STATEMENT OF COMPLIANCE WITH THE 2018 CORPORATE GOVERNANCE CODE
THIS INFORMATION WAS LAST REVIEWED AND UPDATED on 17 JANUARY 2024
The Board recognise that high standards of corporate governance underpin our continuing success and as a Board we acknowledge our responsibility in leading this process.
We continually review the framework within which we operate, and the processes implemented to ensure that they reflect the complexities of our business and, whilst acknowledging our size, are also capable of adding value as the business grows. In line with the London Stock Exchange’s AIM Rules, the Board has adopted the 2018 Quoted Companies Alliance Corporate Governance Code (the “QCA Code”) as the basis of the Group’s governance framework.
Whilst the Company is guided by the provisions of the QCA Code in respect of my independence as Chairman, the Board gives regard to the overall effectiveness and independence of the contribution made by Directors to the Board and does not consider a Director’s tenure and participation in the Company’s share option Schemes in isolation to determine this independence.
Within Image Scan, we promote a culture of good governance in dealing with all key stakeholders: our employees, our customers, our suppliers and our shareholders. This section of the annual report alongside the disclosure on our website describes our corporate governance structures and processes and how they have been applied throughout the Year.
Tim Jackson
Chairman, Image Scan Holdings plc
CORPORATE GOVERNANCE STATEMENT
The Board ensures that the Company maintains proper standards of corporate governance and that the principles of best practice, as set out in the 2018 QCA Corporate Governance Code, are followed so far as is practicable and appropriate to the size and nature of the Group and the constitution of the Board. Set out below is a summary of how, the Group is applying the key requirements of the Code and an explanation of where it has chosen not to fully comply.
- Establish a strategy and business model which promote long-term value for shareholders
The strategy and business operations of the Group are set out in the Strategic Report of the Annual Report. The Group’s strategy and business model are developed and approved by the Board. The management team is responsible for implementing the strategy and managing the business at an operational level. The Group’s overall strategic objective is focused on the development and commercialisation of market leading X-ray solutions for use in the global security and industrial inspection markets.
- Seek to understand and meet shareholder needs and expectations
The Board recognises that Image Scan communicates with its shareholders principally through its website and the Annual Report. Shareholders can also sign up to receive news releases directly from the Company by email. The Chief Executive Officer and Chairman makes themselves available to major shareholders on request and periodically attends meetings with shareholders.
The Annual General Meeting of the Company, normally attended by all directors, gives the directors the opportunity to report to shareholders on current and proposed operations and enables the shareholders to express their views on the Group’s business activities. Shareholders are invited to ask questions during the meeting and to meet with directors after the formal proceedings have ended.
- Take into account wider stakeholder and social responsibilities and their implications for long-term success
The Board believes that, in addition to its shareholders, its main stakeholder groups are its employees, customers, suppliers and relevant Statutory Authorities in its areas of operation.
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 consistent with the Group’s longer-term strategy.
Through the various procedures and systems it operates, the Group ensures full compliance with health and safety and environmental legislation relevant to its activities as well as maintain quality certification ISO9001:2015.
Further details are set out in the s172 Stakeholder Engagement Impact Statement of the Annual Report.
- Embed effective risk management, considering both opportunities and threats, throughout the organisation
The Board is responsible for the Group’s internal control and risk management systems and for monitoring their effectiveness. This is delegated to the Audit Committee as set in the Annual Report. The Board maintains a system of internal controls to safeguard shareholders’ investment and the Group’s assets, and has established a continuous process for identifying, evaluating and managing the significant risks the Group faces.
Details of the principal risks and how they are mitigated, are set out in the Directors report of the Annual Report.
The Board considers risk to the business on an ongoing basis and the Group formally reviews and documents the principal risks at least annually. The Board is responsible for reviewing and evaluating risk in the business.
- Maintain the Board as a well-functioning, balanced team led by the Chair
The Board of Image Scan is comprised of the Chairman, one further Non-Executive Director and two Executive Directors. At every AGM, one-third of the Directors must retire by rotation.
The Board considers itself sufficiently independent. The QCA Code suggests that a board should have at least two independent non-executive directors. The Board have considered each non-executive directors’ length of service and interests in the share capital of the Company and consider that Mr Jackson and Mr Sunil are independent of the executive management and free from any undue extraneous influences which might otherwise affect their judgement. All Board members are fully aware of their fiduciary duty under company law and consequently seek at all times to act in the best interests of the Company as a whole.
Whilst the Company is guided by the provisions of the Code in respect of the independence of directors, it gives regard to the overall effectiveness and independence of the contribution made by directors to the Board in considering their independence and does not consider a director’s period of service in isolation to determine this independence. The Board acknowledge that Mr Jackson, who joined the Board on 22 September 2014, has served for longer than the recommended nine year period and participates in the Company’s share option scheme.
The Board’s role is to establish the strategic objectives and policies; oversee all aspects of the Group’s finances and operations; continuously review performance and controls; manage risk; decide on key business transactions and manage the interests of stakeholder groups.
The Board reserves for itself a range of key decisions such as strategy, acquisitions, significant contracts and internal controls, to ensure it retains proper direction and control of the Group, whilst delegating authority to individual Directors who are responsible for the executive management of the business.
The Group does not have a director designated as the Senior Independent Director. In light of the size of the Board, the Board does not consider it necessary to appoint a Senior Independent Director at this stage but will nevertheless keep this under review as part of the Board’s evaluation of Board effectiveness.
Attendance at Board and its Committee meetings
The following meetings were held during the Year.
|
Number of Meetings |
Attendance |
||||
|
|
T Jackson |
R Leaver |
S Vadgama |
V Deery |
S Atwell King |
Board |
15 |
*15 |
15 |
10 |
15 |
15 |
Audit Committee |
3 |
*3 |
3 |
2 |
2 |
n/a |
Remuneration Committee |
4 |
4 |
4 |
*1 |
2 |
n/a |
Nomination Committee |
1 |
*1 |
1 |
– |
1 |
n/a |
*Indicates the Chair of the committee
From October 2023, the terms of reference of each committee are updated so that the membership of the committees are restricted to Non-Executive Directors but that at least one Executive Director will be in attendance at each committee meeting.
The terms of reference of the Audit Committee stipulate that three meetings per year should be held, however, given the size of the board, some of the Audit Committee business was conducted at the full Board, including review of the Risk Management system and Internal Controls.
- Ensure that between them, the directors have the necessary up-to-date experience, skills and capabilities
The Board is composed of two executive and two non-executive directors who regularly meet throughout the year and receive timely information in a form and of a quality appropriate to enable it to discharge their duties.
The structure of the Board is subject to regular review to ensure that it is appropriate for the Group. The Directors’ varied backgrounds and experience give Image Scan a good mix of the knowledge and expertise necessary to manage the business effectively.
The skills and experience of the Board are set out in their biographical details on the Investor Relations website https://ish.co.uk/investor-relations/board-of-directors. The experience and knowledge of each of the Directors gives them the ability to constructively challenge the strategy and to scrutinise performance. The Board also has access to external advisors where necessary.
- Evaluate Board performance based on clear and relevant objectives, seeking continuous improvement
The Board undertakes an annual evaluation under a formal, self-evaluation process. This process has led to a number of actions, including alternative sources of information that the Board receives, and the Board defined initiatives which are reviewed regularly at Board meetings. The process focuses closely on objectives and targets for improving performance.
- Promote a corporate culture that is based on ethical values and behaviours
The Group is committed to a culture of equal opportunities for all employees. The Board aims to be diverse in terms of its range of culture, nationality and international experience. When there are changes to the Board, the Board will, subject to identifying appropriate candidates, consider the makeup of the Board in making further appointments.
The Board acts to strengthen the culture of the business by setting of values and setting an example which is consistent with the vision and objectives of the Group and flows these down though a set of specific initiatives. These initiatives are driven personally by the Chief Executive and a progress on these are reported to the Board.
- Maintain governance structures and processes that are fit for purpose and support good decision-making by the Board
The Board has twelve scheduled meetings a year, but meets more frequently if required, and, together with the Audit, Remuneration and Nominations Committees, deals with all important aspects of the Group’s affairs. The Board receives timely information in a form and of a quality appropriate to enable it to discharge its duties. All Board Committees have their own terms of reference, which are available from the Company Secretary.
Audit Committee
The Audit Committee comprises Tim Jackson, who acts as the Chairman, Richard Leaver to September 2023, Vince Deery to December 2022 and Sunil Vadgama from December 2022. Tim Jackson is considered to have recent and relevant financial and legal knowledge and experience.
The Audit Committee has three scheduled meetings per year.
The Audit Committee report can be found in the Annual Report.
Remuneration Committee
The Remuneration Committee comprises Richard Leaver, who acted as the Chairman to September 2023, Vince Deery to December 2022, Sunil Vadgama who joined the committee in December 2022 and has taken on the role of Chairman from 1st October and Tim Jackson.
The Remuneration Committee normally meets at least once a year.
The Remuneration Committee report can be found on page 22 of the Annual Report.
Nominations Committee
The Nominations Committee compromises of Tim Jackson, who acts as the Chairman, Richard Leaver to September 2023, Vince Deery to December 2022 and Sunil Vadgama from December 2022.
The Nominations Committee normally meets at least once a year.
The Nomination Committee report can be found on page 21 of the Annual Report.
- Communicate how the Group is governed and is performing by maintaining a dialogue with shareholders and other relevant stakeholders
The Board recognises that Image Scan communicates with its shareholders principally through its website and the Annual Report. Shareholders can also sign up to receive news releases directly from the Company by email. The Chief Executive Officer and Chairman makes themselves available to major shareholders on request and periodically attends meetings with shareholders.
The Annual General Meeting of the Company, normally attended by all directors, gives the directors the opportunity to report to shareholders on current and proposed operations and enables the shareholders to express their views of the Group’s business activities. Shareholders are invited to ask questions during the meeting and to meet with directors after the formal proceedings have ended.
The results of voting on all resolutions in general meetings are posted to the Group’s website.
The Group communicates with its staff in a number of ways including annual appraisals and periodic staff briefings.
s172 STAKERHOLDER ENGAGEMENT IMPACT STATEMENT
The following disclosure describes how the Directors have acted to promote the success of the Company for the benefit of its members as a whole, with regard to the factors set out in section 172(1)(a) to (f) of the Companies Act. When performing their duties under the Act, they have considered the long-term consequences of decisions, matters affecting the Company’s employees and other stakeholder relationships, and the need to act fairly between members of the Company. Furthermore, they have recognised that while companies are run for the benefit of their shareholders as a body, the long-term success of a business is dependent on maintaining relationships with all significant stakeholders. The Board continuously reviews relationships that support the generation and preservation of value in the Company, including those with employees, suppliers, customers and distribution partners, and the Company’s shareholders.
How the Group engages with its key shareholders
Stakeholder |
Examples of engagement |
Employees |
· Comprehensive induction plan for new joiners · Annual employee review process · Promote engagement through regular Group-wide staff briefings. · Recognition scheme rewarding individual staff for contributions to the Group |
Suppliers |
· Comprehensive and ongoing assessment of significant suppliers · Share manufacturing forecasts with key suppliers and set up call-off agreements. · Regular engagement with key suppliers to discuss performance |
Customers and distribution partners |
· Regular communications of product and pricing information · Comprehensive support and training for partners · Field support services, including 24-hour help-line offered for all products · Periodic customer and partner satisfaction surveys · Targeted marketing campaigns to support partner sales campaigns · Exhibition and industry forums |
Shareholders |
· Biannual reporting of results · Detailed presentation at the Annual General meeting · Important developments reported through RNS releases · Visits by individual shareholders to the Company premises |
Principal decisions linked to our strategy and the stakeholders impacted
Decision |
Considerations |
Stakeholders impacted |
Setting annual financial budget,
Updates of forecasts with reviews of market expectations |
Budget is set giving consideration to global economic factors, market requirements, government spending trends and the impact the introduction of new products. Supply chain and inflationary pressures were also taken into consideration.
Detailed consideration is given to trading performance and pipeline opportunities against plans throughout the year and how the investment in marketing and product development is performing. |
Shareholders, employees |
New product investments |
As part of its investment in future sales, internal development of key products continued, leading to the launch of the new premium portable X-ray product. A number of other opportunities both for internal development and external partnership were evaluated, including return on investments and when their introduction would fit with our product offering. |
Shareholders, customers |
Supply chain issues |
Disruption experienced in global supply chains continued throughout the Year albeit at a more manageable level. The Board monitored the situation closely and made decisions regarding holding supplies of key components in order to protect customer delivery times. |
Customers, suppliers |
Board structure |
Board composition was considered in the Year and Mr Sunil Vadgama joined the Board as a non-Executive director being considerable knowledge and experience in X-ray technology. In September Dr Leaver stepped down as Deputy Chairman of the Board. |
Shareholders, employees |
Share Dealing Code
The Company has adopted a share dealing code for the Directors and certain employees, which is appropriate for a company whose shares are admitted to trading on AIM (including relating to the restrictions on dealings during close periods in accordance with MAR and with Rule 21 of the AIM Rules for Companies) and the Company takes all reasonable steps to ensure compliance with the share dealing code by the Directors and any relevant employees.
Anti-Bribery Policy
The Group believes that it has robust policies and procedures for combating bribery and corruption which are periodically reviewed.