Our Governance Board

and It's Responsibilities

Statement

The Board of Directors of the Company (“Board”) acknowledges that adhering to rules of good corporate governance is in the best interests of the Company and its shareholders.

Although the Company is not required to comply with the UK Corporate Governance Code (formerly the Combined Code) published by the Financial Reporting Council in September 2014, all the Directors remain committed to high standards of corporate governance and consider that the Board progressively adopts best practices. Although the Company does not apply the full requirements of the UK Corporate Governance Code, the following sections describe how the Board has applied the principles of the UK Corporate Governance Code that they consider relevant to a company of their size and stage of development.

The Board

The Workings of the Board and its Committees

The Board comprises three Non-executive Directors and one Executive Director. The Executive Director is Mikel Faulkner, who serves as the Chairman of the Company. The three Non-executive Directors are Alan Henderson, David Quint and Zac Phillips. The Company considers that each of the Non-executive Directors is an independent Director in that: i) none are executive officers or employees of the Company; and ii) none have a relationship with the Company that will interfere with the exercise of independent judgement in carrying out the responsibilities of such Directors. Although share option awards and/or long-term incentive grants have been made to the Non-executive Directors these are not considered to impact their independence. Details of the Directors’ skills and experience are continued in the Directors’ Biographies. The combined Board provides the Company with a wide range of expertise on issues relating to the Company’s mission, operations, strategies and, most importantly, its standards of conduct.

The Board is responsible to the shareholders for the leadership and control of the Company. The Board meets formally four times a year and on an ad hoc basis as required. In compliance with the UK Corporate Governance Code, the Board considers and monitors all such matters as are specifically reserved to it under the Company’s articles of association (the “Articles”). The Company’s management provides appropriate and timely information to the Board to enable the Board to carry out its duties. The Company’s Articles provide for formal and transparent procedures to appoint new Board members. The Articles further provide for re-election of all Directors annually. The Board has considered the formation of a Nomination Committee but does not consider it to be appropriate for the recurrent nature and size of the Board and Company. The Board will continue to monitor this Issue.

Internal Controls

The Board acknowledges that it is responsible for establishing and maintaining the Group’s system of internal control, the effectiveness of which is reviewed on a regular basis.

The internal control system is an ongoing process for identifying, evaluating and managing the significant risks faced by the Company and is designed to meet particular needs of the Group and the risks to which it is exposed, and by its nature can provide reasonable but not absolute assurance against material misstatement or loss. In 2015, the Company completed ongoing updates of the internal policies and procedures. In view of the size of the Company, the Board does not consider that an internal audit function is required at present; however, the Board intends to keep this under review. The key procedures, which the Directors have established with a view to providing effective internal control, are described below.

The Board has overall responsibility for the Group and there is a formal schedule of matters specifically reserved for decision by the Board. Each executive has been given responsibility for specific aspects of the Group’s affairs.

Responsibility levels are communicated throughout the Group as part of the corporate accounting and procedures manual which sets out, interalia, the general ethos of the Group, delegation of authority and authorisation levels, segregation of duties and control procedures together with accounting policies and procedures.

The integrity of personnel is ensured through supervision and training. High-quality personnel are seen as an essential part of the control environment and the ethical standards expected are communicated through the corporate accounting and procedures manual.

The Board is responsible for identifying the major business risks faced by the Group and for determining the appropriate course of action to manage those risks.

Regularly the Board reviews the annual budget. Key risk areas are identified. Performance is monitored and relevant actions taken throughout the year through the periodic reporting to the Board of variances from the budget, updated forecasts for the year together with information on the key risk areas.

The budgetary process and authorisation levels regulate capital expenditures. For expenditures beyond specified levels, detailed written proposals have to be submitted to management. Reviews are carried out after the investment is complete and, for some projects, during the investment period, to monitor expenditure. Major overruns are investigated.

Financial Information

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