Board length of service
|Graham Holden||27 November 2007|
|Liz Barber||7 April 2015|
|Bill Halbert||1 September 2006|
|Tony Illsley||2 June 2009|
|Paul Simpson||24 May 2004|
|Peter Smith||5 January 2015|
|Martin Towers||2 June 2009|
Appointment and replacement of Directors
It is the policy of the Board that all Directors wishing to continue in office will stand for election or re-election each year at the AGM.
The Articles of Association allow the Board to appoint a new Director at any time; however, the Articles state that the new Director will only hold office until the next AGM, at which point he or she must stand for election or vacate the office.
The Nomination Committee, and the Board as a whole, have reviewed the performance and contribution of Graham Holden, Bill Halbert, Tony Illsley and Paul Simpson and has no hesitation in proposing the re-appointment of each of these Board members. We believe we have a diverse and balanced Board which meets the current needs of the business and therefore all of these Directors are recommended for re-election on the basis of their contribution to this. Martin Towers has indicated his intention to retire from the Board at the AGM and therefore will not stand for re-election.
In addition, the Nomination Committee is pleased to recommend both Peter Smith and Liz Barber for appointment to the Board. Peter joined the Board on 5 January 2015 and brings with him a vast amount of experience across a number of industries where he has helped many businesses from a strategic perspective. The Nomination Committee believes that Peter will be able to use his experience to make a significant contribution to the Group, particularly as it goes through a period of strategic change. Liz Barber joined the Group on 7 April 2015 and brings with her significant financial expertise, as a previous audit partner for Ernst & Young and as the current Group Director of Finance for Kelda Group. Further biographical details for each of the Directors can be found on the Board of Directors page.
|All Board members contribute to all aspects below. Here are their key areas of expertise:||Graham Holden||Liz Barber||Bill Halbert||Tony Illsley||Paul Simpson||Peter Smith||Martin Towers|
The Articles of Association also state that the Company may remove a Director by ordinary resolution with special notice before the expiration of their period of office. There have been no Directors removed from office during the year.
The Board reviews the independence of the Non-Executive Directors each year, taking into account the length of tenure, relationships and circumstances as well as considering the behaviour of each Director at Board meetings and whether or not they contribute to unbiased and independent debate. All of the Non-Executive Directors at the time of this report and the Non-Executive Chairman were independent upon appointment and the Board believes that all five remain wholly independent in relation to the criteria set out in Provision B.1.1 of the UK Corporate Governance Code.
Commitments of the Non-Executive Chairman
Our Non-Executive Chairman, Graham Holden, does not currently have any other significant commitments.
UK Corporate Governance Code
From 1 April 2014 to 29 July 2014 the Board was non-compliant with provision B.1.2 of the UK Corporate Governance Code, which requires at least half of the Board excluding the Chairman to be independent Non-Executive Directors. During this period there were two Non-Executive Directors and three Executive Directors. The risk created by this imbalance was mitigated by the Chairman consciously ensuring that the views of the Non-Executive Directors were given appropriate prominence in the Board meetings. The retirement of Kevin Walsh as Executive Director on 29 July 2014 rectified this non-compliance and the Board has been compliant with this provision ever since, with three independent Non-Executive Directors and just two Executive Directors as at 31 March 2015.
In addition, the Board was non-compliant with provision C.3.1 of the Code from 1 April 2014 to 5 January 2015, which requires the Audit Committee membership to be made up of at least three independent Non-Executive Directors. This was rectified on 5 January 2015 when Peter Smith was appointed to the Board and became a member of the Audit Committee. The risk created by this non-compliance was mitigated through the Committee members spending additional time meeting with members of the business and the external auditors to ensure matters for discussion were fully explored and all potential viewpoints taken into consideration. At the end of the year there were three independent Non-Executive Directors on the Audit Committee.
Other than the exceptions noted above, the Board considers that it has complied with all the detailed provisions of the September 2012 UK Corporate Governance Code throughout the year ended 31 March 2015.
The UK Corporate Governance Code was updated in September 2014 and the revised version applies to financial years beginning on or after 1 October 2014. We will therefore report against the revised Code in our reporting for the year ending 31 March 2016.
The Board as a whole is committed entirely to the principle of achieving and maintaining a high standard of corporate governance.
The UK Corporate Governance Code is available on the Financial Reporting Council website at www.frc.org.uk.
The Board has established and delegated specific responsibilities to the following Committees. Each Committee reports back to the Board after each meeting and minutes of Committee meetings are circulated to all Board members, where appropriate, to ensure that the whole Board is aware of the matters considered by the Committees.
Each Committee has its own report which sets out the membership and attendance at the Committee meetings during the year, as well as further information on the role of Committee. The Audit Committee report can be found on the Audit Committee report page, the Nomination Committee report on the Nomination Committee report page and the Remuneration Committee report in the Remuneration report.
How the Board operates
The Board has eight scheduled meetings a year, with other ad hoc meetings held as needed. During the year, the Board met 10 times. The two additional meetings were specifically held to consider the appointment of a new Non-Executive Director and to receive an update on an internal project. Attendance at the meetings during the year is shown in the table below. Six of the meetings were preceded the evening before by an informal meeting, allowing more time to debate issues in depth.
The Board agenda is set for each meeting by the Chairman with input from the Executive Directors and the Company Secretary. In addition, any of the Non-Executive Directors can request a matter to be added to the agenda at any time. At each meeting the Board considers business performance, including reviewing past performance and considering the future long-term success of the Group. There is a standing agenda item in relation to strategy and this forms the basis for discussion and debate around all aspects of strategy, along with updates on progress in relation to the strategic aims of the business.
The Board receives reports each month on financial performance, people matters, investor relations, governance, compliance and risk. These reports are circulated every month, regardless of whether or not a Board meeting is scheduled. There are also regular updates on key projects and strategic programmes and regular reports on cyber risk, health and safety and corporate responsibility.
Board meetings are held at various KCOM Group sites throughout the year and the Board seeks to regularly meet both formally and informally with senior management from the four brands and the supporting Group functions to gain further insight into the day-to-day operation of the business and the key risks and opportunities facing each part of the business.
There is a schedule of Matters Reserved for the Board which is reviewed and updated each year. This schedule requires that specific matters relating to budgets, strategy, performance against objectives, financial reporting, internal controls, communications, remuneration and governance, along with any proposed changes to business operations or the structure and capital of the Company, are referred to the Board for consideration and approval.
The Board also reviews contractual clauses escalated to the Board through our Contracting Risk framework and business cases escalated in accordance with our Group-wide delegations of authority.
The Board considers the role of the Company Secretary to be key in ensuring that the Group and the Board have the right governance in place and that Board processes follow best practice. The Company Secretary meets with each of the Directors individually as necessary to discuss governance-related matters and provides a governance report to the Board on a monthly basis. The Directors are able also to obtain independent professional advice at the Group’s expense whenever necessary.
Attendance at Board meetings
|Director||Number of meetings||Out of possible|
|Graham Holden (Chairman)||10||10|
Training and development
The Board receives monthly updates on governance-related matters and more formal training where appropriate. Potential training needs are discussed as part of individual performance evaluation, plus each Director is given the opportunity to flag any additional training requirements which they may have identified as part of the annual Board evaluation process.
New Directors joining the Group are given a broad and comprehensive induction to the business, consisting of site visits, meetings with key personnel and detailed information relating to each brand and the Group as a whole, as well as training specifically in relation to the duties of Directors and their role on the Board.
Relations with shareholders
It is essential that we communicate effectively with our shareholders and understand their views. Our Chief Executive and Chief Financial Officer meet regularly with our institutional shareholders to discuss the strategy, performance and governance of the Company and to obtain feedback. During the year, meetings have been held with 30 such shareholders. There are also general presentations following the half year and final results announcements each year.
Feedback from meetings with shareholders is included as part of the monthly report to the Board and discussed at each Board meeting, along with details of any analyst reports, to ensure that each of our Directors has a clear understanding of the views of our shareholders. Our Non-Executive Chairman and Non-Executive Directors are available to meet face-to-face with our institutional shareholders if requested to do so, although no such requests have been received during the year.
A large number of our individual shareholders live in the Hull and East Yorkshire region and, as a Group, we are very much involved in local life in the area. More information about our community activities is detailed in our CR section. We believe that being a part of the community enables us to learn more about our local shareholders and the issues that matter to them.
We consider our AGM to be an important means of communication between our shareholders and Directors. All of our Directors are available at the AGM to answer questions and we seek to encourage shareholder participation by inviting questions in advance.
We use electronic voting at our AGM each year. The results of voting, including the proxy votes lodged, are shown to shareholders in the meeting and are made available subsequently on our website.
All of our Company announcements are published on our website, www.kcomplc.com, together with presentation materials and financial reports, so that all of our shareholders can keep up to date with our news.
|Area identified||What have we done?|
|More debate and discussion around future strategy and the review of past decisions.||There is now a standing agenda item at each Board meeting on strategy which has led to detailed and robust debates throughout the year. A formal process has also now been put in place to review past decisions and present the outcomes back to the Board, which was previously covered informally.|
|More frequent discussion specifically in relation to risk.||Specific discussions around risks and the risk appetite of the Group have been held during the year, both as part of the Board meetings and in separate meetings where deemed useful.|
|A clear definition of roles for the Chairman and Chief Executive.||Clearly defined role profiles are now in place for the Chairman and Chief Executive, as well as for the Senior Independent Director.|
|More formal individual performance reviews.||Regular formal performance reviews have now been put in place for each of the Directors with the Non-Executive Chairman, and for the Non-Executive Chairman with the Senior Independent Director.|
In the summer of 2014 an externally facilitated Board evaluation was performed by Independent Board Review, a division of Independent Audit Limited, which does not provide any other services to the Group. The review covered the Board and its Committees and the results of the review were very positive, with no areas of major concern.
There were a few areas noted for possible improvement, which are noted in the table above.
In 2015 the intention is to return to using an internal evaluation process, facilitated by the Company Secretary. This has proved extremely useful in the past and has therefore been scheduled for the first quarter of the financial year.
As noted in the table above, the Non-Executive Chairman meets with each Board member individually at least on an annual basis to discuss their own performance and to identify any areas for development or potential training needs. In addition, the Non-Executive Directors meet separately to discuss the performance of the Non-Executive Chairman. The feedback from this meeting is then passed on to the Non-Executive Chairman by the Senior Independent Director.
The Non-Executive Directors have regular dialogue with each other concerning Board matters and the Non-Executive Chairman met with the Non-Executive Directors, without the other Directors present, at regular intervals during the year.
Business model and key performance indicators
Proposal to re-appoint the external auditors
PricewaterhouseCoopers LLP have advised of their willingness to continue in office and have confirmed their continued independence. Following consideration of the relationship with the external auditors, as described in the Audit Committee report, the Audit Committee has recommended to the Board that PricewaterhouseCoopers LLP are re-appointed and a resolution to re-appoint them will be proposed at the AGM. They have provided an independent audit opinion on these accounts which can be found in the Independent auditors' report.
Powers of the Directors
The business of the Company is managed by the Directors, who may exercise all the powers of the Company, subject to the provisions of the Articles of Association, relevant statutes and any special resolution of the Company.
The Articles of Association give the Directors the power to authorise conflicts of interest in relation to transactions or arrangements with the Company, in accordance with the Companies Act 2006. Conflicts of interest are a standing agenda item at Board meetings and each Director proposes any potential conflicts for consideration as soon as they become aware of them. The Director with the potential conflict is excluded from the vote to authorise the transaction or arrangement.
Any conflicts that are authorised are then logged on a register, along with details of any specific terms imposed upon authorisation. Internal controls are in place to ensure that transactions or arrangements which may lead to a potential conflict of interest are conducted on an arm’s length basis.
As at 31 March 2015, the Company had been notified of the following interests amounting to three per cent or more of the voting rights in the issued ordinary share capital of the Company. As at 17 June 2015, there had been no additional disclosures received.
|Number of shares with
|% of total
|Invesco Asset Management||71,999,671||13.94|
|Aberforth Partners LLP||25,113,106||4.86|
|Fidelity Worldwide Investment||22,503,530||4.36|
|Norges Bank Investment Management||15,494,141||3.00|
Directors’ responsibilities statement
The Directors are responsible for preparing the annual report and the financial statements in accordance with applicable law and regulations. Company law requires the Directors to prepare financial statements for each financial year. Under that law, the Directors have prepared the Group and Company financial statements in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union (EU). Under company law, the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Group and the Company and of the profit or loss of the Group for that period.
In preparing these financial statements, the Directors are required to:
- select suitable accounting policies and then apply them consistently;
- make judgements and accounting estimates that are reasonable and prudent;
- state whether applicable IFRSs as adopted by the EU have been followed, subject to any material departures disclosed and explained in the financial statements; and
- 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 adequate accounting records that are sufficient to show and explain the Company’s transactions and disclose with reasonable accuracy at any time the financial position of the Company and the Group and enable them to ensure that the financial statements and the Directors’ Remuneration report comply with the Companies Act 2006 and, as regards the Group financial statements, Article 4 of the IAS Regulation. They are also responsible for safeguarding the assets of the Company and the Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
The Directors are responsible for the maintenance and integrity of the Group’s website, www.kcomplc.com. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.
Directors’ statement pursuant to the Disclosure and Transparency Rules
Each of the Directors as at 31 March 2015 whose names and functions are listed on the Board of Directors page confirm that, to the best of their knowledge:
- the financial statements, which have been prepared in accordance with IFRSs as adopted by the EU, give a true and fair view of the assets, liabilities, financial position and profit of the Group and Company; and
- the Strategic report and Directors’ report contained in the annual report includes a fair review of the development and performance of the business and the position of the Group and Company, together with a description of the principal risks and uncertainties that they face.
Conclusion on the annual report
The Board is responsible for reviewing the annual report and, after consideration, has concluded that the annual report, taken as a whole, is fair, balanced and understandable and that it provides the necessary information for shareholders to assess performance, business model and strategy. In reaching this conclusion, the Board has considered the different types of shareholders that the Group has, the reports and presentations that the Board has received during the year and the reports submitted to the Audit Committee during the year by both the internal and external auditors and combined this with the Board’s collective knowledge of the business, gained through both formal and informal meetings and personal interactions across the Group at all levels. Further information on the reports submitted to the Audit Committee can be found in the Audit Committee report.
Amendments to the Company’s Articles of Association
Any amendments to the Company’s Articles of Association may be made by passing a special resolution at a general meeting of the shareholders.
The Directors confirm that, having reviewed the Group’s budget and forecasts along with the principal risks and uncertainties facing the Group, they are satisfied that the Group has adequate resources to continue in operational existence for the foreseeable future. Accordingly the Group continues to adopt the going concern basis in preparing the financial statements.