© Everyman Media 2014
The Board is committed to maintaining high standards of corporate governance. The Company does not fully comply with the 10 principles and general provisions of the Quoted Companies Alliance Corporate Governance Code for small and mid-size quoted companies (“QCA code”) but the Board does use it as its benchmark in assessing its corporate governance standards.
While seeking to build a strong governance framework the Board is mindful of ensuring that the Company take a proportionate approach and that processes remain fit for purpose as well as embedded within the culture of the organisation. The Company continues to evolve its approach and make ongoing improvements as part of building a successful and sustainable company.
Good governance provides a framework that allows the right decisions to be taken by the right people at the right time. As the Company grows over the medium to long term, the Board is targeting full compliance with the QCA code.
The Board is primarily responsible for enhancing shareholder’s interests. It does this by:
Day-to-day management is devolved to the Executive Directors, who are charged with consulting the Board on all significant financial and operational matters. The Board meets at least ten times a year to review, formulate and approve the Company’s strategy, budgets, corporate actions and oversee the Company’s progress towards its goals. All directors are encouraged to challenge and to bring independent judgement to bear on all matters, both strategic and operational.
The Board retains ultimate accountability for governance and is responsible for monitoring the activities of the executive team. No one individual has unfettered powers of decision. The roles of Chairman and Chief Executive Officer are split in accordance with best practice.
It is important that the board itself contains the right mix of skills and experience in order to deliver the strategy of the Company. As such, the board is comprised of:
The Chairman of the Company is Paul Wise. The Chairman has the responsibility of ensuring that the Board discharges its responsibilities. The Chairman is an executive and works approximately 10 days a month. The Chairman has a key role in creating and planning the strategic direction of the Company and also has an active role in the branding of Everyman and the creative direction of the Company and its cinemas. The Chairman is not deemed independent.
The three Executive Directors, other than the Chairman, are comprised of a Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”). Mr Crispin Lilly is the CEO and Mr Jonathan Peters is the CFO. Additionally, Mr Adam Kaye is an Executive Director who supports the Company on identifying and negotiating new pipeline opportunities.
The CEO has the overall responsibility for implementing and integrating the strategic direction of the Company. This includes responsibility for all components and departments of a business. The CEO ensures that the organisation's leadership maintains constant awareness of both the external and internal competitive landscape, opportunities for expansion, customer base, markets, new industry developments and standards.
The CFO works alongside the CEO and has overall control and responsibility for all financial aspects of company strategy. The CFO takes overall responsibility of the Company’s accounting function and ensures that Company’s financial systems are robust, compliant and support current activities and future growth. The CFO will coordinate corporate finance and manage company policies regarding capital requirements, debt, taxation, equity and acquisitions as appropriate.
Jonathan Peters acts as Company Secretary and the Company has also engaged One Advisory as support for its Company Secretarial function, to ensure the necessary information is supplied to the Company Secretary and Directors on a timely basis to enable them to discharge their duties effectively. All Directors have access to the advice of the Company’s solicitors as well as access to independent professional advice, at the Company’s expense, as and when required.
The Non-Executives of the Company are Michael Rosehill, Charles Dorfman and Phillip Jacobson. Of the Non-Executive Directors, Michael Rosehill and Charles Dorfman are deemed non-independent due to the size of their shareholding in the Company. The Company considers Phillip Jacobson independent. Philip Jacobson has an interest in 73,776 Ordinary Shares and holds 100,000 options over Ordinary Shares which were granted to him as part of the Company’s admission to AIM. Neither Philip Jacobson nor the other Directors believe his shareholding or options are significant in assessing Philip Jacobson’s independence.
The Company is committed to appointing a further independent non-executive director over the coming months.
The Company accepts that having a Chairman and two Non-Executives who are not independent is not in line with best practice or the recommendations made by the QCA. The Board however believes that the skill set of the Chairman and non-independent directors is appropriate and beneficial for all shareholders and stakeholders. Each of the Chairman and non-independent Directors has significant experience in building successful businesses and offer key skillsets to the Executive Directors that are beneficial to the Company as a whole.
The Quoted Companies Alliance Code specifies that the Board should evaluate Board performance based on clear and relevant objectives, seeking continuous improvement. The Company intends to formulate a more detailed evaluation procedure over the coming months and will disclose it in more in detail on its website when this has been implemented.
The Audit Committee has the primary responsibility of monitoring the quality of internal controls and ensuring that the financial performance of the Group is properly measured and reported on. It receives and reviews reports from the Group’s management and external auditors relating to the interim and annual accounts and the accounting and internal control systems in use throughout the Group. The Audit Committee meets no less than twice in each financial year and has unrestricted access to the Group’s external auditors. The Audit Committee is chaired by Philip Jacobson and also includes Michael Rosehill.
The Remuneration Committee consists of a committee chaired by Philip Jacobson and also includes Charles Dorfman and Michael Rosehill. The Remuneration Committee reviews the performance of the executive directors and makes recommendations to the Board on matters relating to their remuneration and terms of service. The Remuneration Committee also makes recommendations to the Board on proposals for the granting of share options and other equity incentives pursuant to any employee share option scheme or equity incentive plans in operation from time to time. The Remuneration Committee meets as and when necessary.
The Nomination Committee consists of a committee chaired by Philip Jacobson and includes Paul Wise and Charles Dorfman. The Nomination Committee considers the selection and re-appointment of Directors. It identifies and nominates candidates to fill Board vacancies and regularly reviews the structure, size and composition (including the skills, knowledge and experience) of the Board and makes recommendations to the Board with regard to any changes. It also considers succession planning.
The Board is satisfied that each of the Directors is able to allocate sufficient time to the Company to discharge their responsibilities effectively.
On joining the Board, new members receive a comprehensive induction, involving meetings with senior employees and the external advisors. Individual training needs are identified as part of the annual Board evaluation process and training is provided as required. All Directors receive regular updates on legal, regulatory and governance issues. In addition, there are regular ‘deep dives’ from across the business at Board level to ensure the Directors’ understanding of the operational aspects of the business are kept up to date. From time to time Board meetings are held away at operational sites away from the head office to further enhance the directors’ understanding of the business.
The Company’s Articles of Association require directors to submit themselves for re-election by shareholders at least once every three years.
The Group operates a system of internal financial controls commensurate with its current size and activities, which is designed to ensure that the possibility of misstatement or loss is kept to a minimum. There is a system in place for financial reporting and the Board receives regular reports to enable it to carry out these functions in the most efficient manner. These procedures include the preparation of management accounts, forecast variance analysis and other ad hoc reports. There are clearly defined authority limits throughout the Group, including those matters which are reserved specifically for the Board.
The Board has responsibility for the effectiveness of the internal financial control framework. Such a system can only provide reasonable and not absolute assurance against material misstatement. The Group does not currently have, nor considers there is currently a need for, an internal audit function. As the number of sites operated by the Group increases the Board intends to regularly assess the ongoing need for strengthening internal financial controls.
The Board’s financial risk management, objectives and policies together with the Board’s policies in respect of price risk, credit risk, liquidity risk and cash flow risk are set out in the notes to the financial statements.
The Board considers risk assessment to be important in achieving its strategic objectives. There is a process of evaluation of performance targets through regular reviews by Senior Management to forecasts. Project milestones and timelines are reviewed regularly.
The Board regularly evaluates and reviews any business risk. The identified risks currently considered relevant by the Board include:
The Group maintains insurance in respect of its Directors and Officers against liabilities in relation to the Company. The Group takes out suitable insurance against property and operational risks where considered material to the anticipated revenue of the Group.
The Board has adopted a Share Dealing Code that applies to Directors, Senior Management and any employee who is in possession of ‘inside information’. All such persons are prohibited from trading in the Company’s securities if they are in possession of ‘inside information’. Subject to this condition and trading prohibitions applying to certain periods, trading can occur provided the individual has received the appropriate prescribed clearance.
The Board recognises that its decisions regarding strategy and risk will impact the corporate culture of the Company as a whole and that this will impact the performance of the Company. The Board is aware that the tone and culture set by the Board will greatly impact all aspects of the Company as a whole and the way that employees behave. The corporate governance arrangements that the Board has adopted are designed to ensure that the Company delivers long term value to its shareholders, and that shareholders have the opportunity to express their views and expectations for the Company in a manner that encourages open dialogue with the Board. Therefore, the importance of sound ethical values and behaviours is crucial to the ability of the Company to successfully achieve its corporate objectives.
Confidentiality: in accordance with legal requirements and agreed ethical standards, Directors and all staff have agreed to maintain the confidentiality of Company information that is not in the public domain, except where disclosure is authorised or legally mandated.
Bribery: in accordance with the provisions of the Bribery Act, all Directors and staff acknowledge that it is an offence under the act to engage in any form of bribery. The Company has an anti-bribery policy in force.
The Company finances its operations through equity and debt. It holds its cash as a liquid resource to fund its ongoing financial outgoings and obligations. Decisions regarding financial management are approved by the Board.
The Board has adopted the Share Dealing Code contained within the AIM Rules and the Market Abuse Regulation (“MAR”) that applies to Directors, senior management and any employee who is in possession of “inside information”. All such persons are prohibited from trading in the Company’s securities if they are in possession of “inside information”.
Subject to this condition and trading prohibitions applying to “closed periods” (usually around two months prior to the publication of the interim and final audited accounts), trading can occur provided the relevant individual has received the appropriate prescribed clearance. All Directors and staff are required to advise the Executive Chairman of their intention to undertake a transaction in the Company’s shares. Such a transaction will be precluded if the Director or employee is considered to be in possession of unpublished price sensitive information.
The Company will ensure, in accordance with and subject to the provisions of Rule 21 of the AIM Rules, that the Directors and applicable employees shall not deal in any of the ordinary shares during a closed period (as defined under MAR) and will take all reasonable steps to ensure compliance by the Directors and applicable employees with this Rule 21.
The Board recognises that it is accountable to shareholders for the performance and activities of the Company and to this end is committed to providing effective communication with the shareholders of the Company and with other stakeholders. Significant developments are disseminated through stock exchange regulatory news service (“RNS”) announcements and regular updates of the Company website. The Board views the AGM as a forum for communication between the Company and its shareholders and encourages their participation in its agenda. The Executive Directors are the primary liaison for shareholders.
The Company is in constant contact with its suppliers and seeks to maintain good relationships.
The Board also recognises that as an operator of cinemas within local communities, it has responsibility to engage openly, transparently and effectively with community stakeholders, local planning and government agencies.
The Group places considerable emphasis on maintaining good relations with all its employees. The Group places great importance on managers at each venue being well trained and capable of recruiting, training and developing a strong team and it equips them with the necessary tools in order to provide a positive working atmosphere. The Group regularly communicates important updates with employees and seeks engagement and consultation whenever making decisions that affect them or their interests. Employees are provided with regular on-the-job training and career development opportunities and the Group places a significant importance on developing from within.
The Group is an equal opportunities employer and is committed to the employment of people with disabilities and guarantees an interview for those who meet the minimum selection criteria. The Group provides training and development for people with disabilities tailored, where appropriate, to ensure they have the opportunity to achieve their potential. If a Group employee becomes disabled while in our employment the Group will do its best to retain them, including consulting with them about their requirements, making reasonable and appropriate adjustments and providing alternative suitable employment where possible.
Material developments within the Company are disseminated through stock exchange regulatory news service (“RNS”) announcements and regular updates of the Company website where details of the Company’s cinema estate are updated regularly.
The Board views the Annual General Meeting as an important forum for communication between the Company and its shareholders and encourages shareholders to express their views on the Company’s business activities and performance.
The Board already discloses the result of general meetings by way of announcement and discloses the proxy voting numbers to those attending the meetings. In order to improve transparency, the Board has committed to publishing proxy voting results on its website in future. All 2018 AGM resolutions were passed comfortably.
Where a significant proportion of votes have been cast against a resolution, the Board may at its complete discretion provide an explanation of what action it intends to take, if any, to understand the reasons behind the vote result and where appropriate, any different action it has taken, or will take, as a result of the vote.