Corporate Governance

Overview

The Board of Directors (“the Board”) of Checkit plc (“Checkit”) has adopted the Quoted Companies Alliance (“QCA”) Corporate Governance Code in line with the London Stock Exchange’s changes to the AIM rules requiring all AIM listed companies to comply with a recognised corporate governance code.

Set out below is how Checkit and members of its group 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 is transitioning to a dynamic subscription-based e global business model focussed on annual recurring revenue driven by the provision of real-time operations management capability to our customers. In the past year, Checkit has won significant new business in the US market and has appointed US based Non-Executive Director (Alex Curran) to assist with the acceleration of the Company’s presence in the US. 

Strategy is the responsibility of the Board, the Chief Executive Officer, Chief Financial and Operations Officer, and the Global Leadership Council. The business model is designed to achieve Checkit’s growth and profitability ambitions by ensuring ability to scale and maximising operating efficiency.  

2. Principle: Seek to understand and meet shareholder needs and expectations

The Board is committed to engaging with shareholders to ensure that the business strategy, operating model, and performance are clearly understood and communicated. The Executive Directors are in contact with the Company’s major shareholders in relation to strategic decisions and regularly pass feedback to the Board. In addition, Checkit’s nominated advisor and broker (Singer Capital Markets) and investor relations advisor (Yellowstone Advisory) keep the Executive Directors appraised of shareholder expectations and reactions.  

The Board looks to maximise opportunities to communicate and actively encourages feedback from the investor community. For example, this year the Board has engaged with its major shareholders in relation to the Company’s developing ESG programme. The Board places great emphasis on having constructive relationships with all shareholders. The AGM is the main forum for dialogue with private shareholders and the Board. Shareholders are given the opportunity to raise questions during the AGM.

In addition, Checkit has a regular programme of investor engagement which includes product and trading updates, an annual capital markets day and presentations to shareholders and analysts immediately following the publication of the half year and full year results.  The half year and full year presentations give shareholders and opportunity to raise questions with the Executives. 

Feedback from shareholders is reviewed by the Board following presentations, and Non-executive Directors are also available to meet major shareholders, if required. 
Checkit’s main point of contact for shareholder engagement is the Company Secretary and general contact details are also available on Checkit’s website to support communication and feedback. 

3. Principle: Take into account wider stakeholder and social responsibilities and their implications for long-term success

In addition to its shareholders, the Company’s other key stakeholder groups are:

• Employees
• Customers
• Suppliers
• Regulators
• Local communities

Checkit takes its responsibility to these stakeholders seriously and seeks to actively engage with them regularly to inform and influence better decision making. For example, this year the Board has engaged with its key stakeholders in relation to the Company’s ESG programme, which is currently under development. A register of all interested parties is maintained and assessed regularly by management as part of the Quality Framework.

4. Principle: Embed effective risk management, considering both opportunities and threats, throughout the organisation

The Board has responsibility for ensuring Checkit has effective risk management processes and that a system of internal control is embedded within the organisation. Checkit has an established framework of internal financial controls which is subject to review by the Executive Directors and the Audit Committee considering the ongoing risks faced by the group. The Audit Committee are bound by formal terms of reference (which can be found on the Company’s website). In addition, Checkit’s auditors are encouraged to raise with the Audit Committee any comments they may have in relation to risk management on an ad-hoc basis and in their management letter following their audit.

The key elements of Checkit’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;
• regular internal audits of all departments within the business;
• centralised control and decision-making over key areas such as capital expenditure and financing; and
• a suite of regular 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.

The group undertakes regular updates and reviews of its business processes, co-ordinated by the group quality and compliance function to ensure that it not only addresses basic financial controls but that non-financial controls are also in place over areas such as information security, calibration and certification, 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 regular 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 regularly reviews its composition and 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. 

The Board comprises the Non-Executive Chairman, Chief Executive Officer, Chief Financial and Operations Officer and two Non-Executive Directors. All Board Directors are put forward for re-election at each AGM. 
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 Chairman takes responsibility for a calendar of regular Board meetings and at least 6 times per year. The Board met 13 times in FY23. The Chairman ensures that Board agendas reflect good corporate governance and concentrate on the key strategic, operational and financial issues. 

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. Procedures are in place to manage potential conflict of interest. 

The Board is supported by an Audit Committee and Remuneration Committee. The Remuneration Committee is comprised of Non-Executive Directors Keith Daley (Chair of Remuneration Committee), Simon Greenman and Alex Curran. The Audit Committee is comprised of Simon Greenman (Chair of the Audit Committee) and Alex Curran. Keith Daley’s financial background and in-depth knowledge of Checkit, Simon Greenman’s senior leadership expertise and Alex Curran’s mixture of UK and US high-growth orientated experience provide the necessary level and combination of skills and knowledge to the respective Committees.

6. Principle: Ensure that between them the directors have the necessary up-to-date experience, skills and capabilities

The Directors keep their skill set up to date with ongoing training and are informally regularly assessed. All Directors are put forward for re-election at each AGM. 

The Directors are required to keep their relevant experience, skill and capabilities up to date and are regularly assessed on an informal basis. 

The Board is supported by the Company Secretary and every Director is aware of the right to have concerns added to minutes and to seek independent advice at the Group’s expense where appropriate.

7. Principle: Evaluate board performance based on clear and relevant objectives, seeking continuous improvement

The Board conducted an evaluation of its effectiveness during the year ending 31 January 2023 and no major issues were identified. A further evaluation is expected to be conducted in the third quarter of the year ending 31 January 2024. 

8. Principle: Promote a corporate culture that is based on ethical values and behaviours

The Board understands that a healthy corporate culture based on sound ethical values and behaviours is essential to creating a working environment in which employees feel valued and can be most effective. 

The employee handbook is updated regularly and provides guidance to all business employees alongside a Company provided employee assistance programme to ensure ongoing employee wellbeing. Employee feedback and cultural tone are regularly reviewed by the Board alongside regular employee communication programmes. During FY21, a social committee was formed to drive greater social interaction and to promote socially focused initiatives. In addition, the Company has started to offer additional time off around birthdays and for wellbeing reasons and has enhanced its maternity/paternity provisions. 

Throughout the COVID-19 pandemic, Checkit supported employees who are able to work remotely and the Company has introduced a remote-working policy to embed flexible ways of working within the Company. 

The Company has a strict share dealing policy covering insider trading/inside information, the AIM Rules and Market Abuse Regulations which apply to Checkit and individuals. This policy is circulated to all individuals who qualify for share options and who fall within the categories of insiders, PDMRs and restricted persons.

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. Two Executive Directors have responsibility for the operational management of the Group’s activities and development of the Group strategy. Three Non-Executive Directors are responsible for bringing independent and objective judgement to Board decisions. The Company Secretary is responsible for ensuring that Board procedures are followed, and applicable rules and regulations are complied with. 

A corporate calendar is set at the beginning of the financial year and includes provisional dates for all Board and Committee meetings, ensuring an appropriate spread throughout the year. Standing agenda items are agreed at the beginning of each year and will include a schedule of matters which allow the Board to carry out its duties effectively. 

Agendas are finalised and circulated with relevant supporting information and papers to Board members ahead of the meetings. In addition, senior managers are regularly invited to attend meetings to update on business performance as appropriate. 
The Company Secretary is responsible for ensuring that a corporate calendar is available to the Board which sets out activities including but not limited to, Board and Committee meetings dates, issue of key reports, business performance cycle, key compliance activities, audits and key stakeholder communication points. 

The Board has two sub-committees as follows:

Audit Committee: 

The Audit Committee oversees the integrity of the financial results and risk management strategy of the Company. 

It engages and works with the external financial 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. 

Remuneration Committee: 

This Committee ensures that the Group’s Executive remuneration policy is aligned to the implementation of the Company strategy and shareholder interests. The Committee seeks to establish a remuneration policy that is designed to motivate, retain and attract Executives of the calibre necessary to achieve the Group’s strategic ambitions. The Remuneration Committee met 5 times during FY23. 

Given the current size and complexity of the Group, the Board does not currently consider that a nominations committee is required.

10. Principle: Communicate how the company is governed and is performing by maintaining a dialogue with shareholders and other relevant stakeholders

Engagement with our stakeholders is key to a successful business and is an ongoing part of managing our business. 

The Group communicates with shareholders in a number of ways, including: 

• the Group’s annual report and accounts; 
• full year and half-year result announcements; 
• other regulatory announcements; 
• the Annual General Meeting and outcomes; 
• meetings with existing shareholders; 
• webinars or roadshows; and 
• one to one meetings with major (or potential) shareholders. 
  
  Corporate information available on the Company website includes: 
• annual reports for the last six completed financial years; 
• full and half year results announcements; 
• notices of general meetings for the last six completed financial years; and 

other regulatory announcements. 

The Company engages its broker (Singer Capital Markets) and investor relations advisers to assist in shareholder interaction and feedback. The Board receives regular updates on the views of shareholders from these advisers. 

Regular on-line Company wide meetings, off-site events and video updates from the Executive ensure that important updates are communicated to employees. All employees are invited to watch the presentation by the Executive which follow the release of our half and full year results. 

Employees are also directed to the Company website, internal HR portal and encouraged to keep up to date with Company reports.