The K3 Board is committed to maintaining high standards of corporate governance and adheres to the Quoted Companies Alliance’s (QCA) Corporate Governance Code for small and mid-size quoted companies (the “Code”).
Following changes to AIM rules on 30 March 2018, and revisions to said code in April 2018, there is a requirement for AIM companies to comply or explain against a recognised corporate governance code by 28 September 2018. The Code states what is considered to be appropriate corporate governance arrangements for growing companies, requiring companies to provide an explanation about how they are meeting the principles through certain prescribed disclosures.
The Chairman (Ian Mattioli) leads the Board and is responsible for directing the Company. He manages the Board agenda and ensures that all Directors have the capability, structure and support to effectively contribute their various talents and experience in the development and implementation of the Company’s strategy.
The Chairman is responsible for ensuring that the Board implements, maintains and communicates effective corporate governance processes and for promoting a culture of openness and debate designed to foster a positive governance culture throughout the Company.
The Board has considered how each principle is applied and provides below an explanation of the approach taken in relation to each and how they support the Company’s medium to long-term success.
Throughout FY18, the Group introduced a number of governance initiatives, these include:
- The Board extended the use of the Group’s Long Term Incentive Plan, taking the number on the scheme to 31. Additionally, further employee wellbeing initiatives were sought in order to attract and retain key personnel, these included a Death in Service policy and an agreement to implement a Healthcare Plan for all employees. The Healthcare Plan is due to be adopted in October 2018.
- The directors continue to nurture an open and communicative culture with senior management and staff, encouraging participation in idea sharing and suggestions. During FY18 a company intranet was launched in order to improve communication across the Group.
- The Group’s vision and culture was regularly reinforced through regular meetings with senior management and department heads.
As part of the year’s Corporate Governance exercise, we have identified the following areas which we intend to consider during FY19
- We will consider whether it is beneficial that a third party conducts a Board evaluation every three years.
- Consider utilising a strategy consultant to encourage greater participation in idea sharing and to further develop relationships.
- Consider whether it is beneficial that the Chairman is available to meet key shareholders on an annual basis.
The Board considers that it does not depart from any of the principles of the QCA Code.
This page was last updated: 27 September 2018
Principal 1: Establish a strategy and business model which promote long-term value for shareholders
K3’s vision for FY19 and beyond is to capitalise on its growing market share by continuing to target organic growth across the three established business streams, and the new TripleTrack stream detailed below, through its mantra of targeting a higher quality and value of client every year. This strategy is reinforced regularly throughout the Group with regular communication with senior management.
To achieve this we plan to leverage our data, technology and systems to find more sellers, more buyers and complete more transactions than any other UK adviser.
In 2018, we formed an FCA regulated subsidiary (KBS Capital Markets Ltd) in order to offer a ‘TripleTrack’ approach for our clients promoting them to Trade Buyers, Private Equity investors and the potential of an IPO / Flotation. We are excited by the upcoming launch of this new route to market and expect it to generate quality clients and mandates into the Corporate Finance division throughout FY19.
KBS Capital Markets, through its recently acquired FCA regulation, allows the Group to broaden its service offering by undertaking transactions involving the transfer of minority interests in client companies, as well as AIM listings. KBS Capital Markets provides the Group with the vehicle to advise on such transactions when required, which is deemed as low risk from a compliance perspective. We do not envisage a requirement to ‘regulate’ the other Group companies, which will continue to trade in the existing manner.
Group income is derived through a combination of non-contingent fee income and transaction fee income, each of which is secured through the following key strategies:
As a marketing centric company, direct marketing plays an important role in the development of each subsidiary’s reputation and growth. Marketing is embedded within the culture of the Group with every Director and employee aligned to preserve and improve upon the Group’s reputation within its marketplace. Regular marketing meetings are held between senior management, and it is given particular focus at Board meetings to ensure marketing activity is aligned to the Group’s vision of targeting higher value clients.
To maintain costs and economies of scale, significant importance has been placed on the Group’s technology base over recent years. Several new developments have streamlined working practices, encouraged greater client communication and improved the quality of data held by the Group. The Board see the development of systems and platforms as an ongoing commitment with new technologies planned for launch in FY19 and beyond.
The nature of the services that the Group offers means that it is partially reliant on forging good relationships with both clients and potential acquirers. Whilst technology has aided such relationships through greater communication, a personal relationship with K3 employees is essential. Ongoing training, development and monitoring of individuals is designed to improve both knowledge and customer service with the requirements of the client the key factor in any development plans put in place.
Challenges to executing the strategy
The key challenges to executing the Group’s strategy are outlined below:
Management consider there could be a risk to the Group’s growth strategy should it fail to retain or attract effective personnel. Mitigation – Subsequent to the AIM floatation, key members of staff were granted share options as part of an LTIP as an incentive to retain talent within the Group, this was widened within the financial year under an additional scheme to bring a total of 31 employees into the schemes. In addition, K3 Capital Group has continued to search for employee wellbeing incentives and during the year has established a Death In Service policy for all members of staff. Post year end, a Healthcare Plan and Employee Discount Scheme have been introduced, effective from the start of FY19. Additionally, employees receive an annual appraisal that reflect on past performance and set future goals. This, combined with regular social events, is deemed to be sufficient for improving and maintaining the attractiveness of employment within the Group, however Directors regularly review opportunities to improve.
With exception of KBS Capital Markets Ltd, K3 Capital Group predominantly operates within a partially unregulated market place and relies on a specific exemption from FCA in order to trade without regulation. It is deemed vital by management that the core of the Group continues to trade unregulated as this would require many of our employees to undertake suitable qualifications to continue in their role. It is our understanding that this would create an industry wide issue with many companies employing staff without FCA approved qualifications. Mitigation – The new client terms distributed through the financial year make it explicitly clear that the main Group trading entities are not FCA regulated and are not able to offer advice on minority share sales. There has been an internal team established to monitor all transactions in Heads of Agreement to ensure that the 50% threshold is not breached, whilst at the same time, our legal partners have been written to asking to inform the Group if a transaction falls below this level. An additional mitigation to this risk, comes from the newly regulated vehicle, KBS Capital Markets Limited. FCA approval was gained post year end and, as all Group contracts have the right to assign a client to Group companies, this will allow K3 to act on minority share sales and AIM listings in the future, where required. This provides greater flexibility when operating around regulated markets.
There was a large change in May 2018 in respect of data protection that could have threatened the marketing capabilities of businesses who were not prepared. The General Data Protection Regulation (GDPR) (Regulation (EU) 2016/679) is a regulation by which the European Parliament, the Council of European Union and the European Commission intend to strengthen and unify data protection for the individuals within the European union (EU) and covers firms that hold client data. Mitigation – Following the commissioning of a taskforce to comply with GDPR, there has been a significant amount of effort provided by our legal partners and the marketing team to ensure full compliance for the May deadline. All staff have been trained, which is ongoing, new procedures have been established, and all breaches are reported at plc board meetings to ensure that the matter is taken seriously.
Economical & Political
Macroeconomic conditions such as government regulation, political instability or recession could cause volatility in the UK economy. The wider economic impacts of the outcome of the EU referendum may also be felt throughout the UK economy. Mitigation – The continued Group policy of sourcing both clients and buyers from all sectors and industries, across all geographic regions of the UK is expected to sufficiently spread this risk of downturn in individual markets or areas. All income is derived from a diverse portfolio of clients, across a broad range of sectors. The economic impacts of the outcome of the EU referendum will be monitored and mitigated where possible by the Board with the appropriate action being taken in a timely manner.
Principal 2: Seek to understand and meet shareholder needs and expectations
The Group seeks to maintain, and determine ways to enhance, good relationships with its shareholders. The Company provides both annual and interim reports which are both published on the K3 Capital Group website, with the annual report posted out to shareholders on the register on the day the final results are announced to the market.
The above reports are supplemented by investor presentations and public announcements on matters of interest.
The Chief Executive Officer (John Rigby) and Chief Financial Officer (Andrew Melbourne) are primarily responsible for maintaining dialogue with shareholders; they are supported by the company’s broker (FinnCap), and PR advisors (Newgate). The CEO and CFO hold both one-to-one and group meetings with shareholders and the investing community following the announcement of the annual and interim results. Detailed feedback is received from the Company’s broker in respect of key announcements and roadshows and this feedback is shared with the Board.
The AGM is the principle forum for dialogue with private shareholders, and we encourage all shareholders to attend and participate. The chairs of the board and all committees, together with all other directors, whenever possible, attend the AGM and are available to answer questions raised by shareholders.
Chief Executive Officer
Chief Financial Officer
Principal 3: Take into account wider stakeholder and social responsibilities and their implications for long-term success
K3 works with its employees, customers and suppliers to conduct its business in an ethical way. The Company is growing and thus the Company’s commitment to Corporate Social Responsibility is dynamic and is reviewed when considered appropriate.
K3 recognises that an essential part of its continued success is the support and involvement of its employees. Specific actions include:
- Effective communication is essential to ensure its employees are fully engaged with the business. The senior management team meets regularly throughout the year to discuss business progress and interdepartmental issues and line managers update employees on Company progress and objectives. There is additional information provided weekly by the marketing department through the Company’s intranet system.
- Employees have regular appraisals to set objectives, identify strengths and areas for development.
- Training is provided when required and where necessary to enhance job performance and aid development.
- The Company regularly reviews the benefits offered to employees.
The Company maintains a suggestion box so that employees can provide feedback and suggestions on any aspect of the business. This feedback is reviewed regularly, and any resulting actions are communicated back to the employees.
Values and the Environment
Specific actions include:
- Recycling of paper, cardboard, printer cartridges is actively encouraged.
- Redundant computer equipment is disposed of in responsible manner.
- Technology advances have reduced the requirement for paper-based filing systems.
- Plastic is discouraged with reusable drinking equipment provided.
Clients and Suppliers
Specific actions include:
- Feedback obtained from clients, either in writing or verbally, are reported to line managers and discussed between senior management. Improvements and changes to operations are discussed and authorisation sought to implement them at Director level. Recent examples of this include, an increase in the KBS corporate Operations department in order to increase the communication to clients, and the marketing department currently investigating the use of electronic documents in order to increase the volume and speed at which Non-Disclosure Agreements are returned.
- Feedback from clients was important as part of the K3 Capital Markets process as it was client feedback that helped establish that this additional channel, particularly for larger businesses was a route they wished to investigate alongside other traditional exit strategies.
- Regular meetings are held with K3’s suppliers to ensure the highest quality of service is passed on to our clients. Any new suppliers undergo a trial period to ensure continuity of service offering.
Principal 4: Embed effective risk management, considering both opportunities and threats, throughout the organisation.
The Directors of K3 recognise their responsibility for the Group’s system of internal control and have established systems to ensure that an appropriate and reasonable level of control is provided.
The Group recognises that the controls can only provide reasonable, not absolute, assurance against material misstatement or loss but Directors and Senior Management meet regularly to review the risks facing the business and the Board meet quarterly to establish controls to minimise those risks.
The aim of these reviews is to provide reasonable assurance that material risks and problems are identified, and appropriate action taken at an early stage.
The Group maintains a risk register which includes commercial, operational and financial, internal and external risks that are assessed according to severity. Upon discussing the seriousness of each risk, a Board member or member of the Senior Management team will be given the responsibility and provided with actions to mitigate the risks, reporting back at each future board meeting.
An example of this during FY18 was the implementation of training programmes to all members of staff that mitigated the risks of the General Data Protection Regulations 2016/670 (EU). As well as advising them of the regulations, training and documentation was made available to ensure staff knew how to escalate and report potential personal data protection breaches.
The annual budget is reviewed and approved by the Board. Financial results, with comparisons to budget and latest forecasts are reported on a weekly basis to the Board together with a report on operational achievements, objectives and issues encountered. Any significant variances from the initial budget are discussed at Board meetings and actions set in place to address them.
The Company’s auditors are encouraged to raise comments on internal control in their management letter following their audit, and the points raised and actions arising are monitored through to completion by the Audit Committee.
Principle 5: Maintain the Board as a well-functioning, balanced team led by the Chair.
The Board comprises a Non-Executive Chairman (Independent), four Executive Directors and one Non-Executive Director (Independent). The Chairman is responsible for the effective leadership, operation and governance of the Board and its Committees. The Chief Executive Officer is responsible for the management of the Group’s business and for implementing the Group’s strategy
The Board, which meets on a quarterly basis (with additional meetings called if required), is provided with the information presented at the Company’s senior management meetings, including reports on Sales, Operations, Corporate Finance, IT & Systems and Marketing across each of the Group’s core brands.
Both of the Non-Executive Directors are considered independent of management and free of any relationship that could materially interfere with the exercise of their independent judgement or financial position. Each Non-Executive Director holds, and have held, positions on the Board of other publicly listed companies and/or carry regulatory qualifications and therefore have wider personal reputational risk issues and/or ethical commitments which further reinforce their independence and ensure they actively challenge in board meetings. Neither Non-Executive Director has received any performance-related bonuses or benefits in kind.
The Board has established Audit, Remuneration and Nominations committees – details and links to their terms of reference are set out under Principle 9.
Details of Directors and their time commitment is set out under Principle 6.
The attendance of current individual directors at the Regular Board Meetings and the Audit and Remuneration Committee Meetings during the year to May 2018 were as follows:
Name Position Regular Board Meetings Audit Committee Remuneration Committee I T Mattioli Non-Executive Chairman 6 (6) 2 (2) 1 (1) W M Robinson1 Non-Executive Director 5 (5) 2 (2) 1 (1) S Lees Executive Director 6 (6) n/a n/a A J Ford Executive Vice-Chairman 6 (6) n/a n/a J S Rigby Chief Executive Officer 6 (6) n/a n/a A R Melbourne Chief Financial Officer 6 (6) n/a n/a
1W M Robinson was appointed on 17 July 2017
Numbers in brackets denote the total number of meetings that each director was eligible to attend during the year.
Principle 6: Ensure that between them the Directors have the necessary up-to-date experience, skills and capabilities
All six members of the Board bring relevant sector experience and each of the non-executive directors’ significant public markets experience. Three of the Board members are qualified accountants. The Board does not have any diversity representation but believes that its blend of relevant experience, skills and personal qualities and capabilities is sufficient to enable it to successfully execute its strategy.We consider the individuals to be diverse in nature and provide each provide significant challenge to Board meetings. Directors attend seminars and other regulatory and trade events to ensure that their knowledge remains current.
All Directors are put up for re-election on an annual basis, for good corporate governance practice.
During FY18, the Board appointment of Martin Robinson followed an open process that sought to find the best candidate with a different skill set and/or background to existing members of the Board. The process included close consultation with the Groups nominated advisors by discussing relevant CVs and conducting interview on the basis of fulfilling the required criteria.
No significant matters of a corporate governance nature arose during the period covered by the 2017 Annual Report nor subsequently to the date of this statement on which it was considered necessary for the Board or any of its committees to seek external advice, although the Board consults with its Nominated Adviser and other professional advisers on routine matters arising in the ordinary course of its business.
The current CFO is also the Company Secretary. The Board considers that,at present, both roles can be undertaken successfully by the CFO but this situation is monitored by the CEO.
Ian Mattioli MBE, Independent Non-Executive Chairman
Term of office: Appointed Non-Executive Chairman on 11 April 2017. Ian is also a member of the Audit, Remuneration and Nominations Committees.
Background and suitability for the role:Ian has over 30 years’ experience in the financial services sector, and co-founded the Mattioli Woods Group in 1991 where he is the Chief Executive Officer and remains responsible for the vision and operational management of the Group. Ian has been awarded an MBE and also won the London Stock Exchange AIM Entrepreneur of the Year award in 2007.
Current external appointments: Ian is Chief Executive Officer of Mattioli Woods plc, a wealth management and employee benefits services provider, which he co-founded in 1991. Ian is also a non-executive director of Custodian REIT plc and Chairman of its discretionary investment manager,Custodian Capital.
Time commitment: 1-2 days per month on average.
John Rigby, Chief Executive Officer
Term of office: John was appointed CEO on 11 April 2017.
Background and suitability for the role:John joined the Group in 2000 following a career in commercial and corporate banking both within the UK and overseas. John has over 18 years of operational,sales and commercial management experience within the sector and developed the national sales infrastructure of the Group. John became Managing Director of the Group in 2010 and has been responsible for driving growth and integral in the development of the low cost, process driven delivery platform.
Time commitment: Full time
Andrew Melbourne, Chief Financial Officer and Company Secretary
Term of office: Appointed Chief Financial Officer and Company Secretary on 11 April 2017.
Background and suitability for the role:Andrew joined the Group in 2012 following ten years in various financial accounting roles across the media, leisure and property management industries.Andrew possesses strong financial, strategy and commercial management skills including HR, IT and managing special projects. Andrew is a fellow of the Chartered Institute of Management Accountants and has an MSC in Strategic Financial Management. Andrew was voted North West Young Finance Director of the Year at the North West Finance Awards in 2016.
Time commitment: Full time
Tony Ford, Executive Vice-Chairman
Term of office: Appointed Executive Vice-Chairman on 11 April 2017.
Background and suitability for the role:Tony is a chartered accountant and experienced corporate financier. He founded K3 and led its investment in KBS in 2007. He was subsequently responsible for the overall strategic direction of the Group and, previously as Chairman, he oversaw a period of strong growth and internal development. Tony possesses significant directorship experience across a broad range of industries including corporate finance, financial services, technology and business services.
Time commitment: – 1-2 days per week on average
Stuart Lees, Executive Director
Term of office: Appointed Executive Director on 17 July 2017. Stuart previously held a Non-Executive Director role.
Background and suitability for the role:Stuart joined K3 as a Non-Executive Director in September 2015 to assist with the development of the strategic direction of the Group. Stuart is a highly respected corporate financier and was previously Managing Director of Altium and head of corporate finance at Arthur Andersen in the UK. Stuart has a wealth of business experience and held the position of Group CEO of Latium Holdings Limited from 2004 to 2009 acquiring Ultraframe plc, Spectus Systems, Kestrel Building Products and the successful disposal of Everest Home Improvements.
Time commitment: 1-2 days per month on average
Martin Robinson, Independent Non-Executive Chairman
Term of office: Appointed Non-Executive Director on 17 July 2017.
Background and suitability for the role: Martin is a highly experienced private and public company director with over 30 years’ experience in financial services, including corporate finance, wealth and fund management, private equity and insurance broking. Until 30 June 2018 he served on the board of a number of the subsidiary companies of AIM-quoted Brooks Macdonald Group Plc, the integrated wealth management group. Martin is a Chartered Accountant and was previously on the AIM Advisory Committee as a founder member, overseeing the development and regulation of the market in 1995.
Current external appointments: Martin has a portfolio of non-executive director appointments, including Hambledon Vineyard plc and Braemar Group PCC Limited (listed on The International Stock Exchange). He is Company Secretary of Ground Rents Income Fund plc. Previously he has been Chairman of three AIM-quoted companies and a non-executive director of two others.
Time commitment: 1-2 days per month on average.
Principle 7: Evaluate Board performance based on clear and relevant objectives, seeking continuous improvement.
The Board meets quarterly and ensures that it includes discussions around Board effectiveness in every meeting. The evaluation process considers effectiveness in a number of areas including general supervision and oversight, business risks and trends, succession and related matters, communications, ethics and compliance, corporate governance and individual contribution. Each Director declares their interests and advises on their commitments and if any changes have arisen, or if changes are impending. Auditors comment on meeting minutes and provide their own feedback on Board effectiveness. In general, no major concerns have arisen throughout FY18 but for openness the following have been considered:
- Formal process for evaluation the Board – current consideration is being given to a more formal process whereby each Director is asked to complete a questionnaire detailing their analysis of the effectiveness of a number of areas, these are likely to include, but are not limited to, structure of the Board, Board arrangements, content of Board meetings, Board succession and individual contributions.
- Succession planning – As is commonplace with many small companies, no natural successors have been identified internally. Given the Company is new to AIM the Board do not believe that at this current time it is necessary to recruit additional Directors or personnel solely for the purpose of succession planning.
- Whether to recruit an additional Non-Executive Director – The Board believe that there are currently a good range of skillsets on the Board and there is no need, at this stage, to consider additions. During FY18 Martin Robinson joined the Board as a Non-Executive Director and brings with him a wealth of experience. This appointment was determined as part of an informal board evaluation process where it was recognised that Stuart Lees was discharging a more executive role and therefore the Board sought a replacement independent director who had public company experience as well as an understanding of the sector.
- Director training and ongoing development – Directors with professional qualifications ensure their core skills are retained by undertaking continuing professional development (CPD), including courses and seminars. Additionally, experienced directors and non-executive directors provide ongoing mentoring to other members of the Board, distributing knowledge gained in other positions throughout a range of sectors. At this time, the Board considers current training and development practices are sufficient for a growing company.
Principle 8: Promote a culture that is based on ethical values and behaviours
K3 Capital Group has grown successfully as a result of a strong service proposition, which has been externally recognised through a number of industry acknowledgements and awards.
In addition to being recognised for the excellent service offering the Group and its subsidiaries offers, such as Acquisition International’s ‘Most Outstanding Company Sale Services Provider’ and ‘Excellence in Corporate Finance Consultancy Services’ (Corporate Livewire), the Group has been ranked as the UK’s number one adviser by deal volume in the 2017 and H1 2018 Thomson Reuters Small Cap M&A Reviews.
The Group’s success and recognition is underpinned by its employees and corporate culture. The Group aims to become one of the ‘employers of choice’ within the local area and to be recognised as an organisation where you can work in a challenging and rewarding environment whilst having fun, developing a career and growing with the business. As the vast majority of the Group’s employees are based out of a single Head Office, it is believed that culture can be demonstrated effectively.
The Group values the following amongst its employees:
- Honesty and integrity
- Energy and enthusiasm
- A strong desire to satisfy customers
- New and innovative ideas
- Commitment and loyalty
- Common sense and intelligence
- Striving to success
The Company operates a fairly flat structure with all staff having the ability to discuss matters with the Group’s senior management or company directors. The management team aims to meet on a regular basis to promote communication, teamwork and agility.
The culture is monitored through engagement with Investors In People, with the opinions of every member of staff regarding a number of topics considered. In 2018, the Group maintained its Investors In People accreditation until 2021.
The board reviews Investors In People’s findings and determines whether any action is required. A staff suggestion scheme is operated in the form of a ‘Suggestion Box’ with ideas being recognised Company-wide.
The Directors believe that it will always be the Group’s people that make the greatest difference, therefore there is a keen focus on the Group’s employee culture, reward and recognition.
Principle 9: Maintain governance structures and processes that are fit for purpose and support good decision-making by the Board.
The Board retains full and effective control over the Company. The Company schedules four Board meetings per year, in addition to regular operational Board meetings, attended by senior management, at which financial and other reports will be considered and, where appropriate, voted on.
Apart from regular meetings, additional meetings will be arranged when necessary to review strategy, planning, operational and financial performance, risk, capital expenditure and human resource and environmental management. The Board is also responsible for monitoring the activities of the executive management.
The board has approved the adoption of the QCA Code as its governance framework against which this statement has been prepared and will monitor the suitability of this code on an annual basis and revise its governance framework as appropriate as the group evolves.
The Audit Committee determines and examines any matters relating to the financial affairs of the Group including the terms of engagement of the Group’s auditors and, in consultation with the auditors, the scope of the audit. In addition, it considers the financial performance, position and prospects of the Group and ensures they are properly monitored and reported on.
The Remuneration Committee reviews the performance of the executive Directors and sets their remuneration, determines the payment of bonuses to the executive Directors and considers the Group’s bonus and incentive arrangements for employees.
The Nominations Committee reviews the composition and efficacy of the Board and, where appropriate, recommends nominees as new directors to the Board.
Matters Reserved for the Board
The following is a list of matters that will be reserved for the board:
- Approval of preliminary announcements of interim and final results.
- Approval of the annual report and accounts, including the corporate governance statement and remuneration report.
- Approval of the dividend policy
- Declaration of the interim dividend and recommendation of the final dividend.
- Approval of any significant changes in accounting policies and practices.
- Approval of treasury policies.
- Approval of material unbudgeted capital or operating expenditures (outside pre-determined tolerances).
- Approval of major capital projects and oversight over execution and delivery.
- Approval of contracts which are material strategically or by reason of size, entered into by the company (or any subsidiary) in the ordinary course of business, for example any bank borrowings and any acquisitions or disposals of any fixed asset.
- Approval of contracts of the company (or any subsidiary) not in the ordinary course of business, for example any loans and repayments (above £50,000) and major acquisitions and disposals (above £50,000).
- Approval of major investments, including in the shares of any other company.
- Responsibility for the overall management of the Group
- Approval of the Group’s long term objectives and commercial strategy.
- Approval of the annual operating and capital expenditure budgets and any material changes to them.
- Oversight of the Group’s operations ensuring:
- competent and prudent management
- sound planning
- an adequate system of internal control
- adequate accounting and other records
- compliance with statutory and regulatory obligations
- Review of performance in the light of the Group’s strategy, objectives, business plans and budgets and ensuring that any necessary corrective action is taken.
- Approval of extension of the Group’s activities into new business or geographic areas.
Any decision to cease to operate all or any material part of the Group’s business.
Principle 10: Communicate how the Company is governed and is performing by maintaining a dialogue with shareholders and other relevant stakeholders
In addition to the investor relations activities described above, the following audit and remuneration committee reports are provided.
Audit Committee Report
During the year, the Audit Committee has continued to focus on the effectiveness of the controls throughout the group. The Audit Committee consists of Martin Robinson, Chair, and Ian Mattioli. The committee met 2 times during FY18, and the external auditor and CFO were invited to attend these meetings. The Audit Committee has primary responsibility for monitoring the quality of internal controls and ensuring that the financial performance of the Company is properly measured and reported on. It receives and reviews reports from the Company’s management and auditors relating to the interim and annual accounts and the accounting and internal control systems in use throughout the Company. The Audit Committee meets at least twice a year and has unrestricted access to the Company’s auditors.
Remuneration Committee Report
The remit of the Remuneration Committee is to determine the level of remuneration, and to make recommendations to the board on the remuneration of executive directors. In addition, the committee oversees the creation and implementation of all-employee share awards. The Remuneration Committee consists of Ian Mattioli, chair, and Martin Robinson. The committee met twice during FY18.
In setting remuneration packages the committee ensured that individual compensation levels, and total board compensation, were comparable with those of other AIM-listed companies.
The Board and the Remuneration Committee consider the Share Option Scheme to be an important element in attracting and retaining key members of staff. In January 2018, a 2nd round of awards were granted to an additional 25 key employees of the Group consisting of 1.2% of the enlarged share capital of the Group. The performance criteria was identical to that of the first plan, with targets for Earnings Per Share and Total Shareholder Return over the 3-year period.
At May 2018, there were a total of 31 current employees (23% of May 2018 Group employees) participating in the Option Plans with a combined grant of 4.0% of the enlarged share capital of the Group.
During FY18 the bonus structure for directors and senior management was revised in order to more closely align their performance with that of the shareholders, encouraging consistent financial over performance against market expectations.
Considerations for FY19
The Board will determine during the course of FY19 whether it would be appropriate for the Chairman to be available to meet key shareholders / stakeholders on an annual basis. Considerations will be made as to how beneficial this would be in enhancing communication between the Company and its shareholders
All shareholders are invited to make use of the Group’s Annual General Meeting to raise any questions regarding the management or performance of the Company. The FY18 Annual General Meeting will be held on the 26th October 2018 at the offices of TLT LLP:
3 Hardman Square
9 resolutions are to be considered and voted on, further information can be found in the Annual Report here.
Voting results are published after each general meeting through regulatory newswire and voting is generally passed by a poll. Going forward, the Board will consider whether to publish its proxy voting results so as to disclose voting results in a more transparent way.