Corporate Governance

The board is pleased to present its first Corporate Governance Report since the CMO Group IPO. The aim of this report is to set out CMO’s approach to corporate governance, the work of the board, and the board committees since listing.

The board strongly believes that corporate governance is more than just a set of guidelines. It’s a framework that helps to improve long-term success and performance. It also ensures a shared understanding of how decisions are made at CMO for the benefit of our stakeholders.

In line with the requirements of the AIM Rules for Companies, the Group has decided to apply the QCA Corporate Governance Code for Small and Mid-Size Quoted Companies (the “Code”). Applying this code will give details to shareholders, both through this Annual Report and in an annually updated compliance statement available on the Group’s website, on the Group’s compliance with the Code.

The Group also takes steps to apply the principles of the UK Corporate Governance Code, as far as it can be applied practically, given the size of the Group and the nature of its operations.

As chairman, it’s my responsibility to ensure our board acts as a cohesive team and serves the Group as a critical friend of management. I’m delighted with the way the board has come together through the IPO process, and I’m confident it adds real value to the thinking of management. We intend to undertake a review of the board’s effectiveness for the first time since listing in 2022, which will help to further shape the ways in which we work.

We’re of the view that our approach to corporate governance is appropriate for a business of our size and scale. However, we recognise that our corporate governance framework needs to remain responsive to the demands of the business as it continues to mature and grow, in both scale and complexity.

I hope this report is of interest to all our shareholders and other stakeholders.

Ken Ford

Chairman of the Board

During the year ended 31 December 2021, the board has reviewed its compliance with the QCA Code and has reviewed and approved a compliance statement. This sets out how the Group complies with the Code’s ten principles and explains any areas in which the Group’s practice and policies deviate from the Code.  The compliance statement can be viewed here on the CMO website.

This Corporate Governance Report is structured against the ten focal areas of the QCA Code, as set out below. The board is of the view that, through disclosure on this websites and in the Annual Report and Accounts, the Group complies with all applicable provisions of the QCA Code, with the exception of Principle 7 in respect of the evaluation of board performance. This is due to the Group having only been listed as a public limited company in mid-2021.

As set out in the Board and Committee Effectiveness section below, the board intends to implement a formal annual internal Board and Committee evaluation within 12 months of listing.

Principle

• Establish a strategy and a business model which promote long-term value for shareholders. Strategy and Business Model sections (pages 12 to 19).
• Seek to understand and meet shareholder needs and expectations. Our governance structure (page 52), Section 172(1) Report (page 42).
• Take into account wider stakeholder and social responsibilities and their implications for long-term success. Section 172(1) Report (page 42).
• Embed effective risk management, considering both opportunities and threats, throughout the organisation. Internal Controls and Risk Management (page 57). Audit Committee Report (page 58).
• Maintain the board as a well-functioning, balanced team led by the Chair. Our governance structure (page 52).
• Ensure that, between them, directors have the necessary up-to-date experience, skills, and capabilities. Board composition (page 56).
• Evaluate board performance based on clear and relevant objectives for continuous improvement. Board and Committee effectiveness (page 57).
• Promote a corporate culture that’s based on ethical values and behaviours. Purpose, values, and culture (page 55).
• Maintain governance structures and processes that are fit for purpose and support good decision-making by the board. Our governance structure (page 52).
• Communicate how the company is governed and is performing by maintaining a dialogue with shareholders and other relevant stakeholders. Audit Committee Report (page 58), Remuneration Report (page 60) and Section 172(1) Report (page 42).

For more information please refer to the Annual Report for year ending 31 December 2021 which is available here.

The board has adopted a Matters Reserved for the Board document setting out its main responsibilities. This document was last reviewed in July 2021.

CMO sees the board as having the following main roles:

Setting CMO Purpose, Strategy, Values, and Culture

The board sets out the Group’s purpose, and strategy in delivering on that purpose, in the Annual Report for year ending 31 December 2021 on pages 2-47. It believes the Group’s values and culture are key differentiators in allowing us to deliver its strategy. As a Board, we’re responsible for determining its values and corporate culture.

Setting and Oversight of the Execution of Strategy

The board is responsible for setting and overseeing the execution of CMO Group’s strategy within a framework of effective risk management and internal controls.

Oversight of Operations

The board monitor management’s execution of CMO’s strategy and financial performance. While the ultimate focus is on long-term value generation, the Group also needs to deliver on short-term objectives and it looks to make sure management strikes an appropriate balance between the two.

Shareholder and Stakeholder Engagement

The board is  committed to communicating openly with CMO shareholders to ensure its strategy and performance are clearly understood and encourage shareholder participation in face-to-face meetings. Communications are held with them 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 announcements and presentations) is also available to shareholders, investors, and the public on the corporate website.

CMO actively engages with key stakeholders throughout the year to ensure the Board understands the views on some of its most critical decisions and incorporates them into its decision-making process.

For details of who is considered a key stakeholder, and how the Group engage with them, please see the S172(1) Statement on page 42 of the Annual Report for year ended 31 December 2021.

Since the IPO, the board has met on a scheduled basis on 4 occasions, alongside a number of meetings held on an ad-hoc basis to discuss specific events, such as the draft interim results, or potential transactions.   

The board ordinarily meets 10 times per year, with regular briefings between scheduled meetings. The board is of the view that this meeting frequency allows it to fulfil its role in setting and monitoring strategy effectively and to gain sufficient insight into the day-to-day operations of the Group. We’ll consider further ways of ensuring the board is able to continue to effectively engage with shareholders and other key stakeholders.

The board also delegates certain matters to its board committees so that it can operate efficiently and give the right level of attention and consideration to relevant matters. The composition, responsibilities, and activities of each of the Board Committees and the terms of reference of each committee are available on this website.

In the forthcoming priorities for 2022, the board will be looking at:

• Mergers and Acquisitions
• New Superstores
• Technology enablers

Board and committee attendance

The table below sets out the Board and Committee attendance for 2021. Attendance is shown as the number of meetings attended out of the total number of meetings possible for the individual director during the year.

If any directors are unable to attend a meeting, they’re encouraged to communicate their opinions and comments on the matters to be considered to the chairman of the board or the relevant committee chairman.

Ken Ford 

• Board: 4 of 4 (100 %)
• Audit Committee: 1 of 1 (100 %)
• Remuneration Committee: 1 of 1 (100 %)

Dean Murray

• Board: 4 of 4 (100 %)
• Audit Committee: N/A
• Remuneration Committee: N/A

Suzanne Packer

• Board: 4 of 4 (100 %)
• Audit Committee: N/A
• Remuneration Committee: N/A

Jonathan Lamb

• Board: 4 of 4 (100 %)
• Audit Committee: N/A
• Remuneration Committee: N/A

Helen Deeble

• Board: 4 of 4 (100 %)
• Audit Committee: 1 of 1 (100 %)
• Remuneration Committee: 1 of 1 (100 %)

James Excell

• Board: 4 of 4 (100 %)
• Audit Committee: 1 of 1 (100 %)
• Remuneration Committee: N/A

Purpose – Why we do what we do

Values – The qualities we embody

Culture – How we work together

The key strategy is centered around building a sustainable and profitable business that will deliver long-term value to all shareholders.

The board believes CMO’s corporate culture continues to serve as one of its key competitive advantages in delivering on that strategy. Encouragement is given to all employees at all levels of the Group to take responsibility for their work and to actively contribute toward the development and delivery of the Group’s strategy.

Regarding the board’s role, it recognises the importance of setting a tone from the top and has met with a number of staff at various levels of the business. As a board, it wants to ensure that it’s  actively engaged with the ongoing development of CMO corporate culture, and it will be looking to develop several cultural metrics for reporting to the board over the course of 2022.  These metrics will allow it to review the progress we’re making in embedding CMO’s cultural aspirations.

The board’s aim is to promote a culture within the Group of ethical values and behaviours. It also has a number of due diligence processes in place to ensure that suppliers meet Group standards and values. It has internal policies covering a range of ethical behaviours, such as anti-bribery and anti-corruption policies, which serve to promote and preserve the right corporate behaviours.

As part of the CMO induction process, new employees receive training on all corporate policies and the expectations of the Group when it comes to ethical values and behaviours. This is refreshed on a regular basis for all employees.

There’s also an active programme of employee engagement, including Employee Engagement Surveys, quarterly strategic updates, informal weekly Group wide town halls, The CMO Academy training platform, and events organised by the Engagement Committee throughout the year. Such engagement shapes the way in which CMO develops its products and how it delivers its services. There’s also a whistleblowing policy and hotline available for all employees.

The successful delivery of CMO’s strategy depends upon attracting and retaining the right talent. This starts with having a high-quality and diverse board. Balance is an important requirement for the composition of the board, not only in the number of executive and non-executive directors, but also the skill, knowledge, and expertise each director brings.

As at 31 December 2021, the board comprised an independent non-executive chairman, three executive directors, and two non-executive directors, one of whom is deemed independent by the board. A short biography of each of the directors in office at the date of this report can be found here.

The role of the chairman is to run the business of the board, ensuring appropriate strategic focus and direction in the board’s discussions, and to facilitate relationships and engagement with shareholders. The chairman also holds responsibility for ensuring the Group is appropriately governed, and that it embraces the principles of good corporate governance and the values that underpin those principles.

Upon appointment, each director receives a tailored induction to the Company, including meeting with relevant members of staff, advisers, and other key stakeholders. This allows each director to gain further insight into the Group, its strategy, culture, and operations. Directors are also encouraged to identify any development opportunities they feel are necessary to help them undertake their role to the best of their ability.

Ken Ford and Helen Deeble are considered by the board to be independent. The board is of the opinion that both Ken and Helen act in an independent and objective manner and are free from any relationship that could affect their judgement.

Notwithstanding any cross-directorships, the board is satisfied that it has a suitable balance between independence (of both character and judgement) and knowledge of the Group, allowing it to perform its duties and responsibilities effectively.

There are procedures in place to monitor and deal with any conflicts of interest, with current commitments of any directors being disclosed at every board meeting. As such, the board is aware of the other commitments and interests of its directors. Any changes to these commitments and interests are reported to and, where appropriate, agreed with the rest of the board.

Election and re-election of directors

Under the Company’s Articles of Association, directors are required to stand for election at the first AGM after their appointment. All directors will therefore stand for re-election at the forthcoming AGM.

As the 2022 AGM will be the Company’s first AGM since IPO listing, all directors will submit themselves for election by shareholders. The Board considers that, during the year ended 31 December 2021, each director that’s served in 2021 has performed effectively and continues to demonstrate commitment to the role. Therefore, it believes it’s in the best interests of shareholders that each director is elected at the AGM.

Succession planning for both board and senior management positions is remitted to the board. The board has decided at the current time not to constitute a Nomination Committee, but this position will remain under continual review.

The board is considered to be of an appropriate size given the size and scale of the Group, and that the skills, experience, and competencies of its members are appropriate. The board is fully confident that the senior management team possess the right range of capabilities to drive the business forward in 2022 and beyond. A focal area for the board in succession planning in 2022 will be on further developing the talent pipeline within the business to produce the next generation of senior leaders.

It is the current intention of the Board to appoint a further independent non-executive director within 12 months of Admission.

The board continually strives to improve its effectiveness and recognises that an annual Board Performance Evaluation review is an important tool in reaching that goal. The directors are aware of the importance to monitor performance through board evaluations and that feedback leads to improving its effectiveness.

As the Group only listed in July 2021, the board has, to date, not conducted a Performance Evaluation review. However, it remains the intention of the board to undertake this evaluation in 2022 and, once completed, will report the outcomes to shareholders via the compliance statement, available on the website, and through the 2022 Annual Report.

The board anticipates the review will focus on board composition, board dynamics and behaviours, how the board fulfils its remit and responsibilities and suggested areas for the board to focus on to deliver long-term value.

The Group has a comprehensive system of internal controls in place, designed to ensure that risks are mitigated, and the Group’s objectives are attained. The board recognises its responsibility to present a fair, balanced, and understandable assessment of the Group’s position and prospects.

It’s accountable for reviewing and approving the effectiveness of internal controls operated by the Group, including financial, operational and compliance controls, and risk management. The board recognises its responsibility of the Group’s risk management process and system of internal control and oversees the activities of both the Group’s external auditors and risk management function (supported by the Audit Committee).

A review of the Group’s risk management approach is further discussed in the Annual Report for year ending 31 December 2021 which is available here. For further detail see pages 20 to 23.

The Audit Committee is responsible for monitoring the integrity of the Group’s financial statements, reviewing significant financial reporting issues, reviewing the effectiveness of the Group’s internal control and risk management systems, monitoring the need for and if necessary, the effectiveness of the internal audit function and overseeing the relationship with the external auditors including advising on their appointment, agreeing the scope of the audit and reviewing the audit findings.

The Audit Committee also advises the Board on the Group’s overall risk appetite and strategy including, inter alia, regularly reviewing and updating (if appropriate) the risk assessment processes in place, including in relation to remuneration and compliance functions, and assisting in overseeing implementation of the adopted strategy.

The Audit Committee is chaired by Helen Deeble CBE. Its other members are Ken Ford and James Excell. The Committee will meet at least three times a year and otherwise as required. The Audit Committee will also meet regularly with the Group’s external auditors.

The Remuneration Committee is responsible for determining and agreeing with the Board the framework for the remuneration of the Executive Directors and other designated senior executives and, within the terms of the agreed framework, determining the total individual remuneration packages of such persons including, where appropriate, bonuses, incentive payments and share options or other share awards. The remuneration of Non-Executive Directors is a matter for the executive members of the Board and the Chairman. No Director will be involved in any decision as to his or her own remuneration.

The Remuneration Committee is chaired by Helen Deeble CBE. Its other member is Ken Ford. The Remuneration Committee will meet at least twice a year and otherwise as required.

The Disclosure Committee provide support to the Board in relation to compliance with MAR, the Disclosure Guidance and Transparency Rules and AIM Rules and the identification, control and disclosure of “inside information”. The Disclosure Committee is chaired by Ken Ford. Its other members are Dean Murray, Suzanne Packer and Jonathan Lamb. The Disclosure Committee will meet at such times and in such manner as shall be necessary or appropriate.

Given the current size and nature of the Group, the Board has not appointed a nomination committee. Nominations will be managed by the Board as a whole.

The Chairman and the Board will continue to monitor and evolve the Company’s corporate governance structures and processes in line with the Company’s growth and development.