Corporate Governance

The rules of the Financial Conduct Authority do not require companies that have securities traded on the Alternative Investment Market to comply with the UK Corporate Governance Code (the Code). In managing the Group, the Board has regard to the UK Corporate Governance Code.

As Sutton Harbour plc is a UK incorporated Company, it is subject to the City Code on Takeovers and Mergers.

The Board continually monitors is procedures for reviewing the effectiveness of its systems of internal controls.

Leadership

The Chairman is responsible for the leadership of the Board and for ensuring the effectiveness of the Board as a whole. The Board currently comprises three Non-Executive Directors, including the Chairman and two Executive Directors and is responsible for the proper management of the Company and for reporting the Company’s progress to Shareholders. The Board has eight scheduled meetings annually for reviewing trading performance, ensuring adequate funding, monitoring strategy and examining acquisition possibilities. Additional meetings are held as required. The Board has a formal schedule of matters specifically reserved to it for decision. The roles of Chairman and Chief Executive are separate. Graham Miller was appointed Chairman on 23 September 2013, and Robert De Barr is the Senior Independent Non-Executive Director.

Internal Control

The Directors are responsible for establishing and maintaining the Group’s internal control systems. Internal control systems are designed to meet the particular needs of the Group and the risk to which it is exposed, and by their nature can provide reasonable, but not absolute, assurance against material misstatement of loss. The key procedures which the Directors have established with a view to providing effective internal controls are as follows:

Corporate Accounting and Procedures

There are defined authority limits and controls over acquisitions and disposals. There are also clear reporting lines within the business and risk assessments are undertaken and regularly reviewed in all divisions and at all levels within the Group. Appropriate internal controls are set

for all divisions of the business. Given the size and nature of the Group, no separate internal audit department is considered necessary.

Quality of Personnel

The competence of personnel is ensured through high recruitment standards and subsequent training courses. High quality personnel are seen as an essential part of the control environment.

Financial Reporting

The Group has a comprehensive system for reporting financial results to the Board and monitoring of budgets.

Investment Appraisal

Capital expenditure is regulated by authorisation levels. For expenditure beyond specified levels, detailed written proposals are submitted to the Board. Reviews are carried out after the acquisition is complete and any overruns are investigated. Due diligence work is carried out if a business is to be acquired.

Remuneration Committee

The Remuneration Committee is chaired by Robert De Barr and its other members are Sean Swales and Graham Miller. The Committee, within its written terms of reference, determines and agrees with the Board the employment terms and remuneration packages of the Executive Directors. The Executive Directors make recommendations to the Board regarding the remuneration of Non-Executive Directors. Independent advice on remuneration is taken where considered appropriate.

Audit Committee

The Audit Committee is chaired by Graham Miller and its other members are Sean Swales and Robert De Barr. The Committee has written terms of reference and provides a forum for reporting by the Group’s external auditors. All members of the Committee are Non-Executive Directors, although other individuals may be requested to attend all or part of any meeting as the Committee considers appropriate.

Full details on the Audit Committee can be found here

Nominations Committee

Members of the Nomination Committee are Graham Miller and Jason Schofield. The Nomination Committee is responsible for proposing candidates to the Board having regard to its balance, expertise and structure. The Nomination Committee is also responsible for making recommendations to the Board regarding appointments to the Audit and Remuneration Committees.

Relations With Shareholders

The Board is committed to a continuing dialogue with its shareholders. The combined Chairman’s Statement and Chief Executive’s Report and the Financial Review include a detailed review of the business and future developments. Shareholders are encouraged to pose questions to the Board at any time of the year and the Board uses the Annual General Meeting to communicate with all shareholders and welcomes their participation.

Following the announcement and presentation of the year end results, there is a series of formal meetings with institutional shareholders and analysts. These meetings enable the Executive Directors to appraise the investors of the Group’s business and future plans and the shareholders can provide feedback.