Corporate Governance

The UK Corporate Governance Code (formerly the Combined Code) sets out standards of good practice in relation to board leadership and effectiveness, remuneration, accountability, audit, risk management and relations with shareholders.

Aim Article 26   Articles of Association

Whilst there is no obligation for AIM‑listed companies to comply fully with this Code, the Board endorses the principles of effective corporate governance and we are committed to maintaining the highest standards of ethics, and professional competence. That said, the Directors do not consider that full compliance with every aspect of the Code is appropriate for our Group at this stage in its development. However, we shall keep the matter under review and continue to develop procedures and policies as the Group grows

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Division of responsibilities

There is a distinct and defined division of responsibilities between the Chairman and the Chief Executive Officer (CEO).

The Chairman is primarily responsible for the effective working of the Board in conjunction with management and the CEO for the operational management of the business and for the implementation of the strategy agreed by the Board.

Board of Directors

The principal duty of the Board is to represent and protect the interests of the Company’s shareholders.

The Board

The Board plays an important role in working with the executive management in each of our businesses to ensure that our businesses are well governed, financially strong, and that we mitigate any risks that our managers identify. Your Board works hard to strike that essential balance between achieving our short‑term objectives and longer‑term growth and development. To this end, your Board has a policy to work closely with management in developing proposals on strategy for each of our businesses and for our Group, as a whole.

COMPOSITION OF THE BOARD


I advised last year that Phil Dutton, one of our Non‑Executive Directors and also Chair of our Audit Committee, would be stepping down at our AGM in September last year, since it became necessary for him and his family to live in the USA. We are however delighted to have appointed Mark Tentori to succeed Phil. Mark is an ACA, who qualified with Price Waterhouse. Mark has considerable Board, Audit Committee, Non‑Executive and Group CFO experiences in both the public and private arena. Mark was appointed to the Board in January 2016. There were no other changes to the composition of the Board during the year. We continue to operate with three Executive Directors balanced by three Non‑Executive Directors, with myself then as Chairman. Our Non‑Executive Directors have an important role of constructively challenging, and working closely with the Executive Directors to develop and agree proposals on strategy, to scrutinise management’s performance in meeting agreed goals and objectives and monitoring performance reports.

The Board

 

The Board has three committees – Remuneration, Audit and Nomination. Our Remuneration Committee is chaired by Elaine Bond, one of our Non‑Executive Directors and the Committee comprises Mark Tentori and myself. Our Audit Committee comprises Elaine and myself and is chaired by Mark. Our Nomination Committee is chaired by myself, and Elaine and Mark sit on that Committee.

The Audit Committee satisfies itself on the integrity of financial information and that controls and risk management systems within our businesses are robust and defensible. The Committee meets as required during the year and at least twice with the Group’s external auditor. Its role is to review the interim and final financial statements for approval by the Board, to ensure that operational and financial controls are functioning properly, and to provide the forum through which the Group’s external auditor reports to the Board.

Following a competitive tender process for the audit of the Company and its subsidiary undertakings in the year ended 31 March 2016 KPMG LLP (“KPMG”) were appointed to replace Ernst and Young LLP as the Company’s auditor and consequently were appointed to fill a casual vacancy in accordance with the Companies Act 2006. The appointment of KPMG will be put forward for approval at the next AGM.

The Remuneration Committee determines appropriate levels of remuneration and compensation for Executive Directors. The Committee meets as required during the year and is closely involved in agreeing the positions within our senior management team that should participate in our Long Term Incentive Plan (“LTIP”), together with the level of awards. The Remuneration Committee is also responsible for agreeing the performance criteria for annual bonuses and LTIP for Executive Directors and senior management.

Anders Hedlund also holds the position of Non‑Executive Director on the Board. Anders Hedlund is presumed not independent, because as founder, he has served on the Board since the Company’s inception, his family hold significant interests in the shareholding of the Company and he also fulfils a consultancy role within one of the Group’s businesses. As reported in the financial statements, there are also some related party transactions between certain of the subsidiaries within our Group and companies under the ultimate control of the Hedlund family.

As at the date of this report, all of the other Non‑Executive Directors are considered independent under the UK Corporate Governance Code.

Board process and information

The Board met eight times during the year, including an in‑depth review of 2016/17 budgets, annual operating plans and strategic objectives with senior management of each of our businesses. This took place over four days during March 2016. The Board aims to meet at least six times a year for formal Board meetings and up to six further times in between for informal business reviews, to review budgets and to focus on strategy. Where possible and cost effective, the Board tries to meet on the premises of various of its subsidiaries during the year, which provides an opportunity for the Directors to visit our businesses, meet with the senior management and be seen by our associates as a Board that genuinely wishes to be involved

Dialogue occurs regularly between Directors outside of scheduled meetings. Meeting agendas include review and approval of minutes recorded, matters arising, a review of material operational matters relating to our businesses and other special items for discussion or consideration. Board papers are usually circulated at least three business days in advance to allow Directors adequate time to prepare.

Our Non‑Executive Directors also meet as a team outside of Board meetings to discuss the performance of our Board as a whole and various topics and matters that require their specific input and attention.

The Board receives operational and financial information and reports from the CEO/CFO to assist in monitoring and assessing the ongoing performance of the businesses on a monthly basis.

Accountability and Audit

All Directors have accepted a duty of care and accountability to act in the interests of the Company.

As stated, the Audit Committee oversees how the Board monitors risk and reviews the adequacy of the risk management framework.

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Risk Management

The Board of Directors has overall responsibility for the establishment and oversight of the Group’s risk management framework. The Group’s risk management systems, policies and procedures are established to identify and analyse the risks faced by the Group, to set appropriate risk limits and controls, and to monitor the risks and adherence to limits. Such a system is designed to manage, rather than eliminate, the risk of failure to achieve business objectives and can only provide a reasonable and not absolute assurance against material misstatement or loss.

Risk management processes are reviewed regularly by the Audit Committee to reflect changes in market conditions and the Group’s activities. The Board’s oversight covers all controls, including financial, operational and compliance controls and general risk management. It is based principally on reviewing reports from management to consider whether significant risks are identified, evaluated, managed and controlled and whether any significant weaknesses are promptly remedied and indicate the need for more extensive monitoring.

Finally, whilst this report provides an overview of the policies and procedures that we adopt in following good corporate governance, I wish to thank my fellow Directors for their hard work, commitment, loyalty and support that they give to our Group. I also wish to place on record once again our thanks and appreciation to all our employees and associates throughout the Group. It is through their efforts and support that we continue to make the excellent progress that we have. We value greatly their commitment and loyalty.

I should also take this opportunity to thank our shareholders, bankers, customers, suppliers and advisers for their input and contributions to all our businesses throughout the world. We never take their support for granted and we are grateful for the excellent working relationship and partnership that we enjoy with them.

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