QCA Principle

Application

Disclosure

(Page references refer to the 2022 Annual Report)

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

As detailed on page 11 of the 2022 Annual Report.

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.

The Group’s business model is set out in Our Strategy in page 2 of the 2022 Annual Report. We believe this promote the long-term value for our shareholders.

We believe this promotes long term value for our shareholders by:

• Stabilising the Group’s position by reducing cash outflows as per Note 6 of the 2022 Annual Report;
• Reducing the Company’s vulnerability to fluctuations in the timing of debt repayments receivable from subsidiaries and joint ventures as per Note 13 of the 2022 Annual Report;
• Working with joint venture partners to ensure that debts from those entities are repaid to the fullest extent possible Note 21 of the 2022 Annual Report;
• Using that financial stability to permit an orderly realisation of assets and investments in a timescale that allows maximisation of the proceeds of such sales Note 22 of the 2022 Annual Report;
• Look to recapitalise the business through a transformative acquisition.

2. Seek to understand and meet shareholder needs and expectations.

As detailed on page 11 of the 2022 Annual Report.

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.

Rurelec PLC places a great deal of importance to providing shareholders with clear and transparent information on the Group's activities, strategy and financial position. The Company uses the Annual Report and Accounts, the AGM, the Interim Report and the website to provide information to shareholders. 

The Company lists contact details on its website and on all announcements released via RNS, should shareholders wish to communicate with the Board.

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

As detailed on pages 11-12 of the 2022 Annual Report.

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.

Stakeholders other than shareholders include our employees, partners, suppliers. These are all key to our long-term success.

Our suppliers are long term partners and an important part of our culture is to establish and maintain relationships of trust. 

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

As detailed on page 12 of the 2022 Annual Report.

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).

The Board has overall responsibility for the system of internal control and for reviewing its effectiveness in managing the risks the Group faces.

Although the Company does not undertake specific risk assessments, the Board as a whole undertakes regular reviews of the principal risks and uncertainties facing the Group.

This has been reported in pages 5 and 6 of the Review of Operations of the Strategic Report and Note 23 of the 2022 Annual Report.

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

As detailed on pages 12-13 of the 2022 Annual Report.

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 fulfil their roles.

The board acknowledges that the Company is not compliant with the QCA Code as the Company currently does not have a Chairman and does not have two independent Non-Executive Directors.

The Board takes collective responsibility for the quality of, and approach to corporate governance by the Company, governance and 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

Board Composition is described at the Board of Directors.

Paul Shackleton was considered to be independent since his appointment in July 2021. The board evaluated the independence requirements of the QCA Code and considered that Paul Shackleton was independent during the period.

The number of times the Board met during the year to 31 December 2022 was 19. All serving directors were present at all the Board meetings.

Audit, Remuneration and Nominations Committees

The Board acknowledges that the Company is not compliant with the QCA Code terms of reference for these committees as these committees should be made up only of Independent Non-Executive Directors. As Paul Shackleton is the Company’s only Independent Non-Executive Director, matters normally reserved for these committees are currently considered by the whole board. The business of the board committees will resume when further appropriate appointments are made to the board

All Directors retire by rotation and are subject to election by shareholders at least once every three years in accordance with the Company’s Articles of Association.

Board Attendance and membership can be found at Attendance at Board and Committee meetings.

The three principal standing committees of the Board are the Audit, Nominations and Remuneration Committees these can be found on pages 12 and 13 of the Corporate Governance Statement and the Board of Directors.

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

As detailed on page 13 of the 2022 Annual Report.

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 Board has a wealth of skills in maintaining, preserving and realising shareholder value by pursuing financial stability. Those skills have been honed within financial and restructuring backgrounds.  

The Board understands the challenges in regard to gender diversity and understands that more can be done to improve the gender balance as part of the composition of the Board.

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

As detailed on page 13 of the 2022 Annual Report.

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. 

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.

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

As detailed on page 13 of the 2022 Annual Report.

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 Group’s corporate culture is based on creating an atmosphere of trust, openness, communication and professionalism.  Due to the size of the Company, the Board is in very close contact with its employees and is able to engender professional development through teamwork in its day to day and strategic activities.

Anti-bribery

The Group has an anti-bribery policy and each of its businesses has implemented that policy and adequate procedures described by the Bribery Act 2010 (the Act) to prevent bribery.

The policy was last updated in 2019.

Cyber risk

The Company has an Information Security Policy (“ISP”) which includes a Data Privacy Policy and a Data Breach Procedure, and covers physical and cyber security of its assets, employees and information, including third-party information, as well as business continuity and disaster recovery procedures.

The Company undertook a full review of its requirements under the General Data Protection Regulation (GDPR), implementing appropriate policies, procedures and training to ensure it has been compliant since 25 May 2018. This ISP encompasses our responsibilities in respect of GDPR as well as other non-personal information we handle.

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

As detailed on page 13 of the 2022 Annual Report.

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.

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.

Disclosure on the capacity, appetite and tolerance for risk can be found in Principle 1 and Principle 8 above.

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

As detailed on page 14 of the 2022 Annual Report.

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:

• 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).

Further disclosure required under QCA Principle 10 is found in:

• Principle 5
• Principle 9
• AGM Results
• Reports and Presentations
• Documents to Shareholders