Corporate Governance Statement
As an AIM-quoted company, Catalyst Media Group plc (“CMG” or the “Company”) is required to apply a recognised corporate governance code, demonstrating how the Company complies with such corporate governance code and where it departs from it.
The Directors of the Company have formally taken the decision to apply the QCA Corporate Governance Code (the “QCA Code”). The Board recognises the principles of the QCA Code, which focus on the creation of medium to long-term value for shareholders without stifling the entrepreneurial spirit in which small to medium sized companies, such as CMG, have been created. The Company will provide annual updates on its compliance with the QCA Code in its Annual Report.
The Board is responsible to shareholders for the effective direction and control of the Company.
The Board recognises the importance of the high standards of good corporate governance prescribed in the QCA Code and seeks to apply its principles, in so far as practicable, having regard to the Company's current size, stage of development and resources. The Board is accountable to the Company's shareholders and takes account of their needs and expectations to the extent it is considered appropriate.
The Board comprises four Directors of all of which are Non-executives, including the Chairman, reflecting a blend of different experience and backgrounds. The Board considers Michael Rosenberg OBE, the Chairman, to be an independent non-executive in terms of the QCA guidelines. Due to the size and shape of the Board, the Company has not appointed a senior independent director.
The Board meets on a regular basis, and at least four times a year, to discuss a whole range of significant matters including strategic decisions and performance. A procedure to enable Directors to take independent professional advice if required has been agreed by the Board and formally confirmed by all directors. The Company’s day-to-day operations are managed by Melvin Lawson and Alan Perrin, the Company Secretary. All Directors have access to the Company Secretary and any Director needing independent professional advice in the furtherance of his/her duties may obtain this advice at the expense of the Company.
There were five Board meetings during the year ended 30 June 2018. Michael Rosenberg OBE and Melvin Lawson were present at all meetings. Christopher Mills and Mark Hawtin were present at four and three of the Board meetings respectively.
Given the size and nature of CMG as a holding company for an investment in SIS, the Board considers it appropriate to have no executive directors.
In view of the fact that the only asset of the business is its 20.54% stake in SIS the Directors role is to review the investment in SIS from time to time through regular reports from our representation on the Board of SIS. This normally takes place through regular board meetings of CMG. Accordingly, the Directors are considered to have sufficient time for their duties.
Details of the current Directors, their roles and background are as follows:
Michael Samuel Rosenberg, OBE - Non-executive Chairman
Michael Rosenberg OBE joined the Board of CMG in May 2004 and was appointed non-executive Chairman in December 2006.
He began his career at Samuel Montagu and Co Ltd, the merchant bank in 1957 and joined the Board in 1971. In 1974 he left the bank to co-found Allied Investments Ltd which became an international healthcare business over the next few years.
He was a founding director and shareholder of TVam the breakfast TV channel in 1982 together with Sir David Frost and others. He has been a director of David Paradine Ltd, the holding company for the business interests of the late Sir David Frost since 1974.
Michael was a director and later chairman of Numis Corporation Plc from 1989 till 1999. He has been chairman of Pilat Media Global plc since 2002, a media software company quoted on AIM, until its acquisition in March 2014 by Sintec Media. He is non-executive chairman of Starcom Systems Ltd, quoted on Aim, a non-executive director of Shefa Yamim (ATM) Ltd listed on the Standard listing of the London Stock Exchange and was a non-executive director of Amiad Water Systems Ltd also listed on AIM. He was a non-executive director of Dori Media Ltd which is a public but unlisted company previously listed on AIM. He was non-executive chairman of Photon Kathaas Productions Ltd, an Indian film production company previously quoted on AIM , until March 2014. He is an active mentor to the Princes Trust.
The role of the Chairman is to provide leadership of the Board and ensure its effectiveness on all aspects of its remit to maintain control of the Company. In addition, the Chairman is responsible for the implementation and practice of sound corporate governance. The Chairman is considered independent and has adequate separation from the day-to-day running of the Company.
Mark Hawtin - Non-executive Director
Mark Hawtin is an Investment Director at GAM International Limited with responsibility for long/short funds as well as a long only technology fund. He was formerly a partner of Marshall Wace LLP, one of Europe’s leading hedge fund managers with more than $12 billion under management until July 2007. Mr. Hawtin has an interest in 2,010,117 Ordinary Shares of 10p each in the Company representing 7.14% of the entire issued share capital.
Melvin Lawson - Non-executive Director
Melvin Lawson is a director of a number of private companies involved in house building and commercial property investment. He is managing director of A Beckman plc, a company formerly listed on the London Stock Exchange and is a non-executive director of Telecom Plus plc. Mr Lawson has an interest in 3,615,486 Ordinary Shares representing 12.85% of the entire issued share capital.
Christopher Mills - Non-executive Director
Christopher Mills was chief investment officer of J O Hambro Capital Management Limited, which he joined in 1993 and is currently Chairman and CIO of Harwood Capital Management. Mr Mills is also chief executive and investment manager of North Atlantic Smaller Companies Investment Trust PLC (a UK listed investment trust) and a director and investment manager of Oryx International Growth Fund Limited. He is a member and chief investment officer of North Atlantic Value LLP, which is interested in 3,500,000 Ordinary Shares representing 12.44% of the entire issued share capital of the Company. Prior to joining the J O Hambro Capital Management group he worked from 1975 to 1993 for Samuel Montagu Limited, Montagu Investment Management Limited, and its successor company, Invesco MIM.
Application of the QCA Code
CMG seeks to grow shareholder value through its approximate 20.54% interest in SIS. SIS is a leading supplier of products and services to the online and retail betting markets. The Company seeks to promote the long-term value for shareholders through both capital appreciation and the return of capital to shareholders as a result of its investment in SIS.
The Company remains committed to listening to, and communicating openly with, its shareholders to ensure that its strategy, business model and performance are clearly understood. The AGM is a forum for shareholders to engage in dialogue with the Board. The results of the AGM will be published via RNS and on the Company’s website. Progress reports are also made via RNS and the main point of contact is Melvin Lawson, Non-Executive Director, who can be contacted on 020 7734 8111.
The Audit Committee, which consists of Melvin Lawson (Chairman of the Committee), Michael Rosenberg OBE, Mark Hawtin and Christopher Mills, will be responsible for the relationship with the Company's auditors, an in-depth review of the Company's financial reports, internal controls and any other reports that the Company may circularise. The terms of reference are to be reviewed on an annual basis, thus ensuring that the Audit Committee's duties adequately cover all those specific areas that are identified by the QCA Code, which includes a review of the cost effectiveness of the audit and non-audit services provided to the Company. The Committee meets twice a year, prior to the finalising and announcement of interim and annual results and, should it be necessary, would convene at other times.
The Remuneration Committee which now consists of Mark Hawtin (Chairman of the Committee), Melvin Lawson and Christopher Mills, meets and considers, within existing terms of reference, the remuneration policy.
The Audit and Remuneration Committees consist solely of Non-executive directors.
The Company does not currently have a Nominations Committee, which the Board considers to be appropriate given the Company’s size and nature, but it will continue to monitor the situation.
Internal financial control
The Group operates a system of internal financial control commensurate with its current size and activities, designed to ensure that the possibility of misstatement or loss is kept to a minimum. There is a comprehensive system in place for financial reporting and the Board receives a number of reports to enable it to carry out these functions in the most efficient manner. These procedures include the preparation of management accounts and other ad hoc reports. All transactions are subject to Director approval and all payments require approval by a minimum of two Directors. The Board has responsibility for the effectiveness of the internal financial control framework. Such a system can only provide reasonable and not absolute assurance against material misstatement.
The Directors are responsible for keeping proper accounting records which disclose with reasonable accuracy at any time the financial position of the Company and the Company and to enable them to ensure that the financial statements comply with the Companies Act 1985. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
The Group does not currently have, nor considers there is currently a need for an internal audit function.
Departure from the QCA Code:
In accordance with the AIM Rules for Companies, CMG departs from the QCA Code in the following way:
Principle 3 – “Take into account wider stakeholder and social responsibilities and their implications for long-term success”
Given the size and nature of CMG as a holding company for an investment in SIS, the Board has no direct interaction with wider stakeholders, which is not linked to long-term success. As such, the Board does not consider it appropriate to have a formal wider stakeholder procedure in place, as described and recommended in Principle 3 of the QCA Code.
Principle 7 – “Evaluate board performance based on clear and relevant objectives, seeking continuous improvement.”
Given the size and nature of CMG as a holding company for an investment in SIS, combined with the fact that it has no executive directors, the Board does not consider it appropriate to have a formal performance evaluation procedure in place, as described and recommended in Principle 7 of the QCA Code.
Principle 8 – “Promote a corporate culture that is based on ethical values and behaviours”
Whilst the Directors recognise their fiduciary duties to act in the best interest of all shareholders, as well as stakeholders, and set out to implement an effective corporate governance framework based on the QCA Code, the Company has no employees or customers so the Directors feel that the spirit of Principle 8 of the QCA Code is not applicable to CMG in its current business context.
Michael Rosenberg OBE