Non-Executive Chair’s opening statement
The Board is focused on developing the Group for the long-term benefit of all shareholders, with well-informed and effective decision making. In 2019 we adopted the QCA Corporate Governance Code and strive to follow its guidance and principles, many of which flow throughout our business via our strategy, our business model, and our stakeholder engagement.
I am pleased to share with you the key parts of our governance structure and how they align with the principles of the Code.
Non-Executive Chair, June 2023
Principle 1: Establish a strategy and business model which promote long-term value for shareholders
The Group continues to operate under a governance structure, which is designed to be flexible and efficient in creating sustainable long-term growth in shareholder value. Our key focus is to continue to drive the Group forward and keep us reaching for the high standards and targets we set ourselves. We do this by leveraging our strengths and the many opportunities to grow in the market.
Further detail on the Group’s strategy and business model can be found on pages 8 to 15 of the Annual Report 2023 with the key challenges faced by the Company in achieving its goals set out on pages 16 to 26.
Principle 2: Seek to understand and meet shareholder needs and expectations
The Group understands the importance of communicating with its shareholders and seeks to build a mutual understanding on objectives by discussing long and short-term issues with shareholders.
During the 2023 financial year, the Chief Executive Officer (CEO), Chief Financial Officer (CFO) and Non-Executive Chair maintained regular contact with our institutional investors as can be seen in the timeline below:
27 April 2022: Trading Update
3 May – 19 May 2022: Investor calls
28 June – 4 July 2022: Full Year results announcement followed by investor meetings and calls
15 August – 16 August 2022: Various investor calls
25 August 2022: Investor call
22 September 2022: Annual General Meeting
20 October 2022: Trading update
14 November 2022: Investor call
30 November – 6 December 2022: Interim results announcement followed by investor meetings and calls
13 December – 20 December 2022: Investor calls
10 January 2023: Investor calls
11 January 2023: Investor calls
13 January 2023: Investor calls
20 February 2023: Investor calls
4 March 2023: Investor calls
16 March 2023: Investor calls
Following the investor meetings, the Board receives feedback on the views and concerns of shareholders as well as investment reports from analysts. We keep all our investors informed on the latest developments with announcements, circulars, videos, and reports; all of which are available on the Company’s website.
Nikky Geairns is our primary contact for shareholders, and she can be contacted at firstname.lastname@example.org. Contact details for the Company’s PR Advisers, Brokers and Registrars are also set out in the ‘Contact’ section of the Company’s website.
Further information can be found on page 62 and of the Annual Report 2023.
Principle 3: Take into account wider stakeholder and social responsibilities and their implications for long-term success
The Board recognises that the continued growth and success of the company are dependent on the efforts of all our employees, customers, suppliers, communities, and all our other key stakeholders. We have set out our Section 172 statement on page; showing how the needs of these important stakeholders are assessed and considered by the Board when making key decisions, as required by the Companies (Miscellaneous Reporting) Regulations 2018.
There are many examples of stakeholder engagement within the Annual report 2023:
• Employees – see pages 22 and 34 to 39
• Customers – see pages 11 to 13
• Communities – see page 39
• Suppliers – see pages 42 to 43 and 53
Principle 4: Embed effective risk management, considering both opportunities and threats, throughout the organisation
The Group operates a decentralised model where risk management is embedded within strategic and operational decision-making. An overarching role is played by the Group team and the Board to ensure oversight in the risk management process.
Design Group’s approach to risk management is bottom up, with each of our business units maintaining standardised risk registers for their territories, identifying key risks, monitoring them, and determining mitigation plans for their businesses, whilst measuring against the Group’s risk tolerance level alongside their own tolerances. The risks are scored using a risk impact matrix which considers both financial and non-financial assessments to determine an overall score for each risk. Each principal risk is also evaluated against the Group’s risk appetite and considered in the context of the Group’s strategic objectives. All of this focuses the Group on where the higher risks sit and prioritises additional mitigation strategies that may be required.
The Group’s risk management framework operates within a ‘three lines of defence’ assurances model. The first line of defence lies with the operational owners and are the teams within the business managing and mitigating risks as part of their operational model. The second line of defence is internal and is corporate oversight, whereby individuals who are independent to the day-to-day operations perform a second layer review or verification of the mitigations and controls in place. The third line of defence is outsourced, providing the Audit Committee with independent assurance over the management of risks around the Group.
Risk management processes are reviewed regularly by the Audit Committee to reflect changes in market conditions and the Group’s activities. The Board’s oversight covers all controls, including financial, operational and compliance controls and general risk management. It is based principally on reviewing reports from management to consider whether significant risks are identified, evaluated, managed, and controlled and whether any significant weaknesses are promptly remedied and indicate the need for more extensive monitoring.
Further detail on the risk management framework, the principal risks faced by the Group and the mitigating actions taken in respect of those risks can be found on pages 51 to 55 of the Annual Report 2023.
Principle 5: Maintain the Board as a well‑functioning, balanced team led by the Chair
The Board consists of the Non-Executive Chair, two executive directors (CEO and CFO) and 5 Non – Executive Directors. The Biographies of the board can be found on pages 56 to 57 of the Annual Report 2023 as well as on our website.
During the 2023 financial year, The Board appointed Paul Bal (who was previously the CFO) as the CEO. The Board also appointed Rohan Cummings as Chief Financial Officer, effective from 3 July 2023. In addition, Lance Burn resigned as a director on 31 March 2023 but remains with the Company undertaking a key project role.
The Board met ten times during the 2023 financial year, of the ten meetings only two meetings were not fully attended, and these were unscheduled meetings for which the non-attendees had prior commitments.
The Audit Committee met three times, all of which were fully attended, and the Remuneration Committee met 10 times; with only two meetings without full attendance. The Nomination Committee held 6 meetings throughout the financial year, all of which were fully attended. The meetings without full attendance were unscheduled meetings for which the non-attendees had prior commitments.
Further information on the operation of the Board and committees can be found under Principle 9 and also on pages 50, 61 and 62 of the Annual Report 2023.
Principle 6: Ensure that between them the Directors have the necessary up-to-date experience, skills, and capabilities
The Board is kept regularly updated by the Company Secretary and the NOMAD of their legal duties and any changes to legal and governance requirements for the Group.
In addition, the Board has access to the Deloitte Academy, which gives each Director (Executive and Non‑Executive) access to a wide-ranging programme of technical briefings, education, bespoke training, and peer-to-peer networking opportunities. This is a useful resource to ensure that they keep abreast of market trends in board governance, legislative reform and keep their skills up to date.
The Board has access to external, specialist advice when necessary. This year, FIT Remuneration Consultants LLP continued to provide advice to the Remuneration Committee on a retained basis and BDO LLP (‘BDO’) continued to provide business assurance support to the Audit Committee. Further information on the directors’ skills and experience can be found on pages and of the Annual Report 2023.
Principle 7: Evaluate Board performance based on clear and relevant objectives, seeking continuous improvement.
In February 2023 the Board conducted a self-evaluation of its performance. As in previous years, the Directors were asked to complete a questionnaire based on the ten principles of the QCA Corporate Governance Code (QCA Code) and answer additional questions allowing Directors to give their views on the main achievements of the Board over the past twelve months, and the Board’s main strengths and weaknesses. The results were initially reviewed by the Non-Executive Chair and Company Secretary and then shared and discussed with the full Board.
The results show an improvement across all principles of the QCA Code other than principle 1. These improvements reflected the Board’s focus over the prior 12 months on areas such as:
• Focusing on shareholder needs and expectations and communicating with them well.
• Working well together as a Board
• Promoting an ethical corporate culture.
The Audit, Nomination and Remuneration Committees also conducted self-evaluations of their performance in November 2022 and January 2023. Similar questionnaires were used which incorporated the applicable QCA guidance with tailoring to the specific tasks of each committee.
Topics covered were:
• roles and responsibilities;
• Terms of Reference and planning;
• meetings – content and running of;
• skill set of members; and
• shareholder interaction.
Responses were collated, reviewed, and compared with the previous year’s results. Noticeable improvements for the Audit Committee were in three areas: i) overseeing financial reporting; ii) overseeing risk management and internal control; and iii) overseeing business assurance. All three of these areas received Committee focus this year, including input from PricewaterhouseCoopers LLP (‘PwC’) and BDO LLP (‘BDO’).
Evaluation of the Non- Executive Chair and the Non-Executive Directors:
Mark Tentori, Senior Independent Director, met with the Board members (excluding Stewart Gilliland) to obtain feedback on Stewart’s performance as Non-Executive Chair. The feedback was extremely positive, with each member confirming their full support for the Non-Executive Chair. Stewart met with each Director individually to discuss their individual contributions to the Board, assessing their effectiveness and highlighting any areas of improvement. It has been good to see the widening of the overall skill set and experience on the Board with the addition of the new Directors. The Board is in a strong position to drive the Group forward and bring about improvements in its performance.
Principle 8: Promote a corporate culture that is based on ethical values and behaviours
The Board desires to promote a culture of respect, integrity, openness, honesty, and fulfilment within each of the businesses in our Group. We believe strongly in these objectives, and we endeavour to practise these in the way that we communicate with our customers, suppliers, shareholders, advisers and of course all our teams employed in the Group.
Feedback from all stakeholders in the business, as set out in Principle 3, allows the Board to assess the state of its corporate culture, as well as performance against the Group’s internal targets.
The Group Values Statement is as follows:
• To strive for excellence in all we do
• To behave ethically and with integrity
• To focus on our customers and to ‘go the extra mile’
• To be open to feedback, ideas and to positive change and promote fulfilment and fun
• To be good ‘citizens’ within our communities and take responsibility for our impact on our planet
• To be innovative and entrepreneurial
• To treat everyone with dignity and respect
• To be a team that succeeds together and aims to be an ‘employer of choice’
In recognising the decentralised structure of our international Group, we do not seek to impose strict guidelines around the adoption of a specific corporate culture but instead allow each business to adapt the principles as is most appropriate to them. For example:
In Australia the corporate culture initiative is called #Be EPIC – Ethical, Passionate, Inspiring and Creative. This is used for the entire employment life cycle from recruitment, performance management to reward and recognition. They include it in the on-boarding process and have developed videos to promote the key aspects of the programme. The plan further expands this by ensuring staff ‘make their mark’ on the organisation. Asking staff to assess how they ‘made their mark’ on the business allows for praise and constructive self-reflection and management feedback.
In the UK and America, the teams have developed their ‘4 Ps’ framework: Purpose, Pace, Passion, and People. These core principles guide the way they do business and help define what the UK business stands for as the company grows and develops. The ‘4 Ps’ have been incorporated into the behavioural competencies to be factored into the online team appraisal system.
Our performance management systems and processes are designed to direct and influence behaviours.
Principle 9: Maintain governance structures and processes that are fit for purpose and support good decision-making by the Board
The Group has established a clear division between the respective responsibilities of the Non-Executive Chair of the Board and the CEO. The Non-Executive Chair is Stewart Gilliland, and he is primarily responsible for the effective working of the Board in conjunction with management.
From 1 June 2022 Stewart Gilliland performed the role of Interim Executive Chair. He reverted to his role as Non‑Executive Chair on 1 April 2023 after overseeing the recruitment process for the new CEO.
The CEO is Pal Bal, and he is responsible for the operational management of the business and for the implementation of the strategy agreed by the Board. Paul was appointed as CEO on 1 April 2023.
More information on the division of responsibilities between the CEO and the Non-Executive Chair can be found here.
The Board is responsible for setting the vision and strategy for the Group, working closely with the executive management team to deliver a successful business model for our shareholders and other stakeholders. The Group Delegation of Authority policy sets out the matters that are reserved for the Board for approval. These can be found here.
The Board has three committees – Remuneration, Audit and Nomination. Other than Stewart Gilliland (during his period as Interim Executive Chair), each of these committees is comprised solely of independent Non-Executive Directors, with Executive Directors being invited to meetings as appropriate. For the membership of each committee, including its Chair, see pages 56 and 57 of the Annual Report 2023.
The Nomination Committee is responsible for regularly reviewing the structure, size and composition (including the skills, knowledge, experience and diversity) of the Board and other senior executives and making recommendations to the Board with regard to any changes. It also keeps under review the leadership needs of the organisation, to ensure succession plans are in place, with a view to ensuring the continued ability of the organisation to compete effectively in the marketplace. Further information can be found on pages 68 to 69 of the Annual Report 2023.
The Audit Committee satisfies itself on the integrity of financial information and ensures the controls and risk management systems within our businesses are robust and defensible. The Committee meets as required during the year and at least twice with the Group’s external auditors. Its role is to review the interim and final financial statements for approval by the Board, to ensure that operational and financial controls are functioning properly, and to provide the forum through which the Group’s external auditors report to the Board. Further details about the activities undertaken by the Audit Committee this year can be found on pages 64 to 67 of the Annual Report 2023.
The Remuneration Committee assists the Board in fulfilling its responsibilities to shareholders to ensure that: (i) the remuneration policies and practices of the Company are designed to promote the long-term success of the Company, and are aligned with the Company’s strategy and values, having regard to all statutory and regulatory requirements and to the views of stakeholders; and (ii) senior executives are provided with fair and sustainable remuneration which is linked to the delivery of strong personal and corporate performance. Further details about the activities undertaken by the Remuneration Committee this year can be found on pages 70 to 77 of the Annual Report 2023.
The Board keeps all aspects of corporate governance under review, with the governance framework developing further as the Group continues to grow.
Principle 10: Communicate how the Company is governed and is performing by maintaining a dialogue with shareholders and other relevant stakeholders.
The Board is determined to maintain effective communication and effective dialogue with its shareholders and other relevant stakeholders. The Group welcomes questions from shareholders and potential investors; questions can be forwarded to email@example.com.
The Company regularly updates investors by announcements on the London Stock Exchange and updates on the Company’s website. Information for investors is kept up to date and contains relevant developments, presentations and press and corporate news.
The Annual Report and half year report are also key tools for demonstrating to shareholders how the Group is governed and provide an overview of core activities over the past financial year. Our historic Annual Reports and notices of general meeting, along with all other documents sent to shareholders can be found here.
Shareholders are invited to attend the Company’s AGM, which also provides an opportunity for them to ask questions to the Board. During the AGM the Non-Executive Chair discloses the results of the votes to those attending the meetings and they are posted on the on the website following the meeting.