The Board has delegated authority to its committees to carry out
certain tasks as defined in each committee’s respective terms of
reference. During the year, the Board conducted a comprehensive
review of each of its committees’ terms of reference against best
practice and approved revised terms. The written terms of
reference for the Audit, Remuneration, Nominations, Corporate
Responsibility, Executive and Disclosure Committees are available
on the Company’s website and hard copies are available
All of the independent Non-Executive Directors are members of
the Audit, Remuneration and Nominations Committees. The Board
considers that this membership structure provides a consistency
of membership within each of these principal committees and
avoids undue reliance on particular members. Minutes of
committee meetings are made available to all Directors on a timely
basis and the chairmen of each of the Audit, Remuneration,
Nominations and Corporate Responsibility Committees provide
updates to the Board at subsequent Board meetings.
A chart setting out the Company’s Board and Executive
Committee structure is set out below.
Details of each committee, including membership, are set out
in the following committee reports:
The members of the Audit Committee are Paul Rayner (Chairman),
Helen Alexander, Mary Francis, Andrew Mackenzie and Paul
Walsh. In accordance with the Code, Paul Rayner is identified as
having recent and relevant financial experience. The Board has
determined that each member of the Committee is independent
and that the membership meets the requirements of the Code.
The key function of the Audit Committee is to review the
effectiveness of the Company’s financial reporting and internal
control policies together with the procedures for the identification,
assessment and reporting of risks. In accordance with its terms of
reference, the Committee is authorised by the Board to:
- monitor the integrity of the Company’s financial statements and
any formal announcements relating to the Company’s financial
performance, including a review of the significant financial
reporting judgements contained within them;
- review the Company’s internal financial controls, internal control
and risk management systems;
- monitor and review the effectiveness of the Company’s internal
- establish and oversee the Company’s relationship with
the external auditors, including monitoring their independent
- establish and oversee appropriate whistleblowing and fraud
prevention arrangements within the Company.
During the year the Committee met on four occasions. At each of
these scheduled meetings, the Committee met privately with the
external auditors, and separately with the Head of Internal Audit.
The Committee received regular comprehensive reports from the
Head of Internal Audit, senior management and the external
auditors, PricewaterhouseCoopers LLP. The Committee also
requested clear objectives, timescale and achievement milestones
against which performance could be clearly measured in respect
of all ongoing issues.
The Committee considered a number of key issues during the year
and in particular reviewed:
- British Gas Residential revenue recognition;
- risk profile of the Group’s business model and risk mitigation;
- information technology general controls;
- management of commodity risk; and
- ongoing compliance with the undertakings in respect
of Centrica Storage Limited.
The Board has approved policies that restrict the types of non-audit
work that can be undertaken by the external auditors and
restrict the employment by the Group of former employees of the
external auditors. The award of non-audit work, within categories
that the external auditors are permitted to carry out under the
Board-approved policies, is subject to pre-clearance by the Audit
Committee if the fee exceeds specified thresholds. The Group’s
policy to seek competitive tenders for all major consultancies and
advisory projects is set out in note 7 to the Financial Statements. In addition, the Committee was provided with reports
of all non-audit assignments awarded to the external auditors and,
on a regular basis, a full breakdown of non-audit fees incurred
during the year.
In accordance with International Standard on Auditing (UK &
Ireland) 260 and Ethical Statement 1 issued by the Accounting
Practices Board, and as a matter of best practice, the external
auditors have confirmed their independence as auditors of the
Company, in a letter addressed to the Directors.
A report detailing the composition, responsibilities and work
carried out by the Remuneration Committee during the year,
including an explanation of how it applies the principles of the
Code in setting Executive Directors’ remuneration, is included
within the Remuneration Report.
The members of the Nominations Committee are Roger Carr
(Chairman), Helen Alexander, Mary Francis, Sam Laidlaw,
Andrew Mackenzie, Paul Rayner and Paul Walsh. The
Committee’s membership is comprised of a majority of
independent Non-Executive Directors. The primary
responsibilities of the Committee are to:
- make appropriate recommendations to the Board for the
appointment of replacement or additional Directors;
- devise and consider succession planning arrangements
for Directors and other senior executives; and
- regularly review the structure, size and composition of the
Board and make recommendations to the Board with regard
to any proposed changes.
The Committee met on three occasions during the year and
considered the proposed appointment of Mark Hanafin as
Managing Director, Centrica Energy and Europe to replace
Jake Ulrich, who resigned from the Board on 12 May 2008.
In making its appointment recommendations to the Board, the
Committee reviews the overall balance of skills, knowledge and
experience on the Board against current and future requirements
of the Company and, as appropriate, draws up a list of required
In addition to this appointment, the Committee considered:
- the reappointment of Directors retiring by rotation at the
2008 Annual General Meeting;
- Board and senior management succession planning; and
- Board constitution changes and appointments.
Corporate Responsibility Committee
The members of the Corporate Responsibility Committee are
Mary Francis (Chairman), Phil Bentley, Deryk King, Sam Laidlaw,
Andrew Mackenzie and Catherine May.
A report detailing the work carried out by the Corporate
Responsibility Committee during the year is included within the
Corporate Responsibility section.
The members of the Executive Committee are the Executive
Directors and those key senior managers whose biographical
details are set out in the Board of Directors and
Executive team section. Sam Laidlaw is Chairman
of the Committee.
The Committee is responsible for the day-to-day management
of the Group’s operations within the limits set out in the Group’s
delegation of authority, which was reviewed and approved by
the Board during the year. The Committee also has a schedule
of matters specifically reserved for its approval.
The Committee has delegated certain tasks to the following
- the Group Risk Management Committee;
- the Group Financial Risk Management Committee;
- the Health, Safety and Environment Committee; and
- the Investment Committee.
During the year, the Committee conducted a thorough review
of the terms of reference in respect of the Group Financial Risk
Management, Health, Safety and Environment, and Investment
Committees and approved revised terms.
The members of the Disclosure Committee are Sam Laidlaw
(Chairman), Nick Luff and Grant Dawson.
The Committee met on a number of occasions during the year
and is responsible for implementing and monitoring systems and
controls in respect of the management and disclosure of inside
information. The Committee is also responsible for ensuring that
all regulatory announcements, shareholder circulars, prospectuses
and other documents issued by the Company comply with any
applicable legal or regulatory requirements.