Chairman’s Corporate Governance Statement
As Chairman of the board of Directors of Unbound Group (“Unbound”, ‘’Company’’ or “Group”), it is my responsibility to ensure that Unbound has both sound corporate governance and an effective board of directors (“Board”). As Chairman, my responsibilities include leading the Board effectively, overseeing the Group’s corporate governance model, and ensuring that good information flows freely between Executive Directors and Non-Executive Directors in a timely manner.
The Board is collectively responsible for the success of the Company. Its role is to provide leadership within a framework of controls that enable risk to be assessed and managed. The Board sets the Company’s strategic aims and ensures that the necessary resources are in place to enable the Company’s objectives to be met.
Corporate governance is an important part of that role, reducing risk and adding value to our business. With effect from its admission to AIM on 1 February 2022 (‘’Admission’’), the Board has adopted the Quoted Companies Alliance Corporate Governance Code (the “QCA Code”) as the basis of the Group’s governance framework. An overview of Unbound’s compliance with the QCA Code principles as of the date of this statement is provided below.
The Board is of the opinion that the Group complies with the QCA Code so far as practicable having regard to size, nature and current stage of the development of the Group. Application of the QCA Code supports the Group’s medium to long-term success whilst simultaneously managing risks and provides an underlying framework of commitment and transparent communications with stakeholders. Prior to the Admission, the Company followed the AIC Code of Corporate Governance (the “AIC Code”). Further details on the Company’s compliance with the AIC Code are set out in the Group’s Annual Report and Financial Statements for the 16 months to 31 January 2022 (‘’2022 ARA’’) available on the Company’s website (https://unboundgroupplc.com/financial-reports/).
1 – Establish a strategy and business model which promote long-term value for shareholders
The Group’s strategy and business model are designed to promote long-term value for the Company’s shareholders. Achieved through developing Unbound from the solid foundation of the Hotter Business, its current main business, to grow value through its curated multi-brand retail platform supporting the active lifestyles of the over 55 age demographic with a range of products and services. The Group’s expanded offering beyond footwear will feature a broad range of active lifestyle products and services, with third-party complementary brands featuring alongside new Unbound brands, as well as Hotter.
The Board believe the business is well-positioned for future growth without significant capital investment and the Company has developed a strategic growth plan that includes focusing on a range of short- and longer-term objectives and opportunities, details of which can be found in Part 1 of the Admission Document (https://unboundgroupplc.com/admission-information-company-documents/). A more detailed description of the Group’s strategy and business model and key strengths and challenges is set out in the Strategic Report in the Company’s 2022 ARA.
2 – Seek to Understand and Meet Shareholder Needs and Expectations
The Group places great importance on communication with its shareholders. Continued shareholder support and engagement are critical to the business and the delivery of its long-term strategy. The Board’s investment realisation strategy was approved by shareholders in October 2018, with over 99% of shareholders voting in favour. The Board subsequently consulted with major shareholders over key strategies in implementing the overall divestment strategy, in particular over the balance between timing and quantum in respect of realisations and the prioritisation of cash vs asset realisations.
The Board is committed to maintaining open channels of communication and to engaging with shareholders in a manner that they find meaningful, in order to gain an understanding of their views. All shareholders are invited to attend the annual general meeting (“AGM”) each year and have the opportunity to put questions to the Board. In addition to the AGM, the CEO and CFO meet regularly with investors to provide them with updates on the Group’s business, and the Executive Directors give regular briefings to analysts who cover the sector.
The Group endeavours to provide the fullest information on the Company to its shareholders, with clear and transparent information on the financial position and strategy of the Group. Shareholders can keep themselves informed about the Company through its website and in particular through publications including the Annual and Half-Year Reports.
Information on the latest news about the Group including all announcements and regulatory news is made available here: www.unboundgroupplc.com/regulatory-news/. Unbound is also committed to making analyst research available for shareholders free of charge, accessible here: www.unboundgroupplc.com/research/.
The Board is always happy to respond to shareholder enquiries and to receive feedback from key stakeholders. The Company Secretary, ONE Advisory Limited (firstname.lastname@example.org) is the first point of contact for such matters.
3 – Take into account wider stakeholder and social responsibilities and their implications for long-term success
The Board seeks to understand the needs and priorities of the Group’s stakeholders and these are taken into account during all its discussions and as part of its decision making.
The Board considers the interests of shareholders and all relevant stakeholders in line with section 172 of the Companies Act 2006. Engaging effectively with the Group’s stakeholders, in particular, its people, customers and suppliers, is core to the Group’s strategy and is considered to be a driver of long-term shareholder value. The Group is in regular dialogue with all its key stakeholders, having appropriate forums and channels to allow feedback to be given on a timely basis.
All employees in the Group are valued members of the team, and the Company strives to put in place measures to keep and motivate them. Regardless of ethnicity, gender, gender identity or reassignment, age, disability, religion, or sexual orientation, the Group provides equal opportunities. The Board understands the importance of ensuring that the team is properly motivated and that their interests are aligned with the Group’s.
The mechanisms for engaging with stakeholders are kept under review by the Directors and will be discussed on a regular basis at Board meetings to ensure that they remain effective. Examples of the Board’s principal decisions during the year and how the Board fulfilled its duties under Section 172 are set in the 2022 ARA.
The Group is committed to achieving high standards throughout all its undertakings. The way in which the Group works and operates in all aspects of its business is a key factor in maintaining its reputation as a responsible business and maintaining the high standards the Group represents. As such, the Group has established an Executive ESG Committee. The main purpose of the Committee is to represent the Board in defining the Group’s strategy relating to ESG matters and in reviewing the practices and initiatives of the Group relating to ESG matters ensuring that they remain effective and up to date. Further details can be found in part 1 of the Admission Document.
4 – Embed effective risk engagement, considering both opportunities and threats, throughout the organisation
The Board maintains responsibility for the Company’s risk management and internal control systems. It has established an Audit and Risk Committee to oversee risk management, monitoring and reporting. The Audit and Risk Committee is also supported by the work of the executive management team. The Audit and Risk Committee Terms of Reference are available on the Company’s website here: https://unboundgroupplc.com/admission-information-company-documents/.
Internal financial control systems were reviewed, designed and strengthened in the lead up to Admission to meet the particular needs of the Group and the risks to which it is exposed. Such internal financial controls include strategic planning, approval of annual budgets and intra year re-forecasts, regular monitoring of performance against budget (including full investigation of significant variances), detailed forecasting of working capital requirements, control of capital expenditure and ensuring proper accounting records are maintained.
The Group operates and maintains a risk management framework and risk register to assist the business and the Board in ensuring that risk is appropriately identified, managed and mitigated. Details of the identified principal risks and uncertainties of the Group can be found in the 2022 ARA. Following the transition of the Company to Unbound Group and the adoption of its new strategy, the Audit and Risk Committee reviews the Group’s Risk Register on a regular basis. Risks are assessed at a gross and managed level and appetite in relation is specific risks is assessed in relation to the strategy and situation of the Group.
The Board regularly reviews the principal risks faced by the Company. In particular, consideration is given to any changes in the nature, likelihood and impact of the principal risks along with the Company’s ability to respond to changes in its business and external environment. Mitigating actions and controls are in place to manage the Company’s exposure to risk.
An internal audit function is not yet considered necessary as the day-to-day controls exercised by the Executive Directors and senior management team are considered sufficient for the Group’s stage of development. However, the Board will continue to monitor the need for an internal audit function.
5 – Maintain the board as a well-functioning, balanced team led by the chair
The Board considers its overall size and current composition to be suitable and have an appropriate balance of sector, financial and public markets skills and experience as well as an appropriate balance of personal qualities and capabilities. A Nomination Committee has been established to review the structure, size and composition of the Board based upon the skills, knowledge and experience required to ensure that the Board operates effectively.
The Board consists of the Non-Executive Chair, the Chief Executive Officer, the Chief Financial Officer and five Non-Executive Directors, four of whom are considered independent. The biographical details of the Board members can be found both in the Group’s About Us section (https://unboundgroupplc.com/board-of-directors/) and in the 2022 ARA.
The Board has determined that each of the Non-Executive Directors of the Group are independent in character and judgment while four Non-Executive Directors satisfy the independence criteria under the QCA Corporate Governance Code – being the recognised corporate governance code adopted by the Company. Of the non-executive Directors, neither the Chair, Neil Johnson, nor Gavin Manson are considered independent, given their previous roles with the Company. The remaining four Non-Executive Directors (being 50 per cent. of the Board) are all considered independent, with Paul Goodson acting as the Senior Independent Director. For so long as the Chair is not considered independent, the Board has agreed that, in the event of an equality of board votes, the independent Directors will have the authority to appoint one of themselves as the chair of the relevant meeting for the purposes of exercising any casting vote. The Board believes that this structure is appropriate given the balance of independent Non-Executive Directors and the knowledge and experience of the non-independent Non-Executive Directors.
The Non-Executive Directors have undertaken to dedicate sufficient time to the Company to discharge their duties effectively.
The Board intends to meet formally at least six times throughout the year in order to, amongst other things, review performance, approve financial statements, and discuss strategy and key commercial matters. There is a formal schedule of Matters Reserved for decision by the Board in place and this is available to view on the Company’s website here: https://unboundgroupplc.com/admission-information-company-documents/.
The role of the Chair and CEO are clearly defined and a description of the split in responsibilities can also be viewed on the website above. The Board is supported by an Audit and Risk Committee, a Remuneration Committee, a Nomination Committee and a Disclosure Committee, further details of which are set out on the Group’s website, including the Committees’ Terms of Reference. The Board, Board Committees and Chair are supported by a professional Company Secretary.
The Group has effective procedures in place to monitor and deal with conflicts of interest reviewed at each Board meeting. The Board is aware of the other commitments and interests of its Directors, and changes to these commitments and interests are reported to and, where appropriate, agreed with the rest of the Board.
6 – Ensure that between them the directors have the necessary up-to-date experience, skills and capabilities
The Company went through an extensive recruitment process to establish the Board in the lead up to Admission and the Board is satisfied that it has the appropriate balance of skills and experience, independence and knowledge of the Group to enable it to provide effective strategic leadership and proper governance of the Group.
The Board considers that each of the Directors has the experience and knowledge to constructively challenge the Group’s strategy and to provide the necessary guidance, oversight and advice to enable the Board to operate effectively. As mentioned under principle 5, the biographical details of the Board members can be found both on the Group’s About Us section (https://unboundgroupplc.com/board-of-directors/) and in the 2022 ARA. The Non-Executive Directors bring key skills, experience and alternative viewpoints to the Board through their varied professional and personal experiences including listed company experience, financial acumen, HR expertise, supply chain, operations management, online retail, marketing and brand management.
All Directors are encouraged to continue to develop their skills and keep up to date with market developments and corporate governance matters. The Executive Directors remain current with industry news and developments as a matter of course, with input from third-party advisers where appropriate. The CFO and Audit and Risk Committee Chair are qualified accountants and maintain their professional standing through CPD compliance, attendance at relevant training and updating events.
Training on AIM Rules and associated regulatory issues is provided by the Company’s nomad on an annual basis. Directors are also able to take independent professional advice, if necessary, at the Company’s expense. The Nomination Committee is responsible for reviewing the skills and capabilities of the Board to determine any areas which may benefit from additional expertise. Relevant regulatory and compliance updates are provided at Board and Committee meetings by the Company Secretary.
7 – Evaluate board performance based on clear and relevant objectives, seeking continuous improvement
As the Board was established at Admission, no evaluation exercise has been undertaken at this point. The Company expects to conduct an evaluation exercise during the current financial year and in the meantime, the Chair will be responsible for gathering feedback and identifying any improvements which may be required or desirable.
8 – Promote a corporate culture that is based on ethical values and behaviours
The Board seeks to establish and maintain a corporate culture characterised by fairness in its treatment of employees and other stakeholders. It is the Board’s belief that this contributes to the greater success of the Group, as well as being an appropriate way to conduct relations between parties engaged in a common purpose. The Chairman encourages open debate to foster a supportive and cooperative approach for all participants. Strategic decisions are discussed openly and constructively. The Board aims to be open and transparent with shareholders and other stakeholders.
The Board recognises that its decisions on strategy and risk will have an impact on the Company’s overall corporate culture and, as a result, on its performance. The Board recognises that the tone and culture it establishes will have a significant impact on all elements of the Company as a whole, as well as how personnel behave. The Board’s corporate governance structures are intended to guarantee that the Company provides long-term value to its stakeholders and that stakeholders have the opportunity to voice their opinions and expectations for the Company in a way that supports open communication with the Board.
The Company’s values and culture are critical to its strategy and are core to promoting long-term shareholder value. More information on the Company’s corporate values, ESG approach and culture generally are set out in the 2022 ARA. The Group has also implemented, inter alia, the following policies to help ensure appropriate values and behaviours:
– an Anti-Bribery and Corruption Policy
– a Whistleblowing Policy
– a Share Dealing Policy
– various HR policies including anti-discrimination and anti-bullying policies.
The Company has focused on establishing a strong culture and has long promoted ethical values and behaviours, which the Directors believe has helped to attract and retain quality, engaged personnel dedicated to delivering high-quality customer service, thereby contributing towards the impressive levels of customer satisfaction. The Group aims to further increase employee engagement, having introduced two employee share schemes (one of which is an all-employee scheme) in connection with the Admission.
9 – Maintain governance structures and processes that are fit for purpose and support good decision-making by the board
Whilst the Board is collectively responsible for defining corporate governance arrangements, the Chair is ultimately responsible for corporate governance, supported by the senior independent director (‘’SID’’). The Board considers that the Group’s governance structures are appropriate for the size, complexity and risk profile of the Company and that the QCA Corporate Governance Code is the appropriate recognised corporate governance code for the Company to adopt. This will be reviewed by the Board periodically to ensure governance arrangements continue to be appropriate as the Company changes over time.
The Chair and Chief Executive Officer have clearly defined roles and responsibilities, with the role of the Chair being to lead the Board and ensure it is operating effectively in setting and monitoring the strategic direction of the Company. The role of the Chief Executive Officer is to propose strategic direction to the Board and to execute the approved strategy by leading the executive team in managing the Company’s business. A more detailed description of the Chairman’s, SID, CEO and CFO role is set out in the Corporate Governance Report in the Company’s 2022 ARA.
The Non-Executive Directors are responsible for constructively challenging management’s proposals and assuring themselves that business risk management and internal controls are sound.
The Board meets formally at least six times throughout the year and the Board and its Committees receive appropriate and timely information prior to each meeting. The Company Secretary has worked with the Board and Committees to develop annual agenda cycles to ensure appropriate time and focus is dedicated to relevant matters.
Meetings are minuted by the Company Secretary and any specific actions arising are documented, with responsibility assigned, and followed up at subsequent meetings until the matter is concluded.
The formal schedule of Matters Reserved for the Board includes matters relating to:
- strategic aims and objectives and approval of budgets;
- structure and share capital;
- financial reporting and controls and dividend policy;
- maintenance of a sound system of internal controls and risk management;
- banking and financing arrangements;
- significant contracts;
- communication with shareholders;
- delegation of authority; and
- changes to Board structure and composition.
The schedule of Matters Reserved for decision by the Board, as well as the Committees’ Terms of Reference and the split of responsibilities between the Chair and CEO, are available to view on the Company’s website here: https://unboundgroupplc.com/admission-information-company-documents/.
The Board is supported by an Audit and Risk Committee, a Remuneration Committee, a Nomination Committee and a Disclosure Committee. The Board, Board Committees and Chair are supported by a professional Company Secretary, ONE Advisory Limited.
Audit And Risk Committee
The Audit and Risk Committee is chaired by Gavin Manson who is considered independent, and its other members are Paul Goodson, Baroness Kate Rock and Suki Thompson. All members of the Audit and Risk Committee have recent and relevant financial experience.
The Audit and Risk Committee will meet not less than two times a year, at appropriate intervals in the financial reporting and audit cycle and otherwise as required.
The Audit and Risk Committee assists the Board in discharging its responsibilities with regard to financial reporting, external and internal audits, the internal controls environment, including reviewing and monitoring the integrity of the Group’s annual and interim financial statements, reviewing and monitoring the extent of the non-audit work undertaken by the external auditor, overseeing the Group’s relationship with its external auditor, reviewing the effectiveness of the external audit process and reviewing the effectiveness of the Group’s internal control review function. The ultimate responsibility for reviewing and approving the annual report and accounts and the half-yearly reports remains with the Board.
The Audit and Risk Committee also advises the Board on the appointment of the external auditor and its remuneration for both audit and non-audit work, as well as discussing the nature, scope and results of the audit with the external auditor.
The Audit and Risk Committee takes appropriate steps to ensure that the auditors are independent of the Company and obtains written confirmation from the auditors that they comply with guidelines on independence issued by the relevant accountancy and auditing bodies.
The Audit and Risk Committee continually assesses and monitors the needs for an internal audit function in the Company.
Appointments to the Audit and Risk Committee are made by the Board. Appointments to the Audit and Risk Committee are for a period of up to three years and may be extended for further two periods of up to three years each, provided the Director whose appointment is being considered still meets the criteria for membership.
The Audit and Risk Committee gives due consideration to laws and regulations, the provisions of the QCA Corporate Governance Code and the requirements of the AIM Rules.
The Remuneration Committee is chaired by Paul Goodson and its other members are Baroness Kate Rock and Suki Thompson. The Remuneration Committee aim to meet at least annually.
The Remuneration Committee assists the Board in determining its responsibilities in relation to remuneration, including making recommendations to the Board on the Company’s policy on executive remuneration, setting the overarching principles, parameters and governance framework of the Group’s remuneration policy and determining the individual remuneration and benefits package of each of the Directors. The Remuneration Committee also ensures compliance with the QCA Corporate Governance Code in relation to remuneration wherever possible.
Appointments to the Remuneration Committee are made by the Board. Appointments to the Remuneration Committee are made for a period of up to three years, which may be extended for further two three-year periods, provided the Director whose appointment is being considered still meets the criteria for membership.
The Nomination Committee is chaired by Neil Johnson and its other members are Kate Rock and Suki Thompson. The Committee considers appointments to the Board and is responsible for nominating candidates to fill Board vacancies and for making recommendations on Board composition.
The members of the Nomination Committee shall be appointed by the Board. The Committee shall have at least three members, the majority of whom are independent Non-Executive Directors. The Board shall appoint the chair of the Committee who should be either the chair of the Company (provided they are independent) or an independent Non-Executive Director. The chair of the Company shall not chair the Committee when it is dealing with the matter of succession to the chair.
The Disclosure Committee manages the disclosure of insider and price-sensitive information and takes reasonable steps to establish and maintain adequate procedures in that respect.
The members of the Disclosure Committee shall be appointed by the Board. The Committee shall have at least three members, which shall comprise at least one independent Non-Executive Director and one executive director.
10 – Communicate how the company is governed and is performing by maintaining a dialogue with shareholders and other relevant stakeholders.
The Board is committed to maintaining effective communication and having constructive dialogue with its shareholders and other relevant stakeholders. The Group’s website is updated on a regular basis and users can view developments in the Group’s business by way of corporate presentations as well as the financial statements as they become available. As noted under Principle 2, the Executive Directors are in regular communication with shareholders to share information regarding the Group and to understand the views of shareholders which are communicated to the Board by the Executive Directors as appropriate.
The above statement was last updated on 28 April 2022.