Investor Relations

Corporate Governance

Corporate Governance

OVERVIEW

The Directors have established an Audit Committee, a Nominations Committee and a Remuneration Committee with formally delegated duties and responsibilities to operate with effect from Admission.

AUDIT COMMITTEE

KRM22 Audit Committee Terms of Reference

Members: Steve Sparke (Chairman) and Garry Jones

Steve’s extensive Board experience and successful career within derivatives and commodities markets provides him with the financial acumen to understand and challenge the financial reporting of the business. Steve is considered to be an independent non-executive director.

REMUNERATION COMMITTEE

KRM22 Remuneration Committee Terms of Reference

Members: Sandy Broderick (Chairman) and Garry Jones

Sandy’s AIM-listed Board experience and successful career in capital markets provides him with the acumen to understand and challenge the senior management needs of KRM22. Sandy is considered to be an independent non-executive director.

NOMINATION COMMITTEE

KRM22 Nomination Committee Terms of Reference

Members: Sandy Broderick (Chairman) and Garry Jones

Sandy’s AIM-listed Board experience and successful career in capital markets provides him with the acumen to understand and challenge the senior management needs of KRM22. Sandy is considered to be an independent non-executive director.

SHARE DEALINGS

The Directors comply with Rule 21 of the AIM Rules for Companies relating to Directors’ dealings and  take all reasonable steps to ensure compliance by the Group’s applicable employees.

The Company has adopted and will operate a share dealing code for Directors and Group employees in accordance with the AIM Rules for Companies.​

CORPORATE GOVERNANCE FRAMEWORK

KRM22 Plc has adopted the QCA Code for small companies for its Corporate Governance framework.

Where appropriate for its size, the business may adopt additional governance included in the full UK Corporate Governance code.

QUOTED COMPANIES ALLIANCE CORPORATE GOVERNANCE CODE

In applying a recognised corporate governance code, the Directors have adopted the Quoted Companies Alliance’s (QCA) Corporate Governance Code for small and mid-sized quoted companies (“QCA Code”).  

The Directors believe that, in addition to being responsible for setting the strategic direction and managing risk across the business, they are responsible for good corporate governance, clear shareholder and stakeholder communications and monitoring the effectiveness of the Executive Directors.  The Directors believe that effective corporate governance, appropriate to KRM22, considering its size and stage of development, will assist in the delivery of corporate strategy, the generation of shareholder value and the safeguarding of shareholders’ long-term interests.

This report follows the structure of the QCA Code guidelines and explains how the Board have applied the guidance as well as the reasons for any departures from the guidance.

At the centre of KRM22’s philosophy are four groups of stakeholders:

·       Customers: Customers should enjoy doing business with KRM22, receive value for money and understand that KRM22 is aligned with their values.

·       Investors: Investors should receive superior returns from KRM22, governed along established lines.

·       Team: The team should be highly motivated, well rewarded and believe in the Company vision.

·       Community: The local and global community should see KRM22 as an asset.

In adopting QCA principles, the Directors have ensured alignment with the goals of the Company’s stakeholders.

Directors

KRM22 Plc

Date: 15 April 2021

QCA PRINCIPLES

Principle 1: Establish a strategy and business model which promotes long-term value for shareholders

KRM22 listed on AIM, via an IPO, on 30 April 2018.  As part of this process, the Board determined the long-term vision of KRM22 and detailed the steps to achieve that strategy.

Since the IPO, the Board has refined the strategy, based on customer feedback, additional input from risk management experts from the five KRM22 domains of risk: enterprise, market, compliance, operations and technology, shareholder feedback, debt provider feedback and employee participation which has led to a clearer definition of KRM22’s strategy.  

Corporate status: KRM22 (KRM:L) is a closed-ended investment company (CEIC) listed on the AIM of the London Stock Exchange.  This means that the number of shares in the Company are known and the shares are traded on AIM.  KRM22 expects to convert to an operating company when its business develops to fit the necessary criteria.

In adopting Principle 1, KRM22 is assisting investors to obtain superior returns.

Principle 2: Seek to understand and meet shareholder needs and expectations

The Company’s CEO and CFO meet institutional shareholders, fund managers and analysts at least twice a year to understand how the strategy and the Board’s decisions impact on and are received by investors.

The Annual General Meeting provides an opportunity for all shareholders to meet the Directors and raise any questions.

finnCap act as the Company’s NOMAD and broker.

Nominated Advisor (NOMAD): NOMADs are approved by the London Stock Exchange and must meet eligibility criteria set out in the AIM Rules for NOMADs.  In their role, finnCap advises and guides the KRM22 Board on its responsibilities as an AIM listed business and undertakes due diligence and works as the primary advisor of the business.

Broker: finnCap is also the appointed broker of KRM22.  In this role finnCap facilitate communications with existing and potential new investors.  The CEO and CFO regularly meet investors together with representatives of the broker.  finnCap also advise KRM22 on shareholder communications on its website, all RNS releases (Regulatory News Service – AIM) and will guide communications within the Annual Report.

Investor queries can be directed to KRM22 by email to InvestorRelations@krm22.com.  

In adopting Principle 2, KRM22 assures investors that the Company is aligned to their needs, expectations and values.

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

The Board believes that KRM22 should be seen as an asset to its stakeholders, aligned with their values.  This is why the Board plans to establish of an Environment, Social and Governance (“ESG”) programme in 2021.

The ESG programme will be centred around meeting the United Nations 17 Sustainable Development Goals (“SDGs”) (https://sdgs.un.org/goals).  In order to work towards these SDGs, KRM22 will promote a culture of transparency and discussion amongst all four stakeholder groups.

The first phase of the ESG programme is an exercise to benchmark the Company against the SDGs with the aim of establishing the areas of focus for the remainder of the programme.  During this benchmarking phase, each stakeholder group will be considered and if necessary, consulted to establish alignment with their views and values.

In addition to the ESG programme, KRM22 continually gathers feedback from all stakeholder groups.

Methods of two-way communication include:

Investors: see Principle 10.

Customers: Regular meetings with existing and potential customers by the Business Development team in Europe via London, North America via New York and Chicago, and Asia via Singapore and Australia.

Team: KRM22 communicates regularly with the cross-country, multi-national and diverse team in multiple ways.  Bi-weekly internal company meetings are held where the Executive team update all staff on business-wide issues and encourage team participation.  In addition, KRM22 uses centralised internal systems including team-wide easy-to-use communication tools, formal performance appraisals are completed three times a year, with informal appraisals completed throughout the year, and “all-employee” announcements (for example, on acquisitions/investments, new customer contract wins, customer projects and other business-wide news).

Principle 3 provides the main methodology of meeting KRM22’s ESG goals across all four stakeholder groups.

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

Good effective risk management is part of KRM22’s DNA and the Company has built the Enterprise Risk Cockpit as a product to market and sell and also use internally to effectively manage risk throughout the Company.  Therefore, risk management is embedded in the culture of not only the KRM22 Board, but also the whole team.

Director experience in risk management: All the Directors have experience of building growing multi-national businesses and understand the risks and challenges that come with the journey.  Their sector and professional mix of skills is particularly relevant – see Principle 6.

Team experience in risk management: The subject matter expertise within the multi-national team is very strong and includes market risk, compliance risk and enterprise risk experts.  As a company dedicated to risk management technology, the KRM22 team has a high understanding and experience in managing risk.

Enterprise Risk Cockpit: The Enterprise Risk Cockpit is an application that KRM22 has developed to allow CEOs and their teams to see real-time risk statuses and enable them to take action.  KRM22 has implemented the Enterprise Risk Cockpit internally to monitor and manage risks.

Controls and processes: The Directors are continually reviewing controls and processes in all key areas on an ongoing basis.  When an acquisition is completed, the acquired company’s control’s and processes are reviewed and are aligned with group policy as quickly as possible, with a target of within three months from the date of acquisition.

Principle 5: Maintain the Board as a well-functioning, balanced team led by the Chair

Role and composition of the board:

Keith Todd is the Executive Chairman and CEO and as such has two roles in the business:

  • Chairman: The principal role of the Chairman is to manage and to provide leadership to the Board of Directors of the Company.  The Chairman is accountable to the Board.
  • CEO: The principal role as the CEO is to make major corporate decisions, manage the overall operations and resources and act as the ultimate point of communication with stakeholders.

Whilst QCA guidelines encourage the role of Chairman and CEO to be held by two different people, Keith Todd’s experience helps him perform these two roles with self-challenge.  In addition, the Board currently comprises an equal number of Executive and Non-Executive Directors which encourages healthy challenge and debate with the Non-Executive Directors providing additional independence.

The Board believes strongly that a mix of professional skills, risk management experience and capital market understanding make a difference, as does diversity, and one of the responsibilities of the Nomination Committee is to undertake an annual assessment of Board Effectiveness which includes a review of skills, experience and composition.

See the KRM22 Leadership team.

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

The Directors consider that the mix of professional skills, risk management experience and capital market understanding is key to the effectiveness of the Board and its Committees.  As such, the Board is very satisfied that the resulting mix of skills is suited to the sector, to the maturity and growth stage and for an AIM-listed business.

Skills: Of the six Directors, five have worked within capital markets, two are qualified accountants and one is a qualified lawyer.  All six Directors have experience of growing businesses and how risks need to be managed within a fast-growth environment.

The Directors maintain their professional experience and skill set through Continued Professional Development (legal and financial), and constant contact with customers, sector experts and industry influencers, and by listening to feedback from all stakeholders.

Principle 7: Evaluate Board performance based on clear and relevant objectives, seeking continuous improvement

The KRM22 Board has three Board Committees, each consisting of the two independent Non-Executive Directors. See more details in Principle 9.

The responsibilities of the Nomination Committee include an annual assessment of Board Effectiveness.  The last assessment was completed in April 2021.  The Directors assessed the Board on:

  • Risk management (including Going Concern);
  • Adequacy of management information to make decisions and manage risk;
  • The effectiveness of decision processes and decision making;
  • Board composition (mix of skills, experience, diversity, and adequate succession planning);
  • The effectiveness of each Director on the Board, whether Executive or Non-Executive;
  • Board communication and organisation; and
  • Director induction and training.

The Nomination Committee regarded the Board’s performance, effectiveness and composition as appropriate considering the size and stage of KRM22’s development however they continue to monitor the Board’s construction and remit as KRM22 develops and grows.  

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

KRM22 has grown fast and brought together different business and nationality cultures, through acquisitions and its own organic growth, and therefore the Board is very people-focused, including all stakeholders whether internal or external.

Team

The aim of the Directors is to build and maintain a culture of transparency and performance and the Directors believe that empowerment of employees is key to delivering the strategy.

KRM22’s three key company values are:

  • Focus wins;
  • Business is a team game; and
  • Clear accountabilities for all.

All employees have access to an internal HR system which provides the full organisation chart across KRM22.  This helps each employee understand where they fit within the organisation and how their work contributes to KRM22’s growth and performance.

As the business has grown, KRM22 has adopted corporate policies, staff handbooks and accounting policies which are aligned with the needs of the Group, each country and team.  As each business is acquired, the team is included in internal communications and is integrated/transitioned into the communication and systems of KRM22.  Each member of the team is expected to sign and adhere to certain policies, including the Business Code of Conduct which outlines key responsibilities in terms or ethics.

In addition, for full transparency, the Board has adopted whistleblowing policies for employees and external stakeholders, including the choice of reporting to and excluding the CFO.

As discussed in Principle 3, KRM22’s ESG programme is focused on meeting the United Nations 17 SDGs which promotes a strong ethical culture within all areas of the Company.

Principle 9: Maintain governance structures and processes that are fit for purpose and support good decision-making by the Board

The Board of Directors is responsible for setting the strategic direction of the business, managing risks and monitoring performance and progress.  To help fulfil these responsibilities, the Directors have implemented independent Board Committees which together with the Matters Reserved for the Board, provide structure and formalisation of corporate governance.

The Matters Reserved for the Board include Board approval for acquisitions.  For the acquisitions completed to date, the Board has received due diligence information undertaken by employees and external advisors to provide the right information to make the right decisions for the business.

The Board is regularly provided with financial information for monitoring performance and to make strategic decisions.

Risk Management

The Company uses its own Enterprise Risk Cockpit software tool to assess and monitor risks.  This has gradually replaced any list of risks in Excel or Word (often the basis for a “Risk Register”) and deliver much more visibility to the Directors of the performance KRM22 as a whole.

Independence

At 31 December 2020 the Board was comprised of three Executive Directors and three Non-Executive Directors.  Three of the Non-Executive Directors are considered independent as they have not previously worked with the Executive team.

Under their letters of appointment, the Non-Executive Directors have a time commitment of two days per month and the Executive Directors are full-time (with time allowed for agreed external professional activities).  All Directors are able to allocate sufficient time to KRM22 to fulfil their responsibilities.

The Directors meet at least monthly, with a minimum of ten meetings per year.

Board committees

The Directors have established an Audit Committee, a Nominations Committee and a Remuneration Committee with formally delegated duties and responsibilities.  None of the Executive Directors are members of these Committees and, when invited to attend Committee meetings, it is to present information and not be part of the decision making.

See the committees here

Principle 10: Communicate how the Company is governed and is performing by maintaining a dialogue with shareholders and other relevant stakeholders

All financial reports and publicly-available information is published in the investor information section of the KRM22 website.  This includes AIM rule 26, significant shareholder information and details of our Directors’ roles and experience.

The CEO and CFO meet with institutional fund investors to communicate progress and plans at least twice a year and have met them at other times where appropriate.  In addition, the CEO and CFO meet with Kestrel Partners LLP (the “Security Agent”) to report on financial covenants and forward-looking compliance information as part of the reporting obligations of the Convertible Loan Agreement dated 15 September 2020 (the “Convertible Loan”).

The Directors believe that these meetings provide valuable two-way communication and allow investors and Security Agent to provide feedback.  Other investors are provided a channel for communication via the KRM22 investor information on the website and via email contact at InvestorRelations@krm22.com.

The report of Board Committees is included in our Annual Report and Accounts each year.  When General Meetings are held, the Directors publish the results of votes on the KRM22 website in the Investor Information section.

Internally KRM22 uses multiple team-tools to communicate – see Principle 3.