Last updated: 6 August 2020
The Board has adopted the Quoted Companies Alliance (‘QCA’) Corporate Governance Code in line with the London Stock Exchange’s recent changes to the AIM rules requiring all AIM listed Companies to comply with a recognised corporate governance code.
Set out below is how we currently comply with the key principles set out in the QCA code. Further updates will be published at least annually in line with our full year reporting calendar.
1. Principle: Establish a strategy and business model which promotes long-term value for shareholders
Checkit’s real-time operations management software makes organisations smart, safe and efficient. Our products use IoT, mobile and cloud technologies to ensure our customers get the best out of their mobile teams, processes and buildings. Our customers operate in many sectors including retail, hospitality, healthcare, real estate management and manufacturing.
Checkit is headquartered in Cambridge, UK, with its operations centre in Fleet, UK. The strategy and business model is more fully explained in the Strategic Report. The business model is developed by the Executive Chairman and Chief Financial Officer and the Global Leadership Council (“GLC”) and approved by the Board in line with the Group’s vision and objectives. Progress is actively tracked by the Board and the GLC, led by the Chairman, is responsible for its effective delivery.
2. Principle: Seek to understand and meet shareholder needs and expectations
The Company is committed to engaging with its shareholders, and maintaining constructive communication to ensure its strategy, business model and performance are clearly understood. We actively seek dialogue with the market by seeking to convey to analysts and investors our plans for the business and understanding what they think about us. We do so via investor roadshows, hosting capital market days and through regular reporting.
a. Private shareholders
The Annual General Meeting (“AGM”) is the main forum for dialogue with private shareholders and the Board. The Notice of the meeting is sent to shareholders at least 21 days prior to the meeting. The Board is available for discussion and to answer questions at the AGM. Results of the AGM are always announced promptly after the conclusion of the AGM. For future AGMs, for each vote, the number of proxy votes received for, against and withheld will be announced at the meeting and will be subsequently published on the Company’s website.
b. Institutional shareholders
The Board seeks to build relationships with institutional shareholders. The Chairman and CFO make presentations to shareholders and analysts immediately following the publication of its half year and full year results. The Company also hosts capital market days inviting both existing and potential new shareholders. The Board reviews and approves the material to be used in the half year and full year presentations to shareholders and it is also briefed on the feedback from shareholders by the Chairman and CFO.
The Non-executive Directors are available to meet major shareholders if required.
3. Principle: Take into account wider stakeholder and social responsibilities and their implications for long-term success
Engaging with stakeholders enables the Group to understand their needs more effectively which in turn helps the Group make more informed business decisions. These stakeholders include the Group’s employees, customers, suppliers, regulators and environment, as well as media and political influencers.
- The Group engages with its customers through regular calls and face-to-face meetings. Feedback is gathered by analysing how customers use our products and engage with the Group’s marketing content.
- The Group engages with its employees through anonymous opinion surveys to gather feedback on all aspects of employment within the Group. This feedback is both considered by the senior management team and reported to the Board on a regular basis. Recognition is given to individual employees’ needs and requirements and employees are encouraged to apply their skills, knowledge and energy. The Group recognises the importance of its employees and their training. The Group recognises that the needs of the business will continue to change. As such, training is and will be offered to enable employees to enhance their skill base to assist the business in meeting future opportunities and challenges. The Group continues to keep its staff informed on matters affecting them as employees and the various factors affecting the performance of the Group. This is achieved through formal and informal meetings. The Executive Team hosts informal meetings with groups of employees as part of maintaining and encouraging an open dialogue on any matter impacting the workplace.
The Group is committed to equality for all, regardless of gender, race, age, disability, religion or sexual orientation, where it is reasonable and practicable within existing legislation.
4. Principle: Embed effective risk management, considering both opportunities and threats, throughout the organisation
The Company sets out in its annual report the steps taken to ensure that effective risk management is embedded within the Company culture. The Board has identified the principal business and financial risks and has implemented control procedures. The Company has an established framework of internal financial controls which is subject to review by the Directors and the Audit Committee considering the ongoing risks faced by the Group.
The Board acknowledges its responsibility for reviewing the effectiveness of the systems that are in place to manage risk. However, no such system can provide absolute assurance against misstatement or loss. The Board considers that the internal controls that are in place are appropriate for the size and complexity of the Group. The key elements of the Group’s internal control environment include:
- close involvement of the Executive Directors in the day-to-day running of the Group;
- clear lines of authority and reporting established;
- centralised control and decision making over key areas such as capital expenditure and financing; and
- a suite of daily and monthly reports focusing on the key performance and risk areas. Such reports include detailed annual budget setting with monthly monitoring and daily reporting including reports on sales, orders and cash balances compared with budget.
Given the current size of the Group and the close involvement of the Executive Directors in the day-to-day operations, the Board believes that an internal audit function is not justified, although this is kept under regular review.
The Group undertakes regular updates and reviews of its business processes, co-ordinated by the Group quality function to ensure that it not only addresses basic financial controls but that non-financial controls are also in place over areas such as health and safety, environmental issues and adherence to law and regulations.
Mitigation can only provide reasonable, but not absolute, assurance against material misstatement or loss. As such the Group maintains appropriate insurance cover for the Group’s activities, with the types of cover and insured values being reviewed on a periodic basis by the Board.
The Group maintains a risk register which not only highlights risks relevant to its businesses but also details the actions being taken to mitigate these risks. These registers are reviewed regularly at executive leadership team level and are subject to scrutiny by the Board at least twice a year.
5. Principle: Maintain the board as a well-functioning, balanced team led by the Chair
The Board currently comprises the Executive Chairman, Chief Financial Officer and two Non-executive Directors. These illustrate the level and range of business experience which the Board believes enables it to provide clear and effective leadership of the Group.
The Chairman has the responsibility for making sure that the Board agenda concentrates on the key strategic issues together with both operational and financial issues and an approach to good corporate governance.
After careful review the Board considers that the Non-executive Directors bring independent judgement and robust challenge to the Board’s discussion. Rachel Neaman became a Non-executive Director in February 2020 and John Wilson, the previous Chief Executive Officer, became a Non-executive Director following the sale of the Bulgin business in September 2019.
As the Group revenue and operations grow the Board may consider adding an additional independent Non-executive Director. However, for now, the Board considers its composition appropriate given the size of its businesses, its revenues and profitability.
The Board receives regular information in respect of the Group’s operational and financial performance from the Executive Directors. In addition, the minutes of the previous Board meeting are reviewed and approved by the Board and the Directors have access to the advice and services of the Company Secretary.
The Board meets at least six times a year, and in FY20 it met eight times, with all Directors attending.
The Executive Directors are required to devote substantially all of their working time to the Company. Non-executive Directors are required to commit at least ten days a year or more should the need arise.
The Company has procedures in place to monitor and manage any conflicts of interest. The Board is aware of the backgrounds and other interests of the Directors and changes to these are reported and where appropriate agreed with the rest of the Board.
The Board is supported by an Audit Committee and Remuneration Committee of which Non-executive Directors John Wilson (Chair of Audit Committee) and Rachel Neaman (Chair of Remuneration Committee) are members. John Wilson’s AIM and business-based financial experience alongside Rachel Neaman’s senior leadership expertise provide the necessary level and combination of skills and knowledge to each of those Committees.
6. Principle: Ensure that between them the directors have the necessary up-to-date experience, skills and capabilities
The Board regularly reviews its composition to ensure that it has the necessary breadth and depth of skills to support the ongoing development and growth of the business. The Board is satisfied that it has an effective and appropriate balance of skills between the Directors to deliver the strategy of the Company for the benefit of its shareholders over the medium to long term.
Where new Board appointments are considered, the search for candidates is conducted and appointments are made, on merit, against objective criteria and with due regard for the benefits of diversity on the Board, including but not limited to gender balance.
The Directors keep their skillset up to date with ongoing training and are individually assessed on an annual basis through the annual evaluation process. The Board is supported by the Company Secretary. Every Director is aware of the right to have any concerns minuted and to seek independent advice at the Group’s expense where appropriate.
All Directors are put forward for re-election at each AGM.
All Directors, the Audit Committee and Remuneration Committee are able to take independent professional advice in the furtherance of their duties, if necessary and in addition have access to advice and the services of the Chief Financial Officer and Company Secretary.
Sara Coate was appointed Company Secretary in May 2020 and is responsible for co-ordinating meetings, distributing information to the Board, providing access to advisers for the Board should the need arise, and managing shareholder enquiries.
7. Principle: Evaluate board performance based on clear and relevant objectives, seeking continuous improvement
Evaluation of the Board has historically been carried out in an informal manner. It is anticipated that from 2020 the Board will formally review and consider the performance of each Director at or around the time of the publication of the Company’s annual report.
8. Principle: Promote a corporate culture that is based on ethical values and behaviours
The Board believes that the promotion of a corporate culture based on sound ethical values and behaviours is essential to creating a workplace environment that allows people to flourish and this will contribute to enhancing shareholder value. An open culture is encouraged within the Group, with employee feedback sought and regular progress and performance updates provided to all employees. The Board monitors and promotes a healthy culture which permeates every aspect of the business including how it seeks to recruit, nominate, train and engage with its employees.
The Company maintains, and reviews annually, an employee handbook that includes clear guidance as to what is expected of every employee.
9. Principle: Maintain governance structures and processes that are fit for purpose and support good decision-making by the Board
The long-term success of the Group is the responsibility of the Board of Directors, which comprises two Non-executive Directors and two Executive Directors. The Executive Directors have responsibility for the operational management of the Group’s activities. The Non-executive Directors are responsible for bringing independent and objective judgement to Board decisions.
The Board meets at least six times a year. Prior to the start of the financial year a schedule of meeting dates is agreed to ensure an appropriate spread of meetings throughout the year. This may be supplemented with additional meetings should the need arise.
There is a clear division of responsibility at the head of the Company. The Chairman is responsible for running the business of the Board and for ensuring appropriate strategic focus and direction and also, in his capacity as an Executive in the development of the Group strategy.
The Board and its Committees receive appropriate and timely information, with a formal agenda and associated papers always circulated a few days in advance of the meeting. The Company Secretary is responsible for ensuring that Board procedures are followed, and applicable rules and regulations are complied with.
The Board is responsible for the long-term success of the Company and has a schedule of matters reserved for it, including:
- allocation of resources;
- structure and sources of capital and funding;
- financial reporting;
- internal controls and compliance including monitoring of risk;
- corporate transactions and expenditure proposals beyond any delegated authority to the Executive Directors;
- Board membership;
- corporate governance;
- advisers, litigation; and
- Directors’ indemnification and insurance.
The Board receives reports from the Executive Directors, Committee Chairs and function heads ensuring matters are considered fully and enabling Directors to discharge their duties properly. In addition, senior managers are invited to attend meetings to update on business performance as appropriate.
The Board has two sub-committees as follows:
- Audit Committee: The Audit Committee oversees the integrity of the financial results of the Company. It engages and works with the external auditor and Group management. It reviews and reports to the Board on significant issues including estimates and judgements made in connection with the preparation of the Group financial statements. The Audit Committee also has a key role in the oversight of the effectiveness of risk management. Full details of the Report of the Audit Committee are set out in the annual report. The Committee met three times during FY20.
- Remuneration Committee: This Committee ensures that the Group’s Executive remuneration policy is aligned to the implementation of the Company strategy and shareholder interests, after considering the views of shareholders. The Committee seeks to establish a policy that is designed to motivate, retain and attract Executives of the high calibre necessary for a business of Checkit’s complexity, international scope and ambitions. Full details of the Report of the Remuneration Committee can be found in the annual report.
Given the current size and complexity of the Group the Board does not currently consider that a nominations committee is required and the Board as a whole leads the process for Board appointments and succession planning for key Senior Executives, whilst reserving its right to establish a committee for any specific appointment process.
10. Principle: Communicate how the company is governed and is performing by maintaining a dialogue with shareholders and other relevant stakeholders
The Group communicates with shareholders in a number of ways, including:
- the Group’s annual report and accounts;
- full year and half-year announcements;
- other regulatory announcements;
- the Annual General Meeting;
- update meetings with existing shareholders;
- outcomes of all votes in a clear and transparent manner; and
- Audit Committee report/Remuneration Committee report.
Other corporate information, including annual reports for the last five completed financial years, full and half year results announcements, notices of general meetings for the last five completed financial years and other regulatory announcements, is also available to shareholders, investors and the public through the Group’s website.
One-to-one meetings are held with large existing or potential new shareholders. The Company engages its broker and investor relations advisers to assist in shareholder interaction and feedback and the Board receives regular updates on the views of shareholders from these advisers.
The Company generally holds briefing meetings for employees following the half and full-year result announcements.