Chairman's Corporate Governance Statement

As Chairman of the Company I have a keen interest in ensuring that an effective and focused Board leads the business and builds upon its successes to date. Strong corporate governance helps underpin the foundations of a solid and successful business. The Board is committed to ensuring good corporate governance, from executive level and throughout the operations of the business. Following the revisions to the AIM Rules for Companies in March 2018, pursuant to which all AIM companies are required to comply with a recognised corporate governance code, the decision has been made by the Company that it will adopt the Quoted Companies Alliance Corporate Governance Code 2018. The Directors believe that the QCA Code is the most appropriate recognised governance code for the Company.

Set out below are details of how the Company complies with the QCA Code. The only material area where the Directors consider that the Company does not comply with the QCA Code is the evaluation of the performance of the Directors and succession planning, which is carried out on an ongoing basis by the Board as a whole rather than being the subject of any formal process. This is considered appropriate given the current size of the Company and the Board. No changes have been made to the Company’s corporate governance processes during the last 12 months and no key corporate governance related matters have arisen during that period.

As Chairman it is my duty to ensure that good standards of governance are delivered and fed down throughout the organisation. The Board, as a whole, looks to instil a culture across the Company which emphasises the importance of good governance and works for the benefit of all stakeholders.

Kevin Hollinrake, Chairman

Corporate Governance

The Directors recognise the importance of sound corporate governance and comply with the QCA Corporate Governance Code (the QCA Code) to the extent that they consider it appropriate having regard to the Company’s size, board structure and resources. The QCA states that, “Good corporate governance creates shareholder value by improving performance, whilst reducing or mitigating the risks that a company faces as it seeks to create sustainable growth over the medium to long-term.”

The QCA Code has been devised by the Quoted Companies Alliance as a practical, outcome-oriented approach to corporate governance that is tailored for small and mid-size quoted companies in the UK. It includes 10 corporate governance principles that companies should follow, and guidance on how to effectively apply these principles. Set out below are details of how the Company complies with each of the principles of the QCA Code and, where it departs from it, an explanation of the reasons for doing so.
 

1. Establish a strategy and business model which promotes long-term value for shareholders

The Company’s business model and strategy are summarised in its most recent annual report, which can be found on the Financial Information page. The “Principal Risks” section of the annual report sets out the key challenges faced by the Company in the execution of its business model and strategy, and how these will be addressed.

 

2. Seek to understand and meet shareholder needs and expectations

The Company maintains open communications with its shareholders and provides up to date information through market announcements and website postings. Copies of all results and announcements are available within the Investor Relations pages. Investor presentations are also available for potential and current shareholders to attend.

Shareholders receive 21 days’ notice of the Annual General Meeting which presents an important opportunity for shareholders to meet with the Board of Directors.

Outside of the Annual General Meeting, Ed Jones, Chief Financial Officer is the primary point of contact for shareholders.

These channels of communication result in constructive dialogue between the Board and the Company shareholders and the Directors consider that they are appropriate to meet current needs and expectations.

 

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

Employees
The Board believes in equal opportunities and people’s development. Appointments within the Group are based entirely on merit regardless of gender, age, marital status, sexual orientation, religion, nationality, ethnicity or disability. Where employees become disabled, the Group looks, where possible, to adjust the working environment to accommodate their needs.

Communication
The Company sees communication with its customers as key and that philosophy extends from the way we deal with both employees and our franchise network. We issue weekly updates and monthly newsletters to all employees and franchisees. We hold regular meetings and conferences for franchisees which employees also attend.   We provide regular updates through our intranet underpinning developments and encourage feedback from our franchisees and employees through surveys and the sharing of information and help.

Legislative Compliance
The Group conforms with all relevant legislation and codes of best practice and this is monitored regularly by the Board. The Board appreciates the social and environmental impact the Group’s decisions can make and these are considered as part of its decision-making process. The Group takes the overall long-term impact that it has very seriously.

 

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

Trading Risks
The “Principal Risks” section of the Company’s most recent annual report, a copy of which can be found on the Financial Information page sets out the principal risks to the Company in the execution of its business model and strategy, and how these will be addressed.

Internal Control
The Board is responsible for ensuring there is an adequate system of internal control and for reviewing its effectiveness. Such a system is designed to mitigate risk to an acceptable level rather than eliminate internal control risks completely. These internal controls include controls over financial, operational and compliance risk factors.

The Board reviews the level of internal control on an ongoing basis and is satisfied that the current level of control meets the needs of the Group and reduces its exposure to risk to an appropriate level.

Financial Reporting
Clear financial reporting procedures have been established which ensure the Board has access to reliable and timely financial reports on a weekly and monthly basis. Financial reporting includes monitoring performance against budget and prior year results as well as outturns and cashflow forecasts.

 

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

The Company has two executive and three non-executive directors and this is considered to be an appropriate balance between executive and non-executive directors. The roles and responsibilities of each of the Directors are set out on the Board of Directors page. Dean Fielding and Harry Hill are considered by the Board to be independent directors.

The time commitment required by the Company from each of the Directors is as follows:

  • Kevin Hollinrake (Non-Executive] Chairman) – 16 hours per month
  • Harry Hill (Non-Executive Deputy Chairman) – 2 days per month
  • Glynis Frew (Chief Executive) – Full time
  • Ed Jones (Chief Financial Officer) – Full time
  • Dean Fielding (Non-Executive Director) – 2-3 days per month

The Company is mindful of the issues of gender balance and diversity, although Board appointments are made with the primary aim of ensuring that the candidate offers the required skills, knowledge and experience.

 

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

The Company’s annual report, a copy of which can be found on the Financial Information page, and the Board of Directors page identify the Directors and give details of their backgrounds, the skills and capabilities they bring to the Board and their individual roles. To the extent that any gaps in the skills and capabilities of the Directors are identified, the Board will ensure that the Directors have access to suitable training to remedy the situation.

Processes are in place to ensure the Board has the access it requires to advisers and the Company Secretary to keep up to date with corporate governance matters. No specific corporate governance issues have been identified in the last 12 months.

 

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

Although the Directors consider the issues of Board performance and succession planning to be integral to the long-term success of the Company, given the size of the Company and the Board, it is not currently considered to be necessary to establish formal processes for Board performance evaluation or succession planning. The performance of the Directors is therefore evaluated on an ongoing basis by the Board as a whole.

 

8. Promote a culture that is based on ethical values and behaviours

The Company takes extremely seriously the protection of the Group’s reputation and brand.

One of the ways the Group seeks to protect both is through the continuous audit programme it operates, which tests the financial probity of its franchisees and periodically audits other aspects of the franchise system.

In addition to the measures described above and elsewhere in this section, the Company has adopted a share dealing code for the Directors and certain employees, which is appropriate for a company whose shares are admitted to trading on AIM (particularly relating to dealing during close periods in accordance with Rule 21 of the AIM Rules for Companies) and the Company takes all reasonable steps to ensure compliance by the Directors and any relevant employees.

The Company also operates a policy of zero tolerance towards bribery.

 

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

Currently the Board consists of two executive Directors and three non-executive Directors. The roles and responsibilities of each of the Directors are set out on the Board of Directors page.

The Board is responsible for ensuring there is an adequate system of internal control and for reviewing its effectiveness. Such a system is designed to mitigate risk to an acceptable level rather than eliminate internal control risks completely. These internal controls include controls over financial, operational and compliance risk factors.

The Board is satisfied that the current level of internal control meets the needs of the Group and reduces its exposure to risk to an appropriate level and the following matters are reserved for the Board:

  • Significant matters
  • Changes in strategic directions
  • Material acquisitions
  • Equity matters
  • Dividends
  • Projects outside of budgetary parameters

There are two Board committees, the Audit Committee and the Remuneration Committee. The Board has not established a Nominations Committee as it considers that, given the current size of the Company and the Board, the functions and responsibilities of such a committee can be adequately and efficiently discharged by the Board as a whole.

The Board meets at least 10 times a year, the Audit Committee meets at least twice a year and the Remuneration Committee meets at least annually. Further details are set out below and the details of the attendance record of each director are set out in the Corporate Governance section of the most recent annual report, a copy of which can be found on the Financial Information page.

Audit Committee
The Audit Committee comprises Dean Fielding (Chairman) and Harry Hill. The Audit Committee meets at least twice a year and is responsible for ensuring that the financial performance of the Company is properly reported on and monitored, including reviews of the annual and interim accounts, results announcements, internal control systems and procedures, risk management and accounting policies. The terms of reference of the Audit Committee are set out here.

Remuneration Committee
The Remuneration Committee is chaired by Dean Fielding (Chairman) and its other member is Harry Hill. The Remuneration Committee meets at least annually and has responsibility for determining, within agreed terms of reference, the Group’s policy on the remuneration of senior executives and specific remuneration packages for the executive Directors. It is also responsible for making recommendations as to the adoption of share options schemes and long-term incentive plans for senior executives and for grants under such schemes or plans to individual senior executives. The terms of reference of the Remuneration Committee are set out here.

 

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

The Company’s arrangements for communication with its shareholders are described in paragraph 2 above. Following general meetings of the Company, the outcome of all votes are announced via a RNS announcement and are also disclosed in the Regulatory News section.

Historical annual reports and other governance-related material, including notices of all general meetings since the Company’s admission to AIM can be found in the Financial Information section.

The Company’s latest annual report, a copy of which can be found here, describes the work of the Audit and Remuneration Committees undertaken during the year. Given the company’s size and structure, the inclusion of formal reports from the Audit and Remuneration Committees in the annual report is not considered to be necessary.

The above information is reviewed annually by the Directors and was last reviewed on 21 September 2018.