Statement of Compliance with the UK Corporate Governance Code
The Board is committed to sound corporate governance and has adopted the Financial Reporting Council’s UK Corporate Governance Code July 2018 (“Code”). The Directors recognise the value of the Code and will take necessary measures to ensure that the Company complies taking into account the Company’s size and the nature of its business. This report sets out in broad terms how we comply at this point in time and where we are not compliant, sets out the reasoning.
The following statements correspond to the principles set out in the Code.
1. Board Leadership and Company Purpose
A. It is the Board’s responsibility to provide strategic oversight and guidance to ensure the Company is able to create and sustain shareholder value over the long term. For this purpose, the Board encourages an open, respectful and collaborative working environment where all directors voice their opinions and contribute constructively to the debate.
B. The Board is committed to maintaining the Group’s culture, values and standards. The Group’s employees are its primary assets and the Board and executive team are committed to their career development and their emotional and physical welfare. The Company recognises that having an effective workforce is fundamental to organisational success and for this reason it is Company policy to recruit the best person for each vacancy based on merit. The Group makes a focused effort to offer bespoke training and mentorship to allow all employees to thrive within their environment and to safely perform their job function.
C. The Board ensures that all key matters affecting the Group are considered and that material risks and opportunities are identified and discussed by the Board and executive management.
D. The Company values the views of its shareholders and recognises their interest in the Company’s strategy and performance, Board membership and quality of management. The Board communicates with its shareholders principally through RNS announcements, the Annual Report, the Annual General Meeting and the Company’s website. The executive directors regularly engage with institutional shareholders during the year. The non-executive directors engage directly with shareholders at the AGM and on other occasions if appropriate. The AGM gives the directors the opportunity to report to shareholders on current and proposed operations of the Company and enables shareholders to express their views on the Company’s business activities. Shareholders are invited to ask questions of all directors at the AGM.
E. The Company communicates and engages with its employees through a range of informal and formal channels including staff presentations several times a year where there are opportunities to ask questions of senior management, confidential discussions between line managers/HR and staff to discuss issues or concerns, and discussions with senior management where employees wish to escalate issues. All matters are dealt with sensitively and confidentially and, where appropriate, anonymously. The Board considers this balance of engagement reasonable in view of the size of the Company’s business and that suitable practices, policies and procedures (e.g. mentoring programmes, training and development, whistleblowing policies, appraisal systems) are in place to enable constructive engagement between employees and the Company.
2. Division of Responsibilities
F. The Company’s business is directed by the Board which is comprised of the part-time Chairman, the executive Finance Director and two independent non-executive directors. One of the non-executive directors has been appointed as the senior independent director. The Board provides leadership and direction for the Company, sets overall strategy and oversees implementation, ensures appropriate systems and processes are in place to monitor and manage risk and compliance issues and takes responsibility for financial performance and corporate governance.
The Chairman is primarily responsible for the leadership and effectiveness of the Board and the Group corporate strategy. The Chairman’s responsibilities also include leading the development and execution of the Company’s long term strategy, overseeing matters pertaining to the running of the Company and ensuring that the Company meets all legal, compliance and corporate requirements. High level strategic decisions are discussed and taken by the Board with recommendations as appropriate from the Chairman.
Operational decisions are taken by the Chairman and the operational management team with specific responsibilities for individual business units within the framework approved in the annual budgets. The Finance Director supports the Board and the management and is responsible for managing the Group’s finance strategy, reporting, investor relations, risk management and internal controls and leadership of the finance function.
The biographical details of the directors are set out here. The directors are of the opinion that the Board comprises a suitable balance and that the recommendations of the Code have been implemented to an appropriate level.
G. The Company does not have an independent Chairman. The Chairman has a significant shareholding in the Company. The Company does not have a separate CEO and, where appropriate, the Chairman assumes the role of CEO, although the day-to-day operations of the Group are managed by the executive management team. However, it is the Board’s opinion that the current arrangements are appropriate to the Company and Group at this stage of development and that there are sufficient compliance structures within the Company to ensure that the governance functions that would be part of an independent Chairman’s responsibility are met. The Board is satisfied with the balance between executive and non-executive directors which allows it to exercise objectivity in decision making and proper control of the Group’s business. The Board considers its composition is appropriate in view of the size and requirements of the Group’s business and the need to maintain a practical and efficient balance between executive and non-executive directors.
H. The independent non-executive directors’ role is to act as a sounding board to the Chairman and to be available to shareholders as and when necessary. The non-executive directors also support executive management whilst providing constructive input and monitoring the delivery of strategy within the risk parameters set by the Board. The Board considers the non-executive directors to be independent in character and judgment and that there are no relationships or circumstances which could materially affect or interfere with the exercise of the non-executive directors strong, independent judgement, knowledge and experience.
I. It is the responsibility of the Chairman and Company Secretary to ensure the Board members receive sufficient and timely information regarding corporate and business issues to enable them to discharge their duties. The Company Secretary attends Board meetings and is responsible for advising the Board on corporate governance matters. The Board is also kept informed of changes in relevant legislation and changing commercial risks with the assistance of the Company’s Group Legal Counsel & Company Secretary, NOMAD and auditors.
3. Composition, succession and evaluation
J. The nomination committee makes recommendations to the Board on all new appointments, re-appointments and advises generally on issues relating to Board composition and balance. Appointments and succession planning are based on merit and the Board does not condone discrimination of any kind, whether negative or positive. The nomination committee is comprised of the Company’s Chairman (committee chair) and the two independent non-executive directors. Please see the nomination committee’s terms of reference for more information.
K. The Board and its committees are considered to have the appropriate balance of skills, experience, independence and knowledge of the Company and its Group to enable them to discharge their respective duties and responsibilities effectively. Further information on the committees and its members are available in the annual report.
The directors are not subject to annual election by shareholders. The Company currently offers its directors for re-election by rotation in accordance with its articles of association every three years, on the basis that at least one third of the directors must be re-elected every year. The Board considers this appropriate given the size of the Board and the benefit of stability and experience in the Board composition. This re-election process will be kept under review.
L. The Board does not conduct a formal performance evaluation of the directors nor do the independent non-executive directors formally appraise the Chairman. Due to the small size of the Board, there is an annual evaluation of the Board and its committees in accordance with the articles of association and informal performance evaluations of directors and the Chairman by the Board on a regular basis which is considered sufficient.
4. Audit, risk and internal control
M. The audit committee is primarily responsible for ensuring that the financial performance of the Company is properly measured and reported on for reviewing reports from auditors relating to the Company’s accounting and internal controls and for reviewing the effectiveness of the Company’s systems of internal control. The audit committee is comprised of the two independent non-executive directors. The committee chair is the Board’s senior independent non-executive director and has over 25 years of corporate finance experience. Please see the audit committee’s terms of reference for more information.
N. The annual report describes the principal risks for the Company and the Board’s view of the Company’s position and prospects.
O. The Board acknowledges its responsibility for a sound system of internal control to safeguard shareholders’ investments and the Group’s assets. Financial, technical and operational risks are reviewed regularly by the Board and, where appropriate, the audit committee. The annual report describes the Company’s internal control framework and risk mitigations.
P. The remuneration committee monitors the remuneration policies of the Company to ensure they are consistent with the Company’s business objectives. The committee is comprised of the two independent non-executive directors. Whilst the chair of the committee had not formally served on a remuneration committee for 12 months prior to his appointment, the Board was satisfied that his extensive prior experience had given him the required skills, knowledge and expertise for the role. The committee determines the individual remuneration package for all director, executive management and senior employees of the Company including pension rights and any other compensation payments including bonus payments and share option awards. Further information on current remuneration policies and practices is provided in the annual report.
Q. Please see the remuneration committee’s terms of reference which set out the factors the remuneration committee considers when considering executive directors’ remuneration. Similar factors are considered in respect of senior management remuneration. No directors are involved in deciding their own remuneration outcome.
R. Please see the remuneration committee’s terms of reference for information on the factors influencing remuneration outcomes.
Updated September 2018