Statement of compliance with the UK Corporate Governance Code

The Group has complied with the provisions of the UK Corporate Governance Code 2014, both the main principles and the supporting principles, throughout the year and to the date of this report. We explain in the reports contained in our annual report how we applied the provisions and principles of the Financial Conduct Authority Listing Rules, the Disclosure and Transparency Rules, and the UK Corporate Governance Code 2014. Further explanation on how the main principles have been applied is set out below and in the Audit Committee Report and the Directors’ Remuneration Report.

The role of the Board

The Board is accountable to shareholders for the proper conduct of the business and ensuring its long-term success. It has ultimate responsibility for the activities of the Group including its overall direction, strategy, risk management, governance and performance. In order to meet that responsibility it ensures that the necessary financial and human resources are in place, and that it is supported in its activities by its various Committees, EMB and senior managers. The authority delegated by the Board to the Audit, Remuneration and Nomination Committees to carry out certain tasks, are defined in each Committees’ Terms of Reference. Further information on the responsibilities of the Audit, Nomination and Remuneration Committees are set on their respective web pages.

Matters specifically reserved for the Board to make decisions on include, but are not limited to, the following:

  • Group long-term strategy;
  • Group major business decisions;
  • Group-wide business and financial review including annual budget;
  • major capital expenditure, acquisitions, disposals and investments;
  • review of the internal financial control and risk management systems;
  • consider recommendations of the sub-committees of the Board,
  • the approval of interim and annual financial statements; and
  • treasury management.

The Board will delegate other operational matters to the EMB for its review with other senior managers of the business to enable them to make appropriate divisional decisions.

The composition of the Board

The Board currently consists of six members; the non-executive Chairman, the CEO, the CFO and three non-executive directors.

Division of responsibilities

The Group has a traditional Board structure with a unitary Board comprising the non-executive Chairman, executive and non-executive directors. The Audit and Remuneration Committees are made up of independent non-executive directors and they, together with the Nomination Committee, report to the Board. The EMB reports to the CEO and the divisions and functions report to the EMB.

In accordance with the Code there is a clear division of responsibilities between the Chairman and the CEO, which have been set out in writing and agreed by the Board. The written roles are available to view on the Group’s website.

Role of Chairman

Peter Hill has led the Board as Non-Executive Chairman since 1st February 2017. The Chairman is responsible for the leadership of the Board and ensuring its effectiveness on all aspects of its role. He sets the agenda for the Board and ensures that the Board receives accurate, timely and clear information, giving sufficient time to review all agenda items thoroughly including strategic issues. He promotes a culture of openness, debate and facilitates constructive relations between executive and non-executive directors. He is also responsible for ensuring that the views of shareholders are communicated to the Board as a whole. In order for him to effectively discharge his duties he works closely with the Company Secretary. He is Chairman of the Nomination Committee.

Role of Chief Executive Officer

Chief Executive Officer, Andrew Heath, is responsible for proposing, developing and implementing the Group’s strategy and commercial targets as agreed by the Board. He is responsible for the day-to-day management of the business. He carries out his duties in consultation with the Chairman, the Board and EMB which in turn are responsible for the commercial and operational activities of the Group. He holds weekly meetings with the CFO and EMB to ensure the Group is actively managing the overall strategy of the business. He regularly holds meetings with the Group’s customers, potential customers and partners for executive discussions on current and future business. He is also responsible, with the EMB, for implementing the decisions of the Board and its Committees.

Role of the Senior-Independent Director (‘SID’)

David Anderson acts as a sounding board for the Chairman and serves as an intermediary for the other directors when necessary. He is also the Chairman of the Audit Committee and a member of the Remuneration and Nomination Committees. He has been actively leading the search for a replacement for the Chairman. More detail is given in the Nomination Committee Report on page 54. He also makes himself available to shareholders if they have concerns where contact through the normal channels of Chairman, CEO or CFO have failed to be resolved or for which such contact is inappropriate. During the year he met with some of the larger institutional shareholders of the business.

Role of the Company Secretary

The Company Secretary under the direction of the Chairman ensures good flow of information within the Board and its Committees and to senior management. She is also responsible for advising the Board on all governance matters and is on hand to offer advice and services should any director require it. The Company Secretary attends all Board and certain Committee meetings. During the year the Company Secretary facilitated the Board effectiveness evaluation. The Board as a whole decides on the appointment or removal of the Company Secretary.

Role of non-executive directors

The non-executive directors have a wealth of experience, business knowledge and are appointed to constructively challenge senior management and provide input to meet agreed goals, objectives and to ensure the integrity of financial information. The role is described in more detail within the Financial Reporting Council Code.

Induction and professional development

The existing induction process is being formalized, following a recommendation from the Board effectiveness evaluation. The induction procedure for all new appointments to the Board is designed to enhance the directors’ knowledge of the industry in general and their understanding of the Group’s operations and performance, and importantly the Group culture.

The induction programme consists of the following:

  • one-to-one meetings with the Chairman, CEO,CFO and Company Secretary and meetings with the remaining Board members;
  • meetings with EMB and senior management to discuss Group operations; and
  • visiting regional and international offices.

In accordance with the Code the Chairman regularly reviews and discusses the development needs with each director. Each director is fully aware that they should take responsibility for their own individual development needs and take the necessary steps to ensure they are wholly informed of regulatory and business developments.

Activities of the Board

The Board holds regular scheduled meetings throughout the year which are supplemented by unscheduled meetings which are held when urgent business decisions are needed, such as relating to acquisition activity. The Board papers are circulated electronically in advance of each meeting.

At each meeting certain regular reports are presented which are:

  • CEO delivers a full business update with focus on the semiconductor market, a business summary for each division, the Group’s relationships with current and potential partners, licensing updates, units shipped, potential acquisitions and key business issues and actions;
  • CFO gives the year to date financial results, latest financial projections, investor relations activity and analysts forecasts;
  • Company Secretary provides updates covering governance, share price data, risk management reporting and shareholder analysis.

In addition the Board meets periodically with senior management in order to review the strategic direction of the business. This has typically been held on an annual basis. The main objectives of the strategy session are to assess and decide upon the key technologies, products and markets for the business to develop by assessing the potential returns against the risks. The result is a common vision of the future aspirations of the business and an understanding of the function and goals that each division has to achieve the strategy. Divisional business plans are built around executing the strategic plan.

The CEO and CFO also attend weekly and monthly meetings of the EMB, where each member provides an up to date operational report in which progress against plan is reviewed to ensure that this is in line with the Group’s strategic and business targets. They will then provide feedback to the Board at the next scheduled meeting on any areas of significant interest.

Commitment

The directors allocate sufficient time to the Group to discharge their responsibilities effectively.

Imagination Technologies Group plc Articles of Association (PDF-19.32 MB)