Corporate Governance

Adept4 plc is committed to operating proper standards of good corporate governance and continues to align its corporate governance activity to the key principles of the QCA Code. The following outlines how the QCA Code is applied to support the company’s medium to long-term success. The Non-Executive Chairman is responsible for corporate governance and the overall leadership of the Board and ensuring its effectiveness.

Adept4 plc operates a business model and growth strategy that promotes the generation of shareholder value through the growth and retention of recurring revenue streams. The company promotes professionalism, openness, honesty and integrity between its customers, staff, shareholders and suppliers.

Principle 1 – Establish a strategy and business model which promote long-term value for shareholders.

Goals:

As a public company we are focused on delivering value for both our shareholders and customers and have three goals that drive our business:

  • Deliver shareholder value
  • Delight our customers
  • Differentiate our service through expertise, innovation and successful execution of solutions.

Purpose:

The purpose of the business is to generate shareholder value through the profitable delivery of IT as a Service (ITaaS) to business customers. IT as a Service provides customers with exactly the right amount of technology and support that they need, ensuring that they only pay for what they receive.

Strategy:

The company currently delivers ITaaS to business customers via a single operating platform established from the integration of a number of businesses along the M62 corridor. Our strategy is to

  • Transform the way our customers use and pay for IT.
  • Leverage our expertise to provide all customers with a corporate IT department experience
  • Lead our customers on their journey from on-premise to the cloud.
  • Partner with the best public cloud and application providers
  • Cross-sell IT and telephony services to customers
  • Focus on growing our recurring revenues through organic growth
  • Develop and expand an innovative portfolio of solutions
  • Stay close to the customer, small enough to care and large enough to cope

Our approach with customers is built around a four-stage methodology:

1.Stabilise
2.Leverage
3.Transform
4.Innovate

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

Adept4 is committed to open communication with all its shareholders.

The Company values the views of its shareholders and recognises their interest in the Group’s strategy and performance, Board membership and quality of management. The Company believes it is important to explain business developments and financial results to its shareholders, to understand shareholder concerns, and to ensure that suitable arrangements are in place to ensure a balanced understanding of the issues and concerns of major shareholders.

The principal method of communication with private investors is via the Company’s Annual Report and Accounts, Interim Reports, the Annual General Meeting and other relevant announcements that are maintained on the Group’s investor website, www.adept4.co.uk. As appropriate, business-related announcements may also be published there if the Group considers them to be of significant interest to shareholders.

The Annual General Meeting is used to communicate with all shareholder and investor groups, and they are encouraged to participate. The Chairmen of the Audit and Remuneration Committees are available to answer questions. Separate resolutions are proposed on each issue so that they can be given proper consideration and there are resolutions to receive the Annual Report and Accounts and the report on Directors’ remuneration. The Company counts all proxy votes and will indicate the level of proxies lodged on each resolution, after it has been dealt with by a show of hands.

The Non-Executive Chairman is primarily responsible for investor relations.

Shareholders are given the opportunity to raise questions at the Annual General Meeting and the Directors are available both before and after the meeting for further discussion with shareholders. The Board receives share register analysis reports to monitor the Company’s shareholder base and help identify the types of investors on the register.

Meetings are offered to major institutional shareholders to discuss strategy, financial performance and investment activity immediately after the full year and interim results announcements. All the Non-Executive Directors are available to meet with major shareholders if such meetings are required. Feedback from such meetings with shareholders is provided to the Board to ensure that the Directors have a balanced understanding of the issues and concerns of major shareholders.

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

The Company regards its shareholders, employees, customers, suppliers, advisors and others as the wider stakeholder group.

Management prioritises its relationships with customers and staff and effort is directed to ensuring they are managed appropriately. Regular reviews are undertaken to ensure any issues are addressed promptly.

The Company records customer service levels. There is a feedback system in place for service levels and issues raised can be addressed.

The Company’s internal stakeholders are its employees. The Group is committed to employment policies which follow best practice, based on equal opportunities for all employees, irrespective of sex, gender reassignment, race, disability, sexual orientation, pregnancy and/or maternity, marital or civil partner status, religion or belief or age.

Employee involvement in the Group is encouraged, as achieving a common awareness on the part of all employees of the financial and economic factors affecting the Group plays a major role in maintaining good relations with them. Employees receive regular updates from the Managing Director on the Company’s progress and new initiatives via monthly staff updates and regular town hall meetings, which offers an opportunity for them to raise queries or issues.

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

The Board has established a risk register relating to the Company’s business. At least twice a year, it meets to consider the appropriateness of the risks identified and the mitigating action taken by management on a risk by risk basis focusing on those deemed most critical.

For further details of the Company’s approach to risk and its management, please refer to the Risk Management and Principal Risks section of the Strategic Report and the Corporate Governance section of the Annual Report and Accounts.

The Board has also set out a policy defining the Group’s compliance, procedures and position regarding the prevention of the facilitation of tax evasion as defined by the Criminal Finances Act 2017.

Principle 5 – Maintain the Board as a well-functioning, balanced team led by the Chair.

The size of the board is considered to be appropriate to the current size and character of the Group. The non-executive directors are independent of management and any business or other relationships which could interfere with the exercise of their independent judgement. The roles of Chairman, CFO and Managing Director of the trading business are separate appointments.

The Board directs the group's activities in an effective manner through regular monthly board meetings and monitors performance through timely and relevant reporting procedures which enables risk to be assessed and managed. Monthly Board meetings are attended by David Griffiths, Managing Director of the trading business, who provides updates on how the business is performing against the objectives set by the Board.

Operational management of the Group is delegated to the Managing Director of the trading business and the Senior Management Team, who meet regularly with the CFO to review current business performance, sales activity, operational projects, customer service, human resourcing matters and other day to day activities.

Detailed Board packs include information on all revenue streams and financial performance and are circulated ahead of Board meetings. Key issues are highlighted and explained, providing Board members with sufficient information to enable a relevant discussion in the Board meeting. The CFO attends the Company’s senior management meetings and updates the Board accordingly on any issues and developments.

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

The Corporate Governance report included in the Annual Report and Accounts identifies each member of the Board and describes the relevant experience, skills and qualities they bring. Directors’ biographies are published on the company website. The Non-Executive Chairman believes that, as a whole, the Board has a suitable mix of skills and competencies covering all essential disciplines bringing a balanced perspective that is beneficial both strategically and operationally and will enable the Company to deliver its strategy.

The Board consists of one executive director and two non-executive directors, both of whom are independent. The nature of the Company’s business requires the Directors to keep their skillset up to date. Updates to the Board on regulatory matters are given by Company’s professional advisers when appropriate.

In addition to the support provided by the Company’s retained professional advisers (Nominated Advisor, lawyers, auditor and M&A advisor), external consultants have been engaged to advise on a number of matters including tax planning and market research.

External advisers attend Board meetings or committee meetings as invited by the Non-Executive Chairman to report and/or discuss specific matters relevant to the Company.

Principle 7 – Evaluate Board performance based on clear and relevant objectives, seeking continuous improvement.

Board performance effectiveness process

The assessment of the Board’s performance to date has been focused on the disposal of the loss making traditional telephony business in 2016 and the subsequent acquisition and integration of three separate IT businesses, to form a profitable IT as a Service business with high recurring revenue streams.

The performance of the Board as a whole may be judged in part by the attainment of financial measures including adjusted EBITDA, operating cash flow and net debt.

In early 2017, the Directors took part in an independent Board Effectiveness exercise that took feedback and measured the performance and effectiveness of the Board across a number of parameters including:

  • setting, guiding and monitoring group strategy
  • standard of internal reporting
  • channels of communication
  • support of management with appropriate challenge
  • structure and effectiveness of meetings
  • appropriate use of external advisors
  • quality debate and appropriate preparation
  • compliance with governance, legislation and regulation
  • focus on future vs past
  • skills of board members.

Succession planning and Board appointments

The Remuneration and Nomination Committee meets as and when necessary to consider the appointment of new executive and non-executive directors, although the Board as a whole takes responsibility for succession planning. Board members all have appropriate notice periods so that if a Board member indicates his/her intention to step down, there is sufficient time to appoint a replacement, whether internal or external.

Each director is required to offer themselves for re-election at least once every three years as per the Company’s Articles of Association. Dr Tom Black is currently the longest serving Board member having been appointed in 2013.

Board appointments are made after consultation with advisers including the Nominated Advisor who undertakes due diligence on all new potential Board candidates.

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

The Board recognises that core values provide a framework which influences every level of the Company. The CFO and the Managing Director of the trading business take the lead in developing and promoting the corporate culture and ensure that employees understand the business values and behaviours required to ensure that we perform as one team with to deliver our business goals and maintain good employee relations.

The Group is committed to employment policies which follow best practice, based on equal opportunities for all employees, irrespective of sex, gender reassignment, race, disability, sexual orientation, pregnancy and/or maternity, marital or civil partner status, religion or belief or age.

The Company’s environmental and health and safety policies are referred to in the Corporate Governance section of the Annual Report and Accounts and as follows:

Environmental policy

The Group acknowledges the importance of environmental matters and where possible uses environmentally friendly policies in its offices, such as recycling and energy-efficient practices.

Health and safety

The Group aims to provide and maintain a safe working environment for all colleagues and visitors to its premises, and to comply with all relevant UK health and safety legislation. Health and safety matters are delegated to representatives within the business, who can raise any issues arising via a number of means, including the corporate risk register whose highest rated risks are reviewed periodically by the Board.

Principle 9 – Maintain governance structures and processes that are fit for purpose and support good decision-making by the Board.

The CFO and the Managing Director of the trading business have overall responsibility for managing the day to day operations of the Company and the Board as a whole is responsible for monitoring performance against the Company’s goals and objectives. The Corporate Governance report in the Annual Report and Accounts sets outs individual Board members’ specific responsibilities, contributions and skills.

The roles of the Audit Committee, Remuneration Committee and Nomination Committee are set out in the Corporate Governance section of the Company’s website below, as well as in the Corporate Governance report in the Annual Report and Accounts.

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

The Company maintains a regular dialogue with stakeholders including shareholders to enable interested parties to make informed decisions about the Company and its performance.

Historical annual reports and notices of general meetings can be found in the Financial Reports section of the website.

The Board discloses the results of Annual General Meetings and can be found in the Regulatory News section of the website. Historically, the Board has not disclosed proxy voting numbers to those attending the meetings, but in order to improve transparency, the Board has committed to announcing proxy voting results in future. In the event that a significant portion of voters have voted against a resolution, an explanation of what actions it intends to take to understand the reasons behind the vote will be included.

The roles and responsibilities of the committees supporting the Board are set out in the Corporate Governance section of the Annual Report and Accounts.

Simon Duckworth
Non-Executive Chairman

 

Board Terms of Reference
Audit Committee Terms of Reference
Nomination Committee Terms of Reference
Monitoring under Criminal Finances Act 2017