THE QUOTED COMPANY ALLIANCE (QCA) CODE
The Directors recognise the importance of good corporate governance and have chosen to apply the Quoted Companies Alliance Corporate Governance Code (the ‘QCA Code’). The QCA Code was developed by the QCA in consultation with a number of significant institutional small company investors, as an alternative corporate governance code applicable to AIM companies. The underlying principle of the QCA Code is that “the purpose of good corporate governance is to ensure that the company is managed in an efficient, effective and entrepreneurial manner for the benefit of all shareholders over the longer term”. The Directors anticipate that whilst the Company will continue to comply with the QCA Code, given the Group’s size and plans for the future, it will also endeavour to have regard to the provisions of the UK Corporate Governance Code as best practice guidance to the extent appropriate for a company of its size and nature. To see how the Company addresses the key governance principles defined in the QCA Code please refer to the below table. Further information on compliance with the QCA Code will be provided in our next annual report.
Peter Levine, Chairman and Chief Executive Officer
This disclosure was last reviewed and updated on 27 September 2018
THE PRINCIPLES OF THE QUOTED COMPANY ALLIANCE (QCA) CODE
|QCA Code Principle||Application (as set out by QCA)||What we do and why|
|1. Establish a strategy and business model which promote long-term value for shareholders||The board must be able to express a shared view of the company’s purpose, business model and strategy. It should go beyond the simple description of products and corporate structures and set out how the company intends to deliver shareholder value in the medium to long-term. It should demonstrate that the delivery of long-term growth is underpinned by a clear set of values aimed at protecting the company from unnecessary risk and securing its long-term future.||President Energy’s stated objective is to deliver material sustainable value growth for our shareholders through:
- Focus on high margin production from conventional assets, not barrels per se
- A regional focus on Latin America that enables a “cleaner” investment thesis and more effective use of management resources;
- Operatorship of our assets which is key to enabling tight cost control and focus on delivery; and
- Inclusion of material exploration activity only where appropriate as part of balanced portfolio
|2. Seek to understand and meet shareholder needs and expectations||Directors must develop a good understanding of the needs and expectations of all elements of the company’s shareholder base.|
The board must manage shareholders’ expectations and should seek to understand the motivations behind shareholder voting decisions.
|As set out on page 16 of our “Report and Consolidated Financial Statements 2017” (the “Report”), communications with shareholders are given high priority by the Board. President Energy sends its annual report and accounts to all shareholders and makes it available on the Investor Relations section on our website. The Company also makes its June interim statement available to shareholders on the website. The Group endeavours to maintain a regular dialogue with institutions and analysts particularly in relation to interim and full year results and organises free-to-access conference calls for both. The Board welcomes as many investors as possible to the Annual General Meeting and invites discussion on issues facing the Group. The Company maintains an up-to-date website, which complies with AIM Rule 26.|
|3. Take into account wider stakeholder and social responsibilities and their implications for long-term success||Long-term success relies upon good relations with a range of different stakeholder groups both internal (workforce) and external (suppliers, customers, regulators and others). The board needs to identify the company’s stakeholders and understand their needs, interests and expectations.|
Where matters that relate to the company’s impact on society, the communities within which it operates or the environment have the potential to affect the company’s ability to deliver shareholder value over the medium to long-term, then those matters must be integrated into the company’s strategy and business model.
Feedback is an essential part of all control mechanisms. Systems need to be in place to solicit, consider and act on feedback from all stakeholder groups.
|As set out on page 17 of the Report, President has an HSE policy through which the Company is committed to maintaining high standards of health, safety and environmental performance across all its oil and gas exploration operations. President is committed to the goals of:
- avoiding harm to all personnel involved in, or affected by, its operations;
- minimising the impact of its operations on the environment;
- complying with all the applicable legal and other requirements where it operates;
- having a positive impact on people or communities directly affected by its activities and achieving continual improvement in its HSE performance; and
- the Modern Slavery Act 2015
|4. Embed effective risk management, considering both opportunities and threats, throughout the organisation||The board needs to ensure that the company’s risk management framework identifies and addresses all relevant risks in order to execute and deliver strategy; companies need to consider their extended business, including the company’s supply chain, from key suppliers to end-customer.|
Setting strategy includes determining the extent of exposure to the identified risks that the company is able to bear and willing to take (risk tolerance and risk appetite).
|The principal risks and uncertainties facing the Company are set out on pages 11 and 12 of the Report.
Page 17 of the Report describes the internal controls implemented by the Board.
MAINTAIN A DYNAMIC MANAGEMENT FRAMEWORK
|QCA Code Principle||Application (as set out by QCA)||What we do and why|
|5. Maintain the board as a well- functioning, balanced team led by the chair||The board members have a collective responsibility and legal obligation to promote the interests of the company, and are collectively responsible for defining corporate governance arrangements. Ultimate responsibility for the quality of, and approach to, corporate governance lies with the chair of the board.|
The board (and any committees) should be provided with high quality information in a timely manner to facilitate proper assessment of the matters requiring a decision or insight.
The board should have an appropriate balance between executive and non-executive directors and should have at least two independent non- executive directors. Independence is a board judgement.
The board should be supported by committees (e.g. audit, remuneration, nomination) that have the necessary skills and knowledge to discharge their duties and responsibilities effectively.
Directors must commit the time necessary to fulfil their roles.
|The Company is controlled by the Board of Directors. Peter Levine, the Chairman and Chief Executive is responsible for the running of the Board as well as the Group’s business and implementing Group strategy.
All Directors receive regular and timely information regarding the Group’s operational and financial performance. Relevant information is circulated to the Directors in advance of meetings. All Directors are able to take independent professional advice in the furtherance of their duties, if necessary, at the company’s expense.
The Board comprises two Executive Directors and two Non-Executive Directors. The Board considers that all Non- executive Directors bring an independent judgement to bear notwithstanding the varying lengths of service.
The Board has a formal schedule of matters reserved to it and is supported by the Audit, Remuneration and Nomination Committee. The Schedule of Matters Reserved and Committee Terms of Reference are available on the Company’s website and can be accessed on the Directors & Committees page of this website.
|6. Ensure that between them the directors have the necessary up-to-date experience, skills and capabilities||The board must have an appropriate balance of sector, financial and public markets skills and experience, as well as an appropriate balance of personal qualities and capabilities. The board should understand and challenge its own diversity, including gender balance, as part of its composition.|
The board should not be dominated by one person or a group of people. Strong personal bonds can be important but can also divide a board.
As companies evolve, the mix of skills and experience required on the board will change, and board composition will need to evolve to reflect this change.
|The Nomination Committee of the Board oversees the process and makes recommendations to the Board on all new Board appointments. Where new Board appointments are considered the search for candidates is conducted, and appointments are made, on merit, against objective criteria and with due regard for the benefits of diversity on the Board, including gender. The Nomination Committee also considers succession planning.
The Board carries out an evaluation of its performance annually, taking into account the Financial reporting Council’s Guidance on Board Effectiveness.
|7. Evaluate board performance based on clear and relevant objectives, seeking continuous improvement|
The board should regularly review the effectiveness of its performance as a unit, as well as that of its committees and the individual directors.
The board performance review may be carried out internally or, ideally, externally facilitated from time to time. The review should identify development or mentoring needs of individual directors or the wider senior management team.
It is healthy for membership of the board to be periodically refreshed. Succession planning is a vital task for boards. No member of the board should become indispensable.
|The Board carries out an evaluation of its performance annually, taking into account the Financial reporting Council’s Guidance on Board Effectiveness.
All Directors undergo a performance evaluation before being proposed for re-election to ensure that their performance is and continues to be effective, that where appropriate they maintain their independence and that they are demonstrating continued commitment to the role.
Appraisals are carried out each year with all Executive Directors.
All continuing Directors stand for re-election on an annual basis.
|8. Promote a corporate culture that is based on ethical values and behaviours||The board should embody and promote a corporate culture that is based on sound ethical values and behaviours and use it as an asset and a source of competitive advantage.|
The policy set by the board should be visible in the actions and decisions of the chief executive and the rest of the management team.
Corporate values should guide the objectives and strategy of the company.
The culture should be visible in every aspect of the business, including recruitment, nominations, training and engagement. The performance and reward system should endorse the desired ethical behaviours across all levels of the company.
The corporate culture should be recognisable throughout the disclosures in the annual report, website and any other statements issued by the company.
|The Board considers that the employees of the Company are its most important asset and is committed to ensuring that they embody the highest levels of ethical values and behaviours in lines with the key policies adopted by the Company in terms of HSE, Anti Bribery and so forth.|
|9. Maintain governance structures and processes that are fit for purpose and support good decision- making by the board||The company should maintain governance structures and processes in line with its corporate culture and appropriate to its:|
• size and complexity; and
• capacity, appetite and tolerance for risk.
The governance structures should evolve over time in parallel with its objectives, strategy and business model to reflect the development of the company.
|Our Corporate Governance Statement on pages 16 and 17 of the Report details the company’s governance structures and why they are appropriate and suitable for the company.|
|QCA Code Principle||Application (as set out by QCA)||What we do and why|
|10. Communicate how the company is governed and is performing by maintaining a dialogue with shareholders and other relevant stakeholders.||A healthy dialogue should exist between the board and all of its stakeholders, including shareholders, to enable all interested parties to come to informed decisions about the company.|
In particular, appropriate communication and reporting structure should exist between the board and all constituent parts of its shareholder base. This will assist:
the communication of shareholders’ views to the board; and
the shareholders’ understanding of the unique circumstances and constraints faced by the company.
It should be clear where these communication practices are described (annual report or website).
|The Company encourages two-way communication with both its institutional and private investors and responds quickly to all queries received. The Chairman talks regularly with the Group’s major shareholders and ensures that their views are communicated fully to the Board.
The Board recognizes the AGM as an important opportunity to meet private shareholders. The Directors are available to listen to the views of shareholders informally immediately following the AGM.
The Board of directors comprises the Chairman, three Executive Directors, and two Non-Executive Directors.
All Directors are subject to election by shareholders at the first AGM after their appointment and to re-election at least once every 3 years. The Board meets regularly and has a schedule of matters reserved to it for decision including overall strategy; approval of the annual budget and the Annual Report and Accounts; major development expenditure; fund-raising; and changes to the Board.
The Audit Committee is chaired by Alex Moody-Stuart. The primary responsibility of the Audit Committee is to monitor and review the Company’s financial policies, statements and controls and the Company’s relationship with its Auditors.
The Remuneration Committee, chaired by Alex Moody-Stuart, reviews and recommends remuneration policy and individual remuneration for Senior Executives.
Further details are provided in the Corporate Governance Statement in the Annual Report.
President Energy PLC is subject to the UK’s City Code on Takeovers and Mergers.