Corporate Governance
Corporate Governance Report
The Directors are committed to high standards of corporate governance. The way in which the Company applies the principles set out in the Combined Code on Corporate Governance issued by the Financial Reporting Council in June 2008 (the “Combined Code”) is described below.Compliance Statement
The Company has been in compliance with all relevant provisions of the Combined Code throughout the year under review.
The Combined Code – Application of Principles
A. Directors
The Board
Christopher Collins was the Non-Executive Chairman of the Board throughout 2009. He retired on 31st December 2009 and was succeeded by David Richardson on 1st January 2010. Charles Hammond is the Group Chief Executive. Gerry Brown is Senior Independent Director. At the beginning of the year, the Board of Directors comprised five Non-Executive Directors and three Executive Directors. The Board considers all its Non-Executive Directors, with the exception of the Chairman, to be independent. Marie-Louise Clayton was appointed as a Non-Executive Director on 1st January 2010.
No Non-Executive Director has served on the Board for more than nine years from the date of his appointment. The Board has adopted the principle that Non-Executive Directors should normally serve two three year terms and that any term beyond six years should be subject to particularly rigorous review. In any event, no Non-Executive Director shall serve longer than nine years. Gerry Brown and Struan Robertson were appointed for a third term in 2009.
The Directors believe that it is essential that the Group should be led and controlled by an effective Board. The Board has adopted a formal Schedule of Matters specifically reserved to it on such matters as:
- Agreeing objectives, policies and strategies and monitoring the performance of the Executive Directors and Senior Management;
- Controlling and monitoring the financial performance of the Group;
- Reviewing strategic options on an annual basis to include any major changes in organisation and direction of the Group;
- Approving major expenditure and transactions with other companies including, for example, acquisitions, disposals and joint ventures;
- Ensuring compliance in relation to
- Safety, health and environmental matters
- Corporate Governance
- Delegating clear responsibility and authority to the Chairman, Committees of the Board, the Group Chief Executive and other Directors;
- Compliance with the Companies Act, UK Listing Authority, London Stock Exchange and other regulations; and
- Consideration and approval of strategy, budgets and major management/financial decisions as determined from time to time by the Board.
The Board met seven times last year for regular business and the Directors participated in the Annual Strategy Conference. The Board meets as necessary for any matters arising at other times. At each Board meeting, the Board considers reports from each of the Executive Directors covering his area of responsibility.
An Annual General Meeting is held every year. All Directors are subject to re-appointment by shareholders at the first Annual General Meeting after their appointment and thereafter to re-election at intervals of no more than three years.
The attendance at Board Meetings during 2009 was as shown below:-
| Name | Meetings Attended |
| Christopher Collins | 5 |
| Charles Hammond | 7 |
| Wilson Murray | 7 |
| Perry Glading | 7 |
| Gerry Brown | 7 |
| Struan Robertson | 6 |
| David Richardson | 7 |
| James Tuckey | 7 |
The Chairman holds one meeting with the Non-Executive Directors without the Executive Directors present.
Sub-Committees of the Board
The Board has delegated certain matters to three sub-committees of the Board comprising the Audit Committee, the Remuneration Committee and the Nomination Committee.
The following table sets out the frequency of, and attendance at, the various sub-committee meetings for the period under review:-
| Audit Committee | Remuneration Committee | Nomination Committee | |
| Number of meetings held | 3 | 5 | 2 |
| Name | |||
| Christopher Collins | n/a | n/a | 1 |
| Gerry Brown | 3 | 5 | 2 |
| Struan Robertson | 2 | 5 | 2 |
| David Richardson | 3 | 5 | 2 |
| James Tuckey | 3 | 5 | 2 |
| Charles Hammond | n/a | n/a | 2 |
Group Company Secretary
The Group Company Secretary is responsible for ensuring that Board procedures and applicable rules and regulations are observed. All Directors have access to the advice and services of the Group Company Secretary. The Group Company Secretary is also responsible for ensuring that the Directors are fully aware of their duties and responsibilities as Directors and that they undertake appropriate training.
Independent Advice
There is an agreed procedure for Directors to take independent professional advice, if necessary, at the Company’s expense.
Unresolved Concerns
Where Directors have concerns which cannot be resolved in connection with the running of the Company or a proposed action, their concerns are recorded in the Board Minutes. If a Non-Executive Director resigns, he is required to provide a written statement to the Chairman, for circulation to the Board, if he has any such concerns.
Insurance Cover
The Company purchases insurance to cover its Directors and Officers and the Trustees of its pension scheme against the costs of defending themselves in civil legal proceedings taken against them in that capacity and in respect of damages resulting from the unsuccessful defence of any proceedings. To the extent permitted by UK Law, the Company also indemnifies its Directors, Officers and Trustees. Neither the insurance nor the indemnity provides cover where a Director, Officer or Trustee has acted fraudulently or dishonestly.
Annual Evaluation of Performance
An annual evaluation of the Board's performance and that of its sub-committees, individual Directors and Chairman is undertaken. In 2009, this explicitly covered the process for appointment of the Chairman. Each Director receives a Board Performance Evaluation Questionnaire and separate Committee Performance Evaluation Forms where appropriate for use in assessing the Board’s own performance and that of the Audit and Remuneration Committees. As the Nomination Committee meets infrequently, there is no separate Performance Evaluation Questionnaire for that Committee however any comments on the Nomination Committee may be sent to the Group Company Secretary as part of the Board Questionnaire.
The Committee Performance Evaluation Questionnaires consider fulfilment of terms of reference, necessary skills and resources of members, evaluation of the supporting processes for the Committee and an overall view of the effectiveness of the Committee.
The results were compiled and addressed by the Group Company Secretary and reported to the Board. The results were considered by the Board at its March meeting in 2010. No major changes were required as a result of this review.
An evaluation of the performance of the Group Chief Executive and each of the other Non-Executive Directors was undertaken by the Chairman.
The Non-Executive Directors, led by the Senior Independent Director, met once without the Chairman and the Executive Directors to evaluate the performance of the Chairman.
As part of the annual budget presentation to the Board, the Board reviews the targets which were given to individual Executive Directors and Senior Managers within the Group and subsequently discusses and approves the targets to be given to these individuals for the following year.
External Audit Process
The Audit Committee has reviewed and monitored the effectiveness of the external audit process by way of a questionnaire which reviewed, on a graded scale, the robustness of the audit, the quality of delivery and the quality of people and service. The Audit Committee was satisfied as to the effectiveness of the external audit process.
B. Directors’ Remuneration
Reference is made to the Directors' Remuneration Report which sets out the composition of the Remuneration Committee, the Company’s remuneration policy for Directors and details of such remuneration (including bonus schemes and pensions) for each Director, and the Committee’s compliance with all relevant sections of the Combined Code.
All Executive Directors are on one year rolling contracts.
No Executive Director who has external directorships is currently paid for these directorships.
C. Relations with Shareholders
The Company encourages regular dialogue with institutional shareholders based on a mutual understanding of objectives.
The Board receives reports prepared by the Company’s broker which reflect the views of the major shareholders on an unattributable basis following the half-yearly and annual presentations to major shareholders. The Board also receives copies of analysts’ reports on a regular basis.
In 2009, the Chairman and the Chairman designate met, or had discussions with, certain of the Company’s major shareholders. As part of the governance process, other major shareholders were offered the opportunity to meet the Chairman should they so wish. The Senior Independent Director is also available for meetings if requested.
The Board uses the Annual General Meeting to communicate with private investors and encourages their participation both inside and outside the formal meeting.
As in prior years, at the 2010 Annual General Meeting, the Company will ensure that the level of proxies for and against each resolution is intimated to shareholders after each resolution has been dealt with.
As at 22nd March 2010, the Company’s issued share capital comprises 45,689,110 Ordinary Shares of 50p each.
D. Financial Reporting and compliance with the 2005 Turnbull Committee Guidance on Internal Control ("the Guidance")
Internal Control: The Board is responsible for and has reviewed the effectiveness of the Group's system of internal control in accordance with the Guidance throughout the year. No significant findings were identified which required action to be taken. The process of internal control has been in place for the year under review and up to the date of approval of the Annual Report and Accounts. It should be recognised that such a system can provide only reasonable, and not absolute, assurance against material misstatement or loss. The key features of the system which have been established are as follows:-
- Control Environment
The Group's control environment is the responsibility of the Group's Directors and managers at all levels. The Group's organisational structure has clear lines of responsibility. Operating and financial responsibility for subsidiary companies is delegated to the local boards. - Identification of Business Risks and compliance with the Guidance
Throughout last year, the Group complied with the Guidance. The Group Risk and Insurance Manager oversees the procedures involved in the identification of business risks and compliance with the Guidance. The Board regularly reviews the process of identifying, evaluating and managing the Group’s key risks which allows it to take a view on the effectiveness of these procedures. All subsidiaries are required to assess key risks and related control and monitoring procedures on an ongoing basis. The Board monitors this process on a regular basis. - Major Corporate Information Systems
The Group operates a comprehensive budgeting and financial reporting system which, as a matter of routine, compares actual results to budget. Management accounts are compiled on a monthly basis. Variances from budget are thoroughly investigated and revisions to forecasts are made twice during the year. Cash Flow projections are prepared monthly and cover a rolling twelve month period to ensure that the Group has adequate funds. The port business uses the Integrated Port Operating System (“IPOS”) to provide it with up-to-date information on marine, general cargo and container operations. Together with Cognos software, this enables core information to be tailored to management’s own particular requirements to assist in the day-to-day operation of the business. - Main Control Procedures
Divisional management establishes control procedures in response to each of the key risks identified. Standard financial control procedures operate throughout the Group to ensure the integrity of the Group's accounts. The Board has established procedures for authorisation of capital expenditure and exceptional maintenance. The Group has an internal audit function which carries out a regular programme of systematic reviews of the financial control procedures. - Monitoring System used by the Board
The Board participates in an annual strategy conference which includes a three year forward financial review which is then updated on an annual basis. The Board reviews and approves budgets and monitors the Group's performance against those budgets. The Board receives reports on a regular basis from the Audit Committee.
Statement of Directors' Responsibilities: The Directors are responsible for preparing the Annual Report, the Directors’ Remuneration 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 elected to prepare the Group and parent Company financial statements in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union. 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 European Union have been followed, subject to any material departures disclosed and explained in the financial statements;
- 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 the maintenance and integrity of the Group and Company’s website www.forthports.co.uk. 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, whose names and functions are listed in the Annual Report and Accounts, confirm that, to the best of their knowledge:
The Group 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 Company and Group; and
The Directors’ Report contained in this Annual Report includes a fair review of the development and performance of the business and the position of the group, together with a description of the principal risks and uncertainties that it faces.
Going Concern: The Directors, having made enquiries, have a reasonable expectation that the Company and the Group have adequate resources to continue in operational existence for the foreseeable future, and that therefore it is appropriate to continue to adopt the going concern basis in preparing the accounts.
By Order of the Board
Morag McNeill
GROUP COMPANY SECRETARY
22nd March 2010
