AIM Rule 26

Updated  30th July 2024:

THE BOARD

The Board is responsible for the governance of the Company, governance being the systems and procedures by which the Company is directed and controlled. A prescribed set of rules does not itself determine good governance or stewardship of a company and, in fulfilling their responsibilities, the Directors believe that they govern the Company in the best interests of the shareholders, whilst having due regard to the interests of other 'stakeholders' in the Group including, in particular, customers, employees and creditors.

The Board comprises, the Non-Executive Chairman J Haigh, the Chief Executive Officer; R M Fiorentino, the Financial Director; T Andreeva and one Non-Executive director S Naylor.

The Biographies of the Directors are set out on this website.  These show the range of business and financial experience upon which the Board can call.  The Board’s goal is to ensure that its membership should be balanced between Executives and Non-Executives and have the appropriate skills and experience and knowledge of the business.

CHAIRMAN

The Chairman is responsible for making sure that the Board agenda concentrates on the key issues, both operational and financial, with regular reviews of the Company's strategy and its overall implementation. The Chairman should ensure that the Board receives accurate, timely and clear information and there should be good information flows within the Board and its committees as well as between the non-executive director and senior management.

NON-EXECUTIVES

Non-executive Directors should be independent to be able to provide appropriate oversight and to perform their role. The non-executive Directors of the Company:

·         are required to commit an appropriate amount of time to the Company of approximately 15 days on an ongoing basis, including attendance at 12 Board meetings per annum of which 5 face to face meetings per year where possible, and on regular conference calls with the Board, and to be available to shareholders as required;

·         are appointed to the three Board committees with formal terms of reference;

·         satisfy themselves on the integrity of financial information and that financial controls and systems of risk management are robust and defensible;

·         are responsible for determining appropriate levels of remuneration of executive Directors and have a prime role in appointing and, where necessary, removing senior management and in succession planning;

·         uphold high standards of integrity and probity and support the chairperson and executive Directors in instilling the appropriate culture, values and behaviours in the Boardroom and beyond;

·         will receive high-quality information sufficiently in advance of Board and committee meetings, which is accurate, clear, comprehensive, up-to-date and timely;

·         have access to the Chief Executive Officer, the Finance Director and the Company's advisers;

·         are able to call upon independent professional advice at the Company's expense if they consider it necessary to discharge their responsibilities as Directors;

are expected to receive ongoing training and development; and

will have their performance assessed on a regular basis (along with the executive Directors).

The QCA guidelines acknowledge for growing companies it may not be possible for boards to meet the definition of “independence” for Non-Executive Directors, however it sets out that it is important for the board to foster an attitude of independence of character and judgement.

BOARD COMMITTEES

The standing committees of the Board are the Audit, Remuneration and Risk Committees. At the current time it is not felt that a Nominations Committee is appropriate given the size and scope of the company’s operations, with any tasks and responsibilities in respect to nominations being handled by the Board as a whole.

COMMITTEES OF THE BOARD

Audit Committee

The Audit Committee comprises J Haigh and is chaired by S Naylor, who is a ACA chartered accountant and has relevant financial experience. The Audit Committee reviews the external audit activities, monitors compliance with statutory requirements for financial reporting and reviews the half year and annual financial statements before they are presented to the Board for approval. The Audit Committee also keeps under review the scope and results of the audit and its cost effectiveness and the independence and objectivity of the Auditor and the effectiveness of the Group's internal control systems.

The Group does not have an independent Internal Audit function, as it is not considered appropriate given the scale of the Group’s operations.  However, the Group finance director acts largely independently of the operating subsidiaries, with a scope to evaluate and test the Group’s financial control procedures and standardise processes around best practice.  Any significant issues are reported to the Chairman of the Audit Committee and shared with the external Auditors as appropriate.

The Group Finance Director and the external Auditors attend meetings of the Audit Committee by invitation.  The Committee may also hold separate meetings with the external Auditors, as appropriate.

Remuneration Committee

The Remuneration Committee comprises of S Naylor and is chaired by J Haigh. Although not a member of the Committee, the Committee would normally consult the Chief Executive on proposals relating to the remuneration of members of the Group's senior management team, though never for matters related to his own remuneration package. The Committee, on behalf of the Board, determines all elements of the remuneration packages of the executive Directors and would also approve any compensation arrangements resulting from the termination by the Company of a Director's service contract.

Risk Committee

The Risk Committee comprises of J Haigh, T Andreeva, R Fiorentino and is chaired by S Naylor.

The primary objective of the Board Risk Committee is to assist the Board in overseeing the management of risk across the Group. This role is performed by ensuring that key risks are identified, and steps are taken by management to mitigate them within the risk appetite levels agreed by the board. Consideration is given to all significant matters relating to governance, control, regulatory and compliance issues. The identified risks and the reporting of the risk assessment is included in the annual report and accounts within the Strategic Report.

FREQUENCY OF MEETINGS

Where possible, the Board meets on a formal basis every month.  Relevant information is distributed to Directors in advance of the meetings.  The Board makes decisions on all material matters including long term and commercial strategy, annual operating and capital budgets, capital structure and financial and internal controls.

The Group has a formal schedule of matters reserved to the Board which is periodically reviewed and approved by the Board.

EVALUATING BOARD PERFORMANCE

The Board has a number of sources of information from which it judges its own performance and that of the individual Directors, and these include but are not limited to:

i.        financial performance indicators including, revenue, order book (including contract wins and losses), gross margin, net margin, earnings per share and cash flow;

ii.        the Company’s share price;

iii.        reports from external auditors;

iv.        shareholder feedback;

v.        customer feedback; and

vi.        employee feedback.

All these factors are considered, and action taken to improve performance as appropriate.

COMMUNICATION WITH SHAREHOLDERS

The Board attaches great importance to providing shareholders with clear and transparent information on the Group’s activities, strategies, and financial position, in addition to having regard to its obligations as a quoted public company and the AIM Rules.

The Group holds meetings with significant shareholders on a regular basis and regards the Annual General Meeting as a good opportunity to communicate directly with shareholders via an open question and answer session.

The Group lists contact details on its website should shareholders wish to communicate with the Board.  All announcements and results, including those released via RNS and RNS Reach, are available on the Group’s website.

INTERNAL CONTROLS

The Board reviews and approves an Annual Budget and Business Plan prior to the start of each financial year.  This includes reviewing the key strategic, operational and financial objectives for the year, together with a detailed financial budget.

The Executives are accountable to the Board for delivery of the Annual Business Plan.  The Executives report performance against the plan on a monthly basis, which includes detailed analysis of budgetary variances and updated financial projections.

To provide a framework for the delivery of the Group’s strategy and plans, the Board has developed an organisational structure with clear roles and responsibilities, and clear lines of reporting.

CITY CODE ON TAKEOVERS AND MERGERS

The Company is subject to the City Code on Takeovers and Mergers

QCA CORPORATE GOVERNANCE CODE

In accordance with AIM rule 26 the Company has adopted the QCA code and sets out below how it has adopted and complied with the QCA code.

1. ESTABLISH A STRATEGY AND BUSINESS MODEL WHICH PROMOTES LONG-TERM VALUE FOR SHAREHOLDERS

The strategy and business model of the Group is expressed more clearly in the Chairman’s Statement and the Strategic Report. In summary, the Group seeks to build a recognised brand that is synonymous with the provision of the highest level of security products and services. The Group is stringently focused upon delivering outstanding service delivery for all our clients, and in such a way that in time our clients can have all their security needs met by one service provider.

The values we adopt are largely driven on endeavouring to engage employees that can deliver a capable, well trained highly motivated service. We continue to believe that this approach will deliver market leading full-service security offerings to the top end of the corporate and residential markets, as well as leading public service providers such as utilities, hospitals and schools.

The business has a reasonable appetite for risk and we actively engage in developing new technologies to assist our service provisions even where such new technologies have a long development phase.

Our markets are highly regulated, audited and accredited by a number of regulatory bodies, including the NSI, BAFE, MLA and CHAS, all of which require our Board and operational employees to be personally regulated, thus adding to the maintenance of the values and standards we operate to.

2. SEEK TO UNDERSTAND SHAREHOLDER NEEDS AND EXPECTATIONS

The Group seeks to maintain a dialogue with its shareholders in order to communicate the Group’s strategy and results and to understand the needs and expectations of its shareholder base.

The Board is aware of the need to protect the interests of minority shareholders, and balancing those interests with those of any more substantial shareholders.

Beyond the Annual General Meeting, the Executives seek to meet with all significant shareholders after the release of the half year and full year results. The Chief Executive is the primary points of contact for the shareholders and is available to answer queries over the phone or via email from shareholders throughout the year.

3. TAKE INTO ACCOUNT WIDER STAKEHOLDER AND SOCIAL RESPONSIBILITIES AND THEIR IMPLICATIONS FOR LONG-TERM SUCCESS

The Directors are aware of the impact that its business activities have on the communities in which the Group's businesses operate, and is aware of its corporate responsibilities to its stakeholders including staff, suppliers, customers and the wider society. The Group endeavours to take into account feedback received from stakeholders, by making amendments to its business plans and operations as appropriate.

The environmental impact of the Group's activities is carefully considered and the maintenance of high environmental standards is a key priority.

The Board endeavours to create a platform for delivering a high-quality service and this requires us to utilise best in class suppliers (such as iLOQ, Hitachi, Assa Abloy, and Bosch), for customers who appreciate and therefore pay for a higher level of service, and a workforce that is trained to the highest standards to always give of its best.

We constantly solicit feedback from all stakeholders, some of which is on the website of the Company in terms of customer experiences, and supplier confidence in us and in our operations.

Our customers are of course pivotal to the success of our business. Through our sales and operations teams, we endeavour to supply a knowledgeable and targeted service. Our security solutions are tailored to exactly meet our client’s requirements. We are well placed to meet our customers security needs by bringing all the skills across our divisions together to provide a one-stop solution.

We operate an open-door policy and employees can speak and engage with senior management or the Board about issues or ideas.

We have a formal induction and appraisal processes for new and existing employees.  We have a web-based employee portal primarily used for scheduling holidays and access to company policies and information.  This portal undergoes continuous development.  We also have a cross company integrated email system and utilise video conferencing software for collaboration between stakeholders internally and externally.

4. EMBED EFFECTIVE RISK MANAGEMENT, CONSIDERING BOTH OPPORTUNITIES AND THREATS, THROUGHOUT THE ORGANISATION

The Board has overall responsibility for the systems of risk management and internal control and for reviewing their effectiveness. The internal controls are designed to manage rather than eliminate risk and provide reasonable but not absolute assurance against material misstatement or loss.

The Board has established Audit, Risk and Remuneration Committees, a summary of which is set out above, and in this Corporate Governance section.

The Group maintains appropriate insurance cover in respect of actions taken against the Directors, as well as against material loss or claims against the Group. The insurance cover in place is reviewed on a periodic basis.

5. MAINTAIN THE BOARD AS A WELL-FUNCTIONING, BALANCED TEAM LED BY THE CHAIR

The Board, the identities and biographies, the Board committees and the timing of Board meetings and a detailed summary of attendances at those meetings is considered in the Strategic Report, the Directors’ Report and elsewhere in the Accounts.

The Board considers that both its non-executive Directors are independent and that they have the time necessary to be able to provide rigorous challenge to the executive Directors when necessary as well as support as needed.  Nevertheless, guidance on time served by non-executives and the expansion in the business means the Board keep this under review.

The Board considers itself sufficiently independent. The QCA Code suggests that a board should have at least two independent non-executive Directors. The Board have considered each non-executive Directors’ length of service and interests in the share capital of the Group and consider that J Haigh and S Naylor are independent of the executive management and free from any undue extraneous influences which might otherwise affect their judgement. All board members are fully aware of their fiduciary duty under company law and consequently seek at all times to act in the best interests of the Company as a whole.

6. ENSURE THAT BETWEEN THEM THE DIRECTORS HAVE THE NECESSARY UP-TO-DATE EXPERIENCE, SKILLS AND CAPABILITIES

Directors who have been appointed to the Company have been chosen because of the skills and experience they offer and their personal qualities and capabilities. Full biographical details of the Directors are included under “the Directors biographies” section of the website which give an indication of their breadth of skills and experience.

The Board regularly reviews the composition of the Board to ensure that it has the necessary breadth and depth of skills to support the ongoing strategy of the Group.

All members of the Board are encouraged to attend management development courses.  The Board is rigorous in reviewing the performance of each of its Directors and where there are actions that need to be taken, the Board is proactive in carrying out what needs to be done.

7. EVALUATE BOARD PERFORMANCE BASED ON CLEAR AND RELEVANT OBJECTIVES, SEEKING CONTINUOUS IMPROVEMENT

The non-executive Directors monitor the personal and corporate performance of the Chief Executive, including asking the Company’s senior management, auditors, and other advisors to report on his performance.

The Executives participates in an annual performance related bonus arrangement. As soon as reasonably practicable after the announcement of the preliminary results or the publication of the accounts of the Company for each financial year, the Remuneration Committee considers the performance of the Company and the Executives in that year against relevant targets and then, in its absolute discretion, determines the value of any bonus to be received by the Executives in respect of that year.

Succession planning is considered by the entire Board. The Board recognises the importance of considering succession planning, and each division has a leader and deputies, who are able, effectively, to step into the shoes of the leader.

The Chairman will conduct an effectiveness review by means of a questionnaire, with comment on the Chairman passed to the Non-Executive Director. Comments will also be made on non-executive Directors and the Committees’ effectiveness. The results of this exercise will be reviewed and individual feedback will be provided for each of the Directors, and the Board as a whole. Feedback will be provided by the Chairman in respect of assessments of each of the other Directors and the Board as a whole, and by the Non-Executive Director to the Chairman himself.

The outcome of the appraisal is to assess if the Board has been effective in discharging its duties during the year and it will be formally discussed at a Board meeting, with conclusions in the areas of major shareholder representation in the Board, how the NEDs interact with the Board, the development of strategy and the presentation of recommendations to the Board.

8. PROMOTE A CORPORATE CULTURE THAT IS BASED ON ETHICAL VALUES AND BEHAVIOURS

The Company has no formal values statement but the business is still driven by a guiding set of principles or ways of behaving and doing business. The Group is focused on principled performance, and transparent reporting from the businesses to the Board, and from the Board to the Shareholders and advisors through regular meetings, presentations, the Annual Report and at the Annual General Meeting.

Senior management are encouraged to take personal responsibility for achieving the Group’s objectives and to act with openness, integrity and trust. Staff are encouraged to ask for help, admit to their mistakes and put things right. The Group does not operate a blame culture. The non-executive members of the Board are encouraged to have open dialogues with senior management around the Group about their opinions and concerns.

Senior management across the organisation are comfortable coming forward with legal, compliance, and ethics questions and concerns without fear of retaliation at the frequent subsidiary level Board meetings, which are all attended by the Chief Executive and the Finance Director.

The Group recruits and screens employees based on integrity, as well as competence. Employees are well-treated when they leave or retire.

The Group has in place an anti-bribery policy and an anti-slavery policy which are both reviewed at appropriate intervals.

9. MAINTAIN GOVERNANCE STRUCTURES AND PROCESSES THAT ARE FIT FOR PURPOSE AND SUPPORT GOOD DECISION-MAKING BY THE BOARD

The Board has overall responsibility for the strategic direction and performance of the Group. The executive Directors have day-to-day responsibility for the operation of the Group’s businesses and implementing the strategy of the Board.

The Board meets once a month. The Board is provided with detailed financial reports of the Group's financial performance on a regular monthly basis with more frequent updates if required. Detailed written reports are provided one week prior to the Company's Board meetings. Written recommendations from the executive Directors are delivered in a timely manner with supporting documentation, supplemented as required by reports from external professional advisers so that the Board can constructively challenge recommendations before making decisions.

The Company’s auditors report on the financial controls in detail at the Audit Committee meeting.

The Chief Executive Officer is the primary points of contact for the shareholders and is available to answer queries over the phone or via email from shareholders throughout the year.

The Group has an Audit, Risk and Remuneration committee. The Audit Committee comprises J Haigh and is chaired by S Naylor. The Remuneration Committee comprises S Naylor and is chaired by J Haigh. The Risk Committee comprises J Haigh, T Andreeva, R Fiorentino and is chaired by S Naylor.

Formal terms of reference have been agreed for Board Committees. The responsibilities of each of these have been summarised below:

Audit Committee

To meet at least twice a year and otherwise as required, with the external auditor in attendance
Appointment of external auditors
To agree the nature and scope of the audit with the external auditors
To review the effectiveness of Company's internal control framework,
To review effectiveness of the Company's risk management framework
To review the annual financial statements, and challenge where necessary, the actions and judgements of management in relation to these; and
To attend the Annual General Meeting to answer any shareholder queries

Remuneration Committee

To set the remuneration for the Board including basic pay, any bonus basis and awards and participation in share incentive schemes.
To agree the terms of employment of all Board members, including those on cessation of employment, ensuring all payments are fair to both the employee and the Company.
To continue to review the appropriateness of the remuneration policies, with reference to the conditions across the Group and up-to-date information in other companies.
To ensure that all requirements on the disclosure of remuneration are fulfilled
To meet at least twice a year and otherwise as required
To attend the Annual General Meeting to answer any shareholder questions on the Committee's activities

Risk Committee

Consider and challenge the effectiveness of the business and recommend any changes to the Board.

Consider, review and approve the overall Risk Appetite, Risk Attitude and Risk Strategy.

Oversee and monitor current risk exposures and emerging/future risk strategy.

Ensure that the processes for managing risks are fit for purpose and implemented appropriately by management.

Monitor the Group most significant risk exposures.

10. COMMUNICATE HOW THE COMPANY IS GOVERNED AND IS PERFORMING BY MAINTAINING A DIALOGUE WITH SHAREHOLDERS AND OTHER RELEVANT STAKEHOLDERS

The Board offer to meet with all significant shareholders after the release of the half year and full year results, and encourage all shareholders to attend and ask questions of the Board as a whole at the Annual General Meeting.

The Chief Executive is the primary points of contact for the shareholders and is available to answer queries over the phone or via email from shareholders throughout the year.

There is a strong focus on transparent reporting in the half year interim results and annual report, including the challenges faced by the Group both in the reporting periods and in the future.

The Group’s website is regularly updated. The Group’s financial reports and Annual Reports, Notices of the General Meetings of the Company can be located under the “Company Documents” section of the website.

The results of voting on all resolutions at future general meetings will be posted to the Group’s website, including any actions to be taken as a result of resolutions of which votes against have been received by a significant proportion of votes.

The Group includes a remuneration committee report and audit committee report in the Annual Report.