Corporate Governance

THE QUOTED COMPANIES ALLIANCE (QCA) CODE

 

The Directors recognise the importance of good corporate governance and have chosen to apply the Quoted Companies Alliance Corporate Governance Code (the ‘QCA Code’). The QCA Code was developed by the QCA in consultation with a number of significant institutional small company investors, as an alternative corporate governance code applicable to AIM companies. The underlying principle of the QCA Code is that “the purpose of good corporate governance is to ensure that the company is managed in an efficient, effective and entrepreneurial manner for the benefit of all shareholders over the longer term”. The Directors anticipate that whilst the Company will continue to comply with the QCA Code, given the Group’s size and plans for the future, it will also endeavour to have regard to the provisions of the UK Corporate Governance Code as best practice guidance to the extent appropriate for a company of its size and nature. To see how the Company addresses the key governance principles defined in the QCA Code please refer to the below table. Further information on compliance with the QCA Code will be provided in our next annual report.

 

Dick Steele, Non-executive Chairman

 

This disclosure was last reviewed and updated on 31 July 2018

 

 

THE PRINCIPLES OF THE QUOTED COMPANIES ALLIANCE (QCA) CODE

 

DELIVER GROWTH

 

 

QCA Code Principle

 

Application (as set out by QCA)

 

What we do and why

 

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

 

The board must be able to express a shared view of the company’s purpose, business model and strategy. It should go beyond the simple description of products and corporate structures and set out how the company intends to deliver shareholder value in the medium to long-term.  It should demonstrate that the delivery of long-term growth is underpinned by a clear set of values aimed at protecting the company from unnecessary risk and securing its long-term future.

 

The Portmeirion Group’s strategy is explained fully within our Strategic Report section on pages 8 & 9 of our Report and Accounts for the year ended 31 December 2017.

 

Our strategy is focused around five key areas: profitable sales growth, introducing new products, supporting our brands, enhancing our operational capabilities and supporting these with complementary strategic acquisitions.

 

The key challenges to the business and how these are mitigated is detailed on pages 16 & 17 of our Report and Accounts for the year ended 31 December 2017.

 

 

2.   Seek to understand and meet shareholder needs and expectations

 

Directors must develop a good understanding of the needs and expectations of all elements of the company’s shareholder base.

 

The board must manage shareholders’ expectations and should seek to understand the motivations behind shareholder voting decisions.

 

The Board is committed to a progressive dividend policy and aims to maintain a sustainable and appropriate level of dividend cover.

 

The Portmeirion Group encourages two-way communication with both its institutional and private investors and responds quickly to all queries received. The Chairman talks regularly with the Group’s major shareholders and ensures that their views are communicated fully to the Board.

 

The Board recognizes the AGM as an important opportunity to meet private shareholders. The Directors are available to listen to the views of shareholders informally immediately following the AGM.

 

Where voting decisions are not in line with the company’s expectations the Board will engage with those shareholders to understand and address any issues. The Company Secretary is the main point of contact for such matters.

 

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

 

Long-term success relies upon good relations with a range of different stakeholder groups both internal (workforce) and external (suppliers, customers, regulators and others). The board needs to identify the company’s stakeholders and understand their needs, interests and expectations.

 

Where matters that relate to the company’s impact on society, the communities within which it operates or the environment have the potential to affect the company’s ability to deliver shareholder value over the medium to long-term, then those matters must be integrated into the company’s strategy and business model.

 

Feedback is an essential part of all control mechanisms. Systems need to be in place to solicit, consider and act on feedback from all stakeholder groups.

 

The Portmeirion Group is committed to sustainability progress in all aspects of our business – for the environment customers, suppliers and the communities we operate in. This is evidenced and underpinned by our vision and values:

 

1.   Customers - Grow profitable sales

2.   Quality – Operational excellence

3.   Environment – Community

4.   Innovation - Excellent product design

5.   Team Work – Engage our people

 

For more information please see our Strategic Report Sustainability section on pages 21 – 23 of our Report and Accounts for the year ended 31 December 2017.

 

The Portmeirion Group conducts employee opinion surveys to get employees feedback on all aspects of employment with the Portmeirion Group and employee representatives meet in forums to discuss business related issues. Actions such as the refurbishment of the cafeteria at our London Road site were as a result of employee feedback.

 

The Portmeirion Group encourages feedback from our customers through trade account managers and engagement with individual customers through customer service teams and social media such as Facebook and Twitter.

 

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

 

The board needs to ensure that the company’s risk management framework identifies and addresses all relevant risks in order to execute and deliver strategy; companies need to consider their extended business, including the company’s supply chain, from key suppliers to end-customer.

 

Setting strategy includes determining the extent of exposure to the identified risks that the company is able to bear and willing to take (risk tolerance and risk appetite).

 

 

 

 

Risk Management on pages 16 & 17 of our Report and Accounts for the year ended 31 December 2017 details risks to the business, how these are mitigated and the change in the identified risk over the last reporting period.

 

The Board considers risk to the business at every Board meeting (at least 5 meetings are held each year) and the risk register is updated at each meeting. The Company formally reviews and documents the principal risks to the business at least annually.

 

Both the Board and senior managers are responsible for reviewing and evaluating risk and the Executive Directors meet at least monthly to review ongoing trading performance, discuss budgets and forecasts and new risks associated with ongoing trading.

 

MAINTAIN A DYNAMIC MANAGEMENT FRAMEWORK

 

 

QCA Code Principle

 

Application (as set out by QCA)

 

What we do and why

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

The board members have a collective responsibility and legal obligation to promote the interests of the company, and are collectively responsible for defining corporate governance arrangements. Ultimate responsibility for the quality of, and approach to, corporate governance lies with the chair of the board.

 

The board (and any committees) should be provided with high quality information in a timely manner to facilitate proper assessment of the matters requiring a decision or insight.

 

The board should have an appropriate balance between executive and non-executive directors and should have at least two independent non- executive directors. Independence is a board judgement.

 

The board should be supported by committees (e.g. audit, remuneration, nomination) that have the necessary skills and knowledge to discharge their duties and responsibilities effectively.

 

Directors must commit the time necessary to fulfill their roles.

The Company is controlled by the Board of Directors. Dick Steele, the Non-executive Chairman, is responsible for the running of the Board and Lawrence Bryan, the Chief Executive, has executive responsibility for running the Group’s business and implementing Group strategy.

 

All Directors receive regular and timely information the Group’s operational and financial performance. Relevant information is circulated to the Directors in advance of meetings. In addition, minutes of the meetings of the Directors of the main UK subsidiary are circulated to the Group Board of Directors. All Directors have direct access to the advice and services of the Company Secretary and are able to take independent professional advice in the furtherance of the duties, if necessary, at the company’s expense.

 

The Board comprises four Executive Directors and three Non-Executive Directors. The Board considers that all Non- executive Directors bring an independent judgement to bear notwithstanding the varying lengths of service.

 

The Board has a formal schedule of matters reserved to it and is supported by the Audit, Remuneration and Nomination Committee.  The Schedule of Matters Reserved and Committee Terms of Reference are available on the Company’s website and can be accessed on the Directors & Committees page of this website.

 

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

 

The board must have an appropriate balance of sector, financial and public markets skills and experience, as well as an appropriate balance of personal qualities and capabilities. The board should understand and challenge its own diversity, including gender balance, as part of its composition.

 

The board should not be dominated by one person or a group of people. Strong personal bonds can be important but can also divide a board.

 

As companies evolve, the mix of skills and experience required on the board will change, and board composition will need to evolve to reflect this change.

 

The Nomination Committee of the Board oversees the process and makes recommendations to the Board on all new Board appointments.  Where new Board appointments are considered the search for candidates is conducted, and appointments are made, on merit, against objective criteria and with due regard for the benefits of diversity on the Board, including gender.  The Nomination Committee also considers succession planning.

 

The Board carries out an evaluation of its performance annually, taking into account the Financial reporting Council’s Guidance on Board Effectiveness.

 

The Company Secretary supports the Chairman in addressing the training and development needs of Directors.

 

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

 

The board should regularly review the effectiveness of its performance as a unit, as well as that of its committees and the individual directors.

 

The board performance review may be carried out internally or, ideally, externally facilitated from time to time. The review should identify development or mentoring needs of individual directors or the wider senior management team.

 

It is healthy for membership of the board to be periodically refreshed. Succession planning is a vital task for boards. No member of the board should become indispensable.

 

The Board carries out an evaluation of its performance annually, taking into account the Financial reporting Council’s Guidance on Board Effectiveness.

 

All Directors undergo a performance evaluation before being proposed for re- election to ensure that their performance is and continues to be effective, that where appropriate they maintain their independence and that they are demonstrating continued commitment to the role.

 

Appraisals are carried out each year with all Executive Directors.

 

All continuing Directors stand for re-election on an annual basis.

 

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

 

The board should embody and promote a corporate culture that is based on sound ethical values and behaviours and use it as an asset and a source of competitive advantage.

 

The policy set by the board should be visible in the actions and decisions of the chief executive and the rest of the management team.

Corporate values should guide the objectives and strategy of the company.

 

The culture should be visible in every aspect of the business, including recruitment, nominations, training and engagement. The performance and reward system should endorse the desired ethical behaviours across all levels of the company.

 

The corporate culture should be recognisable throughout the disclosures in the annual report, website and any other statements issued by the company.

 

The Sustainability section of our Strategic Report on pages 21 – 23 of our Report & Accounts for the year ended 31 December 2017 details the ethical values of the Portmeirion Group including environmental, social and community and relationships.

 

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

 

The company should maintain governance structures and processes in line with its corporate culture and appropriate to its:

 

•  size and complexity; and

•  capacity, appetite and tolerance for risk.

 

The governance structures should evolve over time in parallel with its objectives, strategy and business model to reflect the development of the company.

 

Our Corporate Governance Statement on pages 26 – 29 of our Report & Accounts for the year ended 31 December 2017 details the company’s governance structures and why they are appropriate and suitable for the company.

 

 

  BUILD TRUST

 

 

QCA Code Principle

 

Application (as set out by QCA)

 

What we do and why

 

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

 

A healthy dialogue should exist between the board and all of its stakeholders, including shareholders, to enable all interested parties to come to informed decisions about the company.

 

In particular, appropriate communication and reporting structure should exist between the board and all constituent parts of its shareholder base. This will assist:

 

  • the communication of shareholders’ views to the board; and
  • the shareholders’ understanding of the unique circumstances and constraints faced by the company.

 

It should be clear where these communication practices are described (annual report or website).

 

The Company encourages two-way communication with both its institutional and private investors and responds quickly to all queries received. The Chairman talks regularly with the Group’s major shareholders and ensures that their views are communicated fully to the Board.

 

The Board recognizes the AGM as an important opportunity to meet private shareholders. The Directors are available to listen to the views of shareholders informally immediately following the AGM.

 

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