The Board is accountable to the Company’s shareholders for good corporate governance and the Board is accountable to the Company’s shareholders and stakeholders for good corporate governance. The Group is moving towards full compliance with the 2018 QCA code.
Strategy and business model
Avingtrans’ strategy is explained fully within the Strategic and Business section in the Annual Report
Our core strategy is to buy and build engineering companies in niche markets where we see consolidation opportunities; a strategy we call Pinpoint-Invest-Exit (“PIE”).
The Board of Avingtrans plc comprises two Executive Directors and four Non-executive Directors. The Board is chaired by R S McDowell, and assisted by the Senior Independent Non-executive Director G K Thornton, who have primary responsibility for running the Board.
S McQuillan, has executive responsibilities for the remaining operations, results and strategic development of the Group. S M King is Chief Financial Officer and Company Secretary. The Board structure ensures that no individual or group dominates the decision making process.
The Non-executive Directors are considered to be independent of management and from any business relationship which could materially interfere with their independent judgement. The Senior Independent Non-executive Director is available to shareholders if they have concerns. The Board configuration reviews it has the skills and oversight capability in key markets on a regular basis, strengthening our ability to leverage shareholder value via the PIE strategy.
The Board meets regularly with no less than ten such meetings held in each calendar year. There is a formal schedule of matters specifically reserved to the Board for its decision to enable it to manage overall control of the Group’s affairs. All Directors have access to the services of the Company Secretary and may take independent professional advice at the Group’s expense in the furtherance of their duties. Management has an obligation to provide the Board with appropriate and timely information to enable it to discharge its duties. The Chairman ensures that all Directors are properly briefed on issues arising at Board meetings.
The Nominations Committee is responsible for monitoring and reviewing the membership and composition of the Board, including the decision to recommend to appoint or re-appoint a director.
The Company’s Articles of Association ensure Directors retire at the third Annual General Meeting after the Annual General Meeting at which they were elected and may, if eligible, offer themselves for re-election.
R S McDowell chairs the Nominations Committee, L J Thomas chairs the Audit Committee and G K Thornton chairs the Remuneration Committee. The Non-executive Directors and the Chairman are members of all the above committees.
The responsibilities of the Remuneration Committee, together with an explanation of how it applies the Directors’ remuneration principles of the UK Corporate Governance Code, are set out in the Report of the Directors on Remuneration in the Annual Report.
Relations with Stakeholders
The Board attaches a high importance to maintaining good relationships with shareholders, whether institutional or private ones and all stakeholders
The Board encourages all Directors to attend shareholder meetings and institutional presentations, where they are available for questions from shareholders. This enables the Board to develop an understanding of the views of shareholders.
The Board regards the Annual General Meeting as an opportunity to communicate directly with private investors and actively encourages participative dialogue.
The Company counts all proxy votes and except where a poll is called, it indicates the level of proxies lodged on each resolution and the balance for and against the resolution, after it has been dealt with on a show of hands.
A separate resolution on each substantially separate issue is proposed at the Annual General Meeting. The Chairman of the Board and each of the Chairmen of the Audit, Remuneration and Nomination Committees, are available to answer questions at the Annual General Meeting. All Directors are expected to attend the Annual General Meeting.
On the 14 October 2009 the Company amended its articles to include electronic communication with its members. The Annual Report and Financial Statements and Half Year Report are automatically uploaded to www.avingtrans.plc.uk. All members are given the option to receive a paper copy or an email copy of the Annual Report. Notice of the Annual General Meeting is sent to shareholders at least 20 days before the meeting.
The Group understand the importance of managing relations with all stakeholders and the impact that the business can have on employees, customers, suppliers, regulators, partners and other stakeholders. The impact is regularly reviewed to sustain improvements and to communicate effectively with all stakeholders which in turn support the long-term performance of the business.
Accountability and Audit
The respective responsibilities of Directors and Auditors are set out in the Annual Report. The Board has established an Audit Committee.
The Audit Committee’s primary responsibilities include monitoring of internal control, approving accounting policies, agreeing the treatment of major accounting issues, appointment and remuneration of the external auditors and reviewing the interim and financial statements before submission to the Board. It meets twice a year with the external auditors to review their findings. At these meetings the Non-executive Directors have the opportunity to discuss findings with the auditors in the absence of the Executive Directors.
To follow best practice and in accordance with Ethical Standard 1 issued by the Auditing Practice Board, the external auditors have discussions with the audit committee on the subject of auditor independence and have confirmed their independence in writing.
The Directors acknowledge that they are responsible for ensuring that the Group has in place a system of internal controls which is both effective and appropriate to the nature and size of the business.
The Board, through the Audit Committee, has reviewed the operation and effectiveness of the systems of internal control throughout the accounting year and the period to the date of approval of the financial statements, although it should be understood that such systems are designed to provide reasonable but not absolute assurance against material misstatement or loss. The Group’s system of controls include:
- A comprehensive budgeting system with annual budgets approved by the Directors. Monthly monitoring of actual results against budget and regular review of variances.
Close involvement of Directors who approve all significant transactions.
- Internal management rules which include financial and operating control procedures for all management of the Group.
- Identification and appraisal by the Board of the major risks affecting the business and the financial controls.
- Bank facilities and other treasury functions are monitored and policy changes approved by the Board.
The Board has considered the need for an internal audit function and concluded that this would not be appropriate at present due to the size of the Group.
The Group is exposed to risks and uncertainties that could have a material impact on its performance and financial position. Identifying, assessing and managing risk is the responsibility of the Board.
Our approach to risk is intended to protect the interests of our shareholders and other stakeholders whilst allowing the business to develop. Our risk appetite depends on the nature of an individual risk and it is considered in Board discussions and also as part of our risk review process in the Audit Committee. From time to time, we obtain advice from third party experts in a cost effective manner, to complement in-house knowledge.
The long-term success of the Group relies, in part, on managing the risks to our business. Whilst the Group has risk management policies and practices in place, which address and monitor risk, we seek to improve those practices each year. The Chief Financial Officer is responsible for risk management on behalf of the Board and the Audit Committee reviews the risk register on a regular basis. Ultimately our aim is to ensure that risk management is embedded within the core processes of our business units.
The Group uses a risk register to help coordinate its risk management process. The risk register identifies the key business risks and documents the policies and practices in place to mitigate those risks.
We classify the principal risks to the business into three groups, namely, strategic risk, operational risk and financial risk. The principal risks identified by the Directors under these groups are set out in Annual Report. The risks considered during the Group-wide risk management process cover a wider range of issues than the key risks.
Health, Safety and Environment (HSE)
The Group takes HSE matters and its related responsibilities very seriously.
As regular acquirers of businesses, we find different levels of capability and knowledge in different businesses. Often, a key investment need in smaller acquisitions is to spread HSE best practice from other Group businesses and bring local processes up to required standards. Larger acquisitions like HTG have well developed HSE practices and we seek to learn from these in other business units.
Health and Safety incident reporting has improved across the Group and incident trends have generally been improving over recent years. Near miss reporting and knowledge exchange is also positively encouraged, to facilitate learning and improvement. At Board level, Les Thomas has HSE oversight and he conducts inspections with local management as appropriate
The Group’s environmental policy is to ensure that we understand and effectively manage the actual and potential environmental impact of our activities. Our operations are conducted such that we comply with all legal requirements relating to the environment in all areas where we carry out our business.
It is paramount that the Group maintains the highest ethical and professional standards across all of its activities and that social responsibility should be embedded in operations and decision making.
We understand the importance of managing the impact that the business can have on employees, customers, suppliers and other stakeholders. The impact is regularly reviewed to sustain improvements, which in turn support the long-term performance of the business.
Our focus is to embed the management of these areas into our business operations, both managing risk and delivering opportunities that can have a positive influence on our business.
The Group places considerable value on the involvement of its employees
It has an ongoing programme to keep them informed on matters affecting them directly and on financial and broader economic factors affecting the Group. The Group regularly reviews its employment policies. The Group is committed to a global policy of equality, providing a working environment that maintains a culture of respect and reflects the diversity of our employees. We are committed to offering equal opportunities to all people regardless of their sex, nationality, ethnicity, language, age, status, sexual orientation, religion or disability.
We believe that employees should be able to work safely in a healthy workplace, without fear of any form of discrimination, bullying or harassment. We believe that the Group should demonstrate a fair gender mix across all levels of our business, whilst recognising that the demographics of precision engineering and manufacturing remain predominantly male, which is largely beyond our control.
The Group complies with the Bribery Act 2010.
We do not tolerate bribery, corruption or other unethical behaviour on the part of any of our businesses or business partners in any part of the world. Employee training has been completed in all areas of the business to ensure that the Act is complied with.