Corporate Governance Code
High standards of Corporate Governance are a key priority of the Board and details of how the Company addresses key governance issues are set out in this section of the website by reference to the 10 principles of Corporate Governance developed by the Quoted Companies Alliance.
1. Establish strategy and business model which promote long-term value for shareholders
The board must be able to express a shared view of the company’s purpose, business model and strategy. It should go beyond the simple description of products and corporate structures and set out how the company intends to deliver shareholder value in the medium to long-term. It should demonstrate that the delivery of long-term growth is underpinned by a clear set of values aimed at protecting the company from unnecessary risk and securing its long-term future.
The Group’s vision is to be a leader in specialist industrial and ruggedised computers, electronic components, secure communications systems and battery powered solutions to the electronics market.
The Group intends to deliver long-term shareholder value through a combination of organic and acquisitive growth in these two operating divisions.
2. Seek to understand and meet shareholder needs and expectations
Directors must develop a good understanding of the needs and expectations of all elements of the company’s shareholder base.
The board must manage shareholders’ expectations and should seek to understand the motivations behind shareholder voting decisions.
The Board is aware of the need to protect the interest of all shareholders, balancing the interests of minority shareholders with those of institutional shareholders.
The Board regards regular communications with shareholders as one of its key responsibilities. The Company is committed to engaging with shareholders and this effort is led by the Chief Executive Officer and Group Finance Director.
In order to gauge shareholder sentiment, the Company meets with key institutional shareholders typically every six months and when necessary solicits feedback from its larger shareholders via its nominated adviser. The Company holds an open Q&A session at every Annual General Meeting and attends investor events to engage with retail shareholders. From time to time, the Company holds investor days at its sites.
This communication allows the board to understand the shareholder’s views, and to ensure that the strategies and objectives of the Group are aligned with shareholders. In its decision-making, the Board will have regard to the ascertained expectations and needs of its shareholders (as appropriate in accordance with its statutory and fiduciary duties).
The Company welcomes shareholder contact at any time and communications should be sent in the first instance to the Company Secretary at: firstname.lastname@example.org
3. Take into account wider stakeholder and social responsibilities and their implications for long-term success
Long-term success relies upon good relations with a range of different stakeholder groups both internal (workforce) and external (suppliers, customers, regulators and others). The board needs to identify the company’s stakeholders and understand their needs, interests and expectations.
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.
The Directors are aware of the impact the business activities have on the communities in which the Group’s businesses operate.
The Group’s responsibilities to stakeholders including staff, suppliers and customers and the wider society are also recognised as critical to the delivery of the Company’s business objectives.
The Company regularly holds review meetings with its key customers and suppliers and responds as appropriate.
The environmental impact of the Group’s activities is carefully considered, and the maintenance of high environmental standards is a priority. The Group is committed to reducing that impact as far as reasonably possible through full regulatory compliance, recycling programmes and other initiatives. The company is certified to ISO14001:2015
The executive members of the board hold regular staff group and individual update meetings in order to communicate the company’s strategy, its progress towards targets and to solicit opinion.
The Board has regard to the feedback of relevant stakeholders in its decision-making and the formulation of strategy.
4. Embed effective risk management, considering both opportunities and threats, throughout the organisation
The board needs to ensure that the company’s risk management framework identifies and addresses all relevant risks in order to execute and deliver strategy; companies need to consider their extended business, including the company’s supply chain, from key suppliers to end-customer.
Setting strategy includes determining the extent of exposure to the identified risks that the company is able to bear and willing to take (risk tolerance and risk appetite).
The Board has established Audit and Remuneration Committees, full details of which are contained in the [Corporate Governance section of the Groups website].
The Group 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 Group’s size and nature of its business. The Group does however maintain commercial risk registers by subsidiary which are reviewed and updated at monthly Executive Committee meetings.
At present the internal audit of financial controls forms part of the responsibilities of the Group’s finance function.
5. Maintain the board as a well-functioning, balanced team led by the chair
The board members have a collective responsibility and legal obligation to promote the interests of the company, and are collectively responsible for defining corporate governance arrangements. Ultimate responsibility for the quality of, and approach to, corporate governance lies with the chair of the board.
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 fulfil their roles.
The Board has Four Executive Directors and three Non-Executive Directors (including the Chairman).
The Board considers that of its three Non-Executive Directors, none of those are independent however they are considered independent in terms of character and judgement in how they conduct their roles, giving a balance between Executive Directors and Non-Executive Directors. [Further details are given in the Board structure section of the site LINK]
The Board has an established committee structure, with an Executive Committee, Audit Committee, and Remuneration Committee. The Audit and Remuneration Committees are comprised of Non-Executive Directors.
The Company’s Corporate Governance Statement (available on the website) provides further details, including how the Board evaluates its own performance.
The board actively encourages and supports its members in furthering their knowledge and skills through both training and education programmes.
The annual report and accounts (available on the website) also explains the governance framework and provides data on the number of Board and Committee meetings (and Director attendance at the same).
6. Ensure that between them the directors have the necessary up-to-date experience, skills and capabilities
The board must have an appropriate balance of sector, financial and public markets skills and experience, as well as an appropriate balance of personal qualities and capabilities. The board should understand and challenge its own diversity, including gender balance, as part of its composition.
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.
Directors who have been appointed to the Group have been chosen because of the skills and experience they offer.
Full biographical details of the directors are included under Board of Directors.
As noted above, the Group has put in place an Audit Committee and a Remuneration Committee. The responsibilities of each of these are set out in the corporate governance statement and the terms of reference.
The Board recognises that it needs to improve its diversity and the board aims to address this through succession planning and future appointments.
7. Evaluate board performance based on clear and relevant objectives, seeking continuous improvement
The board should regularly review the effectiveness of its performance as a unit, as well as that of its committees and the individual directors.
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.
At the highest level, the Board judges its own performance by reference to the Company’s progress against the targets set out in the Company’s strategic plan.
The Board formally evaluates its own performance at least once a year with an assessment of its effectiveness. Areas are identified where improvements can be made, and active steps are taken to make improvements accordingly.
The Chief Executive reviews the performance of the Executive Directors on a periodic basis and reports to the Remuneration Committee.
The performance of the Directors, the Chairman and of the Board are monitored on an ongoing basis. Annually the Remuneration Committee evaluates performance as part of the review of remuneration and discretionary bonus awards.
The Board and the Remuneration Committee evaluate the Board performance, including but not limited to Board balance, Board skills and remuneration, to ensure that the Board structure is fit for purpose and is appropriate for the next phase of the Group’s development and growth.
The results of this review are set out in the annual report which is available on the Group website.
8. Promote a corporate culture that is based on ethical values and behaviours
The board should embody and promote a corporate culture that is based on sound ethical values and behaviours and use it as an asset and a source of competitive advantage.
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 Board is committed to embodying and promoting a sound corporate culture and has endorsed various policies which require ethical behaviour of staff and relevant counterparties (such as those mandating anti-corruption, anti-counterfeiting, anti-modern day slavery, fair treatment and equality of opportunity).
The board and management conduct themselves ethically at all times and promote a culture in line with the standards set out on the website. The Group values its reputation for ethical behaviour and has a set of values that are at the core of its business philosophy.
9. Maintain governance structures and processes that are fit for purpose and support good decision-making by the board
The company should maintain governance structures and processes in line with its corporate culture and appropriate to its:
- 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.
The Company’s Corporate Governance Statement explains the structures which are in place at Board and Committee level and how these interact, including the roles which individual Directors fulfill on the Board.
Beneath the Board, there is an operational governance framework which facilities the effective management of the business by the Executive Directors. Further details are contained in the annual report and accounts (available here).
This organisational structure is kept under continual review and evolves as the needs of the business change as it grows and develops.
10. Communicate how the company is governed and is performing by maintaining a dialogue with shareholders and other relevant stakeholders
A healthy dialogue should exist between the board and all of its stakeholders, including shareholders, to enable all interested parties to come to informed decisions about the company.
In particular, appropriate communication and reporting structures 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 Company’s governance structure (as a whole) is explained through the Corporate Governance Statement and the Terms of Reference which accompany it, all of which are available on the website, and is supplemented by the disclosures provided in this compliance statement and the explanations set out in the ‘Corporate Governance’ section of the report and accounts (available here).
The communication between the Company and its shareholders are explained in the disclosure above (see principle 2).
A report from the Audit Committee is contained in the annual report and accounts. A Remuneration Committee report is not included in the 2018 annual report and accounts, but will be introduced in the annual report and accounts for the 2019 financial year. There are however, full director’s remuneration disclosures. Historic reports and accounts, along with all notices and circulars for the last five years, are available on the website.