Novera Energy - Corporate Governance

Corporate Governance

COMPLIANCE WITH THE COMBINED CODE

Novera Energy plc is listed on the Alternative Investment Market (‘AIM’) of the London Stock Exchange (‘LSE’). AIM-listed companies are not required to comply with the disclosure requirements of the Combined Code of Corporate Governance (‘the Combined Code‘) issued by the Financial Reporting Council in June 2006. However, the Board supports the principles contained in the Code, complies where appropriate and cost-effective and is committed to maintaining Corporate Governance according to industry standards.

The following report summarises the current corporate governance processes that are in place.

DIRECTORS

THE BOARD
The Board meets regularly for scheduled Board Meetings and in addition undertakes a separate off-site meeting annually to discuss strategy. The Board also meets as required to deal with urgent business.

The table below lists the number of Board Meetings, Board Committee Meetings, and Directors’ attendance during the year ended 31 December 2008.

		Meetings of commitees
Director	Meetings of Directors	Audit & Compliance	Remuneration	Nominations
Number of Meetings	16	3	8	1
R. Franklin	16	*	*	1
M. Cairns	16	*	8	1
B. Duckworth	16	3	8	1
D. Fitzsimmons	16	*	*	*
J. Grace	16	3	8	1
R. Quinlan	15	*	*	*

* Not a member of the relevant committee

The functions reserved for the Board and management are set out in the Corporate Governance Manual. The Board of Directors are responsible for the direction and oversight of the Group.

The current Directors bring to the Board considerable experience and expertise in their respective fields thus enhancing the effectiveness of the decision-making process. Details of the Chairman, Chief Executive Officer and Directors are set out on page 18 of the Annual Report.

The responsibilities of the Board include:

approval of goals, strategy and plans for the Group’s direction and monitoring implementation;
approval of the Group’s risk management and internal control framework;
approval of Group policies such as remuneration, health & safety and environment;
discussion and approval of management recommendations such as capital expenditure, capital management, acquisitions and divestitures;
review of performance and results;
review of statutory, regulatory and reporting requirements of the Companies Act and the Stock Exchange ('AIM');
review of Stock Exchange matters;
review of related party transactions; and
appointment and dismissal of the Chief Executive Officer, Chief Financial Officer and Company Secretary, determining their conditions of service and monitoring their performance against established objectives.

The Corporate Governance Manual and its policies are updated and managed by the Company Secretary. Responsibility for the management of day-to-day operations and administration of the Group is delegated by the Board to the Chief Executive Officer.

CHAIRMAN AND CHIEF EXECUTIVE OFFICER
The Chairman and Chief Executive Officer have separate clearly defined responsibilities that are not exercised by the same person. Roy Franklin is Chairman and David Fitzsimmons is Chief Executive Officer.

BOARD BALANCE AND INDEPENDENCE
The Board comprises of four non-executive directors and two executive directors. The Board considers that all the Non-executive Directors; Roy Franklin, Michael Cairns, Brian Duckworth and James Grace, are independent. Brian Duckworth is the Senior Independent Director.

The independence criteria of the Combined Code are considered in all current and future appointments of non-executive directors.

The Board’s size and composition is subject to the limits imposed by the Company’s Articles of Association, which provides for a minimum of three and a maximum of ten directors.

The Company has detailed and prescribed guidelines on trading shares.

APPOINTMENTS TO THE BOARD
The Nominations Committee leads the process for Board appointments and makes recommendations to the Board. They evaluate the balance of skills, knowledge and experience of the Board and prepare a description of the roles and capabilities required for new Non-executive Directors to be appointed to the Board.

The Nominations Committee meets as necessary, but at least once a year. The current members are the Non-executive Directors; Brian Duckworth, James Grace, Michael Cairns and Roy Franklin. The number of meetings held by the Committee has been outlined on page 19 of the Annual Report.

INFORMATION AND PROFESSIONAL DEVELOPMENT
Prior to each scheduled Board Meeting, all Directors are presented with the Board Papers which comprise of a CEO Report and a Financial Report. The CEO briefs the Board on results, key issues and strategy during the Board Meetings.

All Directors have access to the advice and services of the Company Secretary. The Company Secretary ensures that good information flows amongst the Board and its committees and between senior management and non-executive directors. The Company Secretary also advises the Board through the Chairman on all governance matters.

The Directors, where appropriate, are able to seek independent professional advice at the expense of the Company and have unrestricted access to the records and information of the Company.

All Directors receive an induction on joining the Board and regularly update and refresh their skills and knowledge of the business.

PERFORMANCE EVALUATION
Key executives have performance expectations in letters of appointment and employment contracts. All executives and employees undergo a formal performance review by April each year by the Chairman or allocated line manager. Position descriptions are updated as part of the performance review process.

RE-ELECTION
All directors are subject to election at the first Annual General Meeting (‘AGM’) after appointment, and to re-election thereafter at intervals of no more than three years. Biographies of all Directors are provided on page 18 of the Annual Report, and those Directors subject to re-election are notified in the Notice of the AGM.

REMUNERATION

REMUNERATION
Disclosure of directors’ remuneration is set out on pages 26 to 29 of the Remuneration Report. The Board believes that levels of remuneration shall be sufficient to attract, retain and motivate directors of the quality required to run the Group successfully. A significant proportion of executive directors’ remuneration shall be structured as to link rewards to corporate and individual performance.

REMUNERATION COMMITTEE
The responsibilities of the Remuneration Committee include:

setting the remuneration policy;
ensuring that the remuneration and terms of service of the directors are appropriate;
reviewing the structure of the Board; and
material changes to the rules of the Company pension or employee share scheme.

The Committee meets as necessary, but at least once a year. The current members are the three Non-executive Directors, Brian Duckworth (Chairman), Michael Cairns and James Grace. The number of meetings held by the committee has been outlined on page 19 of the Annual Report.

ACCOUNTABILITY AND AUDIT

FINANCIAL REPORTING
The Board is committed to ensuring that all communications with shareholders present a balanced, understandable assessment of the Group's position and prospects.

The responsibilities of the Directors and Auditors are set out in the Directors' Report and Auditors' Report on pages 24 and 30 respectively.

INTERNAL CONTROL
The Group’s Audit and Compliance Committee (‘ACC‘) serves the function of reviewing management practices in relation to the identification and management of significant risk areas and regulatory compliance. At least one member has recent and relevant financial experience.

The Group has in place clearly defined lines of responsibility and limits of delegated authority. Comprehensive procedures provide for the appraisal, approval, control and review of capital expenditure.

The Group maintains a comprehensive annual budgeting and management reporting system. A detailed annual budget is prepared in advance of each year and is supplemented by revised forecasts during the course of the year. Actual financial results are reported monthly and compared to budget, revised forecasts and prior year results.

AUDIT AND COMPLIANCE COMMITTEE
The members of the ACC are Non-executive Directors James Grace (Chairman) and Brian Duckworth.

The ACC's primary objectives are to assist the Board in fulfilling its responsibilities in relation to financial reporting and internal controls, and also maintaining the relationship with the external auditors.

The responsibilities of the ACC include:

making recommendations to the Board on the appointment of external auditors;
reviewing the quality and independence of the external auditors and the rotation of external audit engagement partners;
providing an independent, objective review of the adequacy and the integrity of the financial information provided by management to shareholders and regulatory authorities; and
reviewing the changes to treasury policies.

The external auditors have a direct line of reporting to the ACC and have clear and open access to the Committee members. The ACC's policy is to appoint external auditors who clearly demonstrate quality and independence. The performance of the external auditors is reviewed annually.

The number of meetings held by the ACC has been outlined page 19 of the Annual Report. The formal terms of reference for the Audit and Compliance Committee are set out in the Company Governance Manual.

RELATIONS WITH SHAREHOLDERS

The Group has a communications strategy to promote effective communication with all shareholders and encourage effective participation. Communication initiatives undertaken by the Company include media announcements and the Group's website. Other than during a closed period the Chief Executive and Chief Financial Officer also maintain regular dialogue with institutional shareholders throughout the year.

All information disclosed to the London Stock Exchange ('LSE') is posted on the Group's website within three days of being disclosed to the LSE. Access to price sensitive information is rigorously controlled but procedures have been established to ensure that any such information is immediately released to the market, should it become inadvertently disclosed.

The Chief Executive Officer has overall responsibility for management of the Group's continuous disclosure obligations as well as communication with analysts, brokers, shareholders, the media and the public, so as to ensure that the announcements are timely, factual, clear and precise and omit no material information.

Board members and the external auditors attend the annual general meeting and are available to answer questions. Resolutions are proposed on each substantially separate issue, including in relation to the Report and Accounts and the Directors' Remuneration Report.

Notice of the AGM and related papers are sent to all shareholders at least 21 days before the meeting.

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