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, staff, 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 has 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. A Technical Review has been completed by an external adviser and a Business Review is underway. Further details will be provided to shareholders as part of the 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

Staff – regular all staff briefings and periodic staff 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.

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.

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.

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.     

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

The Directors recognise their responsibility for the Group’s system of internal control and 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.

The Finance Director has prepared a Risk Register that identifies key risks for the business. The Risk Register is updated each year and all members of the Board are provided with a copy as part of a formal review by the Audit Committee and the external auditors.

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 collectively 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 three non-executive directors, all of whom are male. One of the non-executive directors is considered to be independent; the other two are not considered to be independent for the reasons outlined in 6) below. The Board intends to appoint one or more new independent non-executive directors and a new Senior Independent Director in the short to medium term when suitable candidates with relevant experience are identified.

Richard Parris, Intercede’s founder, ceased his roles as Chairman & Chief Executive and became a non-executive director of the Company on 28 March 2018. He subsequently ceased to be a non-executive director, as reported on 17 December 2018. Chuck Pol, the previous Senior Independent Director, was appointed as Non-Executive Chairman on 28 March 2018 and Klaas van der Leest was appointed as Chief Executive on 10 April 2018.

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 10 April 2018 onwards is as follows;

Audit Committee – Royston Hoggarth is the Chairman of the Audit Committee given his “recent and relevant” financial experience in a variety of Chairman, Chief Executive and non-executive director roles and given his prior experience as Chairman of the Axon Group plc Audit Committee. Chuck Pol is also a member of the Audit Committee.

Remuneration Committee – Chuck Pol is the Chairman of the Remuneration Committee which also comprises Royston Hoggarth.

Nominations Committee – Chuck Pol is the Chairman of the Nominations Committee which also comprises Royston Hoggarth, Jacques Tredoux, Klaas van der Leest and Andrew Walker.

The attendance of directors at meetings held during the financial year ended 31 March 2018 is summarised below:

 

Board meetings

Audit Committee

Remuneration Committee

 

Possible

Attended

Possible

Attended

Possible

Attended

Executive directors

 

 

 

 

 

 

Richard Parris (moved to non-executive role on 28 March 2018)

  6

  6

Andrew Walker

  7

  7

Non-executive directors

Ben Drury (resigned 13 September    2017)

 

2

 

2

 

1

 

1

 

1

 

1

Royston Hoggarth

1

1

2

2

Chuck Pol (appointed 1 June 2017)

Jacques Tredoux

6

7

6

5

-

-

-

-

1

-

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.

Chuck Pol, Non-Executive Chairman

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

Royston Hoggarth, Non-Executive Director

Term of office: Appointed on 5 August 2002. Not considered independent because he has served on the Board for 16 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: Chair of Xchanging Insurance Services (XIS) Limited, Chair & Chief Executive of iPSL Limited, an advisor to the NEC Corporation and the Board of Northgate Public Services Limited and Chair of Cirrus Response Limited. He is also Chair of England Hockey.

Time commitment: One to two 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 12 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

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

Andrew Walker, Finance Director & Company Secretary

Term of office: Appointed on 11 September 2000.

Suitability for role: Andrew is an experienced finance professional with 30 years of senior management and capital markets experience. He is a Fellow of the Institute of Chartered Accountants.

Current external appointments: None

Time commitment: Full time

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

Following the recent changes in the Board structure, the new Chair will introduce a performance evaluation process. Further details will be provided in the 2019 Annual Report.

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.

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 Chair 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.

Chair - 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, Chair and Chuck Pol. The committee met in May 2018 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 and this provided an opportunity to review the financial information contained in the 2018 Annual Report and the Group’s accounting policies and internal control environment. The committee also met with the external auditors with no executives present.

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, Chair and Royston Hoggarth. The committee met twice during the financial year ended 31 March 2018 and in May 2018.

In setting remuneration packages, the committee endeavours to ensure individual compensation levels are comparable with those of other AIM-listed companies.

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