Chairman's statement

The first of the Group’s four strategic pillars is “Responsibility”.

At M.P. Evans, acting responsibly is at the heart of what we do and, as a board, we believe that a strong governance framework plays a vital role in ensuring that business is conducted responsibly at every level. This, in turn, benefits the Group’s shareholders. The board embraced the QCA’s Corporate Governance Code (the “Code”) in 2018, recognising this as a valuable tool to help the Group achieve its goals. As a board, we dedicate significant time to developing and reviewing codes and policies which support our values of acting responsibly, and have promoted these throughout the organisation. Our compliance with the Code is monitored annually by the board, which also serves as an opportunity to remind ourselves of the corporate governance standards we aspire to and to keep up to date with any developments. The corporate governance information and QCA compliance index on our website is updated annually following the board’s review, and was last updated in September 2022.

As chairman, in addition to setting the Group’s strategy in conjunction with the board, one of my primary responsibilities is to ensure that an effective corporate governance framework exists, and that clear policies, which have been approved and endorsed by the board, are embedded within all levels of the organisation. I am also responsible for ensuring the effective operation of the board. The composition of the board, the breadth and depth of its skill set, the diversity of its members to facilitate insight and perspective on matters being considered, and the inclusive environment within which constructive debate is enabled, are hugely important to the effectiveness of the board in its strategy setting and decision making. Board composition was a particular focus during 2022 due to a number of changes arising during the course of the year. My colleagues and I dedicated significant time, firstly in evaluating the current performance, skills and attributes of the board and identifying areas which could be enhanced to ensure that the board is equipped to deliver on its objectives and the Group’s strategy. Secondly, a robust and transparent recruitment process was carried out with the assistance of specialist recruitment consultants. As a result, we have been very pleased during the year, to welcome firstly Michael Sherwin, a very experienced non-executive director and former listed company executive, coming from an accountancy and finance background, and then Tanya Ashton, who is a leader in sustainability and ESG. At the beginning of February 2023, we also welcomed Lee Yuan Zhang to the board who, due to his roles within the Kuala Lumpur Kepong Berhad Group, has valuable experience in the Indonesian oil-palm plantation sector, as well as wider corporate experience. We are delighted already to be benefiting from the various perspectives brought by our new directors, and are confident that we are in strong shape, with a dynamic board equipped to face challenges and to identify opportunities, particularly those presented by climate change, and to continue to deliver returns to shareholders.

With the appointment of Michael and Tanya at the beginning of July and August respectively, we rebalanced the ratio of independent to non-independent non-executive directors where, for a very short period in June, the remuneration committee had comprised two non-executive directors, one of whom, Jock Green-Armytage, was deemed not to be independent, having at that point reached nine years of continuous service as a director for the Group. We were grateful to Jock for remaining in post until his retirement at the end of September, as this greatly supported the transitions on the board. With the most recent appointment of Yuan Zhang to the board, we now have three independent non-executive directors and two non-executive directors who are not considered to be independent. The board acknowledges that Yuan Zhang is associated with the Group’s significant shareholder, KLK. However, after taking external advice, it has concluded that existing safeguards are sufficient and it would be alert to any conflicts of interest should these occur. I am confident that those deemed not to be independent understand their responsibilities to shareholders and that they will conduct their duties with an independent mindset.

From the beginning of 2022, when Matthew Coulson took up the role of chief executive, I was pleased to relinquish my temporary responsibilities as chief executive. Whilst my role as executive chairman is not strictly in line with the Code, feedback received via the formal board evaluation process and, from time to time, directly from shareholders leads me to feel comfortable that I have the support of my colleagues and shareholders alike, in continuing in this role.

The board continues to evaluate itself. Lines of communication are always open between board members and me, the senior independent non-executive director and chair of the remuneration and audit committees, Bruce Tozer, and the company secretary, and a formal board evaluation is normally conducted towards the end of each year. It has been especially helpful, at the most recent formal evaluation, to receive reassuring feedback from the newest board members on such matters as the induction process, initial impressions on how board discussions are conducted and decisions made, including the quality of board information and the functioning of committees. We note all feedback and agree on actions, in an endeavour continually to improve the way we work together and achieve the best results for the business.

The focus of training for the board during the year, and which is ongoing, has been on ESG, both in understanding the requirements of the emerging regulatory and disclosure environment, and evaluating the associated risks to the business of climate change. Because we are committed to acting responsibly, we have engaged specialist ESG consultants to assist us with collating and evaluating the data needed to fulfil our disclosure obligations and support good decision making across the organisation. In this ongoing process it has been gratifying to note that the requirements of our RSPO membership, which we have adhered to and been audited on for many years, has expedited the data-gathering process. Board members are encouraged to develop and keep all their skills up to date, and training is available as needed.

At least annually, the board considers who the Group’s stakeholders are, and how the board engages with them. This helps to embed into the board’s decision-making process the practice of considering wider stakeholder issues. The whistleblower hotline continues to be effective as a channel for stakeholders to report potential wrongdoing, and whilst we are pleased that no serious whistleblower issues have been identified to date, grievances reported are treated as an opportunity to see whether improvements need to be made in the way we do things.

The board, supported by the audit committee, has continued to make progress on the areas of risk identification, management and mitigation, and disclosure. Stakeholder engagement has proved to be a valuable tool in the risk identification strategy. Matthew Coulson, as tasked by the board, held a series of risk review meetings during the year both in the UK and Indonesia, assisted in Indonesia by the Indonesian head of risk. In these meetings Matthew gathered insights from head office staff, estate management, engineering management and the legal department, with the information feeding into an updated risk register which was reviewed by the board.

As I have stated previously, 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 benefit 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. 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 long-term trust.

My colleagues on the board and I are committed to ensuring that the Group’s corporate-governance structures are robust and are keeping these under frequent review. There have been no significant changes to the Group’s corporate governance framework during the year.

Peter Hadsley-Chaplin
Chairman

21 March 2023