Chairman and CEO statement
The Board is committed to achieving the highest standards of corporate governance, integrity and business ethics and as Chairman and CEO, I am responsible for oversight of this. The Board has adopted the Corporate Governance Code produced by the Quoted Companies Alliance and has taken steps to apply the principles of the QCA Code in so far as they can be applied practically, given the size of the Group and the nature of its operations. We set out below how the Group complies with the QCA Code.
1. Establish a strategy and business model which promotes long-term value for shareholders
The strategy and business operations of the Group are set out in the Strategic Report on pages 1 to 7 of the Financial Statements for the year ended 31 December 2019.
The Group has two divisions, Trading and Forestry, and a clear strategy had been devised for each. The Board continually impresses upon the leadership teams of each division that capital allocation must be both performance and potential driven. Investment, either opex or capex, will only be forthcoming for strategies that can demonstrate significant return to shareholders over time. Running loss-making business lines is not a sustainable business strategy and simply not an option. We will leave no stone unturned in our quest to support and fund businesses where our combination of skills and experience give us an edge. Conversely, if we cannot source the requisite expertise to participate profitably in particular business lines or geographies, we will not waste shareholder money by trying.
2. Seek to understand and meet shareholder needs and expectations
Shareholders play a key role in corporate governance, with our Annual General Meeting for shareholders offering an opportunity to exercise their decision-making power in the company. Shareholders are encouraged to attend the AGM and any other General Meetings which are convened throughout the year. Our Company Secretary, William Place Secretaries Limited, is the contact point for shareholder liaison and contact details can be found here.
3. Take into account wider stakeholder and social responsibilities and their implications for long-term success
The Board recognises that the long-term success of the Group is reliant upon the efforts of the employees of the Group and its contractors and suppliers. We continuously engage with our stakeholders ranging from customers, investors, international development banks, governments, not for profit organisations and academia, to identify and address issues of materiality and to gather feedback from each of them. The Board ensures that all key relationships are the responsibility of, or are closely supervised by, one of the Directors.
Woodbois is in a unique position to bring vital positive impact to Africa’s economic transformation, social development and environmental management through our operations. In this regard we have set out to align our sustainability strategy with the United Nations Sustainable Development Goals (SDGs) which provide a vision for ending poverty, hunger, inequality and protecting the earth’s natural resources.
4. Embed effective risk management, considering both opportunities and threats, throughout the organisation
The business of forestry and timber trading involves a high degree of risk, in addition to technical, political and regulatory risk; the Group is exposed to weather, nutrient and pest risks. Furthermore, the Group is exposed to a number of financial risks which the Board seeks to minimise by adopting a prudent approach which is consistent with the corporate objectives of the Group. Our approach to these risk factors is set out in the Financial Statements for the year ended 31 December 2019.
A comprehensive budgeting process is completed once a year and is reviewed and approved by the Board. Budgets are subsequently updated when there is a significant change in any of the key assumptions to the budget. The Group’s actual results, compared with the budget, are reported to the Executive Board on a weekly basis. Any material deviations from budget are followed up by a member of the Executive Board.
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
The Board is responsible for establishing the strategic direction of the Group, monitoring the Group's trading performance and appraising and executing development and acquisition opportunities. The Company holds a minimum of six Board meetings per year at which financial and other reports are considered and, where appropriate, voted on. It also holds ad hoc meetings as required to deal with specific issues. Board and Committee meetings are convened at times convenient to eligible members to ensure 100% attendance.
Details of the Directors' beneficial interests in Ordinary Shares are available on our website. The Directors comply with Rule 21 of the AIM Rules and the Market Abuse Regulations 2014 relating to directors' dealings and will take all reasonable steps to ensure compliance by any employees of the Company to whom regulations apply. The Company has, in addition, adopted the Share Dealing Code for dealings in its Ordinary Shares by directors and senior employees.
As of 7 August 2020, the Board comprised of three Executive Directors, one Non-Independent Non-Executive Director and one Independent Non-Executive Director. The Chairman and Chief Executive Officer roles were combined on 29 April 2020 and one Independent Non-Executive Director left as part of the cost cutting in response to the effects of COVID-19. It is intended in due course to comply with the Code by separating the roles of Chairman and Chief Executive Officer and to appoint a further Independent Non-Executive Director. Executive Board members are considered full time employees, while Non-Executives are required to commit between 20 and 40 days per annum to their roles.
The Board is supported by the Audit and the Remuneration Committees which comprised of Non-Executive Directors only, and the Nominations Committee which includes the Chairman and CEO.
6. Ensure that between them the directors have the necessary up-to-date experience, skills and capabilities
The Directors’ biographies can be viewed here. The Board believes that their mix of significant senior financial and commercial experience gives a strong and appropriate background to formulate and deliver long term shareholder value.
The Nominations Committee oversees the requirements for and recommendations of any new Board appointments to ensure that it has the necessary mix of skills and experience to support the ongoing development of the Company. Any appointments made will be on merit, against objective criteria and with due regard for the benefits of diversity on the Board, including gender. The Nomination Committee will also be responsible for succession planning.
In addition to bringing considerable skills to the table, appointments to the Board aim to provide a healthy balance of both experience and gender.
7. Evaluate board performance based on clear and relevant objectives, seeking continuous improvement
Internal evaluation of the Board, the Committees and individual Directors is seen as an important next step in the development of the Board and one that is addressed. An annual operational review of all members of the Board is undertaken, in which their performance is evaluated, and development needs identified and actions to be taken agreed. Executive and Non-executive Directors are subject to re-election intervals as prescribed in the Company’s Articles of Incorporation. At each Annual General Meeting one-third of the Directors who are subject to retirement by rotation shall retire from office. They can then offer themselves for re-election.
8. Promote a corporate culture that is based on ethical values and behaviours
The Company is committed to complying with all applicable laws and best corporate governance practices, wherever we operate. It is a core aspect of our mission to act with integrity in all of our operations. The Board expects all employees to comply with both the letter and spirit of the law and governance codes.
The Company fosters a culture where our businesses directly and indirectly promote a range of benefits for the host community and host country on social and environmental levels. One of the most fundamental and positive social impacts associated with our Company’s strategic growth objective is the skills development and employment opportunity we bring to the region. The Group also commits to providing a safe environment for its staff and all other parties for which the Company has responsibility. The Company is committed to protecting the environment, contributing to sustainable management of natural resources by strictly following guidelines set out by host Governments and actively engaging with local communities. The Company clearly articulates objectives and has put in place an internal accountability mechanism to effectively implement commitments, as well as ensuring that outcomes are measured and communicated transparently.
Please see our Sustainability Report for more information. Any material issues are raised and discussed at board meetings as necessary.
9. Maintain governance structures and processes that are fit for purpose and support good decision-making by the board
The following matters are reserved for the board:
- Overall Group strategy
- Approval of major capital expenditure projects
- Approval of the annual and interim results
- Annual budgets
The Company is committed to high standards of corporate governance. Both Management and the Board are dedicated to implementing best practice as the Company grows.
A clear organisation structure exists detailing lines of authority and control responsibilities.
The Board monitors the exposure to key business risks and reviews the strategic direction of all trading subsidiaries, their annual budgets, their performance in relation to those budgets and their capital expenditure.
The agenda of the overall business is determined by a Management Committee setting out agreed targets that will maximise financial return. Opportunities and improvements are identified and prioritised depending on analysis carried out by Management. These projects are supported by detailed financial planning.
Internal controls and systems have been introduced to manage business objectives. As well as Board discussions, regular meetings are held by Management to discuss performance. Detailed information packs are prepared bi-weekly to cover each major area of the business. Variances from the budget and previous forecasts are analysed, explained and acted on. Important capital investments are regularly discussed both at a Board and at a Management level where analysis of budget versus actual spend is carried out.
Effective corporate governance remains key to the business as it grows rapidly. The Company has a structure and process in place to help identify areas in which corporate governance can be improved. The Company is currently implementing technology that will allow both the Board and Management to oversee key performance indicators across the business in real time.
Within the Trading division, the Company has mandated a technology firm to create a custom-built tool to allow for real-time tracking of all trades, which has been implemented in 2020.
The Company is in discussion with several organisations to implement innovative blockchain based technology to manage both the traceability of the timber that the Company produces as well as providing real-time oversight of the business’s supply chain.
The Audit Committee, Remuneration Committee and Nominations Committee have formally delegated duties and responsibilities.
The Board has established an Audit Committee with formally delegated duties and responsibilities. The Audit Committee comprises of Non-executive Directors with Graeme Thomson as Chairman, together with Henry Turcan. It meets at least three times in the financial year.
The terms of reference for the Audit Committee include requirements:
- To monitor the integrity of the financial statements of the Group and any formal announcements relating to the Group's financial performance, reviewing significant financial reporting judgements contained in them;
- To review the Group's internal financial controls together with the Group's internal control and risk management systems.
- To monitor and review the external auditor's independence and objectivity and to make recommendations in relation to the appointment, re-appointment and removal of the external auditor.
The Remuneration Committee meets as and when required. The Remuneration Committee is comprised of Non-executive Directors with Graeme Thomson as the Chairman, together with Henry Turcan.
The policy of the committee is to reward executive Directors in line with the current remuneration of Directors in comparable businesses in order to recruit, motivate and retain high quality executives within a competitive market place.
There are three main elements of the remuneration packages for executive Directors and senior management:
- Basic annual salary (including directors’ fees) and benefits;
- Discretionary annual bonus to be paid in accordance with a bonus scheme developed by the Remuneration Committee. This takes into account individual contribution, business performance and commercial progress; and
- Equity Option incentive scheme which takes into account the need to motivate and retain key individuals.
The Committee intends to issue Options in due course following the publication of the 2019 Annual Report and to cancel existing options. The total number of Options in issue at any time will not exceed 10% of the issued share capital.
The Nomination Committee which comprises of the Non-executive Directors and the Chairman & CEO meets at least once a year and is responsible for the process of reviewing replacement or additional Directors, the monitoring of compliance with applicable laws, regulations and corporate governance guidance and making appropriate recommendations to the Board.
10. Communicate how the company is governed and is performing by maintaining a dialogue with shareholders and other relevant stakeholders
The Company encourages regular communications with its various stakeholder groups and aims to ensure that all communications concerning the Group’s activities are clear, fair and accurate. Quarterly updates are announced via RNS and are available on our website and users can register to be alerted when announcements or details of presentations and events are posted onto the website.
We aim to release our half and full year results to the market well in advance of reporting deadlines and offer visibility for shareholders by including segmental reporting. The Company’s financial statements and Notices of General Meetings of the Company can be found on the website.
The results of voting on all resolutions are announced via RNS immediately following completion of General Meetings and are available on the website. Any actions that are required to be taken as a result of resolutions for which votes against have been received from at least 20 per cent of independent shareholders will be detailed on the RNS.
Date of last review: 7 August 2020