The CareTech Board of Directors (the “Board”) remains committed to achieving the highest standards of integrity, ethics, professionalism and business practice throughout its operations.
As a Company quoted on AIM, a market operated by the London Stock Exchange, the Company is not required to comply with the UK Corporate Governance Code (the “Code”).
However, the Board is accountable to the Company’s Shareholders for ensuring effective governance and therefore strives to implement policies and procedures aimed at Code compliance as far as is reasonably practicable for a public company of its size and complexity.
This sets the tone for corporate behaviour and to help make our governance meaningful and focused on improving our business and protecting Shareholder value.
As Executive Chairman, Farouq Sheikh leads the Board and is responsible for its effective running. The Chief Executive is Haroon Sheikh; Michael Hill is Group Financial Director and Company Secretary and Stewart Wallace is Strategic Director. The Directors’ biographies detail their experience and suitability for leading and managing the Group and are in the Company’s Annual Report.
Karl Monaghan, the senior independent director and Mike Adams are the 2 Non-Executive Directors and the Board considers each of them as independent. Collectively, the Non-Executive Directors bring a valuable range of expertise and experience in assisting the Group to achieve its strategic aims.
In the furtherance of their duties, all Directors are able to take independent professional advice at the expense of the Company and those newly-appointed are made aware of their responsibilities by the Company Secretary. The Board approves the appointment and removal of the Company Secretary.
All Directors are required to submit themselves for re-election at least every 3 years and new Directors are subject to election by Shareholders at the first opportunity following their appointment.
As a Company quoted on AIM, a market operated by the London Stock Exchange, the Company is not required to comply with the UK Corporate Governance Code (the “Code”). However, the Group has complied with the provisions of the Code with the following exceptions:
- Farouq Sheikh, as Executive Chairman has responsibilities for both the organisation of the Board and running of the Group’s business.
- There is currently no annual formal evaluation of the Board, its Committees or individual Directors. The Board did not consider it appropriate to carry out an evaluation exercise during the year but will consider this issue again during the current year.
Conflicts of interest
Following amendments to the Company’s Articles of Association in 2008 to reflect certain provisions of the Companies Act 2006 relating to conflicts of interest that came into force on 1 October 2008, the Board will follow a specific procedure when deciding whether to authorise a conflict or potential conflict of interest. Firstly, only independent Directors (i.e. those that have no interest in the matter under consideration) will be able to take the relevant decision. Secondly, in taking the decision the Directors must act in a way they consider, in good faith, will be most likely to promote the Company’s success. In addition, the Directors will be able to impose limits or conditions when giving authorisation if they think this is appropriate. It remains the Board’s intention to report annually on the Company’s procedures for ensuring that the Board’s power of authorisation of conflicts are operated effectively and that procedures have been followed.
Board and committee meetings
The Board meets in formal session regularly, usually once each month, and members are supplied with financial and operational information in good time for scrutiny in advance of these meetings.
Board decision making responsibilities
Matters which are reserved to the Board for specific consideration and decision include:
- financial reporting and controls including statutory matters such as the approval of final and interim financial statements and dividend declarations;
- Board membership and other senior, key personnel, appointments;
- review of corporate governance arrangements;
- Group strategy matters including the approval of annual budgets, acquisitions and disposals;
- review of the processes for monitoring and evaluating risk and the effectiveness of the Group’s system of internal control and operational efficiency;
- review and supervision of treasury and financial policies; and
- Shareholder communications.
Matters are delegated to Board Committees, individual Directors or executive management where appropriate. The Directors believe the Board is soundly constituted although, at this stage of the Group’s development, it is felt the functions of a Nominations Committee can be adequately fulfilled by deliberation of the full Board; this will nevertheless be kept under review.
The Audit Committee comprises Karl Monaghan (Chairman) and Mike Adams. The Group Finance Director and representatives of the external auditors attend meetings by invitation as required. The Committee meets at least twice each year and receives reports from the Company’s management and external auditors relating to the annual and interim accounts and the accounting and internal control systems throughout the Group. The Committee has direct and unrestricted access to the external auditors and reviews all services being provided by them to evaluate their independence and objectivity, taking into consideration relevant professional and regulatory requirements in order to ensure that said independence and objectivity are not impaired by the provision of permissible, non-audit services. Details of the amount paid to the external auditors during the year, for audit and other services, are set out in note 6 to the financial statements.
The remuneration committee comprises 2 Non-Executive Directors, Karl Monaghan (Chairman) and Mike Adams, meet at least twice each year.
Its principal duties are to review the scale and structure of the remuneration and service contracts for Executive Directors and Senior Management and it also administers the Company’s share option schemes.
The composition and role of the Remuneration Committee is set out in the Remuneration Report on pages 22 to 23. Also detailed in that report are Directors’ remuneration, shareholdings and share option scheme information.
A key Group strategy is to attract and retain talented and committed personnel, at every level of the organisational hierarchy and the Committee aims to foster remuneration philosophy, policies and procedures to achieve this.
The Group operates in a highly competitive environment. For the Group to continue to compete successfully, it is essential that the level of remuneration and benefits offered achieve the objectives of attracting, retaining, motivating and rewarding the necessary high calibre of individuals at all levels across the Group.
The Group therefore sets out to provide competitive remuneration to all its employees, appropriate to the business environment in the market in which it operates. To achieve this, the remuneration package is based upon the following principles:
- total rewards should be set to provide a fair and attractive remuneration package;
- appropriate elements of the remuneration package should be designed to reinforce the link between performance and reward; and
- Executive Directors’ incentives should be aligned with the interests of shareholders.
The remuneration strategy is designed to be in line with the Group’s fundamental values of fairness, competitiveness and to support the Group’s corporate strategy. A cohesive reward structure consistently applied and with links to corporate performance, is seen as critical in ensuring attainment of the Group’s strategic goals.
Care governance and safeguarding committee
The care governance and safeguarding committee is appointed by the Board and comprises at least 3 Board members as well as appropriate independent members. Current memberships Mike Adams (Chairman), Michael Hill and Stewart Wallace.
The committee’s principal duties are to closely examine and pursue improvements to all matters relating to care governance and the safeguarding of those we support, including oversight of the Health and Safety committee. The committee is further described on this link. (link)
Effective relationships with our shareholders
The Board appreciates that effective communication with the Company’s Shareholders and the investment community as a whole is a key objective.
The views of both institutional and private Shareholders are important, and these can be varied and wide-ranging, as is their interest in the Company’s strategy, reputation and performance. The Executive Chairman has overall responsibility for ensuring this communication is effectively discharged and for making the Board fully aware of key Shareholders’ views, comments and opinions.
Contact with investors throughout the year is a priority and the Board strives to look after their interests. General presentations to major Shareholders following the publication of the Group’s annual and interim results are conducted by the Executive Chairman and the Group Finance Director as are regular meetings through the year with fund managers and investment analysts.
Robust year-on-year dividend growth is an objective and all Shareholders are encouraged to attend the Company’s Annual General Meeting, which all Board members attend, as this provides an opportunity to address questions to the Directors.
The Group’s annual and interim reports are sent to all Shareholders and all results, Company announcements and related investor information can be accessed via the Group’s website.
Internal controls and risks
The Board is ultimately responsible for the Group’s system of internal controls and for reviewing its effectiveness. The role of management is to implement Board policies on risk and control. The system of internal controls is designed to manage rather than eliminate the risk of failure of the achievement of business objectives. In pursuing these objectives, internal controls can only provide reasonable and not absolute assurance against material misstatement or loss. The recent challenging business climate has resulted in a sustained focus on the approach to risk. The Directors consider robust risk management to be crucial to the Group’s success and give a high priority to ensuring that adequate systems are in place to evaluate and limit risk exposure. They have overseen the further development of processes and procedures for identifying, analysing and managing the significant risks faced by the Group. The processes and procedures are regularly reviewed by the Board.
A process of control and hierarchical reporting provides for a documented and auditable trail of accountability. These procedures are relevant across all Group operations: they provide for successive assurances to be given at increasingly higher levels of management and, finally, to the Board.
The processes used by the Board to review the effectiveness of the system of internal controls include the following:
- annual budgets are prepared for each operating business. Monthly management reporting focuses on actual performance against these budgets for each operating business;
- management reports and external audit reports on the system of internal controls and any material control weaknesses that are identified;
- discussions with management including discussions on the actions taken on problem areas identified by Board members or in the external audit reports;
- policies and procedures for such matters as delegation of authorities, capital expenditure and treasury management as well as regular updates;
- review of the adequacy of the level of experienced and professional staff throughout the business and the expertise of individual staff members so that they are capable of carrying out their individual delegated responsibilities; and
- review of the external audit work plans