Corporate Governance

Synlait’s Board as at 31 July 2023 is made up of eight Directors. Information on the Director’s profiles can be found on the People page of this website. Synlait’s Board believes in the importance of ensuring that the Board consists of Director’s with a range of skills and experience.

Other information, including information about remuneration, ownership interests, independence, and gender composition of the Board is included in our annual report.

Attendance at Board and Committee meetings in the year to 31 July 2023 was as follows¹:

Our Board Charter sets out the roles and responsibilities of the Board. It requires that the Board meet formally at least six times annually and clearly distinguishes between the role of the Board and the role of management. The Board delegates responsibility to the CEO for implementing Synlait’s strategic direction and day-to-day operations, as recorded in our Delegated Authorities Policy. Management provides detailed reports to the Board to keep the Board up to date with key operational activities and other aspects of Synlait’s affairs, including financial performance.

Our Constitution includes specific governance arrangements permitted by waivers from various rules in the NZX Listing Rules granted by NZX Regulation Limited (“NZ RegCo”).

The minimum number of Directors on Synlait’s Board is three, the maximum is eight. At least two Directors must ordinarily reside in New Zealand and three must be independent. One of Synlait’s shareholders, Bright Dairy Holding Limited, is entitled to appoint four Directors, one of which must ordinarily reside in New Zealand and have local commercial and governance experience appropriate for an NZX listed company.

A Nominations Sub-Committee forms part of the People, Environment and Governance Committee. The Sub-Committee has a majority of independent directors and makes candidate recommendations to the Board. When recommending Directors, the Sub-Committee considers experience, qualifications, character, criminal record, bankruptcy history, judgment, ability to work with others, current Board composition and skill set. Synlait’s Diversity and Inclusion Policy is also considered.

Before any candidate is finally selected, appropriate fit and proper checks are undertaken. Important information about candidates is provided to shareholders in the notice of meeting at which they will vote on the appointment of a new Director.

The Nominations Sub-Committee is satisfied that the current composition of the Board reflects an appropriate range of skill, experience, knowledge, and diversity needed to discharge the Board’s functions and responsibilities to achieve Synlait’s strategic goals.

All Directors enter into an agreement with Synlait outlining their appointment terms, role requirements, including time commitments and remuneration, as well as indemnity and insurance arrangements.

Our Board normally commits to a week-long session of organised visits and meetings focused on some aspect of the business.

In May 2023, our Board spent time in China. The purpose of the visit was to undertake a deep dive into the company’s strategy in the market, with a focus on the Advanced Nutrition and Foodservice business unit. The Board were hosted by Synlait’s President of China and Director of Foodservice Abby Ye and spent time meeting with customers, seeing product in market, and visiting Synlait’s China office. It was also the first time the Board had met with the Directors of Bright Dairy in China since before the start of the COVID-19 pandemic.

Our Chair conducts an annual review of the Board and each Director. The People, Environment and Governance Committee and Independent Assurance function assists with these performance reviews. An external performance review is conducted every three years. Each year the Audit and Risk Committee and the People, Environment and Governance Committee review their performance against the respective Charter and the recommendations in the Corporate Governance Code.

Three of our eight Directors are independent. This does not satisfy Recommendation 2.8 of the Corporate Governance Code, which suggests that a majority of our Directors should be independent, but is permitted by a waiver granted by NZX RegCo from the relevant NZX Listing Rule and our Constitution.

Synlait has considered the independence of its three Independent Directors against the definition in the NZX Listing Rules, the table and commentary to Recommendation 2.4 in the Corporate Governance Code and its Board Charter and is satisfied that the relevant Directors are independent.

At Synlait’s 2021 Annual Meeting, the Board sought ratification from shareholders to change Synlait’s constitution to enable Dr. John Penno, a Board Appointed Director, to become Chair of the Board until the completion of the 2022 Annual Meeting. This was a temporary measure to allow Dr. Penno to guide Synlait’s new CEO, Grant Watson, through his establishment into the position. At the 2022 Annual Meeting, Simon Robertson assumed the role of Chair. This appointment ensures that the Chair of the Board is an independent director

Our Diversity and Inclusion Policy promotes a culture of diversity and inclusiveness, putting in place appropriate strategies and measurable objectives. We aim to achieve three main goals:

• Workforce diversity – employ, develop, and retain more women and Māori.
• Diversity through leadership – empower and equip our leaders to recruit, develop and retain a diverse and competent workforce.
• Workforce inclusion – foster a culture that encourages flexibility and fairness, to enable all employees to realise their potential, and thereby increase employee retention.

To help us meet these goals we have our Mātua (Parental Leave) and our Tāwariwari (Flexible Working) Policies in place.

Our success will be measured against the following as at the end of FY24:

Synlait’s current Director and Officer composition is set out in the table below. The prior year’s comparison in in brackets.

Management report to the Board on progress against the Diversity and Inclusion Policy. The Board also conducts an annual compliance assessment of the Policy.

Our Continuous Disclosure Policy helps employees comply with our reporting and disclosure requirements as a listed company. Everyone is required to be familiar with the Policy and associated procedures. Directors and Management are primarily responsible for compliance with our continuous disclosure obligations.

Synlait is committed to ensuring the integrity and timeliness of its financial reporting, and to providing information to shareholders in a timely manner. The Audit and Risk Committee oversees this process. Following review and approval by the Audit and Risk Committee, the complete set of financial statements and related audit report is submitted to the full Board for final approval. Management makes detailed representations to the Board to assist them in their consideration of the draft financial statements.

Synlait’s full and half year financial statements are prepared in accordance with relevant financial standards. Recent full and half year financial statements and investor presentations are available on the Investor Centre page of this website.

In FY19, we established our Sustainability Framework and related Sustainability Innovation Platforms (SIPs) which align to Synlait’s purpose and strategy. We publish a separate sustainability report each December which meets the disclosure requirements in the NZX Code. Our reports can be viewed here.

As a Climate Reporting Entity (CRE) as defined under the Climate Standards issued by the New Zealand External Reporting Board (XRB),  Synlait will be making disclosures at the conclusion of its 2024 financial year at the earliest. The Climate Standards require reporting entities to make annual disclosures covering governance arrangements, risk management, strategies, metrics, and targets for mitigating and adapting to climate change impacts.

Sustainability, and the transparent reporting of sustainability measures, are important to Synlait. Preparations were started for this work in this financial year and the business is currently working on qualitative climate risk and opportunities assessments entailing stakeholder mapping, a scope and boundaries workshop, physical and transition risk and opportunity identification, risk assessment workshops, and a materiality analysis of the final risk assessment outputs. Management intends to initially make the disclosures in conjunction with Synlait’s annual and sustainability reports, which are released in September and December respectively.

Synlait’s risk management framework is aligned to ISO31000:2018 guidelines and is applied across all sites and operations. Synlait operates under a Board approved Risk Management Policy, with supporting procedures and tools to achieve a consistent approach.

The Board are responsible for approving and making decisions in relation to Synlait’s Risk Management Policy.

The Audit and Risk Committee has been appointed by the Board to review and approve Synlait’s risk management framework and key control framework.  The Committee is responsible for monitoring Synlait’s risk management profile, and the effectiveness of key risk control activities.

Synlait assesses risks as either strategic – that is, risks faced by Synlait because of the strategic objectives and/or decisions taken; or operational – that is, risks faced in the pursuit of delivering on the objectives.

Individual business areas and teams maintain risk registers in line with Synlait’s risk framework. These risk and compliance matters are reported monthly to Management for decision making.

Strategic risks are maintained by the Synlait Risk Team. The Risk Team also provide a consolidated strategic risk and a compliance status report for Management, to highlight key areas requiring ongoing monitoring and attention.

Additionally, the Audit and Risk Committee, People Environment and Governance Committee and the Board receive targeted risk and compliance reports. Quarterly, the Risk Team reports the status of risks and compliance matters being addressed to the Audit and Risk Committee and onto the Board.

Policies and procedures support active management of key operational risks. Key policies include the Synlait Standards Policy, Delegated Authorities Policy, Tax Risk Management Policy, Whistleblower Policy, Health, Safety and Wellbeing Policy  and the Food Safety and Quality Policy .

This table below summarises material risks currently being monitored by the Board and management. Workshops are planned for October and November 2023 to review these Strategic Risks with the Executive and the Board.

At Synlait, risk is everyone’s responsibility. This principle is supported by an integration of risk management processes within key business functions and activities including:

•   Integrated Business Planning (IBP), with formal risk review processes built-in throughout each cycle.
•  Various Health, Safety and Wellbeing processes, including a permit to work process and critical risk programme.

Synlait reset its vision and strategic approach to health, safety, and wellbeing during the financial year, which is now known as “Synlait Safe”.

Synlait Safe is anchored around engaging and inspiring the organisation to achieve justifiably higher standards to ensure we can all work safe, to arrive home safely. This message is being delivered through the creation of a Synlait Safe campaign and brand helping to create an identity for what health, safety and wellbeing means to Synlait and linking it to activities and focused topics that are easily recognisable, engaging, and meaningful for Synlait’s people.

Synlait’s goal is Work Safe | Home Safely, and by integrating key elements of the cognitive behavioural safety programme (Zero Harm Mindsets) the organisation is achieving a clear shift in mindset and culture across its workforce. Over 300 leaders and frontline team members from across Synlait attended training to provide them with a key understanding of how everyone can think differently about safety, give it meaning to each person and their teams (as leaders) and then build a mature safety culture to comprehend risk and expected levels of performance. The investment into shifting mindset, developing leaders, and empowering our teams will continue into FY24 and beyond.

In FY23, Synlait continued to achieve a reduction in the total number of recordable injury events (medical treatment or required time off work) reported across the business. The Total Recordable Injury Frequency Rate decreased by a further 30% from the previous year’s performance (10.6 vs 14.9 in FY22), a reduction of 54% since FY21.

Synlait is continually improving its injury response and management processes to ensure teams receive a high standard of care, and return to work as early as possible. We continue to invest time and resources into investigation and learning to enable us to actively improve. The approach involves challenging Synlait’s practices, processes, equipment, and work design to eliminate risk of harm with a strong focus on repetitive events and manual handling exposure.

Safety Essentials

In FY23, Synlait’s Critical Risk Management Framework was also developed, along with the publication of Synlait’s Critical Risk standards, called Safety Essentials and the associated assurance programme. This will remain a focus in FY24 as practices are embedded into daily work rituals for controlling these potentially fatal exposures and verifying controls are in place.

More information on Synlait’s health and safety initiatives is available in the Sustainability Report.

Contact information is on the contacts page of this website. We aim to respond to all enquiries in a timely manner. Shareholders can elect to receive Synlait communications either electronically or via mail. Our share registry, Computershare, manages this process.

Our Constitution, the Companies Act 1993 and the NZX Listing Rules afford shareholders the right to vote on certain matters affecting Synlait. Our shareholders can vote at any meeting of shareholders in person or by using a proxy or representative. On a show of hands, each shareholder attending in person, by proxy or by their representatives has one vote. If a poll is taken, each shareholder attending in person, by proxy or by their representative has one vote per fully paid up share they hold. Postal votes are not permitted unless the Board notifies shareholders otherwise.

In November 2020 Synlait completed a capital raise by way of private placement and share purchase plan. This was the preferred structure for Synlait to raise capital at the time due to temporary regulatory changes that provided more flexibility in structure allowing Synlait to meet all of its key objectives including allowing almost all existing shareholders the opportunity to achieve at least their pro rata proportion of the capital raise.

2022

Synlait’s last annual meeting was held on Friday 2 December 2022 in Christchurch. It was a hybrid annual meeting with shareholder participation (voting and questions) in person and online. The Notice of Meeting was released on 31 October 2022. An amended Notice of Meeting was subsequently released on 14 November 2022. A recording of the meeting is available here.

2023

Our 2023 meeting will be held on 1 December 2023 at Synlait’s Dunsandel facility. The Notice of Meeting was released on 1 November 2023. The annual meeting will once again be in a hybrid format to allow shareholders the opportunity to participate in person or online. A recording of the meeting will be made available afterwards on the Investor Centre.