The Board is responsible for creating value for shareholders, determining strategy, investment and acquisition policy, approving significant items of expenditure and for the consideration of significant financing and legal matters.
AUDIT & RISK
NOMINATION & REMUNERATION
|PERSONNEL||DESIGNATION||COMMITTEE TITLE||COMMITTEE TITLE|
|Mark Elliott||Non-Executive Chairman||Chairman||Member|
|Richard Mace||Executive Dir-CEO||–||–|
|Alan Carroll||Non-Executive Dir||Member||Chairman|
CORPORATE GOVERNANCE STATEMENT
MALVERN INTERNATIONAL PLC
Corporate Governance Statement
1.1 This statement is made by me, Mark Elliott, as the Company’s Chairman and explains the Company’s present corporate governance arrangements and the standards with which the Company complies.
1.2 The Company has elected to adopt and comply with the QCA Corporate Governance Code (the “QCA Code”). This statement reflects the structures that the Company has adopted in order to achieve compliance with the QCA Code. The Company’s website (the “Website”) provides further explanation as to the Company’s compliance with the ten key principles of the QCA Code.
2. The Board of Directors
2.1 The Company (and thereby its group (the “Group”)) is ultimately managed by the directors of the Company (the “Directors”), who (individually and as a group) are responsible for running the Company for the benefit of its shareholders in accordance with their fiduciary and statutory duties.
2.2 The Board of Directors (the “Board”) currently comprises eight Directors: seven Non-Executive Directors (including the Chairman) and one Executive Directors (being the Chief Executive Officer (“CEO”). The roles of the Chairman and the CEO are undertaken by separate individuals.
2.3 The Board has two standing committees (the “Committees”): the Audit & Risk Management Committee and the Nomination & Remuneration Committee. The Terms of Reference for each of the Committees are available on the Website.
2.4 The Board has a formally-established nominations committee. All matters concerning the appointment and removal of Directors, and for Executive and Non-Executive Director succession planning are considered and recommended by the Nomination & Remuneration Committee to the full Board (with any appointments subject to a shareholder vote at the next Annual General Meeting).
In my role as Chairman, I am responsible for:
3.1 Leading the Board and ensuring that all members are able to contribute to Board discussions and the wider running of the Group as appropriate;
3.2 Ensuring that the Company acts in the best interests of shareholders and other stakeholders; and
3.3 The Group’s corporate governance arrangements.
4. CEO AND EXECUTIVE DIRECTORS
4.1 Richard Mace is the CEO and in that role he is responsible for:
4.1.1 Leading and managing the business of the Company;
4.1.2 proposing and implementing strategy for the success of the Company’s business; and
4.1.3 Leading and maintaining the Company’s investor relations activities.
4.2 The CFO (currently a non Board appointment) is responsible for the operational oversight of all financial matters within the Group.
5.1 In addition to the Chairman, the other Non-Executive Director is Alan Carroll.
5.2 The Non-Executive Directors challenge and scrutinise the performance of the Executive Directors, while supporting them in their delivery of the Company’s strategy and management of the Group’s risks.
6. The Company Secretary
6.1 The Company Secretary is Shoosmiths LLP, who are assisted by the Head of Corporate Affairs & Governance in Malvern. and, in conjunction with me, they ensure that accurate, timely and clear information is provided to the Board in order for informed decisions and discussions to take place.
6.2 The Company Secretary is responsible for advising the Board on governance matters and regulatory requirements. The appointment and removal of the Company Secretary is a matter reserved to the Board. All Directors have direct access to the Company Secretary and to independent professional advice at the Company’s expense as required.
6.3 The Board acknowledges that ideally the office of Company Secretary would not be held by an Executive Director. At the present time, it is considered (given available resources and taking a proportionate approach) that it is in the best interests of the Board’s efficient and proper operation that Shoosmiths LLP (as a qualified solicitor with significant company law and regulatory experience) holds the office. This is kept under review and, if and when the appropriate time arises, the roles will be separated.
7. Frequency of Meetings
7.1 The Board meets at least four times a year and relevant information is distributed to Directors in advance of the meetings.
7.2 The Group does not have a formal schedule of matters reserved to the Board but does maintain a delegated authority framework which is periodically reviewed and approved by the Board. Save for those matters delegated, the Board makes decisions on all material matters including strategy (as may be recommended by the Strategy Committee), annual operating and capital budgets, capital structure and financial and internal controls.
8. Evaluating Board performance
8.1 The Board has a number of sources of information from which it judges its own performance and that of the individual Directors, these include but are not limited to:
a. Financial performance indicators including revenue, order book, gross margin, net margin, earnings per share and cash flow;
b. The Company’s share price;
c. Reports from external auditors;
d. Shareholder feedback;
e. Customer feedback;
f. Formal and informal reviews of its effectiveness by the Company’s nominated adviser; and
g. Employee feedback.
8.2 All these factors are considered and action taken to improve performance as appropriate.
8.3 The Board will evaluate its own performance through peer review or by engaging external consultants annually.
9. Communication with shareholders
The Board attaches a high priority to communication with shareholders having regard to its obligations as a quoted public company and the AIM Rules. The Group liaises regularly with major shareholders and there is an opportunity for individual shareholders to question the management of the Company through the Chairman at the Annual General Meeting.
10. Risk management and internal controls
10.1 The Board seeks to understand and manage the various risks that arise from its operations which include:
a. Reputational risk;
b. Contractual risk;
c. Technical risk;
d. Resourcing and infrastructure;
e. Anti-corruption and compliance;
f. Board and management succession; and
g. Price and margin.
10.2 The Board has overall responsibility for risk management and the Group’s systems of internal controls. This oversight task has been delegated to the Audit & Risk Management Committee. Responsibility for implementing sound and effective systems of internal control has been delegated to the Executive Directors and senior management. The CEO takes responsibility for operational oversight of Group-wide risk management (other than financial risk) and the Finance Director oversees financial risk management.
10.3 Key risks to the Group’s business are recorded in a Group Risk Register and mitigants, controls and corrective actions are reviewed regularly by the Executive Directors and the Board.
10.4 The Company’s annual report and accounts (available on the Website) provide further details as to the Group’s key risks (and the mitigants and controls deployed by the Group).
10.5 An organisational structure with clear operating procedures, lines of responsibility and delegated authority has been established and is kept under review. The purpose of the systems of internal control is to manage rather than eliminate the failure to achieve business objectives and can only provide reasonable, but no absolute, assurance against material misstatement or loss.
11.1 The Company is committed to legal compliance and ethical behaviour and the Board is at the forefront of this effort. The Board has delegated this important task to the Audit & Risk Management Committee.
11.2 Any employee wishing to raise concerns about wrongdoing and/or unethical behaviour within the Company is encouraged to do so in accordance with the Company’s Whistleblowing Policy and Mr. Mark Elliot has been nominated as the Non-Executive Director to whom any such concerns may be raised in confidence.
12. City Code on Takeovers and Mergers
The Company is subject to the City Code on Takeovers and Mergers.
24 September 2018
AIM RULE 26- CORPORATE GOVERNANCE PRO FORMA
MALVERN INTERNATIONAL PLC
QCA Principles of Corporate Governance:
As an AIM listed company, the company is required to adopt a recognised corporate governance code and disclose any deviations from the chosen code. Malvern International PLC has decided to adopt the Quoted Companies Alliance (“QCA”) code. High standards of Corporate Governance are a key priority of the Board and details of how the Company addresses key governance issues are set out in the Corporate Governance section of this website by reference to the 10 principles of Corporate Governance developed by the QCA.
Principal 1) Establish strategy and business model which promote long-term value for shareholders
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.
The Company’s vision is to invest in and develop its operating businesses in the global education sector to deliver long term, sustainable growth in shareholder value to reflect Malvern’s core values.
The Company aims to achieve this by:
a. Promoting Malvern’s globally recognisable brand in education and training
b. Strengthening management and corporate/administrative systems to achieve world class delivery and quality standards
c. Innovating to improve and expand the range of products and services offered
d. Extending distribution through our agent network and collaborations and strategic alliance
e. Delivering organic growth through making training accessible to an increasingly mobile student population using multi-location and technology options
f. Making complementary/strategic acquisitions to broaden geographic reach and subject areas
g. A clearly laid out long term plan linked to performance driven culture
Principal 2) Seek to understand and meet shareholder needs and expectations
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.
The Board is aware of the need to protect the interests of minority shareholders, and balancing these interests with those of any more substantial shareholders.
The Board regards regular communications with shareholders as one of its key responsibilities. The Company is committed to engaging with shareholders and this effort is led by the CEO. A clearly laid out investors’ relationship strategy is in place.
In order to gauge shareholder sentiment, the Company meets with the key institutional shareholders typically every six months and when necessary solicits feedback from its larger shareholders via its nominated adviser. The Company holds an open Q&A session at every Annual General Meeting and attends investor events to engage with retail shareholders.
The communication allows the board to understand the shareholders’ views, and to ensure that the strategies and objectives of the Group are aligned with shareholders. In its decision-making, the Board will have regard to the ascertained expectations and needs of its shareholders (as appropriate in accordance with its statutory and fiduciary duties).
The Company welcomes shareholder contact at any time and contact details can be found on the website.
Principal 3) Take into account wider stakeholder and social responsibilities and their implications for long-term success
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.
The Directors are aware of the Company’s responsibilities to the communities within which they operate and are keen to adopt a proactive approach towards community education-driven initiatives, particularly where they involve the education of those less fortunate members of the respective communities. The Company is currently involved with Refugee Aid agencies in the UK as well as community associations in Asia.
The Group’s responsibilities to stakeholders including staff, suppliers and customers and wider society are also recognised.
The environmental impact of the Group’s activities is carefully considered and the maintenance of high environmental standards is a priority. A sustainability plan with clear board oversight is in the pipeline.
The Board has regard to the feedback of relevant stakeholders in its decision-making and the formulation of strategy.
Principal 4) Embed effective risk management, considering both opportunities and threats, throughout the organisation
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).
The Company has a well-established risk management framework which involves risks being identified, recorded, monitored and addressed at programme, department and Group level and subject to regular review. This enterprise risk management is driven top down using the business plan as the key risk drivers. The group risk appetite is in the process of being drawn up.
The Board has established an Audit and Risk Management Committee (ARMC), a summary of the TOR which is set out here. The Company has an established internal audit function reporting functionally to the ARMC and working closely with the Group Financial Officer and Head of Corporate Affairs & Governance. The ARMC reports to the Board and its primary role is to systematically review each area of its business to monitor the effectiveness of risk management and internal financial controls.
The Company has clear, documented procedures in place to assess risk and progress opportunities arising, whether for process improvement, product enhancement, new business or any other matter.
Maintain a Dynamic Management Framework:
Principal 5) Maintain the board as a well-functioning, balanced team led by the chair
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.
The Board is comprised of a non-executive Chairman, one executive Director, and six non-executive Directors.
The Board is responsible for creating value for shareholders, determining strategy, investment and acquisition policy, approving significant items of expenditure and for the consideration of significant financing and legal matters.
The Group is currently led and controlled by a Board, chaired by Mr. Gopinath Pillai and comprising of one Executive Director – Dr. Sam Malafeh, CEO, and 6 Non-Executive Directors, three of whom are considered to be independent.
The Board considers that the Non-Executive Directors each have specific expertise and experience, materially enhancing knowledge and judgment to contribute to the overall performance of the Board.
Whilst the Company is guided by the provisions of the Code in respect of the independence of directors, it gives regard to the overall effectiveness and independence of the contribution made by directors to the Board in considering their independence.
A description of the roles of the Directors is included within the Board of Directors page of this website.
The Board has established an Audit and Risk Management Committee as well as a Remuneration and Nomination Committee. The responsibilities of each of these committees have been summarised as follows (Audit and Risk Management Committee & Remuneration and Nomination Committee). The Audit & Risk Management and Remuneration & Nomination Committees are comprised of Non-Executive Directors.
Principal 6) Ensure that between them the directors have the necessary up-to-date experience, skills and capabilities
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.
Directors who have been appointed to the Company have been chosen because of the skills and experience they offer.
Full biographical details of all Directors are included within the Board of Directors page of this website (https://www.malverninternational.com/board-of-directors/ ).
As stated above, the Board has put in place an Audit & Risk Management and Remuneration & Nomination Committee. Going forward, the Board will continue to discuss and consider the establishment of further committees where necessary to provide relevant support to the Board.
The Nomination and Remuneration Committee evaluates the board diversity and skills on an ongoing basis to ensure there is a right mix of experience and knowledge in the Board. The Board also recognises that it needs to improve its gender diversity, and this will be addressed through succession planning and future appointments.
Principal 7) Evaluate board performance based on clear and relevant objectives, seeking continuous improvement
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.
At the highest level, the Board judges its own performance by reference to the Company’s progress against the targets set out in the Company’s strategic plan.
The Company undertakes regular monitoring of personal and corporate performance using agreed key performance indicators and detailed financial reports. Responsibility for assessing and monitoring the performance of the executive directors lies with the Chairman and the independent non-executive directors.
The Board considers the need for the periodic refreshing of its membership. Three new non- executive directors have been appointed since September 2016.
The Board and the Remuneration & Nomination Committee evaluate the Board performance, including but not limited to Board balance, Board skills and remuneration, to ensure that the Board structure is fit for purpose and is appropriate for the Group’s ongoing development and growth.
Principal 8) Promote a corporate culture that is based on ethical values and behaviours
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.
The Board is committed to embodying and promoting a sound corporate culture and has endorsed various policies which require ethical behaviour of staff and relevant counterparties (such as those mandating anti-corruption, anti-counterfeiting, fair treatment and equality of opportunity).
The Board and management conduct themselves ethically at all times and promote a culture in line with the standards set out on the website. A whistle-blowing reporting has also been established.
Principal 9) Maintain governance structures and processes that are fit for purpose and support good decision-making by the board
The company should maintain governance structures and processes in line with its corporate culture and appropriate to its:
a. Size and complexity; and
b. 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.
The Company’s Corporate Governance Statement explains the structures which are in place at Board and Committee level and how these interact, including the roles which individual Directors fulfil on the Board.
A Corporate governance unit has recently been established.
Beneath the Board, there is an operational governance framework which facilitates the effective management of the business by the executive directors. Further details are contained in the annual report and accounts, available on the website.
The organisational structure is kept under review and evolves as the needs of the business change as it grows and develops.
Principal 10) Communicate how the company is governed and is performing by maintaining a dialogue with shareholders and other relevant stakeholders
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:
a. The communication of shareholders’ views to the board; and
b. 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).
The Board attaches great importance to providing shareholders with clear and transparent information on the Group’s activities, strategy and financial position.
The communication between the Company and its shareholders are explained in the disclosure above against principle 2.
At the Annual General Meeting the Chairman issues a statement on current trading. All Directors are available following the meeting to answer questions and for informal discussions. The results of the proxy votes are announced at the meeting, including the abstentions and these are published on the website following the meeting.
The Board holds regular meetings with larger shareholders and regards the annual general meeting as a good opportunity to communicate directly with shareholders via an open question and answer session.
The Company lists contact details on its website and on all announcements released via RNS, should shareholders wish to communicate with the Board.
TERMS OF REFERENCE -THE BOARD AND ITS COMMITTEES
Articles and Memorandum of Association
International Financial Reporting Standards (“IFRS”)
The financial statements of Malvern International plc are being prepared in accordance with applicable IFRS as adopted by the European Union.
Feedback and Complaints
The Company is committed to legal compliance and ethical behaviour and the Board is at the forefront of this effort. The Board has delegated this important task to the Audit & Risk Management Committee Chairman and his representative.
Any employee wishing to raise concerns about wrongdoing and/or unethical behaviour within the Company is encouraged to do so in accordance with the Company’s Whistleblowing Policy and any such concerns may be raised in confidence.
The contact information are as follows:
For matters requiring the attention of the CEO, please contact Richard Mace at firstname.lastname@example.org
For significant matters requiring the attention of the Board , please contact Mark Elliot at email@example.com