Corporate Governance

STATEMENT OF COMPLIANCE WITH THE 2018 QCA CORPORATE GOVERNANCE CODE

Chairman’s Introduction

Dear Shareholders

I am pleased to present my first corporate governance report, having joined the Board as independent Non-Executive Chairman on 15 December 2021.

As Chairman of GYG plc, I am responsible for leading the Board so as to ensure that the Group has in place the strategy, people, structure and culture to deliver value to shareholders and other stakeholders of the Group as a whole over the medium to long-term.  On behalf of the Board, I am, therefore, pleased to present our Corporate Governance Statement for the year ended 31 December 2021.

High standards of corporate governance are a key priority for the Board of GYG plc and the Board has adopted the 2018 Quoted Companies Alliance Corporate Governance Code (the “QCA Code”) as the basis of the Group’s governance framework.   The Company complies with the QCA code in so far as is practical given the size of the Company and nature of its operations.

As individual Directors we are mindful of our statutory duty to act in the way each of us considers, in good faith, would be most likely to promote the success of the Company for the benefit of its members as a whole, as set out in our s172(1) statement in the 2021 Annual Report.

It is the responsibility of the Board to ensure that the Group is managed for the long-term benefit of all shareholders and stakeholders, with effective and efficient decision-making.  Corporate governance is an important aspect of this, reducing risk and adding value to our business.  Our effective risk management framework continues to support the business and we have adapted to operating within the challenges and restrictions imposed as a result of the ongoing global COVID-19 pandemic, and the business has demonstrated admirable operational resilience, albeit with inevitable cost implications which we continue to work minimise. Throughout the pandemic, the Group has maintained operations with enhanced health and safety protocols in place for front line staff, and all back-office staff have migrated seamlessly to the home working environment as and when required by the various government guidelines and regulations.

The QCA Code sets out ten principles, in three broad categories, and in this Corporate Governance Statement I have set out the Group’s application of the QCA Code and the Companies Act 2006, including, where appropriate, cross references to other sections of the 2021 Annual Report and to our website.

Richard McGuire
Chairman


QCA PRINCIPLES

Deliver Growth

1. Establish a strategy and business model which promote long-term value for shareholders

GYG plc has a long-established reputation in European marine supply and the global superyacht Coatings segment. The Group is growing its market share in the New Build sector by developing long term relationships with leading shipyards across Europe, and continues to enhance its international footprint in the Refit sector through both its existing relationships and its extensive contacts across the industry.

The Board has established a strategy and business model which seek to promote long-term value for shareholders and has identified the following key areas of operation to focus on improving on the Group’s performance going forwards:

  • leverage market leading position across all segments;
  • enter into new agreements with shipyards to create long-term partnerships;
  • generate further operational efficiencies and synergies;
  • expanding the marine supply offering; and
  • acquisition-led growth where and when appropriate to expand the business model.

A fuller explanation of how the strategy and business model are executed is set out in the 2021 Annual Report

2. Seek to understand and meet shareholder needs and expectations

The Company recognises the importance of engaging with its shareholders and reports formally to them when its full-year and half-year results are published. At the same time, Executive Directors present the results to institutional investors, analysts and the media. The Non-Executive Directors are available to discuss any matter stakeholders might wish to raise, and the Chairman and the other independent Non-Executive Director attend meetings with investors and analysts as required. The Chairman writes to major shareholders once a year offering them the opportunity to meet with him. In view of the ongoing global COVID-19 pandemic, since March 2020, regular contact has been maintained with investors and analysts primarily via video conference or telephone, rather than through face-to-face meetings.

At every Board meeting, the Chief Executive Officer and the Chief Financial Officer provide a summary of the content of any engagement they have had with investors to ensure that major shareholders’ views are communicated to the Board as a whole. The Board is also provided with brokers’ and analysts’ reports when published. This process enables the Chairman and the other Non-Executive Director to be kept informed of major shareholders’ opinions on strategy and governance, and for them to understand any issues or concerns.

Shareholders are usually encouraged to attend the AGM at which the Group’s activities and results are considered, and questions answered by the Directors. However, given the ongoing COVID-19 pandemic and the associated UK Government measures, including restrictions on public gatherings, attendance was not permitted last year. Shareholders were, however, invited to submit questions by email to the Company prior to the AGM.

General information about the Group is available here on www.gygplc.com, including an overview of activities of the Group.  All recent Company announcements are also available on the Company’s website.

The Company receives occasional feedback direct from investors, which is carefully considered by the Board, with appropriate action being taken where the Board believes it in the interests of shareholders to do so. None of the feedback received from investors has involved non-compliance with the QCA Code.

The Company maintains a dedicated email address and telephone number which investors may use to contact the Company which, together with the Company’s address, are displayed here. Investors may also make contact requests through the Company’s Nominated Advisor, Singer Capital Markets Advisory LLP.

3. Take into account wider stakeholder and social responsibilities and their implications for long-term success

In addition to its shareholders, the Company believes its main stakeholder groups are its employees, clients, suppliers and relevant statutory authorities in its areas of operation.

The Group encourages feedback from its customers through engagement with individual customers and relevant advisors. As a consequence of such feedback, our Supply division has responded to customer demand to stock eco-friendly solutions by launching a new refill station with a range of ‘green’ day-to-day cleaning products.

The Group recognises the increasing importance of corporate social responsibility and endeavours to take it into account when operating its business in the interests of its stakeholders, including its investors, employees, customers, suppliers, business partners and the communities where it conducts its activities.

The Board recognises the benefits of a diverse workforce which enables the Group to make better decisions about how to optimise resources and work by eliminating structural and cultural barriers and bias. It allows the Group to protect and enhance its reputation by recognising and respecting the needs and interests of diverse stakeholders; to deliver strong performance and growth by attracting, engaging and retaining diverse talent; and to innovate by drawing on the diversity of perspectives, skills, styles and experience of its employees and stakeholders.

The Group is committed to ensuring that it treats its employees fairly and with dignity. This includes being free from any direct or indirect discrimination, harassment, bullying or other form of victimisation. The Group has policies in place to encourage employees to speak up about any inappropriate practices or behaviour.

The Group believes that having empowered and responsible employees who display sound judgement and awareness of the consequences of their decisions or actions, and who act in an ethical and responsible way, is key to the success of the business. Feedback from employees is received from employee representatives who meet with management on a regular basis to discuss business-related issues.

As a result of such feedback, the Group, with the support of Spanish government and EU funding, established an apprenticeship programme for yacht painters. Due to the ongoing global COVID-19 pandemic, this initiative had been temporarily suspended but was re-commenced in September 2021. The Group’s HR team also works closely with local technical colleges to identify individuals who would be suitable to participate in the Group’s in-house training programmes in various different departments within the business.

During 2021, the Group engaged in a number of charitable activities as more detailed in the 2021 Annual Report. However, the Group was particularly pleased to announce its sponsorship of Frederick Medina’s parabadminton (badminton in a wheelchair) career to enable him able to continue attending all of the championships scheduled during the following season and to continue training both at Badminton Mallorca Club and Club Badminton Calvià. By way of background, Frederick came to Mallorca in search of an opportunity in the nautical world and in 2018 he found it with the Group as a yacht painter. After a year, he was transferred to the Pinmar Yacht Supply retail store in Palma so that he could continue his professional career with a focus on customer sales. Shortly after, in January 2020, tragedy struck when he was involved in a traffic accident that caused a serious spinal cord injury, radically changing his life. During his rehabilitation, Frederick discovered parabadminton and embarked on an intense training programme and began competing at a professional level in November 2020. Further details of Frederick’s incredible journey can be found here.

The operation of a profitable business is a priority and that means investing for growth as well as providing returns to its shareholders. To achieve this, the Group recognises that it needs to operate in a sustainable manner and therefore has adopted core principles to its business operations which provide a framework for both managing risk and maintaining its position as a good ‘corporate citizen’, and also facilitate the setting of goals to achieve continuous improvement.

The Group aims to conduct its business with integrity, respecting the different cultures and the dignity and rights of individuals in the countries where it operates. The Group supports the UN Universal Declaration of Human Rights and recognises the obligation to promote universal respect for and observance of human rights and fundamental freedoms for all, without distinction as to race, religion, gender, language or disability.

The Group’s approach to health and safety and environmental matters is set out in the 2021 Annual Report.

4. Embed effective risk management, considering both opportunities and threats, throughout the organisation

The Board has overall responsibility for the Group’s internal control systems and for monitoring their effectiveness. The Board, with the assistance of the Audit Committee, maintains a system of internal controls to safeguard shareholders’ investment and the Group’s assets, and has established a continuous process for identifying, evaluating and managing the significant risks the Group faces.

Further details of the principal risks and how they are mitigated are contained in the 2021 Annual Report. The Company’s internal control and risk management process is also contained in the 2021 Annual Report.

Maintain A Dynamic Management Framework

5. Maintain the Board as a well-functioning, balanced team led by the chair

The Chairman, Richard McGuire, is responsible for leadership of the Board, ensuring its effectiveness in all aspects of its role. A fuller explanation on the composition of the Board and how it discharges its duties is set out in the 2021 Annual Report. Further details of the time commitment required from the Directors and the Directors’ attendance records for the year ended 31 December 2021 at Board and Committee meetings are set out in the 2021 Annual Report.

6. Ensure that between them the Directors have the necessary up-to-date experience, skills and capabilities

The Board currently comprises three Executive and two Non-Executive Directors with an appropriate balance of sector, financial and public market skills and experience to deliver the Group’s strategy for the benefit of shareholders over the medium to long term. The balance of skills and experience of the current Board is set out in their biographical details and also in the 2021 Annual Report.

7. Evaluate board performance based on clear and relevant objectives, seeking continuous improvement

Board evaluation

The Board is mindful that it needs to continually monitor and identify ways in which it might improve its performance and recognises that board evaluation is a useful tool for enhancing a board’s effectiveness. Alongside the formal annual evaluation, the Chairman routinely assesses the performance of the Board and its members and discusses any problems or shortcomings (if any) with the relevant Directors.

The Board made the decision to postpone the 2021 evaluation in view of the fact that there was a change in the chairmanship of the Company which coincided with the usual timing of the annual evaluation process. It is anticipated that a formal valuation of the Board and its Committees will be conducted in H1 2022.

Succession planning

The Nomination Committee is responsible for succession planning of the executive leadership team and for the appointment and re-appointment of any Non-Executive Directors if and when necessary. Further details of the Company’s approach to succession planning are set out in the 2021 Annual Report.

8. Promote a corporate culture that is based on ethical values and behaviours

The Group adopts a policy of equal opportunities in the recruitment and engagement of staff as well as during the course of their employment. It endeavours to promote the best use of its human resources on the basis of individual skills and experience matched against those required for the work to be performed.

The Group recognises the importance of investing in its employees and, as such, the Group provides opportunities for training and personal development and encourages the involvement of employees in the planning and direction of their work. These values are applied regardless of age, race, religion, gender, sexual orientation or disability.

The Group believes that it has robust policies and procedures for combating bribery and corruption. A copy of the Group’s Anti Bribery Policy can be found here.

The Group recognises that commercial success depends on the full commitment of all its employees and commits to respecting their human rights, to provide them with favourable working conditions that are free from unnecessary risk and to maintain fair and competitive terms and conditions of service at all times. The performance and reward system endorses the desired ethical behaviours across all levels of the Group.

9. Maintain governance structures and processes that are fit for purpose and support good decision-making by the board

The Chairman, Richard McGuire, is responsible for leadership of the Board, ensuring its effectiveness, setting its agenda and ensuring that the Directors receive accurate, timely and clear information. The Chairman also ensures effective communication with shareholders and facilitates the effective contribution of the other Non-Executive Director. Remy Millott, as Chief Executive Officer, is responsible for the operational management of the Group and the implementation of Board strategy and policy. By dividing responsibilities in this way, no one individual has unfettered powers of decision-making.

There is a formal schedule of matters reserved for decision by the Board in place which enables the Board to provide leadership and ensure effectiveness, a copy of which may be found here. Such matters include business strategy and management, financial reporting (including the approval of the annual budget), Group policies, corporate governance matters, major capital expenditure projects, material acquisitions and divestments and the establishment and monitoring of internal controls.

The appropriateness of the Board’s composition and corporate governance structures are reviewed through the ongoing Board evaluation process and on an ad hoc basis by the Chairman together with the other Directors, and these will evolve in parallel with the Group’s objectives, strategy and business model as the Group develops.

Board Committees

The Board has established Audit, Nomination and Remuneration Committees and the Company Secretary acts as secretary to each of the three Committees.

Audit Committee

The Audit Committee has Richard King as chairman, and has primary responsibility for monitoring the quality of internal controls, ensuring that the financial performance of the Group is properly measured and reported on, and for reviewing reports from the Group’s auditor relating to the Group’s accounting and internal controls, in all cases having due regard to the interests of shareholders. The Audit Committee meets at least twice a year. Richard McGuire is the other member of the Audit Committee.

A report on the duties of the Audit Committee and how it discharges its responsibilities is provided in the 2021 Annual Report.

Remuneration Committee

The Remuneration Committee has Richard McGuire as chairman, and reviews the performance of the Executive Directors, and determines their terms and conditions of service, including their remuneration and the grant of options, having due regard to the interests of shareholders. The Remuneration Committee meets at least twice a year. Richard King is the other member of the Remuneration Committee.

The Directors’ Remuneration Report and details of the activities and responsibilities of the Remuneration Committee are set out in the 2021 Annual Report.

Nomination Committee

The Nomination Committee has Richard McGuire as chairman, and identifies and nominates, for the approval of the Board, candidates to fill Board vacancies as and when they arise. The Nomination Committee meets at least once a year. Richard King is the other member of the Nomination Committee.

Details of the activities and responsibilities of the Nomination Committee are set out in the 2021 Annual Report.

The terms of reference of each Committee can be downloaded below:

Build Trust

10. Communicate how the Company is governed and is performing

As explained earlier in this Corporate Governance Statement, the Board has established a Nomination Committee, an Audit Committee and a Remuneration Committee. The work of each of the Board Committees undertaken during the year ended 31 December 2021 is detailed in the 2021 Annual Report.

The results of the poll voting at the 2021 annual general meeting are available here. During the 2021 AGM, the following resolutions were each proposed as a special resolution, which required 75% majority of the votes to be cast in favour:

Resolution 7 The disapplication of statutory pre-emption rights for rights issues, etc and up to 5% of issued share capital (excluding treasury shares)
Resolution 8 The disapplication of statutory pre-emption rights up to an additional 5% of issued share capital (excluding treasury shares)
Resolution 9 Authority for the Company to purchase its own shares

 
All three resolutions were defeated with 74.38%, 70.94% and 74.38% respectively of votes cast voting in favour. Each of these special resolutions was seeking a renewal of the relevant authority granted by shareholders at the 2020 AGM. However, following engagement with leading shareholders the disapplication of pre-emption rights in general potentially grants a benefit to non-shareholders and are unlikely to be supported. The Directors have, therefore, elected not to propose these two resolutions to shareholders at the 2022 AGM. As noted in the 2021 Annual Report, a special resolution will, however, once again be proposed at the 2022 AGM seeking shareholder approval to allow the Company to make market purchases of the Company’s ordinary shares.

The Board maintains a healthy dialogue with all of its stakeholders. Throughout the course of the financial year the Board communicates with shareholders directly and also engaged an external investor relations consultant to canvass shareholders on any views, concerns and expectations they may wish to express indirectly.

Last Reviewed: 6 May 2022

Share Dealing Code

The Directors understand the importance of complying with the AIM Rules and applicable legislation relating to dealings by Directors and certain other employees of the Group in the Company’s shares and has established a share dealing code. The Directors believe that the share dealing code adopted by the Board is appropriate for a company quoted on AIM and is compliant with Rule 21 of the AIM Rules relating to dealing policies. The Company and the Directors have taken all reasonable steps to ensure compliance by the Company’s Directors and relevant employees.

The Company is subject to the City Code on Takeovers and Mergers.

Anti-Bribery Policy

The Group believes that it has robust policies and procedures for combating bribery and corruption. Please click on the link below to view the Group’s Anti-Bribery Policy: