Volvere Regulatory News (VLE)

Volvere plc

("Volvere" or the "Group")

Final Results for the year ended 31 December 2022

Volvere plc (AIM: VLE), the growth and turnaround investment company, announces its audited Final Results for the year ended 31 December 2022.

Highlights

· Good performance from Shire Foods, the Group's savoury pastry products manufacturer

· Losses at Indulgence curtailed following decision to close in the second half of 2022

· Strong financial position maintained

Forward-looking statements:

This report may contain certain statements about the future outlook for Volvere plc. Although the Directors believe their expectations are based on reasonable assumptions, any statements about future outlook may be influenced by factors that could cause actual outcomes and results to be materially different.

The information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014 as it forms part of UK Domestic Law by virtue of the European Union (Withdrawal) Act 2018 ("UK MAR").

Note

1 The comparative results for the year ended 31 December 2022 and the period to 30 June 2022 have been restated to exclude the results of Indulgence Patisserie, which was discontinued during the year. The results of that business have been reported as discontinued operations.

2 Based on the net assets attributable to owners of the parent company and the respective period end shares in issue (excluding treasury shares), which were 2,364,422 at 31 December 2022, 2,568,422 at 31 December 2021 and 2,516,422 at 30 June 2022.

For further information:

Notes to editors:

Volvere plc (AIM: VLE), is a growth and turnaround investment company. The Group's current trading business is involved in food manufacturing. The Group currently employs approximately 275 people.

For further information, please visit www.volvere.co.uk.

Chairman's statement

I am pleased to report on the results for the year ended 31 December 2022.

The Group's performance in 2022 was satisfactory given that we closed one of our two subsidiaries in the second half of the year. The decision to close Indulgence Patisserie, whilst regrettable, was necessary to curtail increasing losses. Our other subsidiary, Shire Foods, performed well in a highly inflationary environment.

Group revenue from continuing operations was £38.03 million (2021 as restated: £30.70 million) and the profit before tax from continuing operations was £2.33 million (2021 as restated: £1.07 million).

Following share buy-backs in the year, the Group's total net assets were £35.75 million (2021: £37.05 million), with net assets per share* increasing to £13.90 (2021: £13.49). This places the Group in a strong position to capitalise on opportunities as they arise.

David Buchler

Chairman

25 May 2023

*Net assets attributable to owners of the parent company divided by total number of ordinary shares outstanding at the reporting date (less those held in treasury), see note 21.

Chief Executive's statement

Principal activities

The Company is a holding company that identifies and invests in undervalued and/or distressed businesses and securities as well as businesses that are complementary to existing Group companies. The Company provides management services to those businesses. The sole activity of the Group's continuing trading subsidiary, Shire Foods Limited ("Shire"), during the year was food manufacturing.

Operating review

The closure of Indulgence Patisserie Limited ("Indulgence") was the first unsuccessful turnaround in Volvere's 20+ year history. The decision was difficult but we think correct due to Indulgence's specific challenges as well as the wider economic environment. In line with most businesses in the UK, Indulgence faced significant volatility and upward pressure in raw material costs and overheads, as well as having to recruit within a challenging labour market. Indulgence's less efficient operating scale meant that its business was, on balance, no longer viable.  Indulgence has been classified as discontinued operations for reporting purposes and comparative results for 2021 have been restated accordingly.

Shire's performance on the other hand was very good. 

Group revenue from continuing operations (all of which relates to Shire) was £38.03 million (2021 as restated: £30.70 million). The Group's profit before tax from continuing operations for the year was £2.33 million (2021 as restated: £1.07 million). The Group's overall loss (including discontinued operations) for the year was £0.06 million (2021: profit £0.06 million). Further information is contained in the Financial review.

Shire Foods - continuing

Shire, in which the Group has an 80% stake, was acquired in 2011 and manufactures frozen pies, pasties and other pastry products for food retailers and food service customers from its factory in Royal Leamington Spa.

Shire continued to grow in 2022, with revenues increasing by approximately 24.2% to a new record of £38.03 million (2021: £30.61 million). Profit before tax, intra-group interest and management charges* was approximately £2.78 million (2021: £2.14 million). Profit before tax was £2.43 million (2021: £1.89 million) - with the difference being intra-group interest and management charges.

Shire continued its strategy of developing new products and increasing factory capacity to meet customer growth, which has been across both retail and food service. Whilst energy and raw material prices increased rapidly in 2022, Shire was able to implement new pricing with its customers to mitigate some of the effect on margins. Whilst labour costs are expected to increase further in 2023, there are signs that raw material price increases and energy prices are abating. Other significant costs, particularly transport and logistics, have been stable so far in 2023. We continue to monitor and discuss pricing with customers to ensure Shire remains competitive yet financially robust and able to invest in further growth of site capacity.

Further information about Shire can be found at www.shirefoods.com.

Indulgence Patisserie Limited - discontinued

Manufacturing was suspended in August 2022 and did not recommence given the outlook for the business. All roles were, regrettably, made redundant. The result for Indulgence reflects the trading losses in the year along with the inevitable write-downs of stock, plant and equipment whose value was impaired following the decision to cease trading. The overall loss for the year was £2.39 million. Further information relating to Indulgence is given in the Financial review and Note 6.

Investing and management services

The Group's investing and management services segment comprises central overheads, partially offset by management and interest charges to Group companies and returns from treasury management activities on current asset investments.

Outlook

Whilst 2022 was, by any measure, a challenging year, we have ensured the continued success of Shire and maintained the Group's robust financial position. In the wider economy, we are seeing an increasing number of investment opportunities across multiple sectors as businesses grapple with higher interest rates, energy, raw material and staff costs at a time of flat or reduced demand. Our strong balance sheet will enable us to capitalise on these opportunities as they arise.

Jonathan Lander

Chief Executive

25 May 2023

* profit before intra-group interest and management charges is considered to be a relevant, useful interpretation of the trading results of the business such that its performance can be understood on a basis which is independent of its ownership by the Group.

Financial review

Detailed information about the Group's segments is set out in note 5 which should be read in conjunction with this financial review and the Chairman's and Chief Executive's statements.

Overview

The decision to close Indulgence Patisserie during 2022 means the results of that business have been classified as discontinued operations and the comparative results for 2021 have been restated for comparability. Group revenue from continuing operations (all of which relates to Shire Foods) was £38.03 million (2021 as restated: £30.70 million), an increase of almost 24%.

The Group's profit before tax from continuing operations for the year was £2.33 million (2021 as restated: £1.07 million). The Group's overall loss (including discontinued operations) for the year was £0.06 million (2021: profit £0.06 million).

The trading performance of each of our businesses is outlined in the Chief Executive's statement and set out further below and in note 5.

Food manufacturing

Following the decision to close Indulgence Patisserie, this segment now includes only the trading of Shire Foods, which manufactures savoury pastry products.

Shire Foods

Partly driven by price inflation and partly by increased volumes, revenue for the year was £38.03 million (2021: £30.61 million), with a profit before tax, intra-group interest and management charges of approximately £2.78 million (2021: £2.14 million)*. Profit before tax was £2.43 million (2021: £1.89 million) - with the difference being intra-group interest and management charges.

With raw materials pricing increasing significantly across the board, Shire's materials margin percentage for the year as a whole was lower than 2021. However, the efforts made to implement price increases with customers during the year saw the materials margin percentage recover in the second half of the year. This, in spite of other increasing costs - particularly those relating to labour - along with the effects of increased volume resulted in overall increased profitability.

During 2022, Shire continued to provide operational and commercial support to Indulgence Patisserie and this again has resulted in some costs being recharged which would otherwise have been borne by Shire.

As highlighted last year, Shire has continued to invest in increasing factory capacity. Capital expenditure in 2022 was £1.01 million (2021: £0.27 million), of which £0.89 million (2021: £0.27 million) was funded from Shire's own resources, with the balance funded by way of debt.

Shire continued to be able to meet its own working capital needs throughout in the year, using external borrowings where required. Following the year end, the company declared and paid a dividend of £2.50 million (2021: £nil), of which the Group's share was £2 million.

The 5-year financial performance of Shire is summarised in the table below:

* profit before intra-group interest and management charges is considered to be a relevant, useful interpretation of the trading results of the business such that its performance can be understood on a basis which is independent of its ownership by the Group.

Discontinued operations - Indulgence Patisserie

As noted above, the decision was made in 2022 to close the Indulgence Patisserie business, which manufactured frozen desserts and cakes. The decision followed a period of growing losses resulting from substantial raw material and energy increases which made the business unviable.

The business's principal sites were freehold and one of three has been sold since the year end at a modest premium to its book value. The remaining two sites are to be separated (they are currently connected) and will be marketed individually. Whilst there may be some limited costs associated with Indulgence in 2023, the Group does not expect these to be material.

For the year as a whole, Indulgence's losses were £2.39 million (2021: £1.08 million), stated after the costs associated with the closure. Inevitably, there were impairments in respect of the carrying value of plant and equipment and stock. There remain some unresolved third-party claims in relation to the closure which may result in the trading company, Indulgence Patisserie Limited, being placed into liquidation. This is not expected to impact the Group materially.

Financial information relating to Indulgence is set out in note 6 to the financial statements.

Throughout the period the Group continued to provide working capital loans to Indulgence. Following the decision to close the business, extensive efforts were made to realise value for the company's assets, particularly debtors and stocks. As a result, Indulgence indebtedness to the Group reduced in the second half of 2022 and, with the disposal of one of the freehold properties in 2023, has reduced further. The amounts outstanding as at 31 December 2022 were as follows:

* excluding intra-Group trading balances

Investment revenues, other gains and losses and finance income and expense

The Group adopted a more active treasury management strategy during the year and this resulted in improved yield on the Group's cash with gains realised on disposal of available for sale investments of £0.58 million (2021: £nil) and investment revenues excluding interest of £0.11 million (2021: £nil).

The Group's net finance expense was in line with the prior year at £0.13 million (2021: net £0.14 million). Individual Group trading companies continue to utilise leverage where appropriate, and without recourse to the remainder of the Group, which attracts some external interest expense.

Statement of financial position

Overall position

Year-end Group net assets were lower than the prior year at £35.75 million (2021: £37.05 million), a reduction of £1.30 million. This reduction is after treasury share purchases of £2.09 million; net assets per share increased to £13.90 (2021: £13.49).

Cash and available for sale investments

Year-end cash totalled £19.14 million (2021: £21.87 million), a reduction of £2.73 million.

Outside of the underlying trading results from operations and associated working capital movements, the principal outflows of cash during the year arose from the purchase of treasury shares (£2.09m), the purchase of plant and equipment in continuing businesses (£0.89 million) and the repayment of borrowings for continuing businesses (£0.58 million). The Group's cash flow is shown below.

During the year the Group invested in equity securities pursuant to its treasury management policies. The investments held at year end are carried at fair value (£1.65 million, 2021: nil).

Dividends

In accordance with the policy set out at the time of admission to AIM, the Board is not recommending the payment of a dividend at this time and prefers to retain such profits as they arise for investment in future opportunities, or to purchase its own shares for treasury where that is considered to be in the best interests of shareholders.

Purchase of own shares

During the year the Company purchased 204,000 (2021: 3,500) of its own shares, which are held in treasury, at a cost of £2.09 million (2021: £0.04 million).

Earnings per share

Basic and diluted profit per ordinary share from continuing operations was 74.36p (2021: restated 30.36p).  Basic and diluted loss per ordinary share from discontinued operations was (95.89)p (2021: restated (41.97)p). Total basic and diluted loss per ordinary share was (21.53)p (2021: (11.61)p).

Investing strategy

The Company's investing strategy is to invest in, or acquire: quoted companies where, in the Directors' opinion, the market capitalisation does not reflect the value of the assets; any company that is in distress but offers the possibility of a turnaround; and any company that fits strategically with an existing portfolio investment.

The Company may also invest in quoted or unquoted start-up, early or development-stage companies in sectors where the Directors have experience of investing or where they have identified management teams with experience in those areas.

The Company may invest in any company (or similar structure) or third-party fund on a short or long-term basis, where the Directors have experience of investing, especially where such investment is complementary to an existing, or similar to a past, investment of the Company.

The Company may also create and invest in fund vehicles owned, managed or controlled by the Company, including where there is the possibility of raising third party investment; and invest in third party funds where the investment strategy of those funds is in the Directors' opinion similar to that of the Company, and specifically including funds that invest in distressed debt and equity, or that invest in derivative securities of distressed debt or equity.

The Company has a preference for active rather than passive investing and for holding a small number of investments, including a single investment, and does not necessarily seek to diversify risk across a wide range of investments, unless this can be achieved without affecting the Company's active investment style. The Company's preference is to make investments in the UK and Continental Europe.

Where the Company makes a direct investment, investment decisions will be made by the Directors, who collectively have many years of experience in selecting and managing investments. Investments made by fund vehicles, if owned, managed or controlled by the Company, will be made by the executives of the investment manager of the fund vehicle, which will include representatives of the Board. Investments made by fund vehicles owned, managed or controlled by third parties, will normally be made by the fund investment manager which may or may not include the involvement of Company executives. Screening and due diligence of potential investments (including any initial investment in a fund vehicle) will be carried out by the executive management of the Company. Any decision on whether to proceed will be made by the unanimous decision of the Board.

Outside consultants and professional advisers will be used where appropriate but the Company will endeavour to keep this to a minimum in order to control expenses.

The Board seeks shareholder approval for the investing strategy on an annual basis. The Directors expect to be able to find suitable investment or acquisition candidates within the next 12 months, however there is no time limit and if no suitable acquisition or investment has been identified before the Company's next annual general meeting, the Directors may review the Company's investing strategy at that time.

Key performance indicators (KPIs)

The Group uses key performance indicators suitable for the nature and size of the Group's businesses. The key financial performance indicators are revenue and profit before tax. The performance of the Group and the individual trading businesses against these KPIs is outlined above, in the Chief Executive's statement and disclosed in note 5.

Internally, management uses a variety of non-financial KPIs as follows: in respect of the food manufacturing sector order intake, manufacturing output and sales are monitored weekly and reported monthly.

Principal risk factors

The Company and Group face a number of specific business risks that could affect the Company's or Group's success. The Company and Group invests in distressed businesses and securities, which by their nature often carry a higher degree of risk than those that are not distressed. The Group's businesses are principally engaged in the provision of goods and services that are dependent on the continued employment of the Group's employees and availability of suitable, profitable workload. In the food manufacturing segment, there is a dependency on a small number of customers and a reduction in the volume or range of products supplied to those customers or the loss of any one of them could impact the Group materially. Rising inflation, including increases in raw materials and overhead costs, may not be able to be passed on to customers through increased prices and this could result in reduced profitability. Any pandemic or other such similar event which could affect consumers, supplier, customers or staff may limit or inhibit the Group's operations.

These risks are managed by the Board in conjunction with the management of the Group's businesses.

More information on the Group's financial risks is disclosed in note 17.

Energy and carbon reporting

As neither Volvere plc nor any qualifying subsidiaries have consumed more than 40,000 kWh of energy in this reporting period, they qualify as low energy users under the regulations and are not required to report on any emissions, energy consumption or energy efficient activities.

Statement by the Directors relating to their statutory duties under s172(1) Companies Act 2006

The Board of Directors considers, both individually and together, that they have acted in the way they consider, in good faith, would be most likely to promote the success of the Company for the benefit of the members as a whole (having regard to the stakeholders and the matters set out in s172(1)(a-f) of the Act) in the decisions taken during the year ended 31 December 2022.

The Company is a holding company for which the investing strategy is approved by members annually at the Company's Annual General Meeting. The Company's success in following this investing strategy is measurable in terms of the value arising over time from the Company's investments.

The Board of Directors had regard, amongst other matters, to the:

· likely consequences of any decision on the long term;

· interests of the Group's employees;

· need to foster relationships with customers, suppliers and others;

· impact of the Group's operations on the communities in which the Group's businesses operate;

· impact of the Group's operations on the environment;

· desirability of maintaining a reputation for high standards of business conduct;

· need to act fairly between the members of the Company.

The broad range of stakeholders and their interests means that it may not be possible to deliver outcomes that meet all individual interests. Whilst there is an inherent and probable interdependency between the success of the Company's underlying investments and the Company itself over time, there may be occasions where actions in relation to those investments taken, or not taken, in the interests of the Company's stakeholders' by the Board could be perceived as, or be, in conflict with stakeholder interests in the investments themselves.

The Board engages with the Group's stakeholders both directly and indirectly at an operational level through the Group's management responsibility structure. Direct engagement includes members of the Board communicating with stakeholders personally in appropriate circumstances. In addition, the Board reviews and challenges the strategies and financial and operational performances of its individual trading businesses, including risk management, legal and regulatory compliance, through periodic reporting processes and management review meetings. The Company makes Stock Market announcements whenever required or considered necessary.

The Board:

· ensures that any recommendations from relevant regulators are properly considered;

· assesses risk in the application of capital when making investment decisions and in making follow-on investments, whether by way of equity or debt;

· through its own and its subsidiaries' employment practices seeks to reward employees fairly and to create a safe and secure environment;

· encourages its subsidiaries to maintain regular, open and honest contact with their customers and suppliers, working collaboratively;

· encourages subsidiaries to support charitable activities in their local communities and to consider the impact of their operations on the local community;

· seeks to minimise negative effects of the Company's operations on the environment by minimising travel and encouraging its subsidiaries to minimise waste and recycle materials wherever practicable.

These activities give the Board an overview of stakeholder engagement and effectiveness, including opportunities to improve further, and enables the Directors to comply with their legal duty under s172 of the Companies Act 2006.

Nick Lander

Chief Financial & Operating Officer

25 May 2023

Corporate Governance Report

All members of the Board believe in the value and importance of good corporate governance and in our accountability to all the Group's stakeholders, including shareholders, staff, clients and suppliers. In the statement below, we explain our approach to governance, and how the Board and its committees operate.

The corporate governance framework which the Group operates, including Board leadership and effectiveness, Board remuneration, and internal control is based upon practices which the Board believes are proportionate to the size, risks, complexity and operations of the business and is reflective of the Group's values. We have partially adopted and partially comply with the Quoted Companies Alliance's ("QCA") Corporate Governance Code for small and mid-size quoted companies (revised in April 2018 to meet the requirements of AIM Rule 26).

The QCA Code is constructed around ten broad principles and a set of disclosures. We have considered how we apply each principle to the extent that the Board judges these to be appropriate in the circumstances, and below we provide an explanation of the approach taken in relation to each. Except as set out below, the Board considers that it does not depart from any of the principles of the QCA Code. The information below was last updated on 24 May 2023.

The following paragraphs set out the Group's compliance (or otherwise) with the ten principles of the QCA Code. 

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

Explanation

The Company's strategy is to identify and invest in undervalued and/or distressed businesses and securities as well as businesses that are complementary to existing Group companies. The Company provides management services to those businesses.

Since 2002 the Company's shares have been traded on the Alternative Investment Market ("AIM") of the London Stock Exchange (ticker VLE).

In order to execute the Company's strategy successfully, the following key issues are addressed:

Investment Identification - the Company's Executive Directors are responsible for identifying potential investments. This is done through maintaining relationships with intermediaries and through personal networks.

Investment Assessment - the Company's Executive Directors are responsible for assessing potential investments as a basis for delivering long-term shareholder value. This is done principally by undertaking due diligence on such investments, such work being done largely by the Executive Directors themselves. Where considered necessary, cost-effective and practicable, external advisers may be used.

Investment Structuring - the Company's Executive Directors are responsible for determining the initial investment structure relating to potential investments. Investments have individual management teams and risk and reward profiles and the Company puts in place an investment structure that seeks to balance the risks and potential rewards for all such stakeholders.

Investment Performance Improvement - the Company's Executive Directors are responsible for implementing a strategy that improves the performance of investments (where such investments are not simply held for treasury purposes). This will typically involve board leadership and an appropriate level of operational involvement to ensure that financial and operational risks are minimised through increased profitability and cash generation. This is typically done by improving customer service and quality, clearer financial reporting and control, increasing management responsibility and target setting.

Investment Exit - the Board is responsible for assessing the optimum time to exit from an investment. This is determined based on a range of factors, including the potential divestment valuation, the nature of any potential acquirer, the external environment and other stakeholder intentions.

Compliance Departure and Reason - None.

2. Seek to understand and meet shareholder needs and expectations

Explanation

Responsibility for investor relations rests with the CEO, supported by the CFO. The Company communicates in different ways with its shareholders to ensure that shareholder needs and expectations are clearly understood.

Communication with shareholders is principally through the Annual Report and Accounts, full-year and half-year announcements, trading updates and the annual general meeting ("AGM"). A range of corporate information (including all Company announcements) is also available to shareholders, investors and the public on our website. The AGM is the principal opportunity for dialogue with private shareholders, and all Board members seek to attend it and answer shareholder questions. The Notice of Meeting is sent to shareholders at least 21 days before the meeting. In addition, the CEO attends potential investor shows in order to increase the Company's profile.

Compliance Departure and Reason - None.

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

Explanation

The Group's ability to deliver on its strategy is dependent partly upon its effective engagement with stakeholders and a wider recognition of the social implications of its operations. In all businesses, the typical key stakeholders are shareholders, customers, staff and suppliers.

Customers - in all businesses the Group seeks to provide clients with products and services that are differentiated from competitors. This is done through meeting clients to understand their needs and through understanding competitors' offerings.

Staff - the Group's staff are critical to delivering client satisfaction over the longer term. All Group companies have in place staff communication forums and flat management structures, which aid communication. Group management is accessible to company staff. In situations where individual subsidiary decisions would impact on staff security or morale, the relevant company will seek to minimise the impact on staff.

Suppliers - to varying degrees the Group is dependent upon the reliable and efficient service of its supply chain. In the case of significant suppliers, each Group company will meet periodically with them to review and determine future trading arrangements and to share the relevant company's requirements of that supplier.

Compliance Departure and Reason - None.

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

Explanation

Recognising and managing business risks is key to ensuring the delivery of strategy and the creation of long-term shareholder value.

As part of the Group's annual reporting to shareholders, specific financial risks are evaluated, including those related to foreign currency, interest rates, liquidity and credit. The Group's key risks are set out in the Annual Report & Accounts.

The nature of the Group's operations is such that individual companies are organised independently and operate business and IT systems that are appropriate to their individual businesses. The Audit Committee reviews the findings of the Group's auditors and considers whether there are remedial actions necessary to improve the control environment in each company.

The Group has in place an Anti-Bribery Policy and a Share Dealing Code that apply to staff.

Compliance Departure and Reason - None.

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

Explanation

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 consists of three directors of which two are executive and one (the Chairman) is non-executive. The Chairman is considered independent and independent directors will stand for re-election on an annual basis in the event of having more than 10 years continuous board service. The QCA Code requires that the Company has two non-executive directors.

The Board is supported by both Audit and Remuneration committees, the member of each of which is the Chairman.

The Board meets formally on a regular basis (typically 4-6 times per annum), with interim meetings convened on an as-required basis. The Audit committee undertakes an annual review and the Remuneration committee undertakes reviews on an as-required basis. All Directors commit the required time to meet the needs of the Group from time-to-time.

Compliance Departure and Reason - As currently constituted the Board includes only one non-executive Director. The Board considers that the size of the Group does not merit the appointment of an additional non-executive Director but will continue to review this over time.

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

Explanation

The Company's Directors are David Buchler (Chairman), Jonathan Lander (CEO) and Nick Lander (COO/CFO). All members of the Board have experience relevant to delivering the Company's strategy.

The Board believes that, as currently constituted, it has a blend of relevant experience, skills and personal qualities to enable it to successfully execute its strategy.

The Directors' biographies are in the Annual Report and Accounts and incorporated here by reference.

Compliance Departure and Reason - The QCA Code requires, inter alia, that the Company describes the relevant experience, skills, personal qualities and capabilities that each Director brings to the Board. The Board believes the individual's biography as noted above, coupled with their successful service to date with the Company, is sufficiently objective evidence that the Board has the necessary requirements to fulfil their roles individually and collectively.

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

Explanation

The Board does not formally review the effectiveness of itself as a unit nor of the Remuneration and Audit committees. The small size of the Board means that individual Directors' contributions are transparent. Where the Company identifies potential Board members, these are noted for any possible future vacancies as part of succession planning or to bring in additional skills or capabilities.

Compliance Departure and Reason - Where the need for Board changes has become evident in the past, the necessary changes have been implemented. It is not considered necessary to formally review performance given this embedded approach, whereby review of effectiveness is continuous.

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

Explanation

The nature of the Group's businesses are diverse and, by their nature, may have different cultures and values relevant to their sector. However, there are some core values that the Group adopts throughout all its businesses, irrespective of their nature and size.

These values are: honesty, integrity, openness and respect. The Board leads by example, demonstrating through its collective actions and individually as Directors through theirs, to local management teams and staff. The Company has an Anti-bribery Policy and makes an annual Modern Slavery statement.

Compliance Departure and Reason - None.

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

Explanation

The Board provides strategic leadership for the Group and operates within the scope of a robust corporate governance framework. Its purpose is to ensure the delivery of long-term shareholder value, which involves setting the culture, values and practices that operate throughout the Group's businesses as well as defining its strategic goals. The Board has approved terms of reference for its Audit and Remuneration committees to which certain responsibilities are delegated.

The individual roles and responsibilities of the Board, the Board members and the Audit and Remuneration Committees are set out below.

The Board has approved the adoption of the QCA Code as its governance framework against which this statement has been prepared and will monitor the suitability of this code on an annual basis and revise its governance framework as appropriate as the Group evolves. The Board is satisfied that the current framework will evolve in line with the current growth plans of the Group.

Compliance Departure and Reason - None.