Corporate Governance
Statement of compliance with the Code of Best Practice
This information is sourced from the Annual Report 31 March 2007.
The Company has complied throughout the year with the Provisions of the Code of Best Practice and the Principles of Good Governance set out in section 1 of the 2003 Combined Code.
Board effectiveness
The directors constituted the Board throughout the year, except that Sir Derek Higgs, Patrick Vaughan and John Weston Smith retired from the Board on 14 July 2006; Sir John Ritblat
retired on 31 December 2006; Andrew Jones and Tim Roberts were appointed on 14 July 2006; and Clive Cowdery and John Travers were appointed on 10 May 2007. The Board is responsible for the
strategy and effective control and management of the Group. There is a written division of responsibilities at the head of the Company between the Chairman and Chief Executive, which has been approved by the Board. There is a formal schedule of matters specifically reserved for Board approval, which includes approval of the annual and interim accounts, the approval of authority levels
below the Board and material acquisitions, disposals and financing arrangements. The Board delegates authority to the Approvals Committee of the Board, which consists of the executive directors of the Company, in respect of certain transactions within defined, limited parameters. The Board has a regular schedule of meetings together with further meetings as required by the ongoing business of the Company. The executive directors and senior executives who comprise the Executive Committee meet weekly, chaired by the Chief Executive, to deal with the ongoing management of the Group.
The Chairman of the Board and individual directors meet regularly, outside formal Board meetings, as part of each director’s continuing contribution to delivery of the Company’s strategy and superior returns for shareholders. This process also allows for open two-way discussion about the effectiveness of the Board, its committees and individual directors, both executive and nonexecutive.
By this means the Chairman is continuously aware of the views of individual directors and can act as necessary to deal with any issues relating to Board effectiveness before they can become
a risk to the Company.
There is a strong and independent non-executive element on the Board as shown by the details of directors
BL Board performance evaluation
The formal Board Performance Appraisal process requires each director to give detailed input annually, the results of which are considered by the Chairman, Senior Independent Non-executive Director and Board as appropriate and relevant consequential changes made.
The Senior Independent Non-executive Director discusses the performance of the Chairman with other directors annually, or more frequently as necessary.The Chairman meets with each non-executive director annually to discuss their contribution. The Chairman provides the Remuneration Committee with a written appraisal of the Chief Executive’s performance for the year. Similarly the Chief Executive provides the Remuneration Committee with a written assessment of executive directors’ performance.
Committees of the Board
The Board has established Audit, Remuneration and Nomination Committees which operate within defined terms of reference, available at the end of this page, and their minutes are circulated to the Board. The Audit and Remuneration Committees are entirely composed of independent non-executive directors. Sir David Michels is the Senior Independent Non-executive Director.
Attendance a Board or Committee meetings during the year to March 2007
Please note: where - is shown, the Director listed is not a member of the Committee
| Name | Board | Nomination Committee | Audit Committee | Remuneration Committee |
|---|---|---|---|---|
| Dr Christopher Gibson-Smith 1 | 6 | 1 | 2 | 3 |
| Sir John Ritblat 2 | 4 | - | - | - |
| Stephen Hester | 6 | - | - | - |
| Robert Bowden | 6 | - | - | - |
| Michael Cassidy | 5 | - | - | - |
| Sir Derek Higgs 3 | 2 | - | - | 2 |
| Andrew Jones 4 | 4 | - | - | - |
| Sir David Michels | 4 | 1 | 4 | 3 |
| Graham Roberts | 6 | - | - | - |
| Tim Roberts 4 | 4 | - | - | - |
| Kate Swann | 5 | - | - | 2 |
| Robert Swannell | 6 | 1 | 4 | - |
| Lord Turnbull | 6 | - | 4 | 3 |
| Patrick Vaughan 5 | 2 | - | - | 3 |
| John Weston Smith 5 | 2 | - | - | - |
| No. of meetings during the year | 6 | 1 | 4 | 3 |
1 Three Audit Committee meetings held during Committee membership to 31 December 2006
2 Four Board meetings held during Board membership to 31 December 2006
3 Two Board and two Remuneration Committee meetings held during Board membership to
14 July 2006
4 Four Board meetings held since Board appointment on 14 July 2006
5 Two Board meetings held during Board membership to 14 July 2006
Nomination Committee
The Nomination Committee’s responsibilities include making recommendations to the Board on all new Board appointments and succession planning. It consists of Chris Gibson-Smith, Sir David Michels and Robert Swannell.
During the year the Nomination Committee conducted a search, with the assistance of consultants, to recruit two new non-executive directors. In consequence, Clive Cowdery and John Travers were appointed to the Board on 10 May 2007.
The Nomination Committee during the year has also considered, inter alia, the constituency of the Board’s committees and the renewal of non-executive directors’ letters of appointment.
Remuneration policy and Committee
Details of the Group remuneration policy and Committee are set out in the online annual report for 2007.
Audit Committee
The Audit Committee meets regularly during the year. It has been chaired by Robert Swannell throughout the year and includes two other non-executive directors, Sir David Michels and Lord Turnbull.
The Committee’s responsibilities include:
- monitoring the integrity of the financial statements of the Company and any formal announcements relating to the Company’s financial performance;
- reviewing the Company’s internal financial controls and the Company’s internal control and risk management systems;
- monitoring and reviewing the effectiveness of the Company’s internal audit function;
- making recommendations to the Board in relation to the appointment of the external auditor and approving the remuneration and terms of engagement of the external auditor;
- reviewing and monitoring the external auditor’s independence, objectivity and
- reviewing and monitoring the valuation process; and
- effectiveness;
- developing and implementing policy on the engagement of the external auditor to supply non-audit services, taking into account relevant ethical guidance.
The Audit Committee has undertaken each of the above responsibilities during the year on which it has received and reviewed relevant reports from management, the valuers, the internal and the external auditors. It has agreed a schedule of internal audit reviews of various of the Group’s processes and controls to be undertaken, and has reviewed the results of those reviews already completed.
Rotation of directors
Under the Articles of Association of the Company, each director retires at the third Annual General Meeting (‘AGM’) after the general meeting at which he was last elected.
Non-executive directors
The Board considers that Michael Cassidy, Clive Cowdery, Sir David Michels, Kate Swann, Robert Swannell, Lord Turnbull and John Travers are independent non-executive directors. In making this
determination the Board has considered whether each director is independent in character and judgement and whether there are relationships or circumstances which are likely to affect, or could
affect, the director’s judgement.The Board believes that it is evident from consideration of the non-executive directors’ biographies detailed on page 60 that they are of the integrity and stature to
perform their roles of independent non-executive directors.
Notwithstanding that Michael Cassidy has served on the Board for eleven years, the Board does not consider that, given his integrity and stature, this affects his independence. He will retire from the
Board at the 2007 AGM.
The terms and conditions of appointment of non-executive directors are available for inspection at the Company’s registered office and at the AGM.
Internal control
The directors are responsible for the maintenance of a sound system of internal control. The Board continues to apply the internal control provisions of the FRC 2003 Combined Code through a continuous
process for identifying, evaluating and managing the significant risks the Group faces. The process has been in place throughout the year, from the start of the year to the date of approval of this report, and the Group has been in compliance with the code provisions set out in Section 1 of the FRC 2003 Combined Code on Corporate Governance. The Board is responsible for the Group’s system of
internal control and for reviewing its effectiveness. Such a system is designed to manage rather than eliminate the risk of failure to achieve business objectives, and can only provide reasonable and
not absolute assurance against material misstatement or loss.
The Group applies two fundamental control principles:
- a defined schedule of matters reserved for decision by the Board; and
- a detailed authorisation process which ensures that no material commitments are entered into without competent and proper authorisation by more than one approved executive.
In compliance with the provisions of the Combined Code, the Board continuously reviews the effectiveness of the Group’s system of internal control. The key risks that the Group faces and features of the internal control system that operated throughout the period covered by the accounts are described below.
Identification and evaluation of commercial risks and related control objectives
British Land has undertaken a comprehensive risk assessment, which has identified over 50 individual risks that affect the Group. The responsibility formanagement of each key risk has been clearly
identified and delegated by the Board to specific executive directors and senior executives within the Group. The executive directors have close involvement with the day-to-day operational matters of the
Group. In addition to the main Board of directors, frequent meetings of the executive directors take place to review the Group’s activities, specific areas of which are also considered by operational boards.
These include:
- Group management and operations;
- management of property assets;
- management of development activities; and
- financing activities.
The Board, the executive directors and the operational boards consider the risk implications of business decisions. These include matters such as new treasury products and major transactions. The control environment is supported by the various committees of the Board and the operational boards, including the Audit Committee, the Corporate Responsibility Committee and the Derivatives Committee.
The way each risk is managed within the Group is considered at least annually by the executive directors and the Audit Committee. The Group reassesses these risks on a regular basis to ensure that any risk arising from changes in the Group’s operations or the external environment are identified and appropriately managed.
In order to provide relevant and timely information to the executives responsible for managing risks, the Group has the following key information systems which generate reports as follows:
- a management reporting system which includes regular working capital reports and forecasts;
- operational reporting on property purchases, sales and portfolio management; and
- regular reporting to the Board on financial and treasury matters.
Monitoring
The Audit Committee meets regularly throughout the year and has reviewed the Group’s internal controls. The Audit Committee has agreed a schedule of internal audit reviews of various of the Group’s processes and controls to be undertaken, and has reviewed the results of those reviews already completed. The Head of Internal Audit reports directly to the Audit Committee.
Investor Relations
The directors place considerable importance on maintaining open and clear communication with investors. The Company’s Investor Relations department is dedicated to facilitating communication with
shareholders. The Company has an ongoing programme of dialogue and meetings between the executive directors and its shareholders, where a wide range of relevant issues including strategy, performance, the market, management and governance are discussed within the constraints of the information already known to the market. In addition, the Company undertakes regular roadshows to the US and Europe and participates in sector conferences.
The directors consider it is important to understand the views of shareholders, and at each scheduled Board meeting the directors receive a written report of the major issues which have been raised with
management. Meetings are also held between shareholders and the Senior Independent Non-executive Director and other non-executive directors, and the Company facilitates such meetings on request.
During the course of a year, shareholders are kept informed of the progress of the Company through results statements and other announcements that are released through the London Stock Exchange and other news services. Company announcements and presentations are made available simultaneously on our website, affording all shareholders full access to material information. Shareholders can also raise questions directly with the Company at any time through a facility on the website.
Additionally there is an opportunity at the AGM for individual shareholders to question the Chairman and the Chairmen of the Audit, Remuneration and Nomination Committees. At the meeting, the Company complies with the Combined Code as it relates to voting, including votes withheld, the separation of resolutions, the attendance of committee chairmen and voting by poll. The Annual Report and Notice of Meeting are sent to shareholders at least 20 working days prior to the AGM. The voting results are announced to the London Stock Exchange and are available on the website and on request. In July 2006, all AGM resolutions were passed on a poll and were approved by substantial majorities in excess of95%in each case.
Going concern
After making enquiries and examining major areas which could give rise to significant financial exposure the directors are satisfied that no material or significant exposures exist, other than as reflected in these financial statements, and that the Group has adequate resources to continue its operations for the foreseeable future. The Group continues to adopt the going concern basis and the accounts have been prepared in accordance with ‘Going Concern and Financial Reporting: Guidance forDirectors of listed companies registered in the United Kingdom’ published in November 1994.
Statement of directors’ responsibilities
The directors are responsible for preparing the Annual Report, remuneration report and the financial statements in accordance with applicable law and regulations.
Company law requires the directors to prepare financial statements for each financial year. The directors are required by the IAS Regulation to prepare the Group financial statements under IFRSs
as adopted by the European Union. The Group financial statements are also required by law to be properly prepared in accordance with the Companies Act 1985 and Article 4 of the IAS Regulation.
International Accounting Standard 1 requires that IFRS financial statements present fairly for each financial year the Company’s financial position, financial performance and cash flows. This requires
the faithful representation of the effects of transactions, other events and conditions in accordance with the definitions and recognition criteria for assets, liabilities, income and expenses set out in the
International Accounting Standards Board’s ‘Framework for the preparation and presentation of financial statements’. In virtually all circumstances, a fair presentation will be achieved by compliance
with all applicable IFRSs. However, directors are also required to:
- properly select and apply accounting policies;
- present information, including accounting policies, in a manner that provides relevant, reliable, comparable and understandable information; and
- provide additional disclosures when compliance with the specific requirements in IFRSs are insufficient to enable users to understand the impact of particular transactions, other events and conditions on the entity’s financial position and financial performance.
The directors have elected to prepare the parent company financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and
applicable law). The parent company financial statements are required by law to give a true and fair view of the state of affairs of the Company. In preparing these financial statements, the directors
are required to:
- select suitable accounting policiesandthen applythemconsistently;
- make judgements and estimates that are reasonable and prudent; and
- state whether applicable UKAccounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements.
The directors are responsible for keeping proper accounting records that disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that the parent
company financial statements comply with the Companies Act 1985. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and
detection of fraud and other irregularities.
The directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company’s website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.
Auditors and valuers
The Audit Committee meets with the auditors and valuers to discuss with them the scope and conclusions of their work. The Committee is specifically charged under its terms of reference with considering matters relating to the audit appointment, the independence and objectivity of the auditors, and reviewing the results and effectiveness of the audit. With respect to other services provided by the auditors the following framework is in place:
- Audit related services – the auditors are one of a number of firms providing audit related services, which include formal reporting relating to borrowings, shareholder and other circulars and various other regulatory reports and work in respect of acquisition and disposals. Where they must carry out the work because of their office or are best placed to do so, the auditors are selected. In other circumstances the selection depends on which firm is best suited;
- Tax advisory – the auditors are one of a number of firms that provide tax advisory services, including the preparation and submission of tax returns. The selection depends on who is best suited in the circumstances;
- General consulting – the auditors do not provide general consultancy services except in rare circumstances, and then only after consideration that they are best placed to provide the service and that their independence and objectivity would not be compromised.
An analysis of fees paid to the auditors is set out in note 5 in the online Annual Report. The arrangements with auditors and valuers have been approved by the Audit Committee and are regularly reviewed in the light of changing requirements and best practice.
The arrangements with auditors and valuers have been approved by the Audit Committee and are regularly reviewed in the light of changing requirements and best practice.
The arrangements with auditors and valuers have been approved by the Audit Committee and are regularly reviewed in the light of changing requirements and best practice.
Terms of reference
Remuneration Committee PDF > (59KB)
Nomination Committee PDF > (62KB)
Audit Commitee PDF > (57KB)
