Governance

STATEMENT OF COMPLIANCE WITH QCA CORPORATE GOVERNANCE CODE

As an AIM quoted company, we recognise the importance of applying sound governance principles in the successful running of the Group. Whilst previously not required to do so, we sought to apply, or work towards, the principles contained in the UK Corporate Governance Code (2016) where appropriate.

In light of the changes to the governance requirements for AIM quoted companies and, with reference to the size and nature of the Company and composition of the Board, we have formally adopted the QCA Corporate Governance Code for Small and Mid-Size Quoted Companies (the QCA Code) and will report annually on our compliance with the QCA Code in our Annual Report.

The sections below set out how we currently comply with the ten principles of the QCA Code.

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

An overview of the Group’s business model and products were set out on pages 2 to 5 of the Annual Report & Accounts 2017. The Group’s strategy was described on pages 8 to 13 of Annual Report & Accounts 2017.

The Chief Executive is responsible for the leadership and day-to-day management of the Group. This includes, in conjunction with the Leadership team (details of whom are on pages 20-21 of the Annual Report & Accounts 2017), formulating and recommending the Group’s strategy for Board approval and then executing the approved strategy.

Our business model is designed to deliver sustainable 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.

  1. Seek to understand and meet shareholders needs and expectations

The Group seeks regular dialogue with both existing and potential new shareholders, ensuring our strategy, business model and performance are clearly understood as well as to understand the needs and expectations of shareholders.

The Chief Executive and Chief Financial Officer meet regularly with investors and analysts via investor roadshows and by hosting tours of our facilities in order to provide them with updates on the Group’s business and obtain feedback regarding the market’s expectations of the Group.

The Board invites communication from its private investors and encourages participation by them at the Annual General Meeting (AGM). All Board members present at the AGM are available to answer questions from shareholders. 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 yet appointed a Senior Independent Director, but will consider annually whether one should be appointed.

  1. 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 the need to maintain effective working relationships across a range of stakeholder groups. These include the Group’s employees, customers, suppliers, shareholders and the wider community in which we operate.

The Group’s operations and working methodologies take account of the need to balance the needs of all of these stakeholder groups while maintaining focus on the Board’s primary responsibility to promote the success of the Group for the benefit of its members as a whole. The Group endeavours to take account of feedback received from stakeholders, making amendments to working arrangements and operational plans where appropriate and where such amendments are is consistent with the Group’s longer term strategy.

The Group takes due account of any impact that its activities may have on the environment and seeks to minimise this impact wherever possible. Through the various procedures and systems it operates, the Group ensures full compliance with Health, Safety and Environmental Legislation relevant to its activities.

The Board intends to launch an annual Group Employee Engagement Survey during 2019, to address where possible, any concerns raised and ensure the alignment of interests between the Group and that of our employees.

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

The Board members are responsible for the Group’s system of Internal Control and for reviewing its effectiveness, taking guidance from the Audit Committee. The systems implemented are designed to manage, limit and control the risk of failure to achieve business objectives rather than eliminate all risk completely. They can therefore only provide reasonable and not absolute assurance against material loss or misstatement.

There is an ongoing process, led by the Chief Financial Officer and supported by the Leadership Team, for identifying, evaluating and managing the Group’s significant risks.  The register of significant risk is reviewed by the Board at least twice per annum.

The Company’s Executive Directors, supported by the Group’s Leadership Team, are actively involved in the daily management of the operations of the Group and meet on a regular basis to discuss:

 

On a monthly basis, management accounts in support of the Chief Financial Officer’s commentary are reviewed by the Board in order to provide effective monitoring of financial performance. At the same time the Board considers other significant strategic, organisational and compliance issues to ensure that the Group’s assets are safeguarded and financial information and accounting records can be relied upon. The Board formally monitors monthly progress against its key objectives for the year using a set of Primary and Secondary KPIs – these KPIs are cascaded via the Leadership Team throughout the organisation.

A summary of the principal risks and uncertainties facing the Group, as well as mitigating actions, are set out on pages 18 to 19 of the Annual Report & Accounts 2017.  These matters are reviewed by the Board at least twice per annum.

  1. Maintain the Board as a well-functioning, balanced team led by the Chair

The Company and Group are managed by a Board of Directors chaired by Adam Attwood. The Board is ultimately responsible for taking all major strategic decisions and also addressing any significant operational matters.  The day to day decisions in support of deployment of the Group’s stated Strategy is delegated to the Executive Directors and the Leadership Team.   In addition, the Board reviews the Risk profile of the Group and ensures that adequate systems of Internal Control are in place. The Board conducts ongoing review of the management information systems to ensure that they are capable of allowing the Board to make informed decisions to properly discharge their duties.

A formal schedule of Matters Reserved for the Board was adopted at the time of the Group’s Initial Public Offering on 22 August 2016 and is reviewed annually.

The Board currently consists of two Executive Directors, a Non Executive Chairman and two Independent Non Executive Directors. Both the Non Executive Directors are considered by the Board to be independent of management and 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 has not yet appointed a Senior Independent Director, but will consider annually whether one should be appointed.

The Board considers that it has sufficient members to contain the appropriate balance of skills and experience to operate effectively and control the business. No individual Board member has unconstrained powers to make decisions.

The role of Chairman and Chief Executive are separate, with their roles and responsibilities clearly defined.  The Chairman’s main responsibility is the Leadership and Management of the Board and its Governance. He meets regularly and separately with the Chief Executive and the Non Executive Directors to discuss matters for the Board.

The Chief Executive is responsible for the Leadership and day-to-day management of the Group. This includes, in conjunction with the Leadership team (details of whom are on pages 20-21 of the Annual Report & Accounts 2017), formulating and recommending the Group’s strategy for Board approval and then executing the approved strategy.

The Board convenes regularly with at least 10 scheduled meetings per year.  These meetings include presentations by members of the Leadership team (to provide the Board with additional insight into their area of expertise) as well as an Annual Strategy meeting.  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 22 of the Group’s Annual Report & Accounts 2017

  1. Ensure that between them, the Directors have the necessary up-to-date experience, skills and capabilities

The Board considers that the skills, experience and knowledge of each Director are sufficient to give them the ability to constructively challenge Strategy and decision making and scrutinise performance. Their biographical details are set out on the Group’s website Company-information

The composition of the Board remains under constant review to ensure it remains appropriate to the 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.

During the course of the year, the Board receives updates from the Quoted Companies Alliance, the Company Secretary and external advisers, where relevant, on Corporate Governance matters.

Directors have access to 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.

  1. Evaluate Board performance based on clear and relevant objectives, seeking continuous improvement

The Chairman, as part of his responsibilities, informally assesses the performance of the Board and its Directors on an ongoing basis and brings to the Board’s attention any areas for improvement.

As noted in the Annual Report and Accounts 2017, the Board made use of its membership of the QCA to access a formal Board effectiveness review. Each Director completed an assessment, with additional narrative feedback where appropriate, across 12 key areas of Board effectiveness. The Chairman collated the scoring and feedback and the Board sought to develop an action plan to address the findings.

Those questions specifically addressing the Chairman’s performance were returned to an independent Non-Executive Director.

The Board are satisfied that their operating culture is such that an externally facilitated review was not necessary.

Mindful of the changes to the Board composition in FY18, the Board is formulating how best to conduct an evaluation of its own performance for the current year. How the evaluation was conducted, its results and recommendations will be reported in the Group’s Annual Report 2019.

The effectiveness of the Board and its Committees will be kept under review in accordance with Corporate Governance best practice and at a minimum on an annual basis.

  1. Promote a corporate culture that is based on ethical values and behaviours

As a growth Company, we recognise that it’s our people that will underpin delivery of our business model.  We therefore strive to recruit, retain, engage and develop our staff in response to ever changing customer demands.

During the year, the Leadership Team, working under delegated authority of the Board conducted behavioural training workshops on Autins’ culture and values in order to establish a framework which all employees could support.

We will set out the Autins values in our 2018 Annual Report and Accounts.  These values will underpin the high-performance culture that is essential to delivery of our strategy.

Our culture will be built on these Autins values and they 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.

The Board actively promotes a positive Health and Safety culture within the business and ensures that this is reflected 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 a standing agenda item at all Board and Leadership meetings.  The Group’s Health & Safety Manager has direct access to the Executive Directors should they wish to raise any urgent concerns and reports ultimately to the Company Secretary.

The Group’s policies and procedures are regularly reviewed, updated and communicated to all staff via our Employee Engagement App which is available to both permanent and temporary contract employees.  The App is also the Group’s portal for Anti-Bribery, Corruption and Whistle-blowing policy. Any concerns raised are passed to the Chairman of the Audit Committee for independent review.

The Group maintains a share dealing code that 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.

  1. Maintain Governance structures and processes that are fit for purpose and support good decision-making by the Board

The Board has, since admission to the AIM market, maintained separate Audit and Remuneration Committees to oversee and consider issues of policy outside main Board meetings.  Each of these Committees has written Terms of Reference setting out its duties, authority, reporting responsibilities and minimum meeting frequency.

Audit Committee terms of reference

Remuneration Committee terms of reference

During the year, the Chairman of these Committees provided the Board with a summary of key issues considered at the Committee meetings. Board committees are authorised to engage the services of external Advisers as they deem necessary in the furtherance of their duties at the Company’s expense.

The Board also maintains a Nominations Committee but this meets as and when 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.

Details concerning the composition and frequency of meetings for these committees are contained in the Annual Report.

  1. Communicate how the Group is governed and is performing by maintaining a dialogue with shareholders and other relevant stakeholders

Communications with shareholders are via the Annual Report and Accounts, full-year and half-year announcements and associated presentations, periodic market announcements (as appropriate), the AGM, one-to-one meetings and Investor road shows.

The Investors section of the Group’s website is updated regularly.  All Reports and Investor presentations since the Group’s Initial Public Offering, together with its Admission Document, Certificate of Incorporation and Articles of Association can be found on the Group’s website at Documents & reports

September 2018