Corporate Governance

The Board is committed to maintaining high standards of corporate governance and complies with the provisions of the Quoted Companies Alliance Corporate Governance Code for small and mid-size quoted companies (“QCA code”).

While building a strong governance framework we also try to ensure that we take a proportionate approach and that our processes remain fit for purpose as well as embedded within the culture of our organisation. We continue to evolve our approach and make ongoing improvements as part of building a successful and sustainable company.

The Board

The Board comprises of a non-executive Chairman, one non-executive director and two executive directors.

Board Members

Board Member Board Title Audit Committee Title Remuneration Committee Title
Andrew Suckling Non-Executive Chairman Member Member
Adrian Fairbourn Non-Executive Director Chairman Chairman
Kiran Morzaria Chief Executive Officer
Donald Strang Finance Director

Learn more about the board members

The Board is responsible for formulating, reviewing and approving the Company’s strategy, financial activities and operating performance. Day-to-day management is devolved to the executive directors, who are charged with consulting the Board on all significant financial and operational matters. The Board retains ultimate accountability for governance and is responsible for monitoring the activities of the executive team.

The roles of Chairman and Chief Executive Officer are split in accordance with best practice. The Chairman has the responsibility of ensuring that the Board discharges its responsibilities. The Chairman is responsible for the leadership and effective working of the Board, for setting the Board agenda, and ensuring that Directors receive accurate, timely and clear information. No one individual has unfettered powers of decision.

The two Executive Directors are comprised of a Chief Executive Officer (“CEO”) and Finance Director. The CEO has the overall responsibility for creating, planning, implementing, and integrating the strategic direction of the Company. This includes responsibility for all components and departments of a business. The CEO to ensures that the organisation’s leadership maintains constant awareness of both the external and internal competitive landscape, opportunities for expansion, customer base, markets, new industry developments and standards.

The non-executive directors are not considered independent under the Financial Reporting Council’s Corporate Governance Code (April 2016)  (“FRC Code”) as they both have options in the Company. However, the board considers that both non-executive are independent of management under all other measures and is able to exercise independence of judgement.

The Committees

Audit Committee

The audit committee consists of two non-executive members of the board and meet at least twice a year.

The principal duties and responsibilities of the Audit Committee include:

  • Overseeing the Group’s financial reporting disclosure process; this includes the choice of appropriate accounting policies
  • Monitor the Group’s internal financial controls and assess their adequacy
  • Review key estimates, judgements and assumptions applied by management in preparing published financial statements
  • Assess annually the auditor’s independence and objectivity
  • Make recommendations in relation to the appointment, re-appointment and removal of the company’s external auditor

Remuneration committee

The remuneration committee consists of two non-executive members of the board and meet at least once a year.

The principal duties and responsibilities of the Remuneration Committee include:

  • Setting the remuneration policy for all Executive Directors
  • Recommending and monitoring the level and structure of remuneration for senior management
  • Approving the design of, and determining targets for, performance related pay schemes operated by the company and approve the total annual payments made under such schemes
  • Reviewing the design of all share incentive plans for approval by the board and shareholders
  • None of the Committee members have any personal financial interest (other than as shareholders and option holders), conflicts of interest arising from cross-directorships or day-to-day involvement in the running of the business. No director plays a part in any financial decision about his or her own remuneration.

Principle and Approach of the Board

Cadence is committed to achieve and maintain high standards of governance. As such, the Board has chosen to adopt the Quoted Companies Alliance Corporate Governance Code for Small and Mid-Size Quoted Companies 2018 (“the QCA Code”). Detailed below is how the Board applies the 10 principles of Corporate Governance, which form part of the QCA code.

Principle Application Compliance
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.

Cadence is a unique early investment strategy & development firm, within the mineral resource sector. We identify undervalued assets, with irreplaceable strategic advantages. We invest in them and help turn them into powerhouses. Lithium and other technology minerals must get to market in order to achieve the global green revolution. We uncover new ways and places to extract and process these minerals, so that burgeoning demand is met; and our tomorrow is better.

A more detailed description of its Strategy and Business Model is available on page 2 of the Annual Report and Accounts for the year ended 31 December 2017 HERE and on the About Page HERE on this website.

Please refer to page 10 of the Annual Report and Accounts for the year ended 31 December 2017 HERE and the Corporate Governance section of the website HERE for further details on the principal risks and uncertainties which the Company faces.

It seeks to share this vision and details of the implementation of its strategy through internal dialogue with employees as well as external communications by way of public announcements and dissemination of information through this website and the annual report and accounts

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.

 

The Board is committed to maintaining an open dialogue with shareholders. Communication with shareholders and is coordinated by the CEO.

Throughout the year, the Board maintains a regular dialogue with investors, providing them with such information on the Company’s progress as is permitted within the guidelines of the AIM rules, MAR and requirements of the relevant legislation. We also use these communications to obtain feedback from shareholders and to assess the effectiveness of our communications. Based on this feedback the Board has determined that this engagement has been, to date, successful.

The Board believes that the Annual Report and Accounts, and the Interim Report published at the half-year which can be found HERE, play an important part in presenting all shareholders with an assessment of the Group’s position and prospects. All reports and press releases are published under the “Investors” tab of the Group’s website.

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.

The Board recognises its prime responsibility under UK corporate law is to promote the success of the Company for the benefit of its members as a whole.

The Board also understands that it has a responsibility towards employees, partners, customers, suppliers and to the community and environment it operates in as a whole.

Communication with and feedback from these various groups is achieved in a variety of ways. The executive directors hold investor roadshows once a year and quarterly webcast, at which feedback from shareholders is sought.

Regular dialogue is maintained with employees through monthly updates and quarterly briefings given by the executive directors.

The nature of the Cadence’s business as an investment company means that although it has no direct effect on the working environments and communities of the companies it invests in, it nonetheless liaises with the management of its investee companies to understand their approach to stakeholder engagement and their policies, which will form part of its investment criteria.

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 Board has an established Audit Committee, a summary of it roles a responsibilities is available on the corporate governance webpage HERE which is set out above.

The Committee is specifically charged with ensuring that Cadence as a whole has the appropriate policies and processes in place to identify the risks which the Company is exposed to and to proactively mitigate those risks as appropriate.

The Company maintains a register of risks and publishes an overview of significant risks and uncertainties in its Annual Report.

Please refer to page 10 of the Annual Report and Accounts for the year ended 31 December 2017 HERE  for further details on the principal risks and uncertainties which the Company faces.

The Company receives regular feedback from its external auditors on the state of its internal controls. The Board maintains a register of risks and publishes an annual summary of the significant risks and uncertainties in the Annual Report.

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 Board is comprised of a non-executive Chairman a non-executive director and two executive directors.

The CEO is engaged to work a minimum of a 39 hour week and is an employee of the Company. The Finance Directors is employed part-time for a minimum of 28 hours a week. The board deemed that given the stage and development of the Company, it would be more cost efficient to employee a full-time accountant which along with the finance director ensure that Company’s financial systems are robust. compliant and support current activities and future growth.

The service agreements of the non-executive directors anticipate that the non-executive Chairman should spend 3 working days per month and the non-executive director 2 working days per month. All directors dedicate such time as required to effectively perform their roles.

The roles of the Chairman and CEO are clearly separated. The directors ensure the skills required to undertake their roles are kept current through training and consultation with subject matter experts as required.

The CEO is responsible for the operational management of the business of Cadence and for the implementation of strategy and policies as agreed by the Board. The non-executive Chairman is responsible for the leadership and effective working of the Board, for setting the Board agenda, and ensuring that Directors receive accurate, timely and clear information.

The non-executive directors are not considered independent under the FRC Code as they hold options in the Company. However, the board considers that the non-executive directors are independent of management under all other measures and are able to exercise independence of judgement. Whilst conflicts of interest are fully disclosed and understood, as appropriate non-executive directors exercise independence of judgement. No director is involved in discussions or decisions where he has a conflict of interest.

The Board is supported by an Audit Committee and a Remuneration Committee.

Cadence has committed that the Board should hold full board meetings at least 4 times each year. The attendance of Board members for meetings during the current financial year is as follows:

·         Andrew Suckling 3 of 3

·         Adrian Fairbourn 3 of 3

·         Kiran Morzaria 3 of 3

·         Donald Strang 3 of 3

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.

Directors who have been appointed to the Company have been chosen because of the skills and experience they offer. The Board continually strives to ensure that it has the right balance of knowledge, skills, experience and contacts across the sectors in which it operates. This is evaluated in line with Cadence’s business model as it changes.

 It is of primary importance that the Board’s knowledge is kept to up to date in a rapidly changing mining and metals marketplace. This is achieved by maintaining a broad network of contacts across the industry and ensuring regular dialogue is held and feedback obtained by both the executive and non-executive directors as appropriate.

As necessary directors receive externally provided refresher and update training specific to their individual roles.

The Company Secretary advises the Board members on their legal and corporate responsibilities and matters of corporate governance.

Biographical details of each of the Directors are given on the ‘Who We Are’ page of this website HERE. Going forward the Directors biographical details will be included in the Annual Report and Accounts.

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.

 

On the 28 September 2018, Cadence adopted the QCA Code. Prior to this point given the nature and the development of the company it did not set Key Performance Indicators.

The Company now measures its performance, and therefore inherently the performance of the Board as a unit, against Key Performance Indicators. The primary KPI is are absolute equity return on investments. Detail will be disclosed in the Annual Report Accounts for 2019, to be published by the end of June 2019.

The performance of the executive directors is monitored and regularly reviewed by the non-executive directors. Such review considers both the KPIs outlined above and measures such as an annual staff satisfaction survey. In 2019, the Board will introduce qualitative performance measurements for the executive directors to ensure that the right degree of focus is applied to the strategic direction as well as the current financial performance of the business.

The Board periodically considers the need to refresh its membership.

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.

Cadence has a strong ethical culture, which is promoted by the actions of the board and executive team.

These include the following key policies which govern its ethical culture.

·         Equal opportunities policy

·         Dignity at work policy

·         Code of conduct

·         Whistleblowing policy

·         Health and safety policy

·         Email and internet policy

·         Social media policy

The Group has an anti-bribery policy and has implemented adequate procedures described by the Bribery Act 2010. The Group reports on its compliance to the board on an annual basis.

The Group has undertaken a review of its requirements under the General Data Protection Regulation, implementing appropriate policies, procedures and training to ensure it is compliant.

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.

Details of the Company’s corporate governance arrangements are provided within this Corporate Governance section of this website. The Board considers the appropriateness of these arrangements against the size and complexity of the Company as it evolves over time.

The Chairman leads the Board and is responsible for ensuring its effectiveness in all aspects of its role. The Chairman promotes a culture of openness and debate, in particular by ensuring the non-executive directors provide constructive challenge to the executive directors.

The matters reserved for the board are:

·         Definition of the strategic goals for the Company, sets corporate objectives to enable the goals to be met, and measures performance against those objectives;

·         Ensuring that the necessary financial and human resources are in place to both meet its obligations to all stakeholders and to provide a platform for profitable growth;

·         Recommending any interim and final dividends;

·         Approving all mergers and acquisitions and all capital expenditure greater than £100,000;

·         Receiving recommendations from the Audit Committee in relation to the reporting requirements and the appropriate accounting policies for the Company, the appointment of auditors and their remuneration, and the identification and management of risk;

·         Receives recommendations from the Appointments Committee concerning the appointment of executive directors, and from the Remuneration Committee concerning the remuneration of the executive directors;

·         Determines the fees paid to the non-executive directors.

The CEO has the overall responsibility for creating, planning, implementing, and integrating the strategic direction of the Company. This includes responsibility for all components and departments of a business. The CEO to ensures that the organisation’s leadership maintains constant awareness of both the external and internal competitive landscape, opportunities for expansion, customer base, markets, new industry developments and standards.

The Finance Director works alongside the CEO and has overall control and responsibility for all financial aspects of company strategy. The Finance Director takes overall responsibility of the Company’s accounting function and ensures that Company’s financial systems are robust, compliant and support current activities and future growth. The Finance Director will coordinate corporate finance and manage company policies regarding capital requirements, debt, taxation, equity and acquisitions as appropriate.

The Board is supported by two committees being the Audit Committee and Remuneration Committee. The Audit Committee advises the Board on the reporting requirements and the appropriate accounting policies for the Company, the appointment of auditors and their remuneration, and the identification and management of risk. The Remuneration Committee advises the Board on all matters pertaining to the remuneration of the executive directors;

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 structures 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 significant queries received.

The “Investors” tab of this website section of this website contains all required regulatory information together with other information which shareholders may find useful.

The AGM is an important forum for shareholder engagement, and the directors are always available immediately after the AGM to listen to the views of any shareholders in attendance and to provide them with an update on the business.

All votes at the most recent AGM held on 28 August 2018 were passed. The proxy votes were in excess of 85% in favour of all resolutions.

Currently there is no Remuneration or Audit Committee report provided in the Annual report but the Board will consider the provision of this in the next Annual report together with other information which shareholders may find useful.

 

Internal Controls

The Directors acknowledge their responsibility for the Group’s systems of internal controls and for reviewing their effectiveness. These internal controls are designed to safeguard the assets of the Company and to ensure the reliability of financial information for both internal use and external publication. While they are aware that no system can provide absolute assurance against material misstatement or loss, in light of increased activity and further development of the Company, continuing reviews of internal controls will be undertaken to ensure that they are adequate and effective.

Risk Management

The Board considers risk assessment to be important in achieving its strategic objectives. There is a process of evaluation of performance targets through regular reviews by Senior Management to forecasts. Project milestones and timelines are reviewed regularly.

Business Risk

The Board regularly evaluates and reviews any business risks when reviewing project timelines. The types of risks reviewed include:

  • regulatory and compliance obligations
  • occupational health, safety and environmental requirements
  • legal risks relating to contracts, licences and agreements
  • insurance risks
  • political risks where appropriate.

Insurance

The Group maintains insurance in respect of its Directors and Officers against liabilities in relation to the Company.

Treasury Policy

The Group finances its operations through equity and holds its cash as a liquid resource to fund the obligations of the Group. Decisions regarding the management of these assets are approved by the Board.

Securities Trading

The Board has adopted a Share Dealing Code that applies to Directors, Senior Management and any employee who is in possession of ‘inside information’. All such persons are prohibited from trading in the Company’s securities if they are in possession of ‘inside information’. Subject to this condition and trading prohibitions applying to certain periods, trading can occur provided the individual has received the appropriate prescribed clearance.