The Company has complied throughout the year with all of the provisions of the Combined Code on Corporate Governance issued in June 2008 (the "Combined Code"). The Board has noted and is aware of the recently introduced UK Corporate Governance Code (which will apply to the financial period of the Group ending 28 January 2012). The Board will seek to comply with the new code where it determines that to do so would be beneficial to the Company and its stakeholders.
The Company has applied the principles of Good Governance set out in section 1 of the Combined Code by complying with the Code of Best Practice. Further explanation of how the principles have been applied is set out below and, in connection with directors' remuneration, in the Directors' Remuneration Report. on pages 26 to 30 of the Annual Report.
The Board currently comprises a non-executive chairman, a chief executive, one other executive director and three non-executive directors. Biographies of these directors appear on page 25 of the Annual Report.
David Bernstein has held the position of non-executive director since 2003 and has been confirmed by the Board as the Company's senior independent director. All the non-executive directors are considered by the Board to be independent of management and free of any relationship that could materially interfere with the exercise of their independent judgement.
The Board meets regularly throughout the year. It considers all issues relating to the strategy, direction and future development of the Group. The Board has a schedule of matters reserved to it for decision that is regularly updated. The requirement for Board approval on these matters is understood and communicated widely throughout the Group. The non-executive directors meet with the chairman separately during the year. In addition the non-executive directors meet without the chairman present to appraise the chairman's performance.
Operational decision making, operational performance and the formulation of strategic proposals to the Board are controlled by the Executive Committee. The Executive Committee meets regularly throughout the year.
To enable the Board to function effectively and the directors to discharge their responsibilities, full and timely access is provided to all relevant information. There is an agreed procedure for directors to take independent professional advice, if necessary, at the Company's expense. This is in addition to the access every director has to the Company Secretary.
On 15 June 2010 the Board appointed Anne Sheinfield as an independent non-executive director. Anne is a commercial lawyer with 20 years' post qualification experience in the theatre, TV and music areas of entertainment.
The table below details the number of Board and committee meetings held during the 52 weeks ended 29 January 2011 and the attendance record of each director.
|Number of meetings held||9||3||1||1|
|David A Bernstein||8||3||1||1|
|Raymond S Kelvin||9||-||-||-|
|Lindsay D Page||9||-||-||-|
Anne Sheinfield was appointed as a non-executive director on 15 June 2010.
The Audit Committee (the "Committee") is chaired by Ronald Stewart and its other members are Robert Breare and David Bernstein, all of whom are independent non-executive Directors and served throughout the course of the year. The Committee met three times during the year with full attendance.
The Committee meets to review and approve the interim and annual financial statements, before submission for approval by the Board and consider any matters raised by the auditors. The committee will consider significant financial reporting judgements contained in the financial statements, including accounting policies and compliance, areas of management judgements and estimates and the effectiveness of financial reporting and controls. The Board considers all members to have relevant financial experience.
The Committee oversees the Company's relationship with the external auditors and makes recommendations to the Board in relation to their appointment, re-appointment and removal and approves their remuneration and terms of engagement. The Committee also reviews the independence of the external auditors and the Company's policy on the supply of non-audit services by the external auditors. The Company has adopted a formal policy on the on the supply of non-audit services by the external auditor. They may only provide such services provided that such advice does not conflict with their statutory responsibilities and ethical guidance. The Committee Chairman's pre-approval is required before the Company uses non-audit services that exceed financial limits set out by that policy and the aggregate spend is also reviewed by the Committee on an annual basis. Details of the auditor's remuneration for audit work and non-audit fees are disclosed in note 3 to the Financial Statements.
The Committee is responsible for the review of the Company's procedures for responding to the allegations of whistleblowers and the arrangements by which staff may, in confidence, raise concerns about possible financial reporting irregularities.
The Committee is also responsible for reviewing the internal audit work plan, monitoring the delivery of that plan during the year and reviewing the effectiveness of the internal audit activities. It also considers the work of the Risk Committee, whose main role is to review, on behalf of the Board, the key risks inherent in the business and the system of control necessary to manage such risks.
The terms of reference for the Committee are available on request from the Company Secretary.
The Nomination Committee (the "Committee") is chaired by Robert Breare and its other members are David Bernstein and Ronald Stewart, all of whom are independent non-executive Directors and served throughout the course of the year.
The Committee is responsible for nominating candidates for appointment to the Board and met once during the year with full attendance, resulting in the appointment of Anne Sheinfield as an independent non-executive director on 15 June 2010.
All non-executive directors are advised of the time commitment considered necessary to enable them to fulfil their responsibilities prior to appointment.
The terms of reference for the Committee are available on request from the Company Secretary.
Newly appointed directors are given training appropriate to the level of their previous experience. Non-executive directors meet regularly with members of the executive committee and other personnel within the organisation. In addition, site visits ensure that the non-executive directors gain first hand experience of developments within the Group.
Any director appointed during the year is required, under the provisions of the Company's Articles of Association, to retire and seek re-election by the shareholders at the next Annual General Meeting.
The Company's Articles of Association require one third of the Directors for the time being to retire, and each Director to retire from office at least once every three years. A retiring Director is eligible for re-election.
The Group attaches considerable importance to the effectiveness of its communication with its shareholders. The full report and accounts are sent to all shareholders and further copies are distributed to others with potential interest in the Group's performance.
The directors seek to build on a mutual understanding of objectives between the Company and its institutional shareholders by making general presentations after the interim and preliminary results; meeting shareholders to discuss long-term issues and gather feedback; and communicating regularly throughout the year. All shareholders have access to these presentations, as well as to the annual report and accounts and to other information about the Company, through the website at www.tedbaker.com. They may also attend the Company's Annual General Meeting at which they have the opportunity to ask questions.
Non-executive directors are kept informed of the views of shareholders by the executive directors and are provided with independent feedback from investor meetings.
Following approval at the 2008 Annual General Meeting, the Company's Articles of Association were amended to take account of certain provisions of the Companies Act 2006 relating to directors' conflicts of interest. These provisions permit the Board to consider, and if thought fit, to authorise situations where a director has an interest that conflicts, or may possibly conflict, with the interests of the Company. The Board has adopted procedures for the approval of such conflicts. The Board's powers to authorise conflicts are operating effectively and the procedures are being followed.
The Board is ultimately responsible for the Group's system of internal control and for reviewing its effectiveness. However, such a system is designed to manage rather than eliminate the risk of failure to achieve business objectives, and can provide only reasonable and not absolute assurance against material misstatement or loss.
Following publication of guidance for directors on internal control "Internal Control: Guidance for Directors on the Combined Code" (the "Turnbull guidance"), the Board confirms that there is an ongoing process for identifying, evaluating and managing the significant risks faced by the Group, that has been in place for the year under review and up to the date of approval of the annual report and accounts, and that this process is regularly reviewed by the Board and accords with the Turnbull guidance.
The Board has reviewed the effectiveness of the system of internal control. In particular, it has reviewed and updated the process for identifying and evaluating the significant risks affecting the business and the policies and procedures by which these risks are managed. Management is responsible for the identification and evaluation of significant risks applicable to their areas of the business together with the design and operation of suitable internal controls. These risks are assessed on a continual basis and may be associated with a variety of internal or external sources including control breakdowns, disruption in information systems, competition, natural catastrophe and regulatory requirements.
The Group has an independent internal audit function whose findings are regularly reviewed by the executive committee and the Board. The Audit Committee monitors and reviews the effectiveness of the internal audit activities.
Management reports regularly on its review of risks and how they are managed to the Risk Committee, whose main role is to review, on behalf of the Board, the key risks inherent in the business and the system of control necessary to manage such risks, and to present their findings to the Board.
The Chief Executive reports to the Board on behalf of the Executive Committee on significant changes in the business and the external environment which affects significant risks. The Finance Director provides the Board with monthly financial information which includes key performance indicators. Where areas for improvement in the system are identified, the Board considers the recommendations made by the Risk Committee and the Audit Committee.
The Risk Committee includes the Finance Director and various heads of department. It reviews, on a twice yearly basis, the risk management and control process and considers:
- the authority, resources and co-ordination of those involved in the identification, assessment and management of significant risks faced by the Group;
- the response to the significant risks which have been identified by management and others;
- the maintenance of a control environment directed towards the proper management of risk; and the annual reporting procedures.
Additionally, the Risk Committee keeps abreast of all changes made to the systems and follows up on areas that require improvement. It reports to the Board at twice yearly intervals or more frequently should the need arise.