Chairman's statement on corporate governance

In June 2018, as required under the AIM Rules, the Group’s board formally adopted the Quoted Companies Alliance Corporate Governance Code (“QCA Code”) as its ‘recognised corporate governance code’. The Group has for some years sought to follow the previous QCA Code as far as was considered relevant to the Group, rather than the UK Corporate Governance Code that applies to all fully-listed companies. In some respects, the Group’s corporate governance exceeds that required under the QCA Code, but the board judged that overall the QCA Code was the most relevant applicable corporate governance code, given the Group’s size and the nature of its operations.

The board recognises the importance of a sound system of corporate governance and internal control. The board is made up of three executive directors and four non-executives. This structure is designed to ensure that there is a clear balance of responsibilities between the executive and the non-executive functions. As chairman I am primarily responsible for setting the Group’s strategy in conjunction with the board, and for ensuring the effective operation of the board. This includes making sure the board continues to develop its corporate governance in response to changes in official standards and public expectations through full and timely discussion at board meetings. Board evaluation and a review of corporate governance will take place at least every two years, although the corporate governance information on our website will be reviewed annually.

A good system of corporate governance is of no use without a board whose members continue to develop their skills and capabilities. Our board members have extensive experience and remain professionally active and motivated to broaden their knowledge. All directors have the opportunity to attend seminars and formal training courses; they keep in touch with relevant developments through discussion amongst their business and professional contacts; and they read relevant trade and other professional publications. This activity is now being recorded by the Group’s company secretary.

The board has begun a process of evaluating itself. Board evaluation is being conducted internally, led by the chairman and supported by the company secretary. Its design draws on an independent framework and recommended questions assessing the nature and performance of the board and its committees. Each board member will invest significant time in answering a series of structured questions. Before the end of the first quarter of 2019, a consolidated report of these assessments will be considered by the board, which will also consider what further action needs to be taken.

Effective risk management and acknowledging the role that stakeholders play in our Group’s operations are central to our success. We believe compliance with the QCA Code provides a valuable support in strengthening our ability to grow and so deliver returns to our shareholders that also benefits our wider stakeholders. The Group sees ethical behaviour as a competitive advantage to building trust with suppliers and attracting and retaining high-performing staff. This too is emphasised in the QCA Code. Finally, the Group operates in a sector where timelines are long and hence where there is a premium on boards in which shareholders can place their trust.

Other than adoption of the revised QCA Code and commencing a board evaluation, there have been no significant changes to corporate governance during the year.

PEHC
26 September 2018