Corporate Governance
Reviewed 27 September 2018

Corporate Governance – Chairman’s Introduction

The Board recognizes the importance of high standards of corporate governance for delivering long-term success to the group and acknowledges its role in setting the culture, values and ethics of the group and communicating these to all the group’s stakeholders. The Chairman has ultimate responsibility for corporate governance matters and has overseen the preparation of this governance statement accordingly.

In March 2018, AIM Rule 26 was amended to require all AIM companies to disclosure details of a recognized corporate governance code that its board of directors has decided to apply, how the group complies with that code and, where it departs from its chosen corporate governance code, an explanation of the reasons for doing so.

Prior to March 2018, the Board had sought informally to apply the principles of the Corporate Governance Code published by the Quoted Companies Alliance (the QCA Code), and in March 2018 it formally selected the QCA Code as the appropriate recognized corporate governance code to be applied for the purposes of AIM Rule 26. The group’s Annual Report and Accounts for the year ended 31 March 2018 (the 2018 Annual Report) was prepared accordingly, and this corporate governance statement includes the further disclosures required by AIM Rule 26 to be made on our website.

Apart from the formal adoption of the QCA Code and the appointment in July 2018 of a new independent non-executive Director, no significant corporate governance matters arose during the period covered by the 2018 Annual Report nor subsequently to the date of this statement on which it was considered necessary for the Board or any of its committees to seek external advice, although the Board consults with its Nominated Adviser and other professional advisers on routine matters arising in the ordinary course of its business.

For the purposes of clarity and candor, the description of how the group complies with the ten principles of the QCA Code begins with a summary of those areas where the group does not fully comply, followed by a review of each of the principles in turn.

The disclosures made in this corporate governance statement were reviewed on 27 September 2018.

On behalf of the Board
Peter Simmonds, Chairman

Exceptions to the application of the QCA Code

The following table summarizes the areas in which the Board considers that the group does not fully comply, or may be perceived as not fully complying, with the QCA Code.

Exceptions

Principle Exceptions and explanations
Principle 5. Maintain the board as a well-functioning, balanced team led by the chair.
Application: The board should have an appropriate balance between executive and non-executive directors
During the period covered by the 2018 Annual Report, the board consisted of 8 members, 5 executive and 3 non-executive. This breakdown would not meet the general expectation that at least half of a board should be independent non-executives, and therefore the board recognized that there was not an appropriate balance. To redress the balance, Mr P Whiting was appointed in July 2018 as an additional independent non-executive director.
Application: The board should have at least two independent non-executive directors. Independence is a board judgment. Following the new appointment made in July 2018, the board currently has four non-executive directors:
Mr P Simmonds, Mr P Whiting and Mr R McDowell are considered to be independent. The Chairman notes that Mr R McDowell has now served more than 9 years on the board since his first appointment and considers that Mr McDowell demonstrates independence of character and judgment, firmly challenging executive members of the board at board meetings. He brings with him significant experience and it is considered that his knowledge of the Company proves highly valuable and complements the newer appointments of Peter Whiting and Peter Simmonds. AS Mr R McDowell has no beneficial holding of Ordinary Shares in the Company he is also considered to be financial independent of the Company. As documented above, for those reasons he is considered independent by the Chairman, however because of his tenure he is now subject to the requirement to retire annually and offer himself for re-election by the shareholders.
Mr J Lythall is not considered independent due to the fact that prior to 1st April 2016 he acted in the capacity of CEO. In addition, he currently holds share options which were issued at the time that he was CEO but which vest in the year ending 31 March 2019. Consequently, Mr Lythall is subject to a requirement to retire and offer himself for re-election on an annual basis, rather than on the basis of the general rotation of one-third of the board annually.
Both Mr J Lythall and Mr R McDowell were re-elected at the Company’s AGM held on 23 August 2018.
Principle 7. Evaluate board performance based on clear and relevant objectives, seeking continuous improvement The board is implementing a formal process for the periodic review of overall board performance, which will be based on a review by the Chairman and independent non-executive director, Mr P Whiting, of (and recommendations arising from) responses to a board effectiveness questionnaire developed for this purpose. The first such review is scheduled to take place in October 2018, following circulation of the questionnaire to all board members in September.
Principle 6. Ensure that between them the directors have the necessary up-to-date experience, skills and capabilities.
Application: The board should contain the necessary mix of experience, skills, personal qualities (including gender balance) and capabilities to deliver the company’s strategy over the medium to long term.
The male to female ratio on the board is presently 8:1 and there are currently no female non-executive directors. We believe that this reflects a strong gender bias in the technology industry as a whole, and the board remains confident both that the opportunities in the Company are not excluded or limited by any diversity issues (including gender) and that the board nevertheless contains the necessary mix of experience, skills and other personal qualities and capabilities necessary to deliver its strategy.

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

The Board’s shared view of the Company’s purpose, business model and strategy, and the values underpinning them, are set out in the Strategic Report at pages 1-25 of the 2018 Annual Report, particularly in the sections on pages 8-9 (“What we do”), 10-11 (“Vision and strategy”) and 12-13 (“Business model”), with the Company’s approach to delivering long-term growth and the risks associated with its businesses described in the Statement of the Chief Executive Officer on pages 4-7 and on pages 18-19 (“Growth acceleration plan”) and pages 22-25 (“Principal risks and uncertainties”).

Principle 2 – Seek to understand and meet shareholder needs and expectations

Relations with shareholders/Dialog with institutional shareholders

The Board as a whole is responsible for ensuring that a dialog is maintained with shareholders based on the mutual understanding of objectives.

Members of the Board meet with major shareholders on a regular basis, including presentations after the Company’s announcement of the year-end results and at the half year.

In addition to regulatory news announcements the directors have published the annual report and accounts, the annual results presentation, the half year results and announcements on new contract wins.

In the period from 1 April 2017 to the date of this corporate governance statement, the following activities and engagements with stakeholders were carried out with a view to communicating the Company’s business model, strategy and values and to understanding the needs and expectations of those stakeholders:

Date Description of Engagement Company Participants Notes
June 2017 Preliminary results roadshow PK, CW  
June 2017 Microsoft Rapid Customer Analytics Proposition - Investor Presentation PK, MT  
July 2017 AGM Directors Shareholders invited to attend with Q&A session
Nov 2017 Interim results roadshow PK, CW  
June 2018 Preliminary results roadshow PK, CW  
Aug 2018 AGM Directors Shareholders invited to attend with Q&A session
Various Various shareholder meetings    
Key: PK: Peter Kear; CW: Carmel Warren; MT: Matthew Tod

The Board is kept informed of the views of shareholders and other stakeholders at each Board meeting through a report from the Chief Executive together with formal feedback on shareholders’ views gathered and supplied by the Company’s advisers. The views of private and smaller shareholders, typically arising from the AGM or from direct contact with the Company, are also communicated to the Board on a regular basis.

Mr Peter Simmonds is available to shareholders if they have concerns where contact through the normal channel of Chief Executive has failed to resolve or for which such contact is inappropriate. Mr Simmonds can be contacted through the UK head office contact information shown on our website.

Constructive use of the AGM

The Board uses the AGM to communicate with private and institutional investors and welcomes their participation. Eight members of the Board attended the Company’s AGM held on 23 August 2018.

Mr Simmonds as Chairman invites all shareholders to the AGM and ensures that he is available to meet them and answer their questions at this time.

Principle 3 – Take into account wider stakeholder and social responsibilities and their implications for long-term success

The Board is mindful of the fact that the long term success of the group relies upon maintaining successful relationships with a range of different stakeholders, both internal and external. The table below identifies some of these stakeholders and how we engage with them.

Stakeholder Reason for engagement How we engage
Staff Our ability to provide an industry leading software and services business is dependent upon communications within our organization. We have identified our internal values in order to recruit and maintain talented and motivated staff. These values form the basis of all communications which are sought through internal appraisals and bi weekly company informal meetings which allow staff to engage with other parts of the organization and recognize the successes of others.
Clients Understanding current and emerging requirements of clients enables us to develop new and enhanced services, together with software to support the fulfillment of those services. We have account managers and account directors whose responsibility is to engage with our clients to understand and develop our products and services so that we can work with them to exceed their requirements.
In addition for our own IP products we seek formal and informal feedback on product roadmap and enhancements via our support offering and annual user group meeting.
Suppliers Our relationships with our suppliers are key to the core success of our business We treat all suppliers as individuals building long term collaborative relationships and where possible work within the local community. Our partnership and purchasing teams seek to build ongoing communication with our suppliers so that feedback can be received and acted upon. We seek to ensure that supplier invoices are processed and paid promptly.
Shareholders As a public company It is important that we build relationships with our shareholders so that we can both inform them of our successes and listen to their guidance This is done through a number of methods:
  • Regulatory news releases
  • Investor relations section of the website
  • Annual and half-year reports and presentations
  • AGM
  • Capital markets events
Our intention is to engage with our shareholders to inform them of our successes and to listen to the question and comments. This feedback is usually received at the AGM, the Capital Markets days and the investor presentations.
Industry bodies Information security is fundamental to our business, clients, partners, suppliers and associated data subjects and so we ensure that our policies and procedures provide a cohesive approach to this important area. We have an established information security management system which encompasses independently audited ISO27001 and PCI DSS controls, industry best practices, as well as latest regulatory requirements including GDPR and the UK Data Protection Act (2018). Our experienced Information Security Committee ensure that governance, risk and compliance is actively managed and our that policies and procedures evolve to meet ongoing requirements.
Communities We consider that it is important to be a business that makes a positive contribution to local economies and is attractive as an employer and partner. We look to recruit locally experienced staff and through the local universities, both in the UK and India. We employ local suppliers where possible and throughout the year, we encourage staff to identify charities that they have an affiliation with for the company as a whole to support.

Principle 4 – Embed effective risk management, considering both opportunities and threats, throughout the organization

The board’s risk management controls and mitigation strategies are described in the 2018 Annual Report at pages 22-24 (“Principal risks and uncertainties”) and page 32 (“Control environment”).

In addition, the board maintains a detailed risk register, in which the nature of the various general and specific risks to the Company and its businesses are identified and the threat level assessed and ranked. The risk register is monitored and updated by an executive director, reporting to the chairman, chief executive and chief financial officer, and is reviewed by the full board at the monthly Board meetings. This process has evolved over a number of years and has so far proven to be an effective tool in assisting the board to identify threats early, and to take any appropriate mitigating action in a timely manner.

Principle 5 – Maintain the board as a well-functioning, balanced team led by the chair

Directors Biographies are shown on our website under Investor Relations, Aim Rule 26.

At the date of this corporate governance statement, the following directors are considered to be independent: -

Mr P Simmonds (Chair)
Mr R McDowell
Mr P Whiting

Please see the “Exceptions” section above for consideration of how the Chairman determines Mr McDowell to be independent.

The board does not presently consider it necessary to appoint an independent director to a senior independent director role but will keep the appropriateness of this position under review.

All directors are subject to election by shareholders at the first AGM immediately following their appointment and thereafter are subject to re-election at intervals of no more than three years. All non-executive directors are appointed for fixed terms in line with corporate governance requirements, although those non-executive directors whose independence may be called into question are subject to re-election annually. The non-executive directors currently subject to annual re-election are Mr J Lythall and Mr R McDowell, as described in the “Exceptions” section above.

All of the executive directors are full-time employees of the Company.

All directors are expected to attend the monthly meeting of the full board, or to make themselves available to join the meeting by telephone, and to attend all meetings of any committee(s) of which they are members. In addition, the directors are expected to attend strategy and business planning meetings each year. The non-executive directors are expected to make themselves available at all reasonable times for consultation by other members of the board.

Prior to each board meeting the directors receive a detailed board pack which includes:

  • Board meeting Agenda
  • Minutes from previous board meeting
  • Board pack which includes financial summary, update on each part of the business, strategy execution update and risk assessment update
  • Paper as required for additional items requiring board attention

Meetings and attendance

The following table summarizes the number of Board, audit committee, remuneration committee and nomination committee meetings held during the period covered by the 2018 Annual Report and subsequently to the date of this statement, and the attendance record of individual Directors at those meetings:

  Board Audit Remuneration Nomination
MG Boxall 16/17 - - -
JL Dodkins 16/17 - - -
PJ Kear 17/17 - 3/3* 3/3
J Lythall 17/17 2/3 3/3* -
RS McDowell 15/17 3/3 3/3 3/3
PA Simmonds 17/17 3/3 3/3 3/3
M Tod 15/17 - - -
CE Warren 16/17 - - -
P F Whiting 1/2 - - -

* by invitation only

Principle 6 – Ensure that between them the directors have the necessary up-to-date experience, skills and capabilities

The 2018 Annual Report includes, at pages 26-32, particulars of the directors who held office throughout the financial year to 31 March 2018, together with a description of the training and performance evaluation processes by which they keep their skillsets up-to-date.

On 2 July 2018 Mr P F Whiting was appointed as an additional independent non-executive director and as a member of the board’s remuneration and nominations committees.

Peter Whiting, Non-executive Director

Educated at Lincoln College Oxford he gained a BA (Hons) in 1986. Having spent some time in industry he chose a career in the City, becoming a research analyst specializing in the technology, engineering and automotive sectors. In 2000 he joined UBS Research and, in 2004 he was promoted to co-manage the pan-European mid and small cap team. He went on to take up the role of Chief Operating Officer, European Equity Research at UBS, a position he held until 2011. Since 2012, Peter has focused his energy and skills set building a portfolio of activities where he has been able to use his experience and knowledge both in the public and private company arena.

Over a 30-year career, Peter has gained extensive financial and commercial experience. His core skills are centered around the financial services and technology industries; he has the proven ability to quickly understand complex technologies and their applications and at the same time successfully developed strong inter-personal and management skills which have enabled him to build a technology-led NED portfolio. His current director positions and those held in the last five years are listed below.

Peter is currently a director of the following companies: TruFin plc, Keystone Law (legal firm), FDM Group plc, Microgen plc, Warwick District Council, Kenilworth Lawn Tennis & Squash Club Limited, Whitingpod Limited. Peter has also been a director of MBA Polymers Inc. in the last five years. He currently holds no shares in the Company.

External Advice

No significant matters of a corporate governance nature arose during the period covered by the 2018 Annual Report nor subsequently to the date of this statement on which it was considered necessary for the Board or any of its committees to seek external advice, although the Board consults with its Nominated Adviser and other professional advisers on routine matters arising in the ordinary course of its business.

Principle 7 – Evaluate board performance based on clear and relevant objectives, seeking continuous improvement

The Board annually informally reviews the effectiveness of itself, its committees and the individual Directors in the following manner:

  1. The Role of the committees is considered by the executive Directors without the presence of the nonexecutive Directors.
  2. The Chairman and CEO examine the contribution and effectiveness of the individual Directors with regard to their line role and contribution at Board meetings.
  3. The whole Board examines its purpose and effectiveness with regard to identified key areas.
  4. The whole Board considers its structure, size and composition with particular regard to the skills, knowledge and experience of its members and otherwise as advised by the Nominations Committee

In addition a formal board effectiveness evaluation process is currently in place. All directors have completed detailed evaluations of board performance. The evaluations cover effectiveness in a number of areas including board composition, board information, board process, internal control and risk management, board accountability, CEO/Senior management and Standards of conduct.

The results of these evaluations are being interpreted by independent non-executive director, Mr P F Whiting with support from the Chairman, and output from these evaluations plus any associated recommendations will be reviewed by the board as a whole at an offsite board strategy meeting in October 2018.

As the business expands and as part of succession planning, the executive directors will be challenged to identify potential internal candidates who could potentially occupy board positions and set out development plans for these individuals.

Principle 8 – Promote a corporate culture that is based on ethical values and behaviors

Our long-term growth is underpinned by our core values, which were defined following a staff consultation process in 2016. These core values guide the strategy and objectives of the group. They are as follows:

Our Client Values:

  1. Innovation – D4t4 Solutions is dedicated to the development of innovative technology that provides insight into your business, drives value from your data and pragmatically addresses your challenges
  2. Security – D4t4 Solutions’ advanced technology collects, manages and enables analysis of your data, supporting it with the utmost care for its security
  3. Trust – D4t4 Solutions takes pride in its relationships with clients, working hard to understand your business needs and developing trust through professional and responsive service provision
  4. Collaboration – D4t4 Solutions augments its own technology by collaborating with industry partners that provide further opportunities for engendering the long-term success of your operation

Our Internal Values:

  1. Pride – D4t4 Solutions will be a company in which we can be proud of our achievements, delivering the highest standards of quality and being confident in our ability to satisfy our clients’ needs
  2. Recognition – D4t4 Solutions will acknowledge the value of all employees and recognize their contribution to the company’s ongoing success
  3. Teamwork – D4t4 Solutions will create an environment of innovation in which we work together as a team to develop pioneering technology that solves our clients’ challenges
  4. Engagement – D4t4 Solutions will be a workplace in which all employees are engaged with our business and are empowered to get involved with our communications and decision-making processes.

The culture of the group is characterized by these values which are communicated regularly to staff through internal communications and forums. A staff recognition program operates on an ongoing basis by which any employee can nominate any of his/her colleagues for a contribution that is in keeping with the core values. The core values are communicated to prospective employees in the group’s recruitment programs and are considered as part of the selection process.

The board believes that a culture that is based on the core values is a competitive advantage and consistent with fulfillment of the group’s mission and execution of its strategy.

Principle 9 – Maintain governance structures and processes that are fit for purpose and support good decision-making by the board

Roles and Responsibilities of Directors

The 2018 Annual Report includes, at pages 26-31, descriptions of the individual roles and responsibilities of the Chairman, Chief Executive Officer and other directors.

Board Committees

The roles of the board audit, remuneration and nominations committees are described at pages 29-30 of the 2018 Annual Report, and in the individual committee reports published on pages 33-35. The chair of each committee reports to the board on the activities of that committee.

The terms of reference for the audit committee may be found here.

The terms of reference for the remuneration committee may be found here.

The terms of reference for the nominations committee may be found here.

Matters reserved to the Board

Save for those responsibilities delegated the audit, remuneration and nominations committees under their respective terms of reference, the board as a whole remains responsible for the strategic leadership of the Group and retains the ultimate decision-making power for all such matters. Day-to-day decision making within the framework set by the board is carried out by or under the direction of the executive officers of the Company, who report to the full board.

Matters reserved for the board include items such as Strategy, Capital Structure, Risk management, Corporate Governance, Audit, Shareholder communications, board membership & remuneration.

Evolution of governance framework

In March 2018 the QCA Code was formally selected as the appropriate recognized corporate governance code to be applied for the purposes of AIM Rule 26. The Board will monitor the requirements of this code on an annual basis and revise its governance framework as appropriate as the group evolves.

Principle 10 – Communicate how the company is governed and is performing by maintaining a dialog with shareholders and other relevant stakeholders

Board Committees

A description of the work of the Board’s committees in the financial year to 31 March 2018, including a report from each of the audit, remuneration and nominations committees, is set out at pages 29-35 of the 2018 Annual Report.

The work of the nominations committee resulted in the appointment on 2 July 2018 of Mr Peter Whiting as an independent non-executive director.

Votes at General Meetings

All resolutions put to the AGM held on 23 August 2018 were passed by majorities of not less than 90% of the votes cast.

Annual Reports

The 2018 Annual Report and the annual report and accounts for each of the previous nine financial periods of the Company may be found here.

Annual General Meetings

Notices of all General Meetings held in the five years preceding the date of this corporate governance statement may be found here.

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