Statements
SIG is committed to business integrity, high ethical values and professionalism in all of its activities. As an essential part of this commitment the Group supports the highest standards in corporate governance. The Board is accountable to the Company’s Shareholders for good governance and this report, the Directors’ Remuneration Report on pages 55 to 62 and the Report of the Audit Comittee on pages 63 to 64 describe how the principles of good governance and this report, set out in The Combined Code on Corporate Governance (“the Code”) as published by the Financial Reporting Council and most recently revised in June 2008, are applied within SIG.
COMPLIANCE WITH THE COMBINED CODE
The Board considers that, throughout the year under review, the Company has complied with the governance rules and best practice provisions applying to UK listed companies as contained in Section 1 of the Code. The Combined code can be accessed at www.frc.org.uk/corporate/combinedcode.cfm.
The Company’s Auditors, Deloitte LLP, are required to review whether the above statement reflects the Company’s compliance with the nine provisions of the Code specified for their review by the Listing Rules of the UK Listing Authority and to report if it does not reflect such compliance. No such report has been made.
THE BOARD
As at 31 December 2009 and at the date of this report, the Board was made up of eight members comprising the Chairman, three Executive Directors and four Non-Executive Directors. Mr. C. V. Geoghegan and Mrs. V. Murray were appointed Non-Executive Directors on 1 July 2009 and Mr. J. C. Nicholls was appointed a Non-Executive Director on 6 November 2009. Mr. P. H. Blackburn and Mr. M. J. C. Borlenghi, both Non-Executive Directors, retired from the Board on 30 September 2009. Mr. D. A. Haxby has advised the Company of his intention to retire as a Director at the conclusion of the Company’s Annual General Meeting on 13 May 2010, having served as a Non-Executive Director since 2003. His intention to retire follows the handover of his Chairmanship of the Audit Committee to Mr. J. C. Nicholls.
The Non-Executive Directors are considered by the Board to be independent of management and free of any relationship which could materially interfere with the exercise of their independent judgement. The Board has satisfied itself that there is no compromise to the independence of those Directors who have other appointments in outside entities. The Board considers that each of the Non-Executive Directors brings their own senior level of experience and expertise and that the balance between Non-Executive and Executive representation encourages healthy independent challenge to the Executive Directors and Senior Management. The Non-Executive Directors have been appointed for their specific areas of expertise and knowledge and their wide ranging experience and backgrounds ensure that they can debate matters constructively in relation to both the development of strategy and performance against objectives set out by the Board. Biographical details of each of the Directors, which illustrate their range of experience, are set out on page 44 of the Annual Report. The Company’s policy relating to the terms of appointment and remuneration of both the Executive and Non-Executive Directors is detailed in the Directors’ Remuneration Report on pages 55 to 62 of the Annual Report.
The division of responsibilities between the Chairman and Chief Executive is clearly established and is understood by the Board. The Chairman at the time of his appointment met and continues to meet the independence criteria set out in the Code.
The Senior Independent Director is currently Mr. D. A. Haxby. Mr. P. H. Blackburn was the Senior Independent Director until 30 September 2009.
All Directors are subject to election at the Annual General Meeting immediately following their appointment and to re-election every three years.
BOARD PROCEDURES
The Board meets regularly during the year, as well as on an ad hoc basis as required by time-critical business needs. The Board met formally on 15 occasions during the year and individual attendance at those and the Board Committee meetings is set out in the table on page 52 of the Annual Report. All Board members are supplied with information in a form and of a quality appropriate to enable them to discharge their duties. Board and Committee papers are sent out seven days before meetings take place. There is an agreed schedule of matters reserved to the Board for collective decision and these include:
• determining the strategy and control of the Group; • amendments to the structure and capital of the Company and Group;
• approval of financial reporting and controls;
• approval of capital and revenue expenditure of a significant size;
• acquisitions and disposals above a prescribed level; and
• corporate governance matters and approval of Group policies and risk management strategies.
The Board has formally delegated specific responsibilities to Board Committees, including the Nominations, Audit and Remuneration Committees. The Board will also appoint Committees to approve specific processes as deemed necessary. For example, during the year, Board Committees were established to approve bank documentation, certain matters relating to the placing and open offer and firm placing of new shares and the preliminary and interim announcements.
To enable the Board to perform its duties effectively all Directors have full access to all relevant information and to the services of the Company Secretary whose responsibility it is for ensuring that Board procedures are followed. The appointment and removal of the Company Secretary is a matter reserved for the Board. There is an agreed procedure whereby Directors wishing to take independent legal advice in the furtherance of their duties may do so at the Company’s expense. Directors have the right to ensure that any concerns they raise about the running of the Company or a proposed action will be recorded in the Board minutes. Further, on resignation, if a Non-Executive Director had any such concerns, the Chairman would invite him to provide a written statement for circulation to the Board.
All Board Committees are provided with sufficient resources to undertake their duties. Appropriate training is available to all Directors on appointment and on an ongoing basis as required.
The Terms of Reference for each of the Board Committees are available on request from the Company Secretary or on the SIG website (www.sigplc.com).
From 1 October 2008, there has been a requirement that Directors must avoid a situation where they have, or can have, a direct or indirect interest that conflicts, or possibly may conflict, with the Company’s interests. Directors of public companies may authorise conflict and potential conflicts, where appropriate, if a company’s Articles of Association permit and Shareholders have approved appropriate amendments.
Procedures have been put in place for the disclosure by Directors of any such conflicts and also for the consideration and authorisation of any conflicts by the Board. These procedures allow for the imposition of limits or conditions by the Board when authorising any conflict, if they think this is appropriate. These procedures have been applied during the year and are now included as a regular item for consideration by the Board at its meetings.
RICHARD MONRO
COMPANY SECRETARY
17 MARCH 2010
