Corporate Governance statement from the Chair
During the last financial year, the Board has reviewed the Company’s corporate governance arrangements, as the AIM rules were updated in 2018 to require companies whose shares are traded on that market to state which corporate governance code they follow and to provide a corporate governance statement on their website. We had previously followed the UK Corporate Governance Code, published by the Financial Reporting Council. However, the Board has now decided to adopt the Quoted Companies Alliance Corporate Governance Code (2018) (“the QCA Code”), believing this to be more appropriate for Blancco. This does not mean that we are any less committed to observing high standards of corporate governance but rather that the board believes that the QCA Code provides greater flexibility and is more relevant to Blancco’s circumstances.
This is the first year we have disclosed under the QCA Code. Information about how the Company has applied the ten principles from the QCA Code follows this statement. The Board considers that the Company complies with the QCA Code.
In my role as Chair, I lead the Board’s deliberations on governance matters and work with the rest of the board and the company secretary to promote good governance across the group. I am also responsible for the effective running of the board, including ensuring that the board has open debate on appropriate matters, in which all directors are encouraged to participate. This debate should be based on clear, timely and good quality information. Where we agree to make changes to our governance arrangements, I take responsibility to make sure the agreed actions are completed. More information about my role is given under principle 9 below.
Each year the Company reviews its governance arrangements and this year has been no exception. As part of this year’s board effectiveness review, I considered the composition of the board, with the nominations committee. For the first time, we carried out a skills audit of the board. Although the board overall has a good mixture of skills and experience to support the business in the pursuit of its strategy, we have for some time, acknowledged the need for greater diversity, particularly gender diversity. The directors will seek to address this when making future appointments to the Board. At the point when we next welcome a new member to the Board it will give us the chance to ensure our induction process is up to date and provides all of the information which a new director will need, together with the opportunity to meet key people, both inside and outside the organisation, so that they can better understand our business, key goals and objectives.
The other aspects of governance which the board has particularly considered during the year are the Company’s culture and values and engagement with stakeholders.
The chief executive led an initiative with the executive team and participation from employees across the group, to set the Company’s vision, mission and values. The Board was invited to comment on these before they were launched throughout the organisation. The Board has also been considering who are the Company’s key stakeholders and how it can best engage with them. In addition, taking account of good business practice, the Board has begun to look at the way in which Blancco acts as a responsible corporation in terms of issues such as the environment and the communities in which it operates. More details are included in the corporate social responsibility and sustainability statement in the annual report. The review of stakeholder engagement and corporate responsibility are expected to continue during the current financial year and a further update will be provided in next year’s annual report.
Our engagement with our shareholders has continued. I wrote to our largest investors last autumn, offering to meet them to discuss our governance arrangements and any other issues they wished to address. Meetings were held with four institutions as a result and I shall be extending the same invitation this year. We also communicate with our major investors about any proposed changes to executive director remuneration. Our CEO and CFO continue to meet investors at the time of the full and half year results announcements and I attend the analysts’ briefing. In June this year, we also held a Capital Markets Day which I attended.
The opportunity for retail investors to attend the AGM and ask questions was taken up by a number of individuals in 2018 and the CEO also provides them with a brief business update at the meeting. This opportunity will again be available in 2019. We have made significant improvements to the investor section of the website which will continue to be kept under review to ensure it is up to date and informative. We also reviewed the annual report both on paper and online with a view to improving our communication with shareholders via these channels.
During the year, in addition to the above, we reviewed our governance framework and documentation. The list of matters reserved to the board for decision and the terms of reference for each of the board committees were reviewed and updated. No major changes were necessary. The board also reviewed and made minor changes to its policies on inside information and share dealing for directors and senior managers, which are in place to ensure the Company complies with its obligations under the Market Abuse Regulation. We also carried out a board effectiveness review, which I referred to earlier. Further details of the process we undertook and the outcomes are given under principle 7 below.
In conclusion, all of the directors take seriously their obligations to act in good faith to promote the success of the Company for the longer term and we strive to provide the right support and challenge for the executive team to deliver outstanding performance at an exciting stage in the Company’s growth and development. This is done while maintaining appropriate checks and balances to ensure risk is properly managed and that there is no compromise in adhering to our corporate culture and values.
The following statement describes how Blancco has applied the ten principles in the QCA Code during the past year.
Principle 1: Deliver a strategy and business model which promote long-term value for shareholders
The Company’s strategy and business model, the challenges faced by the business in executing them and how those challenges are being addressed, are described in the annual report. The board has a discussion on strategy in May each year with the senior management team, following deliberations by the executive. This is part of a two day board offsite meeting. In 2018, this resulted in the Company’s strategy being articulated afresh under the new CEO and in 2019 the strategy remains on track, with some minor alterations to reflect changes in the markets in which we operate and the initiatives we took during the year.
The board receives regular updates from members of the senior management team about progress in delivering the strategy and will, from time to time, invite individuals to present to the board so that directors can understand and discuss various aspects of the business model, providing support and challenge from their skills and experience.
During the last financial year, the board provided feedback to the executive on the proposed relaunch of the Group’s mission, vision and values, which are being rolled out across the group.
Principle 2: Seek to understand and meet shareholder needs and expectations
The company seeks to engage with shareholders in a number of ways:
Each year, the chair writes to our major shareholders, offering a meeting (with himself and the company secretary or senior independent director) to discuss governance matters or to address any concerns which they may have which have not been picked up as part of the regular engagement with the executive team, described below. During 2018, meetings were offered to nine investors and meetings or calls were held with four. A summary of these discussions is reported at the next following board meeting so that all directors are made aware of investors’ views. Shareholders were generally supportive of the strategy and the strength of the new executive team.
The chair of the remuneration committee writes to investors if any changes to executive remuneration are proposed. This was done in October 2018 when there was a proposal to adjust the LTIP targets. Details of the change were disclosed on the Company’s website.
The CEO and CFO meet with current and potential institutional investors and analysts following the release of the full and half year results announcements and at other times as appropriate. During the current financial year, additional investor meetings were held in connection with the recent acquisition of Inhance and the fund raising, which was very well supported. Feedback from all of these meetings is provided to the full Board by the executive directors and separately from the Company’s nomad and brokers.
In June, the Company also held a Capital Markets Day at which members of the senior leadership team below board level gave presentations and answered questions about the business.
Retail investors continue to have the opportunity to meet the board, hear a brief business update from the CEO and ask questions at the AGM. The annual report and notice of AGM is sent to all shareholders and published on the Company’s website (www.blancco.com). The website also contains the information required under AIM Rule 26. All regulatory announcements appear on our website as soon as they have been released to the market. Investor presentations and analysts’ notes are uploaded as they become available. Much has been done to improve the investor section of the website (www.blancco.com/investors/investor-centre/) and further improvements will be introduced over time. The annual report was also refreshed this year, including how it is presented online as well as in paper format. Shareholders may now sign up for email alerts (see www.blancco.com/investors/investor-centre/email-alerts/).
The company secretary engages with investors on various matters, particularly in relation to corporate governance. She can be contacted at email@example.com. The Company’s registrars (Computershare Investor Services plc) are available to assist retail investors with enquiries about their shareholdings and they can be contacted using the Registrar’s helpline on 0370 889 4099. Shareholders can also manage their holdings online by registering on Computershare’s secure shareholder website Investor Centre – see www.investorcentre.co.uk.
Principle 3: Take into account wider stakeholder and social responsibilities and their implications for long-term success
As the executive team reviews the group’s strategy from time to time, they consider the key resources and relationships which are essential to the ongoing success and growth of the business in light of the evolution of the technology, products and services offered, the markets in which the business operates and the competitor landscape among other things. Their conclusions are shared with the Board.
The board has identified the key stakeholders for the business as shareholders, employees, customers and business (channel) partners. Information on our engagement with shareholders is explained under Principle 2 above.
- An employee survey was undertaken in the summer of 2018. As a result of feedback from this, the new Head of HR has led initiatives to make reward policies and procedures more consistent across the group. A global onboarding programme has also been set up so that all staff joining the group receive the same welcome and information about Blancco. A follow up survey will be conducted in the autumn.
- Focus groups were set up to invite feedback from around the group on the new mission, vision and values. These include staff from all levels within the organisation. These groups were also used to provide two-way communication on other projects. It is expected that such groups will continue in future, although their membership may be refreshed to give other employees the opportunity to participate.
A Customer Advisory Board has been set up which meets [once a year] to invite feedback from some of the group’s customers. Discussions are also held on the future direction of the products offered and the feedback informs the prioritisation of the various developments in Blancco’s products and services. During the year, at a two day offsite meeting the directors received presentations from key customers and had discussions with them afterwards. Board reporting includes information about new clients which are taken on.
Business (channel) partners
The board receives regular reports from the Head of Business Development about the progress of key partner relationships. The board is also advised if there are any issues or concerns raised by customers or partners and what steps are planned to resolve these.
A very positive impact of our business on the environment is that use of our erasure software allows devices (both mobile, desktop hardware and servers) to be reused and recycled. It removes the need to destroy hardware in order to ensure the corresponding destruction of the data which it holds.
The Company’s day to day operations do not have a significant impact on the environment or the communities in which it operates. However, the organisation is aware of its responsibilities and this is reflected the way it conducts its business, for example, despite being an international organisation, virtual meetings are held regularly, rather than employees making avoidable business trips. Where these are necessary to benefit the business, then plans are made where possible to combine visits to several nearby countries in one trip and with the objective of satisfying multiple purposes.
Principle 4: Embed effective risk management, considering both opportunities and threats, throughout the organisation
During the year, as part of the review of strategy and the updating of the group’s business plan, the executive team has refreshed the assessment of the opportunities and risks facing the group and produced an updated risk analysis and matrix, which lists the key risks faced by the group, their likelihood and impact and what is being done to mitigate them.
The board considers this high level analysis as a regular agenda item at least twice each year and on other occasions if something significant has changed which requires reconsideration of the risks the business faces. The executive team also reviews the risk analysis quarterly.
The audit committee reviews the risk management and internal control framework at least annually and reports to the board on its effectiveness, with any recommendations for improvements.
A list of the key risks facing the group, with the actions taken to mitigate them can be found in the Strategic report.
MAINTAIN A DYNAMIC MANAGEMENT FRAMEWORK
Principle 5: Maintain the board as a well-functioning, balanced team led by the chair
The board considers that each of the non-executive directors is independent. The executive directors are both employed by the Company on a full time basis. All of the non-executive directors demonstrate the commitment to their roles which is expected of them and give sufficient time to carry out their duties properly.
Information on the roles and duties of the Chair, CEO, Non-executive directors and the company secretary is given under principle 9 below. The time commitment for the Chair is approximately one day per week. The time commitment for the other non-executive directors is approximately 30 days per year.
The table below shows the number of board and committee meetings held during the financial year to 30 June 2019 and the attendance record of each director.
|Board||Audit Committee||Remuneration Committee||Nominations Committee|
|Eligible to attend||Attended||Eligible to attend||Attended||Eligible to attend||Attended||Eligible to attend||Attended|
*Attended by invitation
Simon Herrick resigned on 23 July 2018. Adam Moloney was appointed on the same date.
If Directors are unable to attend Board or Committee meetings, they review the relevant papers and provide comments to the Board or Committee Chair.
Principle 6: Ensure that between them the directors have the necessary up-to-date experience, skills and capabilities
The names of the directors who served during the year are given in the directors’ report on pages 32 and 33 in the annual report. Brief biographical details of each director are set out on page 30 of the annual report and on our website www.blancco.com/about-us/board-of-directors/. The directors come from diverse backgrounds and have a wide range of experience. Three of them have served as CEOs in public companies and all have experience of running businesses and/or advising business owners and leaders, some of which was carried out with international organisations. In their other roles, they have contributed to the development of strategy and handled M&A and other corporate finance transactions. Several have dealt successfully with turnaround situations as well as business growth. Four of the directors have extensive experience in the technology (including cybersecurity) and related sectors. Three are accountants and several have served on listed company boards (including as Chair) for many years, bringing a good breadth of corporate governance knowledge.
Each year the board receives an update on the AIM rules from the Company’s nomad. As part of the strategy review sessions and at other times during the year, the board is given presentations by members of the leadership team on various aspects of the business. During the year the board also attended presentations by two of the Group’s key business partners. The company secretary provides a regular update to the board on relevant legal and governance matters and the external auditors provide information about changes to accounting standards and developments in financial reporting.
The remuneration committee has appointed Deloitte to advise it on market practice and investor relations in respect of remuneration matters.
Details of the company’s other retained professional advisers are given on page 31 of the annual report and on our website www.blancco.com/about-us/advisors/.
The company secretary provides advice to the board and committees as well as to individual directors as required. She supports the Chair on matters of corporate governance and the running of the board and nominations committee. A full role description for the company secretary can be found on the Company’s website.
Philip Rogerson is the Senior Independent Director (SID) and a role description for this position is on the Company’s website. During the year the SID carried out a review of the performance of the Chair. He is also available to engage with investors if they prefer this route to the normal channels of communication. Any engagement with shareholders is reported to the board either immediately or at the next following board meeting, as appropriate.
Principle 7: Evaluate board performance based on clear and relevant objectives, seeking continuous improvement
The board carries out a regular (usually annual) effectiveness review using questionnaires. The questions are updated each year. This year the responses to the questionnaire were sent to the company secretary. The results were reviewed by the company secretary with the Chair, then presented to the whole board.
The board agreed a number of actions as a result of the review, which were tracked and progress reported at each subsequent board meeting.
Further details of the review are given below.
The board undertakes an annual evaluation of its own effectiveness and that of its committees and individual directors.
The criteria against which board effectiveness was considered this year were:
- The role of the board and how well it has performed in leading the company in a number of areas, including strategy, risk management, resource management, reviewing management performance and responsiveness to any problems which have arisen.
- Board composition and structure including the balance of the skills and experience of board members compared to both current and future needs and whether any changes should be considered over the next 12 months.
- Training and continuing professional development which would be beneficial.
- Board meetings, including the items covered, the quality, clarity and timeliness of papers, the frequency and length of meetings, the use of time, quality of discussion and the facilitation by the Chair of contributions by all directors.
- Investor and stakeholder relations, including their effectiveness and how well the board is kept informed of investor and stakeholder feedback.
- The effectiveness of adviser relationships.
The effectiveness of the committees was also explored and feedback in general terms about the performance of the directors was sought.
In addition to the above exercise, the Chair held meetings with each of the directors and the company secretary to discuss individual performance and succession planning. As noted above, the Senior Independent Director led an evaluation of the Chair. No issues of concern were raised in this review.
Other actions arising from the board effectiveness review were:
- Recommendations for future board updates on the business/tech sector as well as legal and regulatory developments.
- Further consideration of who the key stakeholders are and how best to engage with them.
- A review of the board pack to ensure it remains fit for purpose.
- A review of certain of the company’s advisory relationships.
- A review of how risk management and internal controls are dealt with by the board and committees.
- Scheduling the board to meet from time to time for informal discussions outside of board meetings.
All of these actions have either been completed or are in hand. From next year onwards, the board will also consider trends (either positive or negative) in the feedback from the effectiveness review. Comparisons were not made this year as there had been major changes to the board composition since the previous review and it would therefore have been difficult for any comparison to be meaningful.
Principle 8: Promote a corporate culture that is based on ethical values and behaviours
A description of how the board has applied this principle is given in the Chair’s corporate governance statement above.
As described in the corporate governance statement in the annual report, the executive team is currently launching the vision, mission and values statement for the Company. As these are rolled out to all staff across the business the expectation that all staff behave ethically will be reinforced.
Local staff handbooks have been introduced which allow easy access for all staff to Blancco policies and procedures which take account of local legal and regulatory requirements as well as the overarching values of the Group and which have been designed to promote the desired culture and behaviours. All new staff are required to sign up to the Company’s policies and procedures. All staff are given regular training on the key policies which cover Code of Conduct issues, such as whistleblowing, fraud and anti-bribery and corruption.
Managers are required to consider how employees have demonstrated the Company’s values over the previous year as part of the annual performance review process.
Principle 9: Maintain governance structures and processes that are fit for purpose and support good decision-making by the board
The Board is made up of six directors, two of whom are executive and four of whom are non-executive. All of the non-executive directors are independent. The board has an audit committee, chaired by Dr Frank Blin, a remuneration committee chaired by Philip Rogerson and a nominations committee chaired by Rob Woodward. All of the non-executive directors are members of these committees. The executive directors and others may be invited to attend the committee meetings from time to time.
The Chair is responsible for the leadership of the Board and ensuring its effectiveness. He is also responsible for creating the right Board dynamic and for promoting a culture of openness and debate, in addition to ensuring constructive and productive relations between Executive and Non-executive Directors. The Chair acts as an ambassador for the Company to its stakeholders, and in particular, works to ensure there is sufficient and effective communication with shareholders and to understand their issues and concerns.
The CEO, with the senior management team, is responsible for running the business, developing Group strategy having regard to the Group’s responsibilities to its shareholders, customers, employees and other stakeholders. He is also responsible for delivery of the successful achievement of objectives and execution of strategy following presentation to, and approval by, the Board, optimising the use of the Group’s resources.
The Non-executive Directors are responsible for exercising independent and objective judgement in respect of Board decisions, developing corporate strategy with senior management, and for scrutinising and constructively challenging the actions of senior management.
Philip Rogerson is the Senior Independent Non-Executive Director, to whom concerns may be conveyed by shareholders if they are unable to resolve them through existing routes for investor communications or where such channels are inappropriate.
The Company Secretary is responsible for advising the Board on corporate governance matters, supporting the Board and committee chairs in the running of the board and committees and liaising with shareholders on governance matters, among other things.
The Board has agreed a schedule of matters reserved specifically for its decision, which includes:
- Overall strategy and objectives.
- Approving interim and annual financial statements.
- Approving annual budget and medium term projections.
- Reviewing operational and financial performance.
- Significant acquisitions and disposals.
- Approval of major contracts.
- Major divestments and capital expenditure.
- Ensuring maintenance of a sound system of internal control and risk management by the Group.
- Approving appointments to the Board and the appointment of the Company Secretary.
The roles of the chair, chief executive, SID, non-executive directors and the company secretary can be found here.
The schedule of matters reserved to the board can be found here.
The terms of reference for the committees can be found here:
All of the above documents are reviewed regularly by the board. These versions were reviewed and updated in June 2019.
The board considers that the current governance framework is fit for purpose for the Company at its present stage of development and there are no current plans to change it.
Principle 10: Communicate how the company is governed and is performing by maintaining a dialogue with shareholders and other relevant stakeholders
The work of the audit and remuneration committees during the year is given in their respective reports in the annual report. The report of the audit committee is on pages 40 to 44 and the report of the remuneration committee is on pages 45 to 48.
During the year, the nominations committee considered the results of the skills audit and the composition of the board in light of this. It also discussed succession planning. As noted above, the directors will seek to address the issue of gender diversity when making future board appointments.
The skills audit showed that the directors do have between them a wide range of skills and experience which is sufficient for the needs of the Company at the current time. This will be kept under review as the business grows.
At the AGM, a separate resolution is proposed on each substantially separate issue. Shareholders are sent proxy appointment forms which allow them to indicate how they wish their votes to be cast if they are unable to attend the meeting. The proxy forms are received, checked and the voting instructions recorded by the registrars. Voting at the AGM is on a show of hands unless a poll is called. If the voting indications on the proxy forms show that a different outcome might be obtained if a poll was held, then the Chair would exercise his right to call a poll to ensure that the votes of all members were properly taken into account. An announcement of the results of the AGM is made to the market as soon as possible after the meeting and a copy of this appears on the Company’s website immediately afterwards.
At the AGM, details of the proxy votes received for and against each resolution are clearly displayed, together with details of any abstentions.
If there are any significant votes against a resolution the Company engages with the shareholders concerned to find out what their objections are in order to address them and/or to clarify any misunderstandings which might have occurred.
Copies of historical annual reports can be found on the Company’s website. The notice of AGM is included within the annual report. Other circulars to shareholders are also available on the website as is a copy of the Company’s constitution (articles of association).