Corporate Governance

The QCA Code identifies ten principles of Corporate Governance important in maintaining and communicating good governance in smaller, growing businesses. These principles include guidance in three areas, delivering sustainable growth, maintaining a dynamic and effective management framework and building trust between the Company, its shareholders and other stakeholders. The disclosures set out below demonstrate how Churchill China plc meets these requirements.

Deliver Growth

1. Establish a strategy and business model which promotes long term value for shareholders.

The Company’s objective is to generate long term benefits to all stakeholders through the provision of value to customers through excellence in design, quality and service. We aim to increase shareholder returns principally through steady increments to sales and margins, through alignment of our resources with profit opportunities and a focus on cash generation to allow ongoing re-investment in our business.

Currently this objective leads us to focus on Hospitality markets where we see a greater degree of sustainability than in consumer markets and in particular in growing Export revenues, re-positioning our range towards higher margin, innovative, added value products and in investment in support of our manufacturing and technical advantage.

Further Information on our strategy and its implementation is given on page 12 of our 2022 Annual Report.

The key challenges to our strategy and implementation are set out page 18 of our 2022 Annual Report. In summary they comprise: Understanding the impact of Market and Economic change on our business model, including the Russia-Ukraine War, currency movements, cyber security, maintaining efficient, effective and sustainable manufacturing and supply chain operations; continuing to develop our workforce’s skills through training and recruitment and finally in recognising the potential impact of changes in Regulation and Taxation on our business. Each of these challenges is managed though an established Risk Review process.

2. Seek to understand and meet shareholder needs and expectations.

The Company has a wide range of shareholders including major financial institutions and private investors. Regular contact is made with shareholders by a variety of means including formal presentations around the publication of Interim and Full year results and direct contact. The content of statements issued is carefully considered to ensure that they provide appropriate information. Marc Sinclair, Company Secretary is the main point of contact for investors although all Board members are encouraged to meet with shareholders.

The Company’s Annual General Meeting represents an important opportunity for a wide range of shareholders and the Board to meet, both on a formal basis during the meeting and more informally before and after the Meeting.

Voting results are reviewed to ensure that the Board recognises shareholder views.

The Board recognises the importance of a progressive and sustainable dividend policy to shareholders.

3. Take into account wider stakeholder and social responsibilities and their implications for long term success.

The Board has always recognised that the success of the Company relies upon the establishment of strong, long term relationships with a range of stakeholders. Shareholders can only benefit from the performance of the business if other stakeholder groups including customers, employees and suppliers also derive value from our operations. We aim to fulfil our responsibilities to the communities that we operate in at local, national and global levels, both in terms of compliance with regulations and the sustainability of our operations.

We have developed a formal brand framework for Churchill, which highlights the values which we believe embody our business. Many of these values reflect our commitment to our stakeholders. This brand framework is used daily within our business to guide our operations.

The key resources and relationships of the business have been identified as our long standing customer relationships, our employees and technical and business skills alongside our manufacturing and service capability. These resources support an innovative and sustainable business model.

The business receives feedback by many routes including sales and supplier account management and importantly in the case of our employees, through close engagement with our workforce. 

For further information on this area please see pages 9, 10, 14, 16, 17, 22 and 24 of our 2022 Annual Report.

4. Embed effective risk management, considering both opportunities and threats, throughout the organisation.

The recognition and management of both risk and opportunity within our business are a key part of our management philosophy and important to the successful delivery of our strategy.

The Board, senior management and all employees are expected to identify, evaluate and report risks as part of their daily roles. A substantial number of management processes have been designed and implemented to fulfil these responsibilities.

At the same time our staff are encouraged to identify areas where opportunity for development exists, whether this is in commercial relationships or in our manufacturing and logistics operations.

Our business process identifies risk at an early stage and allows management and Directors to manage these risks and opportunities. The Board reviews risk as part of its monthly meeting. Risks are identified, evaluated and existing controls reviewed to ensure that appropriate mitigation is in place. There is a formal Risk Review process in place.

For further information on risk management please see page 18 and 19 of our 2022 Annual Report

Maintain a dynamic management framework

1. Maintain the Board as a well-functioning, balanced team, led by the Chair.

The Directors recognise their responsibility for the management of the Company. They develop and implement strategy and control the operations of the business.

The board is provided with a range of information covering strategic, commercial, operational and financial matters on a regular and timely basis. This includes both historic and forward looking information. This information is supplemented by both formal and informal contact with employees across the business.

The Board of the Company comprises:

Independent Directors

Robin Williams - Non Executive Chairman

Mark Moore - Non Executive Director

Caroline Stephens - Non Executive Director

Martin Payne - Independent Director

The following Directors are not considered to be independent:

David O’Connor – Executive Director (Chief Executive Officer)

James Roper – Executive Director (Sales and Marketing Director)

Michael Cunningham - Executive Director (Chief Financial Officer)

Brendan Hynes – Non Executive Director 

The Board has appointed Audit, Remuneration and Nomination Committees to support its operation. Directors have access to independent advice, where necessary, to allow them to discharge their responsibilities. Directors are expected to commit an appropriate amount of time to their roles, sufficient to discharge their responsibilities. At least twelve Board meetings are held during the year.

For further information on the above, please refer to page 26 of the 2022 Annual Report

2. Ensure that between them the Directors have the necessary up to date experience, skills and capabilities.

As part of the regular Board Effectiveness review performed by the Chairman, the overall composition of the Board is considered to ensure that it supports the operation of a successful business and to meet the requirements of the QCA Code.

Succession planning is the responsibility of the Chairman and Nomination Committee and  Board performance is monitored.

Directors are encouraged to maintain their skills through formal training and research into their areas of responsibility.

Further information is available on Directors on page 26 of the 2022 Annual Report and in the People and Committees section of this website.

3. Evaluate board performance based on clear and relevant objectives, seeking continuous improvement.

Board effectiveness reviews are carried out regularly in relation to the Board as a whole, its sub-committees and individual Directors. The Chairman is responsible for the effectiveness review process.

Reviews consider the impact of the Board on the performance of the Company, the operation of its sub committees and the performance and commitment of individual Directors. Internal input from members of the Board is supplemented by external comment from shareholders and advisers where appropriate.

Succession planning is the responsibility of the Chairman and Nomination Committee.

Performance appraisals are carried out annually for each executive Director.

4. Promote a corporate culture that is based on ethical values and behaviours

The Board acknowledges its role in defining and promoting the culture of the business.

An ethical corporate culture is fundamental to the achievement of our forward business plans. Our business has developed and needs to retain long term relationships with customers, employees, suppliers and other stakeholders in order to prosper.

The Company has a published Ethical Code and a number of supporting policies including those covering, amongst other matters, bribery and corruption, modern slavery, dignity at work and whistle-blowing. Our business with overseas suppliers is covered by our ethical trading policy.

Whilst the above are important in the communication of our corporate culture, they have been supplemented by the core values identified within our brand framework, including ethical behaviour, honesty, commitment to all our stakeholders, responsiveness and innovation form part of our ongoing employee induction, assessment, training and forward recruitment processes. All of our business decisions are benchmarked against these brand values.

5. Maintain governance structures and processes that are fit for purpose and support good decision-making by the Board

The Board considers good corporate governance as a whole, but has delegated certain functions to sub committees, each of which has specific terms of reference.

The Remuneration Committee, composed wholly of non Executive Directors, considers the remuneration of the Chairman and Executive members of the Board, including setting forward policy, considering current remuneration, particularly in relation to performance targets in respect of variable pay elements, and the reporting of Board remuneration.

The Audit Committee, composed wholly of non Executive Directors, reviews the annual and half year financial results, the Annual Report and any other published information relating to the Group’s financial performance including the going concern statement to satisfy itself that they meet statutory and other regulatory requirements including Financial Reporting Standards and, where applicable, the requirements of the UK Listing Authority, AIM Rules for Companies and the QCA Corporate Governance Code. They are also responsible for the relationship with the Company’s Auditors.

The Nomination Committee, composed wholly of non Executive Directors, is responsible for the regular review of the size, structure and composition (including skills, knowledge, experience and diversity) of the Board and to lead the succession planning process.

Each of the Board committees may be attended by Executive directors where appropriate.

There is a schedule of matters reserved for the Board, including strategy and management, changes to the Company’s capital structure, financial reporting, internal controls, major contracts (including capital expenditure), investor communication, board membership and corporate governance.

The Board reviews the effectiveness of the current governance structures considering the forward development of the Company, to ensure it remains appropriate. No significant changes are currently proposed.

The roles and responsibilities of the Board and its Committees are further described on pages 22, 25, 26, 34 and 35 of the 2022 Annual Report.

Build trust

1. Communicate how the Company is governed and is performing by maintaining a dialogue with shareholders and other relevant stakeholders.

The Company has a wide range of shareholders including major financial institutions and private investors. Regular contact is made with shareholders by a variety of means including formal presentations around the publication of Interim and Full year results and direct contact. The content of statements issued is carefully considered to ensure that they provide appropriate information.

The Company’s Annual General Meeting represents an important opportunity for a wide range of shareholders and the Board to meet, both on a formal basis during the meeting an more informally before and after the Meeting.

The Company actively seeks employee engagement through a variety of methods. Meetings with other stakeholders are carried out during the year in the normal course of the Company’s business. Communication is also carried out through membership of our trade association, the British Ceramic Confederation and through contact with local and national representatives. The Company believes it operates in an open fashion, responding quickly to enquiries.

Votes were cast as follows at the 2023 Annual General Meeting:

 

	Resolution Name	For	Against	Withheld
1	To receive and approve the financial statements for the year ended 31 December 2022	5,878,358	600	165
2	To approve final dividend of 21.0p	5,873,864	259	-
3	To re-elect David O'Connor as a Director	5,870,819	974	2,330
4	To re-elect Brendan Hynes as a Director	4,328,680	1,318,063	226,380
5	To elect Robin Williams as a Director	5,870,819	974	2,330
6	To elect Caroline Stephens as a director	5,869,798	1,995	2,330
7	To reappoint PwC as auditors	5,664,987	208,971	165
8	To authorise the Audit Committee to set the Auditors Remuneration	5,873,035	758	330
9	To approve the Annual Report on Directors' Remuneration	5,869,340	2,262	2,521
10	To renew the Directors' power to allot shares	5,872,599	1,359	165
11	To authorise disapplication or pre-emption rights for allotments for general purposes	5,471,080	402,878	165
12	To authorise disapplication of pre-emption rights for allotments for specific purposes	5,471,173	402,878	165
13	To renew the Company's authority to purchase its own shares	5,865,855	8,268	-

Reviewed & Updated June 2023