Statement of Compliance
The Board is firmly committed to ensuring business integrity and high ethical values across the Group’s operations. As an essential part of this commitment, the Board supports high standards of corporate governance and has a policy of seeking to comply with the recommendations of the Combined Code. Details of the mechanisms used by the Company to achieve compliance with the Code are shown in the 2010 Annual Report and are summarised here. The Company was compliant with the provisions of the Code throughout the year to 31 March 2010, except that the Company did not have a Senior Independent Director between 31 December 2009 when David Porter retired until 30 April 2010 when Adrian Auer was appointed as a Non-executive Director and new Senior Independent Director.
The Board
The Board currently consists of seven Directors: five Non-executive and two Executive. Each of the Non-executive Directors, including the Chairman, is free from any business or other relationship which could materially interfere with the exercise of his judgement. Each of the Non-executive Directors is considered by the Board to be independent.
The Board maintains a Practices and Procedures document which sets out the Board’s key administrative processes used to ensure information is provided to the Board and its committees to enable them to fulfil their roles properly. The Practices and Procedures document was updated by the Board in February 2008. The document contains the list of matters reserved for the Board which has been compiled to ensure that the Board is made aware of all matters that are appropriate for it to consider, and has also been communicated to the management of the Group’s companies to enable them to manage their operations within a clearly defined framework of control. Matters reserved for the Board include major investment decisions and changes in the composition of the Group. The Board approves the Group’s strategic plan, which includes financial and operational objectives, and considers detailed financial and operational reports on the progress of the Group. Senior executives below Board level are invited to attend certain Board meetings to make presentations and participate in discussions. Non-executive Directors are encouraged to become familiar with the Group’s businesses and there is regular communication between executive management and Non-executive Directors. The Chairman is responsible for ensuring that Board meetings operate to an appropriate agenda and that adequate information is provided sufficiently in advance of meetings to allow proper consideration. He is supported by the Company Secretary, to whom all Directors have access. The Company Secretary acts as secretary to the Board and audit committee.
Audit Committee
The audit committee is chaired by Graham Zacharias. The other committee members are Adrian Auer and Stephen Bird. Graham Zacharias has significant experience of corporate financial matters and Graham Zacharias is a chartered accountant with recent and relevant financial experience and Stephen Bird and Adrian Auer are senior business executives who have significant experience of corporate financial matters. The members of the audit committee ensure that their knowledge of relevant legislation and best practice developments is maintained. The committee received reports from the external auditor who attended the committee’s meetings. The committee also calls upon the Chief Executive, Finance Director and Company Secretary to attend portions of its meetings.
The committee’s work included reviewing the financial statements, accounting policies and significant areas of judgement. The committee also assessed the proposed external audit approach and the independence and objectivity of the external auditor. In assessing auditor independence the committee obtained confirmation from the external auditor that its ethics and independence policies complied with the requirements of the Institute of Chartered Accountants in England and Wales. The use of the auditor for non-audit work is monitored by the committee. The Board’s approval is required prior to the Company’s external auditor undertaking significant due diligence or similar project-based advisory work for the Group. The Board and audit committee continue to believe that there are certain non-audit services where it is more efficient and more cost effective for the external auditor to be used. These include conducting financial due diligence in respect of potential acquisition opportunities.
The responsibilities and objectives of the audit committee are set out in the committee’s terms of reference, which are summarised as follows:
- to review the financial statements of the Group and report on matters of significance to the Board, particularly any changes in accounting policies and practices, major judgemental areas and significant adjustments arising from the external audit
- to be responsible for the appointment, re-appointment and removal of the Company’s external auditor, subject to consultation with the Board and shareholder approval, and to oversee the relationship with the external auditor
- to review the audit planning process and scope of work performed by the external auditor
- to review the Company’s internal financial control system and risk management systems and to monitor the need for an internal audit function, unless these have been expressly addressed by the Board itself.
Remuneration Committee
The remuneration committee is chaired by Stephen Bird. Its other members are Graham Zacharias and Chris Hole. In order to avoid any compromise in the activities of the remuneration committee, the chairman of the committee takes responsibility for minuting meetings. The committee’s main responsibilities are to determine the specific remuneration packages of the Chairman, Executive Directors and Company Secretary including salaries, annual bonus and longer term incentive schemes, pensions and other benefits. Further information on the structure of remuneration implemented by the committee is contained in the Remuneration Report, which also contains further details of the work of the committee.
The responsibilities and objectives of the remuneration committee are set out in the committee's terms of reference, which are summarised as follows:
- to make recommendations to the Board on the Company's framework of executive remuneration and its cost
- to determine the specific remuneration packages of the Executive Directors and Company Secretary including salaries, bonus schemes, pensions and other benefits
- to approve the payment of any bonuses to those executives
- to approve and operate the long-term incentive plans and executive share option schemes of the Company.
There is a separate Non-executive Directors’ remuneration committee, which has responsibility for reviewing the remuneration of the Non-executive Directors. The members of the Non-executive Directors’ remuneration committee are the Chairman and the Executive Directors.
Nomination Committee
The Board recognises the need to refresh its membership and properly manage the process by which new Directors are appointed. The nomination committee is responsible for identifying and selecting candidates to fill Board vacancies for both Executive and Non-executive positions. The committee also keeps under review the structure, size and composition of the Board. The committee comprises all members of the Board, other than the Director whose replacement is being selected. The Chairman of the Company is normally chairman of the committee, other than when the Chairman’s replacement is being selected, in which case the Senior Independent Director shall chair the committee. In conjunction with the Company Secretary, the committee will ensure that on appointment to the Board, Non-executive Directors receive a formal letter of appointment setting out clearly what is expected of them in terms of time commitment, including committee service and involvement outside Board meetings, and will ensure they receive an adequate introduction to the Group and its activities, including site visits to the Group’s principal operations.
The responsibilities and objectives of the nomination committee are set out in the committee's terms of reference, which are summarised as follows:
- to be responsible for identifying and selecting candidates to fill Board vacancies for both executive and non-executive positions as and when they arise
- to review the structure, size and composition (including the skills, knowledge and experience) of the Board
- to review the time required from a Non-executive Director to fulfil their responsibilities
- to ensure that on appointment to the Board, non-executive Directors receive a formal letter of appointment setting out clearly what is expected of them in terms of time commitment, committee service and involvement outside board meetings
- to ensure appropriate succession planning is conducted in respect of all senior employees within the remit of the remuneration committee, unless this has been expressly addressed by the Board itself.