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Corporate Governance

CHAIRMAN’S CORPORATE GOVERNANCE STATEMENT

As the Chairman, I have overall responsibility for implementing corporate governance within Dillistone Group Plc (the “Company” or “Dillistone”). Working with the Company Secretary, I am responsible for our corporate governance statements. The Board is collectively responsible for setting the tone and culture of the Group and promoting good corporate governance.


Dillistone has now adopted the Quoted Companies Alliance Corporate Governance Code (the “Code”). At Dillistone we believe in good corporate governance and accountability and we make robust corporate governance part of our culture and business values.

I have therefore set out below how the Code is applied by the Group, and where the Group departs from the expectations set by the Code. Adopting the Code in September 2018 is a significant change in our corporate governance. Where we do not fully comply with the expectations of the Code we say so, and we review our position regularly. When preparing our Annual Report we also review and report any significant changes in our corporate governance over the previous 12 months. During this process we review our governance framework, and consider whether it should evolve further in line with our growth. Our primary means of communicating our corporate governance structure is through our Annual Report and our website disclosures. Where specific questions are raised by private individual shareholders and institutional investors, we engage directly with those shareholders, generally through the Finance Director and the Chief Executive Officer. Where appropriate I engage directly. I have set out below how the Board is led, its responsibilities, our risk reporting, governance structure and engagement with stakeholders. I believe in robust corporate governance, which is key to the long-term success of the Group - by helping to improve performance and mitigate risk.

Finally, a word about our corporate culture. We seek to promote openness and respectfulness in all our dealings. Simply speaking to and engaging with our staff regularly, which our Directors and divisional directors all do, is a good means of eliciting feedback and gauging how our values are promoted throughout the business.

Mike Love Chairman

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

Application

The board must be able to express a shared view of the company’s purpose, business model and strategy. It should go beyond the simple description of products and corporate structures and set out how the company intends to deliver shareholder value in the medium to long-term. It should demonstrate that the delivery of long-term growth is underpinned by a clear set of values aimed at protecting the company from unnecessary risk and securing its long-term future.

Compliance

The Group’s strategy is to grow the business both organically and through acquisition. This strategy is made possible through our commitment to product development, which ensures that the business continues to command a leading role in all of the markets in which it operates. The key challenges and risks faced by the business are included in the annual report.

The business is split into three Divisions. Dillistone Systems and Voyager Software and GatedTalent.

Dillistone Systems specialises in the supply of software and services into executive-level recruitment teams. Voyager Software’s clientele are primarily involved in contingent recruitment, including permanent placement, contract placement and the provision of temporary staff. GatedTalent is a private network of executives, accessed by executive recruiters. This Division generates revenue based on a combination of recruiter subscription and transaction fees for connecting with executives. There is a close relationship between GatedTalent and Dillistone Systems.

There is a 3-year rolling process of business planning throughout the Group, within a framework and structure set by the Board. For new projects or products a 5 year horizon may be used. The Group seeks to deliver long term growth and value to shareholders and other stakeholders and its strategy evolves over time as the Group grows. The Executive Directors through the Chief Executive Officer are responsible for executing the strategy once agreed by the Board. The Chief Executive Officer is also responsible for reporting on business strategy, operational performance, risks and other significant developments at Board meetings.

2. Seek to understand and meet shareholder needs and expectations

Application

Directors must develop a good understanding of the needs and expectations of all elements of the company’s shareholder base. The board must manage shareholders’ expectations and should seek to understand the motivations behind shareholder voting decisions.

Compliance

The Board recognises its primary role of representing and promoting the interests of the Group’s shareholders. The Board is accountable to shareholders for the long-term performance and success of the Company. The Chief Executive and Finance Director hold regular meetings with institutional shareholders and private client brokers to discuss and review the Group's activities, strategies and performance. Investor feedback from these meetings is provided by the Group’s NOMAD. The Chief Executive Officer and Finance Director also present interim and annual results through webinars open to all shareholders and members of the public, which has been well received. Questions are also encouraged at these sessions. For the majority of RNS announcements the Chief Executive also records an appropriate update to explain the announcement and again this is available to shareholders. The Chief Executive Officer and Finance Director also make themselves available to speak to potential institutional shareholders. These meetings and discussions give the Board an opportunity to gauge shareholder feedback and expectations, much of which has been around GatedTalent.

A RNS is published after the AGM to announce the resolutions passed at the AGM. To date all AGM resolutions proposed have been passed; the Group has not experienced significant dissenting shareholder votes for resolutions proposed at the AGM (over 20%), including proxy votes.

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

Application

Long-term success relies upon good relations with a range of different stakeholder groups both internal (workforce) and external (suppliers, customers, regulators and others). The board needs to identify the company’s stakeholders and understand their needs, interests and expectations.

Where matters that relate to the company’s impact on society, the communities within which it operates, or the environment have the potential to affect the company’s ability to deliver shareholder value over the medium to long-term, then those matters must be integrated into the company’s strategy and business model.

Feedback is an essential part of all control mechanisms. Systems need to be in place to solicit, consider and act on feedback from all stakeholder groups.

Compliance

The Board recognises its prime responsibility under UK corporate law is to promote the success of the Group for the benefit of its members as a whole.

Our customers are essential to our business and we maintain long-term relationships with our customers. Dillistone operates a system of key account managers whose role is to communicate with them and ensure close liaison, in addition to the day-to-day communication that occurs with every customer contract. Customer feedback is considered at Divisional board meetings, and our services evolves accordingly. Senior executives have frequent discussions with key customers and regular newsletters and other mailings are used to inform customers and potential customers.

Our staff are key to the business and the Directors recognise the need for engagement with employees. Each main division hold monthly staff meetings to update staff on current matters both in the division and in the wider group. With less than 150 people, it means that Directors and management staff are relatively accessible to all employees. We also encourage engagement of staff in the business through share schemes and the Group runs a Sharesave scheme for all UK employees.

We develop long standing relationships with our bankers and keep them regularly updated as to how the business is performing. We also seek to maintain long term relationships with key suppliers.

The Board also understands that it has a responsibility to consider, where practicable, the social, environmental and economic impact of its approach.

4. Embed effective risk management, considering both opportunities and threats, throughout the organisation.

Application

The Board needs to ensure that the company’s risk management framework identifies and addresses all relevant risks in order to execute and deliver strategy; companies need to consider their extended business, including the company’s supply chain, from key suppliers to end-customer.

Setting strategy includes determining the extent of exposure to the identified risks that the company is able to bear and willing to take (risk tolerance and risk appetite).

Compliance

The Board undertakes a regular and robust assessment of the effectiveness of the Group’s risk management framework at least annually. Each Board meeting includes an agenda item on risk and consideration is also given to whether any new risks have been identified The latest annual summary of the significant risks and uncertainties , is contained in our Annual Report. We do not have a formal risk committee.

Our internal governance and reporting structure, for example through monthly Divisional board meetings and financial reporting, provides a key and effective risk management tool. Divergences from expected financial and project performances are discussed in detail and remedial action taken where possible. All divisional Board meetings are attended by the Chief Executive and Finance Director.

The Group takes external advice from its advisors on significant matters, and also tries to ensure that it has qualified staff who understand key risk issues. For example, GDPR has a significant impact within the recruitment and software industry and a senior member of executive team has a GDPR practitioner certificate and also an internal committee has been established to help manage risk and compliance. Legal advice was also sought.

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

Application

The board members have a collective responsibility and legal obligation to promote the interests of the company, and are collectively responsible for defining corporate governance arrangements. Ultimate responsibility for the quality of, and approach to, corporate governance lies with the chair of the board.

The board (and any committees) should be provided with high quality information in a timely manner to facilitate proper assessment of the matters requiring a decision or insight.

The board should have an appropriate balance between executive and non-executive directors and should have at least two independent non-executive directors. Independence is a board judgement.

The board should be supported by committees (e.g. audit, remuneration, nomination) that have the necessary skills and knowledge to discharge their duties and responsibilities effectively.

Directors must commit the time necessary to fulfil their roles.

Compliance

The Board exercises full and effective control over Dillistone Group. There is a formal schedule of matters reserved specifically for its decisions, relating to strategy, finance, risk, operations and governance.

The Board delegates certain functions to its three principal committees, the Audit Committee, the Remuneration Committee and the Nomination Committee, as set out at pages below.

Details of the members of the Board are set out below and further biographical details are on our website or in the annual report.

Non-Executive Directors    
M D Love Non-executive Chairman Independent – although Dr Love has served on the Board for over 9 years and holds 5% of the share capital he is free from any business or other relationship which could materially interfere with the exercise of his independent judgement.
G R Fearnley Non-executive director Senior independent director.  Mr Fearnley holds 2.3% of the share capital and this level of holding is not considered by the Board to change his independence.
Executive Directors    

J S Starr

Chief Executive

 

R Howard Operations director  
A D James Director  
J P Pomeroy Finance director  
A Milne Managing Director – Dillistone Systems Division  


The Chairman leads the Board, while the Chief Executive Officer is charged with managing the Group’s business. The roles of the Chairman and Chief Executive Officer are distinct.

The Code expects an appropriate combination of executive and non-executive directors. Our split is between five Executive and two Non-Executive Directors (including the Non- Executive Chairman).

The Chairman and the Board collectively believes this split between its Executive and Non- Executive Directors is appropriate. This composition continues to provide the expertise, breadth of experience and independence of thought needed, while maintaining efficient Board meetings.

The Group considers that both of its Non-executive directors are independent as discussed above. The Board considers its composition appropriate for an AIM-quoted Group of its size, market cap, and individual circumstances.

The Board meets at least five times each year and has adopted a formal schedule of matters specifically reserved for decision by it, thus ensuring that it exercises control over appropriate strategic, financial, operational and compliance issues. At these meetings the Board reviews trading performance, ensures adequate financing, sets and monitors strategy, examines investment and acquisition opportunities and discusses reports to Shareholders.

The meeting attendance record will be included in future annual reports.

Currently one third of the Board submits itself for re-election at each AGM as part of the Group’s formal retirement by rotation policy. Under the current Articles every Director must offer himself for re-election every three years. We consider a re-election every three years appropriate for all Directors, which is not in line with the Code’s suggestion of annual re- elections. Mike Love, Jason Starr, Alex James and Rory Howard have served on the Board for more than 9 years; despite serving the Board on a long term basis, the Directors individually believe that they act objectively in their respective roles and can act with sufficient independence.

All Directors are given full and timely access to all relevant management and accounting information. All Directors are able to seek independent professional advice in the course of their duties, at the Group’s expense. If any Director has concerns regarding unresolved business issues, they are entitled to require the Company Secretary to minute their concerns.

Formal terms of reference have been agreed for all Board Committees.

The Board reviews trading and operational performance regularly. Divergences from expected performance are followed up promptly and rigorously. Monthly management accounts are prepared and distributed members of the Board. Divisional management accounts are also produced and circulated to divisional directors.

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

Application

The board must have an appropriate balance of sector, financial and public markets skills and experience, as well as an appropriate balance of personal qualities and capabilities. The board should understand and challenge its own diversity, including gender balance, as part of its composition.

The board should not be dominated by one person or a group of people. Strong personal bonds can be important but can also divide a board.

As companies evolve, the mix of skills and experience required on the board will change, and board composition will need to evolve to reflect this change.

Compliance

Directors who have been appointed to the Company have been chosen because of the skills and experience they offer. Full biographical details of the Directors are included under the Management section on the website.

The Board considers itself sufficiently diverse when considering the background, knowledge and experience that each individual member brings to the Board. Where Board appointments are made the whole Board is involved. One member of the Board is female. Board appointments and appointments are made solely on merit. Other senior management appointments, i.e. divisional and subsidiary directors, are considered by the remuneration committee and the Board.

Board member Role Experience
Mike Love Chairman Mike brings a wealth of experience to the Dillistone Board. He was group managing director of SciSys from 1986 to 2003 during which time he led a management buy-out of the business and floated it on AIM in 1997. He is an experienced chairman through his current role at SciSys and also as chairman of a private company Redcliffe Precision Ltd. He has a good understanding of software development projects and he brings strong independent judgement to Dillistone
Giles Fearnley Senior Independent Director Giles has a significant experience leading large business in the passenger transport sector. He brings real commercial judgement to Dillistone through his knowledge of working in challenged sectors.
Jason Starr CEO Jason has worked for the majority of his career at Dillistone and so knows the sector extremely well.  He also brings further Aim experience through his role as a non-executive director of AIM listed PCIPAL PLC where he chairs the remuneration committee.

Rory Howard

Operations Director

Rory has a background as a technical and database analyst as well as being an experienced project manager and a PRINCE2 practitioner.

Alex James Director Alex brought his experience of quality control and account manager as well as his background in recruitment to Dillistone when he joined in 1999. He has since worked in training and consultancy and in projects management. He is now responsible for the implementation of products and services GatedTalent and also projects director for Voyager Division.
Julie Pomeroy Finance director Julie is a chartered accountant (ACA) with additional qualifications in both tax and treasury.  She is also a Chartered Director. She is an experienced finance director of quoted and private companies. Julie is also a non-executive director of Nottingham University Hospitals NHS Trust.
Alistair Milne Managing Director – Dillistone Systems Division <Alistair brought with him a background in marketing and management when he joined Dillistone in 2003.  He has worked principally in support and technical services within the business.

Directors are encouraged to keep their skills up to date by attending appropriate courses or by being members of other boards where new skills and ideas can be learned. The Board keeps under review the strength and depth of its senior management and encourages the divisional teams to ensure they have the skills required. Succession planning is currently not formally discussed but will be considered going forward as part of the Board appraisal process.

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

Application

The board should regularly review the effectiveness of its performance as a unit, as well as that of its committees and the individual directors.

The board performance review may be carried out internally or, ideally, externally facilitated from time to time. The review should identify development or mentoring needs of individual directors or the wider senior management team.

It is healthy for membership of the board to be periodically refreshed. Succession planning is a vital task for boards. No member of the board should become indispensable.

Compliance

The Group undertakes regular monitoring of personal and corporate performance using agreed Key Performance Indicators and detailed financial reports.

The Board has previously not formally evaluated its own performance. However work is underway under the leadership of the Chairman to address this. The first such evaluation is expected to be complete by the end of the year. Thereafter it is expected to be a process carried out internally every two years. The basis of assessment will be along the following lines including:

  • adherence to Group strategy
  • operational performance
  • cash flow and net assets
  • budgetary control
  • value created through acquisitions
  • and share price.


It will also evaluate its balance of skills, experience, independence and knowledge of the business, as well as its diversity.

The Board does not expect to undertake an annual independent evaluation as recommended by the Code. A two-yearly internal evaluation is considered appropriate given the smaller size of the Board and regular day-to-day contact between Board members. The Chairman and Independent Non-Executive Director prepare the board evaluation questionnaire and assessment criteria drawing on their experience of running evaluation programmes at other quoted companies.

Directors’ performance have informally been reviewed by the chairman annually. A formal annual review is currently being put in place.

The Board keeps under review the strength and depth of its senior management and encourages the divisional teams to ensure they have the skills required. Succession planning is currently not formally discussed but will be considered going forward as part of the Board appraisal process.

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

Application

The board should embody and promote a corporate culture that is based on sound ethical values and behaviours and use it as an asset and a source of competitive advantage.

The policy set by the board should be visible in the actions and decisions of the chief executive and the rest of the management team. Corporate values should guide the objectives and strategy of the company.

The culture should be visible in every aspect of the business, including recruitment, nominations, training and engagement. The performance and reward system should endorse the desired ethical behaviours across all levels of the company.

The corporate culture should be recognisable throughout the disclosures in the annual report, website and any other statements issued by the company

Compliance

Our corporate values of openness and respect, set by the Board, seek to promote good corporate behaviours. The Group operates in international markets and is mindful that respect of individual cultures is critical to corporate success.

Our corporate values of openness and respect, set by the Board, seek to promote good corporate behaviours. The Group operates in international markets and is mindful that respect of individual cultures is critical to corporate success.

The Group has undertaken a review of its requirements under the General Data Protection Regulation, implementing appropriate policies, procedures and training to ensure it is compliant. A senior member of executive team has a GDPR practitioner certificate and also an internal committee has been established to help manage risk and compliance. Legal advice was also sought.

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

Application

The Company should maintain governance structures and processes in line with its corporate culture and appropriate to its:

  • size and complexity; and
  • capacity, appetite and tolerance for risk


The governance structures should evolve over time in parallel with its objectives, strategy and business model to reflect the development of the company.

Compliance

The Board sets the Group’s strategic aims and ensures that necessary resources are in place in order for the Group to meet its objectives. All members of the Board take collective responsibility for the performance of the Group and all decisions are taken in the interests of the Group.

The Chairman leads the Board, while the Chief Executive Officer is charged with managing the Group’s business. The roles of the Chairman and Chief Executive Officer are distinct.

Board member Role Responsibilities
Mike Love Chairman Leads the Board
Giles Fearnley Senior Independent Director NED

Jason Starr

Chief Executive Managing the Group’s businesses
Rory Howard Operations director Responsible for operations at Dillistone Division including commercial contracts and insurance. He is also Group DPO
Alex James Director Responsible for the implementation of products and services GatedTalent and also projects director for Voyager Division.
Julie Pomeroy Finance director Group finance director and Company Secretary
Alistair Milne Managing Director – Dillistone Systems Division Responsible for the performance of Dillistone Division

BOARD COMMITTEES OVERSIGHT We have two main Board committees; an Audit Committee and a Remuneration Committee. The Board as a whole makes up the Nomination committee. Their responsibilities are summarised below:

Audit Committee

  • The Committee is made up of the 2 non executive directors and meets twice a year to consider the scope of the annual audit and the interim financial statements and to assess the effectiveness of the Group’s system of internal controls.
  • It reviews the results of the external audit, its cost effectiveness and the objectives of the auditor.
  • Given the size of the Group, the Audit Committee considers an internal audit function is not currently justified.


Remuneration Committee

  • It meets at least once a year to determine Group policy on senior Executive remuneration, to make detailed recommendations to the Board regarding the remuneration packages of the Executive Directors and to consider awards under the Group’s option schemes.
  • The Chief Executive Officer is consulted on remuneration packages and policy but does not attend discussions regarding his own package.
  • The remuneration and terms and conditions of the appointment of Non-executive Directors are determined by the Board.


While our divisions operate as separate units with areas of autonomy set by the Board, they are supervised by the Board through structured Divisional board meetings and reporting, which is fed into the Chief Executive Officer, and reported back into the Board meetings. Divisional boards normally meet monthly.

In 2017, a separate GDPR committee was formed and meets monthly. A Data Protection Officer has been appointed.

Further details of the Group’s corporate governance arrangements are provided within this Corporate Governance section of the website. The appropriateness of the Company’s governance structures will be reviewed as the Company evolves.

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

Application

A healthy dialogue should exist between the board and all of its stakeholders, including shareholders, to enable all interested parties to come to informed decisions about the company.

In particular, appropriate communication and reporting structures should exist between the board and all constituent parts of its shareholder base. This will assist:

  • the communication of shareholders’ views to the board; and
  • the shareholders’ understanding of the unique circumstances and constraints faced by the company.


It should be clear where these communication practices are described (annual report or website).

Compliance

The Board recognises its primary role of representing and promoting the interests of the Group’s shareholders. The Board is accountable to shareholders for the long-term performance and success of the Group. The Chief Executive Finance Director hold regular meetings with institutional shareholders and private client brokers to discuss and review the Group's activities, strategies and performance. Investor feedback from these meetings is provided by WH Ireland. The Chief Executive Officer and Finance Director also present interim and annual results through webinars open to all shareholders and members of the public, which has been well received. Questions are also encouraged at these sessions. For the majority of RNS announcements the Chief Executive also records an appropriate update to explain the announcement and again this is available to shareholders. The Chief Executive Officer and Finance Director also make themselves available to speak to potential institutional shareholders. These meetings and discussions give the Board an opportunity to gauge shareholder feedback and expectations.

A RNS is published after the AGM to announce the resolutions passed at the AGM. To date all AGM resolutions proposed have been passed; the Group has not experienced significant dissenting shareholder votes for resolutions proposed at the AGM (over 20%), including proxy votes.

In conjunction with the Group’s Nomad and other financial advisers we distribute news in a timely fashion through appropriate channels, to ensure that shareholders are able to access material information about the Group’s progress.

Regular newsletters are sent to customers and potential to keep them updated. Also LinkedIn groups have been formed which enable interested parties to have appropriate dialogues with the various business.

Monthly staff meetings are held in the divisions to keep them informed about developments in the business and for issues to be raised.

Details of RNS announcements and copies of annual and interim reports are contained within the accounts and RNS sections of the AIM Rule 26 area of our website.

Approved by the Chairman, Mike Love, and by the Board.