corporate governance statement
Victoria Plc – Corporate Governance Statement
From September 2018 all AIM companies are required to set out details of a recognised corporate governance code that the Board of directors has chosen to apply, how they comply with that code, and where it departs from its chosen corporate governance code an explanation for doing so.
Introduction from Chairman
We have chosen to adopt the Quoted Companies Alliance (“QCA”) Code as our guide and set out below detailed explanations of how we seek to comply with each of the QCA Code’s 10 principles.
All members of the Board recognise the importance of good corporate governance in facilitating Victoria to achieve its goals and in our accountability to all our stakeholders.
In the statements that follow, we explain our approach to governance, and how the Board and its committees operate.
1. Establish a strategy and business model which promote long-term value for shareholders
The strategy and business operations of the Group are set out in the Strategic Report on pages 13 to 15 of the Group’s 2019 Annual Report.
Victoria plc has a clear and simple mission statement “To create wealth for our shareholders”. The Group’s strategy in creating wealth for its shareholders has remained unchanged since the appointment of Geoff Wilding as Chairman in October 2012 and continues to be to deliver profitable and sustainable growth, both from acquisitions and organic drivers.
In terms of acquisitions, Victoria has a track record of identifying value-accretive acquisition targets, integrating the acquired companies and achieving synergies. The Group continues to seek and monitor good opportunities in key target markets that will complement the overall commercial offering and help to drive further improvement in our key performance indicators.
Organic growth is fundamentally driven by the five pillars of Victoria’s business model:
1) Superior customer offering; Offering a range of leading quality and complementary flooring products across a number of different brands, styles and price points, focused on the mid-to-upper end of the market or specialist products, as well as providing market-leading customer service.
2) Sales driven; Highly motivated, independent and appropriately incentivised sales teams across each brand and product range, ensuring delivery of a premium service and driving profitable growth.
3) Flexible cost base; Multiple production sites with the flexibility, capacity and cost structure to vary production levels as appropriate, in order to maintain a low level of operational gearing and maximise overall efficiency.
4) Focused investment; Appropriate investment to ensure long-term quality and sustainability, whilst maintain a focus on cost of capital and return on investment.
5) Entrepreneurial leadership; A flat and transparent management structure, with income statement ‘ownership’ and linked incentivisation, operating a framework that promotes close links with each other and with the Board to plan and implement the short and medium-term strategy.
In addition, the Group continues to seek and deliver synergies and transfer best operating practice between acquired businesses, both in terms of commercial upside, and cost and efficiency benefits to drive like-for-like margin improvement.
2. Seek to understand and meet shareholder needs and expectations
The Group maintains a regular dialogue with both existing and potential new shareholders in order to communicate the Group’s strategy and progress and to understand shareholders needs and expectations.
The Company communicates with its shareholders principally via a Regulatory Information Service, its investor website, formal company meetings and investor roadshows. The Company’s contact details, telephone, email and correspondence address, are listed on its website for shareholders’ use. The Company also provides an email alert service on its website to which shareholders and other interested parties can subscribe, to receive company announcements when they are released.
The Chairman, Chief Executive Officer and Chief Financial Officer meet regularly with investors and analysts to update them on the Group’s business and obtain feedback on the market’s expectations of the Group.
The AGM is the main forum for dialogue with retail shareholders and the Board. The Notice of Meeting is sent to shareholders at least 21 days before the meeting. The chairs of the Board and all committees, together with all other directors, routinely attend the AGM and are available to answer questions raised by shareholders. For each vote, the number of proxy votes received for, against and withheld is announced at the meeting.
The Directors actively seek to build a relationship with institutional shareholders. Shareholder relations are managed primarily by the Chairman, Geoff Wilding and the Chief Financial Officer, supported by the Chief Executive Officer, as appropriate. The Chairman, Chief Executive Officer and Chief Financial Officer make presentations to institutional shareholders and analysts each year immediately following the release of the full-year and half-year results.
The Board as a whole is kept informed of the views and concerns of major shareholders by briefings from the Chairman. Any significant investment reports from analysts are also circulated to the Board. The Chairman and Chief Financial Officer are available to meet with major shareholders if required to discuss issues of importance to them.
3. Take into account wider stakeholder and social responsibilities and their implications for long-term success
The Group is aware of its corporate social responsibilities and recognises the importance of maintaining good relationships with all stakeholder groups as this is essential for building a quality long-lasting growth business.
Engaging with our stakeholders strengthens our relationships and helps us make better business decisions to deliver on our commitments. The Board is regularly updated on wider stakeholder engagement feedback to stay abreast of stakeholder insights into the issues that matter most to them and our business, and to enable the Board to understand and consider these issues in decision-making. Aside from our shareholders, suppliers and customers, our employees are one of our most important stakeholder groups and the Board therefore closely monitors and reviews any feedback it receives to ensure alignment of interests.
Victoria is committed to being an equal opportunities employer and focused on hiring and developing talented people. The health and safety of our employees, and other individuals impacted by our business, is taken very seriously and is reviewed by the Board on an ongoing basis.
Our customers are of paramount importance and the Group seeks to retain customers and establish long and lasting relationships with them, built on mutual respect and trust. The Group is focused on producing quality flooring products at competitive prices for our customers.
Victoria endeavours to forge strong relationships with suppliers built on honesty, fairness and mutual respect.
We oppose modern slavery in all its forms and will try to prevent it by any means that we can. We expect anyone who has any suspicions of modern slavery in our business or our supply chain to raise their concerns without delay.
We promise that we will keep any information provided completely confidential. In the light of the Modern Slavery Act 2015 we annually review internal measures to ensure we are doing what we can to prevent slavery and human trafficking in our businesses and in our supply chains. Our policy is available on the Victoria plc website: www.victoriaplc.com
4. Embed effective risk management, considering both opportunities and threats, throughout the organisation
The Board is responsible for the systems of risk management and internal control and for reviewing their effectiveness. The internal controls are designed to manage rather than eliminate risk and provide reasonable but not absolute assurance against material misstatement or loss. Through the activities of the Audit Committee, the effectiveness of these internal controls is reviewed annually.
A comprehensive budgeting process is completed once a year and is reviewed and approved by the Board. The Group’s results, compared with the budget, are reported to the Board on a monthly basis.
Audit, risk and internal financial controls
The Company has an established framework of internal financial controls, the effectiveness of which is regularly reviewed by the Executive Management, the Audit Committee and the Board.
The Board is responsible for reviewing and approving overall Company strategy, approving revenue and capital budgets and plans, and for determining the financial structure of the Company. Monthly results and variances from plans and forecasts are reported to the Board.
The Audit Committee assists the Board in discharging its duties regarding the financial statements, accounting policies and the maintenance of proper internal business, and operational and financial controls, including the review of results of work performed by the Group controls function.
There are comprehensive procedures for budgeting and planning, for monitoring and reporting to the Board business performance against those budgets and plans, and for forecasting expected performance over the remainder of the financial period. These cover profits, cash flows, capital expenditure and balance sheets. Further details of the Company’s approach to risk and risk management are set out on Page 12 of the 2018 Annual Report in the Principal Risks and Uncertainties section.
Standards and policies
The Board is committed to maintaining appropriate standards for all the Company’s business activities and ensuring that these standards are set out in written policies. Key examples of such standards and policies include the ‘Anti Modern Slavery Policy’ and ‘Employee Code of Conduct’ and our ‘Bribery Policy’.
The Group maintains appropriate insurance cover in respect of actions taken against the Directors because of their roles, as well as against material loss or claims against the Group. The insured values and type of cover are comprehensively reviewed on a periodic basis.
5. Maintain the Board as a well-functioning, balanced team led by the Chair
Victoria’s Board comprises the Executive Chairman, Geoff Wilding, and two other Executive Directors and 3 Non-executive Directors, including a Senior Independent Non-executive Director.
All of the Directors are subject to election by shareholders at the first Annual General Meeting following their appointment to the Board. In accordance with the Company’s Articles of Association Directors are required to seek re-election at least once every three years.
The Board of Directors’ biographies are set out here
The Board is responsible to the shareholders for the proper management of the Group and meetings are held on a regular basis to set the overall direction and strategy of the Group, to review operational and financial performance and to discuss acquisition prospects. The Board intends to disclose details of the number of board meetings held and attendance in the 2019 Annual Report. The Board is provided with key information in a timely manner to enable a proper assessment of all matters requiring a decision or insight. All key operational and investment decisions are subject to Board approval.
The Board also has a list of standing agenda items for compliance and regulatory matters, including compliance with the UK Bribery Act, Health and Safety performance, Insurance and any other relevant developments impacting the Group.
The Board is supported by Audit, Remuneration and Nomination Committees which are considered to have the appropriate skills and knowledge to discharge their duties and responsibilities effectively.
The Board currently has one independent non-executive director. This represents a departure from the QCA code guidance for at least two independent non-executive directors.
Whilst the Company acknowledges the guidance to have at least two independent directors, the Chairman does not consider the current departure from the code as limiting the Board’s ability to operate as a well-functioning and balanced team. The Company will continue to monitor and assess the appropriateness of the current Board composition and if considered appropriate seek to appoint a second independent non-executive director.
There were 16 Board or Committee meetings held during the year ended 30 March 2019. Directors’ attendance at these meetings was a follows:
|Name||Postition||Total||Board||Audit Committee||Renumeration Committee||Nominations Committee|
|Philippe Hamers||Chief Executive||11||11||-||-||-|
|Michael Scott||Finance Director||11||11||-||-||-|
Directors’ conflict of interest
The Company has effective procedures in place to monitor and deal with conflicts of interest. The Board is aware of the other commitments and interests of its Directors, and changes to these commitments and interests are reported to and, where appropriate, agreed with the rest of the Board.
6. Ensure that between them, the Directors have the necessary up-to-date experience, skills and capabilities
The Directors’ biographies are set out here
The Board regularly reviews the composition of the Board to ensure that it has an appropriate mix of skills and experience to support the Group as it develops.
The Chairman, together with the Company Secretary, ensures that the Directors’ knowledge is kept up to date on key issues and developments pertaining to the Group, its operational environment and to the Directors’ responsibilities as members of the Board.
The Directors have access to the advice and services of the Company Secretary and are empowered to take independent professional advice in the furtherance of their duties at the Company’s expense, where necessary.
7. Evaluate Board performance based on clear and relevant objectives, seeking continuous improvement
The effectiveness of the Board’s performance as a collective unit is focused on one measure: the delivery on the Company’s mission statement “To create wealth for our shareholders”.
The Chief Financial Officer is appraised by the Senior Independent Non-executive Director, who is also the Chair of the Audit Committee. He reviews performance annually, taking into account any internal control matters and independent feedback and annual feedback from the external auditors at Audit Committee meetings.
The performance of other board members is currently monitored on an ad-hoc basis. Development or mentoring needs are considered as part of the review process of each board member. The Company seeks continuous improvement as part of its considerations for evaluating the performance of the Board.
8. Promote a corporate culture that is based on ethical values and behaviours
Victoria is committed to good practice and ethical behaviour and we fully recognise our responsibilities to all of our stakeholders as referred to under Principle 3.
The Board firmly believes that sustained success will best be achieved by adhering to our corporate culture of treating all our stakeholders fairly and with respect.
Accordingly, in dealing with each of the Company’s principal stakeholders, we encourage our staff to operate in an honest and respectful manner.
The Group is committed to providing a safe environment for its staff and all other parties for which the Group has a legal or moral responsibility in this area.
Victoria has taken steps to try to prevent slavery or human trafficking within its supply chain, as set out in the Company’s statement on the Modern Slavery Act available here
As a manufacturing and distribution business, there is a risk that some of the Group’s activities could have an adverse impact on the local environment. Policies are in place to mitigate these risks, and all of the Group businesses are committed to full compliance with all relevant health and safety and environmental regulations.
9. Maintain governance structures and processes that are fit for purpose and support good decision-making by the Board
The Company is confident that its governance structures and processes are appropriate for the current size and complexity of the business. The appropriateness of the Company’s governance structures will be reviewed annually in light of further developments of accepted best practice and the development of the Company.
The Board has overall responsibility for promoting the long-term success of the Group. There is a formal schedule of matters reserved for the Board. The Executive Directors have day-to-day responsibility for managing the Group’s operational, commercial and financial activities. The Non-executive Directors are responsible for bringing independent and objective judgement to Board decisions. The Board includes a Senior Independent Director position and this serves to provide a sounding board for the Chairman and to act as an intermediary for the other directors where necessary. The Directors’ Biographies on page 19 in the 2018 Annual Report and Financial Statements briefly describe individual board members’ specific responsibilities.
There is a clear separation of the roles of the Chairman and Chief Executive Officer. The Chairman is responsible for overseeing the running of the Board, ensuring that no individual or group dominates the Board’s decision-making and ensuring the Non-executive Directors are properly briefed on matters. The Chairman has overall responsibility for corporate governance matters in the Group and is a member of the Nominations Committee. The Chief Executive Officer has the responsibility for managing the day-to-day operations of the Company and the Board as a whole is responsible for implementing the Company’s strategy. The Company Secretary is responsible for ensuring that Board procedures are followed and applicable rules and regulations are complied with.
The Board has established an Audit Committee, Remuneration Committee and Nominations Committee with formally delegated duties and responsibilities.
The Audit Committee is chaired by Andrew Harrison, who is the Senior Independent Non-executive Director, and meets at least twice a year at appropriate times in the reporting and audit cycle and otherwise as required. The Committee’s responsibilities are set out in its terms of reference and include amongst other things, reviewing the adequacy of the Group’s accounting and operating controls, reviewing the proposed accounts of the Group prior to publication and recommending the appointment of the auditor and review of the scope and results of its audit. It is also responsible for ensuring that an effective system of internal control is maintained. The terms of reference of the Audit Committee are set out on our website.
The Remuneration Committee is chaired by Andrew Harrison and meets as required, but at least twice a year. The Committee’s responsibilities are set out in its terms of reference which are available on our website and include amongst other things, responsibility for determining the remuneration for the Group’s Executive Directors and senior management and reviewing the design of share incentive plans and sets performance conditions for approval by the Board.
The Nominations Committee is chaired by Alexander Anton and meets as required, but at least twice a year. The Committee’s responsibilities are set out in its terms of reference which are available on our website and include amongst other things responsibility for reviewing the size and composition of the Board, succession planning for executive board appointments, reviewing the time commitment of Non-Executive Directors, and making appropriate recommendations to the Board regarding membership of the Audit and Remuneration Committees.
10. Communicate how the Group is governed and is performing by maintaining a dialogue with shareholders and other relevant stakeholders
The Company reports formally to its shareholders and the market twice each year with the release of its interim and full year results. The full year results are audited by an external firm of auditors.
The Group maintains a regular dialogue with its various stakeholder groups and aims to ensure that all communications concerning the Group’s activities are clear, fair and accurate. The Group’s website is regularly updated and users can register to receive email alerts when announcements or details of presentations and events are uploaded to the website.
The Group’s financial reports and presentations can be found here including the latest Annual Report for the year ended 30 March 2019.
Notices of General Meetings held over the last five years for the Company can be found here
The results of voting on all resolutions in future general meetings will be posted to the Group’s website, including any actions to be taken as a result of resolutions for which votes against have been received from at least 20 per cent of independent shareholders. It should be noted that at the most recent AGM held on 3 September 2019, all resolutions were passed and none of the resolutions received 20% or more of the votes against by independent shareholders.
Employee stakeholders are regularly updated with the development of the Company and its performance.
For and on behalf of Victoria Plc
10 July 2019