The Directors of Active Energy Group Plc (“AEG”, the “Group” or the “Company”) recognise the importance of sound corporate governance. As a Company whose shares are traded on AIM, the Board has adopted the Quoted Companies Alliance’s Corporate Governance Code (the “QCA Code”).
James Leahy, in his capacity as non-executive Director and chairman of the audit committee, has assumed responsibility for ensuring that the Group has appropriate corporate governance standards in place and that these requirements are followed and applied within the Group as a whole. The corporate governance arrangements that the Board has adopted are designed to ensure that the Group delivers long term value to its shareholders and that shareholders and other stakeholders have the opportunity to express their views and expectations for the Group in a manner that encourages open dialogue with the Board.
Application of Principles
The QCA Code sets out 10 principles of corporate governance. These are listed below, together with a short explanation as to how the Group applies each of the principles. Where the Group does not fully apply each principle, an explanation as to why the principle has not been fully applied, is provided below.
Principle One: Business Model and Strategy
The Board has adopted a clear and focused strategy.The Group’s fundamental strategy is to develop a profitable international operation founded on CoalswitchTM and PeatSwitch technologies, underpinned by a forestry management business. Further information is provided on the Company’s website and the Annual Report for the year ended 31 December 2018 and forms the basis of the Group’s financial model and allocation of resources.
The Company’s website may be accessed using the following link:
The 2019 Annual Report is available using the following link:
The audit committee is responsible for ensuring that the financial performance of the Company is properly monitored and reported on and for meeting with the auditors and reviewing reports from the auditors relating to accounts and internal control systems. The Audit Committee is comprised of Michael Rowan and James Leahy.
The remuneration committee reviews the performance of executive directors, sets the scale and structure of their remuneration and reviews the basis of their service agreements with due regard to the interests of the shareholders. The remuneration committee will also make recommendations to the Directors concerning the allocation of share options to Directors and employees. No Director is permitted to participate in discussions or decisions concerning their own remuneration. The remuneration and terms of appointment of the members of the remuneration committee are set by the Board. The Remuneration Committee is comprised of Michael Rowan and James Leahy. The Board receives regular management information, whilst also maintaining on-going contact with suppliers and customers. Although all Board members are involved in committee meetings and official Board meetings, the executive directors have an active role in the day-to-day running of the Group’s business.
Principle Two: Understanding Shareholder Needs and Expectations
The Board recognises the need to maintain communication with our shareholders and this is led by the Executive Directors (Michael Rowan and Antonio Esposito). Institutional shareholders and analysts have the opportunity to discuss issues and provide feedback at meetings with the Company. In addition, all shareholders are encouraged to attend the Company’s Annual General Meeting and any other General Meetings that are held throughout the year.
All of the Company’s regulatory announcements are uploaded to the Regulatory News section of the Company’s website to ensure that shareholders receive price-sensitive information as soon as the market does.
In addition, the website has a specific “Contact us” form to enable shareholders to contact the Company directly.
Principle Three: Stakeholder Responsibilities
The Board takes regular account of the significance of social, environmental and ethical matters affecting the Group in each jurisdiction that it currently operates and communication with key stakeholders is led by the Executive Directors (Michael Rowan and Antonio Esposito). Whilst it has not yet adopted a specific set of policies on Corporate Social Responsibility, the Company seeks to protect the interests of all its stakeholders through individual policies and through ethical and transparent actions, and by following the guidelines in the QCA Code. The Board is regularly updated on wider stakeholder engagement feedback to stay well informed of stakeholder insights and is always prepared, where practicable, to review and update its policies and actions when the size of the Group or its needs dictate that such revisions or updates are either necessary or advisable.
Principle Four: Risk Management
The Board recognises that effective risk management is essential for the Group to meet its corporate objectives and this forms an important part of both formal and informal Board discussions.
Key risks and associated mitigation plans have been identified and this analysis forms a key part of the development and preparation of theCompany’s 5 year business plan. Furthermore, key opportunities and risks are reviewed and assessed on an ongoing basis by the Company’s Operating Committee (see Principle Six below). This Committee, which has a specific terms of reference, comprises the two executive Directors, Chief Financial Officer, Chief Technical Officer and Head of Manufacturing.
A summary of the key risks and mitigation strategies is below:
|1||Insufficient cash resources to meet liabilities, continue as a going concern and finance key projects.||Short term and 5 year business plans are prepared and are reviewed on an ongoing basis. This analysis provides the basis for capital raising activity.|
|2||Loss of key management/staff resulting in failure to secure and meet contractual requirements.||Regular review of salaries and benefits including long term incentives. Ongoing communication with key individuals.|
|3||Project execution risk associated with capital intensive activities.||Strategy is to outsource construction projects to established EPC contractors and to engage suitable engineering counter parties where possible.|
|4||Health and safety risks to employees, contractors and local communities associated capital intensive operations.||Employment of experienced operational managers and contractors. Group wide HSE policies to be introduced on commencement of production.|
|5||Failure to comply with law and regulations in the jurisdictions in which we operate.||Key management are professionally qualified. In addition the Company appoints relevant professional advisers (legal, tax, accounting etc) in the jurisdictions in which we operate.|
|6||Failure to maintain strong and effective relations with key stakeholders in the areas in which we operate, resulting in loss of contracts.||Senior management seeks to establish and maintain an open and transparent dialogue with key stakeholders in the areas in which we operate.|
|7||Significant changes in the political environment results in loss of resources/market and/or business failure.||The Company exited its Ukrainian wood fibre business in 2017, and refocussed its activities in North America and Western Europe, in order to reduce the Group’s country, political and trading risk profiles. Management also monitors the wider political environment on an ongoing basis.|