The principles of corporate governance are set out in the Financial Reporting Council’s revised Combined Code on corporate governance issued in 2006. Under the rules of the Alternative Investment Market (AIM) the Company is not required to comply with the Code and the Board considers that the size of the Company does not warrant compliance with all of the Code’s requirements but has voluntarily adopted appropriate sections of the Combined Code.
If required, the directors are entitled to take independent advice, and if the Board is informed in advance the cost of the advice will be reimbursed by the Company. To discharge its governance function effectively, the Board has laid down rules for its own activities in a governance process policy. Responsibility for implementing this policy is placed on the Chairman.
This policy covers:
- Conduct of members at meeting
- Cycle of board activities and the setting of agendas
- Provision of timely information to the Board
- Board officers and their roles
- Board committees, their tasks and composition
- Qualifications for Board membership and the process of the nomination committee
- Evaluation and assessment of Board performance
- Remuneration of non-executive directors
- Process for directors to obtain independent advice
- Appointment and role of the Company Secretary
- Approval of the annual budget and the regular update of forecasts
The Board acknowledges its responsibility for the Company’s system of internal control and for reviewing its effectiveness. The system is designed to manage rather than eliminate the risk of failure to achieve the Company’s strategic objectives and can only provide reasonable and not absolute assurance against material misstatement or loss.
An ongoing process, in accordance with the guidance of the Turnbull Committee on internal control, has been established for identifying, evaluating and managing the significant risks faced by the Company. The Board regularly reviews the process.
Audit and Risk Committee
The audit and risk committee is responsible for ensuring that the financial performance of the Group is properly reported on and monitored, including reviews of the annual and interim accounts, results announcements, internal control systems and procedures and accounting policies. The Comittee regularly evaluates the relevant financial, comercial and operational risk factors fot he business. The Audit and Risk Committee also reviews the appointment of the external auditor, their independence, the audit fee, and any questions of resignation or dismissal. The Audit and Risk Committee comprises of Mr. Coles (Chairman), Mr. Earl and Mr. Casanueva, and meets as often as required and at least twice annually.
Nomination and Remuneration Committee
The role of the Nomination and Remuneration Committee is to assist the Board in fulfilling its responsibilities in respect of establishing appropriate remuneration levels and incentive policies for employees, executives and directors, including all share compensation. The Comittee evaluates the adequacy of new candidates for the Board and top executives of the Company. The Nomination and Remuneration Committee comprises of Mr. Casanueva (Chairman), Mr. Earl and Mr. Coles, and meets as often as required and at least twice annually.
The key elements of the risk management processes and system of internal control procedures include:
- Clear organisational structure and lines of responsibility
- Identification through reporting procedures of major financial, commercial, legal and operational risks
- Operation of a comprehensive budgeting and financial reporting system and the comparison of actual results against budget
- Periodic update of budgets and performance targets and outlook, which is reviewed by the Board
- Authorisation and monitoring of investment policy, acquisition and disposal proposals, and major capital expenditure
The key processes used by the Board to review the effectiveness of the system of internal controls include the following:
- The review of the results of the risk assessment
- Review of the actual results against budget and results of the investigation of material differences for the year
- The review of issues raised by external auditors