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 is committed to maintaining an appropriate balance between Executive and Non-executive Directors. A list of the individual Directors and 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/.
During the course of the year, reviews of the remuneration of the Chairman, the Non-Executive Directors and the Executive Directors were carried out.
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 and one for the Australian operating division.
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.
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.
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.
Paragraph C.2 of the Combined Code states the principle: "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, which was in place for the whole of the financial year and up to the date of signing the accounts, 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 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'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 unconflicted Directors to authorise conflict situations in appropriate circumstances. Procedures have been put in 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 Nominations Committee reviews any potential conflict of interest for any prospective Director and all continuing authorisations annually and makes recommendations to the Board
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.
The Chairman and the Board seek to ensure that the views of major shareholders are understood by the Board. The Chairman maintains regular contact with major shareholders and offers a line of contact should the shareholders decide they need further understanding of their issues or concerns. The Group Managing Director and Group Finance Director meet regularly with the major shareholders and updates are provided to all Board meetings. (Details of substantial shareholders are set out in the Investors section of this website: http://www.victoria.plc.uk/victoriaplc/investors/management/statistics/?c=0.)
The Board recognises the Annual General Meeting (AGM) as an important opportunity to meet private shareholders. At its AGM, which is chaired by the Chairman, the Company complies with the provisions of the Code relating to the disclosure of proxy votes, the separation of resolutions and the attendance (when physically possible) of the Committee Chairmen. The Company's procedure is to arrange for the notice of the AGM and related papers to be posted to Shareholders at least twenty working days in advance to allow for consideration prior to the meeting.
The Board seeks to present a balanced and understandable assessment of the Company's position and prospects.
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 provision set out therein with the following exception:
A6: 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. 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.