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Escher Group Holdings plc
Annual report 2011
15
Financial statements
Corporate governance
Business review
Overview
Corporate governance report
Escher Group Holdings plc and its
subsidiaries are committed to high
standards of corporate governance.
The Directors recognise the importance
of sound corporate governance and
confirm that they aim to comply with
best practice in corporate governance,
appropriate for a company of its nature
and size.
Role of the Board
The role of Escher’s Board is to represent
and safeguard effectively the long-term
interests of all its shareholders, with the
ultimate aim being to add value to the
Group’s shares. The Board is responsible
for the proper direction and control of the
Group’s activities. To this extent Escher
Group Holdings plc and its subsidiaries
is committed to comply with best practice
in corporate governance, appropriate
for a company of its nature and size.
Board composition
In 2011, Paul Taylor (Non-executive) and
Trevor McIntyre (Finance Director) joined
the Board. Following their appointment
the Board now comprises the Chairman,
who was independent at the time of his
appointment, three executive Directors
and three Non-executive Directors, two
of whom are independent. Biographical
details of all members of the Board are
set out on pages 12–13. Paul Taylor was
appointed to the Board at the time of
the IPO.
The Board is expected to meet at least
six times a year to review the Group’s
strategy and oversee the Group’s progress
towards its goals. In addition, ad hoc
meetings will be called to address specific
issues requiring Board approval. In the
period between admission of Escher
Group Holdings plc to AIM to the date
of this report, the Board has formally
met five times, all being fully attended
meetings with one exception where one
Director was unable to attend. The Board
has established Audit, Remuneration
and Nomination Committees. The Board
considers the current balance of skills
and experience appropriate for the
business following its admission to AIM.
The Board is collectively responsible for
the success of the Group. The roles of
Chairman and Chief Executive Officer
are vested in separate individuals, each
with clear allocation of accountability
and responsibility.
The Chairman has prime responsibility
for running the Board and the
Chief Executive Officer has executive
responsibilities for the Group’s strategic
development, operations and results.
The structure of the Board and the
integrity of each Director ensures that
there is no one individual or group
dominating the decision making process.
Independent professional advice is taken
as required. The Directors comply
with Rule 21 of the AIM rules relating to
directors’ dealings as applicable to AIM
companies and will take all reasonable
steps to ensure compliance by the Group’s
applicable employees. They also comply
with all other AIM rules for companies
as set out by the London Stock Exchange.
Board committees
The Board has formally established three
committees during the year, with clearly
defined terms which are set by the
Board. The role, work and members
of the committees are outlined in the
reports below.
Audit Committee
The Audit Committee, chaired by Paul
Taylor, consists of two Non-executive
Directors, Paul Taylor and John Quinn.
The Audit Committee meets at least
twice a year and is responsible for
ensuring that the financial performance
of the Group is properly reported on,
controlled and monitored, including
reviewing the annual and interim
accounts, results announcements,
internal control and risk management
systems, procedures and accounting
policies. It also reviews and approves
the auditors’ reports and fees and meets
with the auditors without executive
Board members being present at least
two times a year. In the period between
admission of Escher Group Holdings plc
to AIM and the date of this report,
the Audit Committee formally met
twice in preparation for, and subsequent
approval of, the financial statements to
the Board.
Remuneration Committee
The Remuneration Committee is chaired
by John Quinn and consists of three
Non-executive Directors, John Quinn,
Paul Taylor and Michael Smurfit Jnr.
The Remuneration Committee determines
the level and structure of remuneration
of the executive Directors and senior
management, including pension rights
and compensation payments. It is also
responsible for recommending the award
of options for all employees under the
share option scheme. The fees of the
Non-executive Directors are determined
by the Board as a whole. No Director or
employee is involved in any decisions
with regard to their own remuneration.
In the period between admission of
Escher Group Holdings plc to AIM and
the date of this report, the Remuneration
Committee formally met twice, both
fully attended, to include a discussion
and recommendation of a share option
plan to the Board.
Nomination Committee
The Nomination Committee is chaired
by Bernard Somers and consists of
three Non-executive Directors, Bernard
Somers, John Quinn and Paul Taylor.
It is expected to meet not less than
two times a year. The committee has
responsibility for reviewing the balance
of the Board including its balance of
skills and experience and the state of
the business and its leadership needs,
and gives full consideration to succession
planning. It also has responsibility for
recommending new appointments
to the Board. In the period between
admission of Escher Group Holdings plc
to AIM and the date of this report, the
Nomination Committee formally met
once, and the meeting was fully attended.
Internal control and risk management
The Group has established policies
covering the key areas of internal
financial control and the appropriate
procedures, controls, authority levels
and reporting requirements that must
be applied throughout the Group.
Executive directors have a close
involvement with all day-to-day operations
and also meet with staff on a regular basis
to identify and review business risks, the
controls needed to minimise those risks
and the effectiveness of controls in place.
Business risks are monitored and updated
on a regular basis. Insurance is in place
where appropriate.
There is in place a comprehensive system
of financial reporting based on the annual
budget which the Board approves. The
results for the Group as a whole are
reported monthly, along with an analysis
of key variances. Year-end forecasts are
updated on a regular basis. No system
can provide absolute assurance against
material misstatement or loss but the
Group’s systems are designed to provide
reasonable assurance as to the reliability
of financial information, ensuring proper
control over income and expenditure,
assets and liabilities. There is currently
no internal audit function as this is not
considered necessary at this stage of
the company’s development but this will
be reviewed on an annual basis as the
Group evolves.
Shareholder relations
Meetings with institutional shareholders
are held following the interim and full
year announcements and on an ad hoc
basis. These are usually attended by
the Chief Executive Officer and Finance
Director. Feedback from these meetings
and regular market updates prepared
by the Group’s broker are presented to
the Board. The Chairman and the other
Non-executive Directors are available
to shareholders to discuss strategy and
governance issues. In accordance with
AIM Rule 26, there is an investors
section on the company’s website,
investors.eschergroup.com, which is
kept up to date.