CORPORATE GOVERNANCE
The Board and its members strongly believe in the value and importance of good corporate governance and in our accountability to Intercede’s stakeholders; including shareholders, colleagues, channel partners, customers and suppliers. In the statement below, we explain our approach to governance, and how the Board and its committees operate.
The corporate governance framework which the Group operates, including board leadership and effectiveness, board remuneration and internal control is based upon practices which the board believes are proportionate to the size, risks, complexity, and operations of the business at its current stage of development. The Board has therefore decided to adopt the Quoted Companies Alliance (QCA) Corporate Governance Code for small and mid-size quoted companies (revised in April 2018 to meet the new requirements of AIM Rule 26).
The following paragraphs set out the current status of Intercede’s compliance with the ten principles of the QCA Code:
1. Establish a
strategy and business model which promote long-term value for shareholders
Following an extended period of strategic investment in new technology, the Board appointed a new Chief Executive with the remit to return the Group to profitability.
Klaas van der Leest was appointed on 10 April 2018 and he has reorganised and established a new executive management team (EMT). Following the changes implemented by Klaas and the EMT, the Group focused on executing a '5C' strategy, centred around Colleagues, Customers, Channels, Code and Cash. This strategy has not only resulted in a significant turnaround from the losses incurred in previous years but also ensured a 'back to basics' approach strengthening all areas of the Group's operations. The Group has now embarked on Phase Two with overarching themes of scalability and consistent revenue growth. To add further emphasis on growth, the ‘5C’ strategy has become a ‘6C’ strategy to include Corporate Development with a focus on acquiring quality companies with the right strategic fit(s) to ensure scalability and accelerated revenue growth.
Further details are provided to shareholders as part of the ongoing cycle of Interim and Full Year Reporting.
2. Seek to understand and meet shareholder’s needs and expectations
The Company places a high priority on communications with current and potential future shareholders by means of an active investor relations programme. We communicate with shareholders through the Annual Report and Accounts, full-year and half-year announcements, trading updates and the annual general meeting (AGM), and we encourage shareholders’ participation in face-to-face meetings. A range of corporate information (including all Stock Exchange announcements) is also available to shareholders, investors and the public on our website (www.intercede.com).
Private shareholders – The AGM is the principal forum for dialogue with private shareholders, and we encourage all shareholders to attend and participate. The Notice of Meeting is sent to shareholders at least 21 days before the meeting. 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. Shareholders vote on each resolution by way of a poll and full details of the votes received for, against and withheld are subsequently published on our website.
Institutional shareholders – The Directors actively seek to build a mutual understanding of objectives with institutional shareholders. We communicate with institutional investors frequently through a combination of formal meetings and informal briefings with management. The majority of meetings with shareholders and potential investors are arranged by the Group’s nominated adviser and broker, finnCap Ltd. Following these institutional meetings, finnCap provides anonymised feedback to the Board.
3. Take into account wider stakeholder and social responsibilities and their implications for long-term success
Colleagues – regular all colleagues briefings and periodic colleague surveys are completed in the interests of effective two-way communication and a recognition of the need to motivate and retain a highly experienced and expert workforce. Colleagues have continued to work productively either remotely, or in the office where permissible, throughout the Covid-19 pandemic to maintain business as usual. Intercede invests in its people, providing training opportunities to support development and enhance individuals’ opportunities for career progression. The Group continues to actively review the employee benefits package in order to retain and attract the brightest talent and recognises the achievements of its colleagues with pay rises and performance-related rewards.
Channel Partners – Intercede works closely with some of the leading industry IT majors and is looking to form more partnerships, from which a commercial relationship could result in a significant increase in sales revenues. Partners can join the Intercede Connect Partner Programme to gain access to robust sales, co-marketing and technical training that ensures members’ teams are knowledgeable on the software whilst driving incremental revenue streams. Members also have access to support materials and products to help meet the growing demand for strong authentication.
Customers – Intercede works with some of the largest organisations in the world. We continue to endeavour to engage and communicate to meet the current and future needs of existing and potential future customers as the need for enhanced IT security becomes more and more clear. To combat decreasing physical customer interaction during the Covid-19 pandemic, Intercede has continued to push ahead with three important customer focused initiatives: Customer Advisory Board (CAB), Customer Satisfaction Survey and the Customer Portal. There are encouraging signs that efforts to increase and improve customer interaction are paying off as evidenced by the increase in participation of the Customer Satisfaction Survey, the low churn rate in Support & Maintenance revenues and an increased NPS (Net Promoter Score).
Shareholders – see 2) above.
Suppliers – Intercede develops its own software in the UK and does not typically employ contractors or outsource activities so the main suppliers are professional advisers, where we seek to obtain the best quality pragmatic advice, and local tradesmen, who maintain the fabric of our premises at a high level.
Industry bodies – Intercede has longstanding relationships with industry bodies and standard setting organisations to ensure we keep abreast of and play a part in ongoing changes for the application of our technology and the markets we serve.
Communities – Intercede is actively involved in the local economy and community and engages in multiple activities to support fundraising for charities and good causes. Community engagement is highly regarded at Board level and charity and community initiatives continue to be highly valued and well supported by employees, who vote on the range of charities that Intercede will support in the coming year. Intercede maintained its support for the local foodbank during the pandemic, as well as assisting local schools by providing surplus PCs plus new laptops and tablets to be allocated to families who did not have the means for their children to study remotely.
4. Embed effective risk management, considering both opportunities and threats, throughout the organisation
The Directors have established systems to ensure that an appropriate and reasonable level of oversight and control is provided. The Group’s systems of internal control are designed to help the Group meet its business objectives by appropriately managing, rather than eliminating, the risks to those objectives. The controls can only provide reasonable, not absolute, assurance against material misstatement or loss.
Group-wide risk management is ultimately the responsibility of the Board (supported by the Audit Committee) and is overseen operationally by the Chief Operating Officer.
Operational risk management is embedded in the Group’s business processes, which are set down in writing in the policies and procedures that make up the Group’s quality management system (QMS) and are periodically reviewed by external quality compliance auditors. The Group recently obtained ISO 27001 certification in addition to the existing longstanding ISO 9001 accreditation.
The Group’s key risks (operational and otherwise) are recorded in a Group Risk Register and those risks together with their respective mitigants, controls and corrective actions are reviewed regularly by the Board. Risk is a standing agenda item for the Board and senior managers are required to review, identify and report risks on an ongoing basis. This review provides input for the identification of the principal risks and uncertainties that are outlined in the Strategic Report section of the Annual Report.
The annual audit process also results in the specific evaluation of financial risks including interest rate, liquidity, credit and foreign currency and a review of the internal control environment with feedback reported to the Audit Committee.
5. Maintain the Board as a well-functioning, balanced team led by the chair
The members of the Board are collectively responsible and have a legal obligation to promote the interests of the Group. They are all responsible for defining corporate governance arrangements but ultimate responsibility for the quality of, and approach to, corporate governance lies with the chair of the Board.
The Board currently comprises two executive and five non-executive directors. Three of the non-executive directors are considered to be independent; the other two are not considered to be independent for the reasons outlined in 6) below.
The Board meets regularly, and is responsible for the overall Group strategy, acquisition and divestment policy, approval of major capital expenditure projects and consideration of significant financing matters. It monitors the key business risks and reviews the strategic direction of the Group, its codes of conduct, forward projections and progress towards their achievement. Senior management concentrates on the formulation of strategic proposals to the Board and operational decision making.
The Board reserves to itself a range of key decisions to ensure it retains proper direction and control of the Group, whilst delegating authority to individual directors who are responsible for the day-to-day management of the business.
There is a comprehensive planning system, including regular periodic forecasts which are presented to and approved by the Board. The performance of the Group is reported monthly and compared to the latest forecast and the prior period.
The Board has established three committees: the Audit Committee, the Remuneration Committee and the Nominations Committee.
The structure of the Board Committees from 17 June 2019 onwards is as follows;
Audit Committee – Tina Whitley is
the Chair of the Audit Committee given her “recent and relevant” financial experience as a Chief Executive
and non-executive director role.
Jacques Tredoux is also a member of the Audit Committee and Royston Hoggarth will be
invited by the Chair as and when requested.
Remuneration Committee – Chuck Pol is the Chairman of the Remuneration Committee which also comprises Royston Hoggarth, Jacques Tredoux and Tina Whitley.
Nominations Committee – Chuck Pol is the Chairman of the Nominations Committee which also comprises Royston Hoggarth, Jacques Tredoux, Klaas van der Leest and Nitil Patel. The attendance of directors at meetings held during the financial year ended 31 March 2022 is summarised below:
| Board meetings | Audit Committee | Remuneration Committee | ||||
|---|---|---|---|---|---|---|
| Executive Directors | Possible |
Attended | Possible | Attended | Possible | Attended |
| Klaas van der Leest | 5 | 5 | - | - | - | - |
| Andrew Walker (Retired 1st August 2022) | 5 | 5 | - | - | - | - |
| Non-Executive Directors | ||||||
| Rob Chandhok |
5 | 5 | - | - | - | - |
| Royston Hoggarth | 5 | 5 | 2 | 2 | 2 | 2 |
| Chuck Pol | 5 | 5 | 2 | 2 | 2 | 2 |
| Jacques Tredoux | 5 | 3 | - | - | 2 | 1 |
6. Ensure that between them the directors have the necessary up-to-date experience, skills and capabilities
All members of the Board have been appointed because of their experience and expertise.
Royston Hoggarth, Non-Executive Chairman
Term of office: Appointed on 5 August 2002. Not considered independent because he has served on the Board for 17 years.
Suitability for role: Royston has extensive board experience in a variety of quoted and privately owned organisations. This follows on from a long and successful executive career in the technology and telecommunications sectors, including sales and general management roles with large international corporations.
Current external appointments: Cirrus Response Limited and Stellar Omada
Limited. He is a non Executive Director of Cellhire Limited an advisor to the
NEC Corporation and NEC Software Services Limited. He is also Chair of England
Hockey.
Time commitment: One to two days per month
Chuck Pol, Non-Executive Director
Term of office: Appointed as Senior Independent Director on 1 June 2017 and became Non-Executive Chairman on 28 March 2018.
Suitability for role: Chuck has had a long and successful executive career in the technology and telecommunications sectors, including sales and general management roles with large corporations in the US and UK.
Current external appointments: Global adviser to Intelygenz Software
Time commitment: Three to five days per month
Jacques Tredoux, Non-Executive Director
Term of office: Appointed on 31 March 2006. Not considered independent because he represents the Company’s major shareholder and has served on the Board for 14 years concurrently with one of the executive directors.
Suitability for role: Jacques is a qualified lawyer and has extensive investment and fundraising experience.
Current external appointments: Chief Executive of Tredoux Capital Limited, a company authorised by the Financial Conduct Authority to provide corporate finance advisory services.
Time commitment: One to two days per month
Klaas van der Leest, Chief Executive Officer
Term of office: Appointed on 10 April 2018.
Suitability for role: Klaas is an experienced executive with extensive sales, marketing, business development and general management experience in IT and IT services. He has significant international knowledge and experience as a result of various roles with remits across EMEA, Asia-Pac and North America and proven expertise in the development and execution of national and international sales growth, ‘go to market’ initiatives and customer focused expansion strategies.
Current external appointments: None
Time commitment: Full time
Nitil Patel, Chief Finance Officer
Term of office: Appointed on 19 April 2022.
Suitability for role: Nitil is an experienced finance professional with 21 years of senior management and capital markets experience. He is a Fellow of the Institute of Chartered Accountants of England and Wales.
Current external appointments: Pro Bono Trustee of Bird College and NED of openDemocracy.
Time commitment: Full time
Tina Whitley
Term of office: Appointed on 1 July 2022.
Suitability for role: Tina is a proven and inspirational business leader with extensive experience across the Information Technology sector. She has directly overseen teams across all disciplines, including sales, marketing, procurement, operations, product management, technical services, HR and finance. She is passionate about the customer experience, building excellent relationships and ensuring exemplary delivery.
Current external appointments: None
Time commitment: One to two days per month
7. Evaluate board performance based on clear and relevant objectives, seeking continuous improvement
The Group has a strategic plan to expand the business and generate shareholder value, which forms the basis of Phase Two of Intercede’s turnaround. In essence, this is a ‘6C ‘back to basics’ strategy centred around Colleagues, Customers, Channels, Code, Cash and Corporate Development. The ‘6C’ strategy is kept under review by and evolves under the guidance of the Board.
8. Promote a corporate culture that is based on ethical values and behaviours
Following the recent changes outlined above, the Board
is committed to creating an open and transparent corporate culture based on
sound ethical values and behaviours that is consistent with the Group’s
strategy and business model. This includes taking into account the likely
consequences of decisions in the long term by focusing on executing its ‘6C’
strategy to ensure a ‘back to basics’ approach that strengthens all areas of
the Group. While this strategy specifically promotes strong relationships
between employees and with customers, the Board also has regard to the
interests of suppliers and its impact on the local community and
environment. Concern for the environment
and promoting greater sustainability are important considerations for the Group
and how we conduct business; we aim to reduce the environmental impact of our
activities. The Group has introduced an electric vehicle car scheme to help
colleagues access brand new zero emission electric vehicles. The Group also
monitors utilisation of its property portfolio to minimise our energy use
through the use of LED lighting and maximise utilisation by consolidating or
relocating to smaller offices as required. Recycling and waste reduction
programmes are promoted and where IT equipment cannot be recycled and products are
tracked, which may need safe disposal in the future. As with many companies during
the pandemic, Intercede has made the most of recent events to reduce vehicle,
flight and rail travel through the use of effective collaboration tools, video
conferencing facilities and flexible working arrangements. Community engagement
is highly regarded at Board level and charity and community initiatives
continue to be highly valued and well supported by employees, who vote on the
range of charities that Intercede will support in the coming year.
9. Maintain governance structures and processes that are fit for purpose and support good decision-making by the Board
The Board provides strategic leadership for the Group and operates within the scope of a robust corporate governance framework. Its purpose is to ensure the delivery of long-term shareholder value, which involves establishing and maintaining the corporate culture and defining the strategic goals that the Group implements in its business plans. The Board defines a series of matters reserved for its decision and has approved terms of reference for its audit and remuneration committees to which certain responsibilities are delegated. The Chairman of each committee reports to the Board on the activities of that committee.
Audit Committee – monitors the integrity of financial statements; oversees risk management and control; and reviews external auditor independence.
Remuneration Committee – sets and reviews the compensation of executive directors including the setting of targets and performance frameworks for cash and share-based awards.
Nominations Committee – at the request of the Board, the committee recommends candidates for new appointments to the Board and advises on all matters relating to such Board appointments.
Executive Management Team – consisting of the executive directors and senior managers, operates as a management committee chaired by the Chief Executive, which reviews operational matters and the performance of the business, and is responsible for significant management decisions while delegating other operational matters to individual managers within the business.
Chairman – has overall responsibility for corporate governance and in promoting high standards throughout the Group; leads and chairs the Board, ensuring that committees are properly structured and operate with appropriate terms of reference; ensures that the performance of individual directors, the Board and its committees are reviewed on a regular basis; leads in the development of strategy and setting objectives; and oversees communication between the Group and its shareholders.
Chief Executive – provides coherent leadership and management of the Group; leads the development of objectives, strategies and performance standards as agreed by the Board; monitors, reviews and manages key risks and strategies with the Board; ensures that the assets of the Group are maintained and safeguarded; leads on investor relations activities to ensure communications and the Group’s standing with shareholders and financial institutions is maintained; and ensures that the Board is aware of the views and opinions of employees on relevant matters.
Executive Directors – are responsible for implementing and delivering the strategy and operational decisions agreed by the Board; making operational and financial decisions required in the day-to-day operation of the Group; providing executive leadership to managers; championing the Group’s core values and promoting talent management.
Non-Executive Directors – contribute independent thinking and judgement through the application of their external experience and knowledge; scrutinise the performance of management; provide constructive challenge to the Executive Directors; and ensure that the Group is operating within the governance and risk framework approved by the Board.
Company Secretary – responsible for providing clear and timely information flow to the Board and its committees and supports the Board on matters of corporate governance and risk.
The matters reserved for the Board are:
- Setting long-term objectives and strategy;
- Approving annual operating and capital expenditure budgets;
- Changing the share capital or corporate structure of the Group;
- Approving Interim and Full Year results and reports;
- Approving dividend policy and the declaration of any dividends;
- Approving major investments, disposals, capital projects or contracts;
- Approving resolutions to be put to general meetings of shareholders and the associated documents or circulars; and
- Approving changes to the Board structure.
The Board has approved the adoption of the QCA Corporate Governance Code as its governance framework and will monitor the suitability of this code on an annual basis and revise its governance framework as the Group evolves.
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– The Audit Committee monitors the integrity of financial statements; oversees risk management and control; and reviews external auditor independence. The Audit Committee consists of Royston Hoggarth, Chairman, Tina Whitley and Jacques Tredoux. The Committee met in March and May 2022 as part of the annual reporting process and the external auditors, Chief Executive and Finance Director were invited to attend. The auditor’s pre and post audit reports were considered at these meetings which provided an opportunity to review the financial information contained in the 2022 Annual Report and the Group’s accounting policies and internal control environment. The significant issues considered by the Committee in relation to the 2022 Annual Report, and how these were addressed, were:
- External Audit - The Audit Committee monitors the Group’s relationship with the external auditor, Cooper Parry Limited, to ensure that external independence and objectivity has been maintained and will continue to review and challenge the work undertaken to ensure the effectiveness of the audit process. This is the first year that Cooper Parry has provided audit services to the Group and the Audit Committee looks forward to building a strong and productive working relationship with Cooper Parry.
-
Risk management and internal control - The Committee is responsible for advising the
Board on risk exposure and the review of internal controls that are in place to
mitigate risk. The internal control environment continues to evolve and develop
as the Group grows and considers integration of potential acquisitions, with a
particular focus on the automation of processes and introduction of new
technology to enhance control and communication across the Group.
- Going Concern – As part of the going concern assessment, the Board reviewed forecasts for the years ended 31 March 2023 and 31 March 2024 and concluded that the Group has sufficient cash to continue in operational existence for the foreseeable future. The Committee also notes that the Group continues to monitor cash balances weekly for working capital and corporate development funding requirements and that annual recurring revenues from Support & Maintenance, plus repeatable Professional Services revenues, now largely cover annual fixed costs. This is a firm foundation that allows the Group to remain profitable, even in leaner years. The complete conversion and redemption of all convertible loan notes in the previous financial year has left the Group with a stronger balance sheet and no debt.
Remuneration Committee Report - The Remuneration Committee sets and reviews the compensation of executive directors including the setting of targets and performance frameworks for cash and share-based awards. The Remuneration Committee consists of Chuck Pol, Chairman, Royston Hoggarth, Jacques Tredoux and Tina Whitley. The Committee met twice during the financial year ended 31 March 2022 and has subsequently met in May 2022.
In setting remuneration packages, the Committee endeavours to ensure individual compensation levels are comparable with those of other AIM-listed companies.
Last updated: 17th May 2023
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