Corporate governance
The board has considered its policies and practices in relation to corporate governance in the light of the report on ‘Principles of Good Governance and Code of Best Practice’ of the Committee on Good Governance (the “Combined Code”) and the Guidance for Smaller Quoted Companies published by The City Group for Smaller Companies, CISCO.
The board supports the highest standards in corporate governance and endeavours to implement the principles of the Combined Code in such a manner as not to hinder the development of the group. This is perhaps harder in a small group than in the larger organisations with which the Combined Code is chiefly concerned.
The board has two executive and four non-executive directors. Lord Crickhowell, Malcolm Swallow and Malcolm Burne are regarded as being independent non-executive directors for the purposes of the Combined Code. Lord Crickhowell is the senior independent director. John Kearney is the chairman and chief executive. In the light of the size and activity level of the group, the board believes that combining these roles is entirely appropriate for the group at present. The audit committee comprises Lord Crickhowell, Danesh Varma and Malcolm Burne.
The group has complied with the detailed provisions of the Combined Code since the date of its implementation with the following exceptions:
· The board meets when required and not on a fixed schedule.
· There is no formal nomination committee for appointment of new directors.
·
The directors were not appointed for specific terms but are subject to
retirement from the
board by rotation at annual general meetings at intervals of no more than three years.
The board of directors is responsible for and annually reviews the group’s systems of internal control, financial and otherwise. Such systems provide reasonable and not absolute assurance of the safeguarding of assets, the maintenance of proper accounting records and the reliability of financial information. The key feature of the group's financial control system is that board members directly monitor all payments and transactions as well as budgets and annual accounts. The board does not wish to establish an internal audit function. The company’s strategy is determined by the whole board.
The company has entered into a controlling shareholder agreement with Juno Limited which is available for inspection at the registered office.
Except in the case of Ian Cuthbertson, there are no directors’ service contracts and no arrangements in force whereby the group is under an obligation to pay fees, salaries, pensions or any other remuneration to any of the directors. The remuneration committee comprises Lord Crickhowell and Malcolm Swallow
The board’s aim with regard to executive and non-executive directors’ remuneration is to provide a package which will attract, retain and motivate directors of the calibre required and be consistent with the group’s limited ability to pay directors in cash. Consequently share options form the major part of the directors’ remuneration.
All directors and employees are eligible to receive options. In determining the amount of options to be granted to each individual, the directors take into account the need for and value of his services, the amount of time he spends on the business of the group and any other remuneration receivable by him from the group.
Details of directors’ remuneration are as follows:
Name |
Salary |
Benefits in kind |
Other emoluments |
Pension contributions |
Total emoluments |
Executive directors |
£ |
£ |
£ |
£ |
£ |
John Kearney |
- |
- |
- |
- |
- |
Ian Cuthbertson |
24,425 |
- |
- |
930 |
25,355 |
Non-executive
directors |
|
|
|
|
|
Lord Crickhowell |
- |
- |
- |
- |
- |
Malcolm Burne |
- |
- |
- |
- |
- |
Malcolm Swallow |
- |
- |
- |
- |
- |
Danesh Varma |
- |
- |
- |
- |
- |
Totals |
24,425 |
- |
- |
930 |
25,355 |
Details of each share option held by directors are set out below. These holdings were unchanged in amount at 9 September 1999. There have been no options granted, exercised or lapsed during the year.
Name |
Options at 1 April 98 |
Options at 31 March 99 |
Exercise price |
Date from which exercisable |
Expiry date |
John Kearney |
*1,960,000 |
*1,960,000 |
5p |
23 October 96 |
22 October
2003 |
Lord Crickhowell |
384,000 |
384,000 |
5p |
30 November 95 |
30 November 1999 |
Lord Crickhowell |
*216,000 |
*216,000 |
5p |
23 October 96 |
22 October 2003 |
Malcolm Burne |
*500,000 |
*500,000 |
8.5p |
22 December 97 |
22 October 2003 |
Ian Cuthbertson |
400,000 |
400,000 |
5p |
30 November 95 |
30 November 2002 |
Ian Cuthbertson |
200,000 |
200,000 |
5p |
23 October 96 |
22 October 2006 |
Malcolm Swallow |
600,000 |
600,000 |
5p |
30 November 95 |
30 November 2002 |
Danesh Varma |
*300,000 |
*300,000 |
5p |
23 October 96 |
22 October 2003 |
There are performance criteria to be met in respect of share options marked with an asterisk, namely that the company’s share price performance must exceed that of the companies in the top quartile of the FTSE 100 index. There are no performance criteria to be met in #respect of other share options. Each option was granted at a cost of £1. No share options have been exercised during the year.
The market price of the ordinary shares at 31 March 1999 was 4.75 pence, the high for the year to 31 March 1999 was 9.25 pence and the low for the year was 3.25 pence.
The directors are responsible for preparing the annual report, including, as described above, the financial statements. Our responsibilities as independent auditors are established by statute, the Auditing Practices Board, the Listing Rules of the London Stock Exchange and by our profession’s ethical guidance.
We report to you our opinion as to whether the financial statements give a true and fair view and are properly prepared in accordance with the Companies Act. We also report to you if, in our opinion, the directors’ report is not consistent with the financial statements, if the company has not kept proper accounting records, if we have not received all the information and explanations we require for our audit, or if information specified by law or the Listing Rules regarding directors’ remuneration and transactions with the company and the group is not disclosed.
We review whether the statements on page 11 reflect the company’s compliance with those provisions of the Combined Code specified for our review by the London Stock Exchange, and we report if it does not. We are not required to form an opinion on the effectiveness of the company’s corporate governance procedures, or its internal controls.
We read the other information contained in the annual report, including the corporate governance statement, and consider whether it is consistent with the audited financial statements. We consider the implications for our report, if we become aware of any apparent misstatements or material inconsistencies with the financial statements.
We conducted our audit in accordance with Auditing Standards issued by the Auditing Practices Board. An audit includes examination, on a test basis, of evidence relevant to the amounts and disclosures in the financial statements. It also includes an assessment of the significant estimates and judgements made by the directors in the preparation of the financial statements and of whether the accounting policies are appropriate to the company’s circumstances consistently applied and adequately disclosed.
We planned and performed our audit so as to obtain all the information and explanations which we considered necessary, in order to provide us with sufficient evidence to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or other irregularity or error. In forming our opinion we also evaluated the overall presentation of information in the financial statements.
Fundamental uncertainties
In forming our opinion we have considered the adequacy of the disclosures in the financial statements concerning the basis of preparation and the recoverability of development and exploration expenditure.
The financial statements have been prepared on a going concern basis, the validity of which depends on:
· the group’s ability to continue its operations;
· the raising of new finance to develop the mine;
· the viability of the operation of the mine; and
· the ability of the group to trade profitably in the future.
The financial statements do not include any adjustments that would result, should the above conditions not be met. Details of the circumstances relating to this fundamental uncertainty are described in the directors’ report on pages 9 and 10 and in note 1 to the financial statements.
The financial statements disclose the directors’ assumption that the development and exploration expenditure, included in the balance sheet at £11,844,903 and in the consolidated balance sheet at £12,025,673 will be recovered by the operation of the mine. The validity of this assumption depends upon the viability of the operation of the mine, the ability of the group to raise the funding referred to above and the ability of the group to trade profitably in the future. Details of the circumstances relating to this fundamental uncertainty are described in note 7 to the financial statements.
Our opinion is not qualified in respect of the above fundamental uncertainties.
In our opinion the financial statements give a true and fair view of the state of the company’s and group’s affairs at 31 March 1999 and of its loss for the year then ended and have been properly prepared in accordance with the Companies Act 1985.