The Company adopted formally the Quoted Companies Alliance’s (QCA) Corporate Governance Code for small and mid-size quoted companies (the “Code”) on 17thAugust 2018. It is the policy of the Board to comply with the Code wherever it is practicable to do so. The Code was revised in April 2018 and sets out 10 broad principles of corporate governance, states what are considered to be appropriate corporate governance arrangements for growing companies and requires companies to provide an explanation about how they are meeting the principles through certain prescribed disclosures.
Hardide’s full Corporate Governance Statement the (‘Statement’) is published on this website. Below are the key points from that Statement which the QCA guidelines require to be set out separately on the Company’s website. Out of the 10 principles, this is required for principle 2, 3, 7, 8, 9 and 10; together. The Statement has more detail on each principle and the linkages between, as well as setting out more of the reasoning for the Company’s governance rules.
The Board has considered how each principle is applied and provides below an explanation of the approach taken in relation to each and how they support the Company’s medium to long-term success.
During the course of the year, Jan Ward resigned her directorship and the Company recruited two new non-executive directors (‘NEDs’). Together they bring with them specialist knowledge of our target market and strategic planning skills; as well as having served on the Boards of other listed companies. Also, formal scheduled meetings of the NEDs alone have been instituted.
With the addition of two more independent directors, the Company now has scope for a senior independent director. The Board has chosen Charles Irving-Swift to assume this role.
The Board considers that the only area where the Company does not fully comply with the Code is principle 7; the Board does not currently have a formal evaluation process but will consider this over the next year.
Compliance with the Code was last reviewed on 26th September 2018.
The Company’s strategy is articulated on page 11 of its latest Annual Report.
The Company currently operates from two sites. The main coating facility and head office is in Bicester, Oxfordshire, UK with a coatings facility in Martinsville, Virginia, USA. The Company is a service organisation that coats precision engineering components supplied by customers, with the exception of certain new contracts where the Company is responsible for the product being manufactured and coated.
Challenges in Execution of Strategy
Planning increases in capacity
Whilst the Company puts considerable thought into anticipating medium- to long-term demand so as to build capacity in time to meet that demand, there are particular difficulties in this. The oil industry is notoriously cyclical and accurately predicting cycles is close to impossible. In addition, gaining volume-related supply agreements with major customers is normally not possible. The Company has had experience of customers’ best guesses of their demand being markedly both over- and under-achieved. Moreover, the lead time from order to installation of new capacity is about one year.
Together, these things make the matching of additional capacity with demand one year and beyond a very difficult process.
As volume and customer numbers increase, the matching of capacity to demand will become easier. This is because each new increment in capacity will become a smaller proportion of existing capacity and the serving of more-numerous customers will mean that peaks and also troughs in overall demand will become progressively smaller in relation to average demand. Accordingly, increasing sales volumes is the leading objective for the Company, especially since production overheads will rise at a markedly slower rate than sales.
Awareness of Hardide coating and expanding its market
Being a new product and the fact that it often performs a problem-solving role, means that awareness among potential customers for Hardide and our awareness of those customers is hard to achieve. The Company has an awareness programme designed to reach specifiers in a range of industries.
Lead time to acceptance
Nearly always, customers will do extensive testing of Hardide before accepting it and this can take considerable time. Hardide has a programme to commission tests at independent laboratories. In some cases, the results from these will be accepted by potential customers and thereby shorten the acceptance lead time.
Shortly after full- and half-year results, presentations are made by the CEO and the Finance Director to significant shareholders, supported by the Company’s financial PR company and broker. Presentations are also made at various investor events which are usually published on the Company’s website. Normally, but not always, the Company Chairman will attend these presentations so as to appreciate first-hand the concerns or interests that shareholders may have.
The Company Chairman wrote recently to all those shareholders who hold or control 1% or more of the issued share capital. This letter invites direct contact with himself and/or the senior independent director. Shareholders wishing to make contact with the Chairman, CEO or Senior Independent Director (‘SID’) may contact them by email or contact the Company and advise that they wish to speak to any of the aforementioned directors. Feedback from shareholders is carefully considered and acted upon where appropriate.
At the Annual General Meetings ('AGM’) of the Company, shareholders attending are invited to ask questions as part of the formal proceedings and then afterwards on a one-to-one basis in an informal setting.
Shareholders may contact the Company by calling +44 1869 353830 or emailing email@example.com.
The most important resources held by the Company are its skilled employees, its intellectual property, and relationships with customers, suppliers, and its loyal shareholders. Intellectual property in the form of technology development and patents are monitored and rigorously managed by the IP committee of the Board
The form or manner of the coating is different for each application and the lead time to sales can be several months or years and sometimes very much longer. During this period, strong and enduring customer relationships are built and visits to customers are often made by the Technical Director and/or CEO
The CEO holds monthly staff briefings where staff can ask questions and air their opinions and concerns. Feedback from the business development managers on market and customer comments is presented regularly to the whole Board. All staff have regular performance reviews.
The Company takes its environmental obligations very seriously and fully complies with and is accredited to, the international environmental standard ISO 14001.
The Terms of Reference for the Company’s Risk Committee can be found on the website. The Strategic Report on pages 14-16 in the Company’s latest Annual Report includes the Board’s most recent risk evaluation.
The Company's risk management system is performed in accordance with the principles of ISO standards, particularly ISO 9001:2015 and ISO 14001:2015.
This principle is addressed in the Company’s latest Corporate Governance Statement. The time commitment of each director is listed in their biographies on the website. Each executive director is contracted on a full-time basis. Whilst contractually bound to one day per month, the time committed by each non-executive director ('NED') amounts to at least two days per month for the NEDs and at least twice that for the Chairman.
The biography of each director is published on the website. The Chairman along with the Board have sufficient skills and experience to undertake their roles effectively. The skills required and training of directors is under constant review and if necessary training will be provided.
At present, the CEO agrees annually his personal objectives with the Chairman and the document is circulated to the Board. The CEO’s performance is monitored against these objectives and some are taken into account in designing the CEO’s remuneration package. The CEO undertakes a similar process with his direct reports.
So far, neither the Remuneration and Nomination Committee, nor directors independently, have called for a Board evaluation or Board objectives setting process. In the coming year, the Board w ill give detailed consideration to an evaluation of its objectives and performance; both collectively and individually.
A succession plan for key members of staff is prepared by the CEO and then, with the CEO and Chairman in attendance, is reviewed, refined and monitored by the Remuneration and Nomination Committee.
The Board aims to promote and maintain a culture of integrity across all businesses within the Group.
The Group’s policies, including anti-bribery and whistleblowing policies, are communicated to all new employees upon joining through a formal induction process and are contained in the Employee Handbook. This is accessible to all employees either in written or electronic formats. Employees are required to re-affirm their adherence to these polices on a regular basis.
An open culture is encouraged within the Group, with regular communications to employees regarding progress and business updates. Employee feedback is encouraged through line management and monthly team briefs delivered by the CEO.
The Group places significant emphasis on developing people, continually evaluating employee performance and supporting training requirements through a flexible appraisal process, which will add value to the business and its long-term goals.
The Group is committed to corporate social responsibility. This includes equal opportunities in recruitment and employee development, diversity in the workplace, human rights, health and safety and supporting local and associated communities.
As part of the accreditation to aerospace standard AS9100D, the Company has a responsibility to be alert to the possibility of suspect or counterfeit components and will report any such event to the relevant authorities.
The Group recognises the importance of its environmental responsibilities and operates in accordance to ISO14001:2015 as well as additional internal policies and procedures. Initiatives designed to minimise the Group’s impact on the environment include minimising and recycling of waste, reducing CO2emissions, minimising any discharges and use of low energy lighting. The health and safety of the Group’s employees, customers and members of the general public is a matter of primary concern. The Group operates a Health and Safety Committee that meets monthly to monitor, review and make decisions concerning health and safety matters. Accordingly, it is the Group’s policy to manage its activities so as to avoid causing any unnecessary or unacceptable risk to the health of its employees and members of the public. The policy is based on the requirements of national employment legislation in the countries where the Group operates.
The role of the Company’s Chairman is to:
- ensure effective communication with shareholders;
- be available to shareholders for private meetings with principal shareholders;
- set, and ensure compliance with, overall rules for corporate governance;
- lead the development of Corporate Strategy;
- ensure effective and open communication among directors; particularly at Board meetings;
- chair the Risk Committee and be an ordinary member of the Audit Committee and the Intellectual Property Committee;
- together with the CEO, direct and lead induction programmes for new directors; and
- ensure the appropriate content, accuracy, format and presentation of information for the Board.
The principal features of the CEO’s role are to:
- supervise directly all members of the senior management team, including the other two executive directors;
- develop, gain Board approval for and implement the Business Strategy;
- design and implement the sales and marketing plans;
- by virtue of his deep experience in mechanical engineering, provide strong support for operations and engineering;
- take the principal responsibility for the Company’s financial performance;
- maintain a strong relationship with the Chairman and be jointly responsible with him for shareholder communication;
- by way of staff briefings ensures broader awareness within the firm of the Company’s performance and challenges;
- ensure compliance with the quality management systems;
- plan and implement adequate staff training programmes; and
- be responsible for the health & safety of employees and the environment performance of the Company; these are direct accountabilities of the CEO.
The role of the SID is to be:
- a conduit for concerns of directors, shareholders and other stakeholders who prefer to discuss matters that they have been unable to resolve through other channels;
- available to meet principal shareholder;
- a sounding board for the Chairman;
- along with other non-executive directors, and having taken soundings among from other suitable parties, conduct regular reviews of the performance of the Chairman.
As already described above, the Board will review the need for the evaluation and the setting of objectives for individual directors and the Board as a whole. Other than this, the Board has no current plan to adjust its governance framework. The matter will be re‑visited by a committee of the non-executive directors.
All shareholders are invited to make use of the Group’s AGM to raise any questions regarding the management or performance of the Company.
The CEO and Finance Director presented at an investors’ event on 11 June 2018 which was videoed and is available here on the Company’s website. In addition, when significant news or results are released the CEO takes part in audio interviews which are also published on the Company’s website.
The outcome of votes cast at the Company's last AGM held in February 2018 was as follows:
Hardide plc Annual General Meeting: Monday 19 February 2018, 11.30am
|Resolution 1||To receive and adopt the financial statements of the Company for the financial year ended 30 September 2017 and the reports of the directors and auditor thereon||799,110,173||0||0||0||799,110,173|
|Resolution 2||To re-elect Mr P N Davenport as a director||799,110,173||0||0||0||799,110,173|
|Resolution 3||To re-elect Mr A R Boyce as a director||798,521,938||0||588,235||0||799,110,173|
|Resolution 4||To appoint James Cowper LLP as auditor||618,181,647||180,878,526||0||50,000||799,110,173|
|Resolution 5||To authorise the directors to determine the auditor’s remuneration||799,110,173||0||0||0||799,110,173|
|Resolution 6||To authorise the directors to allot relevant securities||799,110,173||0||0||0||799,110,173|
|Resolution 8||To disapply Section 561 (1), Companies Act 2006 to share issues||799,110,173||0||0||0||799,110,173|
|ALL VOTES WERE PROXY VOTES|