Ophir Energy plc Annual Report and Accounts 2011

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34 Ophir Energy plc Annual Report 2011 Directors’ Report continued Details of change of control clauses contained in the contracts of employment of the Executive Directors are set out on page 48 of the Directors’ Remuneration Report. Certain members of the Group’s Senior Management team have agreements providing for compensation for loss of office or employment that occurs because of a change of control. All of the Company’s share incentive plans contain provisions relating to a change of control and details of these plans are provided in the Directors’ Remuneration Report on pages 46 to 47. Generally, outstanding awards under the Foundation Incentive Plan and the 2006 Plan will vest in full and become exercisable on a change of control. The Remuneration Committee may allow outstanding awards under the Long-term Incentive Plan (“LTIP”) to vest to the extent that any performance condition is satisfied at the date of that event and, unless the Remuneration Committee decides otherwise, such level of vesting to be reduced to take account of the fact that the award is vesting early. LTIP awards may instead be exchanged for equivalent awards over shares in the acquiring company. Post Balance Sheet Events A summary of the key Post Balance Sheet Events is set out in Note 29 to the financial statements. By order of the Board Dr Nicholas Cooper Chief Executive Officer Ophir Energy plc Company No. 5047425 55 Grosvenor Street London W1K 3HY Going Concern The Group’s business activities, together with the factors likely to affect its future development, performance and position are set out in the Business Review on pages 2 to 27. The financial position of the Group, consisting of cash resources of US$396.6 million, its cash flows, liquidity position and borrowing facilities are described in the Financial Review on pages 20 to 21. In addition, Note 27 to the financial statements include the Group’s objectives, policies and processes for managing its capital; its financial risk management objectives; details of its financial instruments and hedging activities; and its exposures to credit risk and liquidity risk. In making their going concern assessment, the Directors have considered Group budgets and cash flow forecasts for a period of at least the next 12 months. Following the successful capital raising in April 2012 the Group has increased its cash resources available to complete its planned exploration programmes. As a consequence, the Directors believe that the Group is now well placed to meet its exploration and appraisal expenditure commitments for at least the next 12 months. As a result of this review the Directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. Thus they continue to adopt the going concern basis of accounting in preparing the annual financial statements.
35 Ophir Energy plc Annual Report 2011 Corporate Governance Report Compliance with the UK Corporate Governance Code On 13 July 2011 the Company was admitted to the premium segment of the UK Listing Authority’s Official List and to trading on the main market of the London Stock Exchange. As a premium listed entity, the Company is required to either comply with the UK Corporate Governance Code (a copy of which may be found on the website of the Financial Reporting Council at www.frc.co.uk) or to explain any reason for non-compliance. The UK Corporate Governance Code (the “Code”) consists of main and supporting principles and provisions in five areas: Leadership, Effectiveness, Accountability, Remuneration and Relations with Shareholders, which companies should apply and report to their shareholders on how they have done so. During the year ended 31 December 2011, the Company has complied with all the provisions of the Code with the exception of the requirement to undertake a formal and rigorous annual evaluation of its own performance and that of its Committees and individual Directors (Code Principle B.6). In view of the fact that the new Board has only been in place since July 2011, the Directors are of the opinion that it would be of greater benefit for the first formal evaluation to be undertaken during the Company’s first full year as a listed entity. It is therefore proposed that an evaluation be undertaken during the second half of 2012 and details of the process undertaken, and any outcomes reached, will be included in the Annual Report and accounts for the year ended 31 December 2012. The purpose of this Corporate Governance Report, together with the Directors’ Report on pages 31 to 34 and the Remuneration Report on pages 45 to 52, is to provide shareholders with details of the Company’s governance policies, processes and structures and to explain how compliance with the main principles of the Code has been achieved. –– reviewing financial performance; –– approving material acquisitions, disposals, contracts and expenditure; –– appointments to the Board and senior management appointments, Committee membership and remuneration for Directors and senior executives; –– ensuring the effectiveness of the Company’s system of internal controls including managing risks; –– approval of health, safety, environmental and other relevant policies; and –– setting the Company’s values and standards and ensuring good corporate governance practices. Board composition and independence As at 31 December 2011, the Board of Directors of the Company (the “Board”) comprised the Chairman, three Executive Directors and six Non-Executive Directors. All of the Executive Directors and a majority of Non- Executive Directors have extensive experience within the oil and gas industry. During the period leading up to the Company’s admission to trading on the London Stock Exchange, the Directors considered the most appropriate ongoing structure that would facilitate a smooth transition to full public ownership from the more entrepreneurial pre-IPO structure. The Board considered a phased succession planning process in relation to the Company’s senior executives and appointed Dr Nicholas Cooper as Managing Director in June 2011. Following this appointment Dr Alan Stein, the previous Managing Director, stepped up to the role of Executive Deputy Chairman as part of a planned withdrawal from day-to-day management of the Group. In December 2011, Dr Cooper was formally appointed as the Group’s Chief Executive Officer and Dr Stein notified the Board that, while he would continue to make himself available for advice and guidance, he would not be seeking re-election at the Company’s AGM in 2012. BUSINESS REVIEW GOVERNANCE FINANCIAL STATEMENTS Role of the Board The role of the Board is to lead the Company and, either directly or through the operation of its Committees and delegated authority, bring an independent judgement on all matters of strategy, performance, resources (including key appointments) and standards of conduct. The Board is responsible for the strategic aims of the Company, which are then implemented through the approval and regular monitoring of performance against the budget prepared by the Executive Directors. The Board has adopted a formal schedule of matters reserved for its approval. Reserved matters include –– setting the Company’s strategy and objectives; –– approving annual budgets and operating plans, annual and half year reports and interim management statements; The Board also acknowledged the need to strengthen the Company’s finance function in the short-term prior to, and for the purposes of, the IPO. Ms Yvonne Holm was appointed as Chief Financial Officer in February 2011 and stepped down from the Board in December 2011. The Board considered the Company’s requirements in relation to the roles and responsibilities of its Non-Executive Directors. As a consequence of these deliberations, the Board accepted the recommendations of the Nomination Committee to appoint additional independent Non-Executive Directors and to accept the resignation of a number of its shareholder Directors in July 2011, prior to IPO. The Board considers that the majority of its Non-Executive Directors, namely Nicholas Smith, Ronald Blakely, John
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