Beeks Financial Cloud Group PLC

Statement of Compliance with the QCA Corporate Governance Code

Corporate governance policy

The Company has adopted the Quoted Company Alliance Corporate Governance Code 2018 (the ‘QCA Code’) in line with the London Stock Exchange’s recent changes to the AIM Rules requiring all AIM-traded companies to adopt and comply with a recognised corporate governance code.

The Board recognises the importance of good corporate governance and considers that a strong corporate governance foundation is essential in delivering shareholder value. The QCA Code has ten principles that companies should look to apply within their business. Beeks seeks to adhere to these principles to the highest level possible.

Set out below is an explanation at a high level of how the Company currently complies with the principles of the QCA Code and, to the extent applicable, those areas where the Company’s corporate governance structures and practices differ from the expectations set out in the QCA Code. Annual updates will be provided on the Company’s compliance with the QCA Code.

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

The Company’s strategy and business model can be viewed on pages 4 to 6 of our annual report, which can be found here.

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

The Company is committedto open communication with all its shareholders to ensure that its strategy, business model and performance are clearly understood.  Understanding what analysts and investors think about us, and in turn, helping these audiences understand our business, is a key part of driving our business forward and we actively seek dialogue with the market.  We do so via investor roadshows, attending investor conferences and our regular reporting.

Institutional shareholders

The Directors hold regular meetings with institutional shareholders to discuss and review the Group’s activities and objectives.  The CEO and CFO meet institutional investors shortly after publication of the annual and interim results, and on an ongoing basis as required. In 2017 there was extensive investor engagement with the Executive team as part of the IPO process. In respect of the annual and interim results, Directors also undertake consultation on certain matters with major shareholders from time to time. Through these consultations, the Group maintains a regular dialogue with institutional shareholders and analysts. Feedback is reported to the Board so that all Directors develop an understanding of the views of major shareholders.

Private shareholders

Communication with private shareholders will be principally through the Annual General Meeting, where attendance by shareholders is encouraged and where the Board is available to answer questions.  The Notice of AGM is sent to shareholders at least 21 days before the meeting.  The Chairman of the Board and the committees, together with all other directors attend the AGM and are available to answer questions raised by shareholders.  For each vote, the number of proxy votes received for, against and withheld is announced at the meeting.  The results of the AGM are subsequently published on the Company’s corporate website.

Specific queries may be raised at any time by any shareholder by emailing Beeks’ investor relations team at investorrelations@beeksfinancialcloud.com.  The team ensures that the person best placed to address each query responds as soon as possible.  The CEO is responsible for overseeing day-to-day communications with shareholders.

The news and investor relations sections of the Beeks website are regularly updated and provide the market with the latest business news and shareholder updates.

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

In addition to its shareholders, the Company believes its main stakeholders are its employees and clients.  The Company dedicates significant time to understanding and acting on the needs and requirements of these groups via meetings dedicated to obtaining feedback which is then, where appropriate, considered by the Board and acted upon.

The Company has recently engaged the services of a HR professional who is tasked with improving internal systems and process (including the Staff Handbook) and engaging more closely with our employees.

The Company has recently recruited a Client Services Director whose responsibilities include developing client relations, and providing feedback to the Board on issues arising.

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

The Company’s risk management processes and internal control procedures are set out on pages 9, 13, 18 and 48 of the Company’s annual report, which can be found here.

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

For the year ended 30 June 2018 the PLC Board comprises the Non-Executive Chairman, the CEO, the CFO and two Non-Executive Directors. Short biographies of the Directors are set out on page 12 of the Annual Report. The Chairman, Mark Cubitt holds 70,707 ordinary shares, William Meldrum holds 23,500 ordinary shares. The Company considers the three Non-Executive Directors to be independent.

The Executive Directors of the Company are full time.  The Non-Executive Directors devote as much time as is necessary for the proper performance of their duties.  The Non-Executive Directors typically spend one to two days a month on Company-related matters.  The Board met seven times in the year ended 30 June 2018.  All directors attended every meetings, with the exception of Chris Livesey who was unable to attend the December 2017 Board meeting.

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

Biographies of the Board of Directors can be found on page 12 of the Annual Report here.

Each member of the Board brings different skills and experience to the Board and the Board Committees. The Board is satisfied that there is sufficient diversity in the Board structure to bring a balance of skills, experience, independence and knowledge to the Group.

The CFO is required to keep up to date with the continuous professional development requirements of his professional body to ensure his skillset is refreshed on an ongoing basis. The Non-Executive Directors hold senior positions with other companies ensuring that their knowledge is continuously refreshed. Specific training will be provided to the Board by the Company when required to support the Directors existing skillset.

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

The Company was admitted to trading on AIM on 27 November 2017. The Board was appointed in advance of Admission. Since Admission, evaluation of the performance of the Company’s Board has historically been implemented in an informal manner. The Chairman regularly communicates with Board Members outside of Board meetings to ensure that each director is satisfied with the performance of the Board and  has the opportunity to raise any issues of concern. Similarly, the Chairman uses his substantial experience of plc boards to evaluate the Board effectiveness on an ongoing basis.

The Chairman has been tasked with assessing the individual contributions of each of the members of the team to ensure that:

  • Their contribution is relevant and effective
  • They are committed
  • Where relevant, they have maintained their independence

Over the next 12 months the Company intends to review the performance of the Board to ensure that the Board members collectively function in an efficient and productive manner. There will be a formal Board review process implemented during that time.

The Board has established an executive team with strength in depth in each of its core functions of network operations, software development, sales & marketing and finance which it will draw on, together with appropriate external appointments, in regards to succession.

Principle 8: Promote a corporate culture that is based on ethical values and behaviours

The Board places a high degree of value on promoting a corporate culture that reflects the Group’s ethical principles and behaviours in order to maximise the quality of service that is passed on to the customer. As the Group works as an international team that is spread across three continents, a lot of importance is placed on a culture of inclusivity and communication; ensuring that employees are equally understood, trusted, and that individual cultural values and languages are respected. This helps to ensure that communication and understanding flows well within the Company, and thereby provides the most efficient and highest quality of service to clients. The Board is in the process of introducing an employee handbook that sets out details and guidelines on the culture of the Company and how this should be reflected in employees’ individual conduct.

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

The Board comprises three Non-executive Directors and two Executive Directors.

Board programme

The Board is scheduled to meet ten times each year in accordance with its scheduled meeting calendar.  The Board met seven times during the financial year following the Company’s admission to AIM under the terms of reference of the Board.  The Group has a highly committed and experienced Board and is supported by qualified executive and senior management teams.

The Board and its Committees receive appropriate and timely information prior to each meeting; a formal agenda is produced for each meeting, and Board and Committee papers are distributed several days before meetings take place.  Any Director may challenge Company proposals and decisions are taken democratically after discussion.  Any Director who feels that any concern remains unresolved after discussion may ask for that concern to be noted in the minutes of the meeting, which are then circulated to all Directors.  Any specific actions arising from such meetings are agreed by the Board or relevant Committee and then followed up by the Company’s management.

All Directors receive regular and timely information on the Group’s operational and financial performance.  Relevant information is circulated to the Directors in advance of meetings.  The business reports monthly on its headline performance against its agreed budget, and the Board reviews the monthly update on performance and any significant variances are reviewed at each meeting.  Senior executives below Board level attend Board meetings as appropriate to present business updates.

Roles of the Board, Chairman and Chief Executive Officer

Subject to the Articles of Association, UK legislation and any directions given by special resolution, the business of the Group is managed by the Board. The Code requires the Group to have an effective Board whose role is to develop strategy and provide leadership to the Group as a whole. It sets out a framework of controls that allows for the identification, assessment and management of risk. Additionally, it ensures the Board takes collective responsibility for the success of the Group. The Board’s main roles are to provide leadership to the management of the Group, determine the Group’s strategy and ensure that the agreed strategy is implemented. The Board takes responsibility for approving potential acquisitions, annual budgets, annual reports, interim statements and Group financing matters.

The Board appoints its members and those of its principal Committees following the recommendations of the Nomination and Remuneration Committee. The Board reviews the financial performance and operation of the Group’s businesses. The Board also reviews the identification, evaluation and management of the principal risks faced by the Group, and the effectiveness of the Group’s system of internal control.

The Board considers the appropriateness of its accounting policies on an annual basis. The Board believes that its accounting policies, in particular in relation to income recognition and research and development, are appropriate and are advised by its Auditors on future changes to such accounting policies. In the coming financial year, the business will be preparing for the adoption of IFRS15 and IFRS 9.

Financial results with comparisons to budget and forecast results are reported to the Board on a regular basis, together with a commercial report on strategic and operational issues. Significant variances from budget or strategy are discussed at Board meetings and actions set in place to address them.

There is a clear division of responsibility at the head of the Company.  The Chairman is responsible for the leadership of the Board, ensuring its effectiveness and setting its agenda.  Once strategic and financial objectives have been agreed by the Board, it is the CEO’s responsibility to ensure they are delivered upon. To facilitate this, the CEO regularly meets the Executive Management Team (EMT) which comprises representatives from Operations, Technical Delivery, Finance and Sales. The day to day operations of the Group are managed by the EMT.

Board committees

The Board is supported by the Audit, and Remuneration and Nominations committees.  Each committee has access to such resources, information and advice as it deems necessary, at the cost of the Company, to enable the committee to discharge its duty.

Audit Committee

The Audit Committee is a committee of the Board and is comprised of two Non-Executive Directors: Mark Cubitt and Will Meldrum.  The Audit Committee is chaired by Mark Cubitt.  The Audit Committee invites the Executive Directors, the Auditor and other senior managers to attend its meetings as appropriate.  The Audit Committee is considered to have sufficient, recent and relevant financial experience to discharge its functions.  The Committee carries out its duties for Beeks Financial Cloud Group PLC, its subsidiary undertakings and the Group as a whole as appropriate.

During the current year, the Audit Committee has held three scheduled meetings. The Group’s Auditor, Grant Thornton UK LLP, has a standing invitation to attend meetings and representatives were in attendance at all of the three scheduled meetings.  The Executive Directors, can attend these meetings if they wish.  Simon Goulding was in attendance in all meetings of the Audit Committee in the year and Gordon McArthur attended one.

The Audit Committee has a wide remit and its key functions include reviewing and advising the Board on:

  • the integrity of the financial statements of the Group, including its annual and interim reports, preliminary results’ announcements and any other formal announcement relating to its financial performance, reviewing significant financial reporting issues and judgements which they contain;
  • the appointment and remuneration of the Auditor and their effectiveness in line with the requirements of the Code;
  • the nature and extent of non-audit services provided by the Auditor to ensure that their independence and objectivity are maintained;
  • changes to accounting policies and procedures;
  • decisions of judgement affecting financial reporting, compliance with accounting standards and with the Companies Act 2006;
  • internal control and risk management processes, including principal risks and internal control findings highlighted by management or external audit;
  • the content of the Auditor’s transparency report, concerning Auditor independence in providing both audit and non-audit services;
  • the scope, performance and effectiveness of internal control functions and the Auditor’s assessment thereon; and
  • the Group’s procedures for responding to any allegations made by whistleblowers.

The Audit Committee considers and reviews non-audit services provided by the Auditor, and this is tabled annually at Board for discussion. The Audit Committee reports to the Board on the effectiveness of the Auditor and receives information from the Executive team in this regard. The Audit Committee and Board will also consider the appointment of the Auditor annually prior to recommending the appointment of the Auditor at the Annual General Meeting.

Remuneration and Nominations Committee

The Remuneration Committee reviews the performance of the executive directors and makes recommendations to the Board on matters relating to their remuneration and terms of service. The Remuneration Committee also makes recommendations to the Board on proposals for the granting of share options and other equity incentives pursuant to any employee share option scheme or equity incentive plans in operation from time to time. The Remuneration Committee meets as and when necessary.  The Remuneration Committee comprises the Chairman and two Non-Executive Directors and is chaired by Mark Cubitt.

Principle 10: Communicate how the company is performing by maintaining a dialogue with shareholders and other relevant stakeholders

Trading updates and press releases are issued as appropriate and the Company’s brokers provide briefings on shareholder opinion and compile independent feedback from investor meetings. Information offered at the analysts’ meetings together with financial press releases are available on the Company’s website, wwwbeeksfinancialcloud.com.

The Annual General Meeting is used by the Directors to communicate with both institutional and private investors.  Every shareholder will have access to a full annual report each year end and an interim report at the half year end. Care is taken to ensure that any price sensitive information is released to all shareholders, institutional and private, at the same time in accordance with London Stock Exchange requirements.  The Company strives to give a full, timely and realistic assessment of its business in all price-sensitive reports and presentations.

The Company intends to Disclose the outcomes of all votes in a clear and transparent manner.

Where a significant proportion of votes (e.g. 20% of independent votes) have been cast against a resolution at any general meeting, the Company shall include, on a timely basis, an explanation of what actions it intends to take to understand the reasons behind that vote result, and, where appropriate, any different action it has taken, or will take, as a result of the vote.