The Directors recognise the importance of sound corporate governance and intend that eg solutions will comply with the main provisions of the UK Corporate Governance Code (the “Code”) commensurate with its size and stage of development.
Board structure and committees
The Board is responsible to shareholders for the proper management of the Company. A statement of Directors’ responsibilities in respect of the accounts is set out on page 21 of the 2017 Annual Report and Accounts. The Non-Executive Directors have a particular responsibility to ensure that the strategies proposed by the Executive Directors are fully considered. To enable the Board to discharge its duties all Directors have full and timely access to all relevant information. There is a procedure for all Directors in furtherance of their duties to take independent professional advice, if necessary, at the expense of the Company. The Board has a formal schedule of matters reserved to it and meets at least quarterly. It is responsible for overall strategy, approval of major capital expenditure projects and consideration of significant financing matters.
The following Committees, which have written terms of reference, deal with specific aspects of the Company’s affairs:
- the Nomination Committee is chaired by the Chairman and comprises the Board. The Committee is responsible for proposing candidates for appointment to the Board, having regard to the balance and structure of the Board. In appropriate cases recruitment consultants are used to assist the process. All Directors are subject to re-election at least every three years;
- the Remuneration Committee is responsible for making recommendations to the Board on the Company’s framework of Executive remuneration and its cost. The Committee determines the contract terms, remuneration and other benefits for each of the Executive Directors and senior employees, including performance related bonus schemes, pension rights and compensation payments. The Board itself determines the remuneration of the Non-executive Directors. The Remuneration Committee is chaired by George Rolls, Non-Executive Director and is attended by Nigel Payne. Directors’ Remuneration is set out on page 39-41 of the 2017 annual report; and
- the Audit Committee is chaired by Robert Krakauer and is made up of two other Non–Executive Directors; Nigel Payne and George Rolls. The meetings are also attended, by invitation, by the Chief Executive Officer and the Chief Financial Officer. Its prime tasks are to review the scope of external audit, to receive regular reports from Baker Tilly, and to review the half-yearly and annual accounts before they are presented to the Board, focusing in particular on accounting policies and areas of management, judgement and estimation. The Committee is responsible for monitoring the controls which are in force to ensure the integrity of the information reported to the shareholders. The Committee acts as a forum for discussion of internal control issues and contributes to the Board’s review of the effectiveness of the Company’s internal control and risk management systems and processes. The Committee also considers the need for an internal audit function. It advises the Board on the appointment of external auditors and on their remuneration for both audit and non-audit work, and discusses the nature and scope of the audit with the external auditors. The Committee, which meets at least twice per year, provides a forum for reporting by the Company’s external auditors.
The Audit Committee also undertakes a formal assessment of the auditors’ independence each year which includes:
- a review of the non-audit services provided to the Company and related fees;
- discussion with the auditors of a written report detailing all relationships with the Company and any other parties that could affect independence or the perception of independence;
- a review of the auditors’ own procedures for ensuring the independence of the audit firm and partners and staff involved in the audit, including the regular rotation of the audit partner; and
- obtaining written confirmation from the auditors that, in their professional judgement, they are independent.
The Directors are responsible for the Company’s system of internal control and reviewing its effectiveness. The Board has designed the Company’s system of internal control in order to provide the Directors with reasonable assurance that its assets are safeguarded, that transactions are authorised and properly recorded and that material errors and irregularities are either prevented or would be detected within a timely period. However, no system of internal control can eliminate the risk of failure to achieve business objectives or provide absolute assurance against material misstatement or loss.
The key elements of the control system in operation are:
- the Board meets regularly with a formal schedule of matters reserved to it for decision. It has put in place an organisational structure with clear lines of responsibility defined and with appropriate delegation of authority;
- there are established procedures for the planning, approval and monitoring of capital expenditure and information systems for monitoring the Company’s financial performance against approved budgets and forecasts; and
- the departmental heads are required annually to undertake a full assessment process to identify and quantify the risks that face their businesses and functions, and assess the adequacy of the prevention, monitoring and modification practices in place for those risks. In addition, regular reports about significant risks and associated control and monitoring procedures are reported to the Board to enable the Directors to review the effectiveness of the system of internal control. The process adopted by the Company accords with the guidance contained in the document “Internal Control Guidance for Directors on the Combined Code” issued by the Institute of Chartered Accountants in England and Wales.
The Audit Committee receives reports from external auditors on a regular basis and from Executive Directors of the Company. During the period the Audit Committee has reviewed the effectiveness of the system of internal control as described above. The Board receives periodic reports from all Committees.