The Board is accountable to the Company’s shareholders for good corporate governance and it is the objective of the Board to attain a high standard of corporate governance. Changes to AIM rules on 30 March 2018 require AIM companies to apply a recognised corporate governance code by 28 September 2018. The corporate governance framework which the group operates, including board leadership and effectiveness, board remuneration, and internal control is based upon practices which the board believes are proportional to the size, risks, complexity and operations of the business and is reflective of the group’s values. Of the two widely recognised formal codes, we have therefore decided to adhere to the Quoted Companies Alliance’s (QCA) Corporate Governance Code for small and mid-size quoted companies (revised in April 2018 to meet the new requirements of AIM Rule 26). The QCA has stated what it considers to be appropriate arrangements for growing companies and asks companies to provide an explanation about how they are meeting the principles through the prescribed disclosures. We have considered how we apply each principle to the extent that the board judges these to be appropriate in the circumstances, and below we provide an explanation of the approach taken. The board considers that it does not depart from any of the principles of the QCA Code.
This statement sets out the corporate governance procedures that are in place.
Board of Directors
The QCA Code requires that the boards of AIM companies have an appropriate balance between executive and non-executive directors of which at least two should be independent.
The Board of directors (the ‘Board’) consists of a Non-Executive Chairman, three Executive Directors and three Non-Executive Directors.
The responsibilities of the Non-Executive Chairman and the Chief Executive Officer are clearly divided. 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 that the Non-Executive Directors are properly briefed on matters. Prior to each Board meeting, Directors are sent an agenda and Board papers for each agenda item to be discussed. Additional information is provided when requested by the Board or individual Directors.
The Chief Executive Officer has the responsibility for implementing the strategy of the Board and managing the day to day business activities of the group through his chairmanship of the executive committee.
The Non-Executive Directors bring relevant experience from different backgrounds and receive a fixed fee for their services and reimbursement of reasonable expenses incurred in attending meetings.
The Board retains full and effective control of the Group. This includes responsibility for determining the Group’s strategy and for approving budgets and business plans to fulfil this strategy. The full Board ordinarily meets bi-monthly.
The Company Secretary is responsible to the Board for ensuring that Board procedures are followed and that the applicable rules and regulations are complied with. All Directors have access to the advice and services of the Company Secretary, and independent professional advice, if required, at the Company’s expense. Removal of the Company Secretary would be a matter for the Board.
The Board has a process for evaluation of its own performance which is carried out annually.
As appropriate, the Board has delegated certain responsibilities to Board committees.
The Audit Committee currently comprises Clare Spottiswoode CBE (Chair), Professor Keith Jackson and Jeremy Millard.
The committee monitors the integrity of the Group’s financial statements and the effectiveness of the audit process. The committee reviews accounting policies and material accounting judgements. The committee also reviews, and reports on, reports from the Group’s auditors relating to the Group’s accounting controls. It makes recommendations to the Board on the appointment of auditors and the audit fee. It has unrestricted access to the Group’s auditors. The committee keeps under review the nature and extent of non-audit services provided by the external auditors in order to ensure that objectivity and independence are maintained.
The Remuneration Committee currently comprises Keith Jackson (Chairman), Clare Spottiswoode CBE and Jeremy Millard. It is responsible for making recommendations to the Board on remuneration policy for Executive Directors and the terms of their service contracts, with the aim of ensuring that their remuneration, including any share options and other awards, is based on their own performance and that of the Group generally.
The nomination committee currently comprises Keith Jackson (Chairman), Jeremy Millard and Clare Spottiswoode CBE. It is responsible for providing a formal, rigorous and transparent procedure for the appointment of new Directors to the board.
Senior Independent Director
Clare Spottiswoode CBE is the senior independent Director.
Risk management and internal control
The Board is responsible for the systems of internal control and for reviewing their effectiveness. The internal controls are designed to manage rather than eliminate risk and provide reasonable but not absolute assurance against material misstatement or loss. The Audit committee reviews the effectiveness of these systems primarily by discussion with the external auditor and by considering the risks potentially affecting the Group.
The Group does not consider it necessary to have an internal audit function due to the small size of the administration function. Instead there is a detailed Director review and authorisation of transactions. The annual audit by the Group auditor, which tests a sample of transactions, did not highlight any significant system improvements in order to reduce risk.
The Group maintains appropriate insurance cover in respect of actions taken against the Executive Directors because of their roles, as well as against material loss or claims of the Group. The insured values and type of cover are comprehensively reviewed on a periodic basis.
The Board recognises its legal responsibility to ensure the well-being, safety and welfare of its employees and maintain a safe and healthy working environment for them and for its visitors. A Health and safety report is reviewed at each Board meeting and policies and procedures are independently reviewed to ensure compliance with best practice.
Promoting Ethical Values and Behaviours
The Board has primary responsibility for ensuring that the Group operates according to the highest ethical standards. The Directors believe that the main determinant of whether a business behaves ethically and with integrity is the quality of its people. The Directors have responsibility for ensuring that individuals employed by the Group demonstrate the highest levels of integrity. In addition, the Group has a formal Share Dealing Code.
Share Dealing Code
The Group has adopted a share dealing code to ensure directors and certain employees do not abuse, and do not place themselves under suspicion of abusing inside information of which they are in possession and to comply with its obligations under the Market Abuse Regulation ("MAR") which applies to the Group by virtue of its shares being traded on AIM. Furthermore, the Group's share dealing code is compliant with the AIM Rules for Companies published by the London Stock Exchange (as amended from time to time).
Under the share dealing code, the Group must:
- disclose all inside information to the public as soon as possible by way of market announcement unless certain circumstances exist in which the disclosure of the inside information may be delayed;
- keep a list of each person who is in possession of inside information relating to the Group;
- procure that all persons discharging managerial responsibilities and certain employees are given clearance by the Group before they are allowed to trade in Group securities; and
- procure that all persons discharging managerial responsibilities and persons closely associated to them notify both the Group and the Financial Conduct Authority of all trades in Company securities that they make.
The Board recognises the importance of communicating with its shareholders and maintains dialogue with institutional shareholders and analysts, and presentations are made when financial results are announced. The Group retains the services of a professional financial public relations company, who assist with ensuring the accurate and timely communication of relevant corporate, financial and other regulatory news. The Annual General Meeting is the principal forum for dialogue with private shareholders who are given the opportunity to raise questions at the meeting, and to meet directors and senior managers of the business who make themselves available after each meeting. The Company aims to send out the notice of the Annual General meeting at least 21 working days before the meeting and publish the results of resolutions (which are usually voted on by a show of hands) in a Regulatory News Statement after the relevant meeting. Shareholders also have access to the Company’s website.
Meeting the needs and objectives of shareholders
The Board appreciates that the diverse shareholder base of the Group may have differing objectives for their investment in the business, and therefore the importance of ensuring that non-executive directors (“NED”) have an up to date understanding of these perspectives is well recognised. Directors will therefore routinely engage with both institutional and private investors and will seek out opinions on unusual or potentially controversial matters before adopting policy changes or tabling shareholder resolutions. The Board will always review written feedback reports from investors following financial results “roadshows” and will always consider information received from institutional voter advisory firms.
7th January 2019
|Establish a strategy and business model which promotes long-term value for shareholders.||See page 12 of the Annual Report to 30th April 2018|
|Seek to understand and meet shareholder needs and expectations.|
See the "Meeting the needs and objectives of shareholders" section above
|Take into account wider stakeholder and social responsibilities and their implications for long term success.||See the "Shareholder engagement" section above|
|Embed effective risk management, considering both opportunities and threats, throughout the organisation.||See page 21 of the Annual Report to 30th April 2018|
|Maintain the board as a well-functioning, balanced team led by the chair.||See the "Board of directors" section above|
|Ensure that between them the directors have the necessary up-to-date experience, skills and capabilities.||See page 22 of the Annual Report to 30th April 2018|
|Evaluate all elements of board performance based on clear and relevant objectives, seeking continuous improvement.||See the "Performance evaluation" section above|
|Promote a corporate culture that is based on sound ethical values and behaviours.||See the "Promoting ethical values and behaviours" section above|
|Maintain governance structures and processes that are fit for purpose and support good decision making by the board.||See the "Board Committees" section above|
|Communicate how the company is governed by maintaining a dialogue with shareholders and other relevant stakeholders.||See the "Shareholder engagement" section above|