The Directors appreciate the value of good corporate governance and have regard to the provisions of the QCA Corporate Governance Code, published from time-to time by the Quoted Companies Alliance, to the extent that they believe it is appropriate in light of the size, stage of development and resources of an AIM-quoted company. From 28 September 2018 the Company will disclose and explain where it departs from the QCA Code on the Company’s website.
The Board comprises a Non-Executive Chairman, three executive directors and four non-executive directors. The Board meets regularly to consider the business strategy, performance and the framework of internal controls. To enable the Board to discharge its duties, all Directors receive appropriate and timely information. Briefing papers are distributed to all Directors in advance of Board meetings.
Board performance and remuneration
All Directors have access to the advice and services of the Company Secretary, who is responsible for ensuring that the Board procedures are followed, and that applicable rules and regulations are complied with. In addition, procedures are in place to enable the Directors to obtain independent professional advice in the furtherance of their duties, if necessary, at the Company’s expense.
In line with the requirements of the Company’s Articles of Association, the Group has voluntarily chosen that two Directors will retire at the Annual General Meeting and being eligible, will offer themselves for re-election.
Communicating vision and strategy
The Board of CentralNic Plc places governance and controls at the centre of its strategy. CentralNic Plc has a dedicated Compliance Committee which meets monthly. The remit of the Compliance Committee is to ensure that all governance policies are administered, reviewed and complied with across CentralNic Plc Group. Don Baladasan, the CFO of CentralNic Plc, chairs this committee and provides a conduit between The Board and The Compliance Committee. This ensures timely decisions and challenges are communicated to The Board. In addition, a formal summary report relating on the Compliance Committee is reported at Board meetings.
CentralNic takes a multi-disciplinary approach to governance as it is not possible to have strong governance being driven by one department due to departments interacting on day-to-day operations. The Compliance Committee has representation from Sales, Marketing, Technology, Operations, Legal and Finance departments. By engaging with each department and team leaders, CentralNic works to improve communication, transparency and accountability in compliance matters. CentralNic manages enforcement through well publicised guidelines and policies.
CentralNic views this approach as integral to having a compliant and robust governance structure. Governance in CentralNic is seen as a culture and is communicated to staff and embedded in policies and procedures to ensure compliance. CentralNic uses legal, industry and political frameworks to create a culture and infrastructure to attain strong governance and controls.
CentralNic sees governance not only as compliance driven requirement but as an opportunity to gain commercial sustainability and advantage. Improved compliance can build customer trust by ensuring high standards of data processing and security standards. With GDPR coming into force the measures put into place in the preceding years on data security, internal training, and experience of implementing new procedures are engaged to meet the changes required. This is done by placing all stakeholders at the centre of governance policy and implementation.
CentralNic uses formalised frameworks and directives such as MAR, ISO standards and AIM regulations to help build and maintain a compliant governance structure. Critical to the business is the infrastructure and technology CentralNic uses to provide services. Robust business continuity and disaster recovery plans are in place and tested on a regular basis. IT security policies and operational controls are in place. CentralNic continues to engage, monitor and shape internet governance at ICANN and other international forums, bodies and regulators.
A key tenet of this compliance is to look not only at procedures but also how technology and systems can drive and support compliance and manage risks appropriately.
Risk management and internal controls
The Board has primary responsibility for establishing and maintaining the Group’s financial and non-financial controls, as well as identifying the major risks facing the Group.
Internal control systems are designed to meet the particular needs of the Group and the risks to which it is exposed. By their nature, internal controls can provide reasonable but not absolute assurance against material misstatement or loss.
The Executive Directors and Senior Management have specific responsibilities for aspects of the Group’s affairs and have regular discussions to address operational matters, as well as considering the skill sets required in their teams to maintain the internal controls required.
The Directors comply with Rule 21 of the AIM rules relating to having a suitable dealing policy code and compliance with that dealing code is ensured internally.
The financial processes and control systems are kept under regular review by the Executives with oversight from the Board, with a view to further evolution and improvement as the Group’s activities expand. This includes the maintenance of and adherence to a Financial Procedures Board Memorandum which is reviewed and updated periodically.
Accounting procedures are managed on a day to day basis by the Finance team. Responsibility levels are set and agreed with the Board, with authority delegated to appropriate responsible managers as well as the Executive. Segregation of duties is deployed to the degree this is practical and efficient, noting the size and geographic distribution of the Group.
Monthly management accounts are reported to the Board, under IFRS (EU) with the content aligned to the Group’s management information requirements. The Board reviews the accounts in detail during each Board meeting and requests further information as the need arises. Comparisons to approved budgets and forecasts are prepared with associated commentary provided.
The Company prepares annual Budgets which are reviewed by the Board. The Budgets are then updated during the year to provide latest forecasts.
Capital expenditure is regulated by the Budget process, and is kept under regular review during the year. Investment appraisal techniques, using discounted cashflow projections, are deployed in relation to material investments and are reviewed by the Board as part of good governance such that material transactions that are significant in terms of their size or type are only undertaken after Board review.
The Board acknowledges that there are processes in place for identifying, evaluating and managing risks faced by the Group, and places emphasis on continuous process improvement.
Corporate responsibility, the environment and health and safety
The Group is committed to maintaining and promoting high standards of business integrity. Company values, which incorporate the principles of corporate social responsibility and sustainability, guide the Group’s relationships with its stakeholders including clients, employees and the communities and environment in which the Group operates.
The Group’s approach to sustainability addresses both its environmental and social impacts, supporting the Group’s vision to remain an employer of choice, while meeting client demands for socially responsible partners. By way of example the Group companies have arranged and promoted a number of ACE
(Athletics, Community and Environmental) activities in the past. The Company is also certified by the Carbon Neutral Company.
The Group respects local laws and customs while supporting international laws and regulations. These policies have been integral in the way Group companies have done business in the past and will continue to play a central role in influencing the Group’s practice in the future.
Communications with shareholders
The Board regards the importance of effective communication with shareholders as essential. Relations with shareholders are managed principally by the Chief Executive Officer, Chief Financial Officer and the Chairman, and meetings are regularly held with institutional investors and analysts during the year.
The Chairman, Chief Executive Officer, the Chief Financial Officer and if required other Executive and Non-Executive Directors make themselves available for meetings with major shareholders either individually or collectively. The Group’s shareholders are invited to attend the AGM at which the majority of Directors are present. The Group’s Nominated Advisors and Joint Brokers also convey shareholder opinions to the Chairman and Chief Executive Officer and these are discussed with the Board.
The Group’s website contains information on current business activities, including the annual and interim results.
The Company has established Audit, Nomination and Remuneration Committees. The terms of reference for the three committees were reviewed during the year and are available for inspection on request from the Company Secretary.
The Audit Committee has Iain McDonald as Chairman and other members of the Committee include Mike Turner, Thomas Rickert and Thomas Pridmore. The Chief Financial Officer is invited to and regularly does attend the Committee meetings, as does the Chief Executive Officer.
The primary responsibilities of the Committee, having due regard for the interests of Shareholders include:
- Monitoring the integrity of the half yearly and annual financial statements and formal announcements regarding the Group’s financial performance
- Reviewing significant accounting policies, areas of significant estimates and judgments and disclosures in financial reports
- Monitoring the quality and effectiveness of internal control procedures and risk management systems
- Considering the requirement for Internal Audit, taking into account the size, distribution and nature of the Company and the Group and its operations
- Reviewing the external auditor reports relating to the Company’s accounting and internal control procedures
- Overseeing the Board’s relationship with the external auditors, including their continued independence and making recommendations to the Board on the selection of external auditors.
The Audit Committee is required to meet at least twice a year. During the year the Committee met on three occasions.
The appointment of the independent external auditor is approved by the shareholders annually. The independent auditor’s audit of the financial statements is conducted in accordance with International Standards on Auditing, ISA (UK and Ireland) issued by the Auditing Practices Board.
It is noted that the external auditor also operates procedures designed to safeguard their objectivity and independence.
The Audit Committee reviews all fees related to non-audit work, and the committee reviews any material non-audit work prior to commencement. Details of auditor fees can be found in note 7 to the financial statements.
The Group’s Remuneration Committee is responsible, on behalf of the Board, for developing remuneration policy. Details of objectives and policy are provided in the Remuneration Report on pages 29 to 30 of the Annual Report (2017).
The Remuneration Committee has Tom Pridmore as its Chairman and other members of the Committee include Mike Turner, Samuel Dayani and Thomas Rickert.
The primary responsibilities of the Committee, having due regard for the interests of Shareholders include:
- Determining and agreeing with the Board the remuneration policy for the Chairman of the Board, the non-Executive Directors and the Executive Directors and other senior managers
- Reviewing the design of share incentive plans for approval by the Board and determining the award policy to Executive Directors and personnel under existing plans
- Determining the remainder of the remuneration packages (principally salaries, bonus and pension) for the Executive Directors and senior management including any performance-related targets
- Reviewing and noting remuneration trends across the Group
- Co-ordinating with the Nominations Committee in relation to the remuneration to be offered to any new Executive Director; and
- Taking responsibility for the selection criteria and if appropriate selecting, appointing and setting terms of reference for any remuneration consultants engaged to advise the Committee
The Remuneration Committee was created in September 2013 and is required to meet at least twice a year. During 2017 the Committee met on four occasions.
It is the Group’s policy that Executive Directors’ service contracts contain at least a 3 month notice period.
The Group’s Nominations Committee has the power and authority to carry out a selection process of candidates before proposing new appointments to the Board.
The Nominations Committee has Mike Turner as its Chairman and other members of the Committee include Iain McDonald, Thomas Rickert and Tom Pridmore.
The Nominations Committee was created in September 2013 and is required to meet at least once a year. During 2017 the Committee met on one occasion.
The Group has adopted a policy for Directors and key employee share dealings which is appropriate for an AIM-quoted Group.
The Executive and Non-Executive Directors service contracts are available for inspection by shareholders on request to the Company Secretary.
The Chairman and Non-Executive Directors do not participate in agenda items at any meeting when discussions in respect of matters relating to their own position take place.