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 12 principles of Corporate Governance developed by the Quoted Companies Alliance.
1. Vision and Strategy
The board should express a shared view of the company’s vision and strategy, including detail of:
- what the company is working to achieve;
- the period in which its objectives are to be achieved; and
- what is required to achieve these objectives.
This view should be well communicated, both internally and externally.
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.
2. Managing and Communicating Risk and Implementing Internal Control
The board is responsible for putting in place and communicating a sound system to manage risk and implement internal control.
The management of risk is an essential business practice. Boards are expected to balance risk and return, threat and opportunity. Setting strategy includes determining the extent of exposure to the critical risks the company is willing and able to bear.
The Board has established Audit and Remuneration Committees, full details of which are contained in the Corporate Governance section.
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. At present the internal audit of financial controls forms part of the responsibilities of the Group’s finance function.
3. Articulating Strategy through Corporate Communication and Investor Relations
A healthy dialogue should exist between the board and all of its shareholders to enable shareholders to come to informed decisions about the company.
Appropriate communication and reporting structures should exist between the board and all constituent parts of its shareholder body. This will assist:
- the communication of shareholders’ views to the board; and
- shareholders’ understanding of the unique circumstances and constraints faced by that company.
The Board attaches great importance to providing shareholders with clear and transparent information on the Group’s activities, strategies and financial position.
The Group holds meetings with significant shareholders on a regular basis and regards the Annual General Meeting as a good opportunity to communicate directly with shareholders via an open question and answer session.
The Group lists contact details on its website should shareholders wish to communicate with the Board. All announcements and results, including those released via RNS, are available on the Group’s website.
4. Meeting the Needs and Objectives of your Shareholders
Directors should develop a good understanding of the needs and expectations of the company’s shareholders, as well as the motivations behind shareholder voting decisions.
No board ever wants to find itself in a position where it is voted down by shareholders. Accordingly, it is in the interests of the company to understand the view of shareholders before a potentially controversial or unusual proposal is put to them.
Companies with a dominant shareholder must be particularly aware of the need to hear the voices of and protect the interests of minority shareholders and must therefore consider whether it is necessary to put in place contractual arrangements such as a relationship agreement.
The Board is aware of the need to protect the interest of minority shareholders, and balancing these interests with those of institutional shareholders.
There are currently seven members of the Board which consists of the Non-Executive Chairman, the Chief Executive Officer, Group Finance Director, two divisional Executive Directors, a Non-Executive Director, and Non-Executive Director and Company Secretary. Ten board meetings are held per year.
Independent Non-Executive Director Appointment Terms
The Group has a policy of appointing non-executive directors who can provide an independent view of the Group’s activities.
The Board does not consider that the Group currently has a dominant shareholder where special contractual arrangements would be necessary to protect the interests of minority shareholders.
All directors must stand for re-election at the first annual general meeting after appointment and then every third anniversary. Details in relation to directors’ appointment and re-election are contained within the Group’s Articles of Association which are available on this website.
A description of the roles of the directors is included on the Company’s website under Board of Directors.
The Group publishes all relevant material, according to QCA definitions, on its website. This includes annual reports and shareholder circulars.
5. Meeting Stakeholder and Social Responsibilities
Good governance includes the board considering the company’s impact on society, the community and the environment.
Every company should consider its corporate social responsibilities (CSR). Any CSR policy should include narrative on social and environmental issues and should show how these are integrated into the company’s strategy. Integrating CSR into strategy will help create long term value and reduce risk to shareholders and other stakeholders.
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.
The environmental impact of the Group’s activities is carefully considered and the maintenance of high environmental standards is a key priority.
6. Using Cost Effective and Value added Arrangements
There is a direct cost of delivering effective corporate governance. It is therefore vital to adopt effective and proportionate governance arrangements. The company should benefit from clear and efficient decision making processes.
There should be a clear understanding between the board and the shareholders of how value is enhanced and abuses prevented through effective corporate governance. Publishing relevant key performance indicators on these measures may assist.
While the Group recognises the importance of high standards of corporate governance the Board has sought to address the matter in a proportionate way having regard to the size and resources of the Group.
The principal risks faced by the Group are addressed by the appointment of a group of experienced executive and non-executive directors and a team of appropriately qualified professional advisers.
The executive directors are closely involved in the day to day operations of the Group and the operating subsidiaries and report to the Board in detail at least monthly.
7. Developing Structures and Processes
The company should determine governance structures and processes appropriate to it, based on:
- corporate culture;
- the capacity and appetite for risk and the tolerances of the company; and
- business complexity.
There should be a clear statement as to how the company intends to fulfil its objectives.
The company’s governance structures should evolve in parallel with the company’s strategy and business.
Details of the Group’s corporate governance arrangements are provided on this page and in the Governance section of this website.
8. Being Responsible and Accountable
Responsibility for corporate governance lies with the chairman.
The chairman must therefore determine where responsibility lies within the company for the delivery of key outputs.
The board has a collective responsibility and legal obligation to promote the long term success of the company.
This website page provides full disclosure on the Group’s corporate governance.
Descriptions of the roles of directors are included under Board of Directors.
9. Having Balance on the Board
The board should not be dominated by one person or a group of people.
The board must not be so large as to prevent efficient operation but must not be too small to be ineffective.
The board should be balanced between executive and non-executive directors and should have at least two independent non-executive directors.
The board is comprised of four executive directors and three non-executive directors.
Whilst the Group is guided by the provisions of the Combined Code in respect of the independence of directors, it gives regard to the overall effectiveness and independence of the contribution made by directors to the Board in considering their independence, and does not consider a director’s period of service in isolation to determine their independence.
10. Having Appropriate Skills and Capabilities on the Board
The board must have an appropriate balance of functional and sector skills and experience.
The board should be supported by committees (audit, remuneration, nomination and others) that have the necessary character, skills and knowledge to discharge their duties and responsibilities effectively.
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 have been summarised below.
- To meet at least once a year, and otherwise as required, with the external auditor in attendance.
- Appointment of external auditors.
- To agree the nature and scope of the audit with the external auditors.
- To review the effectiveness of the Group's internal control framework.
- To review the effectiveness of the Group's risk management framework.
- To review the annual financial statement and challenge where necessary the actions and judgements of management in relation to these.
- To set the remuneration for the board including basic pay, any bonus basis and awards and participation in share incentive schemes.
- To agree the terms of employment of all board members, including those on cessation of employment, ensuring all payments are fair to both the employee and the Group.
- To continue to review the appropriateness of the remuneration policies, with reference to the conditions across the Group and up to date information in other companies.
- To ensure that all requirements on the disclosure of remuneration are fulfilled.
- To meet at least twice a year and otherwise as required.
- To attend the Annual General Meeting to answer any shareholder questions on the Committee's activities.
11. Evaluating Board Performance and Development
The board should periodically review its performance, as well as the performance of its board committees and the performance of individual board members. Performance appraisal may include external review and may also identify development needs.
The board should ensure that it possesses the skills and experience to meet present and future business needs. Ineffective directors (whether executive or non-executive) must be identified, supported to become effective and, if that is not possible, replaced. Review, development and mentoring of directors and the wider management team are very important.
It is healthy for membership of the board to be periodically refreshed, regardless of performance issues.
Succession planning is a vital task for boards. No member of the board should become indispensable. How well succession is managed (particularly of the chairman and the chief executive) represents a key measure of the effectiveness of a board.
The Group undertakes regular monitoring of personal and corporate performance using agreed key performance indicators and detailed financial reports. Responsibility for assessing and monitoring the performance of the executive directors lies with the independent non-executive directors.
Key performance indicators include underlying pre-tax profit, cash generation, sales, bookings and gross profit margins, and earnings per share. Agreed personal objectives and targets including financial and non-financial metrics are set each year for the executive directors and performance measured against these metrics.
Succession planning is considered by the main board.
12. Providing Information and Support
The whole board and its committees should be provided with high quality information in a timely manner to facilitate proper assessment of the matters requiring a decision or insight.
Non-executive directors should be provided with access to all information they require and to external advice as necessary.
The Board is provided with detailed financial reports of the Group’s financial performance on a regular monthly basis with more frequent updates if required.
Detailed written reports are provided to the Group’s regular board meetings. Written recommendations from the executive directors are delivered in a timely manner with the supporting documentation, supplemented as required by reports from external professional advisers so that the board can constructively challenge recommendations before making decisions.
Non-executive directors have a contractual right to external advice, at the Group’s expense, when necessary.