Chairman’s Corporate Governance Statement

As Chairman of the Company I am aware of the need for an effective and focused Board that leads the business and builds upon its successes. I and my fellow Board members believe in the value and importance of strong corporate governance, at executive level and throughout the operation of the business, and in our accountability to all stakeholders.

In line with the AIM Rules requirement to apply a recognised corporate governance code, the Board has chosen to apply the Quoted Companies Alliance Corporate Governance Code

published in 2018 (the “QCA Code”). The Board believes that the QCA Code is the most appropriate recognised governance code for the Company. The QCA Code has ten broad principles and

a set of disclosures. The Board has considered how it applies each principle to the extent it judges to be appropriate in the circumstances and in the statements that follow, we explain our approach to governance and how the Board and its committees operate.

I am committed to working with the Board to build upon the existing values that are in place and ensure that good corporate governance continues to be present within the organisation.

Gareth Edwards

Non-Executive Chairman – Last updated on 12 November 2021

1. ESTABLISH A STRATEGY AND BUSINESS MODEL WHICH PROMOTES LONG-TERM VALUE FOR SHAREHOLDERS

Strategy:

Nightcap’s strategy is focused on creating medium to long-term shareholder value through the identification, acquisition and development of ‘drinks-led’ hospitality concepts that focus on the consumers’ social experience over the coming years. In implementing its strategy, the Company acquired The Cocktail Club on admission to AIM in January 2021 and the Adventure Bar Group in May 2021. Further details on the Group’s strategy can be found in the Strategy section of the Company’s Strategic Report on pages 4 to 17 of the Company’s annual report and financial statements for the 52 week period to 27 June 2021 (the “Annual Report”).  

Business Model:

The Group’s business model is primarily focused on identifying, acquiring and developing existing ‘drinks-led’ hospitality brands and continuing the expansion of The Cocktail Club and Adventure Bar Group. The Chief Executive Officer, together with the Board and senior management, will seek to identify suitable

opportunities for acquisition and development. Further details on the Group’s business model can be found in the Business Model section of the Company’s Strategic Report on page 10 of the Annual Report.

Key challenges in the execution of the Company’s business model and strategy:

The Board will discuss any anticipated key challenges and risks and review them on a regular basis. The Board will also make use of the relevant experience of both its executive and non-executive Directors in this regard.

Details regarding how the Board addresses the key challenges in the execution of the Company’s business model and strategy are contained in the Principal Risks and Uncertainties section of the Company’s Strategic Report on pages 16 and 17 of the Annual Report.

2. SEEK TO UNDERSTAND AND MEET SHAREHOLDER NEEDS AND EXPECTATIONS

The Board will continue to provide regular updates relating to the following information, which it considers to be key in managing shareholders’ expectations and understanding of how the Company is delivering its strategy, which include:

1. Latest investor presentations;

2. Latest developments with respect to expansion of The Cocktail Club;

3. Latest developments with respect to expansion of the Adventure Bar Group;

4. Latest developments in relation to any potential acquisitions that occur in the future;

5. All annual and half-yearly audited financial statements;

6. All notifications made via a Regulatory Information Service; and

7. Results and details of all resolutions voted on at the latest Annual General Meeting.

The Chief Executive Officer, Chief Financial Officer and Executive Director aim to communicate with shareholders, both private and institutional, on a regular basis and are primarily responsible for shareholder liaison. Investor views will be formally reported back to the Board. Contact details for shareholder communication can be found in the Investor Relations section of the Company’s website.

The Board encourages all shareholders to attend its Annual General Meeting, and understands its importance in allowing shareholders to have open and direct dialogue with the management of the Company.

Shareholders will be given opportunities to ask questions during the Annual General Meeting or to speak informally with the Board immediately following the Annual General Meeting. Where the voting decisions at a general meeting are not in line with

the Company’s expectations, the Board will engage with those shareholders to understand and address any issues.

The Board believes that the current methods of communication are sufficient in order to ensure shareholders needs and expectations are met.

3. TAKE INTO ACCOUNT WIDER STAKEHOLDER RESPONSIBILITIES AND THEIR IMPLICATIONS FOR LONG TERM SUCCESS

The Board is committed to maintaining open and honest relations with all of its stakeholders, both internal and external. The Board’s familiarity with the Group’s operations and the industry in which it operates enable the Board to clearly identify key stakeholders on which the Group’s business relies, which includes employees, customers and suppliers.

Members of the Board or the Group’s senior management will meet regularly with certain of the Group’s operational employees, such as individual site managers to allow for any key feedback to be obtained and reviewed.

The Group’s senior management welcomes feedback from customers through a variety of channels, particularly social media, which the Board recognises as an excellent opportunity to engage with its target audience. Members of the Board or the Group’s senior management will also attend site visits and may seek feedback from customers. Moreover, members of the Board or the Group’s senior management will also hold meetings with its suppliers discussing a variety of matters including pricing, stock and product feedback from bartenders and managers to ensure continuous improvement of both The Cocktail Club and the Adventure Bar Group experience for customers.

The Group will endeavour to take account of feedback received from stakeholders, making amendments to working arrangements and operational plans where appropriate and

where such amendments are consistent with the Group’s longer- term strategy. In addition, the Group’s senior management will regularly visit the bar venues where the Group’s operations occur and will be able to gain feedback on the Group’s operations. Any significant concerns raised will be reported to the Board. Ultimate responsibility for ensuring that the Group delivers on its corporate responsibility to its stakeholders rests with the Board.

The Group will take into account feedback received from its key stakeholders and consider making amendments to working arrangements and operational plans where appropriate and where such amendments are consistent with the Group’s strategy and objectives. However, no material changes to the Group’s working processes were required during the period from 13 January 2021 to 27 June 2021, or more recently, as a result of stakeholder feedback received by the Group.

Commentary regarding significant actions that have been generated as a result of stakeholder feedback that are considered by the Board to be material will be contained in the Group’s future Annual Reports.

4. EMBED EFFECTIVE RISK MANAGEMENT, CONSIDERING BOTH OPPORTUNITIES AND THREATS, THROUGHOUT THE ORGANISATION

The entire Board is responsible for ensuring that the risks faced by the Group are appropriately managed in order to allow for the execution and delivery of the Group’s strategy. When

identifying, assessing and managing risks, the Board is assisted by the Audit and Risk Committee, with day to day risks being monitored and managed by the Chief Executive Officer and the other executive Board members, together with assistance from senior management. The Board believes that the Chief Executive Officer, Chief Financial Officer and the Executive Director, who have significant experience within the hospitality sector, have the required knowledge and skills to be able to manage daily risks.

The Group’s general risk appetite is a moderate, balanced one that allows it to maintain appropriate potential for growth and scalability, whilst ensuring regulatory compliance. Further details on the principal risks and uncertainties identified by the Board as being applicable to the Group and how these are mitigated through the Board’s risk management and related control systems are contained in the Principal Risks and Uncertainties section of the Group’s Strategic Report on pages 16 and 17 of the Annual Report.

The Company maintains appropriate directors’ and officers’ insurance cover. The insured values and type of cover are comprehensively reviewed on an annual basis. In addition, the Group has disaster recovery and business continuity plans to mitigate these types of risks as much as is possible.

The Board has processes in place for reviewing and evaluating risk. The Board meets formally a minimum of six times a year where the Board review ongoing operational performance, discuss budgets and forecasts and new risks associated with ongoing operations. This ensures that significant risks and changes to risks are identified by the Board and communicated to the Committees as needed. The Group maintains a risk register which is reviewed by the Audit and Risk Committee, where the responsibility for monitoring individual risks has been allocated to appropriate members of the Board and senior management team. The Board believes that the Group has robust financial procedures and safeguards are in place regarding expenditure and accounting functions.

Independent auditors assist the Board to identify financial risks through their annual audit. These are communicated to the Audit Committee and via an Audit Report.

5. MAINTAIN THE BOARD AS A WELL-FUNCTIONING, BALANCED TEAM LED BY THE CHAIR

The Board comprises four non-executive and three executive Directors. The Directors’ biographies can be found on pages 19 and 20 of the Annual Report and on the Company’s website.

The Non-Executive Chairman leads the Board in all matters related to corporate governance. The Chief Executive Officer has executive responsibility for running the Group’s business and implementing its strategies.

The QCA Code suggests that the Board should comprise a balance of executive and non-executive directors, with at least two non-executive directors being independent. The QCA Code suggests that independence is a board judgement, but where there are grounds to question the independence of a director, through length of service or otherwise, this must be explained. The Board considers the following non-executive Directors to be independent – Gareth Edwards, Lance Moir and Thi-Hanh Jelf. None of these Directors are employees, have significant business relationships with the Group, or are significant shareholders in the Company. In accordance with QCA Code guidance, the independent non-executive Directors will not participate in performance-related remuneration schemes.

The Board considers that its current composition and structure is appropriate to maintain effective oversight of the Group’s activities. As the Company advances, the Board will review its structure on at least an annual basis in order to maintain an appropriate corporate governance environment and independent oversight.

The Board is updated regularly on the operations of the Group by the Chief Executive Officer, specifically on progress made on ongoing projects. Relevant information is circulated to the Board prior to Board and Committee meetings. The Company Secretary is a Board member and is directly accessible by all the other Board members, who are also able to take independent professional advice, if needed, in order to perform their duties. Such advice would be taken at the Company’s expense.

The Board will meet at least six times a year, either in person or by telephone. Prior to each Board meeting, the Board and its Committees receive relevant and timely information that will be addressed at each meeting, together with a formal meeting agenda. Additional Board meetings may be called as needed, if specific matters need to be considered.

On an annual basis, the Non-Executive Chairman of the Board will conduct a Board review, assessing the performance of the individual Board members based on specific performance and evaluation criteria. If the Non-Executive Chairman considers it necessary, an independent third-party service provider may be engaged to conduct an annual Board review. Given that, as at the date of the Annual Report, the Board as a whole has only been in place for less than a year, the Non-Executive Chairman intends to perform the first Board and Director review in 2022. As part of this Board Review, the Non-Executive Chairman will review the skills mix present on the Board, and also ensure that the Board has an appropriate level of financial skills and literacy which is in line with its current size and operations.

The Board is assisted in its duties by the Audit and Risk Committee and Remuneration Committee. Further information on the Board Committees can be found on pages 26 to 29 of the Annual Report.

The Remuneration Committee is chaired by non-executive director Tobias van der Meer, who is not considered to be an independent director as envisaged by the QCA Code and the Company does not fully currently comply with the QCA Code in this respect.  However, the Board considers that Tobias van der Meer has significant separation from the day to day operation of the Group’s business, has significant business experience and is independent in terms of his character and judgement, and therefore considers that it is appropriate for Tobias van der Meer to chair the Remuneration Committee.  The other members of the Remuneration Committee, Lance Moir and Gareth Edwards, are non-executive directors whom the Board considers to be independent.

The executive Directors are employed on a full-time basis. Non-executive Directors are expected to spend on average a minimum of 12 days a year on Company activities in addition

to preparation for and attendance at board and sub-committee meetings. The Chairman will spend additional time per month on Company business.

Board meetings

The Board meets formally a minimum of six times a year, excluding Board committee meetings. The table below sets out the total number of meetings held by the Board and its Committees and records of attendance by each member eligible to attend during the year ended 27 June 2021: 

Board Meetings2 Audit Committee1 Remuneration Committee1
PossibleAttendedPossibleAttendedPossibleAttended
Gareth Edwards7722
Sarah Willingham1515
Toby Rolph77
Michael Toxvaerd1515
Thi-Hanh Jelf7722
Lance Moir772222
Tobias van der Meer772222

1 Only Non-executive Directors are entitled to vote in the meetings of these Board Committees.

2 Gareth Edwards, Toby Rolph, Thi-Hanh Jelf, Lance Moir & Tobias van der Meer were appointed as Directors on 13th January 2021 following the successful admission to AIM.

Other senior members of the management team and external advisors will attend, at the invitation of the Board, and as appropriate to the matters under discussion.

6. ENSURE THAT BETWEEN THEM THE DIRECTORS HAVE THE NECESSARY UP-TO-DATE EXPERIENCE, SKILLS AND CAPABILITIES

The Board considers that its members have an effective and appropriate balance of skills and experience, most notably in areas of hospitality and the drinks-led industry, running and growing public companies, capital markets experience, including mergers and acquisitions and capital raising. The Board therefore believes that its members possess the relevant qualifications and skills necessary to effectively oversee and execute the Group’s strategy. The Board considers itself to have an appropriate gender balance given two of its members are female.

The Board is comprised of three executive Directors and four non-executive Directors. Biographies of the Board members show a complimentary balance of skills and experience and can be found on the Company’s website as well as in the Annual Report.

The executive Board members’ operational skills will be maintained through an active day to day involvement in the hospitality industry and by employment of highly skilled and trained bar staff and support.

Non-operational skills are maintained principally via dialogues with the Company’s professional advisers and being active in the market. Involvement with a variety of other boards allows those concerned to witness alternative approaches to similar business issues and to benefit from the advice of more than just the Company’s retained advisers.

The Chief Executive Officer will update the Board on a regular basis on operational and financial matters, with such relevant information circulated to the Board prior to meetings.

The Board members keep their skillsets up to date through attending industry specific events and by monitoring activity within the sector amongst other things. The Board members are free to seek advice from their corporate advisers (nominated adviser, lawyers and accountants) as needed.

Thi-Hanh Jelf, Non-Executive Director will support the Non-Executive Chairman in addressing the training and development needs of directors and is able to assist with aspects of legal and regulatory compliance. The Board does not consider it necessary for a senior independent director to be appointed at the current stage in the Group’s development.

7. EVALUATE BOARD PERFORMANCE BASED ON CLEAR AND RELEVANT OBJECTIVES, SEEKING CONTINUOUS IMPROVEMENT

The performance and effectiveness of the Board, its committees and the individual directors will be evaluated on an annual basis. Given that, as at the date of the Annual Report, the Board as a whole has only been in place for less than a year, it is intended that the first review of the Board, its committees and the individual directors will be in 2022. This performance evaluation will include an assessment of each Board member’s continued independence (or otherwise).

In reviewing each Board member’s performance, the Board will consider, inter alia, the level of achievement of their objectives, assessment of their overall contribution to the performance of the Group and an assessment of their continued independence if applicable.

Following the assessment, the results and recommendations for the Board member shall identify the key corporate and financial targets that are relevant to each Board member and their personal targets in terms of career development and training.

Progress against previous targets shall also be assessed where relevant. The assessment will also feed into the remuneration process conducted by the Remuneration Committee.

On an annual basis, the performance of the Committees will be evaluated by the Non-Executive Chairman, with the first review to take place in 2022. The results thereof will be reported to Board, together with any recommendations.

Succession planning is the responsibility of the Board and is reviewed on an annual basis. When considering succession planning, the Board will take into account the skills and experience required as the Group grows and develops.

8. PROMOTE A CORPORATE CULTURE THAT IS BASED ON ETHICAL VALUES AND BEHAVIOURS

The Board strives to lead by example in its dealings with all its stakeholders. The Board believes that the Group will have a culture of responsible and ethical behaviour. The Board will regularly monitor the Group’s cultural environment and seeks to address any concerns that may arise. The Board will consider the Group’s cultural environment when seeking to recruit staff, and board directors.

In accordance with its business model, and the Group’s key risks identified by the Board, particular areas of focus for the Board include:

1. Health and safety of its employees and customers;

2. Dealing in an honest, open and transparent manner with all its stakeholders and suppliers; and

3. Ensuring all employees uphold the high standard of corporate culture and values.

The Board recognises the importance of a strong and coherent corporate culture particularly as the Group grows and pursues the development of further sites and acquisition of further brands.

The Board believes that Group’s culture is instilled by the high quality of training provided across all sites and accessible to all employees, with continuous development and training also in place.

The Employee Handbook further promotes ethical values and behaviours, which contain policies and procedures including:

• Licensing and legal responsibility

• Responsibilities and duties of employees

• Safety and hygiene

• Accidents and injury

• Fire procedure

• Confidentiality

• Data Protection

• Whistleblowing policy

• Anti-Corruption and Bribery policy

The Board and senior management are prepared to take appropriate action against unethical behaviour, violation of company policies or misconduct.

The Board are also informed of any material enquiries of employees through site managers and when necessary are available to employees on a direct enquiry basis.

9. MAINTAINING GOVERNANCE STRUCTURES AND PROCESSES THAT ARE FIT FOR PURPOSE AND SUPPORT GOOD DECISION-MAKING BY THE BOARD

The Non-Executive Chairman is responsible for overseeing and running the business of the Board, ensuring strategic focus and direction is maintained, ensuring that no individual or group dominates the Board’s decision-making, and ensuring the non- executives are kept up to date with the Group’s business. With guidance from the Company’s advisers, the Chairman will assess the appropriateness of the Company’s governance structures as the Group continues to develop. The Chief Executive Officer has overall responsibility for formulating, planning and implementing the Group’s strategy. As noted in principle 2, the Chief Executive Officer, Executive Director and Chief Financial Officer, are primarily responsible for shareholder liaison.

In addition to formal Board meetings, the Chief Executive Officer maintains open and regular communications channels with all Board members, and provides regular updates on the financial position and operational status of the Group.

The entire Board is responsible for ensuring the success of the Company, while delivering on its strategy, with matters reserved for the attention of the Board including:

1. The setting of the strategy for the Group and the assessment of whether the Group is achieving its strategy;

2. The approval of financial statements, dividends and significant changes in accounting practices;

3. Board membership, succession planning and powers including the appointment and removal of Board members, determining the terms of reference of the Board and establishing the overall control framework;

4. AIM related issues including the approval of communications to the London Stock Exchange and communications with shareholders will be dealt with by the Audit and Risk Committee;

5. Senior management, remuneration, contracts, and the grant of share options will be addressed by the Remuneration Committee;

6. Key commercial matters including consideration of potential acquisition and divestment of new sites or businesses;

7. Financial matters including the approval of the budget and financial plans and performance against such plans and budgets;

8. Approval of the appointment of the current period auditor, year-end audited statutory accounts and audit related queries addressed by the Audit and Risk Committee;

9. Review of management conduct and awareness of the anti-bribery polices. Future capital and funding requirements in the light of new bar and acquisition prospects;

10. Risk Management review;

11. Changes to the Company’s capital structure, its business strategy, acquisitions and disposals of businesses; and

12. Other matters including, but not limited to, health and safety policy, insurance and legal compliance.

Key responsibilities of the Audit and Risk Committee and Remuneration Committee can be found on pages 26 to 29 of the Annual Report.

The full terms of reference of these committees are available from the AIM Rule 26 section of the Company’s website.

The Company is committed to the evolution of its corporate governance in line with best practice, to the extent the Board members judge it appropriate considering the Group’s size, stage of development and resources. However, at present the Board

is satisfied with the Company’s corporate governance and as such there are no specific plans for changes to the Company’s corporate governance arrangements in the short-term.

10. COMMUNICATE HOW THE COMPANY IS GOVERNED AND IS PERFORMING BY MAINTAINING A DIALOGUE WITH SHAREHOLDERS AND OTHER RELEVANT STAKEHOLDERS

The Board will strive to ensure that all shareholders are kept up to date on the Group’s operations, with clear and transparent information being provided on a regular basis. The Board intends to maintain an active dialogue with institutional and private shareholders, and all material information will be released through notifications made via a Regulatory Information Service, which are also made available on the Company’s website. This includes, when appropriate, trading statements.

The Board discloses in the annual report the work of the Audit and Risk Committee and Remuneration Committee during the period. This can be found on pages 26 to 29 of the Annual Report.

On a regular basis, a corporate presentation will be prepared that will provide a more detailed update on the Group’s progress. This will be made available on the Company’s website.