(QCA Principle 10)
The primary responsibility of the Chair is to lead the Board effectively and this includes overseeing the adoption, delivery and communication of the Company's corporate governance model. The Company Secretary assists and reports directly to the Chair on corporate governance matters. The Chair ensures that the Board as a whole plays a full and constructive part in the development and determination of the Company's strategy and overall commercial objectives.
The Board is committed to ensuring that a strong governance framework operates throughout the Group, recognising that good corporate governance is a vital component to support management in their delivery of the Company's strategic objectives and to operate a sustainable business for the benefit of all stakeholders. The Board recognises that the process of identifying, developing and maintaining high standards of corporate governance suitable for the Company is ongoing and dynamic, to reflect changes in the Company and its business, the composition of the Board and developments in corporate governance.
During 2018, the Board chose to adopt the QCA Corporate Governance Code 2018 ('QCA Code'), which they consider is most appropriate to the size of the Company, the regulatory framework that applies to AIM companies and is best aligned to the expectations of the Company's stakeholders. The Board considers that the Company does not depart from any of the principles of the QCA Code and the relevant disclosures and explanations are set out in this Corporate Governance Statement.
Corporate Governance Framework
The Role and Functioning of the Board
(QCA Principles 1, 5, 9 & 10)
The Board is comprised of a Non-Executive Chair, three Executive Directors and two Non-Executive Directors. The Directors have a balance and depth of skills and experience, together with long-standing knowledge of the Group, which enables them to discharge their respective duties and responsibilities effectively.
The Board is collectively responsible for the long-term success of the Company. The Group's strategy and business model are developed by the Chief Executive Officer and his senior management team and approved by the Board. This strategy and business model, designed to promote long-term value for shareholders, is described in the Strategic Report on pages 1 to 29 of the Company's 2018 Annual Report.
The Company is controlled through the Board, which has established Audit, Remuneration and Nomination Committees ('Committees'), to which it delegates clearly defined powers. The Terms of Reference for the Committees are available here.
There is a formal schedule of matters reserved for consideration by the Board, which include responsibility for the following:
approval of overall Group strategy and objectives
approval of the Group annual budget and monitoring progress towards its achievement
changes to the Group's capital structure
changes to the Group's principal activities
review and approval of the annual financial statements
changes to the senior management structure
approval of Group financing arrangements and treasury policy
approval of major investments, disposals and additional investments in existing operations
approval of major unbudgeted expenditure
These reserved matters are reviewed by the Board, at least annually, to ensure they remain appropriate and complete. In tandem, the Board also reviews an approved schedule of operational matters, which are delegated to management of the operating subsidiaries.
The annual minimum time commitment is 25 days for the Chair and 20 days for other Non-Executive Directors. The Executive Directors are full-time employees.
During 2018, there was 100% eligible attendance at all meetings of the Board and Committees.
The following table shows the number of meetings held during 2018, the attendance of each Director and their full years in office as at the 2019 AGM:
Tony Martin (Chairman)
Spencer Wreford (1) (Chief Executive Officer)
Tim Anderson (2) (Group Finance Director)
Rhona Driggs (3) (Chief Operating Officer)
Penny Freer (Non-Executive Director)
Zach Miles (Non-Executive Director)
Joost Kreulen (4) (Chief Executive Officer)
Changed roles from Chief Operating Officer and Group Finance Director to Chief Executive Officer on 2 May 2018
Appointed as Group Finance Director on 2 May 2018
Appointed as Chief Operating Officer on 5 November 2018
Retired as Chief Executive Officer on 2 May 2018
Prior to the beginning of each year, Board meetings are scheduled in line with the key financial reporting dates. A more detailed agenda, together with the Board papers, is distributed in a timely manner before each Board meeting. All Directors receive sufficient relevant information on financial, business and corporate issues to enable informed decisions to be taken by them at the Board meetings. Any specific actions arising during meetings are agreed by the Board and a follow-up procedure monitors their completion. Monthly financial and operational reviews are distributed to the Board, irrespective of whether a scheduled meeting is to take place. This assists the Board to keep informed of developments on a regular basis.
Time is allocated at all meetings to discuss any other business, which all Directors are invited by the Chair to raise. All Non- Executive Directors participate in strategy development and decisions required to implement actions to progress towards meeting the objectives of the Company.
The Chair's primary role is to ensure the effective running of the Board and that the Board as a whole plays a full and constructive part in the development and determination of the Group's strategy and overall commercial objectives. The Chief Executive Officer's primary role is to deal with the running of the Group's business and executive management of the Group. There is a clear division of responsibilities between the Chair and Chief Executive Officer, with no one individual having unfettered powers of decision. The Company Secretary, a solicitor since 2001, advises the Board and reports directly to the Chair on Corporate Governance matters. He also heads up the Group's legal department and advises the Board on legal and governance matters, helping to ensure that Board procedures and applicable rules and regulations are observed.
The Directors are also able to take independent professional advice in the furtherance of their duties as necessary.
Engagement with Shareholders
(QCA Principles 2 & 10)
The Board seeks to engage with shareholders to maintain a mutual understanding of objectives between them and the Company and manage their expectations. Relations with shareholders and potential investors are managed principally by the Executive Directors, who are contactable both directly and via financial PR. Shareholders are encouraged to participate in the Company's Annual General Meetings and contact the Company's officers with any questions. The Executive Directors make regular presentations to investors (both existing and potential shareholders), meet with shareholders to discuss long-term issues and obtain their views, present at externally run investor events and communicate regularly during the year. The annual and interim presentations made to investors, interviews with the Executive Directors and a description of the Company's investment case are all made available here.
The Company has also retained a Financial PR adviser (Alma PR), a house broker (Arden Partners plc) and analyst research (Allenby Capital Limited), who each provide feedback from existing shareholders and potential investors. The Board, including the Chairs of the Committees, make themselves available at each AGM to answer questions from shareholders.
Stakeholders and Social Responsibilities
(QCA Principles 3 & 10)
The Group's business model relies heavily on developing and maintaining strong relationships with internal staff, candidates / workers, clients and regulatory authorities. The Board is conscious of its responsibility towards all stakeholders and believes this is an important consideration for the long-term growth of the business. Stakeholder engagement and feedback is taken seriously throughout the Group. Regular communication is made around the Group companies and internal staff. The Group places considerable value on the involvement of its internal staff and keeps them informed on matters affecting them as employees and on the various factors affecting the performance of the Group. This is achieved through formal and informal meetings, information available on the Company's website and intranet. Additionally, the Group benefits from a highly de-centralised structure, which enables each operating subsidiary to develop its own strategy for internal staff communications and candidate / worker engagement. The Group uses social media to engage directly with stakeholders through various channels including Facebook, WhatsApp, Twitter and LinkedIn. The Group also engages with regulators and Government agencies, for example in response to consultations or proposals, both directly and through membership of worldwide trade associations.
(QCA Principle 4)
Risk management remains the responsibility of the Board. The Audit Committee has delegated responsibility to keep under review the adequacy and effectiveness of the Company's internal financial controls and internal control and risk management system. Risk management is reviewed at every Board meeting as part of the formal Board process. The Board has identified and evaluated the significant risks faced by the Group for the delivery of the Group's strategy. The Board has agreed how each risk is to be addressed and the necessary actions to be taken. Details of the principal risks identified are set out at pages 25 to 27 of the Company's 2018 Annual Report.
The Audit Committee meets specifically to review the effectiveness of the Group's risk management and internal control systems and to review the risks identified and progress of actions taken to manage the risks. Following the review, progress and actions are reported to the Board.
Experience, Skills and Capabilities
(QCA Principle 6)
Biographical details of each of the Company's Officers, detailing relevant experience, skills and capabilities can be found on pages 30 to 31 of the Company's 2018 Annual Report.
The Nomination Committee meets at least once a year to monitor and review the structure, size and composition of the Board. It considers succession planning and makes recommendations to the Board for any appointments, to ensure that the right skills and expertise are maintained by the Company for effective management. All members of the Board participate in the recruitment of members to the Board. On appointment, Directors receive a tailored introduction to the Group and thereafter they determine the training requirements appropriate to their role and the needs of the Group. Directors attend relevant industry conferences and workshops throughout the year. The members of the Committees refresh their skills and knowledge by attending briefings and seminars and reviewing publications provided by various professional services firms and by audit and other regulatory bodies.
(QCA Principle 7)
Formal Executive Director performance evaluations are conducted annually in preparation for the review and approval of annual remuneration packages. Each Non-Executive Director's performance is evaluated as an outcome of the formal performance evaluations of the Committee(s) of which they are a member. Performance evaluations identify and record achievements, training requirements and areas for improvement in relation to annual objectives and performance of their respective roles, in order to consider effectiveness. Objectives for the forthcoming year are defined along with identification of how achievements will be met, target dates and details of resource constraints or issues to ensure that actions are planned and taken as a result of the evaluation process.
Promotion of Corporate Culture
(QCA Principle 8)
The Company actively promotes integrity in its dealings with internal employees, candidates / workers, shareholders, customers and suppliers and the authorities of the countries in which our operating subsidiaries operate. The Board recognises that the reputations of our Group companies are valuable assets gained over a long period and must be protected. The Group has Codes of Conduct, including those for dealing with gifts, hospitality, corruption, fraud and inside information. The Board requires that all Group companies and employees adhere to the Empresaria Code of Conduct, which can be found on the Company's website here.
All staff must comply with the laws and regulations of the country in which they operate and those responsible for the management of each operating subsidiary confirm their compliance to the Board annually. The Group's whistleblowing policy is publicised to internal employees and the Company's senior management visit each operating subsidiary on a regular basis, giving internal employees an opportunity to ask questions of and provide feedback directly to the Board.
Our operating subsidiaries are required to ensure that advertising and public communications avoid untruths or overstatements. They are also expected to build relationships with suppliers based on mutual trust and endeavour to pay suppliers on time and in accordance with agreed terms of business.
For more information on corporate social responsibility see pages 28 and 29 of the Company's 2018 Annual Report.
(QCA Principle 9)
The independence of all Non-Executive Directors is reviewed annually, with reference to their independence of character and judgement and whether any circumstances or relationships exist, that could affect their judgement. As a significant shareholder in the Company, the Chair is not considered to be independent. The independence of Penny Freer and Zach Miles is considered frequently by the Board, in particular having regard to their periods of tenure. The Board assesses what would be the most desirable number of Non-Executive Directors for the Board, having regard to the size of the Group, the scope of its operations and the efficient functioning of the Board. The Board looks at the manner in which the component parts of the Board function together, the skills and external experiences of the Non- Executive Directors, their involvement and insight in Board and Committee meetings and their ability to objectively challenge management. Having regard to all such considerations, the Board is of the view that the number of Non-Executive Directors is appropriate and that Penny Freer and Zach Miles remain independent, notwithstanding their periods of tenure.
In accordance with the Companies Act 2006 and the Company's Articles of Association, each of the Directors has a duty to avoid a situation where they have, or might have, a direct or indirect interest that conflicts, or potentially may conflict, with the Company's interests. The Company has established procedures for the disclosure by Directors of any such conflicts for the Board to consider and, if appropriate, authorise. If such a conflict exists, the relevant Director is excused from consideration of the relevant matter. All additional external responsibilities taken on by Directors during the year were considered by the Board for any actual or potential conflicts that may arise. The Board is satisfied that the independence of the Directors who have additional external responsibilities is not compromised.
The Board is always conscious of the need to benefit from the fresh thinking that new Directors can bring and 2018 saw the appointments of Tim Anderson as Group Finance Director and Rhona Driggs as Chief Operating Officer.
Historical annual reports and interim statements can be downloaded here: http://www.empresaria.com/financial-information/company-reports
The latest reports of the Audit Committee, Nomination Committee and Remuneration Committee can be found in the Company's 2018 Annual Report, which can be downloaded here: http://www.empresaria.com/financial-information/company-reports
Details of the historical annual general meetings of the Company, along with voting results for those meetings, can be found here: http://www.empresaria.com/governance/agm-details.
The annual and interim presentations made to investors, as well as interviews with the Executive Directors, are available at https://www.empresaria.com/investors/investors-presentations.
A description of the Company's investment case is available at http://www.empresaria.com/investors/investment-case.
Shareholders are encouraged to participate in the Company's Annual General Meetings and contact the Company's officers with any questions.
The Company's main contacts and advisers can be found here: http://www.empresaria.com/investors/advisers
Empresaria Group plc:
Spencer Wreford, Chief Executive Officer (firstname.lastname@example.org)
Tim Anderson, Group Finance Director (email@example.com)
James Chapman, Company Secretary & Head of Legal (firstname.lastname@example.org)
Tel: +44 (0) 1342 711 430
Alma PR (Financial PR):
Rebecca Sanders-Hewett/Sam Modlin (email@example.com)
Tel: +44 (0) 208 004 4217