Corporate Governance

The Board fully supports the underlying principles of corporate governance contained in the Combined Code, notwithstanding that, as its securities are not listed on the Official List, it is not required to comply with such recommendations. It has sought to comply with the provisions of the Combined Code, insofar as is practicable and appropriate for a public company of its size and nature, and recognises its overall responsibility for the Group’s systems of internal control and for monitoring their effectiveness.

The main features of the Company’s corporate governance procedures, which do not constitute full compliance with the Combined Code, are as follows:

the Board has two independent Non-executive Directors and two non-independent Non-executive Directors, all of whom take an active role in board matters;
the Company has a Nominations Committee, an Audit Committee and a Remuneration Committee, each of which consists of the Non-Executive directors, and, in the case of the Nominations Committee, of the Chief Executive Officer also. The Audit Committee has unrestricted access to the Company’s auditors and ensures that auditor independence has not been compromised;
all business activity is organised within a defined structure with formal lines of responsibility and delegation of authority, including a schedule of “matters referred to the board”; and
regular monitoring of key performance indicators and financial results together with comparison of these against expectations.

Nominations Committee

The Nominations Committee shall be appointed by the Board from amongst the Non-executive Directors, together with the Chief Executive Officer. The current members are Howard Bell, Bob Lewis, David Macmillan, John Hall and Stephen Lightley.

The Nominations Committee shall have at least two members. The majority of the members shall be independent Non-executive Directors who are independent of management and free from any business or other relationship which could materially interfere with the exercise of their independent judgement. The Nominations Committee’s chairman shall be appointed by the Board.

The Nominations Committee may invite any person it thinks appropriate to join the members of the Nominations Committee at its meetings.

The function and duties of the Committee are:

to make recommendations to the Board on all new appointments; and
in making recommendations to interview all nominees, take up references, to have completed all pre-appointment questionnaires required to comply with the Combined Code and/or any regulatory body or stock exchange upon which the shares in the capital of the company may from time to time be quoted.

Audit Committee

The following is a summary of the terms of reference under which the Company’s Audit Committee operates. The Audit Committee comprises Howard Bell and Bob Lewis, both of whom are Non-executive Directors of the Company.

The Audit Committee shall have at least two members and each member shall be a Non-executive Director. The Audit Committee shall meet at least two times in every year and any other time as required by either the chairman of the Audit Committee, the Finance Director of the Company or the external auditors of the Company. In addition, the Audit Committee shall meet with the external auditors of the Company (without any of the executives attending) at least once a year.

The Audit Committee shall, inter alia:

monitor the financial reporting and internal control principles of the Company;
maintain appropriate relationships with external auditors including considering the appointment and remuneration of external auditors;
review all financial results of the Company, including all announcements in respect thereof before submission of the relevant documents to the Board;
review and discuss (where necessary) any issues and recommendations of the external auditors including reviewing the external auditors’ management letter and management’s response;
consider all major findings of internal operational audit reviews and management’s response to ensure co-ordination between internal and external auditors;
review the Board’s statement on internal reporting systems and keep the effectiveness of such systems under review; and
consider all other relevant findings and audit programmes of the Company.

The chairman of the Audit Committee shall report annually to the Board on behalf of the Company’s shareholders on all matters within its duties and responsibilities. The Audit Committee shall compile a report to Shareholders on its activities to be included in the Company’s annual report.

The Audit Committee is authorised to:

investigate any activity within its terms of reference;
seek any information it requires from any employee of the Company; and
obtain, at the Company’s expense, outside legal or other independent professional advice and to secure the attendance of such persons to meetings as it considers necessary and appropriate.

Remuneration Committee

The following is a summary of the terms of reference under which the Company’s Remuneration Committee operates. The Remuneration Committee comprises Howard Bell and David Macmillan, both of whom are Non-executive Directors of the Company.

The Remuneration Committee shall have at least two members, one of which shall be an independent Non-executive Director. The Chief Executive of the Company will normally be invited to meetings of the Remuneration Committee to discuss the performance of other executive directors but shall not be involved in any of the decisions. The Remuneration Committee shall meet at least two times in every year and any other time as required by either the chairman of the Remuneration Committee, the Finance Director of the Company or the external auditors of the Company.

The Remuneration Committee shall, inter alia:

ensure that the executive directors are fairly rewarded for their individual contributions to the overall performance of the Company;
consider the remuneration packages of the executive directors and any recommendations made by the Chief Executive Officer for changes to their remuneration packages including in respect of bonuses (including associated performance criteria), other benefits, pension arrangements and other terms of their service contracts and any other matters relating to the remuneration of or terms of employment applicable to the executive directors that may be referred to the Remuneration Committee by the Board;
oversee and review all aspects of any share option schemes adopted by the Company including the selection of eligible directors and other employees and the terms of any options granted;
demonstrate to the Company’s shareholders that the remuneration of the executive directors is set by an independent committee of the Board; and
consider and make recommendations to the Board about the public disclosure of information about the executive directors’ remuneration packages and structures in addition to those required by law or by the London Stock Exchange.

The chairman of the Remuneration Committee shall report formally to the Board on its proceedings after each meeting on all matters within its duties and responsibilities. The Remuneration Committee shall produce an annual report which will form part of the Company’s annual report and consider each year whether such report should be put to the Company’s Shareholders for approval at the annual general meeting.

The Remuneration Committee is authorised to:

investigate any activity within its terms of reference;
seek any information it requires from any employee of the Company;
assess the remuneration paid by other UK listed companies of a similar size in any comparable industry sector and to assess whether changes to the executive directors' remuneration is appropriate for the purpose of making their remuneration competitive; and
obtain, at the Company’s expense, outside legal or other independent professional advice and to secure the attendance of such persons to meetings as it considers necessary and appropriate.

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