Thalassa Holdings Ltd - Statement on Corporate Governance

The corporate governance framework, which Thalassa Holdings Ltd (“Thalassa”, the “Group” or the “Company”) has set out, including board leadership and effectiveness, remuneration and internal control, is based upon practices which the board of directors of Thalassa (the “Board’ or the “Directors”) believes are proportionate to the risks inherent to the size and complexity of Thalassa’s operations.

The Board considers it appropriate to adopt the principles of the Quoted Companies Alliance Corporate Governance Code (“the QCA Code”) published in April 2018. The extent of compliance with the ten principles that comprise the QCA Code, together with an explanation of any areas of non-compliance, and any steps taken or intended to move towards full compliance, are set out below:

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

The Company is a Holding Company which has in the past and will in the future seek to acquire assets which in the opinion of the Board should generate long term gains for its shareholders. The current strategy and business operations of the Company are set out in the Chairman’s Statement and Operational Review on pages 4 to 7 of Group’s Annual Report and Accounts, Year to 31 December 2017 and the Chairman’s Statement on pages 3 and 4 of the Group’s Interim Report to 30 June 2018. Shareholders and potential investors must realise that the objectives set out in the documents referred to above are simply that; “objectives” and that the Company may without prior notification change these objectives based upon opportunities presented to the Board or market conditions.

The Group’s strategy and business model and amendments thereto, are developed by the Executive Chairman and his senior management team, and approved by the Board. The management team, led by the Executive Chairman, is responsible for implementing the strategy and overseeing management of the business at an operational level.

The Board is actively considering a number of opportunities and, ultimately, the Directors believe that this approach will deliver long-term value for shareholders. In executing the Group’s strategy, management will seek to mitigate/hedge risk whenever possible.

As a result of the Board’s view of the market, the Board has adopted a five-pronged approach to future investments:

1. Opportunistic: where an acquisition or investment exists because of price dislocation (the price of a stock collapses but fundamentals are unaffected) or where the Board identifies a special “off market” opportunity;

2. Finance: The Board is currently investigating opportunities in Banking and FinTech;

3. Property: The Company currently owns 25.48% of The Local Shopping REIT plc (“LSR”). The Company’s LSR investment is more comprehensively described in the Group’s Annual Report and Accounts;

4. Education: There are few businesses that offer the same longevity and predictability of earnings as Education; and

5. R&D: Development situations such as Autonomous Robotics (“ARL”), where the Board sees an opportunity to participate in disruptive, early stage technology.

The above outlined strategy is subject to change depending on the Board’s findings and prevailing market conditions.

2. Seek to understand and meet shareholder needs and expectations

The Board believes that the Annual Report and Accounts, and the Interim Report published at the half-year, play an important part in presenting all shareholders with an assessment of the Group’s position and prospects. All reports and press releases are published in the Investor Relations section of the Group’s website.

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

The Group is aware of its corporate social responsibilities and the need to maintain effective working relationships across a range of stakeholder groups. These include the Group’s consultants, employees, partners, suppliers, regulatory authorities and entities with whom it has contracted. The Group’s operations and working methodologies take account of the need to balance the needs of all of these stakeholder groups while maintaining focus on the Board’s primary responsibility to promote the success of the Group for the benefit of its members as a whole. The Group endeavours to take account of feedback received from stakeholders, making amendments where appropriate and where such amendments are consistent with the Group’s longer term strategy.

The Group takes due account of any impact that its activities may have on the environment and seeks to minimise this impact wherever possible. Through the various procedures and systems it operates, the Group ensures full compliance with health and safety and environmental legislation relevant to its activities. The Group’s corporate social responsibility approach continues to meet these expectations.

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

The Board is responsible for the systems of risk management and internal control and for reviewing their effectiveness. The internal controls are designed to manage and whenever possible minimise or eliminate risk and provide reasonable but not absolute assurance against material misstatement or loss. Through the activities of the Audit Committee, the effectiveness of these internal controls is reviewed annually.

A budgeting process is completed once a year and is reviewed and approved by the Board. The Group’s results, compared with the budget, are reported to the Board on a regular basis.

The Group maintains appropriate insurance cover in respect of actions taken against the Directors because of their roles, as well as against material loss or claims against the Group. The insured values and type of cover are comprehensively reviewed on a periodic basis.

The senior management team meet regularly to consider new risks and opportunities presented to the Group, making recommendations to the Board and/or Audit Committee as appropriate.

The Board has an established Audit Committee, a summary of which is set out at http://thalassaholdingsltd.com/board-directors.htm.

The Company receives comments from its external auditors on the state of its internal controls.

The more significant risks to the Group’s operations and the management of these have been disclosed in some detail in the Chairman’s statement on pages 4 to 7 of the 2017 Annual Report.

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

The Board currently comprises two Non-executive Directors and an Executive Chairman. Directors’ biographies are set out here http://thalassaholdingsltd.com/board-directors.htm.

All of the Directors are subject to election by shareholders at the first Annual General Meeting after their appointment to the Board and will continue to seek re-election every year.

The Board is responsible to the shareholders for the proper management of the Group and meets at least four times a year to set the overall direction and strategy of the Group, to review operational and financial performance and to advise on management appointments.

A summary of Board and Committee meetings held in the year ended 31 December 2017, and Directors’ attendance records, is set out in the Group’s 2017 Annual report in the Corporate Governance statement on page 11.

The Board considers itself to be sufficiently independent. The QCA Code suggests that a board should have at least two independent Non-executive Directors. Both of the Non-executive Directors who currently sit on the Board of the Company are regarded as independent under the QCA Code’s guidance for determining such independence.

Non-executive Directors receive their fees in the form of a basic cash fee based on attendance at board calls and board meetings. Directors are eligible for bonuses. The current remuneration structure for the Board’s Non-executive Directors is deemed to be proportionate.

6. Ensure that between them, the directors have the necessary up-to-date experience, skills and capabilities

The Board considers that all of the Non-executive Directors are of sufficient competence and calibre to add strength and objectivity to its activities, and bring considerable experience in technical, operational and financial matters.

The Company has put in place an Audit Committee as well as Remuneration and AIM Compliance Committees. The responsibilities of each of these committees are described at http://thalassaholdingsltd.com/board-directors.htm.

The Board regularly reviews the composition of the Board to ensure that it has the necessary breadth and depth of skills to support the ongoing development of the Group.

The Chairman, in conjunction with the Company Secretary, ensures that the Directors’ knowledge is kept up to date on key issues and developments pertaining to the Group, its operational environment and to the Directors’ responsibilities as members of the Board. During the course of the year, Directors received updates from the Company Secretary and various external advisers on a number of regulatory and corporate governance matters.

Directors’ service contracts or appointment letters make provision for a Director to seek personal advice in furtherance of his or her duties and responsibilities, normally via the Company Secretary.

7. Evaluate Board performance based on clear and relevant objectives, seeking continuous improvement

The Board’s performance is measured by the success of the Company’s acquisitions and investments and the returns that they generate for shareholders and in comparison to peer group companies. This performance is presented in the Group’s monthly management accounts and reported, discussed and reviewed with the Board regularly.

The Board is supported by the CFO, a role which is currently fulfilled by a consultant, and the Company Secretary. The Board regularly reviews succession planning and it in the process of identifying a full time CFO.

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

The Board seeks to maintain the highest standards of integrity and probity in the conduct of the Group’s operations. These values are enshrined in the written policies and working practices adopted by all employees in the Group. An open culture is encouraged within the Group. The management team regularly monitors the Group’s cultural environment and seeks to address any concerns than may arise, escalating these to Board level as necessary.

The Group is committed to providing a safe environment for its staff and all other parties for which the Group has a legal or moral responsibility in this area.

Thalassa has a strong ethical culture, which is promoted by the actions of the Board and management team. The Group has an anti-bribery policy and would report any instances of non-compliance to the Board. The Group has undertaken a review of its requirements under the General Data Protection Regulation, implementing appropriate policies, procedures and training to ensure it is compliant.

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

The Board has overall responsibility for promoting the success of the Group. The Chairman has day-to-day responsibility for the operational management of the Group’s activities. The Non-executive Directors are responsible for bringing independent and objective judgment to Board decisions. Matters reserved for the Board include strategy, investment decisions, corporate acquisitions and disposals.

There is a clear separation of the roles of Executive Chairman and Non-executive Directors. The Chairman is responsible for overseeing the running of the Board, ensuring that no individual or group dominates the Board’s decision-making and ensuring the Non-executive Directors are properly briefed on matters. Due to its current size, the Group does not require nor bear the cost of a chief executive. The Company’s subsidiary ARL is led by a chief executive.

The Chairman has overall responsibility for corporate governance matters in the Group but does not chair any of the Committees. The Chairman also has the responsibility for implementing strategy and managing the day-to-day business activities of the Group. The Company Secretary is responsible for ensuring that Board procedures are followed and applicable rules and regulations are complied with.

The Audit Committee normally meets twice at least once a year and has responsibility for, amongst other things, planning and reviewing the annual report and accounts and interim statements involving, where appropriate, the external auditors. The Committee also approves external auditors’ fees and ensures the auditors’ independence as well as focusing on compliance with legal requirements and accounting standards. It is also responsible for ensuring that an effective system of internal control is maintained. The ultimate responsibility for reviewing and approving the annual financial statements and interim statements remains with the Board.

A summary of the work of the Audit Committee undertaken in the year ended 31 December 2017 is set out in the Corporate Governance Statement on page 11 of the Group’s 2017 Annual Report. The Committee has formal terms of reference, which are set out at http://thalassaholdingsltd.com/board-directors.htm.

The Remuneration Committee, which meets as required, but at least once a year, has responsibility for making recommendations to the Board on the compensation of senior executives and determining, within agreed terms of reference, the specific remuneration packages for each of the Directors. It also supervises the Company’s share incentive schemes and sets performance conditions for share options granted under the schemes.

A summary of the work of the Remuneration Committee undertaken in the year ended 31 December 2017 is set out in the Corporate Governance Statement on page 11 of the Group’s 2017 Annual Report. The Directors’ Remuneration is set out on page 9 of the 2017 Annual Report. The Committee has formal terms of reference.

The Directors believe that the above disclosures constitute sufficient disclosure to meet the QCA Code’s requirement for a Remuneration Committee Report. Consequently, a separate Remuneration Committee Report is not presented in the Group’s Annual Report.

The AIM Compliance Committee, which meets as required, is responsible for ensuring that the Company’s obligations under the AIM Rules are discharged by the Board. The Committee has formal terms of reference set out at http://thalassaholdingsltd.com/board-directors.htm.

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

The Board believes that the Annual Report and Accounts, and the Interim Report published at the half-year, play an important part in presenting all shareholders with an assessment of the Group’s position and prospects. The Annual Report includes a Corporate Governance Statement which refers to the activities of both the Audit Committee and Remuneration Committee. All reports and press releases are published in the Investor Relations section of the Group’s website.

The Group’s financial reports and notices of General Meetings of the Company can be found at http://thalassaholdingsltd.com/company-documents.htm. The results of voting on all resolutions in future general meetings will be posted to the Group’s website, including any actions to be taken as a result of resolutions for which votes against have been received from at least 20 per cent of independent shareholders.

Thalassa Holdings Ltd, Folio Chambers, PO Box 800, Road Town, Tortola, VG1110, British Virgin Islands.
Tel: +1 284 494 7065 | Fax: +1 284 494 8356 | Email: enquiries@thalassaholdingsltd.com