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Corporate Governance Statement

Enwell Energy plc (the “Company”) has adopted the Quoted Companies Alliance Corporate Governance Code 2018 (“QCA Code”). This statement sets out how the Company complies with, or departs from, the 10 principles of the QCA Code.

1. Strategy and business model

The Company and its subsidiaries (together, the “Group”) are engaged in exploration and development of oil and gas projects, with assets in Ukraine.

The Directors of the Company (“Directors” and together the “Board”) set the Company’s strategy and monitor its implementation through management and financial performance reviews. The Board also works to ensure that adequate resources are available to implement the Company’s strategy in a timely manner. The Company has set out a strategy and business model (including the key challenges to its implemention) to promote long-term value creation for shareholders and will update all shareholders on this in its Annual Reports for each year.

The Board meets on a regular basis to discuss the strategic direction of the Company and any significant deviation or change will be highlighted promptly should this occur.

2. Understanding and meeting shareholder needs and expectations

The Company is committed to listening to, and communicating openly with, its shareholders to ensure that its strategy, business model and performance are clearly understood. The Annual General Meeting is a forum for shareholders to engage in dialogue with the Board. The results of the Annual General Meeting are published via a regulated information service and can be found in the Regulatory news section of this website.

Chris Hopkinson, Chairman, Sergii Glazunov, Chief Executive Officer, and Bruce Burrows, Finance Director, are the principal contacts between the Company and its shareholders, with whom they each maintain a regular dialogue. The views of shareholders are communicated to the whole Board.

The Company’s progress on achieving its key targets is regularly communicated to investors through its announcements to the market. The Company also utilises other professional advisers such as the Company’s Nominated Adviser, Broker and the Company Secretary, who provide advice and recommendations on shareholder communication.

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

The Board members recognise their responsibilities to stakeholders including staff, suppliers, customers, regulators and within the communities in which it operates. The Company has senior managers of its operating divisions who provide regular feedback to the Chief Executive Officer, who then ensures that the Board as a whole is informed of any major developments. In turn, the Board communicates with management and staff on key issues which may affect them in connection with the Group’s business.

The Company is involved in the local communities close to its operations through sponsorship and community projects and activities. Careful attention is given to ensure that all operational activities are performed in an environmentally responsible manner and in accordance with appliable laws and regulations. Both the involvement in local communities and the performance of operational activites in an environmentally responsible manner are monitored by the Board to ensure that ethical values and behaviors are recognised.

4. Embedding effective risk management

The Board regularly reviews the risks facing the business and the internal controls which are in place to address these risks. The Company has a Risk Committee that monitors the Group’s business operations and identifies key risks that are faced. The Risk Committee maintains a Risk Register and Mitigation Plan that is formally reviewed and updated quarterly. The Risk Committee regularly reports to the Board on risk management and mitigation.

The Company is committed to maintaining the highest quality, health, safety and environmental (“QHSE”) standards and the effective management of these areas is an intrinsic element of the overall business ethos. Through strict enforcement of the Group’s QHSE policies, together with regular management meetings, training and the appointment of dedicated safety professionals, the Company strives to ensure that the impact of its business activities on its staff, contractors and the environment is as low as is reasonably practicable. The Company reports safety and environmental performance in accordance with oil industry practice and guidelines.

The Board is responsible for the Group’s system of internal control and reviewing its effectiveness. Any such system is designed to manage rather than eliminate the risk of failure to achieve business objectives and can only provide reasonable and not absolute assurance against material misstatement or loss. However, the Company believes that its internal control systems are appropriate to the Company’s business. Internal controls are assessed for effectiveness and risks are monitored and reviewed through regular Board and management meetings.

5. Maintaining a balanced and well-functionality board

In the spirit of the QCA Code, it is the Board’s function to ensure that the Company is managed for the long-term benefit of all shareholders and other stakeholders with effective and efficient decision-making. Corporate governance is an important part of that function, reducing risk and adding value to the Company. The Chairman oversees Corporate Governance compliance for the Company and the Board monitors the governance framework of the Company on an ongoing basis.

As an AIM-quoted company, the Company is required to apply a recognised corporate governance code, demonstrating how it complies with such corporate governance code and where it departs from it.

The Board has formally adopted the QCA Code as the basis for its corporance governance framework. The Board recognises the principles of the QCA Code, which focus on the creation of medium to long-term value for shareholders. The Company will provide annual updates on its compliance with the QCA Code in its Annual Report.

The Board comprises six Directors, being the Non-Executive Chairman, the Chief Executive Officer, the Finance Director and three Non-Executive Directors, reflecting a blend of different experience and backgrounds. The Non-Executive Chairman is Chris Hopkinson. The Chief Executive Officer, Sergii Glazunov, and two of the Non-Executive Directors are nominees of Lovitia Investments Limited, the indirect majority shareholder of the Company. The Company has entered into a Relationship Agreement with Lovitia Investments Limited, which regulates the relationship between them to ensure that the business and affairs of the Company are managed by the Board, independently of Lovitia Investments Limited and its associated entities. The Board also has procedures in place to monitor and deal with Directors’ conflicts of interest. The Directors are expected to devote such time as it necessary for the proper performance of their respective duties. The Executive Directors are employees of the Group, and the Non-Executive Directors are expected to spend a minimum number of days on the Group’s business each year. The Board considers Chris Hopkinson and Dmitry Sazonenko to be independent Non-Executives in terms of the QCA guidelines, although given the size of the Company, the Board has not appointed a senior independent Director.

The Board is responsible for setting the direction of the Company through the establishment of strategic objectives and key policies. The Board has a schedule of matters reserved for its review and approval, and such items include Group strategy, approval of major capital expenditure projects, approval of the annual and interim results, annual budgets, dividend policy, Board composition and structure, and appointment and assessment of senior management. The Board monitors the exposure to key business risks and reviews the strategic direction of all operating subsidiaries, their annual budgets, their performance in relation to those budgets and their capital expenditure. The Board maintains its independence from the day-to-day responsibility for managing the business which it delegates to the Chief Executive Officer and the senior management team. The Chief Executive Officer, being the senior Executive Director, has a particular role and area of responsibility and continually engages with the Company’s shareholders and stakeholders.

Regular Board meetings are held, (a minimum of four per year) and ad hoc meetings are scheduled as required. The attendance at Board and Committee meetings during the year will be reported in the Annual Report. All Directors have access to management, including the Company Secretary, and to such information as is needed to carry out their duties and responsibilities fully and effectively. Furthermore, all Directors are entitled to seek independent professional advice concerning the affairs of the Company, at its expense.

All Directors are subject to election by shareholders at the first opportunity following their appointment by the Board. In addition, Directors will retire by rotation and stand for re-election by shareholders at least once every three years in accordance with the Company’s Articles of Association.

Further details of the Board of Directors, and their roles and background, are set out in the Leadership team section of this website.

6. Having appropriate experience, skills and capabilities on the board

The Board has a mix of experience, skills, gender, linguistic and personal qualities that help deliver the strategy of the Company, including managerial, technical and financial expertise in the oil and gas industry. The composition of the Board ensures that no one individual or group dominates the decision making process. The Company will ensure that between them the Directors have the necessary up-to-date experience, skills and capabilities to deliver the Company strategy and targets. The Directors keep their respective skills up-to-date through a combination of attendance at relevant industry events and conferences, continued professional development and experience gained from other board and management roles.

7. Evaluating board performance

Given the Company’s current size, the Board has not considered it necessary to undertake an assessment of the Board performance and effectiveness, but will monitor for any such need.

8. Ethical values and behaviours

The Company operates a corporate culture that is based on ethical values and behaviours. It maintains a quality system appropriate to the standards required for a Company of its size. The Board communicates regularly with management through meetings and messages, and information is cascaded to staff at operating subsidiaries via management meetings with operational personnel.

The Company maintains appropriate policies which reflect these values, including an Anti-Bribery and Corruption Policy in relation to its compliance with the Bribery Act 2010, and Policies on Disclosure of Inside Information and Share Dealing. These policies set out the high ethical standards required of the Group’s staff in the course of carrying out its business activities regarding dealing with gifts, hospitality, corruption, fraud, the use of inside information and whistle-blowing.

9. Maintaining governance structures and processes

The Board
In addition to the Chairman’s statement and explanation provided under principle 5 above, the Chairman is responsible for the leadership of the Board and is pivotal to fostering a culture that adopts good corporate governance.

The Chairman, together with the rest of the Board, sets the direction for the Company through a formal schedule of matters reserved for its decision. The Chief Executive Officer, as senior Executive Director, has a particular role and area of responsibility and continually engages with the Company’s shareholders and stakeholders. The Board has a schedule of matters reserved for its review and approval, and such items include Group strategy, approval of major capital expenditure projects, approval of the annual and interim results, annual budgets, dividend policy, Board composition and structure, and the appointment and assessment of senior management. The Board monitors the exposure to key business risks and reviews the strategic direction of all operating subsidiaries, their annual budgets, their performance in relation to those budgets and their capital expenditure. The Board delegates day-to-day responsibility for managing the business to the Chief Executive Officer and the senior management team.

Committees
The Board has established two committees composed of independent Non-Executive Directors (Chris Hopkinson and Dmitry Sazonenko) and an Executive Director (Bruce Burrows). The QCA Code recommends that the membership of these committees is made up of only non-executive directors, but given the size of the Company and the fact that the other three Directors are nominees of Lovitia Investments Limited, the indirect majority shareholder of the Company, the Board considers that the composition of these Committees is appropriate in the circumstances.

The composition of the committees is as follows:-

Audit
Chris Hopkinson (Chairman)
Dmitry Sazonenko
Bruce Burrows

Remuneration
Chris Hopkinson (Chairman)
Dmitry Sazonenko
Bruce Burrows

Audit Committee
The Audit Committee meets not less than twice a year to review the published financial information, and the effectiveness of external audit and internal financial controls. It deals with the appointment, terms of engagement and fees of the external Auditors, the scope of the audit, review of the financial statements and reports, including any changes to accounting policies or practices, and the review of the Group’s system of risk management and internal controls and compliance with applicable laws and regulations. Meetings are normally attended, by invitation, by a representative of the Auditors.

Remuneration Committee
The Remuneration Committee is responsible for establishing and developing the Company’s general policy on executive and senior management remuneration, having regard to the need to attract and retain individuals of the highest calibre and with the appropriate experience to make a significant contribution to the Group, and determining specific remuneration packages for Executive Directors and senior management.

Nominations Committee
The Directors do not consider that, given the size of the Company, it is appropriate to have a Nomination Committee. Any matters which would normally be dealt with by such a committee are considered by the Board. The appropriateness of such a committee, will, however, be kept under regular review by the Company.

10. Communicating with shareholders and other relevant stakeholders

The Board recognises that it is accountable to shareholders for the performance and activities of the Company and the Group. The Board engages in discussions with shareholders as appropriate from time to time through formal meetings or correspondence and telephone discussions. The Annual General Meeting of the Company provides an opportunity for the Directors to present to the shareholders a report on current operations and developments and enables the shareholders to express their views about the Company’s business.

As required by Rule 26 of the AIM Rules for Companies, the Company publishes historical Annual Reports, Interim Reports, Notices of General Meetings and Circulars since the Company’s admission to the AIM Market, and other announcements since July 2008, which are available in the Reports and presentations and Regulatory news sections of this website.

The Board does not publish an Audit Committee or Remuneration Committee report in its Annual Report as the Board considers this is not appropriate given the size and stage of development of the Company. The Board will consider annually whether it considers it appropriate for these reports to be included in future Annual Reports.

Last updated on 26 May 2020

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