Corporate Governance Statement

 

Compliance with the Combined Code
The Company is not a listed company and, as such, is not required to report on corporate governance. The Directors are committed to maintaining high standards and so have decided to report on corporate governance as set out in The 2008 FRC Combined Code on Corporate Governance. A copy of the Combined Code can be obtained from the Financial Reporting Council’s website www.frc.org.uk.

 

The key components of the Group’s system of corporate governance are as described below.

 

Role of the Board
The Board is responsible for the leadership of the Company. There is a formal schedule of matters reserved by the Board for decision. This includes the approval of:


• the financial statements;
• business/strategic plans;
• budgets and forecasts;
• capital budgets and expenditure;
• any transactions that materially impact NTR plc’s economic interests;
• Board appointments and removals;
• Directors’ remuneration;
• the terms of reference and membership of NTR plc Board committees;
• the appointment of the auditor.

 

The Board has delegated responsibility for the management of the Group, through the Chief Executive, to executive management. The roles of Chairman and Chief Executive are not combined and there is a clear division of responsibilities between them, which is set out in writing and has been approved by the Board. The Chief Executive is accountable to the Board for all authority delegated to executive management.

 

The Board has also delegated some of its responsibilities to Committees of the Board, as described further below.

 

Board of Directors
Directors are appointed to the Board through a formal process and newly appointed Directors are approved by a Nominations Committee. All new Directors offer themselves for election by shareholders at the first Annual General Meeting following their appointment. On appointment, each Director receives training, as appropriate. All Directors have access to the advice and services of the Company Secretary. The Company offers major shareholders the opportunity to meet new non-executive Directors. The non-executive Directors are appointed for specific terms. All Directors are required to stand for re-election every three years.

 

A procedure is in place whereby the Directors may, in furtherance of their duties, take independent professional advice, if necessary, at the Group’s expense.

 

The Group has a policy in place which indemnifies the Directors in respect of legal action taken against them.

 

At 31 March 2010, the Board of Directors comprised two executive and four non-executive Directors. With the exception of Tom Roche and Donal Tierney, the non-executive Directors were considered independent. Tom Roche, a non-executive Director, chairs the Board and Brian Kearney is the Senior Independent Director. Brian Kearney is available to shareholders who have concerns that cannot be addressed through the Chairman, Chief Executive or Finance Director.

 

Given the number of independent non-executive Directors serving in the year ended 31 March 2010, it was not possible to populate the committees in accordance with the Combined Code.

 

To enable them to perform their duties, all Directors have full and timely access to all relevant information. It is the opinion of the Board that, between them, the Directors have the range of skills, knowledge and experience required to lead the Company. All Directors bring independent judgment to bear in respect of all matters.

 

The Board meets regularly throughout the year. Prior to each meeting, all Directors are supplied with a full set of management accounts together with a report from the Chief Executive outlining key aspects of the Group’s performance.

 

The standard terms of the letter of appointment of non-executive Directors can be inspected at the registered office of the Company or prior to the Annual General Meeting.


Board Committees
The Board delegates certain responsibilities to Board Committees and has established an Audit Committee, Nominations Committee, Finance Committee and Remuneration Committee.

 

Audit Committee
During the period, this Committee comprised the following non-executive Directors: Brian Kearney (Chairman), Christopher Nash and Donal Tierney.

 

The Committee has written terms of reference which deal with its authority and duties. These terms of reference include assisting the Board in fulfilling its responsibilities for ensuring:

 

- appropriate financial reporting;
- adequate internal controls;
- corporate governance procedures are in place throughout the Group;
- the effectiveness of the external audit process;
- that an appropriate relationship between the Group and the external auditor is maintained, including reviewing non-audit services and fees; and
- recommendations are made on the appointment, re-appointment and remuneration of the Group’s external auditor.

 

Non-audit tax and advisory services were provided by KPMG during the financial year. The Group believes that the provision of these services by KPMG does not conflict with its independence as auditor.

 

The Committee reviews the Group’s system of internal controls, the processes in place for monitoring and evaluating the risks facing the Group, the choice of accounting policies, the external and internal audit programmes, the annual report and other related matters, including corporate governance. It monitors and reviews the effectiveness of the Group’s internal audit function.

 

The KPMG Audit Partner and the Finance Director normally attend the Audit Committee meetings. The KPMG Tax Partner attends these meetings at the request of the Committee. The Committee also meets in private session with the external auditor, without executive management present.


Nominations Committee

During the period, this Committee comprised the following Directors: Tom Roche (Chairman), Jim Barry, Brian Kearney, Christopher Nash and Donal Tierney. The Nominations Committee advises the Board on new Board appointments. The terms of reference include responsibility for:

 

- identifying and nominating, for the approval of the Board, candidates to fill Board vacancies as and when they arise;
- evaluating the skills, knowledge and experience of the Board;
- performance evaluation;
- succession planning;
- reviewing the composition of the Board;
- reviewing the leadership of the Board.


The Board engages the services of independent consultants to search for suitable candidates to serve as non-executive Directors.

 

Finance Committee

During the period, this Committee comprised the following Directors: Tom Roche (Chairman), Jim Barry, Brian Kearney, Christopher Nash and Michael Walsh. The Finance Committee considers and evaluates proposals, at the discretion of the Board, which may involve major financial expenditure, acquisitions, mergers and business expansions, or may make recommendations to the Board on the appropriate level of dividends and may review capital expenditure and budgets prior to approval by the Board.

 

Remuneration Committee
During the period, this Committee comprised the following non-executive Directors: Tom Roche (Chairman), Brian Kearney and Donal Tierney.


Remuneration Policy
The Company’s policies on executive Director remuneration and the granting of share options are designed to attract and retain individuals of the appropriate calibre for the Group’s activities, having regard to comparable companies. In framing the Company’s remuneration policy, the Remuneration Committee has given consideration to the provisions of the 2008 FRC Combined Code and the Irish Stock Exchange’s requirements on Directors’ remuneration. External advice is sought by the Remuneration Committee when appropriate.

 

The Remuneration Committee has delegated responsibility for setting the remuneration of senior management to the Chief Executive.

 

Details of Directors’ remuneration are set out in Note 5 to the financial statements, while details of Directors’ share options are set out on page 32.

 

There are no service contracts in force for Directors of the Company or its subsidiaries which may not be terminated without payment of compensation in excess of one year’s remuneration.

 

Michael Walsh is a non-executive director of Fleming Capital plc and EFMI Global Utilities and Infrastructure Funds plc. He received aggregate remuneration of €41,000 in respect of these directorships for the year ended 31 March 2010 and retained these earnings.

 

Share Option Scheme
Under the terms of a share option scheme, at 31 March 2010, options in respect of 2,243,330 (2009: 2,243,330) ordinary shares of the Company have been granted to employees of the Group and remain exercisable at the balance sheet date. Outstanding options are exercisable at prices between €0.90 and €5.50 per share at various dates between 2010 and 2016. Options have been granted to non-executive Directors, reflecting the support given by them to the Group.

 

Communication with Shareholders
The Board regards this Annual Report as a key document for communication with shareholders and carefully considers its form and content, in conjunction with its professional advisors. Communications with shareholders are important to NTR plc and regular communication takes place with major shareholders. Investor presentations are held at the time of the release of interim and annual results.

 

The Interim and Annual Reports are available on the Group’s website www.ntrplc.com, together with regular updates on the Group’s activities.

 

The Company’s Annual General Meeting provides individual shareholders the opportunity to question the Chairman and the Board. Notice of the Annual General Meeting is sent to shareholders at least 21 days in advance of the meeting. At the meeting, after each resolution has been dealt with, details are given of the level of proxy votes lodged and the balance for and against that resolution.

 

Risk Management and Internal Control
The Board is responsible for establishing and maintaining the Group’s systems of Risk Management and Internal Control. These systems are designed to meet the particular needs of the Group and the risks to which its operating units may be exposed. Risk Management and Internal Control systems give reasonable assurance that assets are safeguarded against unauthorised use or disposition, that proper books of account are maintained and that the financial information used within the business or for publication is reliable. By their nature these controls can provide reasonable, but not absolute, assurance against material misstatement or loss.

 

The key features of the Risk Management and Internal Control systems which operated throughout the period covered by the financial statements are as follows:

- the Board is responsible for identifying the major business risks faced by the Group and for determining the appropriate course of action to manage these risks;
- the Group has policies and procedures in place for identifying and assessing risk and there is a culture of risk awareness throughout the Group;
- the Group has an organisational structure in place which has clearly defined lines of authority;
- the Group has an internal audit function;
- the Audit Committee, comprising non-executive Directors, seeks to consider all significant control matters.


Meetings
There were 12 meetings of the Board during the year ended 31 March 2010. Details of Directors’ attendance are set out below. The Chairman sets the agenda for each meeting, in consultation with the Chief Executive and Company Secretary. A number of visits are made each year, by the Board, to Group operations.

 

The Chairman holds meetings with the non-executive Directors without the executive Directors present.

 

Where Directors have concerns which cannot be resolved about the running of the Company or a proposed action, these concerns are recorded in the Board minutes. On resignation, non-executive Directors may provide a written statement of any concerns they may have.

 

Attendance at Board and Board Committee meetings during the year ended 31 March 2010

 

 
              Board
               Audit
              Finance
               Remuneration
               Nominations
A B A B A B A B A B
                     
T. Roche 12 12 - - - - 5 5 2 2
J. Barry 12 12 - - - - - - 2 2
B. Kearney 12 12 2 2 - - 5 5 2 2
C. Nash 12 12 2 2 - - - - 2 2
D. Tierney 12 12 2 2 - - 5 5 2 2
M. Walsh 12 12 - - - - - - - -

 

Column A – indicates the number of meetings held during the period the Director was a member of the Board and/or Committee.

Column B – indicates the number of meetings attended during the period the Director was a member of the Board and/or Committee.

 

Going Concern
The Directors, having made enquiries, believe that the Group and the Company have adequate resources to continue in operational existence for the foreseeable future. Accordingly, they continue to adopt the going concern basis in preparing the financial statements.

 

Compliance Statement
The Company has complied throughout the year with the relevant provisions of the 2008 FRC Combined Code except that:

- the majority of Board Directors are not independent;
- share options have been granted to non-executive Directors and there is no restriction on the disposal of shares after the exercise of such options;
- the Chairman of the Board is not an independent Director;
- the Chairman and one of the members of the Remuneration Committee are not independent Directors;
- the majority of the members of the Nominations Committee were not independent;
- the Audit Committee does not have three independent non-executive directors;
- the Senior Independent Director has not attended meetings with major shareholders, but has been available to meet shareholders. No meetings were requested by any shareholder with the Senior Independent Director;
- formal structures for staff to raise concerns about possible improprieties in the Group were not in place during the year.