Corporate Governance
Updated as of 3rd Feb 2012
The Directors acknowledge the importance of the principles set out in The UK Corporate Governance Code (“Code”) issued by the Financial Reporting Council in May 2010. Although the Code is not compulsory for AIM listed companies, the Directors have applied the principles of the Code 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 seven non–executive Directors. Of the non–executive directors D Rolph (Chairman), G Bissett and E van der Werff are viewed as independent as defined by the Code. 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 responsible for the management of the Group. Graeme Bissett is the senior independent non–executive Director and is available should a shareholder request direct access for matters which they believe are not appropriate through the normal channel of the Chairman, Chief Executive or Finance Director. He is also responsible for appraising the Chairman’s performance.
A number of changes to the Board composition have arisen during the year. On February 2011, E Tamimi joined the Board replacing T Thordarson. In addition, on 1 September 2011, S Hu joined the Board as the Sinotrans Limited nominated representative. Subsequent to the year end, on 14 October 2011, B Thomson resigned from the Board.
The Board meets regularly and is responsible for strategy, performance, approval of major capital investments, treasury and financing matters, human resource strategy, risk management procedures 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. During the current year the review of the placing of share and commercial alliance with Sinotrans has been subject to detailed review by the Board. The monitoring of progress of key milestones for the commercial alliance with Sinotrans will be an important task for the Board for the next twelve months. During the current year certain Board meetings have included specific presentations by subsidiary management on key strategic areas within the business units or regions.
The Chairman performs an annual evaluation of the effectiveness of the Board. This is conducted by a combination of written survey questionnaires followed by a series of discussions. The outcome of these evaluations highlight that all Directors were positive about the performance and process of the board and board committees. The modus operandi of the Board and its priorities are annually reviewed and recorded in a Board Charter.
The Company Secretary maintains a register of attendance of Directors at Board Meetings. The Board has met for six scheduled meetings during the course of the 12 months under review and attendance at such board meetings by individual Directors is set out below. There was also a number of telephone board calls during the year to share developments principally surrounding the share placing. In all cases Board members participated in the call or where this was not possible, were consulted in advance.
Board Meetings
K van Wissen 6
S Cunningham 6
S Hu (5 prior to appointment) 1
B Thomson 1
D Rolph 6
J McColl 5
G Bissett 6
E van der Werff 6
T Thordarson (4 post resignation) –
H Ludvigsson 6
E Tamimi (2 prior to appointment) 3
H Montjotin 4
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 23 to 24 of the 2011 annual report and accounts. The Chairman is pleased to confirm that the performance of all Directors has been reviewed and continues to be regarded as effective, and that the Directors offering themselves for re-election at the AGM continue to demonstrate commitment to the role of Director.
Audit committee
The Audit Committee during the year consisted of G Bissett (Chairman of the Audit Committee), E van der Werff and D Rolph. The Board is satisfied that at least one member of the Audit Committee has recent and relevant financial experience. The Audit Committee 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. At the year-end meeting to review the annual report and accounts the Audit Committee formally considers the level of non–audit services and fees provided by the group’s auditors. The detail and level of fees are fully discussed and the Committee is satisfied that there is no risk to the objectivity and independence of the external audit arising from the level of non–audit fees. The majority of non–audit fees relate to support for tax filing compliance. The Committee is also responsible for monitoring compliance with accounting and legal requirements and for reviewing the annual and interim financial statements prior to their submission for approval by the Board. The Audit Committee monitors the effectiveness of internal financial controls and the processes for evaluating and monitoring the risks facing the Group, which includes agreeing a programme of work for internal audit. The Audit Committee met four times during the year ended 30 September 2011. These meetings were attended by the full Audit Committee.
Remuneration committee
The Remuneration Committee during the year consisted of E van der Werff (Chairman of the Remuneration Committee), G Bissett and D Rolph. The Committee’s primary 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 D of the Code. The Report on Directors’ Remuneration is set out on pages 20 to 22 of the 2011 annual report and accounts. The Remuneration Committee met four times during the year ended 30 September 2011. These meetings were attended by the full Remuneration Committee.
Nominations committee
The Nominations Committee during the year consisted of E van der Werff (Chairman of the Nominations Committee), D Rolph, G Bissett, J McColl and K van Wissen. The Committee leads the process for Board appointments and makes recommendations to the Board on the structure, size and composition of the Board. The Nominations Committee led the process for the appointment of one new nominated representative of Atorka Holdings hf and the one nominated representative of Sinotrans Limited. The Nominations Committee also has reviewed the succession planning for Executive Board members and met twice during the year ended 30 September 2011. These meetings were attended by the full Nominations 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 processes and systems of internal control include the following features:
• The Group’s organisational structure has clear lines of responsibility and delegated authority;
• 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. A formal risk register is maintained and is presented at each Board meeting;
• The Group prepares a comprehensive annual business plan and financial budget that is approved by the Board. Monthly reporting, including consolidated management accounts, compare actual results against the budget and prior period with variances 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 risk management and system of internal control as it operated during the year ended 30 September 2011. The Board’s review covers all controls, including financial, operational and compliance controls and risk management. The Audit Committee assists the Board in discharging its review responsibilities.
Relations with shareholders
Communications with shareholders are given high priority. The Chairman, Chief Executive and Finance Director normally meet the major shareholders twice annually and brief the next board meeting on their discussions. This year there was an additional series of meetings following the announcement of the Sinotrans share placing. 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.
The Group’s business activities, together with the factors likely to affect its future development, performance and position are set out in the Chairman’s Statement, Chief Executive’s Review and the Financial Review. The Director’s Report on pages 14 to 17 of the 2011 annual report and accounts outlines the principal risks and uncertainties. The financial position of the Group, its cash flows, liquidity position and borrowing facilities are also described in the Financial Review on pages 10 to 12 of the 2011 annual report and accounts. In addition, note 26 of the financial statements include the Group’s objectives, policies and processes for managing its capital; its financial risk management objectives; details of its financial instruments and hedging activities; and its exposure to credit risk and liquidity risk.
Statement by directors on compliance with the provisions of The UK Corporate Governance Code (“Code”)
The Board considers that they have complied with the provisions of the 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. There are no specific provisions of the Code that have not been adopted.