The UK Corporate Governance Code (formerly the combined code) sets out standards of good practice in relation to board leadership and effectiveness, remuneration, accountability and relations with shareholders. Whilst there is no obligation for AIM-listed companies to comply with this code, the Board endorses the principles of effective corporate governance and as stated is committed to maintaining the highest standards of ethics, and professional competence. That said, your Directors do not consider that full compliance with all aspects of the code is appropriate for the Group at this stage of its development, but we shall keep the matter under review and continue to develop procedures as the Group grows.
Board of Directors
The principal duty of the Board is to represent and protect the interests of the Company’s shareholders. The Board plays an important role in working with management to ensure that our businesses are well governed, financially strong, that we mitigate any risks that our managers identify and that we strike a balance between achieving our short‑term objectives and longer term growth and development. The Board works closely with management in developing proposals on strategy for each of our businesses and our Group, as a whole.
Division of Responsibilities
There is a distinct and defined division of responsibilities between the Chairman and the Chief Executive Officer (CEO). The Chairman is primarily responsible for the effective working of the Board and the CEO for the operational management of the business and for the implementation of the agreed strategy.
Composition of the Board
There were no changes to the composition of the Board during the year under review. We operate with four Executive Directors and three Non-Executive Directors in addition to myself as Non‑Executive Chairman. Our Non-Executive Directors have an important role in constructively challenging and helping to develop proposals on strategy; on scrutinising management’s performance in meeting agreed goals and objectives and the monitoring of performance reports.
The Board has two committees – Remuneration and Audit. During the year I have chaired the Remuneration Committee, which also comprises two Non‑Executive Directors, Elaine Bond and Phil Dutton. Whilst I shall remain on the Committee going forward, it is my intention to appoint one of our Non‑Executive Directors as Chair. Our Audit Committee comprises Elaine Bond and myself and is chaired by Phil Dutton, one of our Non‑Executive Directors.
The Audit Committee satisfies itself on the integrity of financial information and that controls and risk management systems are robust and defensible. The Committee meets as required during the year and at least twice with the Group’s external auditor. Its role is to review the interim and final financial statements for approval by the Board, to ensure that operational and financial controls are functioning properly, and to provide the forum through which the Group’s external auditor reports to the Board.
The Remuneration Committee determines appropriate levels of remuneration and compensation for Executive Directors. The Committee meets as required during the year and this year was heavily involved in agreeing the policies and rules of a new Long Term Incentive Plan for Executive Directors and certain senior management.
Anders Hedlund also holds the position of Non-Executive Director on the Board. Anders Hedlund is presumed not independent because, as founder, he has served on the Board since the Company’s inception, he holds significant interests in the shareholding of the Company and also fulfils a consultancy role within one of the Group’s businesses. As at the date of this report, all of the other Non-Executive Directors are considered independent under the UK Corporate Governance Code.
Accountability and Audit
All Directors have accepted a duty of care and accountability to act in the interests of the Company. As stated, the Group Audit Committee oversees how the Board monitors risk and reviews the adequacy of the risk management framework.
The Board of Directors has overall responsibility for the establishment and oversight of the Group’s risk management framework. The Group’s risk management systems, policies and procedures are established to identify and analyse the risks faced by the Group, to set appropriate risk limits and controls, and to monitor the risks and adherence to limits. Such a system is designed to manage rather than eliminate the risk of failure to achieve business objectives, and can only provide a reasonable and not absolute assurance against material misstatement or loss.
Risk management processes are reviewed regularly by the Audit Committee to reflect changes in market conditions and the Group’s activities. The Board’s oversight covers all controls, including financial, operational and compliance controls and general risk management. It is based principally on reviewing reports from management to consider whether significant risks are identified, evaluated, managed and controlled and whether any significant weaknesses are promptly remedied and indicate the need for more extensive monitoring.
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>> Companies Act 2006 - Articles of Association
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