Corporate Governance

Dart Group plc (the “Group”) has chosen to apply the UK Corporate Governance Code 2016, issued by the Financial Reporting Council (the “Code”).  A copy of the Code can be found here.

An explanation of how the Group has complied with the Code is set out here in accordance with AIM Rule 26.

LEADERSHIP

The Role of the Board

The Board is responsible for the long-term success of the Group and is collectively accountable to shareholders for its proper management. The Board has a formal schedule of matters specifically reserved to it for decision, including: 

  • reviewing and approving the Group’s overall strategy and direction;
  • determining, maintaining and overseeing controls, audit processes and risk management policies to ensure the Group operates effectively and sustainably in the long-term;
  • approval of the financial statements, as well as revenue and capital budgets and plans; and
  • approval of material agreements and non-recurring projects.

Board Committees

The Board is supported by the Audit and Remuneration Committees, each of which has access, at the cost of the Group, to the resources, information and advice that it deems necessary to enable the committee to discharge its duties.  Although not in compliance with the Code, due to the size and composition of the Board, there is no separate Nomination Committee.

Division of Responsibilities between Executive Chairman and Chief Executive Officers

The roles of the Executive Chairman and Chief Executive Officers are clearly defined and separate.

In line with the Code, executive responsibility for the day-to-day running of the Group’s Leisure Travel business (comprising the operating subsidiaries Jet2.com and Jet2holidays) sits with its Chief Executive Officer, Stephen Heapy. Executive responsibility for the day-to-day running of Fowler Welch sits with its Chief Executive Officer, Nicholas Hay.  In these circumstances the Executive Chairman does not fulfil the combined role of Chairman and Chief Executive of the Group.

As the founder of the Group, the Executive Chairman has served on the Board for more than nine years from the date of his election and owns 36.97%1 of the issued share capital of the Group.

1 As at 31 July 2019

The Chairman

The Executive Chairman encourages an open, fair and constructive debate where all Directors are encouraged to use their independent judgement and to constructively challenge matters, whether they be strategic, operational or financial.

Non-Executive Directors

The Non-Executive Directors bring a suitable balance of skills, experience and knowledge of the Company, to provide constructive challenge to management and help develop proposals on strategy. In addition, their independence of character and integrity prevents any individual or small group from dominating the decision making of the Board as a whole. The Group has two Non-Executive Directors with whom the Executive Chairman meets regularly without the other Executive Directors present. 

The Group has appropriate insurance in place in respect of legal action against its directors.

EFFECTIVENESS

Board Composition

The Board comprises:

•            Philip Meeson, who performs the role of Executive Chairman of the Group and has responsibility for the leadership of the Board; 

•            Gary Brown, the Group Chief Financial Officer;

•            Stephen Heapy, Chief Executive Officer of Jet2.com Limited and Jet2holidays Limited;

•            Mark Laurence, an independent Non-Executive Director; and

•            Richard Green, a Non-Executive Director.

Richard Green was appointed to the Board on 6 September 2018.  Prior to his appointment, Richard worked as a consultant for Jet2.com Limited and Jet2holidays Limited and so is not considered independent under the Code.  Although the Group does not have two independent Non-Executive Directors in line with the Code, Richard Green brings significant commercial experience from both airline and tour operating sectors and is considered a highly valuable addition to the Board.

Mark Laurence has now served for more than nine years from the date of his first election to the Board. Notwithstanding this, the Board has determined that he remains independent in character and judgement and are satisfied that he does not have relationships or circumstances which are likely to affect that judgement. He continues to provide valuable challenge as a non-executive director and brings a breadth of financial experience to the Board.

Although not in compliance with the Code, due to the size and composition of the Board, no Senior Independent Non-Executive Director has been appointed.

Overall, the Board is satisfied that both its Executive and Non-Executive Directors have an effective and appropriate balance of skills, experience and calibre to bring independent judgement on issues of strategy, performance, resources and standards of conduct, which is vital to the success of the Group. 

The biographies of the Directors can be found here

Appointments and re-election to the Board

New Director appointments are a matter for the Board as a whole rather than a Nomination Committee and the Executive Chairman considers succession planning on an ongoing basis in consultation with the Board.

Directors are submitted for re-election at regular intervals, subject to satisfactory performance in accordance with the Group’s Articles of Association, whereby at every Annual General Meeting one third of the Directors shall retire by rotation and are eligible for re-election.  Newly appointed Directors are subject to re-election at the first Annual General Meeting after their appointment.

Board and Committee Meetings

The Board meets at least four times a year in order to, amongst other things, review trading performance, ensure adequate funding is in place and to set and monitor strategy.

To enable the Board to discharge their duties, the Executive Chairman, working with the Group Chief Financial Officer and Company Secretary, sets the formal agenda for the Board meetings and committee papers containing appropriate and timely information are distributed several days before the meetings take place. In the months when the Board does not meet, the Directors receive a formal written report in relation to trading performance.  Additional meetings are called if and when required.

The number of full Board and committee meetings scheduled, held and attended by each Director during the financial year ending 31 March 2019 was as follows:

Board meetings

Remuneration Committee meetings

Audit Committee meetings

Philip Meeson

5

2

-

Gary Brown

5

-

2*

Stephen Heapy

5

-

2

Mark Laurence

5

2

2

Richard Green

3

-

1

by invitation

Commitment

All Non-Executive Directors are required to devote sufficient time to their role as a member of the Board in order to discharge their responsibilities effectively. Prior to undertaking an additional external role or appointment, the Directors are asked to confirm that they will continue to have sufficient time to fulfil their commitments to the Group.  Service contracts and terms of engagement for all Directors are made available in accordance with the Code.

Development

The Executive Chairman, with the support of the Company Secretary, is responsible for the Director induction process and ensuring that the Directors receive appropriate training as necessary.

Information and Support

All Directors have access to the advice and services of the Group Company Secretary, Ian Day, who is responsible to the Board for ensuring that Board procedures are followed, and that applicable rules and regulations are complied with. The appointment and removal of the Group Company Secretary is a matter for the Board as a whole. In addition, all Directors have access to independent professional advice at the Company’s expense where required.

Evaluation

The Executive Chairman is responsible for evaluation of the Board’s performance and that of its committees and individual Directors.  This evaluation is made on an ongoing basis using feedback from the Group as a whole, supplemented by regular discussions with the Directors in question.

ACCOUNTABILITY

Financial and Business reporting

A statement of the Directors’ responsibilities in respect of the Annual Report and financial statements is set out on pages 51 and 52 of the Annual Report. A statement on going concern is given within Note 2 to the consolidated financial statements on page 67 of the Annual Report.

Risk Management and Internal Control

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

The Board of Directors have carried out a detailed assessment of the principal risks facing the Group, including those that would threaten its business model, future performance, solvency or liquidity, that can be found on pages 23 to 27 of the Annual Report.

The Directors have chosen a 3-year time period for the Group’s viability assessment, since any longer term is subject to uncertainty and cannot be guaranteed or predicted. The Viability Statement can be found on page 27 of the Strategic Report.

The risk management process and the system of internal control necessary to manage risks are assessed and monitored by the Audit Committee.

The Board maintains processes for identifying, evaluating and managing the risks faced by the Group which take account of the recommendations set out in the Financial Reporting Council’s Guidance on Risk Management, Internal Control and Related Financial and Business Reporting that can be found here.   

To ensure compliance with laws and regulations, and to promote effective and efficient operations, the Board has established an organisational structure with clear operating procedures, lines of responsibility and delegated authority.

Comprehensive guidance on financial and non-financial matters for all managers and employees is given in the Group Management Manual. In particular, there are clear procedures for:

  •  approval of invoices before authorisation for their payment;
  •  capital investment, with detailed appraisal, authorisation and post-investment review; and
  •  financial reporting, within a comprehensive financial planning, budgeting, reporting and accounting framework.    

The Group has an independent Internal Audit department, which provides independent assurance by performing full and regular monitoring of the Group’s procedures, promotes robustness of controls, highlights departures from procedures and suggests relevant KPIs for future monitoring.  Other areas of risk assessment and monitoring which may normally be carried out by an Internal Audit department are, in the main, covered by the Board either as a whole or within the various meetings highlighted.  

Group Risk Management is the responsibility of the Group’s operational Directors, who meet regularly with Internal Audit to review and monitor the Group Risk Register and to discuss existing and emerging risk.  The Directors report their findings to the Audit Committee.

Audit Committee and Auditors

The Board has established an Audit Committee which comprises one independent Non-Executive Director, one Non-Executive Director and one Executive Director. This composition is not in line with the Code, however the Board is satisfied that the Chairman of the Audit Committee has recent and relevant financial experience having held executive roles in the financial services industry, and that the Committee continues to be effective in fulfilling the primary functions described below.

The Audit Committee is chaired by Mark Laurence, an independent Non-Executive Director, and meets not less than twice per year.  The Executive Directors, the Group Company Secretary, the Group Financial Controller as well as the external and internal auditors are invited to attend meetings.  The Committee’s primary function is to assist the Board in:

  1. Fulfilling its responsibilities to protect the interests of shareholders by ensuring the integrity and clarity of the financial statements;
  2. Carefully considering key judgements and estimates applied in the preparation of the consolidated financial statements;
  3. Overseeing the scope of internal audit work for the year;
  4. Reviewing and monitoring the adequacy and effectiveness of internal control and risk management policies; and
  5. Considering the appointment of the external Auditor, their scope of work and their remuneration, including reviewing their independence and objectivity, and agreeing the extent of non-audit work undertaken.

The Audit Committee Chairman engages with both the external and internal auditors, without the Executive Directors or members of the finance team present. During the year, our Audit Partner of 4 years, Adrian Stone, retired after 34 years at KPMG and we welcomed Nick Plumb as our new Audit Partner.

Whilst KPMG LLP (“KPMG”) have been our auditor since the year ended 31 March 2005, the Committee and the Board continue to believe this is in the best interests of shareholders as KPMG have developed an extensive knowledge of the Group.

The fee paid to KPMG for the statutory audit of the Group and Company financial statements and the audit of Group subsidiaries pursuant to legislation was £0.2m. A breakdown of fees paid to KPMG during the financial year is set out in Note 8 of the Annual Report. Resolutions to reappoint KPMG as auditor and to authorise the Directors to agree their remuneration will be put to shareholders at the AGM.

A detailed Audit Committee Report is set out on pages 43 to 45 of the Annual Report.

The Independent Auditor’s Report can be found on pages 53 to 59 of the Annual Report.

REMUNERATION

The Level and Components of Remuneration 

The Board has established a Remuneration Committee comprising one Non-Executive Director and the Executive Chairman. During the year, the Group’s Remuneration Committee was chaired by Mark Laurence.

Although not in line with the Code, the Executive Chairman is a member of this Committee due to him being the founder of the Group and the insight that this brings into the engagement and reward of the top talent within the business.  The Executive Chairman does not receive any bonus or share award and abstains from any discussion about his own remuneration at these meetings, so the Board does not consider that his membership compromises the effectiveness of the Committee’s work.

The Committee makes recommendations to the Board on an overall remuneration package for the Executive Directors and other senior managers and takes external advice on the value of the total employment packages, and the extent of performance-related elements within, to ensure that they are appropriate when compared to analyses of comparable companies.  

Procedure 

The Remuneration Committee is responsible for making recommendations to the Board, within agreed terms of reference, on the Group’s framework of executive remuneration and its cost.  The Committee determines the contractual terms, remuneration and other benefits for the Executive Directors, including performance-related bonus schemes, pension rights and compensation payments.

Further details are set out in the Remuneration Committee Report on pages 47 to 50 of the Annual Report.

RELATIONS WITH SHAREHOLDERS

Dialogue with Shareholders 

The Business & Financial Review on pages 14 to 20 of the Annual Report includes a detailed review of the Group’s business and future developments.  In addition, the Executive Chairman ensures effective communication with shareholders is given high priority and that there is regular dialogue with institutional shareholders, including presentations after the announcement of the Group’s half-year and preliminary full year results. These meetings are attended by both the Group Chief Financial Officer and the Chief Executive Officer of the Group’s Leisure Travel business.  In addition, both the Executive and Non-Executive Directors have the opportunity to meet with other shareholders at the Annual General Meeting and on further occasions during the year as required.

Constructive Use of Meetings 

The Board uses the Annual General Meeting to communicate with private and institutional investors and welcomes their participation.  The Executive Chairman aims to ensure that the Chairman of the Audit and Remuneration Committees is present to answer questions, and there is also a lengthy question and answer session following the conclusion of the formal business of the meeting.  

Details of resolutions to be proposed at the Annual General Meeting are included in the Notice of Annual General Meeting and related papers, which are sent to shareholders in advance of the meeting in accordance with the Group’s Articles of Association. All votes received for general meetings are properly recorded and counted and details of proxy appointments and voting instructions are provided at the meeting.  Full details of votes for, against and withheld will be published on the Group’s website following the meeting. 

The Dart Group plc website (www.dartgroup.co.uk/investor_relations) has a specific section for investors, which is regularly updated with news and information, including the Annual Report and Accounts 2019 and the Notice of Annual General Meeting. 

Significant Shareholders

Details of Significant Shareholders of the Company can be found here.

Tax Strategy

The Tax Strategy of the Group can be found here.

Dart Group’s Constitutional Documents

pdf Memorandum of Association (735kb pdf)
pdf Articles of Association (641Kb pdf)
Please note, to download these document you will need the latest version of Adobe Reader which you can download here

Registered office

Dart Group PLC
Low Fare Finder House
Leeds Bradford International Airport
Leeds
LS19 7TU
United Kingdom

Company number: 01295221

Dart Group PLC was incorporated in the United Kingdom in January 1977.