The Board acknowledges the importance of high standards of corporate governance and the Company has adopted the QCA Code. The QCA Code sets out a standard of minimum best practice for small and mid-size quoted companies, particularly AIM companies.
The Board comprises seven Directors, three of whom are Executive Directors and four of whom are Non-Executive Directors, reflecting a blend of different skills, experiences and backgrounds. The Board considers that Gareth Edwards, Lance Moir and Thi-Hanh Jelf are independent, having taken into account their shareholdings and their separation from the day-to-day running of the business.
The Board intends to meet regularly to review, formulate and approve the Enlarged Group’s strategy, budgets, corporate actions and oversee the Enlarged Group’s progress towards its goals.
The Company has established properly constituted audit and risk and remuneration committees of the Board with formally delegated duties and responsibilities, a summary of which is set out below.
Audit and risk committee
The Audit and Risk Committee comprises Thi-Hanh Jelf and Toby van der Meer with Lance Moir as chair of the committee. The Audit and Risk Committee meets as often as required and at least twice a year. The Audit and Risk Committee’s main functions include, inter alia, reviewing the effectiveness of internal control systems and risk assessment; considering the need for an internal audit function; making recommendations to the Board in relation to the appointment of the Company’s auditors; determining in consultation with the Board as a whole the auditors remuneration; and monitoring and reviewing annually the auditors independence, objectivity, effectiveness and qualifications. The Audit and Risk Committee also monitors the integrity of the financial statements of the Company including its annual and interim reports, preliminary results’ announcements and any other financial information provided to Shareholders. The Audit and Risk Committee is responsible for overseeing the Company’s relationship with the external auditors as a whole and also considers the nature, scope and results of the auditors’ work and reviews, and develops, recommends to the Board and implements policies on the supply of non-audit services that are to be provided by the external auditors. The Audit and Risk Committee further focuses on compliance with legal and accounting standards and ensuring that an effective system of internal financial and non-financial controls is maintained. The ultimate responsibility for reviewing and approving the annual report and accounts will remain with the Board. The membership of the Audit and Risk Committee and its terms of reference will be reviewed on an annual basis.
The Remuneration Committee comprises Lance Moir and Gareth Edwards with Toby van der Meer as chair of the committee. The Remuneration Committee’s main functions includes, inter alia, formulating and agreeing with the Board the framework or broad policy for the remuneration of the Company’s Chairman and Executive Directors; approving the design of, and determining targets for, any performance related pay schemes operated by the Company and approving the total annual payments made under such schemes; reviewing the design of all share incentive plans for approval by the Board and Shareholders together with determining each year whether awards will be made and, if so, the overall amount of such awards, the individual awards to Executive Directors, company secretary and other senior executives and the performance targets to be used; and determining the total individual remuneration package of the Chairman, each Executive Director, and other senior executives including bonuses, incentive payments and share options or other share awards.
The Company is required under the AIM Rules to apply a recognised corporate governance code to be chosen by the Board. The Board recognises the importance of sound corporate governance and intends that the Company will apply the QCA Code. The QCA Code sets out a standard of minimum best practice for small and mid-sized quoted companies, particularly AIM companies.
The Company shall disclose on its website and within its annual report and accounts how the Company complies with the QCA Code and, where it departs from the QCA Code, the Company will explain the reasons for doing so. This information is also set out below. The Company will review this information annually in accordance with the requirements of AIM Rule 26.
The Company’s Chairman leads the Board and oversees its function and direction, as well as having ultimate responsibility for implementing the Company’s corporate governance arrangements.
The following summary sets out how the Company intends to apply the key governance principles defined in the QCA Code.
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.
Non-Executive Chairman – Last updated on 13th January 2021
- Establish a strategy and business model which promotes long-term value for shareholders
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. As the first step in implementing its strategy, the Company acquired the London Cocktail Club. Further details on Nightcap’s strategy in general and its strategy in relation to the London Cocktail Club can be found in paragraphs 1, 2, 4, 7 and 8 of Part I of the Company’s Admission Documents and will be contained in the Company’s future Annual Reports.
The Enlarged Group’s business model is primarily focused on identifying, acquiring and developing existing distressed brands and continuing the expansion of the London Cocktail Club. 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 London Cocktail Club’s business model can be found in paragraph 5 of Part I of the Company’s Admission Document and will be contained in the Company’s future Annual Reports.
Key challenges in the execution of the Company’s business model and strategy:
The Risk Factors in Part II of the Company’s Admission Document detail the key challenges and risks to the Company, including those in relation to the execution of the Enlarged Group’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.
Commentary regarding how the Board intends to address the key challenges in the execution of the Company’s business model and strategy will be contained in the Company’s future Annual Reports.
- Seek to understand and meet shareholder needs and expectations
The Board will 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 is planned to include:
- Latest investor presentations;
- Latest developments with respect to expansion of the London Cocktail Club;
- Latest developments in relation to any potential acquisitions that occur in the future;
- All annual and half-yearly audited financial statements;
- All notifications made via a Regulatory Information Service; and
- Results and details of all resolutions voted on at the latest Annual General Meeting
The Non-Executive Chairman, Chief Executive Officer and Chief Financial Officer 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 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.
- 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 Enlarged Group’s operations and the industry in which it operates enable the Board to clearly identify key stakeholders on which the Enlarged Group’s business relies, which includes employees, customers and suppliers.
Members of the Board or the Enlarged Group’s senior management will meet regularly with certain of the Enlarged Group’s operational employees, such as individual site managers to allow for any key feedback to be obtained and reviewed.
The Enlarged 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 Enlarged Group’s senior management will also attend site visits and may seek feedback from customers. Moreover, members of the Board or the Enlarged 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 the London Cocktail Club’s menu and the mixology experience for customers.
The Company 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 Company’s longer-term strategy. In addition, the Enlarged Group’s senior management will regularly visit the bar venues where the Enlarged Group’s operations occur and will able to gain feedback on the Enlarged Group’s operations. Any significant concerns raised will be reported to the Board. Ultimate responsibility for ensuring that the Company delivers on its corporate responsibility to its stakeholder’s rests with the Board.
Commentary regarding actions that have been generated as a result of stakeholder feedback will be contained in the Company’s future Annual Reports.
- 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 Enlarged Group are appropriately managed in order to allow for the execution and delivery of the Company’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, who has significant experience within the hospitality sector, has the required knowledge and skills to be able to manage daily risks.
The Enlarged 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 Enlarged Group’s identified risks are contained in Part II of the Company’s Admission Document.
The Company intends to maintain appropriate directors’ and officers’ insurance cover. The insured values and type of cover are comprehensively reviewed on an annual basis.
The Board has processes in place for reviewing and evaluating risk. Board meetings are held at least on a quarterly basis, 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 Board will formally review and document the principal risks to the business at least annually. The Board believes that the Enlarged Group has robust financial procedures and safeguards are in place regarding expenditure and accounting functions. The Board is assisted in the performance of its risk management duties by the Audit and Risk Committee.
Going forward a commentary regarding the Board’s risk management and related control systems will be contained in the Annual Report which will be available on the Company’s website.
- 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 in paragraph 10 of Part I of the Company’s Admission Document.
The Non-Executive Chairman leads the Board in all matters related to corporate governance. The Chief Executive Officer has executive responsibility for running the Enlarged Group’s business and implementing its strategies.
The QCA Code suggests that the Board should comprise of 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 Enlarged 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 Enlarged 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 Enlarged 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. In addition, all Directors have access to independent professional advice in the furtherance of their duties, at the Company’s expense.
The Board will meet at least on a quarterly basis, 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. As part of the 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 in paragraph 19 of Part I of the Company’s Admission Document.
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.
- 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 Enlarged 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 can be found in paragraph 10 of Part I of the Company’s Admission Document.
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 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 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 Enlarged Group’s development.
- 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 and Proposed Directors will be evaluated on an annual basis. The 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 Company 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. 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 Enlarged Group grows and develops its projects.
- 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 Enlarged Group will have a culture of responsible and ethical behaviour. The Board will regularly monitor the Enlarged Group’s cultural environment and seeks to address any concerns that may arise. The Board will consider the Enlarged Group’s cultural environment when seeking to recruit staff, and board directors.
In accordance with its business model, and the Enlarged Group’s key risks identified by the Board, particular areas of focus for the Board include:
- Health and safety of its employees and customers;
- Dealing in an honest, open and transparent manner with all its stakeholders and suppliers;
- 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 Enlarged Group grows and pursues the development of further sites and acquisition of further brands. The Board believes that Enlarged 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 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.
- 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 Enlarged Group’s business. With guidance from the Company’s advisers, the Chairman will assess the appropriateness of the Company’s governance structures as the Enlarged Group continues to develop. The Chief Executive Officer has overall responsibility for formulating, planning and implementing the Enlarged Group’s strategy. As noted in principle 1, the Non-Executive Chairman, Chief Executive Officer 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 Enlarged Group.
The entire Board is responsible for ensuring the success of the Company, while delivering on its strategy, with matters reserved for the Board including:
- Ensuring the Company’s internal control systems and processes are operating effectively, and for establishing an overall control framework
- Ensuring that commercial risks and financial needs are properly considered
- All financial matters, which include approval of budgets, changes to the Enlarged Group’s financial structures, changes to business strategy, acquisitions or disposals of brands and incurrence of significant capital expenditure
- Compliance with all relevant health and safety policies
- Ensure the Enlarged Group complies with all rules and regulations as required by AIM, and the jurisdictions it operates in
- Any other material matter or business that may affect the Enlarged Group
Key responsibilities of the Audit and Risk Committee and Remuneration Committee can be found in paragraph 19 of Part of the Company’s Admission Document.
The full terms of reference of these committees will be 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 Enlarged 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.
- 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 Enlarged 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.
On a regular basis, a corporate presentation will be prepared that provide a more detailed update on the Enlarged Group’s progress. This will be made available on the Company’s website.
Going forward, the Company’s website will display:
- the results of voting on all resolutions in future general meetings (including Annual General Meetings), 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; and
- historical annual reports and other governance-related material, including notices of all general meetings over the last five years.
The Company’s annual report and accounts will be published together with notice of the Company’s Annual General Meeting. The Company’s interim results will be notified via Regulatory Information Service announcements and also made available on the Company’s website
The Company has not previously prepared an Audit and Risk Committee report and Remuneration Committee report, as the Company is recently incorporated. The Board intends to include an Audit and Risk Committee report and a Remuneration Committee report in its Annual Reports.