Corporate Governance – Board Sub-Committees

 

Audit committee – terms of reference

The audit committee is responsible for assisting the board in discharging its responsibilities for monitoring the integrity of the group’s financial statements and the effectiveness of the systems of internal controls and to monitor the effectiveness, performance and objectivity of the external auditors.

 

Composition and meetings

The members, including the chairman of the committee, shall be appointed by the board on the recommendation of the nomination committee for a period of three years (with an extension of up to a further three years if warranted).

Current Membership of the Audit Committee comprises Mr. Jonathan Shearman and Mr. Gary Jennison and is chaired by Mr Gary Jennison.

The committee shall consist of not less than two members and all members shall be independent non-executive directors of the company at least one of whom shall have recent and relevant financial experience. A quorum is two members.

Only committee members have the right to attend committee meetings with the group chairman, group CEO, group CFO and a representative of the auditor normally being invited to attend.

Meetings shall be held not less than twice each year and at such other times as required.

Dates for normal meetings shall be confirmed by the company secretary and these shall be communicated to the audit committee.

The company secretary shall be the secretary of the committee.
 

Reporting

The secretary shall minute the proceedings and resolutions of all meetings of the committee.

The committee or its chairman shall meet formally with the board of directors at least once each year to discuss such matters as the Annual Report and the relationship with the external auditors.

The committee shall make whatever recommendations to the board that it deems appropriate in the context of the scope of its responsibilities.

 

Responsibilities and authorities:

In respect of the financial statements

The responsibilities of the committee are to:

  • monitor the integrity of the financial statements of the company, and any formal announcements relating to the company’s financial performance, reviewing significant financial reporting judgements contained in them;

  • keep under review the consistency of accounting policies, both on a year to year basis and across the group;

  • review and challenge where necessary the Company’s financial statements (including the actions and judgements of management in relation to them), before submission to the board, taking into account, in particular:

    • critical accounting policies and practices, and any changes in them;

    • decisions requiring a major element of judgement;

    • the extent to which the financial statements are affected by any unusual transactions or circumstances;

    • the clarity of disclosures;

    • significant adjustments resulting from the audit;

    • the going concern assumption;

    • compliance with accounting standards;

    • compliance with stock exchange and other regulatory and legal requirements;

    • to consider management’s response to any major external audit recommendations;

In respect of internal controls, risk assessment and internal audit

To keep under review the effectiveness of the Company’s financial reporting and internal control policies and systems, covering all material controls, including financial, operational and compliance controls, and the Company’s procedures for the identification, assessment, management and reporting of risks.

To review at least annually the need for an internal audit function.

In respect of the external auditors

To make recommendations to the board in relation to the appointment of the external auditors and to approve the remuneration and terms of engagement of the external auditors.

To monitor and review the external auditors’ independence, objectivity and effectiveness, taking into consideration relevant UK professional and regulatory requirements.

To oversee the selection process, consider and make recommendations to the board in relation to the appointment and re-appointment of the company’s external auditors, and to ensure that the key partners within the appointed firm are rotated from time to time.

To meet with the external auditors at least twice each year, including at the audit planning stage, when the nature and scope of the audit, quality control procedures and steps taken by the auditors in response to regulatory and other requirements will be considered, and post audit at the reporting stage.

To review any auditors’ management letters and management’s responses.

To keep under review the relationship with the external auditors including (but not limited to):

  • the independence and objectivity of the external auditors;

  • the consideration of audit fees which should be paid, as well as any other fees which are payable to auditors in respect of non-audit activities; and

  • discussions with the external auditors concerning such issues as compliance with accounting standards and any proposals which the external auditors have made in relation to the company’s internal auditing standards.

To develop and implement policy on the engagement of the external auditors to supply non-audit services, considering relevant ethical guidance regarding the provision of non-audit services by the relevant external audit firm, specifying types of non-audit work:

  • from which the external auditors are excluded;

  • for which the external auditors can be engaged without referral to the committee; and

  • for which a case by case decision from the committee is necessary.

To give due consideration to the requirements of the AIM Rules.

To co-ordinate the external auditors.

To review the company’s procedures by which staff may raise concerns about possible improprieties in matters of financial reporting or other matters, and to ensure that arrangements are in place for proportionate and independent investigation of such matters and for appropriate follow-up action.

To oversee any investigation of activities which are within its terms of reference, and to act as a court of last resort.

To review the committee’s own performance, constitution and terms of reference, and make recommendations to the board as necessary, to ensure that it is operating at maximum effectiveness.
 

Other matters

The committee is authorised by the board to investigate any activity or state of affairs within its terms of reference.

The committee is authorised to seek any information it requires from any employees or officers and to call any member of staff to be questioned at a meeting of the committee as and when required.

The committee is authorised by the board, at the company’s expense, to obtain expert advice from the company’s auditors, professional advisers or otherwise, and to take independent professional advice and to require the attendance of outsiders with relevant experience and expertise if it considers it necessary.

Approved by the board: 28 September 2018
      

L McShane

Company secretary

  

Remuneration committee – terms of reference

The remuneration committee is responsible, within agreed terms of reference, for establishing a formal and transparent procedure for developing policy on executive remuneration and to set the remuneration packages of individual directors.

 

Composition and meetings

The members, including the chairman of the committee, shall be appointed by the board on the recommendation of the nomination committee for a period of three years (with an extension of up to a further three years if warranted).

Current membership of the Remuneration Committee comprises Mr. Gary Jennison and Mr. Jonathan Shearman, and is chaired by Mr. Jonathan Shearman.

The committee shall consist of not less than two members and all members shall be independent non-executive directors of the company at least one of whom shall have recent and relevant financial experience. A quorum is two members.

Only committee members have the right to attend committee meetings with the group CEO, group CFO and any other senior management being invited to attend.

Meetings shall be held not less than once each year, unless no changes to terms are proposed, and at such other times as required.

Dates for normal meetings shall be confirmed by the company secretary and these shall be communicated to the audit committee.

The company secretary shall be the secretary of the committee.
 

Reporting

The secretary shall minute the proceedings and resolutions of all meetings of the committee.

The committee shall make whatever recommendations to the board that it deems appropriate in the context of the scope of its responsibilities.

The chairman of the committee should be present at the company’s annual general meeting to respond to questions on matters within the responsibility of the committee.
 

Responsibilities and authorities:

The responsibilities of the committee are to:

  • determine and agree with the board the framework or broad policy for the remuneration of the CEO, all other executive directors, the chairman of the company and such other members of the executive management as it is designated to consider. The remuneration of non-executive directors shall be a matter for the executive members of the board. No director or manager shall be involved in any decisions as to his or her own remuneration. In order to ensure his independence, the committee shall also review and recommend to the board the remuneration of the company Secretary;

  • to take into account all factors which the committee deems necessary in determining the remuneration policy. The objective of the policy shall be to ensure that members of the executive management of the company are provided with appropriate incentives to encourage enhanced performance and are, in a fair and responsible manner, rewarded for their individual contributions to the success of the company;

  • to determine targets for any performance related pay schemes operated by the company and to ask the board, when appropriate, to seek shareholder approval for any long-term incentive arrangements;

  • to determine the total individual remuneration package of each executive director including, where appropriate, bonuses, incentive payments and share options, ensuring that:

    • remuneration packages are sufficient to attract, retain and motivate executive directors of the quality required, while avoiding paying more than is necessary for this purpose; and

    • performance-related elements of remuneration form a significant proportion of the total remuneration package, and are designed to align their interests with those of shareholders;

  • to determine the policy for and scope of pension arrangements, for executive directors.

  • to ensure that contractual terms on termination and any payments made, are fair to the individual and the company, ensuring that compensation commitments do not have the effect of rewarding poor performance and that the duty to mitigate loss is fully recognised, while dealing fairly with cases where departure is not due to poor performance.

  • to give due regard to the comments and recommendations of the Combined Code, the AIM Rules and associated guidance, in determining remuneration packages and arrangements.

  • to review and have regard to the conditions of service and remuneration levels of competitor companies, but not so as to cause remuneration to rise without a corresponding improvement in performance.

  • to be aware of and advise on any major changes in employee benefit structures throughout the group.

  • to be exclusively responsible for establishing the selection criteria, selecting, appointing and settling the terms of reference for any remuneration consultants who advise the committee.

 

Other matters

The Committee is authorised by the board to investigate any activity or state of affairs within its terms of reference.

The committee is authorised to seek any information it requires from any employees or officers. In seeking any advice or assistance from any of the company’s executives, to ensure that such role is clearly separated from the executive’s role within the business.

The committee is authorised to obtain, at the company’s expense, expert advice from the company’s auditors, professional advisers or otherwise, and to take independent professional advice and to require the attendance of outsiders with relevant experience and expertise if it considers it necessary.

The committee is authorised to select, set the terms of reference and appoint remuneration consultants, at the company’s expense.

Approved by the Board: 28 September 2018
      

L McShane

Company secretary

  

Nomination committee – terms of reference

The nominations committee is responsible for reviewing the structure, size and composition (including the skills, knowledge, independence, experience and diversity) of the board and make recommendations to the board with regard to any adjustments that are deemed necessary.

The committee comprises the entire board and is chaired by the CEO and the group company secretary shall be secretary to the committee.

The committee shall evaluate the balance of skills, knowledge and experience on the board before an appointment is made and based on such evaluation shall prepare a description of the role, capabilities and time commitment required for a particular appointment.

The committee shall keep under review the leadership needs of the group, both executive and non-executive, with a view to ensuring the continued ability of the organisation to compete effectively in the marketplace.

The committee shall be responsible for identifying and nominating for the approval of the board candidates to fill board vacancies as and when they arise. In identifying suitable candidates for any appointment, the committee shall use open advertising and/or external advisers to facilitate the search, will consider candidates from a wide range of backgrounds and must consider candidates on merit and against objective criteria, and with due regard to the benefits of diversity on the board, including gender, and taking particular care to ensure that candidates have adequate time available to devote to the position.

The committee shall also consider in respect of the executive directors:

  • proposals for their appointment, re-appointment or promotion (including the term of such appointment or re-appointment); and

  • any proposal for their dismissal or non-reappointment or any substantial change in their duties or responsibilities or the term of their appointment.

The committee shall consider proposals for the appointment, re-appointment (including the term of such appointment) or retirement of the chairman of the board and other non-executive directors.

The committee shall make recommendations concerning:

  • membership of the audit and remuneration committees, and any other board committees as appropriate, in consultation with the chairman of those committees;

any matters relating to the continuation in office of any director at any time including the suspension or termination of service of an executive director as an employee of the group; and the appointment of any director to executive or other office.

Approved by the Board: 28 September 2018
      

L McShane

Company secretary