Annual Report and Accounts 2007/08

• Business & operating review
• Financial review
• Corporate social responsibility
• Corporate governance
  • Good governance and the Code of Best Practice
  • The Board of Directors
  • Board committees
  • Internal control
  • Appointment of auditors to non-audit engagements
  • Statement of Directors' responsibilities
  • Relations with shareholders
• Board of Directors

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Directors’ report

Corporate governance

Board committees

The Board has established and delegated specific responsibilities to the following committees and takes care to regularly review Committee membership to ensure continued effectiveness. As already stated, the Board recognises that the number of Non-Executive members who are regarded as wholly independent precludes regular changes in its Committee membership. Nevertheless the Board is satisfied that the calibre of the Committee members is such that they can cope with the current demands made upon them.

Remuneration Committee

The report of the Remuneration Committee and details of its role are given in the Remuneration Report section. During the year the Committee met on 11 occasions. Out of possible attendances each member’s participation was:

	Meetings attended	No of meetings
John Carrington	11	11
Michael Abrahams	11	11
Bill Halbert	1	1
Graham Holden	1	1
Sean Christie	6	9
Gordon Wilson	2	2

The Committee’s Terms of Reference are in line with recommendations in the Combined Code and other best practice. These are available on request from the Company Secretary and are also available on the Company’s website. We are satisfied that the Committee arrangements meet the requirements of the Combined Code.

Audit Committee

Graham Holden, the Committee Chairman is a Chartered Accountant, was the Group Finance Director of Marshalls Plc for nine years and is currently the Chief Executive of Marshalls Plc. The Board is satisfied that Graham Holden has sufficient relevant and current financial experience to carry out this role.

Sean Christie, who was the Committee Chairman for part of the year, is a Chartered Accountant and is currently the Finance Director of Croda International Plc. The Board was satisfied that during his time as Committee Chairman, Sean Christie had sufficient relevant and current financial experience.

The Audit Committee supports the Board in the execution of its responsibilities to establish and monitor financial reporting and internal control procedures. It meets four times a year with the external auditors in attendance. Arrangements are agreed with the Board to allow time for review of any issues and concerns raised by the Committee. The Chief Financial Officer, Chief Executive Officer and Chairman attend by invitation when required. The Committee monitors the Company’s relationship with its external auditors.

Audit Committee members are offered both induction and ongoing training as required. They also receive specific training on any relevant matters as needs arise.

The Committee’s Terms of Reference are in line with the recommendations in the Combined Code and other best practice. These are available on request from the Company Secretary and are also available on our website. We are satisfied that the Audit Committee arrangements meet the requirements of the Combined Code.

The Audit Committee meets with the Director of Internal Audit & Risk Management to review work undertaken by the Internal Audit function and to define and agree the scope of future work. The Committee also meets informally on other occasions with the internal and external auditors.

The Committee met on four occasions and out of the possible attendances each member’s participation was:

	Meetings attended	No of meetings
Graham Holden	1	1
John Carrington	4	4
Bill Halbert	4	4
Sean Christie	3	3
Gordon Wilson	0	1

There has been no disagreement between the Audit Committee and the Board. Should there be disagreement on any material issue, the Audit Committee would be able to report that issue to the shareholders in the Annual Report.

Nomination Committee

The Nomination Committee makes recommendations to the Board regarding appointment of Non-Executive and Executive Directors. It ensures that any appointments or re-appointments are made on merit and against objective criteria. A succession planning strategy has been confirmed and non-executive candidates will be selected without gender bias and potentially from disciplines and backgrounds outside those traditionally associated with non-executive positions. All Directors are required to stand for re-election at least every three years with one third of the Board required to stand for re-election each year. The re-appointment of Non-Executive Directors is subject to consideration by the Nomination Committee, prior to Board approval. The Committee’s Terms of Reference are in line with recommendations in the Combined Code and other best practice. These are available on request from the Company Secretary and are also available on the Company’s website. We are satisfied that the Nomination Committee arrangements meet the requirements of the Combined Code. The Committee has retained external advisers to assist and advise it regarding appointments. The external advisers carry out initial interviews and select suitable applicants for consideration by the Nomination Committee. The Committee also relies on professional assistance from specialists such as psychometric analysts to assist with the selection process.

It has been decided by the Board that Paul Simpson and Kevin Walsh will stand for rotational re-election this year. The Board believe that Paul Simpson has developed into a highly capable Chief Financial Officer combining strong technical capabilties, clear leadership skills and the ability to build trust in both his internal and external relationships. The Board are therefore very happy to confirm that, in its view, he continues to be very effective in his role. Kevin Walsh has built on his sales and marketing experience from within a number of business environments to provide an insightful perspective to the strategic development of the Telecoms & Internet Services business. He has developed into a strong business leader with excellent commercial judgement.

During the year the Committee met on two occasions.

Out of the possible attendances each member’s participation was:

	Meetings attended	No of meetings
Michael Abrahams	2	2
John Carrington	2	2
Sean Christie	2	2

Allotment Committee

This Committee supports the Board in the execution of its duties and responsibilities by considering, and if appropriate, authorising the allotment of shares and any associated administration. Before any allotment is considered, the Committee ensure that the total number of shares to be issued does not exceed the authority given by shareholders at the last Annual General Meeting, in accordance with s.80 of the Companies Act 1985. The quorum for this meeting is two, one of which must be the Company Secretary or Deputy Company Secretary.

The Board is satisfied that the Committee has carried out its duties in a satisfactory manner.

The Committee met on 12 occasions and out of possible attendances each member’s participation was:

	Meetings attended	No of meetings
Malcolm Fallen	12	12
Paul Simpson	12	12
Denise Robinson	12	12
John Bailey	7	7