The board applied all of the main principles and provisions of the Code throughout the year ended 31 March 2015, except in the following respects:
1. The Code recommends that at least half the board, excluding the Chairman, should comprise non-executive directors determined by the board to be independent. This recommendation was not met during the period between the planned retirement of Miles Morland at the conclusion of the 2014 annual general meeting, held on 24 July 2014, and the appointment of Jan du Plessis on 1 September 2014. However, during this period the board was not scheduled to meet and no meetings took place.
2. Our audit committee did not consist solely of independent directors. Under our relationship agreement with Altria, as approved by shareholders in 2002 and in 2005, Altria has the right to nominate a director to the audit committee, and has nominated Dinyar Devitre, who the board does not consider to be an independent director for the purposes of the Code. The board nevertheless considers that the composition of the audit committee remains appropriate, given Altria’s interest as the company’s largest shareholder. Dinyar Devitre is a former Chief Financial Officer of Altria and the board considers that his experience and background in financial matters and his independence from management mean that the effectiveness of our audit committee in discharging its functions is considerably enhanced and not compromised by his membership.
3. The Code recommends that the performance evaluation of the boards of FTSE 350 companies should be externally facilitated at least every three years. In respect of the year under review, given the temporary nature of John Manser’s appointment as Chairman, the board concluded that rather than carry out such a review towards the end of John Manser’s tenure it would be more beneficial to conduct an externally facilitated performance evaluation early in the tenure of the new chairman, Jan du Plessis. As described in the Chairman’s statement, the board did carry out a formal and rigorous evaluation of the performance and effectiveness of the board, its principal committees, its individual directors and the Group Company Secretary. The board intends to conduct an external evaluation during the current financial year.
4. The Code was amended for financial years beginning on or after 1 October 2012 to provide that external audit contracts should be put out to tender at least every 10 years. The company has not tendered its external audit contract within the last 10 years. Since 2012, developing UK market practice has been to conduct an audit tender to coincide with rotation of the lead audit engagement partner. Richard Hughes, the lead audit engagement partner from PwC, our current external auditors, is scheduled to rotate at the conclusion of the audit for the year ending 31 March 2016. However in light of the process underway to appoint a new Chief Financial Officer we have determined that an audit tender should be undertaken during the 2016 calendar year for the start of the financial year ending 31 March 2018 to allow time for a new Chief Financial Officer to be appointed and to become established.