The Board is responsible for the governance of Rurelec PLC (the “Company”), governance being the systems and procedures by which the Company is directed and controlled. A prescribed set of rules does not itself determine good governance or stewardship of a company and, in fulfilling their responsibilities, the Directors believe that they govern the Company in the best interests of the shareholders, whilst having due regard to the interests of other 'stakeholders' in the Group including, in particular, customers, employees and creditors.
This was last updated on 25 February 2019
The Board of Directors (the Board) is responsible for approving Company policy and strategy. The Board meets regularly throughout the year. To enable the Board to perform its duties, each director has access to advice from the Company Secretary and independent professionals at the Company's expense.
The Board comprises of:
|Brian Rowbotham||Senior Independent Non-Executive Director|
Two Executive Directors (Simon Morris and Andy Coveney) and one Non-Executive Director, the Senior Independent Non-Executive Director (Brian Rowbotham). The Board has delegated specific responsibilities to the committees below.
The three principal standing committees of the Board are the Audit, Nominations and Remuneration Committees.
The Audit Committee comprises Brian Rowbotham and Simon Morris and is chaired by Brian Rowbotham. The Company’s Auditors are normally in attendance. The Audit Committee reviews the external audit activities, monitors compliance with statutory requirements for financial reporting and reviews the half year and annual financial statements before they are presented to the Board for approval. The Audit Committee also keeps under review the scope and results of the audit and its cost effectiveness and the independence and objectivity of the Auditor and the effectiveness of the Group’s internal control systems.
The Nominations Committee comprises Brian Rowbotham. The Committee nominates candidates (both executive and non-executive) for the approval of the Board to fill vacancies or appoint additional persons to the Board. It also makes recommendations regarding the composition and balance of the Board.
The Remuneration Committee comprises Brian Rowbotham. Although not a member of the Committee, on occasions, and for matters not related to his own remuneration package, the Committee would normally consult the Chief Executive on proposals relating to the remuneration of members of the Group’s senior management team. The Committee, on behalf of the Board, determines all elements of the remuneration packages of the executive Directors and would also approve any compensation arrangements resulting from the termination by the Company of a Director’s service contract. The Committee also approves the grant of share options.
The Company issued in a Share Dealing Code in compliance with its obligations under the Market Abuse Regulations (“MAR”) which covers dealings by Persons Discharging Managerial Responsibilities (“PDMRs”), which includes the Directors, and persons closely associated with the PDMRs (“PCAs) and certain employees of the Company and its subsidiaries (“Applicable Employees”). The Share Dealing Code restricts dealings in shares during designated closed periods and at any time when in possession of unpublished price sensitive information.
All AIM Companies are now required to apply a "Recognised Corporate Governance Code" and to explain how they apply that code.
As an AIM company, the Directors of Rurelec PLC (“the Company”) have chosen to apply the Corporate Governance Code produced by the Quoted Companies Alliance (“QCA”) (the “QCA Code”).
The QCA Code is constructed around ten broad principles and a set of disclosures which notes appropriate arrangements for growing companies and requires companies who have adopted the QCA Code to provide an explanation about how they are meeting those principles through the prescribed disclosures. In the paragraphs below, Rurelec PLC explains how it has applied them.
1. Establish a strategy and business model which promotes 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 sets 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.
This view should be well communicated, both internally and externally.
Losses of the Group under past Boards had significantly weakened the financial position of the Group to the extent that the current Board is focused not on pursuing a risky expansionist strategy but to deliver value to shareholders by:
The execution of this strategy presents key challenges in the maximisation of returns on assets given market conditions. Those challenges are addressed by ensuring that the Company is stable enough to be able to avoid having to offload such assets when to do so would minimise value, instead choosing to seek opportunities to maximise the long term returns that will optimise value for shareholders.
The business model as to how the Company plans to make money for its investors revolves around maximising the long term collection of debts owed in connection with the joint venture formed to develop the EdS business in Argentina, whilst repaying Rurelec’s own creditors and continually assessing the value and saleability of its assets with a view to developing and/or realising those assets in such a way as to maximise the returns to all shareholders.
2. Seek to understand and meet shareholder needs and expectations.
The 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 attaches great importance to providing shareholders with clear and transparent information on the Group's activities, strategy and financial position. Details of all shareholder communications are provided on the Group's website.
The Board regards the annual general meeting as a good opportunity to communicate directly with shareholders via an open question and answer session.
The Company lists contact details on its website and on all announcements released via RNS, should shareholders wish to communicate with the Board.
The resolutions put to a vote at past AGMs can be found in the Documents to Shareholders: Circulars and Placing Documents section of the Investors page of the Company's website.
The Board seeks to engage with all shareholders as and when relevant information needs to be disclosed. The Board is cognisant or is aware of the fact that different shareholders may have different priorities regarding when those shareholders wish to realise their shareholdings and are mindful of the need to consider the interests of shareholders as a whole in this regard.
Shareholders can communicate with the Company through the email address in its website. The Board is responsible for reviewing all communications received from members and determining the most appropriate response.
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, regulator and others). The Board identifies the Company’s stakeholders, understanding their needs, interests and expectations.
Matters relating 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 which must be integrated into the Company’s strategy and business model.
Feedback is an essential part of all control mechanisms with systems in place to solicit, consider and act on feedback from all stakeholder groups.
The contraction of the Group and the focus on stabilisation of the financial position of the Company and Group has led to frequent communication at Board level within the Company and regular communication with suppliers/funders to maintain their confidence in the business model and strategy being pursued by the Board. This communication extends to regular feedback within the small London-based workforce within the Company and there is also regular communication from the Executive Directors with the Group’s joint venture partner in the British Virgin Islands. The Group’s main trading asset is the joint venture operation in Argentina. This operation is run by a full time local management team that maintains good relations with all key stakeholders to the business in Argentina.
The Executive directors travel regularly to Argentina and they meet key stakeholders whilst they are there.
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 customers.
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).
Given past changes in the Company’s financial position, the current Board consider risk management to be of paramount importance and this has driven its strategy of pursuing financial stability rather than risky expansion in order that shareholder value can be maximised through an orderly realisation of the Group’s assets. The risk position of the Group is considered on a very regular basis by the Board given the cash constraints that the Group has had to work within. The feedback on its strategy of pursuing a low-risk approach is received clearly in terms of reductions in cash outflow as measured by weekly reviews of cash forecasting models, and in terms of reduced exposure to fluctuations in cash inflow.
The Company does not undertake annual assessments of risk and does not maintain a risk register but will seek to implement such procedures within the next financial year.
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 its 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 (audit, remuneration and nomination) that have the necessary skills and knowledge to discharge their duties and responsibilities effectively.
Directors must commit the time necessary to fulfil their roles.
The Board is responsible for running the Company, including all major business and financial risks and taking strategic decisions.
Brian Rowbotham is considered to be independent since his appointment in October 2013.
The Directors communicate at least weekly on significant matters, in particular on matters affecting cashflow and on matters concerning the joint venture in Argentina.
The number of times the Board met during the year to September 2018 is 16. All directors were present at the Board meetings.
The executive directors are part time directors of the Company although all directors are expected to commit sufficient time to the Company in addition to attending the Board meetings.
The Board minutes and papers are circulated to directors in good time and ahead of the relevant Board meeting.
The Board has established audit, remuneration and nominations committees which meet regularly. Details of these committees are set out in page 11 of Rurelec PLC Annual Report and Accounts for the period ended 31 December 2017.
Due to the size of the Company the Board does not comply with the principle that the Board should at least have two independent directors and therefore its committees membership are also not compliant with their terms of reference. The Audit Committee is also not compliant as his Chairman is the acting Chairman of the Company and has as an Executive Director as a member. The board recognise the importance of having a second non-executive director on the board and are actively seeking to appoint such a person when an appropriate candidate is identified.
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 Company has three directors, Brian Rowbotham, Senior Independent Non-Executive Director, Simon C. Morris, Executive Director and Andrew H. Coveney, Executive Director. Biographical details of the Directors can be obtained in the Board of Directors section of the About us page of the website
As the financial position of the Group evolved, so have the skills required of its directors. The current directors have been chosen for their skills in maintaining, preserving and realising shareholder value by pursuing financial stability rather than by pursuing the aggressive expansion of the past. The two Executive Directors have a wealth of experience of dealing with the consequence of deterioration in the financial positions of businesses and in implementing the change necessary to restore such businesses back to stability. Those skills have been honed within financial and restructuring backgrounds. It is important that the directors are seen to be professional, reliable, trustworthy and represent a safe pair of hands.
All three Directors are Chartered Accountants and have a variety of experience gained through long careers as directors in industry and commerce, and/or at partner level in professional firms. This experience has involved regular and frequent acquisition of enhanced skills in response to a series of challenges and situations encountered in different businesses and industries to supplement the updating of skills obtained through the membership of professional organisations.
The Directors keep their skills up to date by attending regular professional briefings.
The Directors receive briefings covering regulations that are relevant to their role as directors of an AIM-quoted Company from our Nominated Adviser and lawyers.
The Board is grateful for the regular, thorough and diligent input of a qualified professional Company Secretary who inputs into and is central to everything that goes on in the Company. As such the Company Secretary provides frequent advice to the Board. On legal matters, the Company Secretary is ably supported by external part-time counsel and the Company’s solicitors. The Independent Non-Executive Director provides guidance and support on relevant matters on a regular basis.
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.
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 evaluates its own performance on a monthly basis and also regularly considers any feedback from external parties as and when that feedback is received.
Board performance is evaluated in the light of its own strategic objectives and tactical plans, in particular in relation to cash management and other financial forecasts. Any Board appointments are considered closely in relation to the ability of the proposed Director to make an active contribution to delivering value to shareholders though the achievement of the strategies and plans balanced against the cost of such an appointment.
The Company has not previously engaged any external evaluation for the performance of the Board members or external advisors for succession planning. Candidates to the Board have been proposed by the Board members based on their skills and experience and the requirements of the Company at the time of the appointment.
There are currently no formal evaluations of the Board but the Board will look to add evaluations as appropriate in the next financial year.
8. Promote a corporate culture that it 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.
Due to the size of the Company, the Board is in very close contact with all employees and is able to engender an ethical, professional and effective environment in its day to day and strategic activities.
The Company has currently 6 employees (including the directors) The Board seeks to ensure that all of its employees are aware of its ethical values communicating on a personal basis with its employees and encourages the adoption of these values through the appraisal and recruitment process.
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:
The governance structures should evolve over time in parallel with its objectives, strategy and business model to reflect the development of the Company.
In addition to the high level of explanation of the application of the QCA Code set out in the Chair’s corporate governance statement:
The Board of Directors (the "Board") is responsible for approving Company policy and strategy. The Board meets regularly throughout the year. To enable the Board to perfom its duties, each director has access to advice from the Company Secretary and independent professionals at the Company's expense.
The Board comprises of 2 Executive Directors and 1 Non-Executive Director.
Biographical details of the Board of Directors can be obtained in the Board of Directors section of the About us page of the website.
All matters are reserved for the Board although the Board has chosen to delegate some of them to the Audit, Remuneration and Nominations Commitees which will issue advice to the board on those matters. Some of the matters reserved for the Board include:
The Board is also responsible for all other matters which are considered to be of importance to the Group as a whole because of their strategic, financial or reputational implications or consequences.
The Board has established audit, remuneration and nominations committees which meet regularly. Details of these committees are set out in page 11of Rurelec PLC Annual Report and Accounts for the period ended 31 December 2017.
The Board has not used external consultants in the appointment of Directors.
All Directors are subject to re-election by shareholders in accordance with the Company's Articles of Association.
There are no plans to change the current governance framework.
The Role of the Chair, includes:
The Role of CEO includes:
10. Communicate how the Company is governed and is performing by maintaining a dialogue.
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 structures should exist between the Board and all constituent parts of its shareholder base. This will assist:
It should be clear where these communication practices are described (annual report or website).
Disclosure of the outcomes of all votes are in the Proxy Results section of the Investors page of the website
Historical annual reports and other governance-related material, including notices of all general meetings over the last five years can be obtained in the Documents to Shareholders: Circulars and Placing Documents section of the Investors page of the website.