Wogen PLC
Corporate Governance
Compliance with Combined Code
The Directors recognise the importance of sound corporate governance and, while the Company is not required as an AIM quoted company to comply with the main provisions and principles set out in the revised Combined Code on Corporate Governance published in June 2006, it intends to do so in so far as appropriate given the Companys size.
Board of Directors
The Board consists of two Non-executive Directors: Richard Nelson (Chairman) and Tony Shearer (senior independent Director), and six Executive Directors: Colin Williams (Deputy Chairman), Allan Kerr (Chief Executive Of¢cer), Peter Watkins, Douglas Hunter, Norman Ting and Damian Brousse. A seventh Executive Director, Neil Poulter was appointed to the Board as Finance Director on 1 October 2007. The Companys Articles of Association require Directors to submit themselves for re-election every three years.
Decisions concerning the direction and control of the business are made by the Board, and a formal schedule of matters speci¢cally reserved for the Board is in place.
The Board has reviewed its own composition and considers that, while the number and balance of Nonexecutive Directors is not in line with the recommendations of the Combined Code, the present position is acceptable as no one individual or small group dominates the Boards decision taking, and both the Nonexecutive Chairman and the Non-executive Director are regarded as wholly independent.
An agreed procedure exists for Directors in the furtherance of their duties to take independent professional advice. Newly appointed Directors are made aware of their responsibilities through the Company Secretary. The Company does not make any provision for formal training of new Directors.
The Board is responsible for formulating, reviewing and approving the Companys strategy, budgets and corporate actions. The Company has established properly constituted audit, risk limit, remuneration and nomination committees of the Board with formally delegated duties and responsibilities.
Meetings with Non-executive Directors
The Chairman holds meetings as required with the Non-executive Directors without the Executive Directors being present.
| Board | Audit | Remuneration | Nomination | |||||
|---|---|---|---|---|---|---|---|---|
| No. of meetings | No. attended | No. of meetings | No. attended | No. of meetings | No. attended | No. of meetings | No. attended | |
| Richard Nelson | 4 | 4 | 4 | 4 | 4 | 4 | 2 | 2 |
| Colin Williams | 4 | 4 | - | - | - | - | - | - |
| Allan Kerr | 4 | 4 | - | - | - | - | 2 | 2 |
| Peter Watkins | 4 | 4 | - | - | - | - | 2 | 2 |
| Douglas Hunter | 4 | 3 | - | - | - | - | - | - |
| Norman Ting | 4 | 1 | - | - | - | - | - | - |
| Damian Brousse | 4 | 4 | - | - | - | - | - | - |
| David Munro | 2 | 2 | 2 | 2 | 2 | 2 | - | - |
| Tony Shearer | 4 | 4 | 4 | 4 | 4 | 4 | 2 | 2 |
Audit Committee
The Audit Committee has formal terms of reference which are approved by the Board. Its primary responsibilities are to monitor the quality of internal controls and ensure that the ¢nancial performance of the Company is properly measured and reported on. It receives and reviews reports from the Companys management and auditors relating to the interim and annual accounts and the accounting and internal control systems in use throughout the Company. The Audit Committee meets at least twice a year and has unrestricted access to the Companys auditors.
The members of the Audit Committee are Tony Shearer (Chairman) and Richard Nelson. David Munro was a member of the Audit Committee until his resignation on 8 March 2007.
Risk Limit Committee
The Risk Limit Committee comprises Richard Nelson, Allan Kerr, Peter Watkins and Tony Shearer, and its principal function is to consider any individual position and/or counterparty risk which might otherwise exceed the limits laid down by the Board. David Munro was a member of the Risk Limit Committee until his resignation on 8 March 2007.
A majority of the members of the Risk Limit Committee has authority to approve such excess.
Remuneration Committee
The Remuneration Committee has formal terms of reference which are approved by the Board. Its principal objectives are to review the performance of the Executive Directors and make recommendations to the Board on matters relating to their remuneration and terms of employment. The Remuneration Committee also makes recommendations to the Board on proposals for the granting of share options and other equity incentives pursuant to any share option scheme or equity incentive scheme in operation from time to time.
The members of the Remuneration Committee are Tony Shearer (Chairman) and Richard Nelson. David Munro was a member of the Remuneration Committee until his resignation on 8 March 2007.
The Remuneration Committees report on Directors remuneration is set out on pages 19 to 22.
Nomination Committee
The Nomination Committee has formal terms of reference which are approved by the Board. The Nomination Committee meets as and when necessary to assess the suitability of candidates proposed for appointment to the Board. In exercising this role, the Directors have regard to the recommendations put forward in the Combined Code. The Nomination Committee is chaired by Richard Nelson, and its other members are Tony Shearer, Allan Kerr and Peter Watkins. David Munro was a member of the Nomination Committee until his resignation on 8 March 2007.
The Nomination Committee met speci¢cally during the year to consider the appointment of a Group Finance Director, and appointed external recruitment consultants to assist with the search for a suitable candidate. The Committee considered both external and one internal candidate for this position. Following a formal process of interviews, and having regard to the relative experiences and background of the candidates, the Committee recommended the appointment of Neil Poulter to the Board.
Communication
Wogen plc recognises the importance of communication to stakeholders. The full annual report and accounts, as well as the interim report, are mailed to all shareholders and on request to other parties who have an interest in the Groups performance. All reports are available to be downloaded from the corporate website, www.wogen.com, which is updated regularly with news and information about the Group.
TThe Board holds a regular dialogue with institutions and the analyst community, as well as general presentations after the announcement of preliminary and interim results. The Board is advised of any speci¢c comments from institutional investors to enable them to develop an understanding of the views of major shareholders. All shareholders have the opportunity to put forward questions at the Companys Annual General Meeting.
The Company responds to individual correspondence from shareholders and interested groups on a wide range of issues within a reasonable time frame.
Audit, internal control and risk management
The respective responsibilities of the Directors and the auditors in connection with the annual report and accounts are explained on pages 26 and 27 and the statement of the Directors on going concern appears on page 16.
Following the publication of guidance for directors, Internal Control : Guidance for Directors on the Combined Code, the Board con¢rms that there is an ongoing process for identifying, evaluating and managing any signi¢cant risks faced by the Group. A formal process is now in place and is regularly reviewed by the Board in the light of the Turnbull Guidance and the subsequent Flint Report.
The Audit Committee has also established a new sub committee, the Risk Management Sub Committee, to address the detailed aspects of all risks at an operational level and to report directly to the Audit Committee.
The Directors are responsible for the Groups system of internal control and for reviewing its effectiveness. However, such a system can only provide reasonable, but not absolute, assurance against material misstatement or loss. The system is designed to manage rather than eliminate the risk of failure to achieve business objectives.
The Directors consider proper risk management to be crucial to the Groups ongoing success and give a high priority to ensuring that adequate systems and structures are in place to measure, analyse and limit exposure to risk. The Directors have established key procedures to ensure that internal controls are effective and are commensurate with a group of this size. A key control procedure is the day to day supervision of the business by the Directors. Other internal control procedures and reviews for effectiveness by the Board continue to be developed.
During the year a Head of Internal Audit was appointed. The Head of Internal Audit reports directly to the Audit Committee and will meet regularly with the Audit Committee in the absence of management. In addition, a procedure has been introduced by which employees may, in con¢dence, raise concerns about possible improprieties in matters of ¢nancial reporting or other matters.
The Audit Committee keeps the scope and cost effectiveness of the external audit under review. The independence and objectivity of the external auditors is also considered on a regular basis, with particular regard to the level of non-audit fees. The Audit Committee is satis¢ed that where the external auditors are used for non-audit services their independence and objectivity is not compromised. The split between audit and non-audit fees for the year under review appears in note 5 on page 39.
