Principles of Corporate Governance
The Board of Directors recognises the importance of good corporate governance to enhance and protect shareholder value. As the Company’s shares are registered on the AIM market of the London Stock Exchange, the Company is not required to report against the UK Corporate Governance Code published in May 2010 (the ‘Code’). However, the Board supports the principles contained in the Code and is committed to applying them, where they are appropriate, given the Company’s size. The following describes how these principles have been applied.
Board of Directors
The Board comprises the Non-Executive Chairman, the Senior Independent Director, the Chief Executive Officer, Chief Finance Officer, the Chief Technology Officer and three Non-Executive Directors. The Board considers that the Senior Independent Director and the Non-Executive Directors are independent in character and judgement and meet the criteria for independence set out in the Code. It is noted that one of the Non-Executive Directors is independent although he represents a significant shareholder.
The Company’s articles of association require that all Directors are subject to election by shareholders at the first Annual General Meeting (‘AGM’) following their initial appointment, and at each AGM one-third of the Directors retire by rotation and offer themselves for re-election.
The Company maintains directors’ and officers’ liability insurance cover, the level of which is reviewed annually.
The terms of reference of the Board Committees are available on request from the Company Secretary.
The Audit Committee currently comprises Steve Callaghan and Mike Lloyd, under the Chairmanship of Aidan Hughes. Meetings of the Committee are attended, at the invitation of the Committee, by the external auditors, the Chief Executive Officer and the Chief Financial Officer. The Committee meets with the external auditors on a regular basis without the Executive Directors being present. The Committee is authorised to seek any information it requires from any employee of the Group in order to perform its duties, and obtain any outside legal or other independent professional advice it requires at the Company’s expense. During its meetings the Audit Committee considered, amongst other items, the following:
- the integrity of the financial statements and other formal announcements relating to the Group’s financial performance, the going concern status of the Group and judgements that are contained within the financial statements;
- the Group’s internal control and risk management policies and systems, and their effectiveness;
- the Group’s whistle-blowing procedures to ensure that employees are able to raise concerns, in confidence, about possible wrong doing in financial reporting and other matters;
- the requirements for an internal audit function. The Audit Committee is satisfied that the Group does not currently require an internal audit function;
- the relationship with the external auditor, in particular satisfying itself as to the independence and effectiveness of the external auditor; and
- the policy on the engagement of the external auditors to supply non-audit services
Technical and Operations Committee
The Technical and Operations Committee was set up during 2014. The members of the committee are Mike Lloyd as Chairman and James Falla, the Chief Operating Officer, Rob Trezona and Mark Selby, the Chief Technology Officer. The committee advises the Board on issues relating to the execution of the Group’s technology programme.
The members of the Committee are Steve Callaghan as Chairman of the Committee and Alan Aubrey, Aiden Hughes and Mike Lloyd. The committee governs all aspects of the Executive Directors’ and Chairman’s remuneration and reward arrangements and advises on employee benefit structures throughout the Group.
Nomination & Governance Committee
The members of this Committee comprises Mike Lloyd and Steve Callaghan, under the Chairmanship of Alan Aubrey. The Committee considers the composition of the Board and is responsible for reviewing the composition and structure of the Board and for identifying and recommending candidates for Executive and Non-Executive Director positions.
Communication with Shareholders
The Board is accountable to the Company’s shareholders and as such it is important for the Board to maintain effective communications with shareholders. The Company maintains an active dialogue with institutional shareholders through regular briefing meetings and formal presentations by the Executive Directors following the interim and preliminary financial results. During the year, the views of major shareholders are communicated to the Board and Senior Independent Director through briefings by the Company’s brokers and face-to-face meetings with the Chairman. Press releases are issued throughout the year. Press releases, corporate presentations and the Annual Report are available to view on the website.
The AGM provides an opportunity for communication with all shareholders and the Board encourages the shareholders to attend and welcomes their participation. The Directors attend the AGM and are available to answer questions.
The Directors acknowledge their responsibility for establishing and maintaining the Group’s systems of internal control. These are designed to safeguard the assets of the Group and to ensure the reliability of financial information for both internal and external use. The Group prepares detailed budgets and cash flow projections, which are approved annually by the Board and updated regularly throughout the year. Detailed management accounts and working capital cash flow projections are prepared on a monthly basis and compared to budgets and projections to identify any significant variances. The Board reviews, identifies, evaluates and manages the significant risks that face the Group. Any system of internal control can only provide reasonable, and not absolute, assurance that material financial irregularities will be detected or that risk of failure to achieve business objectives is eliminated. The Directors, having reviewed the effectiveness of the system of internal financial, operational and compliance controls and risk management, consider that the systems of internal control operated effectively throughout the financial year to 30 June 2015 and up to the date that the financial statements were signed.
Conflicts of Interest
The Group has in place procedures for the disclosure and review of any conflicts or potential conflicts of interest which the Directors may have and for the authorisation of such conflicts by the Board. During the year there were no such conflicts of interest.