CORPORATE GOVERNANCE

Chairman’s introduction

The Board has adopted the Quoted Companies Alliance (QCA) Corporate Governance Code.  The Board considers that good corporate governance is essential to achieve the long-term success of the Company.    

My primary role as Chairman is to lead and manage the Board, which is separate from and independent to the role of the Chief Executive.   

The role of the Board is to ensure that the Company is managed for the long-term benefit of all our stakeholders, and that the Board executes well-informed and high-quality decision making.  Corporate governance is a critical part of this, ensuring that the Company has the appropriate structures and culture in place to achieve long term success.  As Chairman, I lead engagement with stakeholders, including shareholders, to ensure that their views are understood and represented in our oversight of the Company.  Our Chief Executive, Finance Director and I regularly meet with our shareholders and feed back both operational and governance matters as part of the Board’s agenda.  We maintain a regular dialogue with the Company’s nominated advisor, FinnCap Ltd, and obtain other external advice, as necessary, to ensure compliance with governance requirements.   

We continually review our approach to corporate governance and structures in place, ensuring that these are appropriate for the business.  During the year we have increasing formalised our corporate governance procedures and structures.  The role of Company Secretary is currently held by an Executive Director.  This position is kept under constant review. The Board considers that the size and nature of the Company means that the two roles can be undertaken effectively by the Finance Director.  Whilst the Finance Director is also Company secretary, if it is ever felt there was a conflict of interest this would be referred to the Chairman.   

     

Lord Daresbury
Chairman
Business Model and Strategy

Nasstar specialises in building bespoke cloud hosted services to manage a client’s entire application set, tailor made to suit specific industries, designing public, private and hybrid cloud solutions to meet the needs of the client. 

Our mission is to achieve success by delivering hosted managed services and cloud computing services by knowing our customers and understanding their needs, harnessing technology, inspiring our people and invoking the power of partnership. 

Our vision is to lead our clients to the best solutions for their current and future needs, and to set the benchmark for customer service in our industry.  This enables our clients to focus on their business whilst we manage their IT.     

Our strategy is to protect and grow the business, seeking to grow organically and through acquisition in a controlled manner, protecting and nourishing the existing customer base. This will deliver shareholder value, in terms of growth of share price and dividends, through an increase in recurring revenue, identification and timely realisation of synergies relating to acquisitions, and the growth and retention of market share in our chosen industry segments by being at the forefront of technological advances.    

 

Acquisition

Our acquisition strategy has historically been to add to our service portfolio capability to deliver an end to end managed service.  The Group now has the capacity to deliver an end to end managed service such that future acquisitions would likely be for growth in key industry sectors, building new client relationships and associated recurring revenue streams. The key challenges in the execution of our acquisition strategy are the identification of suitable businesses and ensuring that the acquisition will deliver shareholder value and return. The Group seeks to structure acquisitions to ensure that there is continued investment in the Group to deliver shareholder value and return.

 

Organic growth

We have invested heavily in developing the skills and know-how to service the legal and recruitment sectors, which represent circa 50% of revenue, to enable us to lead our clients to the best solutions for their current and future needs.  We are now using these skills to replicate our success in further industry sectors to achieve our strategy for organic growth. The increased competition in the market, with more businesses moving into provision of managed services, is a key challenge for the business in terms of achieving organic growth.  The Group has recently appointed a Head of Customer Development Management (CDM).  This appointment and the growth of the CDM team provides the resource to maintain and service the existing customer base and ensure that the best solutions are identified for our customers evolving IT requirements.  We have also recently won several large customers, providing recognition of our ability to meet the requirements of both SME’s and larger corporate businesses.  

 

Technology

Our technology enables us to offer our customers both public and private cloud solutions. Our hybrid cloud solution, integrating both public and private cloud, enables our customers to benefit from scalability of public cloud platforms.  Our strategy is to continually invest in and enhance our technology to enable us to provide the best solutions for our clients and enhance the performance of their IT.  The key challenges in the execution of our technology strategy are the recruitment and retention of key personnel, ongoing training of our people and keeping abreast of new technology in the market place.  We mitigate these challenges through a dedicated R&D team and CDM team who together ensure we are developing and offering the best solutions for our clients and markets. 

The business model underpinning our strategy is to create and maintain long standing relationships with clients and to add more value to our clients through delivery of additional services to meet their changing needs as their businesses evolve and grow. The focus is on providing our managed IT and bespoke cloud services to key strategic sectors; recruitment, legal, financial services, property services, not-for-profit/education, media and energy/logistics.  

 

Our values

The values of the company, which underpin the culture, are consistent with the company’s objective, strategy for long term growth, business model, principal risks and uncertainties.  Our five values are:    

  1. Working together: We always start and end a project as a team, we proactively support each other in our endeavours and we leverage our collective genius through Group mind share.

  2. We make time to value the contributions our people make, listen to our customer's views and our partner's expertise when integrating new technologies. We work together with customers and suppliers as partners to deliver our service to the end user.

  3. Always innovating: We are restless in our quest to constantly improve upon what we do in the solutions and services that we offer, and we are always searching for ways to innovate.

  4. We are focused on listening to those who use our solutions and we consistently support our knowledge acquired through internal research, development and training programmes.

  5. Talking business sense: We work hard to understand our customers and their markets. We aim to deliver on our promises, whilst striving for optimum efficiency in the way we deliver them.

  6. Safeguarding our future: We work towards controlled growth and regular investment to safeguard our future. We allocate a substantial portion of our capital to invest in our people and technology, whilst continuously managing for quality.

  7. Inspiring through leadership: We proactively share our opinion, analysis & knowledge with others. We are the change we seek, we empower our people to deliver success, and value their contributions.


The Board monitors and promotes a healthy corporate culture through regular engagement with its employees. This includes the use of an internal communications platform which is used by Executive Team to promote and support the values of the company. 

The values of the company are visible across the business and form a crucial element of recruitment, nominations, training and employee engagement. Quarterly performance reviews include consideration of application of company values and ethical behaviours, to ensure that these are recognised.  Ethical values and behaviours are encouraged through initiatives such as “employee of the month”, which is focused on employees embracing and promoting the company values.  

 

Shareholder engagement

The company engages with shareholders through a variety of forums including the Annual General Meeting (AGM), meeting with the main investors bi-annually and publication of key annual and half yearly financial reports on the company website.  The company has recently appointed specialist Investor Relation consultants to ensure that we are engaging with all shareholders, and not just the major shareholders.  We also engage with all shareholders through ‘Directors Talk’, a news channel hosted by IFC Advisory Limited, specifically aimed at individual investors who do not attend the bi-annual meetings.  

Shareholder liaison and engagement is undertaken by Lord Daresbury (Chairman), Nigel Redwood (Chief Executive Officer) and Niki Redwood (Finance Director), who meet with investors on a bi-annual basis.  Nigel Redwood regularly presents updates on the business strategy and trading updates which are available on both the company website and Proactive Investors website.  These forums serve as a helpful adjunct to our Regulatory Statements helping to facilitate the management of shareholder expectations by providing a further background on the business and future strategy, in addition to providing shareholders with the opportunity to raise any issues.    The investors section of the company website also provides a form for investors to contact the company directly.   

The views of shareholders are regularly communicated back to the main Board, including reports setting out the motivation behind shareholder voting decisions, feedback from FinnCap (our Nominated Advisor) on the bi-annual meeting with main investors and other forms of shareholder engagement.  This ensures that the Board can develop a good understanding of both the needs and expectations of its shareholders and ensure that any concerns are addressed. 

 

Annual General Meeting (AGM)

The AGM gives the Directors the opportunity to present and discuss with shareholders the company’s performance, strategy and to listen and respond to any questions from shareholders. All the proposed resolutions below were passed at the AGM. 

Proposal                     

Accept Annual Report and Financial Statements                 

Re-appointment of KPMG LLP as auditors                

Authorise the Audit Committee to determine the remuneration of the auditors               

Authorise issue of equity with pre-emptive rights               

Authorise issue of equity without pre-emptive rights                      

Approve final dividend                       

The company did receive a copy of a report which recommended shareholders voting against the acceptance of the Annual Report and Financial Statements. The company is taking the following actions as a result of the recommendations in this report:

  • Providing enhanced disclosures to explain Board assessment of independence of non-executive directors;

  • Disclosing details on Board and Committee meetings and attendance, on its website and within Annual Report and Financial Statements;

  • Providing enhanced disclosures on remuneration policy for executive directors; and

  • Explanation of the Board rationale for dual role of Finance Director & Company Secretary, and how we would mitigate any conflicts with this dual role.

 
Engagement with other stakeholders

The business model identifies key relationships to the long-term success of the company as its clients, suppliers and employees.  The company engages with each of these key stakeholders and seeks to obtain feedback from them in a variety of methods.  The Board reviews the feedback from these key stakeholders on an ongoing basis.         

 

Clients

The company seeks to understand the needs of its customers through several forums including an annual stakeholder forum, direct contact with individual customers by the Customer Development Management team and customer surveys.  The results of the stakeholder forums are collated and actioned on a timely basis.   

 

Suppliers

The company has processes in place to obtain feedback from its key suppliers.  Nasstar is an accredited Microsoft Gold Partner, making the relationship with Microsoft key to the ongoing delivery of strategy and success of the company.  Nigel Redwood is responsible for the relationship with Microsoft and obtaining feedback from this key stakeholder. The Head of Commercial Strategy and Product Development Department is responsible for other supplier relationships. The strong relationship that the company has with Microsoft provided the platform to successfully transition to and deliver Office 365 to our customers.  

 

Employees

The company recognises that retention of employees is key to the success of the business and its strategy. The Board identifies the needs, interests and expectations of its people through several forums, including company updates, performance reviews and the use of weekly employee surveys which provide its people with the opportunity to raise issues and ask questions to the Executive Management Team.   As a result of feedback from its employees, the company has adopted several initiatives including “employee of the month” and monthly company meetings.  

 
Key resources to deliver strategy

The key resources on which the business relies to deliver its strategy are its people and technology. The company is committed to retaining its people and ensuring that they are effectively utilised in the delivery of the company’s strategy.  In terms of technology, the company has both R&D and technical teams that identify and develop innovative technology.  This enables the Group to be at the forefront of technological advances and can best serve the needs of its clients.   

The company has invested in a health and wellbeing strategy this year.  Training schemes and apprentice schemes are also operated to ensure continued employee career development. 

 
Risk Management

The Board identifies the opportunities and threats to the business through their knowledge of the industry and their chosen target markets.  Underpinning this, all levels of management are responsible for the identification of threats and opportunities, with reporting to the Board through management meetings.  The identified threats and opportunities considers the extended business, including key supplier relationships. 

The company maintains a risk register setting out the operational risks to the business and how these are to be mitigated.  The risk register is formally reviewed quarterly by senior management and annually by the Board.

The Board continually reviews risks and threats to the business to ensure that appropriate mitigating steps are taken to address risks and that opportunities are pursued.  The Board seeks assurance that the risk management and related control systems in place are effective as part of the annual review of the risk register.  The Group are externally audited under ISO27001 which the directors consider to be a valuable additional control tool of the business. 

 
Board

The Board comprises Lord Daresbury Non-Executive Chairman, Nigel Redwood Chief Executive Officer, Niki Redwood Finance Director & Company Secretary, Mike Read Non-Executive Director and Nick Bate Non-Executive Director.  The Board is supported by the Audit Committee and Remuneration Committee.

The Board considers that it has a balance of appropriate experience, personal qualities and capabilities to achieve the strategy of the Group and achieve long term shareholder value.  

 

Responsibilities of the Chairman and Chief Executive Officer

The Board has a clear division of responsibilities between the Chairman and the Chief Executive Officer. The Chairman is responsible for the leadership of the Board and their effectiveness.  The Chairman is also responsible for ensuring that there is effective communication with shareholders, and chair’s Board and Annual General Meetings. 

The Chief Executive Officer is responsible for the day to day management of the business, in line with the strategy and long-term objectives agreed by the Board.  The Chief Executive Officer may make decisions in matters affecting the operations, performance and strategy of the Group, except for matters specifically reserved for the Board or delegated by the Board to its sub-committees. 

 

Role of the Chairman

The principal role of the Chairman is to lead and manage the Board.  The Chairman sets the agenda for the Board which is focused on key operational and financial issues, review of the company strategy and its implementation. The Chairman is responsible for ensuring that the Board is effective in the delivery of the Company strategy, drawing on the skills, qualities, characteristics and experience of the Board.    

The Chairman is responsible for managing Board meetings, ensuring that that Board receives accurate, timely and clear information.  This enables the Board to monitor performance, make well-informed and high-quality decisions which promote the success of the Company. 

The Chairman’s role encompasses the promotion of high standards of corporate governance within the Company. 

 

Role of Chief Executive Officer

The role of the Chief Executive Officer is to lead the development and implementation of the Company’s strategy, vision and mission.  The Chief Executive Officer has oversight of corporate governance matters, ensuring the structures are appropriate for the Company.  The Chief Executive Officer ensures that the Board is updated with operation performance, risks and other issues to ensure that the business remains aligned with the strategy.   

 

Board skills and experience 

Lord Daresbury Non-Executive Chairman

Peter was appointed Chairman in 2005. He is also Chairman of Haydock Racecourse Company Limited, and Auriant Mining. Peter was Non-Executive Chairman of De Vere Group plc, a company he first joined in 1977 and of which he became Chief Executive in February 1997.

Peter has a degree from Cambridge University and Sloan Fellowship from London Business School. Peter has led and built numerous Boards, focusing on developing the Boards as an effective team and working group to deliver the strategy of the respective business.     

 

Nigel Redwood Chief Executive Officer

Nigel has a First-Class BA in Business Studies.  Nigel has worked in the IT sector since 1996 and specifically with cloud computing since 2002.  He has experienced first-hand the evolution of the technical sector.

Nigel has held company directorships since 1998 and continues to develop his leadership techniques as the company grows, learning and developing through his relationships with industry peers and NED’s.

Nigel has led the acquisition and integration of several businesses.  He has developed the skills and experience required to lead the integration, consolidation and synergy recognition of acquired businesses. 

Nigel maintains his skill set through a combination of on the job training and mentoring from Non-Executive Directors and Industry Peers.  Nigel works with and has a close relationship with FinnCap Ltd, the Company’s Nominated Advisor.     

 

Niki Redwood Finance Director & Secretary

Niki has a BSc in Mathematical Sciences from Bath University.  Niki qualified as an ACA in 1995, winning regional prizes in both her intermediate and final exams.  Niki became an FCA in 2008.  Prior to joining the company in 1999, Niki worked in external audit within KPMG providing her with exposure to a wide range of businesses.  Niki is an experienced finance professional, having spent 20 years’ in the industry.     

Niki is required to undertake continued professional development as part of her membership of the ICAEW, including an annual confirmation that her skills are up to date. Niki keeps abreast of upcoming changes in AIM rules, accounting standards and company law to ensure that she maintains her skills and knowledge.  Niki also utilises her extensive network of professional advisers and contacts to ensure she continually builds and maintains the skills required for her role. 

As Company Secretary, Niki advises the Board on legal and regulatory compliance matters. Niki supports both the Chairman of the Board and respective Chairs of sub-committees in the preparation and running of meetings.  In addition, Niki ensures that good governance procedures are in place within the business.   

 

Mike Read Non-Executive Director

Mike has over 30 years’ experience in the telecommunications and internet industries.   He has held Board and senior management level positions within several organisations both within the US and UK.  Mike has extensive experience in Mergers and Acquisitions, raising funds and growing shareholder value. He is also a Chartered Engineer with an MBA. 

Mike’s key skills and capabilities that he provides to the Board are in respect of IT security and Mergers and Acquisitions.  Mike keeps his skill set up to date through his other roles, and through regular discussions with both shareholders and outside influencers. 

 

Nick Bate Non-Executive Director

Nick Chairs, and serves as a Non-Executive Director of, a range of public, private and PE-backed businesses involved in the supply of IT, data and cloud services to the professional and financial services, manufacturing and recruitment sectors. 

Nick qualified as ACMA in 1989 and has more than 30 years executive experience within multiple public and private businesses. Nick has been involved in over thirty corporate transactions over the past 16 years including acquisitions and corporate refinancing. Nick utilises a strong professional network, including senior management colleagues and advisors.    

Nick keeps his skills set up to date by maintaining ongoing relationships with both Finance and Legal Professional Advisors, extensive reading of upcoming developments in both finance and legal frameworks, and attendance at seminars and events.   

Nick is the Senior Independent Director.  Nick advises and supports the Board through his input at both Board and Committee meetings. 

 

Responsibilities of the board

The Board is responsible for determining the strategy to delivery sustainable shareholder value.  This includes determining the risk tolerance and risk appetite of the Group and ensuring that there is an effective risk management framework in place.  The Board provides guidance and oversight to the business operations that assume responsibility for implementing the strategy.  The Board oversees the financial performance of the Group and is also responsible for corporate governance and setting the tone from the top. The Board undertakes an annual review of the corporate governance structure, including whether an internal audit function is required.  Other matters specifically reserved by the Board for its consideration include: 

  • Approval of expenditure over £250,000;

  • Acquisitions;

  • Appointment and resignation of directors;

  • Appointment of certain senior employees; and

  • Approval on Interim Statement and Annual Report & Financial Statements.

 

Board independence

The Board considers the Non-Executive Directors to be independent of management and free from any other business relationships that could materially interfere with the exercise of their independent judgement.   Mike Read has involvement with Falanx, a supplier of the company, but his involvement is not considered to impair his independence and clear demarcation of the relationship between the company’s dealings with Falanx is implemented.  Non-Executive Directors were granted share options when the company listed on AIM by undertaking a reverse take-over in 2014, these share options are not considered to be of sufficient magnitude to impact independence.  These share options were granted to align the Non-Executive Directors with the interests of the company and shareholders.  No options have subsequently been granted to the Non-Executive Directors. 

 

Board meetings

All directors are required to attend Board meetings, with the Board meeting at least 10 times a year (excluding the AGM).  The Board members ensure that they have fully reviewed and considered all agendas and reports prior to any Board meeting to facilitate full discussion of all matters at Board meetings.  The Board considered that the time commitment of directors is appropriate to the Board agenda, Board reports and operations of the company.   

Formal agendas and reports are provided to the Board and Committees in a timely fashion in advance of the meetings to ensure that the directors are sufficiently briefed on matters to be discussed. 

The Board has held 8 scheduled meetings and calls between January and September 2018.  Individual attendance is set out in the table below.

table-1

The AGM is attended by at least Lord Daresbury, Nigel Redwood and Niki Redwood.    

 

External advice

During the year, the Board and Audit Committee have sought advice from external advisers on the implementation of IFRS 15 Revenue from contracts with customers, IFRS 16 Leases and the QCA Corporate Governance Code.  The role of the external advisers on each of these areas is set out below. 

  • IFRS 15 Revenue from contracts with customers – external advisers were engaged to advise the Board and Audit Committee on the impact of adoption of the new standards on the business, in additional to drafting disclosure of the impact of adoption of the new standard, revenue accounting policy and disclosures to be included in Annual Report & Financial Statements.

  • IFRS 16 Leases – external advisers were engaged to calculate the impact on initial recognition and subsequent accounting periods for leases held at 1 January 2018, being the date of transition to the new standard. In addition, the advisers drafted the disclosure of the impact of adoption of the new standard, in addition to the lease accounting policy to be included in Interim Statement and Annual Report & Financial Statements.

  • Corporate Governance – external advisers have been engaged to assist the Board with the disclosures required in both Annual Report & Financial Statements and company website to ensure compliance with the QCA Corporate Governance Code.

 

Board evaluation

The Board reviews the structure of the Board and Committees regularly to ensure that they have the necessary skills to direct the business and implement the strategy.  The review of the board includes both Executive and Non-Executive Directors. 

The Chairman undertakes a continual review of the Board, to ensure that it is effective and that the members have the necessary skills and expertise to deliver the Company’s strategy, including succession planning.    

 

Audit Committee

The Audit Committee comprises Nick Bate as Chair and Mike Read. The Audit Committee is responsible for: 

  • Reviewing half-year and annual results before their submission to the Board.

  • Monitoring controls that are in force to ensure the integrity of information reported to shareholders.

  • Consideration of the continued appointment of the external auditors, their fees, terms of engagement and independence, including the appointment of the auditors to undertake non-audit work.

  • Liaising with the external auditors in relation to the nature and scope of the audit and key audit focus.

  • Reviewing any comments and recommendations received from the external auditors.

  • Reviewing the cost-effectiveness, independence and objectivity of the external auditors.

The terms of reference for the  Audit Committee are available for download.  

The Audit Committee has held 2 scheduled meetings between January and September 2018.  Individual attendance is set out in the table below.

table-3

The Finance Director was invited to attend all meetings in the period. 

During the year, the Audit Committee has undertaken the following activities:

  • Planning and review of 2017 financial statements.

  • Review of half-year results and trading updates.

  • Overview of IFRS 15 (Revenue from contracts with customers) project and subsequent conclusions.

  • Overview of IFRS 16 (Leases) project and subsequent conclusions.

  • Overview of IFRS 9 (Financial instruments) project and subsequent conclusions.

  • Consideration of external auditors’ report on half-year results.

  • Overview of application of the requirements of QCA Corporate Governance Code

  • Consideration of an internal audit function.

 

Remuneration Committee

The Remuneration Committee comprises Lord Daresbury, Nike Bate and Mike Read as Chair. The Remuneration Committee is responsible for:

  • Reviewing the performance of the executive directors.

  • Setting the scale and structure of executive director remuneration, paying due regard to the interests of shareholders and the performance of the Group.

  • Determining the allocations of any share options.

The terms of referene for the Remuneration Committee are agvailable to download.

The Remuneration committee has held 1 scheduled meeting and 3 calls between January and September 2018. Individual attendance is set out in the table below:

table-2

 

During the year, the Remuneration Committee has undertaken the following activities:

  • Review and determination of remuneration for Executive Directors, including salary, bonus and share option awards.

  • Review and approval of award of share options for employees.

  • Review of Executive remuneration policy and consideration of whether current policy remains appropriate.

 

Policy on Executive Director Remuneration

The Group’s current and ongoing policy aims to ensure that executive directors are rewarded fairly for their individual contributions to the Group’s overall performance and is designed to attract, retain and motivate executives of the right calibre. The Committee is responsible for recommendations on all elements of executive remuneration including basic salary, annual bonus, share options and any other incentive awards. In implementing the remuneration policy, the Committee has regard to the achievement of the Group’s strategic objectives, both in the medium and long term. The Committee determines the Group’s Policy on executive remuneration with reference to comparable companies of similar market capitalisation and size. 

 

Basic Salary

The basic salaries of executive directors are reviewed annually having regard to individual performance and position within the Group and are intended to be competitive but fair using information provided from both internal and external sources.

 

Performance Related Annual Bonus

Executive directors are eligible for a performance related bonus based on Group performance, including achievement of profit and other targets.  The performance related annual bonus forms a significant part of the level of remuneration considered appropriate by the Committee. In addition to the formal bonus scheme, the Committee has the discretion to recommend the payment of ad hoc awards to reflect exceptional performance.

 

Share options

Executive directors are granted share options periodically to align their interests with those of the shareholders.  The last share option grant to directors was in May 2018.  

 

Pensions

Company contributions are made to the executive directors’ personal pension schemes up to a maximum of 15% of basic salary.

 

Benefits

Benefits comprise car allowance, private healthcare and critical illness cover.

 

Service Contracts

The Executive directors have contracts with a term of 12 months and notice period of 12 months. 

Information last updated 24/09/2018