Corporate Governance
Corporate Governance Report - 30th September 2007
The Directors acknowledge the importance of the Principles set out in The Combined Code on Corporate Governance (“the code”) issued by the Financial Reporting Council on 23 July 2003. Although the Combined Code is not compulsory for AIM listed companies, the Directors have applied the principles in this statement, together with the Remuneration Report set out on pages 21 to 22 as far as practicable and appropriate for a public company of its size as follows:
The Board of Directors
As at the date of this report the Board consists of three executive Directors and six non-executive Directors. The role of Chairman and Chief Executive are distinct. The Chairman
is responsible for the effectiveness of the Board and ensuring communication with shareholders and the Chief Executive is accountable for the management of the Group. The Chairman has an executive role that is focused on shareholder communication and relationships plus business development including China and new technologies. On 25 April 2007, Roel Molenaar resigned as a Director. On 11 May 2007 the Board was strengthened with the appointment of three additional non-executive Directors. Graeme Bissett and Eric van der Werff are independent non-executive Directors and are available
should a shareholder request direct access for matters which they believe are not appropriate through the normal channel of the Chairman. As such no senior independent non-executive Director has been designated.
The Board meets regularly and is responsible for strategy, performance, approval of major capital investments, treasury and financing matters and the framework of internal controls.
The Board has a formal schedule of matters specifically reserved to it for decision. To enable the Board to discharge its duties, all Directors receive appropriate and timely information. Briefing papers are distributed to all Directors in advance of Board meetings. All Directors have access to the advice and services of the Company Secretary, who is responsible for ensuring that Board procedures are followed and that applicable
rules and regulations are complied with. On appointment of a new Director the Chairman ensures a full, formal and tailored induction is provided. The appointment and removal of the Company Secretary is a matter for the Board as a whole. In addition, procedures are in place to enable the Directors to obtain independent professional advice in the furtherance
of their duties, if necessary, at the Company’s expense. The Company Secretary maintains a register of attendance of Director at Board Meetings and the record of attendance
during the year ended 30 September 2007 is as follows:
Board Meetings
W Thomson 7
K van Wissen 7
S Cunningham 7
Roel Molenaar (resigned 25 April 2007) 5
J McColl 5
G Bissett 7
E van der Werff 7
M Jónsson (appointed 11 May 2007) -
B Olgeirsson (appointed 11 May 2007) 2
H Montjotin (appointed 11 May 2007) 2
Total Number of meetings 7
Subsequent to the year end, the Board has established a Nominations Committee to address changes in Board composition. Directors are subject to re-election by the shareholders at Annual General Meetings. The Articles of Association provide that Directors will be subject to re-election at the first opportunity after their appointment and the Board will voluntarily submit to re-election at intervals of three years.
Brief biographies of all Board members, giving details of their experience and other main commitments are included on pages 14 to 15 allowing shareholders to take an informed decision on those standing for election or re-election. Audit Committee The Audit Committee during the period consisted of G Bissett (Chairman of the Audit Committee), E van der Werff and J McColl. The Board is satisfied that at least one member of the
Audit Committee has recent and relevant financial experience. The Audit Committee meets at least three times a year and advises the Board on the appointment, reappointment and
removal of external auditors and approves their remuneration and terms of engagement, including developing and implementing a policy on the provision of non-audit services
by the external audit firm. It also reviews and monitors the independence and objectivity of the external auditor. The Committee is also responsible for monitoring compliance withaccounting and legal requirements and for reviewing the annual and interim financial statements prior to their submission for approval by the Board. The Audit Committee has assessed the need for an internal audit function and has concluded that the size and complexity of the Group now merits such a function with steps being taken to implement this aspect of assurance across the Group. The Audit Committee met three times during
the year ended 30 September 2007. These meetings were attended by the full Audit Committee. Remuneration Committee. The Remuneration Committee during the period consisted of E van der Werff (Chairman of the Remuneration Committee), G Bissett and J McColl. The Committee’s role is to consider and approve the remuneration and benefits of the Executive Directors. In framing the Company’s remuneration policy, the Remuneration Committee has given full consideration to Section B of The Combined Code. The Report on Directors’ Remuneration is set out on pages 21 to 22. The Remuneration Committee met five times during the year to 30 September 2007. These meetings were attended by the full Remuneration Committee. Internal Control. The Board is responsible for establishing and maintaining the Group’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 Group’s strategic objectives, and can only provide reasonable and not absolute assurance against material misstatement or loss. The key risk management process and system of internal control procedures include the following:
• The Group’s organisational structure has clear lines of responsibility;
• The Board is responsible for identifying the major business risks faced by the Group and for determining the appropriate courses of action to manage those risks;
• The Group prepares a comprehensive annual budget that is approved by the Board. Monthly results are reported against the budget and variances are closely monitored
by the Directors; and
• Executive Directors hold regular meetings with the executive managers of the Group’s business units. The Directors have reviewed the effectiveness of the system of internal control as it operated during the year ended 30 September 2007.
Relations with Shareholders
Communications with shareholders are given high priority. The Board uses the Annual General Meeting to communicate with investors and welcomes their participation. The Chairman aims to ensure that the Directors, including non-executive Directors, are available at Annual General Meetings to answer questions. Going Concern
After consideration of the future and taking into account all information available, the Directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. For this reason, they continue to adopt the going concern basis in preparing the financial statements.
Statement by Directors on Compliance with the Provisions of the Combined Code
The Board considers that they have complied with the provisions of The Combined Code, as far as practicable and appropriate for a public company of this size, in accordance with the recommendations on corporate governance of the Quoted Companies Alliance. The specific provisions of The Combined Code not adopted during the year to 30 September
2007 are establishment of a Nominations Committee and the related provisions of The Combined Code to this plus A1.3, A2.2, A6.1, B.2.1 and C.3.1. In respect to B.2.1 and C.3.1 the Board are satisfied that the membership of the relevant committees is appropriate. Subsequent to the year end, the Board has established a Nominations Committee. It is the
intention of the Group to develop its procedures in certain of these areas during the forthcoming financial year where it would be valuable to do so.