PRINCIPLES OF CORPORATE GOVERNANCE
The Company is committed to high standards of corporate governance. The Board is accountable to the Company's shareholders for good corporate governance.
The role of the Board is to provide entrepreneurial leadership of the Group within a framework of prudent and effective controls, which enables risk to be assessed and managed. The Board sets the Group's strategic aims, ensures that the necessary financial and human resources are in place for the Group to meet its objectives and reviews management performance. The Board sets the Group's values and standards and ensures that its obligations to its shareholders and others are understood and met.
BOARD STRUCTURE
The Board fully supports the underlying principles of corporate governance contained in the Combined Code, notwithstanding that, as its securities are not listed on the Official List; it is not required to comply with such recommendations. It has sought to comply with the provisions of the Combined Code, insofar as is practicable and appropriate for a public company of its size and nature, and recognises its overall responsibility for the Group's systems of internal control and for monitoring their effectiveness.
- The Board comprises the Executive Chairman, the three other Executive Directors, and the one Non-executive Director.
- The Company has a Nominations Committee, an Audit Committee and a Remuneration Committee, each of which consists of the Executive Chairman and the Non-Executive. The Audit Committee has unrestricted access to the Company's auditors and ensures that auditor independence has not been compromised.
Audit Committee
The Audit Committee comprises the Executive Chairman and the Non-executive Director (who chairs this Committee). The Audit Committee shall meet at least two times in every year and any other time as required by either the chairman of the Audit Committee, the Finance Director of the Company or the external auditors of the Company. In addition, the Audit Committee shall meet with the external auditors of the Company (without any of the executives attending) at least once a year.
The Audit Committee shall:
- monitor the financial reporting and internal control principles of the Company
- maintain appropriate relationships with external auditors including considering the appointment and remuneration of external auditors
- review all financial results of the Company, including all announcements in respect thereof before submission of the relevant documents to the Board
- review and discuss (where necessary) any issues and recommendations of the external auditors including reviewing the external auditors' management letter and management's response
- consider all major findings of internal operational audit reviews and management's response to ensure co-ordination between internal and external auditors
- review the Board's statement on internal reporting systems and keep the effectiveness of such systems under review
- consider all other relevant findings and audit programmes of the Company
The chairman of the Audit Committee shall report annually to the Board on behalf of the Company's shareholders on all matters within its duties and responsibilities. The Audit Committee shall compile a report to SHAREHOLDERS on its activities to be included in the Company's annual report.
Remuneration Committee
The Remuneration Committee comprises the Executive Chairman and the Non-executive Director (who chairs this Committee).
The Remuneration Committee:
- ensure that the executive directors are fairly rewarded for their individual contributions to the overall performance of the Company
- consider the remuneration packages of the executive directors and any recommendations made by the Executive Chairman for changes to their remuneration packages including in respect of bonuses (including associated performance criteria), other benefits, pension arrangements and other terms of their service contracts and any other matters relating to the remuneration of or terms of employment applicable to the executive directors that may be referred to the Remuneration Committee by the Board
- oversee and review all aspects of any share option schemes adopted by the Company including the selection of eligible directors and other employees and the terms of any options granted
- demonstrate to the Company's shareholders that the remuneration of the executive directors is set by an independent committee of the Board
INTERNAL CONTROL
The Directors are responsible for the Group's system of internal control and reviewing its effectiveness.
The Board has designed the Group's system of internal control in order to provide the Directors with reasonable assurance that its assets are safeguarded, that transactions are authorised and properly recorded and that material errors and irregularities are either prevented or would be detected within a timely period. However, no system of internal control can eliminate the risk of failure to achieve business objectives or provide absolute assurance against material misstatement or loss.
The key elements of the control system in operation are:
- the Board meets regularly with a formal schedule of matters reserved to it for decision and has put in place an organisational structure with clear lines of responsibility defined and with appropriate delegation of authority;
- there are established procedures for planning, approval and monitoring of capital expenditure and information systems for monitoring the Group's financial performance against approved budgets and forecasts;
- the Board is required annually to undertake a full assessment process to identify and quantify the risks that face the business and functions, and assess the adequacy of the prevention, monitoring and modification practices in place for those risks; and
- the Audit Committee receives reports from the external auditors on a regular basis and from the Executive Directors. During the period, the Audit Committee has reviewed the effectiveness of the system of internal control as described above. The Board receives periodic reports from all committees.
