Corporate Governance

The Board understands the value and importance of good corporate governance and is committed to the ongoing development of practices within the Group to provide better governance. In this statement we explain our approach to governance and how the Board and its committees operate.

The corporate governance framework which the Group operates is proportional to the size, stage of development and complexity of the business. In order to meet the requirements of AIM Rule 26, we have decided to follow the Quoted Companies Alliance (“QCA”) guidance for smaller and mid-sized quoted companies.

The QCA Code is constructed around ten broad principles and a set of disclosures. The QCA has stated what it considers to be appropriate arrangements for growing companies and asks companies to provide an explanation about how they are meeting the principles through the prescribed disclosures. We have considered how we apply each principle to the extent that the Board judges these to be appropriate in the circumstances.

The purpose of the Group is to provide document and data centric Quality, Safety, Audit and Risk solutions to heavily regulated markets such as Aviation, Life Sciences, Banking and Finance, Aerospace and Defence, and Automotive. This is distributed through our Ideagen Cloud Service architecture (ICSA) and licensed software technology to deliver world class governance, risk and compliance outcomes for our customers on a long-term basis. 

Our business model is to deliver this through our own sales, marketing and customer delivery teams within our global network of offices in the UK, Europe, Middle East, Asia and the US.

Our strategy is to develop, in conjunction with our 5500+ global customers, leading proprietary software technology that acts as a competitive differentiator. This enables us to drive excellent return on investment and world class outcomes for our customers while providing high-quality long-term recurring revenue. In addition, we look to make acquisitions in complementary markets which deliver high value IP and strong recurring revenue growth.

This will deliver a profitable and highly-valued business with competitive advantages over other providers of similar services.

The key challenges we face include: 

• Maintaining consistently high levels of quality development and market leading roadmap – With 35% of all employees engaged in our R&D teams we invest heavily in ensuring the continued development of our products. Very high standards are now expected by customers when it comes to software development. We have implemented automated testing wherever possible, and our software is 100% unit tested throughout its lifecycle. Our product roadmaps are developed through a 25-strong product team that works closely with customers and industry analysts such as Gartner, Verdantix and Forrester. This delivers a product roadmap which maintains competitive advantage and ensures our continued high rate of customer retention.
• Customer Success and Loyalty – We continue to invest heavily in customer success and continually measure customer sentiment and health through an ongoing programme. This includes voice of the customer survey, transactional measurement of customer service and net promoter score as well as a full customer success platform. Additionally, we have a customer success team managing recurring revenue, subscriptions and attrition rates.
• Delivering continuous availability – a failure in the group’s systems could lead to an inability to deliver services to our customers. This is addressed by operating redundant systems across multiple availability zones using both AWS and Azure cloud infrastructure, and a comprehensive business continuity programme. In addition, we have a 24/7 global support operation in the UK and Kuala Lumpur which monitors availability and performance.
• Acquisition and Integration – We apply strict criteria to ensure that acquisitions represent value for shareholders. A key element is the active integration of all the acquisition’s technology, organisational and sales capability. We have a dedicated integration team which actively bring together the integration through our 72-point programme. This is reviewed by the senior management and leadership team through a regular monthly meeting, and the PLC Board on a quarterly basis to ensure this is independently checked and verified and that the integration and return on capital is being fully maximised.
• Recruiting and retaining suitable staff – the group’s ability to execute its strategy is dependent on the skills and abilities of its staff. We undertake ongoing initiatives to foster good staff engagement and ensure that remuneration packages are competitive in the market.

We believe we have the right strategy and service in place to deliver strong growth in sales over the medium to long term and we expect to continue growing our base of recurring revenues. This is achieved by increasing the percentage of total revenue derived from recurring contracts through the medium-term transition from a traditional licence model to a SaaS subscription-based model. The Group has successfully completed much of this transition providing improvements to profitability or scope for additional investment in new services. This will help us to deliver sustainable shareholder value in the longer term.

Responsibility for investor relations rests with the Executive Chairman, supported by the Chief Executive Officer, the Chief Financial Officer and the Senior Independent Non-Executive Director. During the 12 months to 30^th April 2020, the following activities were pursued to develop a good understanding of the needs and expectations of all constituents of the group’s shareholder base:

Date	Description	Participants	Comments
June 19	Capital Markets Day	DH/BD/BK/GS/AC	35 investors and 7 private investors
July 19	Preliminary results roadshow	DH/GS/BD	3 days London, 1 Day Edinburgh, 2 day conference calls
Aug 19	US Investor show (Boston)	BD	19 Investor meetings over 2 days
Oct 19	Scandinavian Visit	BD	5 Investors in 1 day
Oct 19	AGM	Board	Number of PIs in attendance
Nov 19	Mello Private Investor Show	DH/AC/BD	40+ PI in attendance
Nov 19	Trading Statement		Following the half year end
Jan 20	Interim results roadshow	DH/GS/BD	3 days London, 1 day conference calls

 

Key: DH: David Hornsby; GS: Graeme Spenceley; BD: Ben Dorks; BK: Barney Kent; AC: Alan Carroll

The group is committed to communicating openly with its shareholders to ensure that its strategy and performance are clearly understood. We communicate with shareholders through the Annual Report and Accounts, full-year and half-year announcements, trading updates and the annual general meeting (AGM), and we encourage shareholder participation in face-to-face meetings. A range of corporate information (including all Ideagen announcements) is also available to shareholders, investors and the public on our website.

Private shareholders: The AGM represents a forum for formal dialogue with private shareholders, and we encourage all shareholders to attend and participate. The Notice of Meeting is sent to shareholders at least 21 days before the meeting. The chairs of the Board and all committees, together with all other directors whenever possible, attend the AGM and are available to answer questions raised by shareholders. Shareholders vote on each resolution, by way of a poll. For each resolution we announce the number of votes received for, against and withheld. We have not previously published the voting results on our website however we intend to do so for the forthcoming AGM and for future meetings. The Company has also engaged with ShareSoc / Mello, a Private Investors forum, attending at least one meeting annually to present the Ideagen strategy and provide an update on performance.

Institutional shareholders: The directors actively seek to build a mutual understanding of objectives with institutional shareholders. Our Executive Chairman, Chief Executive Officer and Chief Financial Officer make presentations to institutional shareholders immediately following the release of the full-year and half-year results. We communicate with institutional investors frequently through a combination of formal meetings, participation at investor conferences, roadshows and informal briefings with management. The majority of meetings with shareholders and potential investors are arranged by the group’s two brokers. Following meetings, the brokers provide feedback to the Board from all fund managers met providing the Board with concise insight into the shareholders’ views on the company strategy and performance.

Stakeholder	Reason for engagement	How we engage
Staff – our ability to fulfil client services and develop and enhance the cloud software platforms on which they depend relies on having talented and motivated staff.	Good two-way communication with staff is a key requirement for high levels of engagement, fostering a culture of innovation.	Monthly staff town hall with full Q&A Leaning & development manager along with rewards and benefits manager to drive staff learning and engagement and maintain staff retention above industry average Quarterly engagement survey. These have provided insights that have led to enhancement of management practices and staff incentives.
Clients – our success and competitive advantage are dependent upon fulfilling client requirements, and maintaining our high rate of customer retention	Understanding current and emerging requirements of clients and market trends enables us to develop new world-class software to support the fulfilment of those services.	Seek feedback on our software through our annual Horizons conferences which over 500 customers attend. Obtain fulfilment metrics employed by clients to measure performance. Work with industry analysts such as Gartner and Verdantix to understand future market trends These have led to the group continuing to win over 400 new logo customers in the last year.
Shareholders – as a public company we must provide transparent, easy-to-understand and balanced information to ensure support and confidence.	Meeting regulatory requirements and understanding shareholder sentiments on the business, its prospects and performance of management.	Regulatory news releases. Keeping the investor relations section of the website up to date. Periodic investor newsletters. Participation at investor events. Publish videos of investor presentations and interviews. Annual and half-year reports and presentations. AGM. Capital markets events. We believe we have successfully engaged with our shareholders over the past 12 months. This engagement has led to support for the group, increased liquidity of trading and higher valuation.
Industry bodies – the services we provide must meet certain requirements.	Within compliance the regulatory requirements and views of certain industry groups is vital.	We maintain membership and active participation with multiple industry groups across our range of products and vertical markets. Maintain full certification of ISO 9001, 14001, 27001, Microsoft Gold ISV plus many more to ensure compliance with industry requirements These partnerships and certifications have resulted in certain clients commencing engagement.
Communities– what we do impacts communities in the places where we operate and elsewhere.	It is important to be perceived as a reputable business that makes a positive contribution to local economies and is attractive as an employer and partner.	Multiple activities to support fundraising for local charities and good causes. Participation in apprenticeship and other schemes to support and provide opportunities to young people. A corporate social responsibility program that encourages active participation throughout the business. These have led to an improved profile for the group in the local areas of its major operations.

RISK GOVERNANCE

Ideagen has implemented strong governance risk and compliance procedures and effective risk management is integral to these. The Board receives a comprehensive annual risk report and reviews a monthly risk dashboard, which are generated using the group’s own operational risk product, Pentana Risk. The day-to-day management and reporting of risk are the responsibility of each operational business unit supported by the Risk & Compliance function. This approach ensures the consistent application of Ideagen’s risk framework, risk management and reporting policies across the business.

 

RISK MANAGEMENT FRAMEWORK

Our risk management framework details how the group proactively manages risk in a systematic and structured way and ensures appropriate control measures are in place to mitigate risks while maximising opportunity. By facilitating the consideration of risk in the decision-making process across all business units the group also identifies new and emerging risks on a continuous basis.

 

KEY ELEMENTS OF RISK MANAGEMENT PROCESS

The risk management process includes an assessment of risks to determine the likelihood of occurrence, potential impact and the effectiveness of any mitigation or controls that are in place. All risks are measured on an inherent and residual basis using a pre-determined scoring matrix. The potential impact of risks materialising is graded against several key perspectives; financial, strategic, reputation & customers, infrastructure & people.

 

PRINCIPAL RISKS & UNCERTAINTIES

The company manages 10 strategic ‘principle risks’ that represent those areas where uncertainty could arise in the pursuit of the group’s strategic objectives.

By adopting a top-level overview of the principle risk areas with a bottom-up approach to identifying sub-risks, a holistic framework for managing risk is achieved. Business units and key stakeholders identify sub-risks at an operational level which are fed into the principal risk areas. These sub-risks are managed and reviewed regularly and where appropriate are escalated to the Board.

The Board has a legal obligation to promote the interests of the Group, and the members of the Board are collectively responsible for defining the Group’s corporate governance arrangements. Ultimate responsibility for the quality of, and approach to, corporate governance lies with the Executive Chairman.

 

The Board consists of seven directors of which four are executives and three are non-executives, one of whom, Ricard Longdon was appointed during the year. The Board has and will continue to evolve to support the strategic objectives of the Group

 

In May 2018 significant changes were made to the Board structure and the roles of three members of the Board were changed. These changes were designed to optimise the talent and expertise within the Group and to provide a structure that ensures the Board's skillset remains aligned to the Group's ongoing growth strategy.

 

David Hornsby moved from the role of Chief Executive Officer to become the Group's Executive Chairman. The Board has a clear strategic objective to grow the business both organically and through further acquisitions. Having led Ideagen's significant growth since 2009, David now has responsibility for Ideagen's medium and long-term growth plans and his particular areas of focus include Group strategy, M&A and Investor Relations. David will continue to be involved with Ideagen on a full-time basis but will not be involved in the day to day operational management of the Group. Since that change David has led the successful acquisitions of Qualsys, Workrite, Optima, Redland, InspectionXpert, Morgan Kai and Scannell.

 

Ben Dorks, formerly Ideagen’s Chief Customer Officer, succeeded David to become Ideagen's Chief Executive Officer in May 2018. In this role, Ben has building upon his previous leadership responsibilities and his focus is on the Group's overall operational performance, customer acquisition and retention and product development. Under Ben’s leadership the Group has continued to flourish meeting all its business objectives.

 

In July 2020 Emma Hayes joined the Board as Chief Financial Officer replacing Graeme Spenceley who retired from the Board. Emma joined the Group from Severn Trent plc where she was Group Finance Director, Capital Delivery & Commercial. Previously Emma spent 10 years at Deloitte LLP as a Corporate Finance Director and qualified as a chartered accountant (ACA) with BDO.

 

Following David Hornsby’s appointment as Executive Chairman, Jonathan Wearing  stepped down from his position as Non-Executive Chairman after 15 years in this role. Jonathan remained on the Board as a Non-Executive Director until November 2019 at which point he retired from the Board. Jonathan was replaced by Richard Longdon who had long and extremely successful career within a listed computer software company serving as the CEO of Aveva Group plc for 17 years.

 

The Board has been supported by an Audit Committee and Remuneration Committee for a number of years and introduced a Nominations Committee in November 2019. The Nominations Committee is chaired by Richard Longdon and includes David Hornsby and Alan Carroll as member. Richard Longdon, Alan Carroll and Tony Rodriguez are considered to be independent non-executive directors and Richard Longdon is considered to be the Senior non-executive Director.

 

During the year ended 30 April 2020, there were 10 scheduled Board meetings and other Board meetings as required to approve other business such as the acquisition of a business. All directors attended all 10 meetings with the exception of David Hornsby, Jonathan Wearing and Barnaby Kent who were each unable to attend one meeting, mainly due to illness. In addition to attending Board meetings, non-executive directors are required to be available at other times as required for face-to-face and telephone meetings with the executive team and investors.

 

In addition, there were two Audit Committee meetings and two Remuneration Committee meetings which were all attended by Alan Carroll as committee chairman and Tony Rodriguez. The Nominations Committee oversaw the appointment of Emma Hayes and two committee meetings were attended by Richard Longdon, David Hornsby and Alan Carroll.

 

The chairman is responsible for ensuring that directors receive accurate, sufficient and timely information. The company secretary compiles the board and committee papers which are circulated to directors prior to meetings. The company secretary provides minutes of each meeting and every director is aware of the right to have any concerns minuted and to seek independent advice at the group’s expense where appropriate.

The Board considers that it has an appropriate blend of sector, financial and public markets experience and personal skills and capabilities to enable it to deliver its strategy. Six members of the Board have been involved in the technology sector for many years and three of the directors have at least 6 years of public markets experience. Directors are encouraged to attend trade events and seminars to ensure that they remain up to date with current developments.

Further information on the experience of each of the directors is provided on the ‘Board of Directors’ page on this website.

It is recognised by shareholders that the Board has performed well both in terms of the development of an effective business strategy and in its day to day execution. The Board has continued to evolve and a number of important changes have been implemented to ensure continuous improvement and performance.

In January 2016 Ben Dorks, then Chief Customer Officer and Barney Kent, Chief Operating Officer joined the Board to provide deeper and broader input to board decision making. In September 2017 Tony Rodriguez joined the board as an independent non-executive Director with a specific responsibility for technology. In November 2019 Richard Longdon joined the board as senior independent non-executive and in July 2020 (post year end) Emma Hayes joined as Chief Financial Officer.

A further board evaluation process led by the Chairman took place between November 2019 and April 2020. All directors met with the Chairman about the effectiveness of the Board and provided a self-assessment of their own contributions, skillset and future development.

Ideagen is an organisation built on the three core pillars of People, Customers, and Products. These provide the foundation for the company culture and identity, which revolves around investment in our people, to build great products for both existing and new customers. These customers in turn provide the revenue to feed back into the cycle for continuous improvement of our People.

This simple approach is at the heart of the Group, whereby all the functions and teams believe they contribute to the success of Ideagen and feel empowered to contribute to the delivery of the Group’s vision.

Complimenting these three pillars are seven shared strategic drivers, which are used to ensure the actions of our employees are targeted towards improving the organisation in a sustainable and controlled manner and one that represents Ideagen’s core values and beliefs of open communication and transparency.

In support of all actions within the Group is a strong organisational structure and a comprehensive suite of documented policies and processes to ensure all appropriate workflows have rigorous safeguards. However, as an organisation we are conscious to strike the balance to create a culture of openness and collaboration, where teamwork in delivering the Group’s objectives is the primary driver.

The Group measures employee engagement as one of key its key performance indicators. This is looking at all areas of people through from learning and development, career opportunity, management and vision and overall satisfaction. We are pleased with the progress we continue to make and monitor feedback regularly and provide a people update to the board on a monthly report.

The Board provides strategic leadership for the group and operates within the scope of a robust corporate governance framework. Its purpose is to ensure the delivery of long-term shareholder value, which involves setting the culture, values and practices that operate throughout the business and defining the strategic goals that the group implements in its business plans. The Board defines a series of matters reserved for its decision and has approved terms of reference for its Audit, Remuneration and Nominations Committees to which certain responsibilities are delegated. The chair of each committee reports to the Board on the activities of that committee. The Remuneration Committee sets and reviews the compensation of executive directors including the setting of targets and performance frameworks for cash- and share-based awards. The Audit Committee monitors the integrity of financial statements, oversees risk management and control and reviews external auditor independence. The Nominations Committee reviews the composition of the Board and oversees the identification and appointment of directors.

The Executive Chairman has overall responsibility for corporate governance and in promoting high standards throughout the group. He leads and chairs the Board, ensuring that committees are properly structured and operate with appropriate terms of reference, ensures that performance of individual directors, the Board and its committees are reviewed on a regular basis, leads in the development of strategy and setting objectives, leads the M&A process and leads investor relations.

The Chief Executive Officer provides coherent leadership and management of the Group, leads the development of objectives and performance standards as agreed by the Board, ensures that the assets of the Group are maintained and safeguarded, and ensures that the Board is aware of the views and opinions of employees on relevant matters. The Executive Directors are responsible for implementing and delivering the strategy and operational decisions agreed by the Board, making operational and financial decisions required in the day-to-day operation of the group, providing executive leadership to managers, championing the Group’s core values and promoting talent management.

The Independent Non-Executive Directors contribute independent thinking and judgement through the application of their external experience and knowledge, scrutinise the performance of management, provide constructive challenge to the executive directors and ensure that the group is operating within the governance and risk framework approved by the board.

The Company Secretary is responsible for providing clear and timely information flow to the board and its committees and supports the board on matters of corporate governance and risk. The matters reserved for the Board are:

• Setting long-term objectives and commercial strategy.
• Approving annual operating and capital expenditure budgets.
• Changing the share capital or corporate structure of the group.
• Approving half-year and full-year results and reports.
• Approving dividend policy and the declaration of dividends.
• Approving major investments, acquisitions, disposals, capital projects or contracts.
• Approving resolutions to be put to general meetings of shareholders and the associated documents or circulars.
• Approving changes to the board structure.

The board has approved the adoption of the QCA Code as its governance framework against which this statement has been prepared and will monitor the suitability of this code on an annual basis and revise its governance framework as appropriate as the group evolves.

The Audit Committee is required to meet not less than twice each year. The Audit Committee receives and reviews reports from management and from the Group’s external auditors relating to the annual accounts and to the internal control procedures in use throughout the Group. It is responsible for ensuring that the financial performance of the Group is properly reported with particular regard to legal requirements, accounting standards and the AIM Rules for Companies. The ultimate responsibility for reviewing and approving the annual report and accounts and the interim reports remains with the Board.

The Audit Committee comprises two of the independent non-executive directors, Alan Carroll (as committee chairman) and Tony Rodriguez.

During the year the Committee held meetings with the external auditors on two occasions, prior to and towards the end of the annual audit. The members of the Committee also have direct access to the external auditors on an ongoing basis as required.

Audit Committee Terms of Reference

The Remuneration Committee is required to meet not less than twice each year. It is responsible for considering and reviewing the terms and conditions of service (including remuneration) of executive directors and senior employees and the design and operation of the Company’s share option schemes and making appropriate recommendations to the Board.

The Remuneration Committee comprises two of the independent non-executive directors, Alan Carroll (as committee chairman) and Tony Rodriguez.

The Nominations committee was formed in November 2019 to manage the assessment of the Board in terms of skills and experience and to manage the recruitment process of new Board members.

The committee comprises Richard Longdon as Chairman and David Hornsby and Alan Carroll as members. Nominations committee members work together to form the best process for nominating and recruiting candidates for Board and leadership roles.

All members of the Nominations committee are required to identify potential candidates for current or upcoming vacancies and to work diligently toward attracting and securing top talent. Their duties include identifying, recruiting, screening and interviewing candidates for Board and management leadership positions. The committee selects the top candidates and recommends them to the Board as official nominees.

The Nominations committee will meet as required to meet the needs of the business but no less than twice per year. This year the committee was responsible for the recruitment of Emma Hayes as Chief Financial Officer to replace Graeme Spenceley who retired from the Board in July 2020.

The Nominations committee utilised the services of a headhunting firm, who drew up a shortlist of 5 candidates of which 3 were interviewed. Emma was considered by all committee members and the Chief Executive Officer to be the most qualified and was selected for this important Board position.