Safety leadership team ('SLT')
Group human resources ('GHR') committee
Structure of the board
The Company is controlled through the board of directors, which consists of the chairman, four other non-executive directors and four executive directors. Four of these directors have been directors of the Company for less than five years. The membership of the board is stated in our board of directors.
Alan Dunsmore has board-level responsibility for corporate and social responsibility and employment matters; Ian Cochrane has board-level responsibility for health and safety matters.
Role of the chairman, chief executive officer and senior independent director
The board has agreed a clear division of responsibility between the chairman and chief executive officer and their roles and responsibilities are clearly established and set out in writing.
The chairman, John Dodds, is mainly responsible for managing the business of the board, evaluating its performance and setting the agenda for board meetings to ensure that adequate time is allocated to the discussion of all agenda items, facilitating the effective contribution of all directors. The chairman acts as an ambassador for the Company and provides effective communication between the board and its shareholders.
|Chief executive officer|
As the senior executive of the Company, Alan Dunsmore is responsible to the chairman and the board for directing and prioritising the profitable operation and development of the Group. The chief executive officer is responsible for the day-to-day management of the operational activities of the Group, assessing and implementing strategy and implementing the board's decisions.
The chief executive officer chairs an executive committee consisting of the members indicated in our executive committee. This committee assists the main board by focusing on strategic and operational performance matters relating to the business and meets formally on a monthly basis. He also, together with the Group finance director and chief operating officer, holds quarterly meetings with each of the three business unit boards to review all operational issues and meets with an executive risk committee comprising himself, the Group finance director, chief operating officer and the Group legal director on a weekly basis to discuss any key issues affecting the business.
In addition, he chairs a safety leadership team ('SLT') and a Group human resources ('GHR') meeting once a month, both of which consist of certain other members of the executive management team and business unit managing directors.
|Senior independent director|
Kevin Whiteman is the senior independent non-executive director whose role is to provide a sounding board for the chairman and to serve as an alternative source of advice to the chairman for the other non-executive directors. The senior independent director is available to shareholders if they request a meeting or have concerns which contact through the normal channels has failed to resolve, or where such contact is inappropriate. He also leads the performance review of the chairman and the board, taking into account the views of the executive directors.
Between the start of the financial year and 31 January 2018, as a result of the temporary leave of absence of the former chief executive officer Ian Lawson on grounds of physical ill health, John Dodds acted as executive chairman on a temporary basis, and the chief executive officer and Group finance director performed those roles on an acting basis.
All the non-executive directors are considered by the board to be independent in character and judgement and no cross-directorships exist between any of the directors.
At no time during the year ended 31 March 2018 did any director hold a material interest, directly or indirectly, in any contract of significance with the Company or any subsidiary undertaking other than the executive directors in relation to their service agreements. The directors have put in place procedures to ensure the board collectively, and the directors individually, comply with the disclosure requirements on conflicts of interest set out in the Companies Act 2006. The interests of the directors in the share capital of the Company and its subsidiary undertakings and their interests under the performance share plan and other share schemes are set out in the remuneration report. Save as disclosed in the directors' remuneration report, none of the directors, or any person connected with them, has any interest in the share or loan capital of the Company or any of its subsidiaries.
Directors to stand for election
The Company's articles of association require the directors to offer themselves for re-election at least once every three years. Notwithstanding this, and in accordance with the recommendations of the Code, the Company's policy is that all the directors retire at each AGM and may offer themselves for re-election by shareholders. Accordingly, all of the existing directors whose biographies are set out in our board of directors will be standing for re-election at the 2018 AGM.
The board is satisfied that the performance of all of the non-executive directors continues to be effective and that they continue to show commitment to their respective roles. Non-executive directors are not appointed for a fixed term. The terms and conditions of appointment of non-executive directors will be available for inspection at the AGM.
Operation of the board
The board is responsible for providing effective leadership to the Group to create and deliver long-term shareholder value. This includes setting the strategic direction of the Group, reviewing all significant aspects of the Group's activities, overseeing the executive management and reviewing the overall system of internal control and risk management. The board has a formal schedule of matters reserved for it. It is responsible for overall Group strategy, acquisition and divestment policy, approval of major capital expenditure projects and consideration of significant financing matters. It monitors the exposure to key business risks including environmental and health and safety issues. It reviews the Group's strategic direction, codes of conduct, annual budgets, progress towards achievement of those budgets, significant capital expenditure programmes and the annual and half year results.
The board also considers employee issues and key appointments. It also ensures that all directors receive appropriate training on appointment and then subsequently as appropriate. Other specific responsibilities are delegated to the board's committees described below.
The chairman, together with the Company secretary, ensures that the directors receive clear information on all relevant matters in a timely manner. Board papers are circulated sufficiently in advance of meetings for them to be thoroughly digested to ensure clarity of informed debate. The board papers contain the chief executive officer's, the Group finance director's and chief operating officer's written reports, high-level papers on each business area, key metrics and specific papers relating to agenda items. The board papers are accompanied by a management information pack containing detailed financial and other supporting information. The board receives occasional ad hoc papers on matters of particular relevance or importance. The board also receives presentations from various business units and members of the executive committee.
The directors' attendance record at the scheduled board meetings and board committee meetings for the year ended 31 March 2018 is shown in the table below.
|Board||Audit committee||Remuneration committee||Nominations committee|
|Total number of meetings||11||3||5||4|
* Ian Lawson was unable to attend any board meeting due to his continued ill health and he resigned as a director on 31 January 2018.
† Adam Semple attended all board meetings during the period but was not appointed as a director of the Company until 1 February 2018.
** During his tenure as executive chairman (1 April 2017 to 31 January 2018), John Dodds attended nine board meetings (the remaining two meetings he attended as non-executive chairman). In addition, he attended all board committee meetings during the year but those which took place during his tenure as executive chairman were by invitation only.
Board meetings are held primarily at the Group's head office in Dalton, North Yorkshire, but also at various locations in London, and at the offices of the Group's other operating subsidiaries and, from time to time, at clients' sites to provide non-executive directors the opportunity to increase their knowledge and understanding of the Group's operations.
Board evaluation process
All members of the Board complete a questionnaire
Senior independent director documents key points
Discussion between senior independent director and chairman
Report given to the board and actions determined
The board considers that the balance of relevant experience amongst the various board members enables the board to exercise effective leadership and control of the Group. It also ensures that the decision-making process cannot be dominated by any individual or small group of individuals.
The Code attaches importance to boards having processes for individual and collective performance evaluation. The performance of individual directors is evaluated annually in conjunction with the remuneration review. The chairman meets with the non-executive directors at least annually to review their performance.
During the year, the board asked Kevin Whiteman, the senior independent director, to undertake a formal evaluation of board effectiveness. This process was undertaken using a questionnaire which was completed by all members of the board and focused on the performance of the chairman and overall cohesiveness of the board. The key points arising from the evaluation were documented and discussed with the chairman.
Consideration was given to undertaking an externally facilitated review but it was decided that such an approach would not be beneficial in the current year. A further evaluation of the board will be undertaken during the year ending 31 March 2019.
Appropriate training and briefing is provided to all directors on appointment to the board, taking into account their individual qualifications and experience. This is supplemented with visits to the Group's operations and meetings with senior business unit management to develop each director's understanding of the business.
Training and updating in relation to the business of the Group and the legal and regulatory responsibilities of directors was provided throughout the year by a variety of means to board members including presentations by executives, visits to business operations and circulation of briefing materials. Individual directors are also expected to take responsibility for identifying their training needs and to ensure they are adequately informed about the Group and their responsibilities as a director. Particular attention was paid to the new corporate criminal offence of failing to prevent the facilitation of tax evasion and to the new General Data Protection Regulation ('GDPR'), and ensuring all directors were aware of their implications and their duties.
Non-executive directors are continually updated on the Group's business, its markets, social responsibility matters, changes to the legal and governance environment and other changes impacting the Group. During the year, the directors received updates on various best practice, regulatory and legislative developments.
All directors have access to the advice and services of the Group legal director and Company secretary who ensures that board processes are followed and good corporate governance standards are maintained. Any director who considers it necessary or appropriate may take independent professional advice in furtherance of their duties at the Company's expense. No directors sought such advice in the year.
The board is confident that all its members have the knowledge, ability and experience to perform the functions required of a director of a listed company.
The board has established three standing committees, all of which operate within defined terms of reference, which are available from the Company secretary by request, published on the website and will be available for inspection at the AGM.
The committees established are the audit committee, the remuneration committee and the nominations committee. Trading companies are managed by separate boards of directors. Any matters of a material nature concerning the trading companies are reported to the board on a monthly basis.
Details of the work of the audit, nominations, and remuneration committees can be found in the respective reports.
Board site visit
In May 2018, the board visited the Indian joint venture, JSSL. The board members visited the company's offices in Mumbai where they had the opportunity to meet key members of the India management team. Whilst in Mumbai, Derek Randall, JSSL managing director, presented an overview of the business and its strategic plans. The board also visited the main production facility in Bellary, where they enjoyed a factory tour and also received a wide range of presentations covering subjects such as operational improvements, safety, HR and finance. Whilst in India, the board also took the opportunity to visit a large construction site in Dolvi, where work is being undertaken for our joint venture partner, JSW Steel.
Board strategy review
In addition to regular scheduled board and board committee meetings, the board undertakes an annual strategy away day each year. This is structured to follow a scheduled board meeting. The agenda for the strategy away day is agreed in advance, including specific strategic issues which have been raised at previous board meetings or requested by the board.
Board meetings for the current year
During the financial year, the board discussed and implemented the following key actions:
- Review of the HSE sentencing guidelines and business continuity and crisis management arrangements
- Strategic review undertaken and strategic plan updated
- Reviewed the statement of compliance in accordance with the Modern Slavery Act
- Presentation by the Group SHE director on current health and safety performance and strategy
- Board visit to Sherburn factory and business update presentation by Severfield (Design & Build)'s senior management team
- Approved proposal to make a further India equity investment to repay joint venture term debt
- Reviewed and approved annual report and accounts
- Approved final dividend
- Assessed going concern and longer term viability of the Group
- Board site tour at 22 Bishopsgate
- Presentation by Group HR director on HR strategy
- Reviewed feedback on year-end results
- Reviewed IT director's paper on current and planned cybersecurity risk mitigation plans
September 2017 (two meetings)
- Board visit to the Ballinamallard factory and business update presentation by Severfield (NI)'s senior management team
- Approved the corporate criminal offence risk mitigation plan
- Reviewed annual statements of compliance from directors and approved conflicts of interest
- Adopted new PSP rules after AGM shareholder approval
- Approved appointment of new financial PR advisers (Camarco)
November 2017 (two meetings)
- Board site tour at Tottenham Hotspur
- Reviewed and approved half year results
- Approved interim dividend
- Presentation by the Group SHE director on current health and safety performance
- Board visit to Dalton factory and business update presentation by Severfield (UK)'s senior management team
- Presentation on implementation of strategy in Europe by European Business Development Director
- Reviewed investor feedback on interim results
- Agreed scope and content of board and chairman evaluation
- Approved board changes for appointment of new chief executive officer and Group finance director
- Approved the proposed GDPR compliance plan
- Presentations on latest market developments
- Reviewed board and chairman evaluation results
Financial and business reporting
The financial statements contain an explanation of the directors' responsibilities in preparing the annual report and the financial statements and a statement by the auditor concerning their responsibilities. The directors also report that the business is a going concern and detail how the Group generates and preserves value over the longer term (the business model) and the Group's strategy for delivering its objectives in the strategic report. The directors have also made a statement about the long-term viability of the Group, as required under the Code.
The board is responsible for the preparation of the annual report and the financial statements to ensure that the annual report taken as a whole is fair, balanced and understandable.
The annual report is drafted by executive management with reviews undertaken by third-party advisers as required. Additional steps have been built into the reporting timetable to ensure that directors are given sufficient time to review, consider and comment on the annual report. Our external auditor reviews the narrative sections of the annual report to identify any material inconsistencies between their knowledge acquired during the audit and the directors' 'fair, balanced and understandable' statement and whether the annual report appropriately discloses those matters that they have communicated to the audit committee. A substantially final draft is reviewed by the audit committee prior to approval by the board.
The directors' remuneration report sets out the activities of the committee, the levels and components of remuneration and refers to the development of the remuneration policy.
Relations with shareholders
The board recognises the importance of communicating with its shareholders to ensure that its strategy and performance is understood. The Company encourages two-way communication with both its institutional and private investors and attempts to respond quickly to all queries received verbally or in writing.
The executive directors undertake a programme of regular communication with institutional shareholders and with analysts covering the Group's activities, its performance and strategy and issues regular trading updates to the market. Alan Dunsmore and Adam Semple attended several meetings with institutional shareholders, private investors and analysts during the year, at the time of the announcements of the Group's annual and half year results, during visits to the Group's head office in North Yorkshire and on an ad hoc basis as required. Feedback from those meetings was reported to the board, including the non-executive directors.
The board has sought to use the AGM to communicate with private investors and encourages their participation. The notice of the AGM, detailing all proposed resolutions, is posted to shareholders at least 20 working days before the meeting.