The duties of the various bodies within Alfesca are determined by Icelandic law, and Alfesca makes it a priority to comply with the guidelines issued by the OMX Nordic Exchange, the Iceland Chamber of Commerce and the Confederation of Icelandic Employers, as well as international corporate governance principles. Alfesca aims to comply with current best practice in relation to corporate governance and expects its employees to do likewise.

Lawful shareholders’ meetings are the supreme authority in relation to the affairs of Alfesca and they may be attended by shareholders, their proxies and advisors. The chief executive officer can speak and submit motions at shareholders’ meetings.

Alfesca’s financial year starts on 1 July and ends on 30 June. The annual general meeting of Alfesca is held in September each year. Shareholders at the annual general meeting decide the remuneration of the board members. Directors of the board are appointed for a one-year term.

According to Alfesca’s articles of association, the board comprises five ordinary members and one alternate member. The board considers all its non-executive directors, except for its chairman, to be independent. In addition to meeting the criteria for independence on appointment below, all of its non-executive directors are independent in character and judgment. The board’s criteria for independence are that the person concerned:

• has not been an employee of the Group within the last five years;
• does not have, and has not had within the last three years, a material business relationship with the Group;
• save in exceptional circumstances, has received no remuneration other than a director’s fee;
• has no close family ties with any of the Group’s advisers, directors or senior employees;
• does not have significant links with other executive directors through mutual involvement in other companies or bodies;
• does not represent a significant shareholder and has not served on the board for more than ten years.

Non-executive directors may be called upon from time to time to carry out additional duties outside the scope of their ordinary duties. In such circumstances they may be paid additional sums for such duties. Provided such duties are not provided frequently or to an extent where they represent the relevant director’s predominant role, the board considers that independence can be, and is being, maintained.

The board is responsible for ensuring the proper management and control of Alfesca. It aims to enhance shareholder value by maintaining entrepreneurial leadership of the Group, whilst ensuring that appropriate checks and balances are in place. The board has specific powers reserved to it, including the approval of group strategy and annual budgets, interim and final results, acquisitions and disposals, major agreements, capital expenditure and unusual transactions. It also has responsibility for setting policy and for monitoring from time to time such matters as financial and risk control, health and safety policy, environmental issues, food safety and management succession and planning. The board delegates to the chief executive and his executive team responsibility for implementation of the agreed strategy and budget and the day-to-day management of the Group’s operations.

The chairman and deputy chairman of the board are elected from among the board members. The board appoints the chief executive officer of Alfesca, decides on the terms of his employment and evaluates his performance annually. Alfesca’s main organisational structure has to be approved by the board.

The board of directors and the chief executive officer are responsible for the management of Alfesca between shareholders’ meetings. Alfesca’s operations are coordinated through the executive board, which consists of functional officers and regional chief executives and certain managing directors within the Group. Day-to-day operational responsibility rests with the executive managements of each subsidiary and their operational teams, supported by various staff. The board has approved a procedure for directors to take independent professional advice, if necessary, at Alfesca’s expense.

The operational managers are required to manage the operations of Alfesca within the management, financial and risk guidelines laid down.

Board and committee members are given appropriate documentation in advance of each board or committee meeting. For regular board meetings, this normally includes a detailed monthly report on current and forecast trading with comparisons against budgets and prior years. For all meetings, explanatory papers are sent out on matters where the board or committee will be required to give its approval, make a decision or give its response. In addition to frequent business presentations, reports are given to the board or its committees at appropriate intervals on such matters as pensions, insurance, environment, health and safety and treasury.

Alfesca prepares annual and interim financial accounts conforming to International Financial Reporting Standards (IFRS). These reports are published in English.