The key challenges to the business and how these are mitigated is detailed on pages 8 to 10 of the Group’s Annual Report and Accounts for the year ended 30 June 2024 under the “Business Review” heading.

The board must manage shareholders’ expectations and should seek to understand the motivations behind shareholder voting decisions.

The Board regards regular communications with shareholders as one of its key responsibilities. CAP-XX is committed to engaging with shareholders and this effort is led by the Chief Executive Officer.

In order to gauge shareholder sentiment, CAP-XX meets with key institutional shareholders typically every six months and when necessary, solicits feedback from its larger shareholders via its NOMAD and broker. CAP-XX welcomes shareholder contact at any time and communications should be sent in the first instance to mailto:investor.relations@cap-xx.com.  CAP-XX will generally exercise discretion responding to individual shareholders correspondence but will update the market via regulatory and non-regulatory announcements and via its annual and interim financial reports.

CAP-XX holds an open Q&A session at every Annual General Meeting and attends investor events to engage with retail shareholders.

This communication allows the CAP-XX board to understand the shareholder’s views and to ensure that the strategies and objectives of the Company are aligned with shareholders. In its decision-making, the Board will have regard to the ascertained expectations and needs of its shareholders (as appropriate and in accordance with its statutory and fiduciary duties).

The Board believes the Company’s mode of engaging with shareholders is adequate and effective.

Where matters that relate to the company’s impact on society, the communities within which it operates or the environment have the potential to affect the company’s ability to deliver shareholder value over the medium to long-term, then those matters must be integrated into the company’s strategy and business model.

Feedback is an essential part of all control mechanisms. Systems need to be in place to solicit, consider and act on feedback from all stakeholder groups.

On the basis of the Directors’ experience and their operational knowledge of the Company, the Directors believe that the key resources and relationships on which the Company relies are the Company’s employees, partners, suppliers, regulatory authorities and contractors. The Company’s operations and working methodologies take into account the requirement to balance the needs of all these stakeholder groups while maintaining focus on the Board’s primary responsibility to promote the success of the Company for the benefits of its shareholders.

The executive member of the Board holds regular staff group and individual update meetings in order to communicate CAP-XX’s strategy, progress versus targets and to receive feedback and solicit opinion.

The Company endeavours to take account of feedback received from stakeholders, making necessary amendments to working arrangements and operational plans where appropriate and where such amendments are consistent with the Company’s long-term strategy. The CAP-XX Board considers the feedback of relevant stakeholders in its decision-making and in the formulation of strategy. However, no material changes to the Company’s processes were required for the year ended 30 June 2024, or more recently, as a result of feedback that has been received by the Company from the stated key resources and relationships on which the business relies.

The Company takes due account of any impact that its activities may have on the environment and seeks to minimise this impact whenever possible. Through various procedures and systems that the Company operates, especially in the manufacturing process, the Company ensures full compliance with health and safety and environmental legislation relevant to its activities. CAP-XX is certified to IOS9001:2015.

• Monitoring the effectiveness of CAP-XX’s risk management systems, including compliance with regulatory requirements;
• Satisfying itself through regular reporting and oversight that appropriate internal and external control mechanisms are in place and are being implemented; and
• Approving CAP-XX’s financial statements and monitoring financial performance against the approved budget.

The Board has established Audit and Remuneration Committees. Full details of which are contained in the Corporate Governance sections of the Company’s website.

The Board receives regular feedback from its external auditors on the state of its risk management and internal controls. The Board does not consider it would be appropriate to have its own internal audit function at the present time, given the Company’s size and nature of its current operations. The Group does complete regular fraud and internal risk questionnaires which are completed and reviewed on a six-monthly basis.

At present the internal audit of financial controls form part of the responsibilities of the Group’s finance function.

The board (and any committees) should be provided with high quality information in a timely manner to facilitate proper assessment of the matters requiring a decision or insight.

The board should have an appropriate balance between executive and non-executive directors and should have at least two independent non- executive directors. Independence is a board judgement.

The board should be supported by committees (e.g. audit, remuneration, nomination) that have the necessary skills and knowledge to discharge their duties and responsibilities effectively. Directors must commit the time necessary to fulfill their roles.

All of the non-executive Directors are subject to election by shareholders at the first Annual General Meeting after their appointment to the Board and at least one third of the Board must retire and seek re-election at every Annual General Meeting.

All Directors are expected to devote the necessary time commitments required by their position and where possible should attend all Board meetings. The Board meets at regular scheduled intervals and follows a formal agenda, papers and reports are sent to the Directors in a timely manner, prior to the Board meetings. It also meets as and when required. During the financial year ended 30 June 2024, eighteen Board meetings were held as well as two Audit Committee meetings and one Remuneration Committee meeting.

The Company’s Corporate Governance Statement (available on the CAP-XX website) provides further details, including how the Board evaluates its own performance.

The CAP-XX Annual Report and Accounts for the year ended 30 June 2024 also explains the governance framework and provides data on the number of Board and Committee meetings (and Director attendance at the same)

The board should not be dominated by one person or a group of people. Strong personal bonds can be important but can also divide a board.

As companies evolve, the mix of skills and experience required on the board will change, and board composition will need to evolve to reflect this change.

The Company encourages continuing education of its directors and officers where appropriate in order to ensure that they have the necessary skills and knowledge to meet their respective obligations to the Company.

As noted above the Company has put in place an Audit Committee and a Remuneration Committee. The responsibilities of both Committees are set out in the Corporate Governance Statement on the CAP-XX website (https://www.cap-xx.com/the-company/corporate-governance/) and the terms of reference.

The board performance review may be carried out internally or, ideally, externally facilitated from time to time. The review should identify development or mentoring needs of individual directors or the wider senior management team.

It is healthy for membership of the board to be periodically refreshed. Succession planning is a vital task for boards. No member of the board should become indispensable.

The Board’s annual effectiveness review was conducted, and high-level recommendations were discussed and agreed. These recommendations and the associated improvements are consistently being monitored at the regular Board meetings.

The performance of the individual Directors including the Chairman are monitored on an ongoing basis. On an annual basis, the Remuneration Committee evaluates the individual Director’s performance as part of the review of remuneration and share equity grants.

Given the scale and scope of the current operation and the risk management framework, the Directors are of the view that a formal evaluation process of the effectiveness of both the Audit and Remuneration Committees is not required at this stage. The need for an evaluation process is monitored on an on-going basis.

The Board and the Remuneration Committee will also regularly discuss the Board’s balance, the Board’s current skills set and remuneration to ensure that the Board structure is fit for purpose and is appropriate for the next phase of CAP-XX’s development and growth.

The composition of the Company’s Board including individual directors has changed in the past twelve months due to the resignation of one director and the appointment of three new directors during the year. The Board are still of the view that the above processes are appropriate for the Company’s requirements, given the size and nature of the CAP-XX business.

The Board uses the results of its evaluation process when considering the adequacy of the composition of the Board and any succession planning requirements. However, there are no plans at present for changes or additions to the Board and the Directors believe that the current Board meets the needs of the Company’s current and medium-term requirements.

The policy set by the board should be visible in the actions and decisions of the chief executive and the rest of the management team.
Corporate values should guide the objectives and strategy of the company.

The culture should be visible in every aspect of the business, including recruitment, nominations, training and engagement. The performance and reward system should endorse the desired ethical behaviours across all levels of the company.

The corporate culture should be recognisable throughout the disclosures in the annual report, website and any other statements issued by the company.

The CAP-XX Board and management conduct themselves ethically at all times and promote a culture that is in line with standards set out on the website. CAP-XX values its reputation for ethical behaviour and has a set of values that are at the core of its business philosophy.

• size and complexity; and
• capacity, appetite and tolerance for risk.

The governance structures should evolve over time in parallel with its objectives, strategy and business model to reflect the development of the company.

At present, the Board is satisfied with the Company’s corporate governance, given the Company’s size and the nature of its operations, and as such there are no specific plans for changes to the Company’s corporate governance arrangements in the shorter term.

There is a clear separation of the roles of Chief Executive Officer and Non-executive Chairman. The Chairman has overall responsibility for corporate governance matters in the Company, leadership of the board and ensuring its effectiveness on all aspects of its role.

The Chief Executive Officer leads the executive team and is responsible for implementing those actions required to deliver on the agreed strategy.

The matters reserved as the responsibilities of the CAP-XX board include:-

• Developing, providing input into and final approval of the Company’s strategic plan;
• Evaluating, approving and monitoring the strategic and financial plans and performance objectives of the Company;
• Reviewing, ratifying and monitoring systems of risk management and internal compliance and control, codes of conduct and legal compliance;
• Evaluating and monitoring annual budgets and business plans;
• Ensuring appropriate resources are available to senior management;
• Approving all accounting policies, financial reports and external communications by the Company;
• Appointing, re-appointing or removing CAP-XX’s external auditors; and
• Appointing, monitoring and managing the performance and remuneration of executive directors and senior executives.

Details of the Company’s audit and remuneration committees, including their terms of reference can be found here: https://www.cap-xx.com/aim-rule-26/

Beneath the Board there is an operational governance framework which facilitates the effective management of the business by an Executive Committee. This organisation structure is kept under continual review and evolves as the needs and requirements of the business changes as it grows and develops.

In particular, appropriate communication and reporting structure should exist between the board and all constituent parts of its shareholder base. This will assist:

• the communication of shareholders’ views to the board; and
• the shareholders’ understanding of the unique circumstances and constraints faced by the company.

It should be clear where these communication practices are described (annual report or website).

The communication and interaction between CAP-XX and its shareholders are explained in the disclosure above (see principle 2).

Audit and Remuneration Committee’s membership is included in the CAP-XX Annual Report for the year ended 30 June 2024 as well as the full disclosure of CAP-XX Directors remuneration. Responsibilities of both the Audit and Remuneration Committee’s responsibilities can be found on the CAP-XX website (available here https://www.cap-xx.com/aim-rule-26/)

Historical Annual and Interim Reports with all notices, circulars and results of resolutions since the Company’s ordinary shares were admitted to trading on in April 2006 can also be found on the CAP-XX website (available here https://www.cap-xx.com/investors/financial-performance/
The Company encourages two-way communication with both its institutional and private investors and responds quickly to all queries received. The Chairman talks regularly with the Group’s major shareholders and ensures that their views are communicated fully to the Board.

The Board recognizes the AGM as an important opportunity to meet private shareholders. The Directors are available to listen to the views of shareholders informally immediately following the AGM.