The Board consists of three Executive Directors and four Non-Executive Directors, of which Robert H Gunlack, Charles G Toner and John A Bateman are considered to be independent. They meet regularly throughout the year. The Board sets the Company's policy on matters such as overall strategy, financial performance, capital projects, investment and financing decisions, budget approval and treasury and risk management.
All Directors are equally accountable under the law for the proper stewardship of the Company's affairs. The Non-Executive Directors have a particular responsibility to ensure that the strategies proposed by Executive Directors are fully discussed and critically examined, not only to protect the long-term interests of shareholders, but also to ensure that they take proper account of the interests of employees, customers and suppliers.
The Non-Executive Directors fulfil a vital role in corporate accountability. The remit and membership of the two relevant Board Committees are set out below. The Remuneration Committee and the Audit Committee comprise solely Non-Executive Directors.
The Board previously considered both the roles of Chairman and Chief Executive and after due consideration, David A Sugden had been appointed as Executive Chairman on the 1 August 1998 to hold both these roles concurrently. Following the resignation of David A Sugden, the roles have been separated, with John A Bateman’s appointment as Non-Executive Chairman and Peter P Flaherty appointed as Chief Executive on 27 March 2000.
The Remuneration Committee
The Remuneration Committee comprises four Non-Executive Directors and is chaired by Charles G Toner.
Executive Directors are in attendance at the Remuneration Committee for appropriate items but are always excluded when their own performance and remuneration are under review. The Chief Executive is not a member of the Remuneration Committee but he attends all remuneration discussions except when his own position is being discussed. Remuneration for the Non-Executive Directors is discussed on a regular basis. These discussions, instigated by the Chief Executive and involving the Executive Directors, are based on market comparisons. Any recommendations are laid before the full Board. It is the policy of the Company that part of the Non-Executive remuneration is made up of shares in the Company.
The remuneration report in the Directors’ Reports section includes details on remuneration policy and procedures, and on the remuneration of Directors.
Where appropriate, appointments to Executive Director are fully discussed by the Chief Executive with the Remuneration Committee before the proposal is formally made to the Board by the Chairman of that Committee. Possible new Non-Executive Directors are suggested by all members of the Board to take into consideration the requirements of the Company's business and the need to have a balanced Board. In appropriate cases recruitment consultants are used to assist the process. Possible candidates are discussed with all Directors before any approach is made to them. All Directors are subject to re-election at least every three years.
The Audit Committee
The Audit Committee comprises the three independent Non-Executive Directors and is chaired by Robert H Gunlack. The Committee normally meets three times a year and receives reports from external auditors. It follows up outstanding matters contained in those reports, where appropriate. The Committee reviews the Company's interim and annual reports before they are submitted to the Board for approval and monitors the extent of the Company's compliance with the recommendations of the Combined Code of Best Practice (‘Combined Code’). The Committee also recommends the appointment and reviews the fees of external auditors.
Relations with Shareholders
The Directors encourage dialogue with Institutional Shareholders and use the Annual General Meeting to encourage participation by private investors. The Company has regular dialogue with Institutional Shareholders where it believes this to be in the interests of Shareholders generally. Procedures at the Company’s Annual General Meeting, to be held on 26 May 2000, are in compliance with the ‘Combined Code’.
Internal Financial Control
As required by the ‘Combined Code’, the Directors have reviewed the effectiveness of the Company’s system of internal financial controls. The Directors consider that they have observed the principles of the ‘Combined Code’.
The Directors acknowledge their ultimate responsibility for ensuring that the Company has in place a system of controls, financial and otherwise, appropriate to its business. Such controls are designed to give reasonable assurance with respect to the:
- reliability of financial information used within the business or for publication;
- maintenance of proper accounting records;
- safeguarding of assets against unauthorised use or disposition;
- business being operated efficiently and effectively.
The Company's internal financial control and monitoring procedures include:
- clearly laid down systems and procedures, both financial and operational, including maintenance of good financial controls and the production of accurate and timely financial management information;
- the control of key financial risks through clearly laid down authorisation levels and proper segregation of accounting duties;
- detailed budgeting and reporting of trading results, balance sheets and cashflows, with regular review by management of variances from budgets.
The Board of Directors is responsible for the Company’s system of internal control and for reviewing the effectiveness of the internal controls. The system is designed to manage rather than eliminate the risk of failure to achieve business objectives, and can only provide reasonable and not absolute assurance against material misstatement or loss.
During the year, the procedures necessary for identifying, evaluating and managing the significant risks faced by the Company were established. The procedures are reviewed regularly by the Board and comply with the transitional approach to implementing the Turnbull guidance on internal control.
The Company monitors the effectiveness of the system of internal control by a continuous process of improving systems, and completing quality and operational audits. As part of this process, the Board has reviewed the need for an internal audit function and the Company has appointed an internal audit manager.
The executive members of the Board have close day-to-day contact with the business and are actively involved in monitoring risks and the control activities. All of the Board members receive copies of management and audit reports and are involved in agreeing the actions that are required to maintain the level of risk at an acceptable level.
Compliance with Combined Code
Other than the following, the Directors consider that the principles of the ‘Combined Code’ have been observed.
During the year, an imbalance between the number of Executive and Non-Executive Directors occurred regarding members of the Audit and Remuneration committees. This first resulted from the resignation of Michael G Harrison. This has now been addressed with the appointment of John A Bateman to the Audit and Remuneration committees on 3 March 2000. Both committees are now comprised of at least three independent Non-Executive Directors which complies with the ‘Combined Code’.
In addition, the ‘Combined Code’ requires the Remuneration Committee to consist exclusively of Non-Executive Directors who are independent of management and free from any relationship, which could materially interfere with the exercise of their independent judgement. During the year Nicholas J A Parker was a member of this committee. The Board does not believe that his interest in the Company would jeopardise the independence of any committee decisions.
In accordance with the ‘Combined Code’ the Board appointed Charles G Toner as senior Non-Executive Director with effect from 30 July 1999. Following the appointment of John A Bateman as Non-Executive Chairman on 27 March 2000, Charles G Toner has now stepped down from the role of Senior Non-Executive Director.
Going Concern
The Directors, having made appropriate enquiries, are satisfied that the Company has adequate resources to continue in operational existence for the foreseeable future. Accordingly, they continue to adopt the going concern basis in preparing the accounts.
European Monetary Union
The Company is one of the leading suppliers of IT contract personnel in the UK. Presently it supplies approximately 95% of its personnel to client sites in the UK with the remainder to client sites in other countries within Continental Europe.
EMU and the use of the euro are important issues, as the Company continues to develop and expand its business further into Continental Europe. As a result, the Company is in the process of developing its systems in order to ensure that it meets any trading requirements.
Company law requires the Directors to prepare financial statements for each financial year which give a true and fair view of the state of affairs of the Company and of the results for the year. In preparing those financial statements, the Directors are required to:
- select suitable accounting policies and then apply them consistently;
- make judgements and estimates that are reasonable and prudent;
- follow applicable accounting standards, subject to any material departures disclosed and explained in the financial statements;
- prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business.
The Directors are responsible for keeping proper accounting records which disclose, with reasonable accuracy at any time, the financial position of the Company and to enable the Directors to ensure that the financial statements comply with the Companies Act 1985. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
