The directors of Balmoral are committed to maintaining high standards of corporate
governance. While adherence to the FRC Combined Code on Corporate Governance
(June 2008) is not required of ESM and AIM listed companies, Balmoral supports
the principles and provisions of the Code and has undertaken to apply these insofar
as appropriate and practical for a company of its size.
The Board
While day to day responsibility for the conduct of the group's operations is delegated
to the executive management team within predefined authority limits, the board is
ultimately responsible for the leadership and control of the company.
The board agrees a schedule of regular meetings to be held in each calendar year
and also meets on other occasions as necessary. There is a schedule of matters
specifically reserved for decision at board meetings, the principal of which include:
- approval of strategic plans for the group
- approval of annual statutory financial statements, annual budgets and interim
accounts
- review of operational and financial performance
- approval of major property acquisitions, disposals and investments
- review of the group's internal controls and risk management processes
- appointments of senior members of the management team
The board has delegated authority to management for decisions taken in the normal course of business, subject to specified authority limits. The board is currently comprised of four executive directors and three non-executive directors. Biographical details of the directors can be found here.
The board considers that between them, the directors bring the range of skills,
knowledge and experience necessary to lead the company.
Operation of the board
The board meets regularly throughout the year. The directors receive bi-monthly
management accounts and full board papers are sent to each member on a timely
basis prior to each board meeting to enable them to discharge their duties.
Attendance at scheduled board and relevant commIttee meetIngs durIng the year ended 31 December 2010
| |
Board |
Audit |
Remuneration |
| Number of meetings |
6 |
3 |
3 |
| C.McCann |
6 |
N/A |
N/A |
| R.Knox |
6 |
3* |
N/A |
| P.Halpenny |
6 |
3* |
N/A |
| T.Neasy |
6 |
N/A |
N/A |
| A.Kelliher |
6 |
3 |
3 |
| D.McCourt |
6 |
N/A |
3 |
| A.White |
6 |
3 |
N/A |
*In attendance only
Terms of appointment
Non-executive directors have been invited to join the board for a three year period,
subject to re-election by shareholders as provided for in the company's articles of
association.
Insurance cover is in place to protect board members and officers against liability
arising from legal actions taken against them in the course of their duties.
Effective governance is achieved by the separation of the roles of the chairman
and the chief executive, as this division of responsibilities at the head of the group
ensures a balance of power and authority. The chairman has overall responsibility
for ensuring that the group achieves a satisfactory return on investment for
shareholders; he oversees the orderly operation of the board and ensures
appropriate interaction between it, executive management and the company’s
shareholders. The chief executive is responsible for developing and delivering the
group’s strategy and is accountable for its overall performance and day to day
management.
The appointment and removal of the company secretary is a matter for the board.
All directors have access to the advice and services of the company secretary.
Independence of directors
All the directors bring independent judgement to bear in the course of performance
of their duties. The board has determined that each of the non-executive directors
is independent. In particular, the board reviewed the position of D. McCourt in
the context of the guidance in the FRC Combined Code on Corporate Governance
(June 2008) and determined that, despite his directorship of Fyffes, a significant
shareholder, he executed his powers in an independent manner throughout the
financial year. Like each of the other non-executive directors, he discharges his
duties in a proper and consistently independent manner and constructively and
appropriately challenges the executive directors and the board.
EvaluatIon of the performance of the board,
its committees and individual directors
In December 2010, as part of an annual process, the board undertook an evaluation
of its own performance, and that of its committees and of each individual director
throughout the year. In assessing the performance of the board, the directors
considered such matters as the appropriateness of its composition, its effectiveness
in developing group strategy, its contribution to managing the group’s business
and operational risks, its response to developing issues and its communications
with the group’s stakeholders. In assessing the performance of the committees of
the board, the directors considered the appropriateness of their composition and
terms of reference, their effectiveness in fulfilling their roles and their interactions
with the board. The assessment of the performance of individual directors
included consideration of their contribution to the effective functioning of the
board, the appropriateness of their knowledge, skill and experience levels and their
commitment to their roles. The chairman summarised the results of these evaluation
processes and reported them to the board. In addition, the non-executive directors
met privately to evaluate the effectiveness of the chairman. Following consideration
of the results of these processes, the directors concluded that the performance of
the board, its committees and individual directors were satisfactory throughout the
year.
Board committees
The board has established two committees, an audit committee and a remuneration
committee, to assist it in the execution of its duties.
Audit committee
The audit committee comprises two non-executive directors, A. Kelliher (chairman)
and A. White, both of whom are considered independent.
The purpose of the audit committee is to oversee the financial reporting processes
and internal control systems of Balmoral. The committee held three meetings during
the year which were attended by all members.
The board believes that A. Kelliher satisfied the recommendation in the FRC
Combined Code on Corporate Governance (June 2008) that at least one member
of the audit committee should have recent relevant financial experience. It is also
satisfied that A. White was sufficiently knowledgeable in relevant financial matters to
enable him to fulfil his responsibilities on the committee.
In the course of its meetings, the audit committee reviewed the accounting policies
adopted by the company, the annual and interim financial statements and any
reports of the external auditors. The committee also evaluated the need for an
internal audit function in the group and concluded that such was not necessary at
this stage of the group’s development. The committee has reviewed the company’s
system of risk management and internal controls and determined that these
operated effectively during the reporting year.
The audit committee also satisfied itself that employees can raise concerns
about possible improprieties in matters of financial reporting or other matters in
confidence.
It also reviewed the external auditor’s independence and the effectiveness of its
planning for audit.
The audit committee adopted appropriate policies regarding the provision of non-audit
services by the external auditors. The auditors are permitted to provide non-audit
services that are not in conflict with auditor independence where they are considered
by the committee to be the most appropriate to provide the services in the best
interests of the group. The engagement of the auditors to perform non-audit services
is authorised by the committee or pre-approved in accordance with policies and
procedures established by the committee.
The external auditors have full and unrestricted access to the audit committee.
Remuneration committee
The remuneration committee comprises two non-executive directors, D. McCourt
(chairman) and A. Kelliher, both of whom are considered independent. The
committee met three times during the year to determine the emoluments of
executive directors and senior management, including basic salaries and the
parameters for any possible bonus payments. The underlying objective is to ensure
that individuals are rewarded appropriately relative to their responsibility, experience
and value to the group. Remuneration policy reflects the need to ensure that the
group can attract, retain and motivate executives to perform at the highest levels
of expectation.
The executive directors’ level of bonus earned in any one year depends on an
assessment of individual performance and the overall performance and activities
of the group.
Nominations
The board plans for its own succession and that of management. In view of
the current size of the company, the board has not established a nominations
committee. Directorships and senior management appointments are considered
and recommended by the full board.
Internal controls
The board has overall responsibility for the group’s system of internal control and for
monitoring its effectiveness. The system of internal control applied by the company
is designed to allow reasonable but not absolute assurance against material
misstatement or loss. The board has established an organisational structure with
clear operating and reporting procedures, lines of responsibility, authorisation limits,
segregation of duties and delegated authority.
The board has reviewed the effectiveness of the group’s systems of internal controls,
covering all material controls, including financial, operational and compliance
controls and risk management systems and the directors believe that the group
has, throughout the reporting year and up to the date of approval of the financial
statements, complied with the principles and provisions of the FRC Combined Code
on Corporate Governance (June 2008) on internal control.
On a regular basis, the board receives reports on the key risks facing the business
and the steps taken to manage such risks. It further considers whether those risks
are being identified, evaluated and appropriately managed, having regard to the
balance of risk, cost and opportunity.
The audit committee regularly meets with and receives reports from the external
auditors. The chairman of the audit committee reports to the board on all significant
issues considered by the committee and the minutes of its meetings are circulated
to all directors.
Communications with shareholders
Communications with shareholders are given high priority and there is regular
dialogue between group executives and its principal shareholders. Financial results
are communicated promptly to shareholders, as well as major property acquisitions,
in accordance with the requirements of the ESM and AIM rules.
The company’s Annual General Meeting affords individual shareholders the
opportunity to question the chairman and members of the board. Notice of the
Annual General Meeting is sent to shareholders at least 20 working days before the
meeting. At the meeting, after each resolution has been dealt with, details are given
of the proxy voting in respect of each resolution.
Accountability and Audit
The contents of the Operating and Financial Review, the Directors' Report and Financial Statements (as well as official company press releases, stock exchange announcements, preliminary announcement and interim results) have been reviewed
by the board in order to ensure a balanced presentation so that the group's position and results may be properly appreciated by shareholders.
A summary of directors' responsibilities in respect of the financial statements is given on page 25. The system of internal controls and risk management established to safeguard the company's assets is set out above. The audit committee, whose composition and functions are described on pages 20 and 21, has considered, in conjunction with the external auditor, the accounting policies adopted in the financial statements and has evaluated the internal controls that have been established within the group.
