Corporate Governance
What is our approach to corporate governance?
The Board is committed to continuing its high standards of corporate governance,
managing the Group in an efficient, effective, entrepreneurial and ethical manner for the
benefit of shareholders over the longer term.
Whilst the Company is not subject to the Combined Code applicable to companies listed on
the Official List, the Directors recognise the importance of sound corporate governance.
The Company intends to comply with the Corporate Governance Guidelines for AIM
Companies as published by the Quoted Companies Alliance (as far as applicable). The
Board is responsible for the governance of the Company and ensures, through the
supervision of its management, the integrity of the Group’s accounting and financial
reporting systems and that the appropriate controls are in place, including those for
monitoring risk, financial control and compliance with the law.
What are the Board’s management objectives?
Entrepreneurial management
There is a vision of what the Company is trying to achieve, over what period and an
understanding of what is required to achieve this ambition. A dialogue exists between
shareholders and the Board, with the aim that the Board understands shareholders’
objectives and the shareholders understand the Company’s constraints.
Efficient management
The mechanisms by which important decisions are taken are transparent. It is clear where
the responsibility lies for the management of the Company and for the achievement of key
tasks. Procedures are in place to protect significant tangible and intangible assets and
these are regularly reviewed and updated.
Effective management
The Board has the appropriate skills available to it in order to make the key decisions
expected of it. The composition of the Board and the skills mix are regularly reviewed.
The Board is provided with appropriate information on which to constructively challenge
recommendations made to it before making its decisions, including regular management
and financial information. The collective responsibility of the Board requires all Directors to
be involved in the process of arriving at significant decisions and there is a formal schedule
of matters reserved for their decision. The formal schedule of matters reserved for the
Board includes strategy, the approval of financial statements and shareholder circulars,
treasury policy, major capital investments, risk management strategy and acquisitions and
disposals.
Ethical management
Behaving ethically, both in the company’s decisions and through the actions of our
employees, is a must for the Group. Our continued success depends on earning and
keeping the trust of and on preserving our reputation in the eyes of those we deal with –
including clients, contractors, employees, business partners and the broader community.
How does the Board review performance?
To ensure that vested interests should not be able to act in a manner contrary to the common good of all shareholders the Board has two
independent Non-Executive Directors.
The Board has a regular schedule of meetings together with further meetings when required. In addition, Directors meet as members of relevant
Committees. There is a formal schedule of matters reserved specifically to the Board for decision, delegating specific responsibilities to
Committees.
The Chairman and the Non-Executive Directors meet without the Executive Directors present at least once a year. The Chairman had no other
significant commitments in the two years ended 31 July 2009.
All Directors have access to the advice and services of Tony Dyer, the Chief Financial Officer and Neil Ayton, the Company Secretary, who are
responsible for ensuring that Board procedures and applicable rules and regulations are observed.
There is an agreed procedure for Directors to obtain independent professional advice, paid for by the Group.
In accordance with the Company’s Articles of Association, one third of the Board is required to retire by rotation each year. In addition, all those
appointed during the year will stand for re-election at the next Annual General Meeting.
The Board recognises the benefit of performance evaluation of the Board, Directors and Board Committees and exercised this during the year.
The Board undertook individual Board member leadership profile assessments and a Board culture survey that involved the whole Group
management team. The recommendations arising from this process have been considered by the Board and appropriate actions were identified
and have been implemented.
The Board is satisfied with the current balance between Executive and Non-Executive Directors which allows it to exercise objectivity in decision
making and proper control of the Group's business. The Board is also satisfied with the performance of each individual Board member and the
Board as a whole. Where there are areas for improvement the Board have agreed objectives and action plans in place and will continually review
progress on these.
Committees of the Board
The Board has three established Committees for Audit, Nominations and Remuneration. The Committees have terms of reference which are
reviewed bi-annually by the Board and revised as deemed necessary and appropriate; copies are available on request from the Company
Secretary.
Following formal decision making, the Board may, on occasion, delegate authority to a Standing Committee consisting of any two Directors to
facilitate final sign off for an agreed course of action within strict parameters.
Audit Committee
The Audit Committee comprises of Ric Piper, who is the Committee’s Chairman, and Stephen Burke. Both are independent non-executive
directors.
The Committee’s central function is review the scope of the external audit, to receive direct reports from the independent external auditors and to
review the half yearly and annual financial statements before they are presented to the Board, focusing in particular on accounting policies and
compliance, areas of management judgment and estimates and the effectiveness of internal control procedures. Part of each meeting is with the
independent external auditors without Executive Board members present. The independent external auditors also have unrestricted access to the
Committee and its Chairman.
The key elements of processes used by the Audit Committee to review the effectiveness of internal control include:
- Review of significant Group risks reported by the Group Executive and the Board;
- Discussion with management on risk areas identified by management and/or the audit process
The Board and the Audit Committee monitor the cost effectiveness of audit and non-audit work performed by the independent external auditors and
also consider the potential impact, if any, on the corporate relationship with the auditors before awarding any non-audit work. The appointment of
independent external auditors and level of fees payable for both audit and non-audit work are agreed by the Committee. The Committee regularly
reviews all fees for non-audit work paid to the independent external auditors. Details of these fees can be found in note 3 to the Financial
Statements.
The independent external auditors also operate procedures designed to safeguard their objectivity and independence. These include the periodic
rotation of audit partner, use of independent concurring partners, use of a technical review panel (where appropriate) and annual independence
confirmations by all staff. The independent external auditors report to the Committee on matters including independence and non-audit work on an
annual basis.
Nominations Committee
The Nominations Committee is headed up by George Materna, who is the Committee’s Chairman, with the independent non-executive directors
Ric Piper and Stephen Burke the other members.
The Nominations Committee has full power and authority to carry out a formal selection process of candidates and then propose new
appointments to the Board.
The Company has adopted a policy for Directors’ and key employees’ share dealings which is appropriate for an AIM quoted company. The
Directors comply with Rule 21 of the AIM rules relating to Directors’ dealings and in addition take all reasonable steps to ensure compliance by the
Group’s applicable employees.
Remuneration Committee
The Remuneration Committee comprises of Stephen Burke, who is the Committee’s Chairman, and Ric Piper who are both independent nonexecutive
directors.
Details on the directors’ remuneration and the work of the Remuneration Committee can be found in the Directors’ Remuneration Report.
The Committee’s duties include reviewing the performance of Executive Directors, determining the employment packages of the Executive
Directors and the need to ensure the Executive Directors’ commitment to the continued success of the Group by means of incentive schemes to
enhance performance and align the interests of the Executive Directors with those of shareholders. The Committee also reviews the employment
packages of other senior managers.
The Committee is also responsible for the implementation and subsequent monitoring of the share based incentive schemes.
In determining the Executive Directors’ remuneration for the year, the Committee consulted the Company’s Chairman about its proposals (except
for his own remuneration). No Director or senior manager participates in meetings at which his own remuneration is under consideration.
The objectives of the Group’s remuneration policy are to attract, retain and incentivise management with the appropriate professional, managerial
and technological expertise to realise the Group’s business objectives and to align their interests with those of shareholders. The Group strives to
link payment to performance and thereby create a performance culture.
To ensure that they offer the best available incentive for Executive Directors and senior managers to enhance shareholder value, the Committee
continues to monitor basic salary, benefits, performance bonus payable for achievement of in year targets, and medium term share incentives.
Attendance Register
Attendance in the year ended 31 July 2009 was:
* Resigned 6 February 2009
Attendance is expressed as number of meetings attended/number eligible to attend.
Non-Executive Directors
The Non-Executive Directors have letters of appointment stating their annual fee and that their appointment is subject to satisfactory performance
and their re-election at forthcoming AGMs. Their appointment may be terminated within a maximum of six months written notice at any time.
Copies of the letters of appointment will be available for inspection prior to and during the AGM and are also available for inspection at the
Company’s registered office during normal business hours.
The remuneration of the Chairman and the Non-Executive Directors is determined by the Board within the limits set out in the articles of
association, including reviewing the level of fees paid by comparator companies.
The Chairman and the Non-Executive Directors do not participate in any meeting at which discussions in respect of matters relating to their own
position take place. There is not currently a Senior Independent Director although there is a deputy Chairman. The Board will review annually the
need for a Senior Independent Director.
Executive Directors
Adrian Gunn, the Chief Executive Officer, and Tony Dyer, the Chief Financial Officer, are responsible for the management of the business. Chaired
by the Chief Executive Officer the Group Executive Committee meets regularly throughout the year. As well as the Chief Executive Officer and the
Chief Financial Officer, its membership at the date of this report also includes Keith Lewis, Engineering Operations Director and Dave Rees, HR &
Training Director who joined the committee on 1 August 2009.
The principal role of the Group Executive Committee is to ensure the Group Management Team is directed to implement the requirements of the
Board and the Company’s shareholders.
The respective roles of the Board and Group Executive are discussed further under Internal Control.
The Company seeks to have a development framework to assist the Chairman, Executive Directors and Non-Executive Directors in discharging
their responsibilities effectively. Non-Executive Directors meet regularly with members of the Group Executive Committee and other senior
managers and receive regular business updates via scheduled presentations.
Internal control
The Board has accountability for reviewing and approving the adequacy and effectiveness of internal controls operated by the Group, including
financial, operational and compliance controls and risk management and this is intended to manage rather than eliminate the risk of failure to
achieve business objectives and can only provide reasonable not absolute assurance against material misstatement or loss. It is the role of the
Group Executive to implement the agreed policies on risk and control. No material internal control issues arose during the year.
The system of internal financial and operational controls is designed to meet the Group’s particular needs and aims to facilitate effective and
efficient operations, to safeguard the Group’s assets, ensure proper accounting records are maintained and ensure that the financial information
used within the business and for publication is reliable.
Such a system of internal control can only be designed to manage rather than eliminate risk of failure to achieve business objectives and can
provide reasonable, but not absolute, assurance against material misstatement and loss.
The Board confirms that there is a continuing process for identifying, evaluating and managing the risks faced by the Group, with further
improvements planned for 2009. The Board reviews regularly whether an internal audit function is required and will continue to do so this year.
Key features of the Group’s internal control are as follows:
-
Group culture
The Board’s statements and actions emphasise a culture of openness, integrity, competence, fairness and responsibility.
-
Group organisation and performance
The Board focuses mainly on strategic issues, senior management and financial performance. The Group Executive concentrates on
operational performance, operational decision making and the formulation of strategic proposals to the Board. The Board determines how the
Chief Executive Officer operates within a framework of delegated authorities and reserved powers which seek to ensure that certain
transactions, significant in terms of their size or type, are undertaken only after Board review.
-
Risk Management Policy
The Company has an overall Risk Management Policy in place which has been communicated to all staff and is continually accessible.
-
Corporate Policies
The Board has introduced a range of policies for the company to comply with which it constantly monitors, including policies on Corporate
Social Responsibility, Equal Opportunities, Disability, Diversity, Health and Safety, Gifts and Entertainment and the Environment.
-
Professional Practices
Matchtech is a corporate member of the Recruitment and Employment Confederation (REC). Matchtech encourages all recruitment consultants
to become members and actively promotes the REC training programme to ensure that all staff are working to the appropriate guidelines.
Matchtech endeavors to fully comply with the REC Code of Ethics, The Employment Agencies Act and Conduct Regulations 2003 and the REC
Code of Professional Practice. Matchtech has achieved REC Audited status, which means systems and processes comply with current
legislation.
-
Control Environment
The Group’s management systems and procedures are subject to ongoing review to ensure that improvements to enhance controls can be
made.
-
Financial Reporting
The Board approves a business plan and annual budgets for individual business units and the Group. The financial performance of individual
business units is reported regularly. We report to our shareholders on a half-yearly basis. Forecasts for the Group are updated and reviewed
by the Board regularly.
Investor Relations
The Board regards communication with shareholders as key.
The Annual and Interim Reports are sent to all shareholders and all shareholders are invited to the Company’s AGM, which is attended by the full
Board. Appropriate updates of trading performance and business successes are communicated. The Annual Report is designed to present a
balanced and understandable view of the Group’s activities and prospects. The Chairman’s Statement, Chief Executive’s Report and the Chief
Financial Officer’s Review are designed to provide an assessment of the Group’s affairs and position.
The Board welcomes the views of all shareholders and other stakeholders, which in the first instance should be made to the Chairman.
Relations with shareholders are managed mainly by the Chief Executive Officer and the Chief Financial Officer. Meetings are held regularly
throughout the year with institutional investors, fund managers and analysts. The Group’s website contains information on current activities
including the annual and half-year results presentations.
The non-executive directors are kept informed of the views of shareholders with the executive directors providing updates on investor meetings.
The Group’s broker provides briefings to the Board on shareholder opinions and compiles independent feedback from investor meetings.
If they are requested to do so, the Chairman and Non-Executive Directors will make themselves available for the regular investor meetings to be
held by the Chief Executive Officer and the Chief Financial Officer.