Overview and statement of compliance
All members of the board believe strongly in the value and importance of good corporate governance and in our accountability to all 21st Century Technology plc (21st) stakeholders, including shareholders, staff, clients and suppliers.
In the statement below, we explain our approach to governance, and how the board and its committees operate.
The corporate governance framework which the group operates, including board leadership and effectiveness, board remuneration, and internal control is based upon practices which the board believes are proportional to the size, risks, complexity and operations of the business and is reflective of the group’s values. Of the two widely recognised formal codes, we have decided to adhere to the Quoted Companies Alliance’s (QCA) Corporate Governance Code for small and mid-size quoted companies (revised in April 2018 to meet the new requirements of AIM Rule 26).
The QCA Code is constructed around ten broad principles and a set of disclosures. The QCA has stated what it considers to be appropriate arrangements for growing companies and asks companies to provide an explanation about how they are meeting the principles through the prescribed disclosures. We have considered how we apply each principle to the extent that the board judges these to be appropriate in the circumstances, and below we provide an explanation of the approach taken in relation to each. The board considers that it does not depart from any of the principles of the QCA Code.
Board composition and compliance
The QCA Code requires that the boards of AIM companies have an appropriate balance between executive and non-executive directors of which at least two should be independent. During the period under review we have met this requirement and will maintain it in the future.
We have supported the QCA Code’s principle to review regularly the effectiveness of the board’s performance as a unit, as well as that of its committees and individual directors. I led the most recent review in 2017 following the resignation of our previous CFO and the appointment of Nick Lowe. We will be considering the use of external facilitators in future board evaluations.
We have made significant efforts to ensure effective engagement with both institutional and private shareholders. Due to the concentrated nature of approximately 35% of our shareholder base we make ourselves available to speak or meet with each one. We will continue to undertake summary presentations at our AGM’s and have been keen to meet with potential and existing shareholders whenever requested.
At this point in time the board has not commissioned any research reports. When it does consideration will be given to meeting the needs of both private and institutional investors in this respect.
The board has ultimate responsibility for reviewing and approving the Annual Report and Accounts and it has considered and endorsed the arrangements for their preparation, under the guidance of its audit committee. The directors confirm that the Annual Report and Accounts, taken as a whole, is fair, balanced and understandable and provides the information necessary for shareholders to assess the group’s position and performance, business model and strategy.
The following paragraphs set out 21st’s compliance with the ten principles of the QCA Code.
Establish a strategy and business model which promote long-term value for shareholders
Our business model is to compete in the market as an open provider of technology solutions, working with global-scale product companies and local specialists to deliver highly reliable and cost-effective solutions for the transport community over the lifecycle of the systems. The service offering includes the design, tailoring, installation, on-site support and back-office systems. We compete by striving to offer better integrated solutions at reduced costs to our customers. We carefully select niche markets where we can generate significant market share to generate the economies of scale needed. Our customers in the transport community include fleet operators, vehicle manufacturers, local authorities and Passenger Transport Executives (PTEs).
Our vision is to become the market-leading provider of tailored solutions to the transport community, solving the complex operational requirements on-board vehicles and associated connected systems in towns and cities. Our guiding principle is to improve the customer service experience continuously through innovation of our solutions, having the best team of people and operating efficiently.
Management of risk
As explained below the group maintains a risk register. In pursuing our strategic goals strong internal procedures to monitor financial performance and strict working capital management are principal elements of this. Key business risks and their mitigation are detailed in the Chief Executive’s report in the annual financial statements.
Seek to understand and meet shareholder needs and expectations
Responsibility for investor relations rests with the Chairman supported by all other members of the board.
The group is committed to communicating openly with its shareholders to ensure that its strategy and performance are clearly understood. We communicate with shareholders through the Annual Report and Accounts, full-year and half-year announcements, trading updates and the annual general meeting (AGM), and we encourage shareholders’ participation in calls and face-to-face meetings. A range of corporate information (including all 21st announcements) is also available to shareholders, investors and the public on our website.
Private shareholders: The AGM is the principal forum for dialogue with private shareholders, and we encourage all shareholders to attend and participate. The Notice of Meeting is sent to shareholders at least 21 days before the meeting. The chairs of the board and all committees, together with all other directors whenever possible, attend the AGM and are available to answer questions raised by shareholders. Shareholders vote on each resolution, by way of a poll the results of which are announced and then published on our website.
Institutional shareholders: The directors actively seek to build a mutual understanding of objectives with institutional shareholders. Our CEO and CFO make presentations to institutional shareholders and analysts when requested immediately following the release of the full-year and half-year results. We communicate with institutional investors frequently through a combination of formal meetings and informal briefings with the board.
The Board take a keen interest in any votes against resolutions proposed at the AGM or any general meeting of the company to understand the motivation behind them. This is the case even if resolutions are passed.
Take into account wider stakeholder and social responsibilities and their implications for long-term success
|Stakeholder||Reason for engagement||How we engage|
|Staff - our ability to fulfil client services and develop and enhance the systems on which they depend relies on having talented and motivated staff.||Good two-way communication with staff is a key requirement for high levels of engagement, fostering a culture of innovation.||
Monthly staff meetings.
Invitation to staff to ask questions of management that are answered in the meetings.
These have provided insights that have led to enhancement of management practices and staff incentives.
|Clients - our success and competitive advantage are dependent upon fulfilling client requirements, particularly in relation to tailored solutions for the transport community, solving complex operational requirements both on and off the vehicle||Understanding current and emerging requirements of clients enables us to develop new and enhanced services, together with software to support the fulfilment of those services.||
Seek feedback on services and software systems.
Obtain fulfilment metrics employed by clients and regulators to measure performance.
Obtain requests for new services and service enhancements.
|Supplier||Suppliers will provide similar services to other organisations, including our competitors, so we must ensure that competitive terms and dealings are agreed.||
We operate systems to ensure that supplier invoices are processed and paid in accordance with agreements we have.
We maintain a regular dialogue with our key suppliers.
These have led to a large, growing and supportive supplier network.
|Shareholders - as a public company we must provide transparent, easy-to-understand and balanced information to ensure support and confidence.||Meeting regulatory requirements and understanding shareholder sentiments on the business, its prospects and performance of management.||Regulatory news releases.
Keeping the investor relations section of the website up to date.
Publish investor presentations.
Annual and half-year reports and presentations.
We believe we successfully engage with our shareholders: this engagement has led to support for the group and increased stakes from notifiable holdings.
|Industry bodies - the services we provide must meet certain requirements.||To gain insight into customer needs in addition to maintaining our expert knowledge of industry and regulatory requirements||
We hold membership and accreditation with a host of industry bodies ranging from standard membership to committee leadership
|Communities - what we do impacts communities in the places where we operate and elsewhere.||It is important to be perceived as a reputable business that makes a positive contribution to local economies and is attractive as an employer and partner.||
Multiple activities to support fundraising for local charities and good causes.
These have led to an improved profile for the group in the local areas of its major operations
Embed effective risk management, considering both opportunities and threats, throughout the organisation
The CFO maintains a risk register for the group that identifies key risks in the areas of corporate strategy, financial, clients, staff, environmental and the investment community. Within each of these areas the risks are rated as to likelihood and impact, who is responsible for managing and identifies the controls and mitigations in respect of each. All members of the board are provided with a copy of the register. The register is reviewed in detail at least annually and is updated as and when necessary in consideration of the nature of risks and the sufficiency of controls in respect of them.
Within the scope of the annual audit, specific financial risks are evaluated in detail, including in relation to foreign currency, interest rates, liquidity and credit.
Staff are reminded on a monthly basis to report, anonymously or otherwise, any security risks or threat they perceive in the operations of the business. On receipt of any such notification, a security incident team is assembled to assess and take remedial action as appropriate in the circumstances.
Staff are reminded on a monthly basis that they should seek approval from the CFO if they, or their families, plan to trade in the group’s equities.
Maintain the board as a well-functioning, balanced team led by the chair
The members of the board have a collective responsibility and legal obligation to promote the interests of the group 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 consists of four directors of which two are executive and two are independent non-executives. The board is supported by three committees: audit, remuneration and nomination. The board will consider appointing additional non-executive directors as its business expands.
Non-executive directors are required to attend 12 board and board committee meetings per year (in Ashby de la Zouch or London) and to be available at other times as required for face-to-face and telephone meetings with the executive team and investors.
Meetings held during the period under review and the attendance of directors is summarised below:
|Board meetings*||Audit Committee||Remuneration Committee|
The board has a schedule of regular business, financial and operational matters, and each board committee has compiled a schedule of work to ensure that all areas for which the board has responsibility are addressed and reviewed during the course of the year. The chairman is responsible for ensuring that, to inform decision-making, directors receive accurate, sufficient and timely information. The CEO compiles the board and committee papers which are circulated to directors prior to meetings. The company secretary provides minutes of each meeting and every director is aware of the right to have any concerns minuted and to seek independent advice at the group’s expense where appropriate.
Ensure that between them the directors have the necessary up-to-date experience, skills and capabilities
All four members of the board bring relevant sector experience in media and technology, three have at least nine years of public markets experience and two members are chartered accountants. The board believes that its blend of relevant experience, skills and personal qualities and capabilities is sufficient to enable it to successfully execute its strategy. Directors attend seminars and other regulatory and trade events to ensure that their knowledge remains current.
Mark Elliott FCA, Independent Non-Executive Chairman
Term of office: Appointed as Chairman on 23 August 2013; Chair of the Audit and Nomination Committees and a member of the Remuneration Committee.
Background and suitability for the role: Prior to becoming Chairman Mark had fulfilled positions of non-executive director and CFO within 21st. Mark has had a long executive career in the technology and corporate finance sectors, including finance and management roles operating in Europe, the USA and South Africa. He also has extensive AIM experience having brought two technology companies to this market together with associated fund raises. He therefore brings a long experience of governance, public markets and investor relations.
Current external appointments: Chairman of Trustees of Union Discount Retirement Benefit Scheme and trustee of two charities, the National Benevolent Society of Watch and Clockmakers and the Metropolitan Drinking Fountain and Cattle Trough Association.
Time commitment: two to three days per month.
Jamie Cumming, Independent Non-Executive Director
Term of office: Joined as Non-Executive Director on 22 August 2013; Chair of the Remuneration Committee and member of the Audit and Nomination Committees.
Background and suitability for the role: Jamie has had a long career in corporate advisory and broking in the City, including acting as Chief Executive Officer of N+1 Brewin LLP and latterly as Senior Adviser to Cantor Fitzgerald Europe. Jamie has significant experience working with small and mid-cap companies, particularly in the AIM market, across a wide spectrum of sectors, covering all aspects of primary and secondary fund raising and mergers and acquisitions.
Current external appointments: Non-Executive Director of CareTech Holdings plc and an Associate of Ruffena Capital.
Time commitment: one to two days per month.
Russ Singleton, CEO
Term of office: Joined as CEO on 11 October 2013.
Background and suitability for the role : Russ is a Chartered Engineer and brings over 25 years’ experience of forming and growing technology businesses to his role as CEO.
Originally a development engineer in visual systems, Russ has designed products and software and founded businesses to generate substantial sales growth and leadership positions in a number of market sectors world-wide.
Russ has over 10 years’ experience working as CEO of AIM-quoted Companies with M&A experience in the UK and USA and extensive international experience; having set up businesses and operations throughout Continental Europe, USA, Singapore & the Middle East.
Current external appointments: None
Time commitment: full time.
Nick Lowe, CFO and Company Secretary
Term of office: Joined as CFO and Company Secretary on 15 May 2017.
Background and suitability for the role: Nick is an FCA having qualified as a Chartered Accountant with Tenon in Nottingham, before joining KPMG. He has significant experience at finance director level in growing, technology led, SME businesses and has strong group reporting, process and control skills.
Current external appointments: None
Time commitment: full time.
Evaluate board performance based on clear and relevant objectives, seeking continuous improvement
A board evaluation process led by the chairman takes place at least annually. It consists of informal discussions relating to contributions made, roles to be fulfilled and effectiveness in a number of areas including general supervision and oversight, business risks and trends, succession and related matters, communications, ethics and compliance, corporate governance and individual contribution.
We will be considering the use of external facilitators in future board evaluations however based on our current scale of operations and the frequent contact that exists between all board members maintaining our current approach is considered the more appropriate and effective form of evaluation.
As the business expands, the executive directors will be challenged to identify potential internal candidates who could potentially occupy board positions and set out development plans for these individuals.
Promote a corporate culture that is based on ethical values and behaviours
The Board oversees and participates in a culture of innovation and development in order to delight our customers. By providing the teams within 21st Century with clear, deliverable goals and the tools with which to complete the job, the Company management aims to create a culture where the needs of the customer are paramount.
Individual team members are encouraged to enhance their skills through external courses and internal, mentored development in order to deliver an ever-growing range of solutions and capabilities for our broad range of customers. Team work is encouraged with external activities, such as charity fundraising and other company events.
We strive to create an inclusive workplace that promotes and values diversity. Companies that are diverse in age, gender identity, race, sexual orientation, physical or mental ability, ethnicity, and perspective are proven to be more innovative and better positioned to succeed.
The culture of the group is characterised by these values which are communicated regularly to staff through internal communications and forums.
Maintain governance structures and processes that are fit for purpose and support good decision-making by the Board
The Board provides strategic leadership for the group and operates within the scope of a robust corporate governance framework. Its purpose is to ensure the delivery of long-term shareholder value, which involves setting the culture, values and practices that operate throughout the business, and defining the strategic goals that the group implements in its business plans. The board defines a series of matters reserved for its decision and has approved terms of reference for its audit and remuneration committees to which certain responsibilities are delegated. The chair of each committee reports to the board on the activities of that committee.
The Audit Committee monitors the integrity of financial statements, oversees risk management and control and reviews external auditor independence.
The Remuneration Committee sets and reviews the compensation of executive directors including the setting of targets and performance frameworks for cash and share-based awards.
The Operations Committee, consisting of the executive directors and senior management, operates as a management committee, chaired by the CEO, which reviews operational matters and performance of the business, and is responsible for significant management decisions while delegating other operational matters to individual managers within the business.
The Chairman has overall responsibility for corporate governance and in promoting high standards throughout the group. He leads and chairs the board, ensuring that committees are properly structured and operate with appropriate terms of reference, ensures that performance of individual directors, the board and its committees are reviewed on a regular basis, leads in the development of strategy and setting objectives, and oversees communication between the group and its shareholders.
The CEO provides coherent leadership and management of the group, leads the development of objectives, strategies and performance standards as agreed by the board, monitors, reviews and manages key risks and strategies with the board, ensures that the assets of the group are maintained and safeguarded, leads on investor relations activities to ensure communications and the group’s standing with shareholders and financial institutions is maintained, and ensures that the board is aware of the views and opinions of employees on relevant matters.
The Executive Directors are responsible for implementing and delivering the strategy and operational decisions agreed by the board, making operational and financial decisions required in the day-to-day operation of the group, providing executive leadership to managers, championing the group’s core values and promoting talent management.
The Independent Non-Executive Directors contribute independent thinking and judgement through the application of their external experience and knowledge, scrutinise the performance of management, provide constructive challenge to the executive directors and ensure that the group is operating within the governance and risk framework approved by the board.
The matters reserved for the board are:
- Setting long-term objectives and commercial strategy.
- Approving annual operating and capital expenditure budgets.
- Changing the share capital or corporate structure of the group.
- Approving half-year and full-year results and reports.
- Approving dividend policy and the declaration of dividends.
- Approving major investments, disposals, capital projects or contracts.
- Approving resolutions to be put to general meetings of shareholders and the associated documents or circulars.
- Approving changes to the board structure.
The board has approved the adoption of the QCA Code as its governance framework against which this statement has been prepared and will monitor the suitability of this code on an annual basis and revise its governance framework as appropriate as the group evolves.
Communicate how the company is governed and is performing by maintaining a dialogue with shareholders and other relevant stakeholders
In addition to the investor relations activities described above, the following audit and remuneration committee reports are provided.
Audit Committee Report
During the year, the Audit Committee has continued to focus on the effectiveness of the controls throughout the group. The Audit Committee consists of Mark Elliott, Chair, and Jamie Cumming. The committee met twice, and the external auditor, the CEO and CFO were invited to attend these meetings. Consideration was given to the auditor’s pre- and post-audit reports and these provide opportunities to review the accounting policies, internal control and the financial information contained in both the annual and interim reports. The committee also met with the auditors with no executives present.
Remuneration Committee Report
The remit of the Remuneration Committee is to determine the framework, policy and level of remuneration, and to make recommendations to the board on the remuneration of executive directors. In addition, the committee oversees the creation and implementation of all-employee share plans. The Remuneration Committee consists of Jamie Cumming, chair, and Mark Elliott. The committee met twice.
In setting remuneration packages, the committee ensured that individual compensation levels, and total board compensation, were comparable with those of other AIM-listed companies.