The Board is responsible for the governance of the Company, governance being the systems and procedures by which the Company is directed and controlled. A prescribed set of rules does not itself determine good governance or stewardship of a company and, in fulfilling their responsibilities, the Directors believe that they govern the Company in the best interests of the shareholders, whilst having due regard to the interests of other 'stakeholders' in the Group including, in particular, customers, employees and creditors.
The three principal standing committees of the Board are the Audit, Nominations and Remuneration Committees.
The Audit Committee comprises Jeremy Brade and Edmund Rowland and is chaired by Jeremy Brade. The Company's Auditor is normally in attendance. The Audit Committee reviews the external audit activities, monitors compliance with statutory requirements for financial reporting and reviews the half year and annual financial statements before they are presented to the Board for approval. The Audit Committee also keeps under review the scope and results of the audit and its cost effectiveness and the independence and objectivity of the Auditor and the effectiveness of the Group's internal control systems.
The Nominations Committee comprises Edmund Rowland and Jeremy Brade and is chaired by Edmund Rowland. The Committee nominates candidates (both executive and non-executive) for the approval of the Board to fill vacancies or appoint additional persons to the Board. It also makes recommendations regarding the composition and balance of the Board.
The Remuneration Committee ('Committee') comprises Jeremy Brade and Edmund Rowland. Although not a member of the Committee, on occasions, and for matters not related to his own remuneration package, the Committee would normally consult the Managing Director on proposals relating to the remuneration of the other executive Directors and members of the Group's senior management team, and they attend meetings of the Committee by invitation. The Committee, on behalf of the Board, determines all elements of the remuneration packages of the executive Directors and would also approve any compensation arrangements resulting from the termination by the Company of a Director's service contract. The Committee also approves the grant of share options.
As an AIM company, FIH group plc is not required to comply with the UK Corporate Governance Code (the 'Code') which applies only to Fully listed UK companies and adherence to which requires the commitment of significant resources and cost. However high standards of Corporate Governance are a key priority of the Board and details of how the Company addresses key governance issues are set out in the Corporate Governance section of this website by reference to the 12 principles of Corporate Governance developed by the Quoted Companies Alliance.
The board should express a shared view of the company's vision and strategy, including detail of:
This view should be well communicated, both internally and externally.
The Company's vision is to invest in and develop its operating businesses to deliver long term, sustainable growth in shareholder value with particular focus on exploiting the outstanding business opportunities in the Falkland Islands.
The board is responsible for putting in place and communicating a sound system to manage risk and implement internal control.
The management of risk is an essential business practice. Boards are expected to balance risk and return, threat and opportunity. Setting strategy includes determining the extent of exposure to the critical risks the company is willing and able to bear.
The Board has established Audit, Remuneration, Nominations, and AIM Rules Compliance Committees a summary of which is set out below, and full details of which are contained in the Corporate Governance section.
The Company receives regular feedback from its external auditors on the state of its internal controls and has established and internal audit function led by the Group Financial Controller, reporting to the Chairman and Group Managing Director, to systematically review each area of its business to monitor the effectiveness of internal controls
A healthy dialogue should exist between the board and all of its shareholders to enable shareholders to come to informed decisions about the company.
Appropriate communication and reporting structures should exist between the board and all constituent parts of its shareholder body. This will assist:
The Board attaches great importance to providing shareholders with clear and transparent information on the Group's activities, strategy and financial position. Details of all shareholder communications are provided on the Group's website .
The Board holds regular meetings with larger shareholders and regards the annual general meeting as a good opportunity to communicate directly with shareholders via an open question and answer session.
The Company lists contact details on its website and on all announcements released via RNS, should shareholders wish to communicate with the Board.
The resolutions put to a vote at the next and past AGMs can be found in the AGM information section of the company's website.
Directors should develop a good understanding of the needs and expectations of the company's shareholders, as well as the motivations behind shareholder voting decisions.
No board ever wants to find itself in a position where it is voted down by shareholders. Accordingly, it is in the interests of the company to understand the view of shareholders before a potentially controversial or unusual proposal is put to them.
Companies with a dominant shareholder must be particularly aware of the need to hear the voices of and protect the interests of minority shareholders and must therefore consider whether it is necessary to put in place contractual arrangements such as a relationship agreement.
The Board is aware of the need to protect the interests of minority shareholders, and balancing these interests with those of any more substantial shareholders.
The Board consists of the Chairman, the Managing Director and three non-executive directors. Board meetings are held at least five times a year, with seven held from August 2013 to July 2014.
Independent Non-executive director appointment terms
The Company has a policy of appointing non-executive directors who can provide an independent view of the Company's activities.
In exceptional cases a non- executive may also be appointed to represent the interests of a major shareholder where the board is satisfied that he or she has the requisite experience and is fully aware of his or her fiduciary duty to act in the wider interests of shareholders as a whole.
The board do not consider that the company currently has a dominant shareholder where special contractual arrangements would be necessary to protect the interests of minority shareholders.
Appointments continue subject to re-election by shareholders at the Annual General Meeting. Non-executive directors must stand for election at the first Annual General Meeting after appointment and then every third anniversary, for nine years. After nine years service, each independent director must be re-elected every year. If not re-elected, the appointment is terminated automatically with immediate effect. If appointment is terminated for any reason, there is no entitlement to redundancy or compensation for unfair dismissal.
A description of the roles of the Directors is included under Management.
The Company publishes all relevant material, according to QCA definitions, on its website. This includes annual reports and shareholder circulars.
Good governance includes the board considering the company's impact on society, the community and the environment.
Every company should consider its corporate social responsibilities (CSR). Any CSR policy should include narrative on social and environmental issues and should show how these are integrated into the company's strategy. Integrating CSR into strategy will help create long term value and reduce risk to shareholders and other stakeholders.
The Directors are aware of the impact the business activities have on the communities in which the Group's businesses operate particularly in the small remote community in the Falkland Islands and also the importance of the ferry business to the population of Gosport.
The Group's responsibilities to stakeholders including staff, suppliers and customers and wider society are also recognised.
The environmental impact of the Group's activities is carefully considered and the maintenance of high environmental standards is a key priority.
There is a direct cost of delivering effective corporate governance. It is therefore vital to adopt effective and proportionate governance arrangements. The company should benefit from clear and efficient decision making processes.
There should be a clear understanding between the board and the shareholders of how value is enhanced and abuses prevented through effective corporate governance. Publishing relevant key performance indicators on these measures may assist.
Whilst the Group recognises the importance of high standards of Corporate Governance the Board has sought to address the matter in a proportionate way having regard to the size and resources of the Group.
The principal risks faced by the Group are addressed by the appointment of an experienced executive board supported by a group of experienced non- executive directors and a team of appropriately qualified professional advisers
The executive directors are closely involved in the day to day operations of the Group and the operating subsidiaries and report to the Board in detail at least monthly. nTheir reports include the status and trends of agreed Key Performance Indicators which are noted in the Group's Annual Report under the Managing Director's Strategic Review
The company should determine governance structures and processes appropriate to it, based on:
There should be a clear statement as to how the company intends to fulfil its objectives.
The company's governance structures should evolve in parallel with the company's strategy and business.
Details of the Company's corporate governance arrangements are provided on this page and in the Corporate Governance section of this website.
The directors attendance at Board meetings in the 12 months ended 31 July 2014 was as follows :
David Hudd 7/7
John Foster 7/7
Mike Killingley 7/7
Jeremey Brade 7/7
Edmund Rowland 7/7
Responsibility for corporate governance lies with the chairman.
The chairman must therefore determine where responsibility lies within the company for the delivery of key outputs.
The board has a collective responsibility and legal obligation to promote the long term success of the company.
Responsibility and accountability
This website page provides full disclosure on the Company's corporate governance.
Descriptions of the roles of Directors are included above.
The board should not be dominated by one person or a group of people.
The board must not be so large as to prevent efficient operation but must not be too small to be ineffective.
The board should be balanced between executive and non-executive directors and should have at least two independent non-executive directors.
The Board is comprised of two executive Directors, and three non-executive Directors
Whilst the company is guided by the provisions of the Combined Code in respect of the independence of directors, it gives regard to the overall effectiveness and independence of the contribution made by directors to the board in considering their independence, and does not consider a directors' period of service in isolation to determine their independence.
A description of the roles of the Directors is included under Management.
The board must have an appropriate balance of functional and sector skills and experience.
The board should be supported by committees (audit, remuneration, nomination and others) that have the necessary character, skills and knowledge to discharge their duties and responsibilities effectively.
Directors who have been appointed to the Company have been chosen because of the skills and experience they offer. Full biographical details of the Directors are included under Management.
As noted above, the Company has put in place Audit, Remuneration, Nominations, and AIM Rules Compliance committees.
Formal terms of reference have been agreed for all Board Committees. The responsibilities of each of these have been summarised below
AIM Rules Compliance Committee
The board should periodically review its performance, as well as the performance of its board committees and the performance of individual board members. Performance appraisal may include external review and may also identify development needs.
The board should ensure that it possesses the skills and experience to meet present and future business needs. Ineffective directors (whether executive or non-executive) must be identified, supported to become effective and, if that is not possible, replaced. Review, development and mentoring of directors and the wider management team are very important.
It is healthy for membership of the board to be periodically refreshed, regardless of performance issues.
Succession planning is a vital task for boards. No member of the board should become indispensable. How well succession is managed (particularly of the chairman and the chief executive) represents a key measure of the effectiveness of a board.
The Company undertakes regular monitoring of personal and corporate performance using agreed key performance indicators and detailed financial reports. Responsibility for assessing and monitoring the performance of the executive directors lies with the independent non executive directors.
Key performance indicators include, Underlying Pre Tax Profit , cash generation , return on investment and Earnings per share . Agreed personal objectives and targets including financial and non- financial metrics are set each year for the executive directors and performance measured against these metrics.
The Board considers via. the Nominations Committee the need for the periodic refreshing its membership. 2 new non- executive directors have been appointed since August 2009.
Succession planning is considered by the Nominations Committee comprising the Chairman and senior non- executive director.
The whole board and its committees should be provided with high quality information in a timely manner to facilitate proper assessment of the matters requiring a decision or insight.
Non-executive directors should be provided with access to all information they require and to external advice as necessary.
The board is provided with detailed financial reports of the Group's financial performance on a regular monthly basis with more frequent updates if required. Detailed written reports are provided one week prior to the Company's regular board meetings. Written recommendations from the executive directors are delivered in a timely manner with supporting documentation, supplemented as required by reports from external professional advisers so that the board can constructively challenge recommendations before making decisions.
Non-executive directors have a contractual right to external advice, at the Company's expense, when necessary