Corporate Governance

This statement describes how DCC has applied the principles set out in Section 1 of the Combined Code on Corporate Governance (‘Combined Code’) published by the Financial Reporting Council in the UK.

The Board of Directors
Roles
The Board of DCC is responsible for the leadership, strategic direction and overall management of the Group. It has a formal schedule of matters specifically reserved to it for decision, which covers key areas of the Group’s business including approval of the annual strategy statement, the financial statements, budgets (including capital expenditure), acquisitions and dividends.

The Board has delegated responsibility for the management of the Group to the Chief Executive and executive management.

Chairman
The Chairman’s primary responsibility is to lead the Board, to ensure that it has a common purpose, is effective as a group and at individual director level and that it upholds and promotes high standards of integrity, probity and corporate governance.

The Chairman is the link between the Board and the Company. He is specifically responsible for establishing and maintaining an effective working relationship with the Chief Executive, for ensuring effective and appropriate communications with shareholders and for ensuring that members of the Board develop and maintain an understanding of the views of shareholders.

Deputy Chairman and Senior Independent Director
The Deputy Chairman (who is also the Senior Independent Director) chairs meetings of the Board if the Chairman is unavailable or is conflicted in relation to any agenda item. The Senior Independent Director is available to shareholders who have concerns that cannot be addressed through the Chairman or Chief Executive and leads the annual Board review of the performance of the Chairman.

Membership
The Board consists of three executive and seven non-executive Directors. Brief biographies of the Directors are set out on pages 4 to 5. The Board, with the assistance of the Nomination Committee, keeps Board composition under review to ensure that it includes the necessary mix of relevant skills and experience required to perform its role.

Jim Flavin resigned from his position as Executive Chairman and Director on 27 May 2008. On the same date, Michael Buckley was appointed Chairman and Tommy Breen, previously Group Managing Director, was appointed Chief Executive. On 4 June 2008, Bernard Somers replaced Michael Buckley as Senior Independent Director. Kevin Melia and Donal Murphy were appointed to the Board with effect from 1 December 2008. Paddy Gallagher and Tony Barry retired from the Board with effect from 1 December 2008 and 28 February 2009 respectively. David Byrne was appointed to the Board with effect from 1 January 2009 as Deputy Chairman and Senior Independent Director. Bernard Somers resigned as Senior Independent Director on the same date. John Moloney was appointed to the Board with effect from 2 February 2009.

Appointment
Non-executive Directors are appointed by the Board and following appointment are, in accordance with the Articles of Association, subject to re-election at the next Annual General Meeting. The Board has adopted the practice that all Directors will submit to re-election at each Annual General Meeting.

The expectation is that non-executive Directors would serve for a term of six years and may also be invited to serve an additional period thereafter.

The terms and conditions of appointment of non-executive Directors are set out in their letters of appointment, which are available for inspection at the Company’s registered office during normal office hours and at the Annual General Meeting of the Company.

Independence
The Board has carried out its annual evaluation of the independence of each of its non-executive Directors, taking account of the relevant provisions of the Combined Code, namely, whether the Directors are independent in character and judgment and free from relationships or circumstances which are likely to affect, or could appear to affect, the Directors’ judgment. Each of the current non-executive Directors fulfilled the independence requirements of the Code.

Michael Buckley has been Chairman of the Company since May 2008. On his appointment as Chairman, Mr Buckley met the independence criteria as set out in the Combined Code. Thereafter, as noted in the Code, the test of independence is not appropriate in relation to the Chairman.

While Mr Buckley holds a number of other directorships outside of the DCC Group, the Board considers that these do not interfere with the discharge of his duties to DCC.

Board Procedures
There is an established procedure for Directors to take independent professional advice in the furtherance of their duties if they consider this necessary. All Directors have access to the advice and services of the Company Secretary who is responsible to the Board for ensuring that Board procedures are followed and that applicable rules and regulations are complied with.

The Board recognises the need for Directors, in particular new Directors, to be aware of their legal responsibilities as directors and, in addition, the Board ensures that Directors are kept up to date on the latest corporate governance guidance and best practice. There is a full, formal and tailored induction process for new non-executive Directors, which includes detailed presentations on the Group’s operations.

Meetings
The Board holds regular meetings and there is contact as required between meetings in order to progress the Group’s business. At the beginning of the financial year, the Chairman sets a schedule of Board meetings to be held in the following twelve months, which includes the key agenda items for each meeting, having consulted with the other Directors and the Company Secretary. The current schedule envisages seven Board meetings each year but additional meetings are arranged as necessary.

During the year ended 31 March 2009, the Board held thirteen meetings. Individual attendance at these meetings is set out in the table on page 50.

The non-executive Directors meet periodically without executives being present.

Remuneration
Details of remuneration paid to the Directors are set out in the Report on Directors’ Remuneration and Interests on pages 52 to 55.

Share Ownership and Dealing
Details of the Directors’ interests in DCC shares are set out in the Report on Directors’ Remuneration and Interests on pages 52 to 55. The Board has adopted The Model Code, as set out in the Listing Rules of the Irish Stock Exchange and the UK Listing Authority, as the code of dealings applicable to dealings in DCC shares by Directors and relevant Group employees. Under the policy, Directors and relevant Group employees are required to obtain clearance from the Chairman or Chief Executive before dealing in DCC shares and are prohibited from dealing in the shares during prohibited periods as defined by the Listing Rules.

Board Committees
Audit Committee
The Audit Committee comprises three independent non-executive Directors, Bernard Somers (Chairman), Kevin Melia and John Moloney. The Board has determined that Bernard Somers is the Committee’s financial expert. Maurice Keane resigned from the Committee on 1 December 2008 and was replaced by Kevin Melia. Roisin Brennan resigned from the Committee on 30 March 2009 and was replaced by John Moloney. The Committee met four times during the year ended 31 March 2009. Individual attendance at these meetings is set out in the table on page 50.

The Chief Executive, Chief Financial Officer, Head of Enterprise Risk Management, Group Internal Auditor, other Directors and executives and representatives of the external auditors may be invited to attend all or part of any meeting. The Committee also meets separately at least once a year with the external auditors and with the Group Internal Auditor without executive management being present.

The role and responsibilities of the Audit Committee are set out in its written terms of reference, which are available on the Company’s website www.dcc.ie, and include:

•	monitoring the integrity of the financial statements of the Company and any formal announcements relating to the Company’s financial performance and reviewing significant financial reporting judgments contained in them;
•	reviewing the half-year and annual financial statements before submission to the Board;
•	considering and making recommendations to the Board in relation to the appointment, reappointment and removal of the external auditors;
•	approving the terms of engagement of the external auditors;
•	approving the remuneration of the external auditors, whether fees for audit or non-audit services, and ensuring that the level of fees is appropriate to enable an adequate audit to be conducted;
•	assessing annually the independence and objectivity of the external auditors and the effectiveness of the audit process, taking into consideration relevant professional and regulatory requirements and the relationship with the external auditors as a whole, including the provision of any non- audit services;
•	reviewing the operation and the effectiveness of the Group Internal Audit function;
•	reporting to the Board on its annual assessment of the operation of the Group’s system of internal control, making any recommendations to the Board thereon and reviewing the Company’s statements on internal control and risk management prior to endorsement by the Board; and
•	reviewing the Group’s arrangements for its employees to raise concerns, in confidence, about possible wrongdoing in financial reporting or other matters and ensuring that these arrangements allow proportionate and independent investigation of such matters and appropriate follow up action.

These responsibilities of the Committee are discharged in the following ways:

•	The Committee reviews the interim and annual reports as well as any formal announcements relating to the financial statements before submission to the Board. The review focuses particularly on any changes in accounting policy and practices, major judgmental areas and compliance with stock exchange, legal and regulatory requirements;
•	The Committee regularly reviews reports from the Risk Committee and the Enterprise Risk Management function (incorporating Group Internal Audit and Group Environmental, Health and Safety);
•	The Committee conducts an annual assessment of the operation of the Group’s system of internal control based on a detailed review carried out by Group Internal Audit. The results of this assessment are reviewed by the Committee and are reported to the Board;
•	The Committee makes recommendations to the Board in relation to the appointment of the external auditor. Each year, the Committee meets with the external auditor and reviews their procedures and the safeguards which have been put in place to ensure their objectivity and independence in accordance with regulatory and professional requirements;
•	The Committee reviews the external audit plan and the findings from the external audit of the financial statements;
•	The Committee has a process in place to ensure that the independence of the audit is not compromised, which includes monitoring the nature and extent of services provided by the external auditors through its annual review of fees paid to the external auditors for audit and non-audit work. Details of the amounts paid to the external auditors during the year for audit and other services are set out in note 6 on page 78; and
•	The Committee has approved a policy on the engagement of the external auditors to provide non-audit services. The policy provides that the external auditor is permitted to provide non-audit services that are not, or are not perceived to be, in conflict with auditor independence, providing they have the skill, competence and integrity to carry out the work and are considered to be the most appropriate to undertake such work in the best interests of the DCC Group.

Nomination Committee
The Nomination Committee comprises Michael Buckley (Chairman) and two independent non-executive Directors, David Byrne and Maurice Keane. Jim Flavin resigned from the Committee on 27 May 2008. Bernard Somers resigned from the Committee on 30 March 2009 and was replaced by David Byrne. The Committee met four times during the year ended 31 March 2009. Individual attendance at these meetings is set out in the table on page 50.

The role and responsibilities of the Nomination Committee are set out in its written terms of reference, which are available on the Company’s website www.dcc.ie. The principal responsibilities of the Committee are to keep Board renewal, structure, size and composition under constant review, including the skills, knowledge and experience required.

The Committee has particular regard to the leadership needs of the organisation, both executive and non-executive.

During the year, upon the recommendations of the Nomination Committee, the Board appointed David Byrne, Kevin Melia and John Moloney to the positions of non-executive Directors and Donal Murphy to the position of executive Director. This followed a thorough process undertaken by the Nomination Committee which carefully considered the Board’s requirements, identified suitable candidates, in terms of quality of individual, age profile, qualification and business background, and made recommendations to the Board.

The Nomination Committee did not use an external search consultancy or open advertising in the appointment of the new non-executive Directors. Rather, the Committee utilised industry and professional contacts to identify suitable candidates and, as such, did not require the additional assistance that an external search consultancy or open advertising might offer.

Remuneration Committee
The Remuneration Committee comprises three independent non-executive Directors, Maurice Keane (Chairman), Róisín Brennan and David Byrne, and the Chairman of the Board, Michael Buckley. Bernard Somers resigned from the Committee on 1 January 2009 and was replaced by David Byrne. The Committee met nine times during the year ended 31 March 2009. Individual attendance at these meetings is set out in the table below.

The role and responsibilities of the Remuneration Committee are set out in its written terms of reference, which are available on the Company’s website www.dcc.ie. The principal responsibilities of the Committee are determining the policy for the remuneration of the Chairman, the Chief Executive, the other executive Directors and certain senior Group management and determining their remuneration packages, including salary, bonuses, pension rights and compensation payments, and the granting of awards under the Company’s long term incentive schemes.

The Remuneration Committee consults with the Chief Executive on remuneration for the other executive Directors and for senior Group management. The Remuneration Committee is authorised to obtain access to professional advice if deemed desirable.

The Committee has engaged Mercer to make recommendations in relation to and assist in the implementation of a proposed new long term incentive plan which will be put before the 2009 Annual General Meeting.

Oversight Committee
In August 2007, the Board established an ad hoc Committee of non-executive Directors to oversee issues arising from the Supreme Court judgment in the Fyffes case and the subsequent Inspectorship process. Meetings are held as required. The Committee comprises Michael Buckley, David Byrne and Maurice Keane. Bernard Somers resigned from the Committee on
1 January 2009 and was replaced by David Byrne.

Attendance at Board and Committee meetings during the year ended 31 March 2009:

Director

Board

Audit
Committee

Nomination
Committee

Remuneration
Committee

Michael Buckley

Tommy Breen

Tony Barry¹

Róisín Brennan

David Byrne²

Jim Flavin³

Paddy Gallagher⁴

Maurice Keane

Kevin Melia⁵

John Moloney⁶

Donal Murphy⁷

Fergal O’Dwyer

Bernard Somers

Column A indicates the number of meetings held during the period the Director was a member of the Board and/or Committee.
Column B indicates the number of meetings attended during the period the Director was a member of the Board and/or Committee.

1	Tony Barry retired on 28 February 2009.
2	David Byrne was appointed to the Board and to the Remuneration Committee on 1 January 2009 and to the Nomination Committee on 30 March 2009.
3	Jim Flavin resigned on 27 May 2008.
4	Paddy Gallagher retired on 1 December 2008.
5	Kevin Melia was appointed to the Board and to the Audit Committee on 1 December 2008.
6	John Moloney was appointed to the Board on 2 February 2009 and to the Audit Committee on 30 March 2009.
7	Donal Murphy was appointed to the Board on 1 December 2008.

Performance Evaluation
The Board undertakes a formal annual evaluation of its own performance, that of each of its principal committees, the Audit, Nomination and Remuneration committees, and that of individual directors, using the ‘Performance Evaluation Guidance’ set out in the Higgs Suggestions for Good Practice.

As part of the Board evaluation of its own performance, a questionnaire is circulated to all Directors. The questionnaire is designed to obtain Directors’ comments regarding the performance of the Board including any recommendations for improvement.

The Chairman, on behalf of the Board, conducts evaluations of performance with each of the non-executive Directors on an annual basis.

The non-executive Directors, led by the Senior Independent Director, meet annually without the Chairman present to evaluate his performance, having taken into account the views of the executive Directors. The non-executive Directors also evaluate the performance of each executive Director.

These evaluations are designed to determine whether each Director continues to contribute effectively and to demonstrate commitment to the role.

The Audit, Nomination and Remuneration committees carry out annual reviews of their own performance and terms of reference to ensure they are operating at maximum effectiveness and recommend any changes they consider necessary to the Board for approval.

The Board considers the results of the evaluation process and any issues identified.

Relations with Shareholders
DCC recognises the importance of communications with shareholders. Presentations are made to both existing and prospective institutional shareholders principally after the release of the interim and annual results. DCC issues an Interim Management Statement twice yearly in February and July. Major acquisitions are also notified to the market and the Company’s website www.dcc.ie provides the full text of all press releases. The website also contains annual and interim reports and incorporates audio and slide show investor presentations.

The Board is kept informed of the views of shareholders through the executive Directors’ attendance at investor presentations and results presentations. Furthermore, relevant feedback from such meetings, investor relations reports and brokers notes are provided to the entire Board on a regular basis. In addition, the Board determines, on a case by case basis, specific issues where it would be appropriate for the Chairman and/or Senior Independent Director to communicate directly with shareholders or to indicate that they are available to communicate if shareholders so wish. If any of the non-executive Directors wishes to attend meetings with major shareholders, arrangements are made accordingly. If major shareholders request meetings with new non-executive Directors, this is also facilitated.

The Company’s Annual General Meeting affords shareholders the opportunity to question the Chairman and the Board. The chairmen of the Audit, Nomination and Remuneration Committees are also available to answer questions at the Annual General Meeting. The Chief Executive presents at the Annual General Meeting on the Group’s business and its performance during the prior year and answers questions from shareholders. Shareholders can meet with the Chairman or the Senior Independent Director on request.

Notice of the Annual General Meeting, the Form of Proxy and the Annual Report are sent to shareholders at least 20 working days before the meeting. At the Meeting, after each resolution has been dealt with, details are given of the level of proxy votes cast on each resolution and the numbers for, against and withheld.

The 2009 Annual General Meeting will be held at 11 a.m. on 17 July 2009 at The Four Seasons Hotel, Simmonscourt Road,

Ballsbridge, Dublin 4, Ireland.

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

In accordance with the revised FRC (Turnbull) guidance for directors on internal control published in October 2005, ‘Internal Control: Revised Guidance for Directors on the Combined Code’, the Board confirms that there is an ongoing process for identifying, evaluating and managing any significant risks faced by the Group, that it has been in place for the year under review and up to the date of approval of the financial statements and that this process is regularly reviewed by the Board. The key risk management and internal control procedures, which are supported by detailed controls and processes, include:

•	skilled and experienced Group and divisional management;
•	an organisation structure with clearly defined lines of authority and accountability;
•	a comprehensive system of financial reporting involving budgeting, monthly reporting and variance analysis;
•	the operation of approved risk management policies (including treasury and IT);
•	a Risk Committee, comprising senior Group management, whose main role is to keep under review and report to the Audit Committee on the principal risks facing the Group, the controls in place to manage those risks and the monitoring procedures;
•	an independent Enterprise Risk Management function, which incorporates Group Internal Audit and Group Environmental, Health and Safety; and
•	a formally constituted Audit Committee which reviews the operation of the Risk Committee and the Enterprise Risk Management function, liaises with the external auditors and reviews the Group’s internal control systems.

The Board has reviewed the effectiveness of the Group’s system of internal control. This review took account of the principal business risks facing the Group, the controls in place to manage those risks (including financial, operational and compliance controls and risk management) and the procedures in place to monitor them.

Going Concern
After making enquiries, the Directors have formed a judgment, at the time of approving the financial statements, that there is a reasonable expectation that the Company and the Group as a whole have adequate resources to continue in operational existence for the foreseeable future. For this reason, they continue to adopt the going concern basis in preparing the financial statements. The Directors’ responsibility for preparing the financial statements is explained on page 56 and the reporting responsibilities of the auditors are set out in their report on page 57.

Compliance Statement
DCC has complied, throughout the year ended 31 March 2009, with the provisions set out in Section 1 of the Combined Code on Corporate Governance.

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