CHAIRMAN’S CORPORATE GOVERNANCE STATEMENT
As the Chairman, I have overall responsibility for implementing corporate governance within Dillistone Group Plc (the “Company” or “Dillistone”). Working with the Company Secretary, I am responsible for our corporate governance statements. The Board is collectively responsible for setting the tone and culture of the Group and promoting good corporate governance.
Dillistone has adopted the Quoted Companies Alliance Corporate Governance Code (the “Code”). At Dillistone we believe in good corporate governance and accountability and we make robust corporate governance part of our culture and business values.
I have therefore set out below how the Code is applied by the Group, and where the Group departs from the expectations set by the Code. Where we do not fully comply with the expectations of the Code we say so, and we review our position regularly. When preparing our Annual Report we also review and report any significant changes in our corporate governance over the previous 12 months. During this process we review our governance framework, and consider whether it should evolve further in line with our growth. Our primary means of communicating our corporate governance structure is through our Annual Report and our website disclosures. Where specific questions are raised by private individual shareholders and institutional investors, we engage directly with those shareholders, generally through the Finance Director (‘FD’) and the Chief Executive Officer (‘CEO’). Where appropriate I engage directly. I have set out below how the Board is led, its responsibilities, our risk reporting, governance structure and engagement with stakeholders. I believe in robust corporate governance, which is key to the long-term success of the Group – by helping to improve performance and mitigate risk.
Finally, a word about our corporate culture. We seek to promote openness and respectfulness in all our dealings. Simply speaking to and engaging with our staff regularly, which our Directors and senior management all do, is a good means of eliciting feedback and gauging how our values are promoted throughout the business.
Giles Fearnley Chairman
1. Establish a strategy and business model which promote long-term value for shareholders.
The board must be able to express a shared view of the company’s purpose, business model and strategy. It should go beyond the simple description of products and corporate structures and set out how the company intends to deliver shareholder value in the medium to long-term. It should demonstrate that the delivery of long-term growth is underpinned by a clear set of values aimed at protecting the company from unnecessary risk and securing its long-term future.
The Group’s strategy evolves over time, responding to changes in the market and as the Group itself grows. The key challenges and risks faced by the business are included in the annual report.
The business operates through one division, Ikiru People.
Ikiru People supplies products and services to the staffing industry. This covers everything from retained executive search technology through to tools to facilitate the hiring of temporary staff, pay and bill, from pre-employment skills testing through to a B2C platform that allows executives to share information with executive search firms.
There is a 3 year rolling process of business planning throughout the Group, within a framework and structure set by the Board. For new projects or products, a 5 year horizon may be used. The Group seeks to deliver long term growth and value to shareholders and other stakeholders and its strategy evolves over time as the Group grows. The Executive Directors through the Chief Executive Officer are responsible for executing the strategy once agreed by the Board. The CEO is also responsible for reporting on business strategy, operational performance, risks and other significant developments at Board meetings.
2. Seek to understand and meet shareholder needs and expectations
Directors must develop a good understanding of the needs and expectations of all elements of the company’s shareholder base. The board must manage shareholders’ expectations and should seek to understand the motivations behind shareholder voting decisions.
The Board recognises its primary role of representing and promoting the interests of the Group’s shareholders. The Board is accountable to shareholders for the long-term performance and success of the Company.
The CEO and FD offer to hold meetings with institutional shareholders and private client brokers to discuss and review the Group’s activities, strategies and performance. Investor feedback from these meetings is provided by the Group’s NOMAD. The CEO and FD also make themselves available to speak to potential institutional shareholders. These meetings and discussions give the Board an opportunity to gauge shareholder feedback and expectations.
A RNS is published after the AGM to announce the resolutions passed at the AGM. To date the majority of AGM resolutions proposed have been passed.
3. Take into account wider stakeholder and social responsibilities and their implications for long-term success
Long-term success relies upon good relations with a range of different stakeholder groups both internal (workforce) and external (suppliers, customers, regulators and others). The board needs to identify the company’s stakeholders and understand their needs, interests and expectations.
Where matters that relate to the company’s impact on society, the communities within which it operates, or the environment have the potential to affect the company’s ability to deliver shareholder value over the medium to long-term, then those matters must be integrated into the company’s strategy and business model.
Feedback is an essential part of all control mechanisms. Systems need to be in place to solicit, consider and act on feedback from all stakeholder groups.
The Board recognises its prime responsibility under UK corporate law is to promote the success of the Group for the benefit of its members as a whole.
Our customers are essential to our business and we seek to maintain long-term relationships with our customers. Ikiru People operates a system of key account managers whose role is to communicate with them and ensure close liaison, in addition to the day-to- day communication that occurs with every customer contract. Customer feedback is considered at operational meetings, and our services evolve accordingly. Senior executives have frequent discussions with key customers and regular newsletters and other mailings are used to inform customers and potential customers.
One of our key performance indicators is the universally recognised Trustpilot review/score. Clients are invited to leave feedback via this service automatically after each interaction with us.
Our staff are key to the business and the Directors recognise the need for engagement with employees. Regular staff meetings are held to update staff on current matters. With around 80 people, it means that Directors and senior management staff are relatively accessible to all employees. We also encourage engagement of staff in the business through share schemes and the Group runs a Sharesave scheme for all UK employees.
We develop long standing relationships with our bankers and keep them regularly updated as to how the business is performing. We also seek to maintain long term relationships with key suppliers.
The Board also understands that it has a responsibility to consider, where practicable, the social, environmental and economic impact of its approach.
4. Embed effective risk management, considering both opportunities and threats, throughout the organisation.
The Board needs to ensure that the company’s risk management framework identifies and addresses all relevant risks in order to execute and deliver strategy; companies need to consider their extended business, including the company’s supply chain, from key suppliers to end-customer.
Setting strategy includes determining the extent of exposure to the identified risks that the company is able to bear and willing to take (risk tolerance and risk appetite).
The Board undertakes a regular and robust assessment of the effectiveness of the Group’s risk management framework at least annually. Each Board meeting includes an agenda item on risk and consideration is also given to whether any new risks have been identified. The latest annual summary of the significant risks and uncertainties is contained in our Annual Report. We do not have a formal risk committee, although there is an Information Security Committee.
Our internal governance and reporting structure, for example through our monthly operational meetings and financial reporting, provides a key and effective risk management tool. Divergences from expected financial and projected performances are discussed in detail and remedial action taken where possible. Operational meetings are attended by members of the executive team.
The Group takes external advice from its advisors on significant matters, and also tries to ensure that it has qualified staff who understand key risk issues.
5. Maintain the board as a well-functioning, balanced team led by the chair.
The board members have a collective responsibility and legal obligation to promote the interests of the company, and are collectively responsible for defining corporate governance arrangements. Ultimate responsibility for the quality of, and approach to, corporate governance lies with the chair of the board.
The board (and any committees) should be provided with high quality information in a timely manner to facilitate proper assessment of the matters requiring a decision or insight.
The board should have an appropriate balance between executive and non-executive directors and should have at least two independent non-executive directors. Independence is a board judgement.
The board should be supported by committees (e.g. audit, remuneration, nomination) that have the necessary skills and knowledge to discharge their duties and responsibilities effectively.
Directors must commit the time necessary to fulfil their roles.
The Board exercises full and effective control over Dillistone Group. There is a formal schedule of matters reserved specifically for its decisions, relating to strategy, finance, risk, operations and governance.
The Board delegates certain functions to its three principal committees, the Audit Committee, the Remuneration Committee and the Nomination Committee.
Details of the members of the Board are set out below and further biographical details are on our website or in the annual report.
|Independent – GR Fearnley holds 2.3% of the share capital and this level of holding is not considered by the Board to change his independence. Commitment to the business is as required and averages approximately 1 day per month.
|JP Pomeroy has moved to being a Non-executive director having previously held the role of Group Finance Director. JP Pomeroy is free from any business or other relationship which could materially interfere with the exercise of her independent judgement and Julie holds 0.3% of the share capital. Time commitment to the business is as required and averages approximately 1 day per month.
|Chief Executive Officer
|Chief Operations Director
|Group Finance Director
|Chief Technology Officer
|Chief Engineering Officer
The Chairman leads the Board, while the CEO is charged with managing the Group’s business. The roles of the Chairman and Chief Executive Officer are distinct.
The Code expects an appropriate combination of executive and non-executive directors. The Chairman and the Board collectively believes this split between its five executive and two non-executive directors, including the Chairman, is appropriate for an AIM-quoted Group of its size, market cap, and individual circumstances. This composition continues to provide the expertise, breadth of experience and independence of thought needed, while maintaining efficient Board meetings.
The Group considers that its Non-executive directors are independent as discussed above. The Board considers its composition appropriate for an AIM-quoted Group of its size, market cap, and individual circumstances, although this is kept under regular review.
The Board meets regularly and has adopted a formal schedule of matters specifically reserved for decision by it, thus ensuring that it exercises control over appropriate strategic, financial, operational and compliance issues. At these meetings the Board typically reviews trading performance, ensures adequate financing, sets and monitors strategy, examines investment and acquisition opportunities and discusses reports to Shareholders.
The meeting attendance record is included in annual reports.
Currently one third of the Board submits itself for re-election at each AGM as part of the Group’s formal retirement by rotation policy. Under the current Articles every Director must offer himself for re-election every three years. We consider a re-election every three years appropriate for all Directors, which is not in line with the Code’s suggestion of annual re- elections.
As Non-Executive directors, Giles Fearnley and Julie Pomeroy have served on the Board for more than 9 years and as a result offer themselves for re-election on an annual basis. Despite serving the Board on a long term basis, the Directors individually believe that they act objectively in their respective roles and can act with sufficient independence.
All Directors are given full and timely access to all relevant management and accounting information. All Directors are able to seek independent professional advice in the course of their duties, at the Group’s expense. If any Director has concerns regarding unresolved business issues, they are entitled to require the Company Secretary to minute their concerns.
Formal terms of reference have been agreed for all Board Committees.
The Board has three principal committees. The audit committee, which is made up of the Non-executive directors, meets twice yearly. The remuneration committee is made up of the Non-executive directors and meets on an ad hoc basis. Other Board members may attend these meetings by invitation.
The nomination committee meets as and when required and there was one meeting in 2022 to appoint I Mackin to the Board, (2021: one)
The Board reviews trading and operational performance regularly. Divergences from expected performance are followed up promptly and rigorously. Monthly management accounts are prepared and distributed to members of the Board. Operational management accounts are also produced and circulated to operational management.
6. Ensure that between them the directors have the necessary up-to-date experience, skills and capabilities.
The board must have an appropriate balance of sector, financial and public markets skills and experience, as well as an appropriate balance of personal qualities and capabilities. The board should understand and challenge its own diversity, including gender balance, as part of its composition.
The board should not be dominated by one person or a group of people. Strong personal bonds can be important but can also divide a board. As companies evolve, the mix of skills and experience required on the board will change, and board composition will need to evolve to reflect this change.
Directors who have been appointed to the Company have been chosen because of the skills and experience they offer. Full biographical details of the Directors are included under the Management section on the website.
The Board considers itself sufficiently diverse when considering the background, knowledge and experience that each individual member brings to the Board. Where Board appointments are made the whole Board is involved. Board appointments are made solely on merit. The appointment of subsidiary directors are considered by the remuneration committee and the Board.
|Giles has a significant experience leading large business in the passenger transport sector and extensive experience of delivering transformational programs. He brings real commercial judgement to Dillistone through his knowledge of working in challenged sectors.Giles has a significant experience leading large business in the passenger transport sector and extensive experience of delivering transformational programmes. He brings real commercial judgement to Dillistone through his knowledge of working in challenged sectors.
|Jason has worked for the majority of his career at Dillistone and so knows the sector extremely well. He also brings further Aim experience through his role as a non-executive director of AIM listed PCIPAL PLC where he chairs the remuneration committee.
|Chief Operations Officer
|With a degree in Physics, Paul has worked in a variety of roles in Voyager Software before becoming operations director in 2003. Voyager was acquired by Dillistone in 2011. Paul is now responsible for Group operations globally and holds a GDPR qualification.
|Group Finance Director
|Ian graduated with an honours degree in Accountancy Studies from the University of Huddersfield. Following CIMA qualification in 2004, Ian spent 11 years as Financial Controller of a Childcare chain before a stint as Director of Finance in a Care Home chain. Ian joined the Group in 2018 and since 2019 has been Group Financial Controller, playing a key role in the restructuring of the Group.
|Chief Technology Officer
|After graduating with a degree in Computer Science Simon had a brief stint with an IT recruitment business, before joining Voyager Software’s technical team in 1997. In the following years, Simon held various roles in the business in both the technical and sales arenas before becoming Managing Director in 2002, Voyager was acquired by Dillistone in 2011 and post-acquisition, he continued in the role of Managing Director for the contingent recruitment division. He is currently CTO with responsibility for the Group’s IT infrastructure alongside his other roles in the sales, marketing and account management operations.
|Chief Engineering Officer
|Steven Hammond has a multifaceted IT background spanning more than 20 years with a blend of technical, software development and business roles throughout that time. He joined the Group after the acquisition of ISV Software Ltd in 2014. Post-acquisition, Steve continued his role of Director of IT for ISV, and in 2019 became responsible for the R&D and software engineering strategy of the Group’s software products.
|Julie is a chartered accountant (ACA) and was previously Group Finance Director. Julie has additional qualifications in both tax and treasury and is also a Chartered Director. She is an experienced finance director of quoted and private companies. Julie was also a non-executive director of Nottingham University Hospitals NHS Trust until January 2020. She also joined the Board of Oxford Cannabinoid Technologies Holdings plc as a non-executive director in May 2021 and became its chair in February 2022. She is also an NED for the NHS Lincolnshire Integrated Care Board.
Directors are encouraged to keep their skills up to date by attending appropriate courses or by being members of other boards where new skills and ideas can be learned. The Board keeps under review the strength and depth of its senior management to ensure they have the skills required. Succession planning is discussed as part of the annual appraisal process.
7. Evaluate board performance based on clear and relevant objectives, seeking continuous improvement.
The board should regularly review the effectiveness of its performance as a unit, as well as that of its committees and individual directors.
The board performance review may be carried out internally or, ideally, externally facilitated from time to time. The review should identify development or mentoring needs of individual directors or the wider senior management team.
It is healthy for the membership of the board to be periodically refreshed. Succession planning is a vital task for boards. No member of the board should become indispensable.
The Group undertakes regular monitoring of personal and corporate performance using agreed Key Performance Indicators and detailed financial reports.
The Board does not expect to undertake an annual independent evaluation as recommended by the code given the size of the Board and the day-to-day interaction between members. A two-yearly internal evaluation is considered appropriate with the last evaluation taking place in February 2022 with the results reported to the Board by the Chairman in April 2022. It was based on a board evaluation questionnaire and assessment criteria. The key areas addressed by the questionnaire were as follows:
- Board Role and Agenda Setting (Monitoring Performance and Strategic Planning)
- Size, Composition and Independence of Board
- Director Orientation and Development
- Board Leadership, Teamwork and Management Relations
- Board (and Committee) Meetings
- Director and Board Evaluation, Compensation and Ownership
- Management Evaluation, Compensation and Ownership
- Succession Planning
Directors’ performance is reviewed formally by the Chairman on an annual basis.
The Board keeps under review the strength and depth of its senior management. Succession planning is considered as part of the Board appraisal process.
8. Promote a corporate culture that is based on ethical values and behaviours
The board should embody and promote a corporate culture that is based on sound ethical values and behaviours and use it as an asset and a source of competitive advantage.
The policy set by the board should be visible in the actions and decisions of the chief executive and the rest of the management team. Corporate values should guide the objectives and strategy of the company.
The culture should be visible in every aspect of the business, including recruitment, nominations, training and engagement. The performance and reward system should endorse the desired ethical behaviours across all levels of the company.
The corporate culture should be recognisable throughout the disclosures in the annual report, website and any other statements issued by the company.
Our corporate values of openness and respect, set by the Board, seek to promote good corporate behaviours. The Group operates in international markets and is mindful that respect of individual cultures is critical to corporate success.
The Group has an anti-bribery policy and has implemented adequate procedures described by the Bribery Act 2010.
The Group has undertaken a review of its requirements under the General Data Protection Regulation, implementing appropriate policies, procedures and training to ensure it is compliant. A senior member of executive team has a GDPR practitioner certificate and also an internal committee has been established to help manage data risk and compliance.
9. Maintain governance structures and processes that are fit for purpose and support good decision-making by the board.
The Company should maintain governance structures and processes in line with its corporate culture and appropriate to its:
- size and complexity; and
- capacity, appetite and tolerance for risk
The governance structures should evolve over time in parallel with its objectives, strategy and business model to reflect the development of the company.
The Board sets the Group’s strategic aims and ensures that necessary resources are in place in order for the Group to meet its objectives. All members of the Board take collective responsibility for the performance of the Group and all decisions are taken in the interests of the Group.
The Chairman leads the Board, while the Chief Executive Officer is charged with managing the Group’s business. The roles of the Chairman and Chief Executive Officer are distinct.
|Leads the Board and a NED
|Managing the Group’s businesses
|Chief Operations Officer
|Global operations of the Group
|The financial aspects of the group and all Company Secretary activities
|Chief Technology Officer
|IT infrastructure together with sales, marketing and account management operations
|Chief Engineering Officer
|R&D and software engineering strategy of the Group’s software products
There are two main Board committees; an Audit Committee and a Remuneration Committee, their responsibilities are summarised below. The Board as a whole makes up the Nomination Committee.
- The committee consists of the 2 non-executive directors with members of the executive management team joining by invitation.
- It monitors the integrity of the financial statements of the Company, including its Annual and Interim Reports, trading statements, preliminary and interim financial results.
- It assesses the external auditor’s independence and objectivity and the effectiveness of the audit process.
- The committee considers an internal audit function is not currently justified based on the size of the Group.
- The committee meets at least annually with the external auditors and without executive management.
- The committee reports to the Board on how it has discharged its responsibilities.
- The Committee is made up of the 2 non-executive directors and meets at least once a year to determine Group policy on senior Executive remuneration, to make detailed recommendations to the Board regarding the remuneration packages of the Executive Directors and to consider awards under the Group’s option schemes.
- The Chief Executive Officer is consulted on remuneration packages and policy but does not attend discussions regarding his own package.
- The remuneration and terms and conditions of the appointment of Non-executive Directors are determined by the Board.
Management meetings consisting of the executive directors and senior management team take place on a monthly basis.
A separate Information Security committee exists and meets monthly or more frequently if required. A Data Protection Officer has been appointed.
Further details of the Group’s corporate governance arrangements are provided within the Corporate Governance section of the website. As the Company evolves the appropriateness of its governance structures will be reviewed.
10. Communicate how the company is governed and is performing by maintaining a dialogue with shareholders and other relevant stakeholders.
A healthy dialogue should exist between the board and all of its stakeholders, including shareholders, to enable all interested parties to come to informed decisions about the company.
In particular, appropriate communication and reporting structures should exist between the board and all constituent parts of its shareholder base. This will assist:
- the communication of shareholders’ views to the board; and
- the shareholders’ understanding of the unique circumstances and constraints faced by the company.
It should be clear where these communication practices are described (annual report or website).
The Board recognises its primary role of representing and promoting the interests of the Group’s shareholders. The Board is accountable to shareholders for the long-term performance and success of the Group.
The CEO and FD offer regular meetings to institutional shareholders and private client brokers to discuss and review the Group’s activities, strategies and performance. Investor feedback from these meetings is provided by WH Ireland. The CEO and FD also make themselves available to speak to potential new shareholders. These meetings and discussions give the Board an opportunity to gauge shareholder feedback and expectations. The Chairman is also available to shareholders on request.
After the AGM a RNS is published to announce the resolutions passed at the AGM, with the majority of AGM resolutions proposed have been passed to date.
In conjunction with the Group’s Nomad and other financial advisers we distribute news in a timely fashion through appropriate channels, to ensure that shareholders are able to access material information about the Group’s progress. Details of RNS announcements and copies of annual and interim reports are contained within the accounts and RNS sections of the AIM Rule 26 area of our website.
Details of the work of the audit and remuneration committee are dealt with above.
Regular newsletters are sent to customers and potential to keep them updated. Communication channels exist between our clients and our various product management teams to ensure products are developed in a manner sympathetic to their needs.
Regular staff meetings are held to keep them informed about developments in the business and for issues to be raised.
Approved by the Chairman, Giles Fearnley, and by the Board.
Section review 20 April 2023