Updated: 14th February 2019
As an AIM listed company, we recognise the importance of applying sound governance principles in the successful running of the Company. We adopt and adhere to the QCA Corporate Governance Code for Small and Mid-Size Quoted Companies (the QCA Code) in so far as is practical and appropriate.
Details of our application of the QCA code principles:
We believe that good corporate governance is about having the right people (in the right roles), working together, and doing the right things to deliver value for shareholders over the medium to long-term.
Principle 1 - Establish a strategy and business model which creates long-term value for shareholders
Creating long-term shareholder value is dependent on high quality strategic decisions being made by our board of directors and senior management, including the ability to make wise investments and generate a healthy return on invested capital. It is a result of both growth and operating efficiency.
We build long-term relationships with our customers and working closely with them to develop in-depth knowledge of their innovation needs, business and processes, with a specific focus on delivering measurable returns on investment.
Company’s business model and strategy, including key challenges in their execution (and how those will be addressed)
As set out in the Annual Report
Re-setting the Companies strategic goals
Strategic goal progress reviews
Principle 2 - Seek to understand and meet shareholder needs and expectations
The Board considers effective communication with shareholders to be very important and encourages regular dialogue with both institutional and private investors.
In particular, we strive to understand who the key shareholders are as well as their investment strategies and other interests. This information is key not only in engagement with shareholders, but also in exploring how to better communicate corporate strategies to attract the type of long-term shareholders we want.
Communication with shareholders happens on a regular basis and whenever it is requested.
Our shareholder liaison contacts with responsibility for understanding and meeting shareholder needs and expectations are:
Position - name
Chairman of the Board - Nicholas Habgood
Chief Executive Officer - Luke McKeever
Chief Financial Officer - Eric Dodd
Public Relations Advisors - Alma PR
Each member of the appointed liaison team keeps the other team members informed of significant matters discussed with shareholders and of shareholders’ views.
The Company has institutional shareholders and is, where practicable, willing to enter into a dialogue with them. The Chief Executive and the Chief Financial Officer meet regularly with institutional investors within the confines of relevant legislation and guidance. The Company’s engagement plan with institutional shareholders is set out below:
Frequency of meetings
At least twice a year
Form of meetings
In-person; telephone conference
Communications plan with all shareholders
In accordance with AIM requirements
Oversight over shareholder communication channels
Chairman of the Board
The Board invites communication from its investors and encourages participation by them at the AGM. All Board members present at the AGM are available to answer questions from shareholders. Notice of the AGM is in excess of 14 clear days and the business of the meeting is conducted with separate resolutions, voted on initially by a show of hands and with the result of the voting being clearly indicated.
Analyst reports are shared with the Board.
Principle 3 - Take into account wider stakeholder and social responsibilities and their implications for long-term success
The Board values good relations with the Company’s key stakeholder groups. We have made a considerable effort to understand their needs, interests and expectations, as set out below.
Objectives: Provide education sessions; promote strong relationships between employees; encourage sharing of views; improve products, processes and outcomes; creation of a culture that is positive, engaged and energetic
Customers and key suppliers
Objectives: Foster positive relationships; find innovative solutions; obtain feedback; guide strategic positioning and product offering
Environment and social impact
Objectives: We aim to manage our operations in ways that are environmentally sustainable, economically feasible and socially responsible.
Principle 4 - Embed effective risk management, considering both opportunities and threats, throughout the organisation
The Board is responsible for the Company’s system of internal control and for reviewing its effectiveness. Such a system is designed to mitigate the risk of failure to achieve business objectives and can only provide reasonable, but not absolute, assurance against material misstatement or loss.
The internal control procedures are delegated to Executive Directors and senior management in the Group, operating within a clearly defined departmental structure. The Board balances performance and compliance by ensuring that management’s actions are consistent with corporate strategy, reflective of the culture of the business, and in-line with the organization’s risk tolerance. This is aided by risk identification processes to identify, consolidate and prioritise the risks facing it, as set out below.
Opportunities and threats
The principle risks and uncertainties facing the Company are set out in the Annual Report.
Principle 5 - Maintain the Board as a well-functioning, balanced team led by the Chair
Frequency of reporting
The Board receives information and reporting from key parts of the business each month.
Quality of information
The information, which is always provided in a timely manner, is of a high quality and comprehensive, ensuring that the Board is well informed and has the tools to facilitate proper assessment of matters which require its insight and decision making.
Balance of Executive and Non-Executive Directors
Skills of each director
See biography and Annual Report
Nick focuses on delivering long-term shareholder value as the key priority. He achieves this by providing strong and active leadership of the Board team, in shaping strategy and providing guidance when difficult decisions are required.
Separation of the Chairman and Chief Executive role
Senior Independent Non-Executive Director
The Board does not believe it is appropriate to have a Senior Independent Non-Executive Director at this time given the size of the Company.
Conflicts of interest
The Board may authorise any actual or potential conflicts of interest. The Board considers directors’ conflicts of interest at each meeting.
Principle 6 - Ensure that the Directors collectively have all appropriate skills, capabilities and experience
Board composition is at the heart of good corporate governance and high performance. Accordingly, we think strategically about the role board composition plays in meeting our strategic goals.
Board dominance risk
In all new appointments, the Board aims to appoint those who bring new and diverse attributes to its complexion.
Principle 7 - Evaluate Board performance based on clear and relevant objectives, seeking continuous improvement
We recognise that Board evaluations can bring substantial benefits and can contribute significantly to performance improvements on the organisational, Board and individual member level
We joined AIM in 2014 and have previously evaluated board performance informally. However, as the Company has grown, we have purposefully sought to identify and surmount the barriers impeding our effectiveness. In June 2018, we conducted our first formal review of board performance and intend to formally review board performance annually.
Board assessment frequency
Date of last assessment
Board member training
Available on request, or if Chairman feels it is necessary
Board changes in 2018
Additions(s): Luke McKeever (CEO)
Removal(s): Andre Brown
Directors are subject to election by shareholders at the first opportunity after their appointment.
Board size planning
The Board considers it also has a good mix of backgrounds, views and capabilities. However, it is assessing the possibility of additions to accelerate achievement of the Company’s strategic goals.
Principle 8 - Promote a corporate culture that is based on ethical values and behaviour
The Board bears ultimate responsibility for promoting ethical behaviour. Doing so boosts employee morale, increase performance beyond bare minimums and retains employees in the long run.
Our corporate ethical values involve all employees with each taking personal responsibility for his or her own performance and results.
Supporting ethical policies
Principle 9 - Maintain governance structures and processes that are fit for purpose and support good decision-making by the Board
Principle 10 - Communicate how the Company is governed and is performing by maintaining dialogue with shareholders and other relevant stakeholders
The Board is responsible to shareholders for the proper management of the Company and meets formally at least nine times a year to set the overall direction and strategy of the Company, to review operating and financial performance and to consider and advise on senior management appointments. The Board also monitors and approves financial policy and budgets, including capital expenditure over an agreed limit. All key operational decisions are subject to Board approval.
The Board has an Audit Committee and a Remuneration Committee to oversee and consider issues of policy outside of main Board meetings. The Board does not consider it necessary to have a separate Nominations Committee and any future recommendations for appointments to the Board will be considered by the Board as a whole.
The audit committee is chaired by Robert Fenner. The Company's chairman can attend committee meetings as an observer. The audit committee meet formally at least two times a year and otherwise as required. It has the responsibility for ensuring that the financial performance of the Company is properly reported on and reviewed and its role includes monitoring the integrity of the financial statements of the Company (including annual and interim accounts and results announcements), reviewing internal control and risk management systems, reviewing any changes to accounting policies, reviewing and monitoring the extent of the non-audit services undertaken by external auditors and advising on the appointment of external auditors.
The most recent Audit Committee report may be found here.
The remuneration committee is chaired by Robert Fenner who is also a non-executive director. The Company's chairman can attend committee meetings as an observer. The remuneration committee meet not less than once a year and at such other times as required. It has responsibility for determining, within the agreed terms of reference, the Company's policy on the remuneration packages of the Company's chief executive, chairman, and the executive directors, the company secretary, senior managers and such other members of the executive management as it is designated to consider. The remuneration committee also has responsibility for determining (within the terms of the Company's policy and in consultation with the chairman of the Board and/or the chief executive officer) the total individual remuneration package for each executive director, the company secretary and other designated senior executives (including bonuses, incentive payments and share options or other share awards). The remuneration of non-executive directors will be a matter for the chairman and executive directors of the Board. No director or manager is allowed to partake in any discussions as to their own remuneration. In addition, the remuneration committee has the responsibility for reviewing the structure, size and composition (including the skills, knowledge and experience) of the Board and giving full consideration to succession planning.
The most recent Renumeration Committee report may be found here.
Board and Committee attendance
Times Board formally met in past 12 months
Times committees formally met in past 12 months
Audit committee: 2 times
Renumeration committee: 3 times
Protocol where a director is unable to attend a meeting
Comments circulated prior to meeting to the chairman
Eligible to attend
The Board has not experienced a situation where a significant proportion of votes have been cast against a resolution at any general meeting in the past 12 months. However, if this did occur in the future, the Board will take steps to understand the reasons behind that vote result, and, where appropriate, explain any different action it has taken, or will take, as a result of the vote.