Corporate Governance

Executive Chair statement

The Board is committed to achieving the highest standards of corporate governance, integrity and business ethics and as Executive Chair, 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.

The strategy and business operations of the Group are set out in this Annual Report and in the Group’s annual Sustainability Report.

The Group had two divisions during the year Trading and Forestry, and on 8 March 2021 announced that it had established a Reforestation and Carbon Credit division: 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. We will prioritise 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 look to cease these activities. 

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 Meeting’s which are convened throughout the yearr, either online or in person, and for which our Company Secretaries are the point of contact for shareholders. Our Executive Directors and our  Investor relations officer are the contact point for shareholder updates and wider liaison. The contact details are set out in these financial statements. 

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.

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 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 2021.   

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 Directors on a weekly basis and any material deviations from budget are followed up by a member of the Executive Board. Variances are reviewed at least monthly by the Board.  

The Group maintains appropriate Directors & Officers insurance cover in respect of actions taken against the Directors because of their roles, as well as insurance against material loss or claims against the Group, where it is considered cost-effective. The insured values and type of cover are comprehensively reviewed on a yearly-basis or where new assets or risks arise.

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 nine 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. During 2021 the Board met 20 times. 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 and are set out in the Directors’ Report. 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.   

The Board comprises of three Executive Directors, two Independent Non-Executive Directors and one Non-Independent Non-Executive Director. The Chair, Graeme Thomson, is an Independent Non-Executive Director and Paul Dolan is full-time CEO. 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 are comprised of Non-Executive Directors only, and the Nominations Committee which also includes the Executive Chair.

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 and inclusivity on the Board.  The Nomination Committee will also be responsible for succession planning.

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. 

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 and contractors 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. 

The following Group matters are reserved for the Board:

  • Overall strategy
  • Approval of major capital expenditure projects
  • Approval of the annual and interim results
  • Annual budgets, KPI’s and revisions thereto
  • ESG matters, including climate change initiatives and actions

 

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 include financial return, sustainability and actions on climate change. Opportunities and improvements are identified and prioritised depending on analysis carried out by Management. These projects are supported by detailed financial planning. Comprehensive internal controls and systems enable the Board 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 developed a custom-built tool to allow for real-time tracking of all trades, which has been progressively implemented in 2021.

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 Board has established an Audit Committee, Remuneration Committee and Nominations Committee with formally delegated duties and responsibilities.

 

Audit Committee:

The Board has established an Audit Committee with formally delegated duties and responsibilities. During the year, the Audit Committee comprised of the Non-Executive Directors with Graeme Thomson as Chair. It formally meets at least three times in the financial year. In addition, the Chair has a regular dialogue with our auditors

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.

 

Remuneration Committee:

The Remuneration Committee meets as and when required. During the year the Remuneration Committee comprised of Non-Executive Directors with Graeme Thomson as the Chair. It meets at least three times per year.

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; and
  • Equity Option incentive scheme,
  • All of these elements take into account the need to
    motivate and retain key individuals.

 

Nominations Committee:

The Nomination Committee which comprises of the Non-Executive Directors and the Executive Chair meets at least twice 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.

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: 01 April 2022

Date of last review: 01 April 2022

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