Corporate Governance Statement

Introduction from the Chairman

As a company admitted to trading to AIM, the Board recognises that good corporate governance enhances its decision-making processes, improving the success of the Company and increasing shareholder value over the medium to long-term, and it formally adopted the Quoted Companies Alliance’s Corporate Governance Code (the “QCA Code”) on 27 June 2018. 

The underlying principle of the QCA Code is that good governance ensures that a company is managed in an efficient, effective and dynamic framework that is accompanied by good communication, and this promotes confidence and builds trust.

An explanation of how the QCA Code is applied and how compliance with its principles will promote the success of the Company is set out below, together with any areas of non-compliance.

This disclosure was last reviewed 25/09/2018

Role of the Chairman

The Board as a whole is responsible for effective corporate governance. As Chairman of the Board, I have overall responsibility for the corporate governance arrangements of the Company, the provision of effective leadership to the Board, ensuring the smooth running of the Board and ensuring effective implementation of the Board’s decisions.

In addition, my role as Chairman is to build constructive relationships both within and outside the boardroom, based on mutual understanding and open communication.

Further corporate governance disclosures will be included in our next Annual Report.

The QCA Ten Principles of Corporate Governance:

DELIVER GROWTH

QCA Code Principle

Application (as set out by QCA)

What we do and why

1.

Establish a strategy and business model which promote long-term value for shareholders

The board must be able to express a shared view of the company’s purpose, business model and strategy.  It should go beyond the simple description of products and corporate structures and set out how the company intends to deliver shareholder value in the medium to long-term.  It should demonstrate that the delivery of long-term growth is underpinned by a clear set of values aimed at protecting the company from unnecessary risk and securing its long-term future.

The Board is responsible for setting the Group’s strategy and annually reviews the strategy to ensure it promotes long-term value for shareholders.

A comprehensive description of our purpose, strategy, business model and the key challenges in the strategy execution is available on pages 4 to 21 of the Annual Report for the year ended 31 January 2018 (the “2018 Annual Report”), a copy of which is available here.

The five pillars of the Company’s strategy are underpinned by our values: integrity, honesty and openness.

The Board is committed to an appropriate dividend policy and level of dividend cover.

2.

Seek to understand and meet shareholder needs and expectations

Directors must develop a good understanding of the needs and expectations of all elements of the company’s shareholder base.

The board must manage shareholders’ expectations and should seek to understand the motivations behind shareholder voting decisions.

The Board appreciates the support of its shareholders and recognises the importance of encouraging two-way communications with both its institutional and private investors.

The AGM is an important opportunity for private shareholders to meet the Board with all the Directors available to listen to shareholders views informally immediately following the meeting.

The Chief Executive Officer and Chief Financial Officer have regular dialogue with institutional investors in order to develop an understanding of their views. Presentations are made bi-annually to analysts, investors and prospective investors covering the annual and interim results.

The Chairman and Non Executive directors periodically hold meetings with major shareholders.

3.

Take into account wider stakeholder and social responsibilities and their implications for long-term success

Long-term success relies upon good relations with a range of different stakeholder groups both internal (workforce) and external (suppliers, customers, regulators and others).  The board needs to identify the company’s stakeholders and understand their needs, interests and expectations.

Where matters that relate to the company’s impact on society, the communities within which it operates or the environment have the potential to affect the company’s ability to deliver shareholder value over the medium to long-term, then those matters must be integrated into the company’s strategy and business model.

Feedback is an essential part of all control mechanisms. Systems need to be in place to solicit, consider and act on feedback from all stakeholder groups.

The Board recognises the importance of positive relationships with the Company’s key stakeholder groups and its impact on the long-term success of the Company.

The Board considers its key stakeholder groups to include:

- Suppliers and business partners – we aim to develop strong relationships with our suppliers based on trust, understanding and respect;

- workforce – we are a responsible employer, compliant with all relevant human resources and health and safety regulations;

- customers – good relationships with our customers are important for the success of our business.

Our business model identifies the key resources and relationships on which the Company relies. The Company also gives due consideration to the environment and the local community, further information on which can be found in the At a glance section of the website. 

The company obtains feedback from stakeholder groups by way of:

- informal meetings and consultation with employees’ representatives, an annual employee engagement survey, and reports received through the Group’s Whistleblowing policy;

- regular meetings with suppliers and business partners; and

- maintaining a social media presence in order to understand the sentiment of and obtain feedback from the customers.

The Company considers the feedback received and takes appropriate action as necessary.

4.

Embed effective risk management, considering both opportunities and threats, throughout the organisation.

The board needs to ensure that the company’s risk management framework identifies and addresses all relevant risks in order to execute and deliver strategy; companies need to consider their extended business, including the company’s supply chain, from key suppliers to end customers.

Setting strategy includes determining the extent of exposure to the identified risks that the company is able to bear and willing to take (risk tolerance and risk appetite).

The Board acknowledges that it is responsible for the Group’s system of internal control and risk management and for reviewing its effectiveness. In order to do this, the Board maintains a comprehensive risk register which is reviewed semi-annually by the Board.

The Board keeps its risk control procedures under constant review particularly with regard to the need to embed internal control and risk management procedures further into the operations of business, both in the UK and overseas, and to deal with areas of improvement which come to management’s and the Board’s attention.

The Group’s significant risks, including those outline on the risk register, together with the relevant control and monitoring procedures, are subject to regular review to enable the Board to assess the effectiveness of the system of internal control.

More information about the Group’s principal risks and the work of the Audit Committee in relation to internal control and risk management can be found on pages 26 and 27 and page 52 of the 2018 Annual Report respectively.

MAINTAIN A DYNAMIC MANAGEMENT FRAMEWORK

QCA Code Principle

Application  (as set out by QCA)

What we do and why

5.

Maintain the board as a well-functioning, balanced team led by the chair

The board members have a collective responsibility and legal obligation to promote the interests of the company, and are collectively responsible for defining corporate governance arrangements.  Ultimate responsibility for the quality of, and approach to, corporate governance lies with the chair of the board.

The board (and any committees) should be provided with high quality information in a timely manner to facilitate proper assessment of the matters requiring a decision or insight.

The board should have an appropriate balance between executive and non-executive directors and should have at least two independent non-executive directors. Independence is a board judgement.

The board should be supported by committees (e.g. audit, remuneration, nomination) that have the necessary skills and knowledge to discharge their duties and responsibilities effectively.

Directors must commit the time necessary to fulfil their roles.

The Company is supervised by the Board of Directors which comprises two Executive and two Non-executive Directors.

The Chairman of the Board, has overall responsibility for the corporate governance arrangements of the Company, the provision of effective leadership to the Board, ensuring the smooth running of the Board and ensuring effective implementation of the Board’s decisions.

The Board is collectively responsible to the shareholders and sets the Group’s strategy for achieving long-term success. It is responsible for the management, governance, controls, risk management, direction and performance of the Group.

There is a formal schedule of matters reserved to the Board (insert link), and the Board is supported by the Audit, Remuneration and Nomination Committees, each of which has responsibilities as set out in the terms of reference section of the website.

Further details about the independence of directors, the number of meetings attended and the information received by the Board and its committees are disclosed on page 49 of the 2018 Annual Report.

 

6.

Ensure that between them the directors have the necessary up-to-date experience, skills and capabilities

The board must have an appropriate balance of sector, financial and public markets skills and experience, as well as an appropriate balance of personal qualities and capabilities.  The board should understand and challenge its own diversity, including gender balance, as part of its composition.

The board should not be dominated by one person or a group of people.  Strong personal bonds can be important but can also divide a board.

As companies evolve, the mix of skills and experience required on the board will change and board composition will need to evolve to reflect this change.

The Board has an appropriate balance of skills and experience, as well as an appropriate balance of personal qualities and capabilities. Details of each of the Directors can be found at Board of Directors section of the website, together with pages 40 and 41 of the Annual Report, which identify each Director and explain how their skills and experience contribute to the delivery of the Company’s strategy.

The Nomination Committee gives full consideration to the succession planning for directors and other senior executives in the course of its work, taking into account the challenges and opportunities facing the company, and the skills and expertise needed on the board in the future.

The Nomination Committee makes recommendations to the Board on all new Board appointments.

The Company’s Articles of Association stipulate that one-third of the Directors, or the nearest whole number below one-third, shall retire each year. The Company requires all Directors to submit themselves for re-election at least every three years.

7.

Evaluate board performance based on clear and relevant objectives, seeking continuous improvement

The board should regularly review the effectiveness of its performance as a unit, as well as that of tis committees and the individual directors.

The board performance review may be carried out internally, or ideally, externally facilitated from time to time.  The review should identify development or mentoring needs of individual directors or the wider senior management team.

It is healthy for membership of the board to be periodically refreshed.  Succession planning is a vital task for boards.  No member of the board should become indispensable.

The Board continually reflects on its performance and aims to identify areas for improvement where such areas exist.

The Board has not yet undertaken a formal review of its performance but has undertaken to complete an informal review during the next financial year.

Key findings from the review and the resulting actions agreed by the Board will be published in the next Annual Report.

8.

Promote a corporate culture that is based on ethical value and behaviours

The board should embody and promote a corporate culture that is based on sound ethical values and behaviours and use it as an asset and a source of competitive advantage.

The policy set by the board should be visible in the actions and decision of the chief executive and the rest of the management team.  Corporate value should guide the objectives and strategy of the company.

The culture should be visible in every aspect of the business, including recruitment, nominations, training and engagement.  The performance and reward system should endorse the desired ethical behaviours across all levels of the company.

The corporate culture should be recognisable through the disclosures in the annual report, website and any other statements issued by the company.

The Board is committed to ensuring the highest legal and ethical standards and acknowledges its responsibilities in relation to corporate governance.

The Board has produced a Code of Conduct that can be found at the Code of Conduct section of the website and aims to ensure that the Company and its employees conduct themselves respectfully and honestly in all their dealings with customers in accordance with the principles on the Code of Conduct.

The annual employee engagement survey provides a measure of the corporate culture and its embodiment throughout the business.

9.

Maintain governance structures and processes that are fit for purpose and support good decision-making by the board

The company should maintain governance structures and processes in line with its corporate culture and appropriate to its;

  • Size and complexity; and
  • Capacity, appetite and tolerance for risk

The governance structures should evolve over time in parallel with its objectives, strategy and business mode to reflect the development of the company.

Good governance reduces risk and adds value to our business. Delivering growth and long-term shareholder value with effective and efficient decision-making is of paramount importance to the Board.

There is a clear division of responsibilities between the Chairman, who is responsible for the effective leadership and smooth running of the Board, and the Chief Executive Officer who, together with the other Executive Directors, is responsible for the running of the Company.

The Board is supported by Audit, Nomination and Remuneration Committees, further information of each  is set out on the website under the written terms of reference section.

 


BUILD TRUST

QCA Code Principle

Application  (as set out by QCA)

What we do and why

10.

Communicate how the company is governed and is performing by maintaining a dialogue with shareholders and other relevant stakeholders

A healthy dialogue should exist between the board and all of its stakeholders, including shareholders, to enable all interested parties to come to informed decisions about the company.

In particular, appropriate communication and reporting structure should exist between the board and all constituent part of its shareholder base.  This will assist:

  • the communication of shareholders’ views to the board; and
  • the shareholders’ understanding of the unique circumstances and constraints faced by the company.

It should be clear where these communication practices are described (annual report or website).

The Company maintains a healthy dialogue with shareholders and other relevant stakeholders.

As detailed in 2 above,

the communication and reporting practices consist of:

  • AGM-related interactions
  • regular contact maintained throughout the year by way of meetings with shareholders and feedback obtained from stakeholders.

The Company website has an Investors section giving private investors direct access to business information and Company reports which can be found here. There is also an enquiries mailbox facility on the website which can be found here.

 

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