The board is committed to the highest standards of corporate governance
throughout the group. The board is accountable to the company’s shareholders
for good governance and this statement describes how the Principles of
Good Governance and the provisions of the Code of Best Practice, identified
in the London Stock Exchange’s Combined Code, issued on 25 June 1998,
are applied by the group.
Nycomed Amersham strives to maintain a good dialogue with shareholders
and regular meetings are held with institutional shareholders throughout
the year to discuss the progress of the group, future growth prospects
and strategy. Other channels of communication include company presentations,
seminars, press releases and interim and annual reports. There is a company
website www.nycomed-amersham.com
which provides information on the company for all shareholders and the
general public.
The remuneration policy and the terms and conditions of service of the
Executive Directors appear in the Remuneration report on page 19. The
Executive Directors are employed on rolling contracts subject to two years’
notice when given by the company or one year’s notice if given by the
Director, except for Mr R E Long, whose contract is subject to three months’
notice on either side.
The board comprises five Executive Directors, seven Non-executive Directors
and an employee representative Non-executive Director. Throughout the
financial year the offices of Chairman and Chief Executive have been held
separately. The Chairman, Mr R D Lapthorne, is a Non-executive Director.
During the year Mr R E Long was appointed Vice Chairman of the board.
The Deputy Chairman, Mr J Fr Odfjell has been identified as the senior
independent Non-executive Director.
Biographies of the board members appear on page 14 which also show the
membership of the Nomination, Remuneration and Audit Committees. These
indicate the high level and range of business experience amongst board
members which is essential to manage effectively a business of the size
and complexity of the Nycomed Amersham group.
Apart from the employee representative and Professor Sir Keith Peters
who serves on our Scientific Advisory Board, all of the Non-executive
Directors were independent of management and free from any business or
other relationship which could materially interfere with the exercise
of independent judgment. All Directors have access to the Company Secretary.
The board meets at least seven times a year – and more frequently when
business needs require. The board has a schedule of matters reserved to
it for decision and the requirement for board approval on these matters
is communicated widely throughout the group. To enable the board to function
effectively and allow Directors to discharge their responsibilities, full
and timely access is given to all relevant information.
Newly appointed Directors are given training appropriate to the level
of their previous experience. All are apprised of their roles and duties
as Directors of a public company.
The board is responsible for the overall direction, strategy, performance
and management of the group. Authority for implementing the board’s policies
is delegated to the Chief Executive within certain limits authorised by
the board.
The Nomination Committee meets at least twice a year to review the composition
of, and succession to, the board and make recommendations to the board
on the appointment of Non-executive and Executive Directors. The Committee
comprises the six independent Non-executive Directors and is chaired by
Mr J Fr Odfjell, the Deputy Chairman of the board.
Members of the Committee abstain when matters affecting their own appointments
are discussed. The Committee has available to it the services of external
advisers as it deems necessary and at the company’s expense. The Chief
Executive attends the meetings of the Nomination Committee.
The Remuneration Committee is responsible for determining the remuneration
policy and the terms and conditions of service of the Executive Directors.
The Remuneration Committee also determines group policy relating to share
option schemes and the level at which options are granted to senior executives
within the group. The Committee has available to it the services of independent
advisors. The Committee comprises the six independent Non-executive Directors
including the Chairman and Deputy Chairman of the board and is chaired
by Mr R D Lapthorne, the Chairman of the board. The principal terms of
reference of the Remuneration Committee appear in the Remuneration Report
on page 19. The Chief Executive and the Human Resources Director attend
the meetings of the Committee to discuss the performance of the other
Executive Directors and to make proposals as necessary but they are not
present when their own remuneration is being considered.
The Audit Committee monitors and reviews the internal controls and accounts
of the group. It also considers the group’s compliance with the Combined
Code. The Committee is chaired by Mr D H Brydon and comprises three further
independent Non-executive Directors: Mr R D Lapthorne, Mr J Fr Odfjell,
and Mr J F Rejeange. The Committee can request the external auditors,
who are normally present, Executive Directors and other officers of the
group to attend its meetings.
Any Director appointed during the year is required, under the provisions
of the company’s Articles of Association, to retire and seek re-appointment
by shareholders at the next Annual General Meeting. The Articles also
require that one third of the Directors retire by rotation each year and
seek re-appointment at the Annual General Meeting. The Directors required
to retire will be those in office longest since their previous appointment
or re-appointment and this will usually mean that each Director retires
at least every three years. The board has resolved that each Director
will retire at least every three years, even if this is not strictly required
by the application of the provisions of the Articles of Association.
Non-executive Directors are appointed for a term of three years, renewable
annually by mutual agreement thereafter.
In addition to the Principles of Good Governance, the Combined Code also
contains a Code of Best Practice detailing some 45 provisions. The board
has carried out a full internal review of compliance with its provisions.
Except that Executive Directors were employed on service contracts subject
to two years’ notice rather than one year, the board confirms that the
company has complied with these provisions throughout the financial year.
The Remuneration Committee’s policy on this is explained more fully in
the Remuneration Report on page 19.
The board is ultimately responsible for the group’s system of internal
controls 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 the Turnbull Committee’s guidance for Directors
Internal Control: Guidance for Directors on the Combined Code, the board
confirms that there is an ongoing process for identifying, evaluating
and managing the significant risks faced by the group, which 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 guidance.
The board has reviewed the effectiveness of the group’s system of internal
controls, key elements of which are set out below:
The group is committed to the highest standards of business conduct and
seeks to maintain these standards across all of its operations throughout
the world. The group has in place group finance policies and employee
procedures.
The group has an appropriate organisational structure for planning,
executing, controlling and monitoring business operations in order to
achieve group objectives. Lines of responsibility and delegations of authority
are documented.
Group management are responsible for the identification and evaluation
of key risks applicable to their areas of business. 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.
Group businesses participate in periodic strategic reviews which include
consideration of long term financial projections and the evaluation of
business alternatives. Operating units prepare annual budgets and five-year
strategic plans; performance against plan is actively monitored at the
board and Business unit level supported by regular forecasts. Forecasts
and results are consolidated and presented to the board on a regular basis.
The group and its operating units have implemented control procedures
designed to ensure complete and accurate accounting for financial transactions
and to limit the potential exposure to loss of assets or fraud. Measures
taken include physical controls, segregation of duties, reviews by management
and internal audit, and external audit to the extent necessary to arrive
at their audit opinion.
A process of control self-assessment and hierarchical reporting has been
established which provides for a documented and auditable trail of accountability.
These procedures are relevant across group operations and provide for
successive assurances to be given at increasingly higher levels of management
and, finally, to the board. These documents are reviewed by the internal
auditors for completeness and accuracy. Planned corrective actions are
independently monitored for timely completion.
There are clear and consistent procedures in place for monitoring the
system of internal controls. The Audit Committee meets at least three
times a year and, within its remit, reviews the effectiveness of the group’s
system of internal controls. The committee receives reports from the group
internal audit function and management.
After making appropriate enquiries the Directors have reasonable expectation
that the company and the group have adequate resources to continue in
operational existence for the foreseeable future, and that it is therefore
appropriate to adopt the going concern basis in preparing the financial
statements. In forming this view the Directors have reviewed the Annual
Profit Plan for the year ending 31 December 2001 and strategic plan projections
for subsequent years. The Directors have satisfied themselves that the
group is in a sound financial position and that sufficient borrowing facilities
will be available to meet the group’s foreseeable cash requirements.
On behalf of the board
Mr R D Lapthorne
Chairman
9 March 2001
|
