With exceptions as highlighted below, the Company complied with the provisions of the UK Corporate Governance Code issued by the Financial Reporting Council in 2010.
The Board acknowledges Malcolm Diamond is a non-independent Executive Chairman which does not comply with the requirements of section C.3.1 of the Corporate Governance Code. However, the Board believes, that given Mr Diamond has sat as Chairman and as a Non-Executive in other companies, his experience from these appointments and his previous knowledge of Trifast is invaluable and can best be delivered through the position of Chairman.
The Company has applied the principles set out in the Code, including both the main principles and the supporting principles, by complying with the Code as reported above. Further explanation of how the principles and supporting principles have been applied is set out below and in the Directors' Remuneration Report.
The structure of the Board and its standing Committees are as follows:
On 25 April 2013, Scott Mac Meekin was appointed as an Independent Non-Executive Director to the Board.
Currently the Board consists of five Executive Directors and three Independent Non-Executive Directors. The Non-Executive Directors are considered to be independent of management and free from any business or other relationship which could interfere with the exercise of their independent judgement for the purposes of the Code. The Chairman who is an Executive Chairman is not considered by the Board to be independent.
The appointment, replacement and powers of the Directors are governed by the Company's Articles of Association, the Corporate Governance Code, the Companies Act, prevailing legislation and resolutions passed at the Annual General Meeting (AGM) or other general meetings of the Company.
The Senior Independent Non-Executive Director is Neil Chapman who was chosen due to his Executive Board experience with other companies.
All Independent Non-Executive Directors have the authority to meet with shareholders without first seeking approval from the Executive Directors.
The Board met nine times during the period with attendance as follows:
Upon appointment the Directors are required to seek election at the first AGM following appointment. All Directors are required to submit themselves for re-election at regular intervals and at least every three years.
The Company has separate posts of Chairman and Chief Executive. The Chairman leads the Board and the Chief Executive is responsible for the management of the Company, implementing policies and strategies determined by the Board.
The Independent Non-Executive Directors have full access to the external Auditor and to management and there is a formal procedure for Directors to obtain independent professional advice in the furtherance of their duties should this be necessary. All Directors have access to the advice and services of the Company Secretary.
Appropriate and relevant training is provided to the Directors as and when required.
The Board meets a minimum of five times a year, and is supplied as early as practical with an agenda and appropriate papers. Further ad-hoc meetings of the Board are held as and when required. Directors are appointed by the Board on recommendation from the Nominations Committee. The Board monitors the financial performance of the Group, and approves and reviews major projects and acquisitions. The Board has formally adopted a schedule of matters which are reserved to the Board for decision, thus ensuring that it maintains control over appropriate strategic, financial, organisation and compliance issues.
The Board undertakes annual evaluation of its own performance and that of its Committees using questionnaires and continues to train and evaluate Senior Managers below Board level in order to maintain its continuous succession policy.
The Board has delegated specific responsibilities to Committees, as described below:
The Audit Committee
The Audit Committee's principal responsibilities are to assist the Board in reviewing and approving the Company's financial statements including any significant financial judgements contained therein, monitoring the Company's internal financial control and risk management systems and making recommendations to the Board with regard to the appointment and remuneration of the external Auditor.
The Audit Committee's terms of reference include all matters indicated by the Disclosure and Transparency Rule 7.1 and the Corporate Governance Code.
It is Group policy to ensure Auditor independence by carefully considering any non-audit work carried out by the Auditor. There are no contractual obligations that oblige the Company to appoint KPMG to conduct the annual audit. There is no agreed timescale requiring formal tendering of the audit appointment; however, the Committee reviews on an annual basis the performance, expertise and independence of the external Auditor and maintains appropriate contact with potential alternative suppliers for audit and accountancy Advisery services. In addition, the Board receives written confirmation from the Auditor of any relationships they have which may cause a conflict of interest, together with a declaration from them that they consider themselves to be independent. The Board has approved the Auditor undertaking certain other limited activities for the Group but any assignment outside these activities requires separate Board approval. Following its review, the Board is satisfied that independence has been maintained and it is satisfied that it is appropriate to continue with the re-appointment of KPMG LLP as the Company's Auditor.
The Audit Committee comprises entirely of the Independent Non-Executive Directors. It is chaired by Neil Chapman and has met three times in the year. During the period the Committee felt that, given the size of the Group, it was valuable having the Executive Chairman, Chief Executive Officer (CEO) and Group Finance Director (GFD) attending the Committee meetings. The external Auditor also normally attends meetings. In addition there is at least one meeting a year where the Audit Committee meets the external Auditor without executive management present.
The Committee is considered to be adequately qualified. The Chairman, a Fellow of the ICAEW was previously the senior partner of KPMG's South-East operation and now works in industry as a Group Finance Director.
The Remuneration Committee
The Remuneration Committee comprises the Independent Non-Executive Directors and is chaired by Jonathan Shearman. The Committee meets as required during the year to review and determine the terms and conditions of employment of the Executive Directors and senior management, including levels of remuneration and other benefits. During the period, the Committee met on two occasions.
The Nominations Committee
The Nominations Committee comprises Neil Chapman and Jonathan Shearman (Independent Non-Executive Directors), the Chief Executive and the Chairman, and meets at least once a year. It is chaired by Neil Chapman, as Senior Independent Non-Executive Director. The Committee is responsible for reviewing the Board structure, size and composition, and for nominating candidates for Executive and Non-Executive positions. It will also ensure that any newly appointed Director receives a full and proper induction into the Company's affairs. Appointments will be made after evaluating the balance of skills, knowledge, experience and diversity on the Board. In identifying suitable candidates the Committee shall consider from a wide range of backgrounds both internally and externally and will take due regards for the benefits of diversity on the Board, including gender taking care that appointees have enough time to devote to the position. During the period, the Committee met on three occasions.
The Group has a website www.trifast.com, which is regularly updated to ensure that shareholders are fully aware of the Group's activities. The Group's Registrar, Computershare, is also linked to the Trifast website and offers services for the shareholders.
Trifast also works with City specialists to ensure all levels of shareholders receive Group information. These include:
Arden Partners plc – Stockbroker and Adviser to the Company: Institutional Fund Managers
TooleyStreet Communications – Investor Relations, Analysts, Private Client Brokers and Media
Edison Group – Investment Research which is also available on the Trifast website
The members of the Audit, Remuneration and Nomination Committees will normally be available to speak to shareholders at the AGM in order that they understand the views of the shareholders. In addition, shareholders can contact them at any time by writing to Trifast plc, Trifast House, Bellbrook Park, Uckfield, TN22 1QW.
After making enquiries, the Directors have reasonable expectations that the Group has adequate resources to continue in operational existence for the foreseeable future. Further information is given in the Basis of Preparation, note 1. For this reason, they continue to adopt the going concern basis in preparing the financial statements.
The Corporate Governance Code requires that Directors review the effectiveness of the Group's system of internal controls which includes controls over financial, operational, compliance and risk management. The Audit Committee has reviewed the effectiveness of the system of internal control and reported its positive conclusions to the Board.
In addition, the Board takes required account of the significance of social, environmental and ethical matters in regard to the business of the Group and seeks to take an ethical view of its responsibilities in providing business opportunities.
Our Corporate Social Responsibility Statement can be found in this publication and via the Company website.
The Board has overall responsibility for the Group's controls. However, such a system is designed to manage rather than eliminate the risk of failure in order to achieve business objectives, and can only provide reasonable and not absolute assurance against material misstatement or loss regarding:
- The safeguarding of assets against unauthorised use or disposition.
- The maintenance of proper accounting records and the reliability of financial information used within the business or for publication.
The key elements of the system are as follows:
- Full detailed reviews of the business risks undertaken as part of the ongoing day-to-day procedures of the business.
- An organisational structure with clearly defined lines of responsibility and delegation of authority.
- Group policies for financial reporting, accounting, financial risk management, information security, capital expenditure appraisal and Corporate Governance are all well documented.
- Detailed annual budgets and rolling forecasts are prepared for all operating units and reviewed/approved by the Board.
- Performance against budget is monitored closely and material variances are reported to the Board on a monthly basis.
- The control system is operated with the full co-operation of all Company Directors. Risk assessments are done at all levels from local divisional right up to the Main Board with the summaries all being fed up to the Main Board for review.
- The Audit Committee deals with any significant control issues raised by the external Auditor.
- Well structured reporting lines to the Board. There is a formal schedule of matters specifically reserved for decisions by the Board.
- Investment approval, controlled by the budgetary process with authorisation levels in place. Any single capital expenditure over £50,000 goes to the Board with detailed written proposals and financial analysis of expected returns.
A formalised internal review process 'Health Check' has been set up to routinely review the operational and financial controls within the Group. These reviews are conducted by senior personnel who are independent from the entity which is under review. Whilst the Board recognises that this does not constitute a fully independent internal audit function, it believes that due to the size of the Group, this process provides appropriate comfort as to the operational and financial controls in place.
The Board and Audit Committee continually review the effectiveness of the Group's internal control systems. No significant failings or weaknesses were identified as a result of this review process. As such, the Board and Audit Committee are comfortable that they meet the requirements of the Turnbull Report.