ANNUAL REPORT AND FINANCIAL STATEMENTS 2011 | 27


Directors’ Report on Corporate Governance


The Group is committed to, and strives for, best practice in corporate governance. The Board is accountable to the Group’s shareholders for good corporate governance. This statement describes how the principles of corporate governance set out in section one of the UK Corporate Governance Code issued in 2010 (the Code) have been applied.


Statement of compliance The Directors consider that the Company has, throughout the year ended 31 December 2011 and up to the date hereof, applied the principles and met the requirements of the Code with the following exceptions:


• The Company did not comply with Code provision A.3.1 in that Mr Bramson, the Company’s Chairman was, by virtue of his participation in Sherborne (the Company’s largest shareholder), not independent on appointment.


• On 6 October 2011 Mr Grisay announced his intention to retire from the Board with effect from the conclusion of this year’s Annual General Meeting. On the same date, the Company announced that Ed Bramson, the Company’s Chairman, would take on the role of Executive Chairman to oversee the implementation of the strategic review that was underway at that time. Mr Bramson’s appointment as Executive Chairman is for an interim period only.While the Board acknowledges that the temporary appointment of Ed Bramson as Executive Chairman does not meet the best practice guidance set out in the Code (Provision A.2.1), they believe it to be appropriate given the strategic review work being performed by Mr Bramson.


The Chairmen of the Audit, Risk & Compliance, Remuneration and Nomination committees will be available to answer questions at this year’s Annual GeneralMeeting to be held onWednesday, 9May 2012.


Going concern The Code requires Directors to report, under the terms set out in the relevant guidelines to the Code, on the appropriateness of adopting the going concern basis in preparing Financial Statements.


The Group’s business activities, together with the factors likely to affect its future development, performance and position are set out in the Business Review on pages 2 to 21. The financial position of the Group, its cash flows and liquidity position are described in the Business Review on pages 2 to 21. In addition, note 36 to the Financial Statements includes the Group’s objectives, policies and processes for managing its capital; its financial risk management objectives; details of its financial instruments and hedging activities; and its exposure to credit risk and liquidity risk.


The Group has considerable financial resources together with long- term contracts with a number of clients across different geographic areas and industries. After making enquiries, the Directors have a reasonable expectation that the Company and the Group have adequate resources to continue in operational existence for the foreseeable future. Accordingly, they continue to adopt the going concern basis in preparing the Annual Report and Financial Statements.


The Board The Board of Directors currently comprises the Executive Chairman, two further Executive Directors and seven Non-executive Directors, six of whom the Board has identified as Independent Directors. Ian Brindle, a representative of Sherborne, the Company’s largest shareholder, does not meet the criteria of independence as set out in the accepted guidance.


The biographies of the Directors appear on page 22. These demonstrate a range of experience, skills and personal standing sufficient to bring independent judgement on issues of strategy, performance, resources and standards of conduct which are vital to the success of the Group. All Directors have access to the advice and services of the Company Secretary, who is responsible to the Board for ensuring that Board procedures are followed and that applicable rules and regulations are complied with. The Board meets formally on a regular basis and is responsible for approving the Group’s objectives and policies. The Board focuses mainly on strategy, investment and financial performance, the Group’s control environment and executive management and Board succession. To enable the Board to discharge its duties, all Directors receive appropriate and timely information ensuring that they are properly briefed on issues for consideration in advance of meetings. In addition, all Directors have access to senior management and can request, either during meetings or at other appropriate times, further explanation or written papers on matters as they see fit.


The Board has a detailed list of matters specifically reserved to it – the ‘Board Reserved List’. This is contained in ‘The Directors’ Guide’, a training and reference document issued to all Directors on appointment and updated as appropriate. The Board Reserved List is reviewed annually and clearly sets out what authority is delegated from the Board to Board Committees and to management. This ensures that matters of significance are overseen and reviewed by the Board prior to implementation. Examples of matters reserved for the Board as set out in the Board Reserved List are the approval of: the Group strategy; the annual budget; the composition and terms of reference of any of the Board Committees; the high level organisational structure; and the review of the effectiveness of the Group’s system of internal control.


The composition of the Board is reviewed annually.


The Board committees The Board has established a number of standing committees to facilitate the smooth transaction of business within the Group.


The terms of reference of each Board Committee, outlining its authority and duties, are reviewed and approved annually by the Board, published on the Company’s website and are available on written request from the Company Secretary. The terms of reference of each of the Board Committees provide the authority to take independent professional advice, if necessary, at the Company’s expense.


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