Corporate Governance

Maintel Group

Corporate Governance Statement

As Chairman of the Maintel Group Board, it is my responsibility to ensure that the Board is performing its role effectively and has the capacity, ability, structure and support to enable it to continue to do so.

We believe that a sound and well understood governance structure is essential to maintain the integrity of the Group in all its actions, to enhance performance and to impact positively on our shareholders, staff, customers, suppliers and other stakeholders.

After due consideration, Maintel has adopted the QCA Corporate Governance Code (“the Code”) as the benchmark for measuring our adherence to good governance principles.  These principles provide us with a clear framework for assessing our performance as a Board and as a company, and the report below shows how we apply the Code’s ten guiding principles in practice.

Governance during the last year

Following the acquisitions of Azzurri and Intrinsic in May 2016 and August 2017 respectively, which added significantly to the size and diversity of our workforce as well as its geographic spread, a substantial shift was required in the way the company is managed to align all employees to a common purpose, behaviour and goals.

This has been addressed primarily through organisational restructuring and a significantly enhanced People Strategy that encompasses the development and embedding of Maintel Values (described in more detail on page 9 of the 2017 Annual Report, found here, together with the publishing of an HR roadmap designed to harmonise terms of employment, career opportunities, management development, training and culture across the Group.

This process is ongoing and in the last twelve months has seen, amongst others, the following governance developments:

  • The production of the HR roadmap, combined with analysis of the gender pay gap exercise carried out during the year has resulted in initiatives to attempt to home grow talent, including under-represented female talent at grass roots level, by way of establishing a technical training academy and commencing a graduate training scheme in the sales arena.
  • The directors are committed to nurturing an open and communicative culture which encourages employee participation in the exchange of ideas, information and suggestions.  The culture is also conveyed throughout the Group by way of regular employee newsletters and an employee forum, together with interactive presentations by the executive directors to employees across the Group’s five offices.
  • The Maintel culture and Values are reinforced informally through regular meetings between the executive directors and the senior management team.
  • In order to align senior management interest with that of the Group and to encourage key employee retention, the board extended the use of the Group’s Long Term Incentive Plan to key members of senior management in April 2018.

The board will continue to develop its governance processes in the coming year.

John Booth

Chairman

28 September 2018

Corporate governance compliance

Application by Maintel as at 28 September 2018

The directors have elected to report the Company’s corporate governance compliance against the QCA Corporate Governance Code (“the Code”) issued by the Quoted Companies Alliance in April 2018.  The Chairman takes overall responsibility for compliance with the Code and justifying any divergence from it.

The Code notes that good corporate governance adds value to a company:

  • Good corporate governance creates shareholder value by improving performance, whilst reducing or mitigating the risks that a company faces as it seeks to create sustainable growth over the medium to long-term.
  • Companies join public markets to access capital, to benefit from the kite mark of being a well regulated, transparent, communicative and financially sound organisation, to facilitate employee motivation and involvement, to drive investment and to effect acquisitions and mergers. Without trust, there will be no appetite from shareholders to invest further or remain shareholders. As trust increases, so the cost of capital is reduced.

The Code notes that compliance disclosures may be made in the Company’s Annual Report, on its website, or both.  Where disclosure has been made in the Company’s 2017 Annual Report (found here), cross-reference is made to it in this report.

Compliance

The board considers that Maintel complies fully with the provisions of the Code.

Adherence to the ten Principles of the Code

The ten Principles of the Code and the Company’s application of them are as follows:

1. Establish a strategy and business model which promote long-term value for shareholders

The Group’s strategy and business model are detailed in the Maintel Overview section of the 2017 Annual Report, in particular on pages 8 & 9, and derives primarily from the aggregation of directors’ and senior management assessment of the evolution of the Group’s key markets and how best to capitalise on that evolution.  It includes the People Strategy and Values.

The principal risks and uncertainties affecting the Group are shown under the Corporate Governance heading on pages 21-22, with the risk management process described on page 28.

2. Seek to understand and meet shareholder needs and expectations

Twice-yearly meetings are held with key shareholders, with a developing programme of contact and meetings with existing and prospective shareholders outside of the reporting seasons, including recent investor events held at the Company’s London offices.  The Company’s broker also provides formal (after the twice-yearly meetings) and informal ad hoc feedback on shareholder and prospective shareholder views.  These meetings and feedback inform the board as to shareholder preferences in respect of the likes of acquisition appetite, dividend policy, share buy-back policy and acceptable levels of debt and are considered to be valuable forums for the open exchange of views and information, to the extent permitted by legislation.

The company’s AGM also provides the opportunity for the exchange of views with private shareholders.

Expectations are managed in the above meetings and by way of trading updates, the latter having become more regular in recent times to improve communication.  Other announcements are made to the market via the Regulatory News Service as required.

The directors source and review the ISS (Institutional Shareholder Services) report on its AGM voting recommendations and assess the validity of these recommendations in the light of the Company’s own circumstances. The primary issue raised by the report in advance of the 2018 AGM related to the independence of the Company’s non-executive directors, which is discussed below under Principle 5.

The Company’s website includes contact details for The Chairman, Chief Executive and Chief Financial Officer here. The Senior Independent Director makes herself available to institutional investors should they require an alternative communications route with the Group.

3. Take into account wider stakeholder and social responsibilities and their implications for long-term success

The directors consider the following to be the key stakeholders in the business and how the Company interacts with each to achieve mutual success.

Shareholders

As noted in Principle 2 above, the directors maintain contact with key shareholders with a view to maximising their long-term returns and will consider any input from them to achieve those returns.

Employees

Details of methods of engagement, including a Maintel Matters employee forum, a monthly Update communication, Share Incentive Plan and employment policies are given on page 35 of the 2017 Annual Report.  The role and responsibilities of the Chief People Officer have also been elevated, recognising the need to improve the attractiveness of the company to existing and prospective employees, through career planning, benefits alignment, work/life balance, culture development and similar initiatives.

Annual employee reviews, employee satisfaction surveys, the Maintel Matters forum and exit interviews all provide valuable feedback to management and directors on the success of the actions above, otherwise quantified in the monthly board pack by employee turnover statistics.

Customers

The Group’s product and service offerings are described in the Maintel Overview section on pages 6 to 9 of the 2017 Annual Report, and these are sold by both a new business sales team and account managers who service existing customers.  In addition to other contact points such as project managers for installations and customer service teams, communication with customers and prospects also occurs via social media feeds, blogs, events, conferences and exhibitions.  Particularly key customers and partners have an allocated executive sponsor.

The success of these offerings and interactions is evidenced by growth in the Group’s revenues, together with feedback from account managers and other customer-facing employees, feedback at events, customer satisfaction surveys reported monthly, and ultimately customer churn statistics. 

Suppliers

The Group’s main suppliers are shown on page 7 of the 2017 Annual Report, contacts at senior level being maintained with all of these.  The Group also employs product managers to monitor the changing products and services of the suppliers and manage relationships with them.  Representatives of the key suppliers regularly hot-desk at the Group’s London offices enabling enhanced relationships to be forged.

Regulators

The Group’s mobile and landline services are regulated by Ofcom, to whom an annual subscription is paid; this relationship is benign in the absence of any customer complaints.

The Company is listed on the AIM market of the London Stock Exchange, which is an exchange-regulated market.  The Company’s broker and NOMAD, finnCap, is responsible for advising and guiding the Company in relation to its responsibilities under the AIM Rules.

Broker/NOMAD

The directors work closely with finnCap around year end and half year, and in the event of other communications to the market that are required throughout the year, whether for regular share transactions relating to the Share Incentive Plan or for ad hoc events such as trading updates or acquisitions.  finnCap provides other advice and information to the directors as required.

The directors also employ the services of Oakley Advisory in helping compile the Annual and Interim Reports and for ad hoc advice.

Auditors

The Group typically has two concentrated periods of interaction with its auditors each year, around year end and half year, and in preparing for those exercises; in addition, ad hoc advice will be sought from the auditors as required. 

Advice on tax, corporate finance and other matters may also be sought from the auditors’ associates or from other organisations.

The Audit & Risk committee (or its representative(s)) meet with the auditors at least twice a year – a summary of the committee’s terms of reference can be found here.

Other

The Group is cognisant of its social responsibilities and reports on its environmental actions on page 36 of the Annual Report.

Current initiatives include measures to enhance investor relations and to embed a consistent corporate culture and organisational structure across a group that has grown significantly through acquisition. 

 

4. Embed effective risk management, considering both opportunities and threats, throughout the organisation

The board annually reassesses its risk appetite for eight areas within the business:

  • Financial
  • Health & Safety
  • Environmental
  • IT security
  • Legal and regulatory compliance
  • Strategic suppliers and partners
  • Sales and competition
  • HR/personnel

which defines the risk profile the business is prepared to apply to achieve medium- to long-term success. 

The risk appetite report forms the basis of the board’s monthly review of the Group’s risk register, which is updated by the Head of Business Improvement from the filtering upwards of risks identified in a range of operational and review meetings held throughout the month. 

The Audit and Risk committee is responsible for the monitoring of risk, and its report at page 26 of the 2017 Annual Report further describes its responsibilities and actions taken during 2017.  The Audit and Risk committee reviews the effectiveness of the risk management process annually.

The monthly board pack also includes KPIs and explanations of variances, which can provide an early warning of certain opportunities and threats.

5. Maintain the board as a well-functioning, balanced team led by the chair

The directors are agreed that an established, experienced and balanced board is in place, with three non-executives and five executives.  The directors’ titles are shown on pages 23 and 24 of the Annual Report and are self-explanatory, with clear divisions of responsibility.  The Annual Report also describes selected historical roles and experience of the directors which reinforce their value to the Group.

 A “Corporate Governance Review” paper, updated in March 2018 affirms that the board review process is undertaken on a rolling basis: “The Chairman and CEO discuss the performance of the board as a whole; the Remuneration committee reviews the performance of the executive directors”.

A schedule of Matters Reserved for the board was also updated in March 2018 and requires an annual review by the board of its own performance and that of its committees and individual directors. 

At the February 2018 board meeting it was agreed that a third party review of board effectiveness was not required, the Remuneration Committee setting each executive director personal and Group profitability targets annually and measuring performance against both these and effectiveness generally. The board considers that this process, together with an assessment of the effectiveness of the non-executive directors, is currently adequate, however the benefits or otherwise of an external review are considered annually. 

The directors are also agreed that, in line with the statement on page 25 of the 2017 Annual Report, the non-executive directors are independent, as is necessary to challenge the executive directors, and commit sufficient time to the fulfilment of their duties as directors of the Company. 

The directors acknowledge that the shareholdings, length of service and consultancy work undertaken by some non-executive directors might be seen to compromise their independence, as suggested by the report prepared by ISS in advance of the 2018 AGM.  The board has considered the issue of independence at length and has taken soundings from institutional investors and concluded that all three non-executives act independently and are demonstrably able to challenge the rest of the board, having extensive experience in such positions, as shown by their external appointments described on pages 23 and 24 of the Annual Report.  Further, the executive directors consider that the longevity of tenure of two directors gives them valuable insight to the business, that the non-executive directors’ shareholdings align their interests with those of other shareholders and that the consultancy services provided from time to time by two non-executive directors have been cost-effective expedients during corporate actions utilising the directors’ skillsets which would otherwise have been outsourced.

Updated terms of reference of the Remuneration, Nomination and Audit and Risk Committees, together with the process for obtaining independent advice, were agreed at the February 2018 board meeting; key elements of the terms are shown here.  The directors believe that, given the external roles they hold and have held, together with the knowledge and insight gained as directors of Maintel, the members of each committee have the appropriate experience to fulfil their committee responsibilities.

The directors’ attendance records at board and committee meetings during 2017 is shown on page 27 of the Annual Report.

6. Ensure that between them the directors have the necessary up-to-date experience, skills and capabilities

The directors’ biographies on pages 23 and 24 of the Annual Report show the depth of skills and experience of each director, which the board believes represents an appropriate balance.

The board’s Gender Pay Report (accessed here) highlights the male/female balance throughout the Group and its plans to improve the balance, whilst applying meritocratic appointments rather than positive discrimination.  Change depends on vacancies becoming available and suitable candidates for those roles.  As board vacancies arise, the Nominations Committee will continue to assess the diversity of the board as one of the criteria to apply in choosing candidates, the previous board appointment, for example, being Mrs Nabavi.

The Company has experienced dramatic change in recent years, primarily technological and size-related, mainly through the acquisition of Azzurri Communications.  The board has critically assessed its structure and capability, together with the Group’s operational structure at each acquisition and made changes accordingly.  The board believes that its members are able to keep abreast of technological change with attendance at industry events and regular interaction with suppliers, customers and counterparts in other TMT companies, supported by a management team with frontline technical capabilities. 

Non-technical expertise is maintained and developed through attendance at financial, legal and other corporate events and regular liaison with advisers, together with input from senior internal sources including the Company Secretary.

The bulk of the work required to respond to the recent growth has already been successfully implemented, demonstrating the abilities of the board to manage such change.  The executives also have experience of operating in larger entities prior to joining Maintel, as described on pages 23 and 24 of the Annual Report.

7. Evaluate board performance based on clear and relevant objectives, seeking continuous improvement

Board evaluation is undertaken on a rolling basis, the Chairman and CEO discussing the performance of the board as a whole and the Remuneration committee reviewing the performance of the executive directors against annual and triennial performance objectives defined for the purposes of bonus eligibility and option exercise criteria; the latter are described in the Remuneration committee report on page 32 of the 2017 Annual Report.  Bonus eligibility is dependent on Group financial performance combined with individual role-specific objectives which are tailored to Group requirements for that year.

The board does not consider that any executive director is indispensable, with sound second tier operational management - which is in the process of being strengthened further – capable of assuming operational duties in the absence of a board member and succession planning at all levels being a key component of our People Strategy. 

Directors retire, in any event, in accordance with the Company’s articles of association on a three-year rotational basis and in accordance with corporate governance recommendations if these require a shorter period.

The directors consider that change for the sake of it is not productive, but its regular review of board effectiveness will highlight when change is required.

8. Promote a corporate culture that is based on ethical values and behaviours

In April 2017 the Group devised Maintel Values, defining the culture of the Group in a range of areas.  These values are designed to be applied to all areas of the Group’s operations, and are kept in employees’ minds by reference in monthly employee newsletters.  They are enshrined in the Company Handbook and separately on the Group intranet, and have also been replicated on page 9 of the 2017 Annual Report and here.

Key elements of the values include integrity, creativity and agility in customer delivery and personal development in an enjoyable work environment, which the board considers particularly important to the ongoing profitability and growth of the Group by way of attracting and retaining satisfied customers and employees.  The values also allow other stakeholders to assess the quality and aspirations of the company with which they are dealing.

As required by law, the Group adheres to Anti-bribery and Anti-slavery legislation (see here); it is also ISO14001-cerfified and reports on its environmental policies on page 36 of the 2017 Annual Report.

The Group has in place procedures for the disclosure and review of any conflict, or potential conflict of interest which the directors may have and for the authorisation of such conflict matters by the board.

As described under Principle 6, the board recognises the importance of establishing and maintaining a consistent, positive corporate culture, aligned to the Maintel Values and with a growing recognition of a “Maintel person” following the Company’s recent acquisitions.  This culture is also promoted informally through actions and direction from the board downwards and in the implementation of the Group’s People Strategy throughout 2018.

9. Maintain governance structures and processes that are fit for purpose and support good decision-making by the board

This document highlights the main structures and processes underpinning the governance of the Group, including:

  • Corporate Governance Review paper (see Principle 5)
  • Matters Reserved for the board paper which  includes the approval of:
    • the overall leadership and management of the Group
    • budgets
    • strategy
    • reporting of performance against objectives
    • significant capital expenditure and contracts
    • external financial reporting
    • dividend and treasury policies
    • overall systems of internal controls and risk management
    • remuneration and governance policies
    • any significant proposed changes to business operations or the structure of the Company’s capital
    • Terms of Reference of Remuneration Committee, Nomination Committee and Audit & Risk Committee (Principle 5)
    • Risk Appetite review (Principle 4)
    • The Annual Report and Interim Statement
    • Maintel Values document (Principle 8)
    • Anti-bribery policy (Principle 8)
    • Anti-slavery policy (Principle 8)
    • ISO14001:2004 (Principle 8), ISO9001, ISO20000, ISO18001and ISO27001
    • Shareholder meetings and other communications

All governance papers referred to in this document are subject to annual review.

10. Communicate how the company is governed and is performing by maintaining a dialogue with shareholders and other relevant stakeholders

The 2017 Annual Report contains a Report on Corporate Governance on pages 25-28, and a Report of the Remuneration Committee on pages 29-33, in addition to the statutory Directors Report, all providing details of the Group’s corporate governance regime.

The Strategic Report at the front of the Annual Report, provides details of the Group’s performance.

Pages 27 and 28 of the 2017 Annual Report describe the modes of communication with its shareholders and other stakeholders, primarily being the issue of year and half year results announcements, together with trading updates where necessary.

Meetings are held with interested investors and prospective investors in respect of the two results announcement dates, and where arranged at other times.  A non-executive director will usually accompany the presenting team, encouraging investors to contact them should they wish to make representations to the board absent the executive directors.

The first meetings were held in Q2 18 updating interested parties, including a range of investors, on the Group’s product development, to help in understanding the Group’s future strategy.

finnCap also produce brokers’ notes following the two results announcements and following any other announceable events.

All announcements are shown on the Company website, as are all Annual Reports and Interim Statements, under an “Investors” link here.

      28 September 2018