The Company has a policy, so far as is practicable and appropriate for a company of its size and nature, to comply with the provisions of the Corporate Governance Code for Small and Mid-Sized Companies issued by the Quoted Companies Alliance. The Company currently has two non-executive Directors with relevant sector experience to complement and bring an independent view to the Board, and to provide a balance to the executive Directors. The Board is responsible for formulating, reviewing and approving the Group’s strategy, budgets and corporate actions. The Directors will continue to hold meetings of the Board approximately nine times a year and at other times as and when required.
The Board is currently in the process of reviewing the composition of its non-executive board.
The Board of Directors and Committees of the Board of Directors
The Company has established Audit and Remuneration Committees with formally delegated duties and responsibilities.
Audit Committee The Audit Committee is chaired by Alan Aubrey and has the primary responsibility of monitoring the quality of internal controls and ensuring that the financial performance of the Group is properly measured and reported on. It receives and reviews reports from the Group’s management and external auditors relating to the interim and annual accounts and the accounting and internal control systems in use throughout the Group. The Audit Committee meets not less than twice in each financial year and has unrestricted access to the Group’s external auditors. The Audit Committee comprises Alan Aubrey and Rodney Potts.
Remuneration Committee The Remuneration Committee is chaired by Rodney Potts and reviews the performance of the executive directors and makes recommendations to the Board on matters relating to their remuneration and terms of service. The Remuneration Committee also makes recommendations to the Board on proposals for the granting of share options and other equity incentives pursuant to any employee share option scheme, equity incentive plan or bonus scheme in operation from time to time. The Remuneration Committee meets as and when necessary. In exercising this role, the members of the committee have regard to the recommendations put forward in the QCA Guidelines and, where appropriate, the UK Corporate Governance Code. The Remuneration Committee comprises Rodney Potts and Alan Aubrey.
The division of responsibilities between the Chairman and the Chief Executive Officer is clearly defined. The Chairman's primary responsibility is ensuring the effectiveness of the Board and setting its agenda. The Chairman has no involvement in the day-to-day business of the Group. The Chief Executive Officer has direct charge of the Group on a day-to-day basis and is accountable to the Board for the financial and operational performance of the Group.
The performance of the Board is evaluated on an ongoing basis with reference to all aspects of its operation including, but not limited to: the appropriateness of its skill level; the way its meetings are conducted and administered (including the content of those meetings); the effectiveness of the various Committees; whether Corporate Governance issues are handled in a satisfactory manner; and, whether there is a clear strategy and objectives.
A new director, on appointment, is briefed on the activities of the Company. Professional induction training is also given as appropriate. The Chairman briefs non-executive directors on issues arising at Board meetings if required and non-executive directors have access to the Chairman at any time. Ongoing training is provided as needed. Directors are continually updated on the Group's business and on issues covering insurance, pensions, social, ethical, environmental and health and safety by means of Board presentations.
In the furtherance of his duties or in relation to acts carried out by the Board or the Company, each director has been informed that he is entitled to seek independent professional advice at the expense of the Company. The Company maintains appropriate cover under a Directors and Officers insurance policy if legal action is taken against any director.
The non-executive directors are considered by the Board to be free to exercise independence of judgement. They have never been employees of the Company nor do they participate in any of the Company's pension schemes or bonus arrangements. They receive no other remuneration from the Company other than their fees.
It is recognised that the FRC’s Corporate Governance Code does not treat the Chairman as independent and it is considered best practice that he should not sit on the Audit or Remuneration Committees. However the Board takes the view that as the number of non-executive directors is only two, including the Chairman, and as the Chairman does not chair either of those Committees, his participation will continue as each of the Committees gain the benefit of his external expertise and experience in areas which the Company considers important.
The Remuneration Committee reviews the performance of the Executive Directors and sets the scale and structure of their remuneration and it reviews the basis of their service agreements with regard to the interests of the shareholders. Other board members may be invited to attend meetings. The Remuneration Committee also makes recommendations to the Directors concerning the allocation of share options to Directors and employees. The remuneration and terms of appointment of Non-Executive Directors is set by the Board.
The Audit Committee meets at least twice each year and is responsible for monitoring the quality of internal control, ensuring that the financial performance of the Company is properly measured and reported on, meeting with the auditors and reviewing reports from the auditors relating to accounting and internal controls. The Chief Financial Officer will be invited to attend meetings but the committee will meet with the auditors at least once each year without the Chief Financial Officer being present.
There is no formal Nominations Committee, the appointment of new Directors is being considered by the full Board.