Corporate Governance
Augean is committed to high standards of corporate governance in all its activities. While the company is not required under AIM rules to comply with the 2003 FRC Combined Code (the Code), the board recognises the value of the Code and has regard to its requirements as far as is practicable and appropriate for a public company of its size and nature.
The board of directors
The board currently comprises a non-executive chairman, the chief executive, the finance director and three independent non-executive directors. During part of the year under review, Roger McDowell, a non-executive director, acted as interim chief executive until a permanent appointment was made. In addition, Andrew Bryce, a non-executive director and environmental lawyer, provided specialist assistance to the board in connection with certain legal matters. Further details are provided in the remuneration report, but the board confirms that, in its opinion, the independence of these directors has not been compromised as a result of these additional services.
The composition of the board is reviewed regularly. Appropriate training, briefings and induction are available to all directors on appointment and subsequently as necessary, taking into account existing qualifications and experience. All directors have access to the advice and services of the company secretary, who is also responsible for ensuring that board procedures are followed. Any director may take independent professional advice, if necessary, at the company’s expense.
The board meets formally nine times a year but additional meetings are held to review and approve special matters if necessary. During 2007, no director was absent from more than two board meetings. Each director is provided with sufficient timely information to enable full consideration of matters in advance of meetings and proper discharge of duties. There is a formal schedule of matters reserved for the board which includes published financial statements, strategy, acquisitions, significant capital projects, budgets and borrowing facilities.
Executive directors’ normal retirement age is 60 and non-executive directors’ normal retirement age is 65. One-third of all directors are subject to annual re-appointment by shareholders.
Board committees
The company has established a number of committees, details of which are set out below:
Audit committee
The audit committee comprises the non-executive directors, is chaired by Rory Macnamara, and meets at least three times a year. The external auditors and the executive directors are regularly invited to attend the meetings and the committee has access to the external auditors’ advice without the presence of the executive directors. The audit committee considers the adequacy and effectiveness of the risk management and control systems of the group. It reviews the scope and results of the external audit, its cost effectiveness and the objectivity and independence of the auditors. It also reviews, prior to publication, the interim report, the preliminary announcement, the annual financial statements and other information included in the annual report.
Remuneration committee
The remuneration committee comprises the non-executive directors and is chaired by Roger McDowell. It meets at least twice a year and reviews and advises upon the remuneration and benefits packages of the executive directors and other senior management of the group, including the Long Term Incentive Plan (LTIP). The remuneration of the chairman and non-executive directors is agreed upon by the full board.
Nomination committee
The nomination committee comprises the non-executive directors and is chaired by Andrew Bryce. It meets as required in order to review the structure, size and composition of the board. It is responsible for the selection and recommendation of suitable candidates for appointment to the board.
Internal controls
The board has overall responsibility for the group’s system of internal control and for reviewing its effectiveness, while the role of management is to implement board policies on risk management and control. The system is designed to provide reasonable but not absolute assurance against material misstatement or loss.
The group operates a series of controls to meet its needs. Key features of the control system include the following:
· an annual review of business risks affecting the group which also identifies procedures to manage and mitigate those
risks;
· monthly reports to the board on key risks and their management;
· an annual strategic planning and budgeting process;
· a clearly defined organisational structure with terms of reference for board committees and responsibilities and
authorisation limits for executive management;
· monthly visits by the executive directors and group senior management to key operating locations to meet with local
management and review business performance;
· a range of compliance management systems at the group’s sites subject to external review, including certification to
ISO 9001, ISO 14001 and OHSAS 18001; and
· reviews by senior management and the board of monthly financial and operating information including comparisons with
budgets and forecasts.
The audit committee receives reports from management and the auditors concerning the system of internal control and any control weaknesses.
The board does not believe it is currently appropriate to establish a separate, independent internal audit function given the size of the group but keeps this position under review.
Going concern
The directors have a reasonable expectation that the group as a whole has adequate resources to continue in operational existence for the foreseeable future. As the group has net current liabilities at 31 December 2007 the directors have further considered the company’s ability to continue as a going concern. On the basis of detailed forecast cash flows for the next twelve months the directors are confident that the company will be able to meet its liabilities as they fall due. Consequently these financial statements have been prepared on a going concern basis.
Annual general meeting
At the annual general meeting on 3 June 2008, Andrew Bryce and Roger McDowell will retire by rotation in accordance with the articles of association. Being eligible, they offer themselves for re-election. No director has a contract with an unexpired notice period of more than twelve months.