1.1 This statement explains the Company’s present corporate governance arrangements and the standards with which the Group complies.
1.2 The Company has elected to adopt and comply with the QCA Corporate Governance Code (the “QCA Code“). The QCA Code is constructed around ten broad principles and a set of disclosures and this statement reflects the structures that the Company has adopted in order to achieve compliance with the QCA Code. The QCA has stated what it considers to be appropriate arrangements for growing companies and asks companies to provide an explanation about how they are meeting the principles through the prescribed disclosures. We have considered how we apply each principle to the extent that the Board judges these to be appropriate in the circumstances, and in the Appendix, we have provided an explanation of the approach taken in relation to each. The Board considers that it does not depart from any of the principles of the QCA Code.
2. THE BOARD OF DIRECTORS
2.1 The Company (and thereby its group (the “Group)) is ultimately managed by the directors of the Company (the “Directors“), who (individually and as a group) are responsible for running the Company for the benefit of its shareholders in accordance with their fiduciary and statutory duties.
2.2 The Board of Directors (the “Board“) currently comprises 6 Directors: three Non-Executive Directors (including the Chairman) and three Executive Directors (being the Chief Executive Officer (the “CEO“), the Chief Technology Officer (the “CTO“) and the Chief Financial Officer (the “CFO“). The roles of the Chairman and the CEO are undertaken by separate individuals.
2.3 The Board has two standing committees (the “Committees“): the Audit Committee and the Remuneration Committee. The Terms of Reference for each of the Committees are available on the Website.
2.4 The Board does not have a formally-established nominations committee. All matters concerning the appointment and removal of Directors, and for Executive and Non-Executive Director succession planning are considered by the full Board (with any appointments subject to a shareholder vote at the next Annual General Meeting).
The role of the Chairman is to:
3.1.1 lead the Board and ensure that all members are able to contribute to Board discussions and the wider running of the Group as appropriate;
3.1.2 ensure that the Company acts in the best interests of shareholders and other stakeholders;
3.1.3 the Group’s corporate governance arrangements; and
3.1.4 ensures that performance of individual directors, the board and its committees are reviewed on a regular basis.
4. CEO AND EXECUTIVE DIRECTORS
4.1 The role of the CEO is:
4.1.1 lead and manage the business of the Company;
4.1.2 propose and implement strategy for the success of the Company’s business;
4.1.3 lead and maintain the Company’s investor relations activities;
4.1.4 monitors, reviews and manages key strategies with the Board; and
4.1.5 ensures the Board is aware of the views and opinions of employees on relevant matters.
4.2 The Chief Technology Officer is responsible for the Group’s scientific and technological direction within the business and for supporting the CEO in their role.
5.1 In addition to the Chairman, there are two other Non-Executive directors
5.2 The Non-Executive Directors challenge and scrutinise the performance of the Executive Directors, while supporting them in their delivery of the Company’s strategy and management of the Group’s risks.
6. COMPANY SECRETARY
6.1 The Company Secretary ensures that accurate, timely and clear information is provided to the Board in order for informed decisions and discussions to take place.
6.2 The Company Secretary is responsible for advising the Board on governance matters and regulatory requirements. The appointment and removal of the Company Secretary is a matter reserved to the Board. All Directors have direct access to the Company Secretary and to independent professional advice at the Company’s expense as required.
7. FREQUENCY OF MEETINGS
The Board typically meets at least seven times a year and relevant information is distributed to Directors in advance of the meetings.
8. EVALUATING BOARD PERFORMANCE
8.1 The Board has a number of sources of information from which it judges its own performance and that of the individual Directors, these include but are not limited to:
- financial performance indicators including revenue, order book, gross margin, net margin, earnings per share and cash flow;
- the Company’s share price;
- reports from external auditors;
- shareholder feedback;
- customer feedback;
- formal and informal reviews of its effectiveness by the Company’s nominated adviser; and
- employee feedback.
8.2 All these factors are considered and action taken to improve performance as appropriate.
8.3 The Board will formally evaluate its own performance (whether itself, through its retained advisors, or by engaging external consultants) not less than once a year.
9. COMMUNICATION WITH SHAREHOLDERS
The Board attached a high priority to communication with shareholders having regard to its obligation as a quoted public company including the AIM rules. The Group liaises regularly with major shareholders and there is an opportunity for individual shareholders to question the management of the Company through the Chairman at the Annual General Meeting.
10. RISK MANAGEMENT AND INTERNAL CONTROLS
10.1 The Board seeks to understand and manage the various risks that arise from its operations which include:
- reputational risk;
- contractual risk;
- technical risk;
- resourcing and infrastructure;
- anti-corruption and compliance;
- board and management succession; and
- price and margin
10.2 The Board has overall responsibility for risk management and the Group’s systems of internal controls. Responsibility for implementing sound and effective systems of internal control has been delegated to the Executive Directors and senior management. The CEO take responsibility for operational oversight of Groupwide risk management.
10.3 Key risks to the Group’s business are recorded in a Group Risk Register and mitigants, controls and corrective actions are reviewed regularly by the Executive Directors and the Board.
10.4 The Company’s annual report and accounts (available on the Website) provide further details as to the Group’s key risks (and the mitigants and controls deployed by the Group).
10.5 An organisational structure with clear operating procedures, lines of responsibility and delegated authority has been established and is kept under review. The purpose of the systems of internal control is to manage rather than eliminate the failure to achieve business objectives and can only provide reasonable, but no absolute, assurance against misstatement or loss.
10.6 The Group maintains a schedule of matters reserved to the Board (which underpins its delegated authority framework) and this is periodically reviewed and approved by the Board. The Board makes decisions on all reserved matters including strategy, annual operating and capital budgets, capital structure and financial and internal controls.
Establish a strategy and business model which promotes long-term value for shareholders
Details of the Company’s business are contained on the Company’s website, www.byotrolplc.com (the “Website“). The strength of the Company’s business is based on its status as a long-term, trusted supplier to its global customers.
Seek to understand and meet shareholder needs and expectations
The Company is committed to engaging with shareholders and this effort is led by the Chairman (John Langlands) and the CEO (David Traynor). The Company communicates with shareholders through the Annual Report and Financial Statements, full-year and half-year announcements, trading updates and the Annual General Meeting (AGM). A range of corporate information is also available to shareholders, investors and the public on the Company website.
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 advisor. It is the CEO’s role to lead and maintain the Company’s investor relation activities.
The Company holds an open Q&A session at every AGM and attends investor events to engage with retail shareholders. All Board members attend the AGM and are available to answer any questions raised by the shareholders. Shareholders vote on proposed resolutions and for AGMs held in 2019 onwards, for each resolution the Company will announce the number of votes received for, against and withheld via RNS and via the Company website.
Take into account wider stakeholder and social responsibilities and their implications for long-term success
The Company has identified its key customers, suppliers and other advisors and recognises that its staff are critical to the delivery of the Company’s business objectives. A high priority is placed on employee engagement (through periodic staff briefings and regular meetings).
The Company is committed to engaging with the communities in which it operates and actively works with Chester University (the campus on which the Company is based).
Embed effective risk management, considering both opportunities and threats, throughout the organisations
The Company has a well-established risk management framework which involves risks being identified, recorded, monitored and addressed at programme, department and Group level and subject to regular review. Matters arising under this risk management framework are reported at every Board meeting. At Board level, the Chief Executive Officer is accountable for all operational risk management. Details of principle risks and uncertainties facing the business are outlined in the Strategic Report contained within the 2018 Annual Report and Financial Statements.
The Company has clear, documented procedures in place to assess and progress opportunities arising, whether for process improvement, product enhancement, new business or any other matter.
Maintain the board as a well-functioning, balanced team led by the Chair
The Board has three Executive Directors and three Non-Executive Directors (including the Chairman). Each of the Non-Executive Directors is considered independent of management and free of any relationship that could materially interfere with the exercise of their independent judgement. The Chairman was considered independent upon his appointment. The Board considers that its three Non-Executive Directors are independent, giving an appropriate balance between Executive Directors and independent directors.
The Board has an established committee structure, with an Audit Committee and Remuneration Committee, both of which as comprised solely of Non-Executive Directors. The Board does not consider that it is of a size at present to require a separate nominations committee, and all members of the board are involved in the appointment of new directors.
The above Corporate Governance Statement provides further details, including how the Board evaluates its own performance.
Ensure that between them the directors have the necessary up-to-date experience, skills and capabilities
The Board has a broad range of skills and a wealth of experience appropriate to the Company’s business (see Directors biographies within the Board of Directors page on the website).
Those members of the Board with professional qualifications keep up-to-date in accordance with the relevant ‘continuing professional development’ regimes and the Board engages with various industry bodies and associations and obtains regular advice from subject matter experts (both internal and external) as to changes to good practice and regulatory environments.
Evaluate board performance based on clear and relevant objectives, seeking continuous improvements
The Board will formally evaluate its own performance (whether itself, through its retained advisors, or by engaging external consultants) not less than once a year.
The performance of individual Executive Directors is reviewed formally not less than once a year by the Remuneration Committee (by reference to general contribution and performance against specific targets set by the Chief Executive Officer, in the case of the Chief Technology Officer, or the Chairman, in the case of the CEO).
The Chairman monitors the performance of individual Non-Executive Directors, who themselves may feed back to the CEO with any concerns regarding the Chairman. Throughout, each Director has access to the Company’s nominated advisor (who in turn may provide feedback on the Board as a whole or individual Directors).
Regard is also given to the views of key shareholders and other stakeholders as appropriate.
Promote a culture that is based on ethical values and behaviours
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, fair treatment and equality of opportunity).
The Executive Directors are overseeing ongoing work to establish a clear set of ‘Core Values’ for the Company which will clearly set down the ethical and cultural expectations of the Company, which will guide and inform the actions of the Company (and to which its staff can be held accountable).
Maintain governance structures and processes that are fit for purpose and support good decision-making by the board
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 fulfil on the Board.
Beneath the Board, there is an operational governance framework via the Operating Board (overseen by the Executive Directors) which facilitates the effective management of the business. This organisational structure is kept under continual review and evolves as the needs of the business change as it grows and develops.
Communicate how the company is governed and is performing by maintaining a dialogue with shareholders and other relevant stakeholders
The channels for communication between the Company and its shareholders are explained in the disclosure above against principle 2.
A report from the Remuneration Committee is contained in the annual report and accounts. An Audit Committee report is not currently included so one will be introduced in the annual report and accounts for the 2019 financial year. Historic reports and accounts, along with notices and circulars for the last five years, are available on the website.