the Board (13 March 2019); Ms Eleanor O'Neill (24 July 2019) and Mr Gerard Murphy (Pending 13 December 19) were appointed as non-executive Directors.¹
The Chairman and non-executive board members are independent of the Chief Executive and senior management. All the non-executive Directors are appointed to the Board by the Minister for Agriculture, Food and the Marine for a period not to exceed 5 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 nonexecutive Directors is not linked to performance.
The Board meets formally on a regular basis. 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 ten year financial plan are reviewed and approved by the Board. The Board receives monthly management accounts promptly with detailed comparison of actual to budget. The presentation of management accounts is supported by detailed presentations by senior management to the Board on a regular basis. All significant contracts, 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.
¹Mr Dermot Mulvihill, Ms. Roisin Brennan and Mr Tommy O'Malley (Worker Director) retired as directors in 2019. Mr Jerry Houlihan was re-appointed for a further 2 year period in 2019.
Audit and Risk Committee
Members: Gerry Gray (Chair) Gerard Murphy and Eleanor O'Neill.
The Audit Committee is composed of non-executive Directors and operates under formal terms of reference. 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, reports of the external auditors and internal assurance and compliance 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 is responsible for the appointment and fees of the external auditors and meets with them 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 Auditors monitor 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 Remuneration Committee of the Board was reconstituted in 2016 for the following purpose: to advise the Board in regard to policy on executive remuneration generally in the Company; to give guidance and advice to the Chief Executive in regard to the implementation of the Board’s policy as applied to the top management; to review performance related pay objectives and payment for the Group in any given year; to assist the Board in reviewing the performance and reward of the Chief Executive (subject to consultation with the Department of Agriculture, Fisheries and Marine and recommendations in relation to changing the pay and conditions of the Chief Executive being subject to Ministerial approval)
The members of the Committee are : Julie Murphy-O'Connor (Chair) Patrick Eamon King and Bernie Gray.
The Board has overall responsibility for the Group’s system of internal control. Those systems which are maintained by the Group can provide only reasonable and not absolute assurance against material misstatement or loss. The Board confirms that it has reviewed the effectiveness of the system of internal control.
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, which accords with guidance contained in the Code of Practice for the Governance of State Bodies, is designed to ensure management carry on the business of the Group in an orderly manner, safeguard its assets and ensure, as far as possible, the accuracy and reliability of its records.
The key elements of the system are:
- An organisation structure with clear operating and reporting procedures, authorisation limits, segregation of duties and delegated authorities.
- A comprehensive system of financial reporting.
- Annual budgets and long term plans for the business that identify key risks and opportunities.
- Monitoring performance against budgets and reporting on it to the Board on a monthly basis.
- A formal code of business conduct applicable to the business and communicated to staff.
- An Assurance and Compliance function that reviews the system of internal controls on a regular basis.
- An audit and risk committee that reviews the effectiveness of the Group’s system of internal financial control on an annual basis.
A risk register has been compiled that identifies the most significant risks facing the Group. These have been identified, evaluated and graded according to their significance. The key risks are reviewed by the Board on a regular basis. The outcome of these assessments is used to plan and allocate resources to ensure risks are managed at an acceptable level. In reviewing these risks, managers were asked to pay particular attention to:
- The counter measures in place to mitigate the risk.
- The net residual risk having regard to the processes and controls in place.
- Actions required or being taken to further mitigate the risk.
- The risks identified were ranked in terms of their impact and likelihood of occurrence and managers have been instructed to ensure these risks are considered in the development of business plans and the performance plans of individual managers. This is an ongoing process and the Group’s risk profile and risk management process will continue to be reviewed on a periodic basis.
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 2018 is set out in note 18 of the 2018 Annual Accounts.
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 2018.
Events since the end of the financial year
There were no significant events, outside the ordinary course of business, that affected the Group since 31 December 2018.
The Auditor, KPMG, have indicated their willingness to continue in office.