Annual Report and Accounts 2006 - Optos

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Corporate Governance continued Barry Rose joined the Company as non-executive Director on 21 December 2005. Dr David Guyer joined the Company as non-executive Director on 5 May 2006. Michael Rutterford and Ann Gloag resigned as non-executive Directors on 21 December 2005. David Cairns resigned as an executive Director on 21 December 2005. Mr Cairns retains his position as Chief Technology Officer of the Company. Barry Sealey resigned as non-executive Chairman on 31 December 2005 and as a non-executive Director on 27 January 2006. Stephane Sallmard resigned as an executive Director on 30 September 2006. Mr Sallmard concurrently resigned his position as Chief Executive Officer. Thomas Butts joined the Company and the Board as Chief Executive Officer on 18 December 2006. Mr Butts comes to Optos with a proven ability in leading top-performing teams and driving shareholder value. He has both an exceptionally strong grasp and understanding of the global healthcare marketplace, and extensive operating experience across North America and Europe. Role of Non-Executive Directors Each of the Company’s non-executive Directors has a significant input into the business. Each contributes to and constructively challenges the development of the Company’s strategy, scrutinises the performance of management, is required to be satisfied that the financial information is accurate and that the policies and procedures governing risk management are robust and effective. The non-executive Directors have the responsibility of ensuring that the actions proposed by the executive Directors are critically probed and examined, and discussed in detail. The Company’s non-executive Directors have exposure to and are available to major shareholders. The independent contributions that the non-executive Directors bring to the Board are considered by the Company to be a major strength. The Board considers that all of the non-executive Directors are independent of management and, with the exception of two of the four non-executive Directors excluding the Chairman, free from any business or other relationship which could materially interfere with the exercise of independent judgement within the meaning of the Combined Code. Attendance at Meetings Below is a table showing the number of Board and committee meetings held from 15 February 2006, which represents the date of admission to the Official List and to trading on the main market of the London Stock Exchange, to the financial year ended 30 September 2006. Full Audit Remuneration Nomination Members Board Committee Committee Committee Meetings 4 2 3 1 Douglas Anderson 4 – – – Anne Glover 4 2 3 1 Dr David Guyer (3) 3 – – 1 Dr John Padfield (1) 4 2 3 1 Patrick Paul 4 2 3 1 Barry Rose (2) 4 2 3 1 Ian Stevens 4 – – – Allan Watson 4 – – – Stephane Sallmard (4) 4 – – – (1) Joined the Board on 17 November 2005 and appointed Chairman with effect from 1 January 2006. (2) Joined the Board on 21 December 2005. (3) Joined the Board on 5 May 2006. (4) Resigned from the Board on 30 September 2006. Executive Directors are in regular contact with one another and participate in meetings as part of the Company’s senior management team in addition to any Board meetings. The non-executive Directors met as a group on two occasions during the year without the presence of any of the executive Directors. They did not meet during the year without the Chairman. The Board receives a regular flow of information to enable it to discharge its duties effectively, including monthly management accounts detailing current and forecast trading results and treasury position. It also receives an analysis of the shareholder register on a monthly basis. Board papers are generally distributed not less than seven days in advance to allow the Directors to prepare fully for meetings. Minutes of Board meetings are distributed as soon as practically possible following the meeting. Minutes of committee meetings are circulated to all Directors. The Board is kept informed of developments within the Company through regular updates and presentations by the members of the senior management team covering their respective departments. In those instances when a Director has been unable to attend Board or committee meetings, his or her comments on the papers to be considered at that meeting have been relayed in advance to the relevant Chairman. Performance Evaluation The Combined Code provides that the Board should undertake a formal and rigorous annual evaluation of its own performance and that of its committees and individual Directors. Individual evaluation should aim to show whether each Director continues to contribute effectively and to demonstrate commitment to the role, including commitment of time for Board and committee meetings and any other duties. The Chairman is aware that it is his responsibility to select an effective process to assess the performance of the Board, its committees and individual members and to report and act on its outcome. The Board did not carry out a performance evaluation at the end of the 2006 financial year. The Chairman considered that the changes to strengthen the balance and structure of the Board leading up to and following the Company’s initial public offering did not provide sufficient time or constitute sufficient basis to conduct a fair and accurate performance evaluation of the full Board, its committees or individual members. The Chairman will initiate a performance evaluation process for the 2007 financial year, which will be used constructively as a mechanism to improve the effectiveness of the Board and the committees. The performance evaluation will aim to maximise strengths and tackle apparent weaknesses. The results of the full evaluation of the Board and the committees will be shared with the Board as a whole, but the results of individual assessments will remain confidential between the Chairman and the Director concerned. Accountability and Audit While all Directors have a duty to act in the interests of the Company, the audit committee has a particular role, acting independently from the executive, to ensure that the interests of shareholders are properly protected in relation to financial reporting and internal control. Internal Control The Board is responsible for the Company’s system of internal control and for reviewing its effectiveness. Its system is designed to manage rather than eliminate the risk of failure relative to achieving business objectives and can only provide reasonable and not absolute assurance against material misstatement or loss. Monitoring of internal control has been delegated by the Board to the Chief Executive Officer. The audit committee determined that, due to the current size of the Group, an internal audit function was not required for the year ended 30 September 2006. This will be reviewed annually by the audit committee. The audit committee’s role in this area is confined to a high-level review of the arrangements for internal financial and overall business risk management control. The Board’s agenda includes a regular item for consideration of risk and control. The Board receives regular reports thereon from the senior management team and the audit committee. 22 Optos plc Annual Report & Accounts 2006
Corporate Governance continued Control An established and appropriate control environment has been established by the Board through the following systems and procedures: • manuals of policies and procedures applicable to all material aspects of the business and organisation • budgetary control system which includes monitoring actual performance against predetermined plans; and, • appointment of suitably qualified and experienced staff to fulfil their allotted responsibilities. The Board confirms that it has reviewed and satisfied itself with the effectiveness of the systems and procedures of material controls for the period under review. Risk Management The above procedures are designed to serve as ongoing processes for identifying, evaluating and managing the significant risks faced by the Company. A Group Risk and Control Framework is prepared, taking into account the significant risks identified by the individual units together with other Group-wide risks. The Group Risk and Control Framework has been considered and adopted by the Board, which holds ultimate responsibility for the management of risk. The members of the senior management team assess the effectiveness of the internal control environment and procedures within their respective units and report to the Chief Executive Officer. They are responsible for the operation of key internal controls. The process covers the areas of most significant risk to the Company. External audit risk assessment and planning is in place. The audit committee considers and determines relevant action in respect of any control issues raised by either the Chief Executive Officer or the external auditors. The Board has monitored the effectiveness of the Group’s system of internal control during the year. In particular, the Board has reviewed and regularly monitored progress against the Company’s Risk and Control Framework. Communication with Shareholders The Company has historically maintained an open and regular policy of dialogue with shareholders to ensure that the objectives of the Company are communicated and understood. Following the initial public offering, the Chief Executive Officer and Chief Financial Officer at a minimum make twice yearly presentations to shareholders following the Company’s interim and preliminary results announcements. This is followed by road-show presentations in one-on-one investor and shareholder meetings where issues of concern and business progress and performance can be addressed and discussed. During the last financial year, the Chief Executive Officer and Chief Financial Officer and other members of the senior management team held a number of additional one-on-one and group investor and shareholder meetings and presented at a number of investor conferences. After these meetings the views of the investors and shareholders are reported to and discussed by the rest of the Board. During the year the Company issued trading updates in advance of its interim and preliminary results announcements. The Company is aware of the provisions set out in the proposed EU Transparency Directive and will meet these financial reporting requirements as set out in the new legislation. The Board receives regular reports on the investor and shareholder meetings including all relevant feedback. The Chairman is available to shareholders throughout the year. The Company also has named its director of communications as investor and shareholder contact who is available to shareholders throughout the year. The Company enables shareholders and the general public to access press releases and general information on the Company on its http://www.optos.com web site. Going Concern The Directors’, having reviewed the Group’s and the Company’s budgets for the next financial year and other longer-term plans, are satisfied that the Group and the Company have adequate resources to continue in operational existence for the foreseeable future and therefore it is appropriate to continue to adopt the going concern basis in preparing the accounts. The Board considers it has reviewed and satisfied itself of the efficacy of the Group’s internal controls, which the Board has determined as being suitable and satisfactory for a Company of its size. The Board can therefore confirm that there is an ongoing process for identifying, evaluating and managing the Group’s significant risks, that such process has been in place for the year ended 30 September 2006 and up to the date of the approval of the Annual Report and Accounts, that it is regularly reviewed by the Board and that it accords with the internal control guidance for Directors relative to the Combined Code. Optos plc Annual Report & Accounts 2006 23
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Page 3 and 4: Highlights Year ended Year ended
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Optos plc Annual Report & Accounts
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