Statements
SIG is committed to business integrity, high ethical values and professionalism in all of its activities. At SIG, we believe that good governance comes from an effective Board which provides strong leadership to the Company and engages well with both management and stakeholders. As an essential part of this commitment the Group supports the highest standards in corporate governance.
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 the Code with the exception of Code Provision B.1.2. which requires that at least half of the Board (excluding the Chairman) should comprise Non–Executive Directors who are determined by the Board to be independent, with which the Company was not compliant from 16 March 2011 to 11 July 2011. This non-compliance arose as a result of Mrs V. Murray’s resignation as a Non-Executive Director of the Company on 16 March 2011 pursuant to her also being a Non-Executive Director of Carillion plc, that company’s agreed offer for Eaga plc and her future potential conflict of interest as a result of that transaction in respect of SIG’s energy management business. The Nominations Committee then undertook the process of seeking a replacement for Mrs Murray in order that the Company would return to compliance with Code Provision B1.2. as soon as possible.
The Combined Code can be accessed at www.frc.org.uk/corporate/ukcgcode.cfm.
THE BOARD
As at 31 December 2011, the Board was made up of seven members comprising the Chairman, two Executive Directors and four Non-Executive Directors.
Mr. L. Van de Walle became Non-Executive Chairman on 1 February 2011. Mr. L.O. Tench retired as both Chairman of the Company and a Non-Executive Director on 31 January 2011.
Mrs. V. Murray resigned as a Non-Executive Director of the Company on 16 March 2011. Mrs. Murray was also a Non-Executive Director of Carillion plc and her resignation was pursuant to that company’s acquisition of Eaga plc and her future potential conflict of interest as a result of that transaction in respect of SIG’s Energy Management business.
Ms. J. E. Ashdown was appointed a Non-Executive Director on 11 July 2011 and Mr. M. Ewell was appointed a Non-Executive Director on 1 August 2011.
Mr. G.W. Davies resigned as Finance Director on 30 November 2011 and left the Company on 31 December 2011. Mr. D.G. Robertson joined the Company on 1 November 2011 and was appointed Finance Director on 1 December 2011.
Mr. M. J. Chivers retired from the Board on 31 December 2011 and left the Company on the same day.
At 1 January 2012, SIG has one female Board member equating to 14% of our Directors.
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 48. 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 61 to 69.
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. C. V. Geoghegan.
Under the Articles of Association all Directors are subject to election at the Annual General Meeting immediately following their appointment and to re-election every three years. However in accordance with the Code, all Directors will seek election or re-election at the Company’s AGM each year. Ms. Ashdown, Mr. Ewell and Mr. Robertson will be seeking election having been appointed to the Board since the last AGM.
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 12 occasions during the year and individual attendance at those and the Board Committee meetings is set out in the table on page 57. 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.
The Directors are provided with opportunities for training to ensure that they are kept up to date on relevant new legislation and regulation changes, corporate governance developments and changing commercial risks. There is an agreed schedule of matters reserved to the Board for collective decision (which can be viewed on the Company’s website at www.sigplc.com), which was reviewed and updated in November 2011. These matters 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 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
13 MARCH 2012