Corporate Governance Disclosures

Last updated

27 September 2018

PipeHawk plc (the "Company" and the "Group")

The Board recognises the value and importance of high standards of corporate governance. Accordingly, the Board has adopted the Corporate Governance Code (“the Code”) published by the Quoted Company Alliance (“QCA”).

The below outlines our approach to addressing the key principles of the QCA Corporate Governance Code. This will further be expanded upon as required under the Code in our next and subsequent annual reports.

1. Establish a Strategy and Business Model which promotes Long-Term Value for Shareholders

The Company’s strategy to achieve this is:

-          by increasing year-on-year profitability of the Group, whilst ensuring survival by managing in particular, risks arising out of macro-political and economic uncertainty; and

-          by investing in businesses and opportunities which have game changing potential.

This will be achieved by:

-          fostering an expectation which encourages subsidiary companies to optimise their profitability over the medium term whilst properly identifying and managing the risks associated therewith;

-          seeking additional businesses which are likely to add both critical mass and profitability to the Group; and

-          encouraging a culture of appropriate devolved empowerment which emphasises and expects fair and ethical treatment and good communication with all stakeholders.

 

2. Seek to Understand and Meet Shareholder Needs and Expectations

The Company’s details are displayed on its website allowing shareholders to contact the Company if they so wish. The Company holds an annual general meeting to which all members are invited and after the AGM a short presentation is given on each aspect of the Group, time is then set aside to allow questions from attending members to any Board member. As the Company is small, it does not have a dedicated investor relations department and so the Chairman, Gordon Watt, is responsible for reviewing and dealing with all communications received from members.

 

3. Take into Account Wider Stakeholder and Social Responsibilities

In addition to members, the Company believes its main stakeholders to be its employees, customers and suppliers. The Company dedicates significant time to understanding and acting on the needs and requirements of each of these groups via meetings and feedback tools. The Company believes in protecting the wider community and takes due account of any impact that its activities may have on the environment and holds the ISO 14001 standard. Through holding the ISO 9001, OHSAS 18001 and other quality standards, the Company ensures compliance with health and safety and other regulations. The Company is an equal opportunities organisation and encourages applicants for positions irrespective of age, disability, gender, race, religious or political views or sexual orientation and are committed to providing an inclusive working environment.

In terms of wider Corporate Social Responsibility, the Company promotes and uses its range of PipeHawk products to significantly reduce body risk to anybody who may have a reason to dig underground and, by properly investigating the underground environment before detailed planning, the Company helps minimise disruption to road users and hence CO2 emissions from traffic congestion.

 

4. Embed Effective Risk Management, Considering Both Opportunities and Threats, Throughout the Organisation

The Board is responsible for the systems of risk management and internal control and for reviewing their effectiveness. The internal controls are designed to manage rather that eliminate risk and provide reasonable but not absolute assurance against material misstatement or loss. All contracts are reviewed in detail by subsidiary board members and, where the risk could be material, are discussed with the Chairman. Through the activities of the Audit Committee and with the assistance of the external auditors these controls are reviewed annually. A summary of the principal risks and uncertainties facing the Company can be found in the Company’s annual report.

 

5. Maintain the Board as a Well-Functioning, Balanced Team Led by the Chair

The Board currently comprises only two executive directors and one non-executive who receive high quality information in a regular manner to facilitate proper assessment of the matters requiring a decision or insight. Randal MacDonnell acts as Senior Independent Director.  The Board does not comply with the requirement of the Code to have at least two non-executive directors, but the Board intends, at an appropriate time in the future when the Company is in a position to afford a further non-executive director, to make such an appointment.

The Chairman has regular meetings with the managing directors and boards of the Group’s subsidiary companies. The Chairman holds regular update meetings with each Director to ensure they are performing as they are required.

Although Randal MacDonnell has been a non-executive director since 2006, the Board still considers him to be independent.  The Board also considers that Soumitra Padmanathan is independent.


6. Ensure that, Between Them, the Directors Have the Necessary Up to Date Experience, Skills and Capabilities

The ability of individual members and the board as a whole to deliver the Company strategy is reviewed annually in an exercise undertaken by the Chairman. The Board composition will be reviewed and refreshed again in 2019. The Chairman and Board members can call on external advisers as the need arises.

 

7. Evaluate Board Performance Based on Clear and Relevant Objectives, Seeking Continuous Improvement

Evaluation of the performance of the Company’s board has historically been implemented in an informal manner.  From 2019 however, the Board will formally review and consider the performance of each director at or around the time of publication of the Company’s annual report. The Board considers that it has the necessary experience and skill required to manage the Company. Professional advice and the assistance of consultants is sought when appropriate.

On an ongoing basis and as part of succession planning, the Board maintains a watching brief to identify relevant internal and external candidates who may be suitable additions to or backup for current board members.

 

8. Promote a Corporate Culture that is based on Ethical Values and Behaviours

The Board and directors take a forward-looking, proactive approach to culture within the Group in order to achieve a level of discipline that aids management with its oversight of risks within the business. There are several values that are important to the Company including:

-           promoting a culture of respect and tolerance: team members throughout the Group work well together across a broad range of projects; being a team player, honesty and straightforwardness with clients and suppliers and among employees are values that are highly regarded; and

-           the importance of the individual: we recognise that the business would fail without the loyalty of our employees, so we encourage free-thinking and individuality in the workplace wherever possible.  

These matters are considered as part of the annual performance evaluation of all employees and reported to the Board.

 

9. Maintain Governance Structures and Processes that are fit for Purpose and Support Good Decision Making by the Board

The Board currently comprises two Executive Directors and one independent non-executive director.  As the Company grows the Board will actively consider adding an additional independent Non-Executive Director however for now the Board considers its composition appropriate given the size of the company, its revenues and profitability.

The names of the directors with their titles and biographical details are set out under Investor relations Rule 26.  The Chairman is responsible for engagement with shareholders.

The Board meets regularly (at least 4 times a year) and additional meetings are called when required. Directors can take independent professional advice in the furtherance of their duties at the Company’s expense. Due to the size of the Board, the Board does not maintain a Nominations Committee. Evaluation of the performance of the Board has historically being done informally.

The Company has adopted a schedule of Matters Reserved for the Board. This includes the approval of Group strategy and policies, major acquisitions and disposals, major capital projects and financing, Group budgets and material contracts entered into other than in the ordinary course of business, reviewing the functioning of the internal control environment and reviewing corporate governance arrangements. The Board is responsible for determining the nature and extent of the principal risks it is willing to take in achieving its strategic objectives. It also retains oversight of the risk management and internal control systems with the aim that these are sound and protect shareholders’ interests.

The Board has formed an Audit Committee and a Remuneration Committee, whose members and terms of reference are set out below:

Audit Committee

The Audit Committee comprises Gordon Watt and Randal MacDonnell and is chaired by Gordon Watt. The Audit Committee will meet at least twice a year and is responsible for reviewing the annual and half-yearly accounts, the system of internal controls and risk management, and the terms of appointment and remuneration of the auditors. It is also the forum through which the auditor’s report to the Board. The Audit Committee is also responsible for reviewing the objectivity of the external auditors and the terms under which the external auditors are appointed to perform non-audit services. The Company’s auditor will also attend the Audit Committee at its request and report on its work procedures, the quality and effectiveness of the Company’s accounting records and its findings in relation to the Company’s statutory audit. The Audit Committee will meet with the auditors at least once a year.

Remuneration Committee

The Remuneration Committee comprises Gordon Watt and Randal MacDonnell and is chaired by Gordon Watt. It will meet at least once a year and is responsible for reviewing the scale and structure of the executive directors’ remuneration and the terms of their service or employment contracts, including any share option granted and other bonus arrangements. The remuneration and terms and conditions of the Non-Executive Director are set by the entire board.


10. Communicate how the Company is governed and is performing by maintaining a dialogue with shareholders and other stakeholders

The Company discloses all relevant information in its annual report, copies of which are available on the Company’s website along with governance related information issued from the date of admission to trading on AIM under Investor Relations.

The Company also discloses the outcomes of votes at general meetings and will provide such information on the website in future.  Where more than 20% of independent votes are cast against a resolution at any general meeting the Company will indicate its actions to understand the reason for that vote and any decisions or actions taken as a result.

Historical accounts, including the notices of annual general meetings, for the last five years are available on the company's website under the page entitled Investor Relations Rule 26


 

 

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