Governance

As an AIM listed company Redstone plc is not required to comply with the principles and provisions of the 2003 Combined Code on Corporate Governance (“the Combined Code”) however the Board of Redstone plc is committed to the principles of good corporate governance. This report explains how the Directors seek to apply the requirements of the Combined Code to procedures within the Group.

The Board considers that it is compliant with all aspects of the Combined Code.

The Board of Directors
The Board comprises the Chairman (Alan Coppin), the Chief Executive Officer (Martin Balaam), the Chief Financial Officer (Tim Perks) and four non-executive Directors (David Payne, Oliver Vaughan, Tim Sherwood and Gerard Spencer).

Alan Coppin was appointed to the Board as Chairman on 22 June 2006 and Tim Sherwood was appointed to the Board on 6 March 2007, both are independent non-executive Directors.

A biography of each Director is set out on this website.

The business and management of the Company and its subsidiaries are the collective responsibility of the Board. At each meeting, the Board considers and reviews the trading performance of each of the major products and services. The Board has a formal written schedule of matters reserved for its review and approval. These include the approval of the annual budget, major capital expenditure, investment proposals, the interim and annual results, and a review of the overall system of internal control and risk management.

There are three standing Board Committees: Audit, Nominations and Remuneration. Each of these Committees acts within defined terms of reference. Additional information is set out later in this report and also in the Directors’ Remuneration Report in respect of the Remuneration Committee.

Authority for the execution of the approved policies, business plan and daily running of the business is delegated to the executive Directors. The Chief Executive has established a Senior Management Team that comprises the Chief Executive, the Chief Financial Officer and the divisional heads of the principal businesses in the Group, being Telecom, Mobile, Converged Solutions, Managed Solutions and Redstone Technology.

The Board meets formally on eleven occasions each year and several times on a quorate basis.

There is a clear division of responsibility between the Chairman who is responsible for the running of the Board and the Chief Executive who has responsibility for the running of the business.

David Payne is the Senior Independent non-executive Director and served throughout the year in this position.

The Company’s Articles of Association require one third of the Directors to stand for re-election each year at the Annual General Meeting and that each Director should seek re-election every three years. In addition, Directors appointed by the Board during the year must seek re-appointment at the next Annual General Meeting.

All Directors have access to the advice and services of the Company Secretary who is responsible for ensuring that Board procedures and applicable rules and regulations are observed. The Board has a procedure whereby any Director may seek, through the office of the Company Secretary, independent professional advice, at the Company’s expense, in furtherance of his duties.

Formal agendas and reports are provided to the Board on a timely basis for Board and Committee meetings and the Chairman ensures that all Directors are properly briefed on issues to be discussed at Board meetings. Directors are able to obtain further advice or seek clarity on issues raised at the meetings from within the Company or from external sources.

All Directors are subject to appraisal by the Board. A formal system for the evaluation of Board members, as both Board members and where appropriate, as committee members, has been introduced. The non-executive Directors are responsible for the evaluation of the Chairman.  

Nominations Committee
The Nominations Committee consists of Alan Coppin (Chairman), David Payne and Oliver Vaughan.

For nominations, the Committee meets as and when necessary to consider the appointment of new executive and non-executive Directors. A process is in place for the appointment of new Directors involving the use of external consultants followed by meetings with both the Committee and subsequently with the Board as a whole, together with the Company Secretary. This ensures that the selection process is both formal and objective. The Committee has formal terms of reference (available on request from the Company Secretary) and meets at least once a year to review succession planning at both Board and senior management level across the Group.

Remuneration Committee
The Remuneration Committee consists of Oliver Vaughan (Chairman), Alan Coppin and David Payne.

The Committee makes recommendations to the Board, within agreed terms of reference, on the remuneration and other benefits, including bonuses and share options, of the executive Directors.

In considering the remuneration for the year, the Committee consulted with Martin Balaam (Chief Executive) about its proposals.

The Board sets the fees payable to the non-executive Directors.

The Committee has formal terms of reference (available on request from the Company Secretary).

Audit Committee
The Audit Committee consists of David Payne (Chairman), Alan Coppin, Tim Sherwood and Oliver Vaughan.

The Committee has formal terms of reference (available on request from the Company Secretary). These include the recommendation of the appointment, re-appointment and removal of the external auditors, the review of the scope and results of the interim review and external annual audit by the auditors, their cost effectiveness and independence and objectivity. The Committee also reviews the nature and extent of any non-audit services provided by the external auditors. In addition, the Committee reviews the effectiveness of internal controls, considers the need for an internal audit function and considers any major accounting issues and reports on such matters to the Board. The Committee reviews the integrity of the financial statements and formal announcements. A whistle blowing arrangement exists whereby matters can be confidentially reported to the Committee. The executive Directors are not members of the Committee but attend the meetings by invitation, as necessary, to facilitate its business.

The Chief Financial Officer monitors the level and nature of non-audit services and specific assignments are flagged for approval by the Audit Committee as appropriate. The Audit Committee reviews non-audit fees and considers implications for the objectivity and independence of the relationship with the external auditors. During the year ended 31 March 2007, PricewaterhouseCooper LLP was appointed as the Group external auditor.

The Board is satisfied that the members of the Audit Committee have recent and relevant financial experience necessary to meet the requirements of the Combined Code.

Internal Control
The Board has overall responsibility for the Group’s system of internal control and for reviewing its effectiveness. The implementation and maintenance of the risk management and internal control systems are the responsibility of the executive Directors and senior management. The internal control system is designed to manage risk rather than eliminate it and can therefore only provide reasonable and not absolute assurance against material mis-statement or loss.

In accordance with the guidance set out in the Turnbull Guidance on Internal Control, the Group has an ongoing process for identifying, evaluating and managing the significant risks faced by it. Accordingly, the Board is satisfied with the process in place for risk identification and management.
The Group is committed to maintaining high standards of business conduct and operates under an established internal control framework covering financial operational and compliance controls. This is achieved through an organisational structure that has clear reporting lines and delegated authorities. Whilst the organisational structure was changed during the year, the reporting lines and delegated authorities were clearly re-defined. The management and monitoring of risk and performance occurs at multiple levels throughout the Group. In addition, the Group maintains written processes to control expenditure, authorisation limits, purchase ordering, sales order intake, project management, inventories and assets.

The Board receives monthly financial information which includes key performance and risk indicators and the Chief Executive reports on significant changes in the business and the external marketplace to the extent they represent significant risk. There is an established budgetary system with an annual budget approved by the Board. The Board reviews the results monthly against budget, forecasts and prior year actuals together with other business measures.

The principal treasury related risks are documented and approved by the Board. Details of derivatives and financial instruments are set out in the financial statements.

The Board did not consider an internal audit function appropriate at the stage of the Group’s development. The Board will continue to keep the need for an internal audit function under review.

Relations with Shareholders and Investors
Copies of the Annual Report and Accounts and the Interim Statement are issued to all shareholders and copies are available on the Company’s website. The Group makes full use of its website to provide information to shareholders and other interested parties. The Company Secretary also deals with a number of written or e-mailed enquiries throughout the year.

Shareholders are given the opportunity to raise questions at the Annual General Meeting and the Directors are available both prior to and after the meeting for further discussion with shareholders.

The Chief Executive and the Chief Financial Officer meet with institutional investors and analysts after the announcement of the interim and year end results. Additional meetings are arranged during the year by the Company’s brokers, Investec Bank (UK) Limited, and the Company’s financial PR advisors, ICIS Limited. Feedback arising from these meetings is communicated to the Board and the Company Secretary also reports to the Board on feedback from shareholders.

David Payne, as Senior Independent non-executive Director, is available to shareholders if they wish to raise any matters that contact through the normal channels of Chairman, Chief Executive, Chief Financial Officer or Company Secretary has failed to resolve or for which such contact is inappropriate.

Going Concern      
The Directors are required by the Combined Code to be satisfied that the Group has adequate resources to continue in business for the foreseeable future. A review has been conducted and the Directors have concluded that such resources are available and that the going concern basis is justified in the preparation of the financial statements.

If you are unable to find the information that you require please contact Redstone’s financial public relations team at ICIS, on 0207 651 8688 or email fiona.conroy@icisnet.com 

Please be aware that ICIS and Redstone plc are not able to give investment advice of any kind. Any enquiries of this nature should be made to an FSA regulated stock broker or financial advisor.