The Board is committed to high standards of corporate governance and complies with the principles of the Combined Code. The Combined Code recommends that at least half of the board of directors (excluding the chairman) of a UK listed company should be independent in character and judgement and free from relationships or circumstances which are likely to affect, or could appear to affect, their judgment.
Currently, the Board is composed of nine members, consisting of the Non-Executive Chairman, the Executive Directors (four in total) and the Non-Executive Directors (four in total). The Board believes that it has sufficient members to contain a balance of experience and skills but is not so large as to be unwieldy.
The independence of Non-Executive Directors is considered at least annually and is based on criteria suggested in the Combined Code, and the composition of the Board and balance between Executive and Non-Executive Directors is kept under review. Richard Rose was an executive director and chairman of Blueheath immediately prior to the Reverse Takeover and became Non-Executive Chairman of the Company upon its completion. The Company’s combined business is significantly different to and larger than Blueheath and there is a division of responsibilities between Richard Rose and the Executive Directors, in particular, Charles Wilson, such that his current and former roles can be considered incomparable.
Having regard to all the circumstances, including the independence he has demonstrated the Board is satisfied and has determined that Richard is independent. Consequently all Non-Executive directors are considered to be independent of management and free from any business or other relationship that could materially interfere with the exercise of their independent judgement in accordance with the Combined Code.
The roles of Chairman and Chief Executive are separate and are set out in writing. The Non-Executive Chairman’s role is to ensure good corporate governance. His responsibilities include leading the Board, ensuring the effectiveness of the Board in all aspects of its role, ensuring effective communication with Shareholders, setting the Board’s agenda and ensuring that all Directors are encouraged to participate fully in the activities and decision-making process of the Board.
The Chief Executive is responsible for the leadership and day-to-day management of the Company, which includes formulating and recommending the Group’s strategy for Board approval and executing the approved strategy.
The Board reviews trading performance, ensures adequate financing, sets and monitors strategy, examines investment and acquisition opportunities and discusses reports to Shareholders. The Board has a formal schedule of matters specifically reserved to it for decisions.
The Combined Code recommends that the Board should appoint one of its independent non-executive directors as senior independent director and Lord Bilimoria has been appointed to fill this role. The senior independent director is available to Shareholders if they have concerns which contact through the normal channels of Chairman, Chief Executive or Group Finance Director has failed to resolve or for which such contact is inappropriate.
The Board has established Nomination, Remuneration, Executive and Audit Committees, with formally delegated duties and responsibilities and written terms of reference. From time to time, separate committees may be set up by the Board to consider specific issues when the need arises. Each committee and each Director has the authority to seek independent professional advice when necessary to discharge their duties, in each case at the Company’s expense. In addition, each Director and committee has access to the advice of the Company Secretary, Mark Chilton. The Company maintains appropriate Directors’ and Officers’ Liability Insurance.
The Board keeps the membership of its committees under review to ensure gradual refreshing of skills and experience, and is satisfied that all Directors have sufficient time to devote to their roles and that it is not placing undue reliance on key individuals. The Directors also complete performance evaluations to ensure that the Board and its committees are operating effectively and that each Director is contributing effectively and continues to demonstrate commitment to the role.
Accordingly, the Company complies with the provisions of the Combined Code and report to Shareholders on compliance with the Combined Code in accordance with the Listing Rules.
Nomination Committee
The Nomination Committee has defined terms of reference which are published on the Company’s website and assists the Board in discharging its responsibilities relating to the composition and make up of the Board. The Nomination Committee is responsible for making recommendations on the appointment of additional Directors and for reviewing the size, structure and composition of the Board and the membership of Board committees. Appointments are made on merit and against objective criteria; care is taken to ascertain that appointees have sufficient time available to devote to their position.
The Company's Nomination Committee is chaired by the Non-Executive Chairman and comprises two other independent Non-Executive Directors, Lord Bilimoria and Andrew Cripps. The Combined Code provides that a majority of the members of the Nomination Committee should be independent Non-Executive Directors. The Company therefore considers that it complies with the Combined Code recommendations in this regard.
The Nomination Committee meets formally at least twice a year and otherwise as required.
Remuneration Committee
The Remuneration Committee has defined terms of reference which are published on the Company’s website and is responsible for setting and reviewing the remuneration and other terms of employment of the Company's executive officers and management and determining and reviewing any share incentive plans. The Remuneration Committee consults, where appropriate, with the Chief Executive about its proposals. No Director or senior executive participates in discussions about his own remuneration.
The membership of the Company's Remuneration Committee comprises three independent Non-Executive Directors (namely Lord Bilimoria, Andrew Cripps and Richard Farr). Charles Wilson, Chief Executive, also attends meetings, by invitation, when appropriate. The Chairman of the Remuneration Committee is Lord Bilimoria. Richard Farr was appointed to the Remuneration Committee on 27 May 2009. The Combined Code provides that the Remuneration Committee should consist of at least three members who are all independent Non-Executive Directors. The Company therefore considers that it complies with the Combined Code recommendations in this regard.
The Remuneration Committee meets formally at least twice a year and otherwise as required.
Audit Committee
The Audit Committee has defined terms of reference which are published on the Company’s website and is responsible for ensuring that the financial performance of the Company is properly monitored and reported on, reviewing and monitoring the independence of the external auditors and the effectiveness of the audit procedure, meeting with the auditors and reviewing reports from the auditors relating to the Company’s accounting and internal controls, reviewing the effectiveness of the Company’s systems of internal control (including internal audit), and agreeing the terms of appointment and remuneration of the auditors. The Audit Committee also monitors the Company's “whistleblowing” policy, which was introduced in February 2009.
The membership of the Company's Audit Committee comprises three independent Non-Executive Directors, namely Andrew Cripps, Karen Jones and Richard Farr. The Chairman of the Audit Committee is Andrew Cripps, who is considered by the Board to have recent and relevant financial experience. Richard Farr and Karen Jones were appointed to the Audit Committee on 27 May 2009. The Combined Code provides that the Audit Committee should consist of at least three members who are independent Non-Executive Directors. The Company therefore considers that it complies with the Combined Code recommendations in this regard.
The Audit Committee meets formally at least three times a year and otherwise as required.
Executive Committee
In addition to the Board, the Company has an Executive Committee. The Executive Committee assists the Board in discharging its responsibilities in relation to operational matters, compliance, health and safety and trading performance.
The Executive Committee is chaired by Charles Wilson and comprises the other Executive Directors and other senior members of the management team representing the operational businesses within the Group. The Executive Committee meets formally at least once a month and otherwise as required.
Internal controls and risk management
The Board has overall responsibility for the Group’s system of internal control and for reviewing its adequacy and effectiveness. Such a system is designed to manage rather than eliminate the risk of failure to achieve business objectives, and aims to provide reasonable and not absolute assurance against material misstatement. In order to discharge that responsibility in a manner that ensures compliance with laws and regulations and promote effective and efficient operations, the Directors have established an organizational structure with clear operating procedures, lines of responsibility and delegated authority.
The Audit Committee formally reviews the operation and effectiveness of the Group’s system of internal controls on an annual basis. Where any significant failings or weaknesses are identified from such review, necessary actions are taken to remedy these.
The Board has a process for identifying, evaluating and managing the risks faced by the Company. There is an established framework of internal controls, which is set out in procedures approved by the Executive Directors and which includes financial, operational and compliance control risk management. These procedures are readily accessible to staff, who are expected to follow their guidance.
The more important elements of this framework are as follows:
Management structure
The Board has overall responsibility for the Company and the generation of its business. Each of the Executive Directors has responsibility for specific aspects of the Company's affairs. In additional, the Board and each of its committees operate under a schedule of matters or terms of reference and the Board determines how the Chief Executive and the Executive Committee may operate within a framework of delegated authorities and reserved powers which seek to ensure that certain transactions which are significant in terms of their size or type, are undertaken only after Board review.
Corporate accounting and procedures
Responsibility levels are communicated throughout the Group as part of the corporate communication procedure. Accounting, delegation of authority and authorisation levels, segregation of duties and other control procedures, together with the general ethos of the Group are included in these communications, and standardised accounting policies are in place reflecting this policy. These procedures are subject to review to ensure that improvements to enhance controls can be made.
Quality and integrity of personnel
The integrity and competence of personnel is ensured through recruitment standards and subsequent training. Quality personnel are seen as an essential part of the control environment and the ethical standards expected are communicated through senior members of staff.
Budgetary process
Each year the Board approves the annual budget, which includes an assessment of key risk areas. Performance is monitored and relevant action taken throughout the year by regular reporting to the Board of updated forecasts together with information on key risk areas.
Risk management
The Board assess risk management throughout the Group aided by detailed reviews of internal controls and risk management procedures.
Investment appraisal
Capital expenditure is regulated by the use of authorisation levels. For all expenditure beyond specified levels, Board approval is required.
Internal audit
The Group's internal audit function reports to the Group Finance and monitors the effectiveness of key internal controls and the adequacy of these controls to manage the business risk and to safeguard the Company’s assets and resources. Its conclusions are communicated to the relevant level management and the function has a direct reporting responsibility to the Audit Committee.
Securities Dealing Code
The Company has adopted a code of securities dealing in relation to its Ordinary Shares which is based on, and is at least as rigorous as, the Model Code as published in the Listing Rules. The code applies to the Directors and other relevant employees of the Group.
–Extracted from Prospectus document, 25 June 2009