In line with the London Stock Exchange’s recent changes to the AIM Rules requiring all AIM-listed companies to adopt and comply with a recognised corporate governance code, the Board has adopted the Quoted Companies Alliance Corporate Governance Code (QCA Code). Details of how we comply with the QCA Code principles in broad terms can be found below in our Statement of Compliance with the QCA Code and in the 2018 Annual Report, a copy of which can be found on this website (www.1spatial.com). The information contained in this Statement of Compliance was updated on 21 September 2018. This information will be reviewed and updated annually.
Statement of Compliance with the QCA Corporate Governance Code
As Chairman, it remains my responsibility, working with my fellow board colleagues, to ensure that good standards of corporate governance are embraced throughout the group. As a board, we set clear expectations concerning the group’s culture, values and behaviours.
The Directors recognise the importance of good corporate governance and during 2017 and 2018 we have been using the Quoted Companies Alliance Corporate Governance Code (the ‘QCA Code’) as a framework to improve corporate governance at 1Spatial plc. Given the London Stock Exchange’s recent changes to the AIM Rules requiring all AIM-listed companies to adopt and comply with a recognised corporate governance code, we are now in a good position to adopt and comply with this code. We’ve chosen the QCA Code as it is a practical, outcome-oriented approach that is tailored for small and mid-size quoted companies in the UK.
Set out below is a summary, in broad terms, which demonstrates how the Company addresses the key governance principles defined in the QCA Code. Further information on compliance with the QCA Code will be provided in our next annual report and we will provide updates on our compliance with the QCA Code annually.
Andy Roberts, Non-executive Chairman
Principle 1: Establish a strategy and business model which promote long-term value for shareholders
1Spatial’s strategy is explained fully within the Strategic Report section on pages 10 to 12 of the 2018 Annual Report. More information is also provided in the Strategy Section of the Website: https://1spatial.com/strategy/
Our strategy is focused on profitable sales growth by providing software based, innovative solutions to the Geospatial market. We have operations in the UK, Europe, US and Australia and focus on three core sectors of government, utilities and transport.
Key challenges which the company face in relation to the execution of the strategy are set out in the Principle Risks and Uncertainties section of the 2018 Annual Report on page 19.
Principle 2: Seek to understand and meet shareholder needs and expectations
Regular dialogues are held with shareholders, including holding briefings with analysts and other investors and staff shareholders. The company also uses the Annual General Meeting as an opportunity to communicate with its shareholders. All directors are expected to attend the Annual General Meeting with the Chairmen of the Audit and Remuneration Committees being available to answer shareholders’ questions. The Chairman of the Board is the primary point of contact for all shareholders. Private shareholder events are held by the Executive Directors. To request a meeting please contact: firstname.lastname@example.org
The Company produces year end and interim announcements as well as a Full Annual Report all of which are available on the Investors’ section of the Company’s website and hard copies of the annual report are distributed to those shareholders who have requested to continue to receive them. The Company’s website (www.1spatial.com) contains information on the Group, matters reserved for the Board, the Company’s articles of association, the Committee terms of references, copies of all documents sent to shareholders and all market and regulatory announcements.
There is a separate section on the website named ‘Shareholder communications including notices and circulars’ and within this section are documents such as notices of Annual General Meetings, Proxy Voting details, circulars sent to shareholders and any other information sent to shareholders during the period.
The Directors actively seek to build a relationship with institutional shareholders. Shareholder relations are managed primarily by the Chairman. The Chief Executive Officer and Chief Financial Officer make presentations to institutional shareholders and analysts each year immediately following the release of the full-year and half-year results. In addition, in 2018 the Chairman and Non-Executive Directors visited the substantial shareholders to listen to their feedback and have a direct conversation on any areas of concern.
As well as the Board being available at the AGM to meet with private shareholders, the Company has engaged with Edison Investments Ltd to provide independent research on the Group which is publicly available on the Company’s website.
The Board is kept informed of the views and concerns of major shareholders by briefings from the Chairman. Any significant investment reports from analysts are also circulated to the Board. The Chairman and Non-Executive Directors are available to meet with major shareholders if required to discuss issues of importance to them.
Principle 3: Take into account wider stakeholder and social responsibilities and their implications for long- term success.
The Group’s stakeholders include shareholders, member of staff, customers, suppliers, regulators, partners, industry bodies and creditors. The principal ways in which their feedback on the group is gathered is via meetings, conversations and feedback processes.
Following this feedback the company has a clearly defined customer centric approach where collaboration between customers and employees is key. This is underpinned by our brand values which are:
Further information on these stakeholders and governance policies are set out in the ‘who we are’ section of the website, details are provided on the following:
- Corporate Social Responsibility
Principle 4: Embed effective risk management, considering both opportunities and threats, throughout the organisation
The Board is responsible for ensuring the Group has effective and sound systems of internal controls, which are designed to manage, but not eliminate, the risk of failure to achieve business objectives and provide reasonable, but not absolute, assurance against material misstatements and loss. The day-to-day management and monitoring of the Group’s systems of internal control is delegated to the Chief Financial Officer.
The Chief Financial Officer ensures that the Group’s risk management framework and control culture are embedded within the business, the Executive Directors provide assurance to the Board, through the audit committee, that risks are monitored, appropriately escalated and managed within the risk appetite of the Board.
The key business risks affecting the Group are set out on page 19 of the 2018 Annual Report. The systems of internal control are designed to cover all business, financial, reputational and legal risks of the Group and are embedded within the day to day operations of the Group.
The financial reporting controls in place are designed to maintain proper accounting records and provide reasonable assurance concerning the accuracy and integrity of financial information reported both internally and externally. The financial reporting controls are monitored monthly and are reported regularly to the audit committee.
In accordance with the QCA Code and best practice guidance for Directors on internal controls issued by the Financial Reporting Council, the Board, with the advice of the Audit Committee, has reviewed the effectiveness of the systems of internal control for the year to 31 January 2018. As part of this review, the Board received assurances from the Chief Executive Officer and the Chief Financial Officer of 1Spatial plc that the Directors’ Responsibilities Statement on page 24 of the 2018 Annual Report is founded on a sound system of risk management and internal controls and that the systems of internal controls are operating effectively in all material respects in relation to reporting financial risks and the mitigation of material business risks.
Principle 5: Maintaining the Board as a well-functioning, balanced team led by the Chair
The composition and experience of the Board is shown on the Company’s website https://1spatial.com/investors/board/
As non-executive Chairman, I am responsible for the running of the Board and Claire Milverton, the Chief Executive Officer, has executive responsibility for running the Group’s business and implementing Group strategy.
The Board comprises two Executive Directors and two Non-Executive Directors. The Board considers that all Non- executive Directors bring an independent judgement to bear notwithstanding the varying lengths of service.
The Board has a formal schedule of matters reserved to it and is supported by the Audit, Remuneration and Nomination Committee. The Schedule of Matters Reserved and Committee Terms of Reference are available on the Company’s website.
Over the last year the Directors welcomed two new Non-Executive Directors. On 1 August 2017 Francis Small joined as an independent Non-Executive Director. Francis is a financial expert and brings significant experience from his financial services background, having been at Ernst & Young from 1979 to 2015.
In July 2018, Peter Massey was appointed an independent Non-Executive Director. Peter brings significant industry expertise and strategic insight to the Board in the key focus areas of Government, Utility and Transport which he has developed through his long career driving business growth within these industries.
The current Directors possess a range of skill sets, capabilities and experience gained from diverse backgrounds, thereby enhancing the Board by bringing a wide spectrum of knowledge and expertise. You can find more about the experience and expertise of the other current members of the Board on the Company’s website.
Directors’ conflict of interest
The Company has effective procedures in place to monitor and deal with conflicts of interest. The Board is aware of the other commitments and interests of its Directors, and changes to these commitments and interests are reported to and, where appropriate, agreed with the rest of the Board.
Principle 6: Ensure that between them the Directors have the necessary up-to-date experience, skills and capabilities
The Board is satisfied that, between the Directors, it has an effective and appropriate balance of skills and experience, including in the areas of software and technology, utilities, asset management international trading, business transformation, capital markets, mergers and acquisitions, change management and governance.
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. Contracts are available for inspection at the Company’s registered office and at the Annual General Meeting. All Directors retire at the Annual General Meeting each year in accordance with good governance practice.
All new Directors appointed to the Board receive a comprehensive induction and the Board will be implementing an on-going structured training and development programme. The Company’s Nomads are invited to attend a Board meeting each year to update the Board on their general and statutory duties and current best practice governance issues.
All Directors can take independent professional advice in the continuance of their duties, if necessary, at the Company’s expense. In addition, the Directors have direct access to the advice and services of the Company Secretary and Chief Financial Officer.
Principle 7: Evaluate Board performance based on clear and relevant objectives, seeking continuous improvement
The Board continually considers and evaluates its own performance and effectiveness and that of the individual Directors and Board Committee members. The Company also conducts annual formal performance appraisals for Executive Directors and all Country Managers and will continue to do so on an on-going basis. As part of a comprehensive governance review undertaken by the Directors in early 2018, it has been agreed that a formal internal evaluation of the performance and effectiveness of the Board and its Committees will be conducted in 2018.
Principle 8: Promote a culture that is based on ethical values and behaviours
To execute on our customer centric solutions approach it is vital that all our employees act in a way that reflects the underlying values of the business. Our brand values of Approachable, Smart, Innovative and Agile is something that we expect our staff to adhere to. In addition, in each quarter we award staff that have demonstrated exceptional performance in these areas – these awards are known as the 1Spatial 1Awards.
Each year, our staff volunteer for projects that support global good causes and that give something back to our local community. Our raised funds have gone to various charities. We put a significant amount of time into the Charity Missing Maps which is a project to map the most crisis-prone parts of the world.
More information on this is provided in our Sustainability Section of our Website.
Principle 9: Maintain governance structures and processes that are fit for purpose and support good decision-making by the Board
The role of the Board is to ensure delivery of the business strategy and long-term shareholder value. The general obligations of the Board and the roles and responsibilities of the Chairman and the Chief Executive Officer are set out in a formal Board responsibilities statement approved by the Board. The Board fulfils its role by approving the annual strategic plan and monitoring business performance throughout the year. The Board held 12 formal scheduled Board meetings during the financial year to 31 January 2018 and in addition held a number of unscheduled ad-hoc meetings, typically by conference call. There is in place a schedule of matters reserved for Board approval that can be found on the Company’s website (www.1spatial.com).
The Board have approved an annual Board calendar setting out the dates, location and standing agenda items for each formal scheduled Board and Committee meeting and scheduled Board calls. Board papers are circulated to Directors in advance of scheduled and unscheduled meetings, which are of an appropriate quality to enable the Directors to fulfil their obligations and adequately monitor the performance of the business. Directors who are unable to attend a meeting are expected to provide their comments to the Chairman, the Chief Executive Officer, or the Company Secretary as appropriate. The Board also receives management information on a regular basis that sets out the performance of the business. The Chief Executive Officer and Chief Financial Officer are invited to attend the Audit and Remuneration Committee meetings, if appropriate.
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 where appropriate to present business updates. Board meetings throughout the year are held at the Company’s various location offices giving, in particular the Non-Executive Directors, access to the different divisions to gain a greater understanding of the Group’s activities.
The Executive Team consists of Claire Milverton, Chief Executive Officer and Nicole Payne, Chief Financial Officer with input from the Country Managers and their teams. They are responsible for formulation of the proposed strategic focus for submission to the Board, the day-to-day management of the Group’s businesses and its overall trading, operational and financial performance in fulfilment of that strategy, as well as plans and budgets approved by the Board of Directors. It also manages and oversees key risks, management development and corporate responsibility programmes. The Chief Executive Officer reports to the PLC Board on issues, progress and recommendations for change. The controls applied by the Executive Team to financial and non-financial matters are set out earlier in this document, and the effectiveness of these controls is regularly reported to the Audit Committee and the Board.
The Board is supported by the Audit, Remuneration and Nomination 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 duties. The terms of reference of each Committee are available at www.1spatial.com
The board has appropriate policies and procedures in place to guard against insider trading by employees including Directors. Appropriate clearances are required in order that trades can be made and all employees are made aware, via company-wide emails, of relevant close periods prior to financial results being announced.
More information about the Board and Committees can be found in the Corporate Governance Statement on pages 25-30 of the 2018 Annual Report.
Principle 10: Communicate how the Company is governed and is performing by maintaining a dialogue with shareholders and other relevant stakeholders
The Company encourages two-way communication with both its institutional and private investors and responds quickly to all queries received. As the Chairman, I talk regularly with the Group’s major shareholders and ensures that their views are communicated fully to the Board.
In addition, the Company communicates with shareholders through the Annual Report, full-year and half-year announcements, the Annual General Meeting, General Meetings and one-to-one meetings with large existing or potential new shareholders.
To provide analyst insight to private investors, we have engaged Edison Investments Ltd to provide independent research on the Group. This research plus the full range of corporate information (including all Company announcements and presentations) is also available to shareholders, investors and the public on the Company’s corporate website, www.1spatial.com.
The Investors and Shareholders’ Communication pages on the Company’s website also include annual and interim reports from 2012. These pages include details of all proxy votes received and the number of shares voted for and against all resolutions put to shareholders at Annual General Meetings and General Meetings held throughout the year.
1Spatial plc – Matters Reserved for the Board
All matters that have a material impact upon the company or any of its subsidiaries will be referred to the Board. However, below is a schedule of matters reserved specifically for the decision of the Board or a duly authorised committee thereof. The Board has the authority to obtain outside legal or other independent advice at the expense of the Company.
Strategy and Management
- Responsibility for the overall leadership of the Company and setting the Company’s values and standards.
- Oversight of the Group’s operations ensuring:
- Competent and prudent management;
- Sound planning;
- Maintenance of sound management and internal control systems;
- Adequate accounting and other records; and
- Compliance with statutory and regulatory obligations.
- Review of performance in the light of the Group’s strategic aims, objectives, business plans and budgets and ensuring that any necessary corrective action is taken.
- Any decision to cease to operate all or any material part of the Group’s business.
- Any decision to acquire a new business either subsidiary, or trade and assets.
- Approval of full year (preliminary) and half year results’ announcements.
- Approval of dividend policy and payment.
- Declaration of the interim dividend and recommendation of the final dividend.
- Adoption of significant change in accounting policies or practices.
- Approval of all circulars and prospectus to shareholders.
- Changes relating to the capital structure of 1Spatial plc.
- Approval of increases in share capital of any Group Company, or equivalent financing arrangement above £250,000.
- The approval of all guarantees given by the Company.
- The approval of any new or increase in borrowing facilities exceeding £250,000 (or equivalent), or cancellation of such facilities.
- Change in 1Spatial plc Company status.
- Approval of material unbudgeted capital or operating expenditures (outside pre-determined tolerances).
- Convening general meetings of 1Spatial plc.
- Recommending to shareholders the approval of alterations to the Articles of Association of 1Spatial plc.
- Making any take-over offer for another company or other companies within the City Code on Takeovers and Mergers and considering a response to any such approaches to the Company.
Annual Report and Accounts
- To issue the Annual Report and Accounts of 1Spatial plc having approved the following:
- Strategic Report.
- Directors’ Report.
- Remuneration, Audit and Nomination Committee Reports.
- Accounts and notes to the Accounts.
Appointments and Structure
- Appointment and removal of the Chairman of 1Spatial plc.
- Appointment, removal and re-election of the Directors of 1Spatial plc.
- Appointment and removal of the Secretary of 1Spatial plc.
- Reviewing succession planning for the Group Plc Board and senior management of the Group.
- Carry out a formal and rigorous review of its own performance and that of its Committees and individual Directors on an annual basis.
- Changes to the structure, size and composition of the Board, following recommendations from the nomination Committee.
- Appointment of the Senior Independent Director to provide a sounding board for the Chairman, if required.
- Continuation in office of any Director at any time, including the suspension or termination of service of an Executive Director as an employee of the Company, subject to the law and their service contract.
- Appointments to Boards of subsidiaries.
- Determining the remuneration policy for the Directors, Company Secretary and other senior executives.
- The introduction of new share incentive plans or major changes to existing plans, to be put to shareholders for approval.
- Agreeing fee levels for Non-Executive Directors.
Delegation of Authority
- The division of responsibilities between the Chairman, the Chief Executive Officer and other Executive Directors, which should be clearly established, set out in writing and agreed by the board.
- Approval of the delegated levels of authority, including the Chief Executive Officer’s authority limits (refer to Authorisation Matrix below).
- Establishing Board Committees and approving their terms of reference, and approving material changes thereto.
- Receiving reports from Board Committees on their activities.
Corporate Governance Matters
- Determining the independence of Non-Executive Directors in light of their character, judgement and relationships.
- Considering the balance of interests between shareholders, employees, customers and the community.
- Review of the Group’s overall corporate governance arrangements.
- Receiving reports of the views of the Company’s shareholders to ensure that they are communicated to the board as a whole.
- Authorising conflicts of interest where permitted by the Company’s articles of association.
Budgets, Contracts and Business Development
- Approval of strategic plans of the Group.
- Approval of the annual budget of the Group and subsequent revision requested by the Group Plc Board.
- Approval of significant changes in treasury and foreign currency policy of the Group.
- Approval of investment and Research and Development proposals where cost exceeds £250,000.
- Approval of material contracts with a revenue impact of £500,000 in terms of gross fees per proposal or whose terms could give rise to an abnormal loss (as defined by the Authorisation Matrix).
- Significant changes to the Group’s activities to include, acquisitions or divestments or entry into a new foreign jurisdiction or exit from an existing one.
- Approval of major capital projects and oversight over execution and delivery.
- Contracts in the Company (or any subsidiary) not in the ordinary course of business, above £250,000.
- Approval of the internal Authorisation Matrix and associated approval personnel and levels.
- Ensuring a satisfactory dialogue with shareholders based on the mutual understanding of objectives.
- Approval of resolutions and corresponding documentation to be put forward to shareholders at a general meeting.
- Approval of press releases concerning matters decided by the Board.
- The Group Plc Board must be advised of all litigation either proposed by or commenced against the Group, including recommendations for settlement.
- To receive reports directly from the Chief Executive Officer / Chief Financial Officer on the Group’s internal control systems and to consider amongst others:
- Changes in the nature and extent of significant risks to the business.
- The key risks and how these are evaluated and managed.
- To review annually the effectiveness of the Group’s internal control systems and consider:
- For identified weaknesses, the actions being taken and the timeliness of rectification.
- The effectiveness and output of the management’s review process.
- Incidence of major control weaknesses, their cause and potential impact on the business.
- Approval of policies, including:
- Code of conduct;
- Share dealing code;
- Bribery prevention policy;
- Whistleblowing policy;
- Environment and sustainability policy;
- Human resources policy;
- Communications policy (including procedures for the release of price-sensitive information);
- Corporate social responsibility;
- Charitable donations policy; and
- Group’s Health and Safety Policy.
- General Data Protection Regulation Policy.
- Recommendation to shareholders to appoint or remove the Company’s auditors including approval of their fees.
- Appointment or removal of the Company’s principal advisors.
- Major changes in the applications of Group Pension Schemes.
- Monitoring of the Directors and Officers Liability Insurance.
- Any decision likely to have a material impact on the Company or Group from any perspective, including, but not limited to, financial, operational, strategic or reputational.
- This schedule of matters reserved for Board decisions.