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The Board

The Board is committed to the principles of corporate governance contained in the Combined Code on Corporate Governance that was issued in June 2008 by the Financial Reporting Council (“the Combined Code”) for which the Board is accountable to Shareholders.  The Board reports in this section of the website on how it applies the principles of good governance and complies with the Combined Code and explains where it does not.

The Board

The Board is committed to maintaining an appropriate balance between Executive and Non-Executive Directors.  It currently consists of three Executive and one Non-Executive Director, following the resignation of Mr Anton in February 2010. A list of the individual Directors, their biographies and other significant commitments are set out in the about  us section of this website:  http://www.victoria.plc.uk/victoriaplc/aboutus/board/

The Board is currently seeking to increase the number of independent Non-Executive Directors through the recruitment of another independent Non-Executive Director to take over the role of Senior Non-Executive Director from Nikki Beckett and to redress the imbalance between the number of Executive and Non-Executive Directors.  In the meantime, Ms Beckett has been nominated as Senior Independent Director.

The Board meets monthly throughout the year.  A formal schedule of matters reserved for the decision of the Board covers key areas of the Group’s affairs.

The Board’s primary role is to set the strategic direction of the Group as a whole, leaving day-to-day operational matters delegated to the two Executive Boards which meet monthly: one for the UK and Ireland operating division and one for the Australian operating division.
 
The Executive Boards are attended by the Group Managing Director and the Group Finance Director.  The Board of the Canadian associate meets independently and is chaired by the Group Finance Director.

Board papers are distributed the week before Board meetings and Board decisions are only taken when adequate information is available to the Board and are deferred when further information is required.

During the financial year 2009/10, the Board met 12 times.  Board meetings are usually held at the operating sites in order that the Board members have the opportunity to gain a direct appreciation of the Group’s operations. Board meetings operate to a standing agenda ensuring that matters requiring regular or annual review are given sufficient time for debate and scrutiny.

The Non-Executive Directors met as required, until Mr Anton’s resignation in February 2010, to discuss matters that did not concern the Executive Directors.

In addition to the formal scheduled meetings, additional ad hoc Board and Committee meetings were held during the year to consider any time critical matters.

Information, Professional Development and Performance Evaluation

The Chairman seeks to ensure that the Board is supplied in a timely manner with information that is relevant, accurate and complete in order that the Board is able to carry out its duties.  All Directors follow an induction programme on joining the Board and the Chairman seeks to ensure that all Directors regularly update and refresh relevant skills and knowledge.

The Directors have access to the advice and services of the Company Secretary and are empowered to take independent professional advice in the furtherance of their duties at the Company’s expense where necessary.  The Company Secretary also provides advice and support to each of the Board’s committees and to the Chairman on all corporate governance issues. The Group maintains insurance cover in respect of the liability of its Directors and officers to third parties.

Independence

In compliance with the requirements of the Combined Code,  the Board considered the independence of each of Alexander Anton and Nikki Beckett who served during the financial year ended 3 April 2010 as Non-Executive Directors.

Mr Anton was not considered to be independent since he had been in office for longer than the period of nine years referred to in paragraph A.3.1. After careful consideration, the Board determined that Niiki Beckett had demonstrated the required degree of independence, both in character and judgement taking into account all the relevant circumstances. Therefore the Board currently only has one Non-Executive Director determined by the Board to be independent.

Internal Control

Para. C.2 of the Combined Code states the principle that “The Board should maintain a sound system of internal control to safeguard shareholders’ investment and the company’s assets”.  The Board is responsible for the Group’s system of internal control and for reviewing its effectiveness.  This system is designed to manage rather than eliminate the risks of failure to achieve business objectives and can only provide reasonable and not absolute assurance against material misstatement or loss.

The Board has put in place a system under which there is an ongoing process for identifying, evaluating and managing the significant risks faced by the Group.  The system is regularly reviewed and accords with the guidance in the Turnbull Report.

The framework of the Group’s system of internal control includes:

  • An annual review of all business risks affecting the Group which also identifies procedures to manage and mitigate such risks.  These risks are monitored on a monthly basis.
  • A Group Policy and Procedures Manual with clearly designated responsibilities and levels of authority.
  • A comprehensive budgeting and financial reporting system with an annual business plan approved by the Board.  Operating results, cash flow, working capital and future capital expenditure are reported monthly.  This data is reviewed and assessed by reference to KPIs and internal targets.

During the year, the Board reviews the effectiveness of the system of internal control by a process of continuous monitoring.  The Executive Directors of each business unit are responsible for ensuring that controls are operating effectively.  Exceptions are reported to the two Executive Boards and, if sufficiently serious, to the PLC Board, with any required improvements fed back for action.  The Board keeps under review any need for an internal audit function and presently believes that such a function is not required and is inappropriate in a group of Victoria Plc’s current size and complexity.

Conflicts of Interest

With effect from 1 October 2008, Section 175 of the Companies Act 2006 introduced a statutory duty on a director to avoid a situation in which he has, or can have, a direct or indirect interest that conflicts, or possibly may conflict, with the interests of the Company. This duty is not infringed if the situation cannot reasonably be regarded as likely to give rise to a conflict or if the conflict has been authorised by the Board. The Company’s articles of association allow un-conflicted directors to authorise conflict situations in appropriate circumstances. Procedures have been put place for the disclosure of any such conflicts and if appropriate authorisation of the same. The procedures permit any authorisation to be granted subject to terms or conditions.

The Company maintains a register of any conflicts of interest of a Director including the date of grant of the authorisation, and any limitations or terms and conditions that apply. Any authorisations given by the Board are reviewed and may be renewed, varied or revoked at any time.

Financial reporting

The Board seeks to present a balanced and understandable assessment of the Company’s position and prospects.  Details are given in the Chairman’s statement and the Business Review.

Compliance with the provisions of the Combined Code

The Company has applied the principles set out in Section 1 of the Combined Code throughout the year and has complied with the detailed provisions set out therein with the following exceptions:

  • A.3.2:  As reported earlier in this report, the Board is currently seeking to recruit another independent Non-Executive Director to ensure the Board balance is appropriate for a company of its size.  The Board wishes to ensure that any new Director appointed has the appropriate skills and experience to enhance the effectiveness of the Board.
  • A.4.1: This paragraph recommends that a majority of the members of the Nominations Committee should be independent Non-Executive Directors.  As is stated above, until Mr Anton’s resignation from the Committee in February 2010,  the Nominations Committee consisted of Mr Anton (who was not deemed independent due to the fact that he had been in office for ten years) and Nikki Beckett (who is independent). Mr Anton continued as a Non-Executive Director beyond a nine year term until his resignation in February 2010, as the Board considered that he continued to make a valuable and effective contribution.  The composition of the Nominations Committee since that date is also in breach of the Combined Code recommendation since it includes, in addition to the Chairman, Messrs Bullock and Davies, who are both Executive Directors. As stated above, the Board are now seeking to appoint another independent Non-Executive Director, following which appointment the membership of the Committee will be reviewed.
  • A.6: This paragraph recommends that the Board should undertake a formal and rigorous annual evaluation of its own performance and that of its committees and individual directors. As stated above, no formal reviews were undertaken of the performance of individual Directors or of the effectiveness of the Board as a whole, as each Director’s performance is evaluated annually in conjunction with the remuneration review and the Board does not consider that a formal review of its effectiveness would be of any significant value.
  • B.2.1: This paragraph recommends that the Remuneration Committee should comprise at least two independent Non-Executive Directors.  Until Mr Anton’s resignation in February 2010, the Remuneration Committee consisted of Mr Anton (who was not deemed independent due to the fact that he had been in office for ten years) and Nikki Beckett (who is independent). The composition of the Committee since that date is also in breach of the Combined Code recommendation since it includes, in addition to the Chairman,  Messrs Bullock and Poynter, who are both Executive Directors. As stated above, the Board is now seeking to appoint further independent Non-Executive Directors, following which appointment, Messrs Bullock and Poynter will resign from the Remuneration Committee.
  • C.3.1: This paragraph recommends that the Audit Committee should comprise at least two independent Non-Executive Directors. As is stated above, until Mr Anton’s resignation from the Committee in February 2010, the Audit Committee consisted of Mr Anton (who was not deemed independent due to the fact that he had been in office for ten years) and Nikki Beckett (who is independent).  Furthermore, the participation of Messrs Bullock and Poynter in the Audit Committee since January 2010 is also a breach of paragraph C.3.1 in that they are not independent Non-Executive Directors.  Again, as stated above, the Board is now seeking to appoint further independent Non-Executive Directors, following which appointment, Messrs Bullock and Poynter will resign from the Audit Committee.

The Company’s Auditor, Deloitte LLP, is required to review whether the Company’s Corporate Governance Statement reflects the Company’s compliance with the nine provisions of the Combined Code specified for its review by the Listing Rules and to report if it does not reflect such compliance.  No such report has been made.