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BOARD EFFECTIVENESS

A performance evaluation process was undertaken based on an online questionnaire. This was facilitated by the Company Secretary who is considered a suitable and independent person to conduct this process.

Evaluation process

The Board evaluation was conducted via an online questionnaire and focused on a range of governance matters, including:

  • continuing implementation of the 2022/23 external Board effectiveness review;
  • Board composition;
  • leadership and succession planning;
  • Board dynamics and decision making;
  • strategy, purpose, values and culture;
  • operation of Board Committees;
  • Board logistics and secretariat support; and
  • the Board’s advisers.

In addition, the views were sought from senior executives who interact regularly with the Board and the Board’s remuneration advisers and auditors in relation to the operation of the Remuneration Committee and Audit Committee.

The Company Secretary then prepared a Board Report summarising the key findings and themes arising from the responses to the questionnaire. The report was then presented to the Board and discussed at its April meeting.

Findings

The report found that the Board continues to operate effectively in a collegiate manner with a strong sense of common purpose and included a good balance of challenge and support to management. While the Directors were considered to have the necessary skills required for the effective governance of the Company, a requirement was identified for further training for more recently appointed Non-Executive Directors to enhance their understanding of some of the sectors and markets which the Group operates in, that is being addressed with more specific training and exposure to our operations being scheduled. It was also agreed that further resource should be added to the secretariat support to assist in the administration and operation of the Board and its Committees.

The report also considered continuing progress in relation to the recommendations made against areas identified for further improvement by the independent external assessment of Board effectiveness undertaken by Clare Chalmers in 2022/23, which included the following:

  • A more central role for the Board in articulating and overseeing strategic aims of the business. The review concluded that there had been a greater focus by the Board on strategic matters at scheduled meetings over 2024/25 with presentations and deeper consideration being given by the Board to a number of the Company’s key sectors during the year. The Board also undertook a separate strategy review, which involved a detailed review of the Group’s five-year strategy and related budgets.
  • Consideration of the frequency and duration of Board and Committee meetings with less emphasis on operational matters. The Board schedule has been reduced to eight scheduled meetings, with a greater focus on strategic topics, which was considered to have worked well over the year.
  • The need for a more formal, structured approach to long-term executive succession planning. A formal succession plan review was undertaken by the Nomination Committee during 2024/25 when a wider range of key roles was considered, and a timetable for the implementation of succession plans was agreed. This also involved reviewing the succession pipeline within the Group and where necessary agreeing further development plans.
  • A deeper understanding of certain risks faced by the Group and to test the Board’s appetite for risk. The Group’s approach to risk assessment and embedding this within its decision making has been reviewed with the help of external consultants and a formal in-depth review of the Board’s risk appetite has been undertaken, which is reflected in the principal risks and uncertainties summarised in the Strategic Report on pages 78 to 82. While significant progress has been made during the year, further work is being undertaken to ensure the Board’s risk appetite is embedded in its decision making.
  • Further development of the ESG Committee in relation to the social aspects of its remit. Further consideration will be given generally to the remit of the ESG Committee through an externally facilitated review to be undertaken later in 2025.

In accordance with good governance practice, the Board will be commissioning a further independent review of its effectiveness later in 2025/26, which will be reported in next year’s Annual Report and Accounts.