Corporate Governance Statement

The ECSC Group plc Board recognises the importance of sound corporate governance and endorses and monitors compliance with the Quoted Companies Alliance ("QCA") Corporate Governance Guidelines for Smaller Quoted Companies. The Company has not included all the annual report and accounts disclosures required by the 2018 QCA Corporate Governance Code in the Company's annual report and accounts for the financial year ended 31 December 2017, as these disclosures were not required as of the date of issuance of the said annual report and accounts. The Company intends to include the annual report and accounts disclosures required by the 2018 QCA Corporate Governance Code in the Company's annual report and accounts for the financial year ending 31 December 2018.

Shareholder Engagement

We have a dedicated email address (investor@ecsc.co.uk) for inquiries and will endeavour to respond to any inquiries by our shareholders in an adequate and effective way. The inquiries are directed to, and addressed by, the Chief Financial Officer/Chairman. The Company may exercise discretion as to which shareholder questions shall be responded to, and the information used to answer questions will be information that is freely available in the public domain. Communication may be from the Company's Financial PR representatives. If deemed necessary, the inquiries will be brought to the Board's attention.

The Board uses the Annual General Meeting, to which all members are invited, to communicate with investors, and welcomes their participation. The notice of Annual General Meeting is sent to shareholders no less than 14 days before the meeting. The Chairman of the Audit and Remuneration Committees are typically available at Annual General Meetings to answer questions. Where significant shareholder voting decisions are not in line with the company's expectations, the Board considers and discusses this.



Board Committees

The Board has established audit, remuneration, nomination and disclosure committees with formally delegated duties and responsibilities and with written terms of reference. Each of these committees will meet regularly and at least twice a year. From time to time, separate committees may be set up by the Board to consider specific issues when the need arises.

Stakeholder Engagement

Aside from the Company's shareholders, on the basis of the Directors' knowledge from the operation of the Group's business, the Board considers that the Group's business relies on three key stakeholders, which are:

(1) the Group's clients;
(2) the Group's employees;
(3) Suppliers and other Business Partners.

These three key stakeholders are considered to be most important to the Group's business and operations because the Group's sources of revenue and major expenditures are attributable to these stakeholders. In addition, the Group depends on its employees to deliver and provide the required services to its clients in order to generate revenue.

(1) Our Clients
We are committed to maintaining and continually improving our service proposition to our clients through various channels of communication. On a case by case basis, senior management will interact with major clients and senior management will take steps for improvement, if deemed necessary.

(2) Our Employees
At ECSC, our employees matter, and we strive to create an environment where our employees can align their efforts with the Company's philosophy, mission, values and vision to deliver results to our clients, shareholders and the community. We believe and practice a diverse and fair working culture. We encourage the success of our employees by providing them with equal opportunities, competitive remuneration packages and a continual learning work environment.

(3) Suppliers and other Business Partners
We acknowledge the importance of the support of our suppliers and business partners in creating a sustainable platform for our business. We work closely with our suppliers to raise their awareness to ensure sourcing of high-quality, yet reasonably priced products and services. Feedback from major suppliers and other business partners is channelled to senior management. The Board believes that, as a provider of cyber security services, the Company's day-to-day activities have minimal direct impact on local communities and the environment, although we actively support charities where possible.

Board Performance

The effectiveness of the Board as a whole is assessed annually in terms of the size of the Board, the competency, and the area of expertise and experience of each Board member. This informal assessment is led by the Chair of the Nomination Committee.

The Board committees are assessed based on their roles and terms of reference and the effectiveness of communicating relevant information to the Board in a timely manner, and the overall effectiveness and efficiency in discharging their duties. There were no substantive issues arising from the assessment process.

In the case of individual Directors, peer and self-assessment is carried out on a yearly basis to evaluate each director's contribution, performance and competency, taking into consideration the Director's ability to provide constructive suggestions, rational and honest opinions on issues deliberated, and pragmatic advice when necessary. In the case of independent Directors, they are also assessed based on their degree of independence and their ability to defend and stand through constructive deliberation where necessary, and their ability and willingness to devote time and effort to the Board and board committees.

The Company's Executive Directors and senior management team are given annual performance targets and are evaluated based on these pre-determined targets. The results of the review processes described above are used to determine whether any changes should be considered.

Collectively, the members of the Board deliberate on the composition of Board members and succession planning matters. Should the need arise to recruit a new Board member or to replace a retiring Board member, the presiding Board members, under the guidance of the Chair of the Nomination Committee, will meet and, on an ad hoc basis, to determine the skill-sets and other criteria required of a prospective Board candidate. Taking into consideration each Board member's professional and social network, the Board is confident that it can prudently identify and recruit new Board members when necessary.

In accordance with the Company's Articles of Association, a number of Directors stand for re-election on an annual basis.

Corporate Culture

In general, the Board and management team encourages and promotes a corporate culture that is based on ethical values. The Company's Employee Handbook stipulates clearly the practices that are prohibited because they are considered to be either illegal or contradictory to our corporate culture. Those who violate the standards of the Code of Conduct will be subject to disciplinary action, including possible dismissal. All new employees are required to attend an introductory session which includes an overview of the general policies, employees' handbook, and operational practices. Staff performance appraisal is undertaken regularly.

Governance Structure

The roles and responsibilities of the Board and the Board committees are as follows:

Board Roles
The Board is responsible for formulating, reviewing and approving the Group's strategy, budgets and corporate actions.

Board Committees
The Group has established the Audit, Remuneration and Nomination Committees with formally delegated duties and responsibilities.

The duties of the Audit Committee are to consider the appointment, re-appointment and terms of engagement of, and keep under review the relationship with, the Company’s auditors, to review the integrity of the Company’s financial statements, to keep under review the consistency of the Company’s accounting policies and to review the effectiveness and adequacy of the Company’s internal financial controls. In addition, it will receive and review such reports as it from time to time requests from the Company’s management and auditors. The Audit Committee will meet at least twice a year and will have unrestricted access to the Company’s auditors. The Audit Committee comprises David Mathewson and Elizabeth Gooch and is chaired by David Mathewson.

The Remuneration Committee has responsibility for reviewing and determining, within agreed terms of reference, the Company’s policy on the remuneration of senior executives, Directors and other key employees and specific remuneration and benefits packages for Executive Directors, including pension rights and compensation payments. It is also to be responsible for making recommendations for grants of options under the New Share Option Scheme. It is expected to meet not less than twice a year. The remuneration of Non-Executive Directors is a matter for the Board and no Director may be involved in any discussions as to his or her own remuneration. The Remuneration Committee comprises Elizabeth Gooch and David Mathewson and is chaired by Elizabeth Gooch.

The duties of the Nomination Committee are to consider the structure, size and composition of the Board and make recommendations to the Board with regard to any changes. It will also be responsible for identifying and nominating candidates to fill Board vacancies as and when they arise. The Nomination Committee will also make recommendations to the Board concerning, among other things, plans for succession for both Executive and Non-Executive Directors. It is expected to meet at least two times a year. The Nomination Committee comprises David Mathewson and Elizabeth Gooch and is chaired by David Mathewson.

The Executive Directors’ responsibility for the day-to-day running of the Company and our operating subsidiaries and the delivery of strategy set by the Board sits with our Chief Executive Officer, who is also a member of the Board.

The Chairman is responsible for corporate governance and overseeing the functions of the Board, ensuring that no individual or group dominates the Board's decision-making process, and ensuring that the Non-Executive Directors are promptly and properly briefed on all relevant matters.

The Board's role and responsibilities include:

  • Together with senior management, promote good corporate governance culture within the Group which reinforces ethical, prudent and professional behaviour;
  • Review, challenge and decide on management's proposals for the company, and monitor its implementation by management;
  • Ensure that the strategic plan of the Company supports long-term value creation and includes strategies on economic, environmental and social considerations underpinning sustainability;
  • Supervise and assess management performance to determine whether the business is properly managed;
  • Ensure there is a sound framework for internal controls and risk management;
  • Understand the principal risks of the Company's business and recognise that business decisions involve the taking of appropriate risks;
  • Set the risk appetite within which the Board expects management to operate and ensure that there is an appropriate risk management framework to identify, analyse, evaluate, manage and monitor significant financial and non-financial risks;
  • Ensure that the Company has procedures in place to enable effective communication with stakeholders;
  • Ensure the integrity of the Company's financial and non-financial reporting.

The list of matters reserved for the Board are as follows:

  • Business strategy;
  • Proposed changes to share capital structure;
  • Statutory and regulatory financial reporting;
  • Major contracts and procurement;
  • Capital expenditure budgets;
  • Communications with substantial shareholders;
  • Appointment of board members;
  • Remuneration of Executive Directors payments to management outside the usual remuneration parameters;
  • Appointment of Board Committees and review of the functions of Board Committees;
  • Implementation of new corporate governance policies and revisions to such policies, including review and approval of financial authority limits.

The Board believes the Group's current standard of corporate governance is adequate to support its future business plans. However, the Group's corporate governance processes will be reviewed annually.

Communication with Shareholder and Stakeholder

The Company communicates how it is governed and is performing through its Annual Report and Accounts, full-year and half-year announcements, regulatory announcements and its website: https://investor.ecsc.co.uk/

The Board also recognises the AGM as an avenue to convey to shareholders how the Company is governed.

The outcome of all resolutions tabled at general meetings, including details of voting, are to be posted on the Company's website and also announced via RNS. In addition, all historical Annual Report and Accounts and governance-related materials (including notices of all general meetings) since IPO and, in time, for the last five years are maintained in the Company's website.

The Group's financial reports can be viewed and/or downloaded from the following link: https://investor.ecsc.co.uk/governance/report-archive-annual.html

Notices of General Meetings of the Company can be viewed and/or downloaded from the following link: https://investor.ecsc.co.uk/governance/report-archive-notice.html

Going forward, where a significant proportion of independent votes have been cast against a resolution at any general meeting, the Board intends to identify the dissenting shareholders concerned and endeavour to appoint an officer of the Company to engage with the said shareholders in order to understand the reasons behind the vote results. The appointed officer will then be required to report his/her findings to the Board, and the Board will take the appropriate action. The Board may consider making an appropriate public statement via this website ahead of undertaking this process. Following this process, the Board may also make an appropriate public statement via this website regarding any different action it has taken, or will take, as a result of the vote.

Dealing Policy

The Company has adopted a dealing policy for dealings by persons discharging managerial responsibilities and persons closely associated with them in accordance with the requirement under Rule 21 of the AIM Rule for Companies (“AIM Rules”) and shall use its best endeavour to ensure compliance by the said persons discharging managerial responsibilities and persons closely associated with them. This dealing policy takes into account the Company's broadened obligations, not only to a now-revised AIM Rules, but also to the Market Abuse Regulation (Regulation 596/2014).

David Mathewson
Non-Executive Chairman
27 September 2018

ECSC Group plc

ECSC Group plc is incorporated and registered in England and Wales under the Companies Act 2006 with Registered No. 3964848. Its main country of operation is the UK.

VAT No. 746361914

Contact

28 Campus Road
Listerhills Science Park
Bradford
BD7 1HR
United Kingdom

+44 (0) 1274 736 223

investor@ecsc.co.uk

Popular Reading


ISIN: ECSC
SEDOL: BYMJ4J9