Corporate Governance
AIM-quoted companies are required to adopt a recognised corporate governance code with effect from their admission to trading on AIM and are required to state how they will comply with such code and to explain the reasons for any non-compliance. However, there is no prescribed corporate governance regime in the UK for AIM companies. The Directors recognise the importance of sound corporate governance commensurate with the size and nature of the Group and the interests of its Shareholders. The QCA has published the QCA Code, a set of corporate governance guidelines, which include a code of best practice, comprising principles intended as a minimum standard, and recommendations for reporting corporate governance matters. The Board has adopted the QCA Code with effect from Admission.
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Corporate Governance Report for year ending 31 December 2022
The board is pleased to present its Corporate Governance Report for the financial year ended 31 December 2022. The aim of this report is to set out CMO’s approach to corporate governance, the work of the board, and the board committees over 2022.
The board strongly believes that corporate governance is more than just a set of guidelines. It’s a framework that helps to improve long-term success and performance. It also ensures a shared understanding of how decisions are made at CMO for the benefit of our stakeholders.
In line with the requirements of the AIM Rules for Companies, the Group has decided to apply the QCA Corporate Governance Code for Small and Mid-Size Quoted Companies (the “Code”). Applying this code will give details to shareholders, both through this Annual Report and in an annually updated compliance statement available on the Group’s website, on the Group’s compliance with the Code.
The Group also takes steps to apply the principles of the UK Corporate Governance Code, as far as it can be applied practically, given the size of the Group and the nature of its operations.
Much of our focus over the course of 2022 has been on responding to some of the unique macroeconomic challenges facing the business, including changing consumer habits as we emerge from the COVID-19 pandemic and the impact of the Ukraine conflict. We have dedicated time to understand the impact of both of these events on our business and on our stakeholders, ensured through both the Board and the Board committees that we are managing risks and opportunities appropriately, and provided supportive but critical challenge to our management.
As per good governance practice, and the recommendations of the Code, we undertook a Board performance evaluation in 2022, our first since listing as a public company. The process is set out in greater detail later in this report; the findings overall have been a very useful tool in identifying the areas in which the Board is working effectively and the areas where we may wish to focus in 2023 and beyond.
We’re of the view that our approach to corporate governance is appropriate for a business of our size and scale. However, we recognise that our corporate governance framework needs to remain responsive to the demands of the business as it continues to mature and grow, in both scale and complexity.
I hope this report is of interest to all our shareholders and other stakeholders.
Ken Ford
Chairman of the Board
Compliance statement
During the year ended 31 December 2022, the board has reviewed its compliance with the QCA Code and has reviewed and approved a compliance statement.
This sets out how the Group complies with the Code’s ten principles and explains any areas in which the Group’s practice and policies deviate from the Code. The compliance statement can be viewed on the Investor Relations section of the CMO website.
This Corporate Governance Report is structured against the ten focal areas of the QCA Code, as set out below. The board is of the view that, through disclosure on both websites and in this Annual Report and Accounts, the Group complies with all applicable provisions of the QCA Code.
Governance structure
The board is committed to communicating openly with CMO shareholders to ensure its strategy and performance are clearly understood and encourage shareholder participation in face-to-face meetings. Communications are held with them through the Annual Report and Accounts, full-year and half-year announcements, trading updates and the annual general meeting (AGM). The Board was pleased to note that all resolutions put to the 2022 AGM passed comfortably, with all resolutions receiving more than 99% of votes cast in favour.
A range of corporate information (including all announcements and presentations) is also available to shareholders, investors, and the public on the corporate website.
CMO actively engages with key stakeholders throughout the year to ensure the Board understands the views on some of its most critical decisions and incorporates them into its decision-making process.
For details of who is considered a key stakeholder, and how the Group engage with them, please see the S172 Statement on page 31.
Purpose, Values and Culture
Purpose – Why we do what we do
Values – The qualities we embody
Culture – How we work together
The Group’s strategy is centered around building a sustainable and profitable business that will deliver long-term value to all shareholders.
The board believes CMO’s corporate culture continues to serve as one of its key competitive advantages in delivering on that strategy. Encouragement is given to all employees at all levels of the Group to take responsibility for their work and to actively contribute toward the development and delivery of the Group’s strategy.
Regarding the board’s role, we recognise the importance of setting a tone from the top and has met with a number of staff at various levels of the business. As a board, we want to ensure that it’s actively engaged with the ongoing development of CMO corporate culture, and it will be looking to develop several cultural metrics for reporting to the board over the course of 2022. These metrics will allow it to review the progress we’re making in embedding CMO’s cultural aspirations.
The board’s aim is to promote a culture within the Group of ethical values and behaviours. It also has a number of due diligence processes in place to ensure that suppliers meet Group standards and values. It has internal policies covering a range of ethical behaviours, such as anti-bribery and anti-corruption policies, which serve to promote and preserve the right corporate behaviours.
As part of the CMO induction process, new employees receive training on all corporate policies and the expectations of the Group when it comes to ethical values and behaviours. This is refreshed on a regular basis for all employees.
Our employee engagement activities are set out in our s172 report on pages 31 to 33.
Board composition
The successful delivery of CMO’s strategy depends upon attracting and retaining the right talent. This starts with having a high-quality and diverse board. Balance is an important requirement for the composition of the board, not only in the number of executive and non-executive directors, but also the skill, knowledge, and expertise each director brings.
As at 31 December 2022, the board comprised an independent non-executive chairman, three executive directors, and two non-executive directors, one of whom is deemed independent by the board. A short biography of each of the directors in office, at the date of this report, is set out on pages 39 to 40.
The role of the chairman is to run the business of the board, ensuring appropriate strategic focus and direction in the board’s discussions, and to facilitate relationships and engagement with shareholders. The chairman also holds responsibility for ensuring the Group is appropriately governed, and that it embraces the principles of good corporate governance and the values that underpin those principles.
Upon appointment, each director receives a tailored induction to the Company, including meeting with relevant members of staff, advisers, and other key stakeholders. This allows each director to gain further insight into the Group, its strategy, culture, and operations. Directors are also encouraged to identify any development opportunities they feel are necessary to help them undertake their role to the best of their ability.
Ken Ford and Helen Deeble are considered by the board to be independent. The board is of the opinion that both Ken and Helen act in an independent and objective manner and are free from any relationship that could affect their judgement.
Notwithstanding any cross-directorships, the board is satisfied that it has a suitable balance between independence (of both character and judgement) and knowledge of the Group, allowing it to perform its duties and responsibilities effectively.
There are procedures in place to monitor and deal with any conflicts of interest, with current commitments of any directors being disclosed at every board meeting. As such, the board is aware of the other commitments and interests of its directors. Any changes to these commitments and interests are reported to and, where appropriate, agreed with the rest of the board.
Election and re-election of directors
Under the Company’s Articles of Association, all Directors are subject to election by Shareholders at the first Annual General Meeting after their appointment and are subject to re-election at least every three years. However, in line with good corporate governance practice, all Directors submit themselves for re-election by shareholders at each AGM.
Accordingly, all directors will submit themselves for election by shareholders at the 2023 AGM. The Board considers that, during the year ended 31 December 2022, each director that served in 2022 has performed effectively and continues to demonstrate commitment to the role. The Board therefore believes that it is in the best interests of shareholders that each director is re-elected at the forthcoming AGM.
Succession Planning
Succession planning for both board and senior management positions is remitted to the board. The board has decided at the current time not to constitute a Nomination Committee, but this position will remain under continual review.
The board is considered to be of an appropriate size given the size and scale of the Group, and that the skills, experience, and competencies of its members are appropriate. The board is fully confident that the senior management team possess the right range of capabilities to drive the business forward in 2023 and beyond. A focal area for the board in succession planning in 2023 will be on further developing the talent pipeline within the business to produce the next generation of senior leaders.
Board and Committee Effectiveness
The board continually strives to improve its effectiveness and recognises that an annual Board Performance Evaluation review is an important tool in reaching that goal.
The directors are aware of the importance to monitor performance through board evaluations and that feedback leads to improving its effectiveness.
Internal Controls and Risk Management
The Group has a comprehensive system of internal controls in place, designed to ensure that risks are mitigated, and the Group’s objectives are attained. The board recognises its responsibility to present a fair, balanced, and understandable assessment of the Group’s position and prospects.
It’s accountable for reviewing and approving the effectiveness of internal controls operated by the Group, including financial, operational and compliance controls, and risk management. The board recognises its responsibility of the Group’s risk management process and system of internal control and oversees the activities of both the Group’s external auditors and risk management function (supported by the Audit Committee).
A review of the Group’s risk management approach is further discussed in the Strategic Report on pages 7 to 20. For detail on the management and mitigation of each principal risk, see pages 18 to 20.
Audit Committee
The Audit Committee is responsible for monitoring the integrity of the Group’s financial statements, reviewing significant financial reporting issues, reviewing the effectiveness of the Group’s internal control and risk management systems, monitoring the need for and if necessary, the effectiveness of the internal audit function and overseeing the relationship with the external auditors including advising on their appointment, agreeing the scope of the audit and reviewing the audit findings.
The Audit Committee also advises the Board on the Group’s overall risk appetite and strategy including, inter alia, regularly reviewing and updating (if appropriate) the risk assessment processes in place, including in relation to remuneration and compliance functions, and assisting in overseeing implementation of the adopted strategy.
The Audit Committee is chaired by Helen Deeble CBE. Its other members are Ken Ford and Mike Fell. The Committee will meet at least three times a year and otherwise as required. The Audit Committee will also meet regularly with the Group’s external auditors.
Remuneration Committee
The Remuneration Committee is responsible for determining and agreeing with the Board the framework for the remuneration of the Executive Directors and other designated senior executives and, within the terms of the agreed framework, determining the total individual remuneration packages of such persons including, where appropriate, bonuses, incentive payments and share options or other share awards. The remuneration of Non-Executive Directors is a matter for the executive members of the Board and the Chairman. No Director will be involved in any decision as to his or her own remuneration.
The Remuneration Committee is chaired by Helen Deeble CBE. Its other member is Ken Ford. The Remuneration Committee will meet at least twice a year and otherwise as required.
Disclosure Committee
The Disclosure Committee provide support to the Board in relation to compliance with MAR, the Disclosure Guidance and Transparency Rules and AIM Rules and the identification, control and disclosure of “inside information”. The Disclosure Committee is chaired by Ken Ford. Its other members are Dean Murray, Jonathan Lamb and Callum Tasker. The Disclosure Committee will meet at such times and in such manner as shall be necessary or appropriate.
Nomination Committee
Given the current size and nature of the Group, the Board has not appointed a nomination committee. Nominations will be managed by the Board as a whole.
The Chairman and the Board will continue to monitor and evolve the Company’s corporate governance structures and processes in line with the Company’s growth and development.