Investor Relations

Corporate Governance

CHAIRMAN’S CORPORATE GOVERNANCE STATEMENT

All members of the board believe strongly in the value and importance of good corporate governance and in our accountability to all of Samuel Heath & Sons plc (“Samuel Heath” or the “Company”) stakeholders including the shareholders, staff, advisers, regulators and other suppliers. Robust corporate governance improves performance and mitigates risk and therefore is an important factor in achieving the medium to long term success of the Company. In the statement which follows, we explain our approach to governance, and how the board and its committees operate.

AIM companies are required to apply a recognised corporate governance code. Samuel Heath has chosen to adhere to the Quoted Company 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. The QCA has stated what it considers to be appropriate arrangements for growing companies and asks companies to provide an explanation about how they are meeting the principles through the prescribed 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.

The Chair has the overall responsibility for implementing an appropriate corporate governance regime at the Company.

GOVERNANCE STRUCTURES

The Company has both internal and external infrastructure to support the business:

Internal

• Board committees to support independence (Audit and Remuneration).
• Quality processes such as the BS EN ISO 9001:2015 Quality Management System.

External

• Independent Audit.
• Trade body membership. Actively participates in membership of The Door Hardware Federation (DHF), The British Woodworking Federation (BWF) and The Guild of Architectural Ironmongers (GAI).
• Industry governance. Attend Management and Technical committees to ensure the Company 'has a voice' in the development of best practice and are able to influence any applicable legislation.
• AIM regulation.

The matters reserved for the board are:

• Setting long-term objectives and commercial strategy;
• Approving annual operating and capital expenditure budgets;
• Changing the share capital or corporate structure of the Group;
• Approving half year and full year results and reports;
• Approving dividend policy and the declaration of dividends;
• Approving major investments, disposals, capital projects or contracts;
• Approving resolutions to be put to general meetings of shareholders and the associated documents or circulars; and
• Approving changes to the board structure.

BOARD COMMUNICATION

The board has a schedule of regular business, financial and operational matters, and each board Committee has compiled a schedule of work to ensure that all areas for which the board has responsibility are addressed and reviewed during the course of the year. The Chair is responsible for ensuring that, to inform decision-making, Directors receive accurate, sufficient and timely information. The Company Secretary compiles the board and Committee papers which are circulated to Directors prior to meetings. The Company Secretary provides minutes of each meeting and every Director is aware of the right to have any concerns minuted and to seek independent advice at the Group’s expense where appropriate.

The board believes that its blend of relevant experience, skills and personal qualities and capabilities is sufficient to enable it to successfully execute its strategy. Directors attend seminars and other regulatory and trade events to ensure that their knowledge remains current.

Communication to and from stakeholders is encapsulated within the department processes and fed up through management to the Board.

Shareholders are invited and welcomed to the AGM held on company premises, to be able to meet with the Board.

AUDIT COMMITTEE

The Audit Committee consists of Ross Andrews (Chair), Anthony Buttanshaw and Martin Green. The committee meets twice a year and the external auditor and financial director are invited to attend these meetings. Consideration is given to the auditor's pre- and post-audit reports and these provide opportunities to review the accounting policies, internal control and the financial information contained in both the annual and interim reports. The committee monitors the integrity of financial statements, oversees risk management and control and monitors the effectiveness of the internal audit function. It also reviews accounting and treasury policies. The committee also meets with the auditors with no executives present.

REMUNERATION COMMITTEE

The remit of the Remuneration Committee is to determine the framework, policy and level of remuneration, and to set the remuneration of executive directors and senior managers. The committee approves annual salary and bonuses where appropriate and will consult outside of the company for relevant benchmark data from time to time. The Remuneration Committee consists of Martin Green (Chair), Anthony Buttanshaw and Ross Andrews. The Remuneration of Non-Executive Directors is a matter for the Board. No Director or officer is allowed to participate in any decisions as to their own remuneration.

NOMINATION COMMITTEE

Due to the nature and size of the Company, the Directors have decided that issues concerning the nomination of directors will be dealt with by the Board rather than a Nomination Committee.

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