Overview and statement of compliance
The Directors recognise the value of the UK Corporate Governance Code which was revised in September 2012 by the Financial Reporting Council.
Whilst under AIM Rules full compliance is not required, the Directors believe that the Company applies best practice corporate governance insofar as is practicable and appropriate for a public company of its size.
The Directors acknowledge that they are responsible for the Group’s system of internal control and for reviewing its effectiveness. The internal control systems are reviewed annually by the Board. Internal control systems are designed to meet the particular needs of the Group and the risks to which it is exposed. Internal control procedures are regularly reviewed in the light of an ongoing process to identify, evaluate and manage the significant risks faced by the Group. The procedures are designed to manage rather than eliminate risk of failure to achieve business objectives and can only provide reasonable but not absolute assurance against material misstatement or loss. The process has been in place for the full year under review and up to the date of approval of the Annual Report and Accounts.
The key procedures which the Directors have established with a view to providing effective internal control are as follows:
The Board has overall responsibility for the Group and there is a formal schedule of matters specifically reserved for decision by the Board. Each Executive Director has been given responsibility for specific aspects of the Group’s affairs. The Executive Directors, together with key senior Executives, constitute the management committee, which meets weekly to discuss day-to-day operational matters.
The Group’s control environment is the responsibility of the Group’s Directors and managers at all levels. A review of the key risks facing the business and the effectiveness of the Group’s internal controls is performed at least once a year.
Main control procedures
The Directors have established control procedures in response to key risks. Standardised financial control procedures operate throughout the Group to ensure the integrity of the Group’s financial statements. The Board has established procedures for authorisation of capital and revenue expenditure.
Monitoring system used by the Board
The Board reviews the Group’s performance against budgets on a monthly basis. The Group’s cash flow is monitored monthly by the Board.
The Group does not have an independent internal audit function, as the Board does not consider that the current scale of operations warrants such a function. However, the Board will keep this under review, with a view to creating an internal audit function when it is warranted.
Communication with investors
The Group is committed to maintaining good communications with investors. Normal shareholder contact is the responsibility of the Executive Chairman together with the Chief Executive Officer and the Finance Director.
There is regular dialogue with institutional investors who, along with analysts, are invited to presentations immediately after the announcement of the Group's interim and full year results. Shareholders have the opportunity to meet and question the Board at the AGM. The Independent Non-executive Director and Chairmen of the Audit, Remuneration and Nomination Committees will be available to answer questions. A detailed explanation of each item of special business to be considered at the AGM is included with the Notice of Meeting. All resolutions proposed at the AGM are taken on a poll vote. This follows best practice guidelines and enables all votes to be counted, not just those of shareholders who attend the meeting.