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For pdfs of the Audit, Nomination and Remuneration Committees' Terms of Reference which came into effect on April 1, 2004, please click on the relevant committee name.
Page references relate to 2007 Annual Report & Accounts which is downloadable here.
Corporate governance
The Company is committed to high standards of corporate governance. The Board is accountable to the Company's shareholders for good corporate governance. The Statement below describes how the principles of corporate governance are applied to the Company and reviews the Company's compliance with the Combined Code. The Board has adopted a formal corporate governance manual which is updated on an ongoing basis.
Statement by the Directors on compliance with the provisions of the Combined Code
The Board has reviewed the Company's compliance with the revised Combined Code ("the Code") on Corporate Governance issued in June 2006. The Company has, throughout the year, been in full compliance with the principles and provisions set out in Section 1 of the Code, with the exception of the point noted in the second paragraph of "The workings of the Board and its Committees" below.
The workings of the Board and its Committees
The Board
The Non-executive Directors comprise the majority of the Board and are kept fully informed of all areas of the Company's activities so that they are able to participate fully in all aspects of the Company's strategy and control.
Louise Patten is Chairman of the Board and Tim Wheeler is the Chief Executive of the Company. Their roles are separate and clearly defined. David Scotland is the Senior Independent Non-executive Director. The current Non-executive Directors, being Louise Patten, Nicholas Fry, Stephen Harris, Mark Moran and David Scotland are considered by the Board to be independent. Non-executive Directors are not appointed for specified terms, as recommended by the Code, but are subject to election and re-election by shareholders at least every three years. The Non-executive Directors understand that the Board will not automatically recommend their re-election by shareholders.
The biographies of the members of the Board appear on page 12. These demonstrate a range of experience of sufficient calibre to bring independent judgement on the issues of strategy, performance, resources and standards of conduct that is vital to the success of the Company. The Board is responsible to shareholders for the proper management of the Company. A statement of Directors' responsibilities in respect of the financial statements is set out on page 25 and a statement on going concern is set out on page 15.
The Board meets regularly reviewing financial performance, ensuring adequate funding, setting and monitoring strategy, examining major acquisitions and disposal possibilities and reporting to shareholders. The Non-executive Directors have a particular responsibility to ensure that the strategies proposed by the Executive Directors are fully considered. To enable the Board to discharge its duties, all Directors receive appropriate and timely information. Briefing papers are distributed by the Company Secretary to all Directors in advance of Board meetings. The Directors may take independent professional advice in appropriate circumstances at the Company's expense.
During the year there were six Board meetings, three meetings of the Audit Committee, two meetings of both the Remuneration Committee and the Nomination Committee, which had full attendance except that David Scotland was unable to attend one Board meeting.
A Board self assessment evaluation was carried out during the year which covered structure and content of Board meetings and all Board processes and communication channels. The results of the evaluation were considered at a meeting of the Board.
Separate meetings were also held between the Chairman and the Non-executive Directors to evaluate the Executive Directors' performance and between the Non-executive Directors only to evaluate the Chairman's performance.
Evaluations were also carried out during the year of the Audit, Nomination and Remuneration Committees.
The following Committees deal with the specific aspects of the Company's affairs. The Board has approved terms of reference for these Committees and the Company has published these terms on its website.
Audit Committee
The Audit Committee is chaired by Mark Moran who took over from Nicholas Fry with effect from the Annual General Meeting on 24 April 2008. The membership of the Committee is set out on page 12. The Committee meets not less than twice a year and meetings are also attended, by invitation, by the Chief Executive and Deputy Chief Executive.
The Audit Committee is responsible for reviewing a wide range of matters including the half-year and annual financial statements before their submission to the Board and monitoring the controls which are in force to ensure the integrity of the information reported to shareholders. The Audit Committee advises the Board on the appointment of external auditors and on their remuneration and discusses the nature, scope and results of the audit with the external auditors. The Audit Committee may also meet with the Company's valuers.
Nomination Committee
The Nomination Committee is chaired by Louise Patten and its current membership is set out on page 12. The Committee is responsible for reviewing the size, structure and composition required of the Board, making recommendations on changes to and considering succession planning for Directors and other senior executives. In appropriate cases, recruitment consultants are used to assist the process.
Remuneration Committee
The Remuneration Committee is chaired by David Scotland and its current membership is set out on page 12. The Report on Directors' Remuneration is set out on pages 18 to 24.
Relations with shareholders
Communications with shareholders are given high priority. The various reviews on pages 2 to 11 include a detailed review of the business and future developments. There is regular dialogue with, and presentations are made to, existing and prospective institutional shareholders.
The Board uses the Annual General Meeting to communicate with private and institutional investors and welcomes their participation. The Chairmen of each of the Audit, Nomination and Remuneration Committees are normally available at the Annual General Meeting to answer questions. Details of the resolutions proposed at the Annual General Meeting on 24 April 2008 can be found in the Notice of the Meeting. The Board indicates the level of proxies lodged on each resolution and the balance for and against the resolution after it has been dealt with on a show of hands.
Internal control
The Board recognises that it is responsible for the Company's system of internal control and for reviewing its effectiveness. Such a system can only provide reasonable assurance and not absolute assurance against material misstatement or loss, as it is designed to manage rather than eliminate the risk of failure to achieve business objectives.
It is a requirement of the Code that the effectiveness of the system of internal control, including financial, operational and compliance controls and risk management, is reviewed by the Board.
The Board carries out a review of significant business risks and formally considers the scope and effectiveness of the Company's system of internal control annually. This review covers all controls, including financial, operational and compliance controls and risk management. The risks are identified by the Executive Directors using their detailed knowledge of the Company's activities and of those areas of the property and financial markets which impact on its objectives. The Board considers risk management and internal control on a regular basis during the year. There is an ongoing process for identifying, evaluating and managing the significant risks faced by the Company. No significant weaknesses have been identified during the year under review.
As the Company has a relatively small number of employees there is a high level of senior executive involvement in the majority of business transactions. The Company has four Executive Directors who also sit on the fifteen person Operations Board who manage the day to day activities of the business.
The Board has considered the need for an internal audit function, but has decided that because of the scale and focus of the Company it is not justified. However, it is a matter that is kept under regular review.
Going concern
The financial statements, which appear on pages 27 to 51, have been prepared on the going concern basis as, after making appropriate enquiries, the Board has a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future.
Payment of suppliers
The Board maintains a policy of paying suppliers promptly in accordance with the terms and conditions agreed with them. At the 2007 year-end its trade creditors represented 18 days' (2006: 17 days') purchase.
Corporate Responsibility
Brixton is committed to being a socially responsible company. It seeks to enhance relationships with stakeholders and manage key Corporate Responsibility ("CR") issues such as climate change, health and safety and land contamination.
All the information published on CR is assured by WSP Environmental and their assurance statement can be found under the CR section of our website. The statement states that:- "Brixton's CR reporting provides a detailed and accurate representation of the progress that has been made during 2007. Brixton has made a significant commitment to embed sustainability into its operations and engage with key stakeholders. The assurance review has identified considerable progress by Brixton during the reporting period".
How we manage corporate responsibility
Brixton has a CR Policy Statement plus a range of more detailed policies to guide employees on specific aspects of CR.
Steve Lee, Operations Director, is the Board member with overall responsibility for CR. He oversees Brixton's CR programme and provides an annual report to the Board on performance. Brixton's CR Committee is made up of managers from different areas of the business and meets quarterly. Implementation and day-to-day management of CR policies is the responsibility of the Company's senior managers.
Every employee can play an important role in CR at Brixton. As part of their annual performance appraisal, employees are asked to consider how they can contribute to the Company's CR values.
Brixton is included in the FTSE4Good Index and participated in the 2006 Business in the Community ("BITC") Index. The Company's overall score in the BITC Index was 89% (silver band) and it was placed in the list of top 100 'Companies that Count'. Brixton also participates in the annual Carbon Disclosure Project ("CDP") survey and was included in the list of "best reporters" in the 2007 survey of FTSE 350 companies.
Environment
Brixton recognises that a key sustainability challenge for the business is climate change, since the construction and running of buildings has a significant carbon footprint. It has therefore produced a guide to climate change and sustainability for its employees and a similar guide for occupiers of Brixton owned and managed properties. The guide for employees sets out the key climate change impacts for each of its main business activities and a checklist of actions to take. The occupiers guide looks at how Brixton can work together with its occupiers to address climate change issues.
In an effort to incorporate sustainability into the design of new buildings, Brixton has introduced a checklist of environmental criteria for new developments and a similar checklist for refurbishment projects. This is delivering results - for example, the new X2 development at Heathrow has incorporated the use of ground source heat pumps and two wind turbines have been installed at Polar Park, Heathrow. A workshop on sustainability will be held for construction contractors in 2008 and Brixton will in future monitor the carbon footprint of construction projects.
Since 2002 Brixton has, through The Carbon Neutral Company, offset the C02 generated from business travel. In 2007, Brixton extended the scope of its C02 offsets to also cover energy use in its own offices and became 'carbon neutral' in respect of its energy and travel. Brixton has also purchased C02 offsets in advance for marketing brochures and other company publications estimated to be produced during 2008. A total of 290 tonnes of C02 was offset by Brixton in 2007.
Brixton has started to switch to a 'greener' electricity tariff (sourced from 'good quality' Combined Heat and Power plants) for the electricity purchased for the common parts of its property portfolio. By 31 December 2007, it had moved 30% of its electricity supply contracts across to the new tariff - the rest will be switched during 2008 (in line with contract terms). It is also working to introduce recycling collections at all multi-occupier estates (where practical) by the end of 2008, including estates where it does not currently have responsibility for waste collection.
A key environmental risk for Brixton is land contamination due to past industrial activities or fuel spillages. Environment audits are carried out prior to the acquisition of new properties to identify any potential contamination. During 2007 Brixton spent approximately £570,000 on costs associated with the investigation, monitoring and remediation of contaminated land.
Customers
Brixton's goal is to be the landlord of first choice in its chosen markets. Customer service is therefore a key priority for the business.
Customer Service Managers visit all customers regularly (on average every six weeks) and a 24-hour help desk is available. An independent customer satisfaction survey is commissioned annually to measure customer satisfaction ratings.
Employees
Brixton has an equal opportunities policy and monitors the diversity profile of employees. Women accounted for 38% of staff and 25% of managers as at 31 December 2007. An awareness training session for senior managers on equality and diversity was held in 2007.
All employees receive an annual performance appraisal and training is provided to help employees develop their skills and reach their potential. Brixton's Code of Conduct sets out the standards expected from employees and forms part of the employment contract. In 2007, a training session on business conduct and ethics was held for senior managers.
Local communities
Brixton supports community organisations local to its property portfolio as well as various charities. Over the past two years Brixton has supported the following community partnership projects in its three main locations:
• Heathrow - a project with London Cyrenians Housing to refurbish accommodation for homeless people in Hounslow.
• Park Royal - a project to build a new garden and outdoor area at a long term care home run by St Mungo's.
• Trafford Park - a training course for visually impaired people (Skill Step) run by Henshaws School for Blind People.
Brixton is working to establish a new community partnership project in 2008 with the charity Wooden Spoon. This will provide physical training equipment at Oaklands School, a special school in Hounslow.
Brixton allows employees to take one day off work per year for volunteering. Employees gave 34 work days in support of community projects during 2007. The Company also matches money raised by employees for charity (up to an agreed maximum). A payroll giving scheme was established in 2006.
Brixton takes great care to be considerate towards neighbours and works hard to keep sites and estates tidy. All contractors on new development/major refurbishments are required to sign up to the Considerate Constructors Scheme.
Business partners
Brixton seeks to build long-term relationships with a small number of best in class business partners. An annual Supply Chain Award is given to Brixton's partner of the year. Brixton's pre-qualification questionnaire for new business partners has been extended to include an assessment of their approach to CR.
Brixton has introduced new processes to assess the CR performance of business partners within its estate services supply chain. These include an annual CR questionnaire and a CR question in the monthly scoring system. A target has been set to extend the CR assessment to other business partners in construction and refurbishment during 2008.
Further information is available in the Corporate Responsibility section of this website.
Health and safety
The Board is committed to continuously improving the management of health and safety. An independent, external consultancy carries out an annual audit of health and safety at Brixton. Their findings and recommendations are reported to the Board as part of its annual review of health and safety. An action plan is developed and implemented to deal with any issues identified during the audit.
The Company has an established Health & Safety Management System which sets out the Group's detailed policies and procedures. Operations Director, Steve Lee, is responsible for implementation of the health and safety policy. A Health and Safety Committee, chaired by Steve Lee and comprising managers from different areas of the business, meets four times a year to review health and safety policy and practice and to suggest ways in which the management of health and safety can be improved.
Regular risk assessments are carried out at all properties managed by B-Serv. This includes vacant units and common areas of multi-let properties. Appropriate action is taken to address any risks identified during these assessments. Development, refurbishment and maintenance work at Brixton properties is carried out by independent contractors on our behalf. We work closely with contractors on health and safety issues and a contractor's health and safety record is an important consideration in their selection. Construction activities are managed in accordance with the requirements of the Construction (Design and Management) Regulations 2007.
All employees share responsibility for maintaining a safe workplace and health and safety training is part of induction training for all new employees. Additional health and safety training is provided for any Brixton employees working on or visiting construction sites.
The Company is pleased to report that there were no work-related lost time employee accidents in 2007 (2006: nil).
Richard Howell
Company Secretary
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