The Group, mindful of changes to governance requirements for AIM quoted companies, and having considered the size and nature of the Company and composition of the Board, formally adopted the QCA Corporate Governance Code for Small and Mid-Size Quoted Companies (the QCA Code) in September 2018. This was in line with the Board’s previously stated aims of seeking to apply, or work towards, best practice for smaller quoted companies. The Group remains subject to the UK City Code on Takeovers and Mergers.
The statement on Corporate Governance below should be read in conjunction with relevant sections of the Company Overview, Strategic Report and Governance sections of these Annual Reports and Accounts which are cross referred from these pages and the Group’s website – www.autins.com.
QCA Principle 1: Establish a strategy and business model which promote long-term value for shareholders
An overview of the Group’s business model is set out on pages [•] to [•] of this report, whilst the Group’s strategy is described on pages [•] to [•].
Leadership and day-to-day management of the Group is the responsibilities of the Chief Executive. The Executive Directors, in conjunction with the Leadership team (details of whom are on pages [•] and [•]) formulate, review and recommend the Group’s strategy for Board approval as part of the annual planning cycle. The Leadership team will then take ownership of specific policy deployment plans that are designed to implement and promote the approved strategy in addition to delivery of annual financial plans.
The Group’s business model has been designed to deliver sustainable, long term, profitable growth. As a partner of choice for the automotive industry, we generate growth by providing differentiated acoustic and thermal products with a clear benefit to the customer. We do this through a high-performing, values-led organisation focused on delivering our strategic goals.
QCA Principle 2: Seek to understand and meet shareholders needs and expectations
The Group seeks regular dialogue with both potential and existing shareholders in order to confirm that our wider investor relations plan has allowed investors to clearly understand the strategy, business model and performance.
The Executive Directors meet regularly with investors and analysts at investor roadshows and by hosting tours of our facilities in order to facilitate open communications regarding the Group’s business performance (both current and expected future state) and reconfirm the Board’s understanding of shareholder’s expectations and needs with regards the Group.
The Board recognises the importance of the Annual General Meeting (AGM) and therefore encourages participation by all investors at the AGM. All Board members present at the AGM therefore make themselves available to answer any questions from shareholders that may arise. Notice of the AGM is in excess of 21 clear days and the business of the meeting is conducted with separate resolutions, voted on initially by a show of hands and with the result of the voting being clearly indicated.
The results of the AGM are subsequently published on the Company’s corporate website and are announced through a regulatory information service. The Board will also disclose any actions to be taken as a result of resolutions, for which, votes against have been received from at least 20 per cent of independent Shareholders.
The Group has not appointed a Senior Independent Director, but cons0069ders annually whether one should be appointed.
QCA Principle 3: Take into account wider Stakeholder and Social responsibilities and their implications for long-term success
The Group is aware of its Corporate Social Responsibilities and has spent time in the year refining its CSR policies, data recording and procedures. The Group recognises the need to maintain effective working relationships across a range of stakeholder group including its employees, customers, suppliers, shareholders and the wider community in which it operates. The revised policy document will be deployed during FY20 and is designed to provide a focal point for the Group’s CSR efforts.
The Board’s primary responsibility is to promote the success of the Group for the benefit of its members as a whole, but they recognise their obligation to balance the Group’s operations and working methodologies to take account of, and balance with, the needs of all of the wider stakeholder group. Where feedback is received from stakeholders, the Group endeavours to make appropriate amendments to working arrangements and operational plans to address this feedback whilst remaining consistent with the Group’s longer-term strategies.
The Group employs a full time Environmental, Health and Safety professional who ensures that due account is taken of any impact on the environment that its activities may have and seeks to minimise this impact wherever practical and possible. The Group remains fully compliant with Health, Safety and Environmental legislation relevant to its activities and performs regular reviews of its various procedures and systems in order to maintain and enhance both compliance and the sharing of best practice.
During the year, the Group launched Autins Values, as set of six principles designed to influence and inform our response to stakeholder needs and the Group’s responsibilities to them. Management launched an annual Group Employee Engagement Survey in the year to assess the implementation of these values and to address, where possible, any concerns raised and ensure the alignment of interests between the Group and that of our employees.
QCA Principle 4: Embed effective risk management, considering both opportunities and threats, throughout the organisation
The Audit Committee provides guidance, having taken feedback from management and third party advisors, to the Board with regards the effectiveness of the Group’s system of Internal Control. The Group has designed and implemented systems to manage, limit and control the risk of failure to achieve business objectives. As with all systems, the Group’s processes cannot eliminate all risk completely, but provide reasonable rather than absolute assurance against material loss or misstatement.
The Chief Financial Officer leads a continuous process, with support from the Leadership and finance team, to identify, evaluate and manage the Group’s significant risks. The Group’s register of potentially material or significant risks are typically reviewed by the Board twice per annum. This register informs the principal risks and uncertainties as stated on pages [•] to [•].
As an SME, the Executive Directors, supported by the Group’s Leadership Team, are actively involved in the daily management of all aspects of Group operations and meet on a regular basis to discuss:
- Quality, Environmental and Health & Safety performance.
- Monthly financial and commercial results of the business compared to forecast.
- Achievement against annual policy deployment activities that support the Board’s overall strategic plans.
- Business risks and appropriate control systems improvements to manage those risks.
- Progress on performance improvement projects.
- Steps taken to embed internal control and risk management further into the Group’s operations.
On a monthly basis, agreed financial and non-financial KPIs together with management accounts are reviewed by the Board to assess progress against its key objectives for the year. The Executive Directors’ provide a supporting written commentary in order to highlight key areas of performance and address previously agreed areas of interest. These KPI’s, management accounts and more detailed departmental level data are cascaded via the Leadership Team throughout the organisation.
The Board further considers whether any significant strategic, organisational or compliance issues have occurred (or are at risk) to ensure that the Group’s assets are safeguarded and financial information and accounting records can be relied upon.
A summary of the principal risks and uncertainties facing the Group, as well as mitigating actions, are set out on pages [•] to [•] of this report.
QCA Principle 5: Maintain the Board as a well-functioning, balanced team led by the Chair
Role of the Board
The Company and Group are managed by a Board of Directors, chaired by Adam Attwood, who are ultimately responsible for taking all major strategic decisions and also addressing any significant operational matters. Deployment of the Group’s strategy and management of day to day decisions is delegated to the Executive Directors and the Leadership Team. The Board also reviews the Group’s risk profile and the adequacy of the implemented systems of internal control that are in place. The management information systems continue to be evolved to adapt to changing data enquiry needs and to ensure that they are capable of facilitating informed decisions by the Board to allow them to properly discharge their duties.
Delegation of responsibilities
The Group maintains a formal schedule of matters reserved for the Board which is reviewed at least annually. A schedule of delegated authorities under which Management can operate without reference to the Board exists and was last reviewed, revised and approved by the Board in [•] 2019.
The Board consisted of two Executive Directors, a Non Executive Chairman and two Independent Non Executive Directors for the majority of the year. All Non Executive Directors that served in the year were considered to be independent of management by the Board and were free from any business or other relationship that could materially interfere with the exercise of their independent judgement in accordance with the QCA Code.
The Group considers annually whether a Senior Independent Director should be appointed, but has not currently chosen to do so.
The Board are satisfied that they have sufficient members and with an appropriate balance of skills and experience to allow it to operate effectively and exert control over, and provide challenge and guidance to, the business and its management team. No individual Board member has unconstrained powers to make decisions of a material nature.
Role of Chairman and Chief Executive
The Chairman and Chief Executive Board positions are separate with clearly defined individual duties and responsibilities. The Chairman is responsible for the leadership and management of the Board and its governance and as such meets regularly and separately with the Executive and Non Executive Directors to discuss matters for the Board.
The Chief Executive is responsible for day-to-day management and leadership of the Group. This includes guiding the Leadership Team (details of whom are on pages [•] and [•]), in its formulation, review and confirmation of the Group strategy for Board approval and subsequent execution.
The Board convenes regularly with at least 10 scheduled meetings per year. These meetings incorporate an annual strategy day and scheduled presentations by Leadership team members to provide the Board with additional insight into their area of expertise. Additional meetings are held in person or via teleconference where it is considered necessary to respond to any urgent change in circumstance.
Details of Directors’ attendance at scheduled Board and Committee meetings during the year can be found on page [•] within the Director’s report.
QCA Principle 6: Ensure that between them, the Directors have the necessary up-to-date experience, skills and capabilities
The Board composition has materially changed in the year but is still considered to have all appropriate skills, experience and knowledge sufficient to give the Board the ability to constructively challenge strategy, decision making and scrutinise business performance.
The Board’s biographical details are set out on the Group’s website and within this Annual Report and Accounts on page [•] and [•].
Board composition remains under review to ensure it remains appropriate to the strategic and managerial requirements of the Group. One third of the Directors are required, in accordance with the Company’s Articles of Association, to retire annually in rotation. This enables the Shareholders to decide on the election of the Company’s Board.
Attendance and participation in relevant training, networking and update events are encouraged in order to create, maintain or enhance relevant skills and knowledge. Updates from the Quoted Companies Alliance and external advisers are utilised to ensure relevant knowledge of Corporate Governance matters where appropriate.
All Directors have access to the Group’s (or independent) professional advice at the Company’s expense. In addition, they have access to the advice and services of the Company Secretary who is responsible to the Board for advice on Corporate Governance matters.
QCA Principle 7: Evaluate Board performance based on clear and relevant objectives, seeking continuous improvement
As part of his responsibilities with regards Board effectiveness and governance, the Chairman, informally assesses the performance of the Board and its Directors on an ongoing basis and brings to the relevant party’s attention any areas for improvement.
The Board has committed to using the QCA Board effectiveness review to assess the 12 defined key areas of Board effectiveness. Due to the change of Chief Executive at the start of the period and the change in Non Executive Director in the second half year, the effectiveness review scheduled for FY19 was postponed. The Board will next conduct an evaluation of its own performance in the second half of FY20.
The Board is satisfied that its operating culture is open and dynamic enough not to warrant the use of Group resources for an externally facilitated review at this time. This approach will be reviewed on an annual basis.
The effectiveness of the Board and its Committees are reviewed on at least an annual basis but kept under review in accordance with Corporate Governance best practice.
QCA Principle 8: Promote a corporate culture that is based on ethical values and behaviours
As an SME, we recognise that it’s our people that will underpin delivery of our business model. We therefore aim to create systems and roles that support the recruitment, retention, engagement and development of our staff in response to ever changing customer demands.
During the year Autins’ core values, as proposed by the Leadership team, were approved by the Board and deployed across the business. These values seek to to establish a framework which all employees can support, will govern our behaviours and underpin a high performance culture that the Board believes is required in order to deliver our strategy.
Our aim is that the Group’s culture will be built on these Autins values and they will inform the expected behaviours that will be an integral part of our induction, appraisal and performance management and remuneration processes. We have already established a twice yearly Leadership Organisational Management Review which allows for peer to peer review of critical business challenges, staff performance and reward.
A positive Health and Safety culture is promoted within the business and the Group seek to reflect this in all of our policies and procedures, as well as in our approach to the training and development of the people involved in our operations. Health and Safety is the standing first agenda item at all Board and Leadership meetings. The Group’s Health & Safety Manager, who reports ultimately to the Chief Executive, has direct access to the Executive Directors should he wish to raise any urgent concerns.
The Group’s policies and procedures are given to all new employees at induction, and are available to both permanent and temporary staff via our Employee Engagement App. The App is also the Group’s portal for Anti-Bribery, Corruption and Whistle-blowing policy. Any concerns raised are passed directly to the Chairman of the Audit Committee for independent review. All policies and procedures are subject to a periodic review and re-approval to ensure they continue to meet their aims.
The Group’s share dealing code is applicable to all staff and available for review on the Employment Engagement App. All staff are subject to a closed period from the last day of each full or half year until 48 hours after the results for that period have been published and require authorisation from the Company Secretary for any trading activity outside of a close period.
QCA Principle 9: Maintain Governance structures and processes that are fit for purpose and support good decision making by the Board
The Board maintains separate Audit, Nomination and Remuneration Committees whose purpose is to consider and oversee issues of policy outside main Board meetings.
The Audit Committee comprises the three Non-executive Directors. It was chaired by Terry Garthwaite until April 2019, Ian Griffiths from April until July 2019, and is now chaired by Neil MacDonald.
The Committee’s role includes:
- Considering the appointment, fees, independence and effectiveness of the auditor, the audit process and discuss the scope of the audit and its findings.
- Review audit and non-audit services and fees.
- Monitor the Group’s accounting policies and their interaction with changes in GAAP.
- Review and challenge the Group’s assessment of business risks and internal controls to mitigate these risks.
- Review the annual and interim statements prior to their submission for approval by the Board.
- Review and challenge the going concern assumptions for the Group.
- Review the Group’s whistle-blowing policy and procedures.
The Board retains ultimate responsibility for reviewing and approving the Annual Report and Accounts and the half-yearly reports.
The Remuneration Committee comprises the two independent Non-Executive Directors and is chaired by Ian Griffiths. The Committee is responsible, within its agreed terms of reference, for the following remuneration matters:
- Setting and reviewing the remuneration policy for all Executive Directors.
- Confirming that remuneration payments made to Directors are consistent with the approved policy.
- Ensuring that remuneration payments are in accordance with appropriate benchmarks as well as assessing changes in practice that may have future remuneration impacts.
- Overseeing incentives-based remuneration for Senior Management or other employees identified as relevant by the Committee.
In carrying out these duties the Committee shall ensure the appropriateness, relevance and market practice in respect of such remuneration policy.
The Nomination Committee has responsibility for reviewing the size, composition and structure of the Board (and it’s Committees) and making recommendations of any changes it believes are required for succession planning. The Committee identifies and nominates for approval by the Board of candidates to fill vacancies as and when they arise as well as reviewing the results of any Board performance evaluations and proposing corrective actions if required.
Whilst the Committee has ultimate responsibility for reviewing the structure, size and composition of the Board and recommending any changes required, in practice the Board as a whole considers any recommendations for appointments.
Interaction with the Board and governance
During the year, the Chair of each Committee will provide the Board with a summary of key issues considered, and conclusions drawn, at the Committee meetings. Details regarding the frequency and attendance of meetings for these committees are contained in the Director’s Report.
Written Terms of Reference have been established (and are regularly reviewed) for all Board Committees. These Terms of Reference are available on the Group’s Investor website and confirm the duties, authority, reporting responsibilities and minimum meeting frequency for each Committee.
Board committees are authorised, in the furtherance of their duties, to engage the services of external advisers as they deem necessary at the Company’s expense.
QCA Principle 10: Communicate how the Group is governed and is performing by maintaining a dialogue with shareholders and other relevant stakeholders
The Group communicates formally with shareholders via the Annual Report and Accounts, the full-year and half-year results announcements and associated presentations, periodic market announcements and trading updates (as appropriate) and the AGM.
The Executive Directors periodically meet with analysts and shareholders in face to face meetings as well as hosting Investor road shows and events both at the Group’s and investor’s premises.
The Group’s website has been reviewed and redesigned to allow a more accessible platform to communicate the Group’s strategy, products and processes to the wider community. A dedicated Investors section is maintained within the main site and is updated regularly. The Investor’s website contains all financial reports and associated Investor presentations since the Group’s Initial Public Offering, together with downloadable copies of standing data (including the terms of reference of the Board’s subcommittees) that are of use to stakeholders.
This governance statement was last reviewed and updated on [•] November 2019