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Corporate Governance

The UK Corporate Governance Code

Companies that have shares traded on AIM, the London Stock Exchange’s market for smaller growing companies, are not required to comply with the UK Corporate Governance Code (‘the Code’). Whilst the Group does not adhere to the Code, the Board is committed to maintaining high standards of corporate governance, and draws on best practice including those aspects of the Code it considers to be appropriate and practicable for a company of this size. In line with a focus on cost-effectiveness across the Group, the corporate governance processes in place balance the need to ensure that the Board carries out its responsibilities effectively with the need to do so cost-effectively.

The Board of Directors

The Board currently consists of two executive and four non-executive directors. Biographies of the directors are provided on Board page. There is a clear division of responsibilities between the Chairman and the Chief Executive Officer (CEO) and their roles have been set out in writing and agreed by the Board.

The non-executive directors are Ms Wallis (Chairman), Mr Grant (Chairman Designate), Mr Brown (Senior Independent Director) and Mr Cooper. The non-executive directors bring a wide range of skills and experience to the Board. The Board considers that the non-executive directors are independent, despite the fact that the terms of Ms Wallis and Mr Brown now exceed nine years, a factor which the UK Corporate Governance Code states is likely to affect or could appear to affect their independence, although they meet the Code’s other independence criteria. In last year’s Annual Report, the Board indicated its support for refreshing the non-executive director representation on the board and stated it was actively engaged in a search for a new non-executive director. In August 2016 Mr Cooper was appointed to the Board as a non-executive director. In March 2017 Mr Grant was appointed as Chairman Designate and a non-executive director and it is the Board’s intention that Mr Grant will succeed Ms Wallis as Chairman of the Board, Audit and Nomination Committees when she steps down at the 2017 Annual general Meeting. Mr Brown has also stated his intention to step down at the 2017 Annual General Meeting. Mr Clifford will retire at the end of March 2017 and his replacement Jill McGregor has agreed to take up the role of Chief Financial Officer no later than 3 July 2017.

In February 2017, the Board carried out an evaluation of the performance of the Board and its Committees. This involved each director reviewing information and completing an evaluation questionnaire, the results and feedback from which were collated into a document and discussed by the Board. It is the Board’s intention to continue to review annually its performance and that of its Committees.

Board processes

There is a list of the types of decisions reserved for the Board, which is reviewed annually by the Board. In addition, an agenda plan is prepared with the aim of ensuring that the Board considers all the matters that it should, whilst allowing for the unexpected. The agenda plan is reviewed regularly.

The Group normally conducts about eight Regular Board Meetings a year. In addition the Board meets to approve financial statements, the allotment of shares and to approve significant commercial agreements or transactions. The attendance of the individual directors at the Regular Board Meetings and the Audit and Remuneration Committee Meetings during the year ended 31 January 2017 were as follows:

Attendance record at Board Meetings and Committees

Name Position Regular Board
Meetings
Audit
Committee
Remuneration
Committee
Ms T A Wallis Non-executive Chairman 8(8) 4(4) 9(9)
Mr M G Sassone Chief Executive Officer 8(8) n/a n/a
Mr P L Clifford Finance Director 8(8) n/a n/a
Mr I G Brown Non-executive Director 7(8) 4(4) 7(9)
Mr P M Cooper* Non-executive Director 4(4) 2(2) 5(5)

*Mr P M Cooper was appointed as a director on 11th August 2016

The above table does not include Mr P W Grant as he was appointed on 6 March 2017, after the year end.

Numbers in brackets denote the total number of meetings during the year. The Nomination Committee met once during the year with all committee members present.

All the directors have access to the advice and services of the Company Secretary, whose appointment and removal is a matter for the Board as a whole. All directors are able to take independent advice in the furtherance of their duties, if necessary, at the Company’s expense.

Under the Company’s Articles of Association, all new directors are required to resign and seek re-election at the first Annual General Meeting following their appointment. All directors are required to seek re-election at intervals of no more than three years.

Committees of the Board

The terms of reference of the committees are set out in full on the Company’s website, but a summary of the membership and work of each committee is set out below:

Audit Committee

The members of the Committee are Ms Wallis (Chairman), Mr Grant (Chairman Designate), Mr Brown and Mr Cooper. The executive directors and the external auditors attend the meetings by invitation. The Committee considers financial reporting and internal controls. It also reviews the scope and results of the external audit and the independence and objectivity of the auditors. It meets at least twice a year and reviews the interim and annual financial statements before they are submitted for approval by the Board. The Committee met four times during the year; twice to approve results and twice in connection with the planning of year end audits. The Committee considers annually whether the auditors remain independent for the purposes of the audit. This year the fee for non-audit work is £10,000 against an audit fee of £48,000. The Committee is satisfied that the auditors remain independent for the purposes of the annual audit. The Committee considers that given the size of the Group and its current stage of development a separate internal audit function is not required, but the matter is reconsidered annually by the Committee.

Click here to view the Terms of Reference.

Remuneration Committee

The members of the Committee are Mr Cooper (Chairman), Ms Wallis, Mr Grant and Mr Brown. The Committee reviews and sets the remuneration of the executive directors and considers any bonuses to be awarded to them. The Committee decides upon all aspects of share schemes including the approval of share options. The Committee met nine times during the year. The Remuneration Committee met more times than usual during the year due to business relating to the recruitment of the new Chief Financial Officer, reviewing existing share options and the granting of share options to new members of staff.

Click here to view the Terms of Reference.

Nomination Committee

The members of the Committee are Ms Wallis (Chairman), Mr Grant (Chairman Designate), Mr Cooper, Mr Brown and Mr Sassone. At the request of the Board, the Committee recommends candidates for new appointments to the Board and advises on all matters relating to such Board appointments. The Committee met once during the year relating to the appointment of the new Chief Financial Officer although consideration of this matter was largely undertaken by the Board as a whole.

Click here to view the Terms of Reference.

Relations with shareholders

The Company seeks to maintain and enhance good relations with its shareholders. The Company’s interim and annual reports are supplemented by public announcements to the market on technological, commercial and financial progress. All investors have access to up-to-date information on the Company via its website, www.lidco.com, which also provides contact details for investor relations enquiries. All shareholders are invited to make use of the Group’s Annual General Meeting to raise any questions regarding the management or performance of the Company.

The Chief Executive Officer and the Finance Director meet regularly with shareholders and the investing community and report to the Board feedback from those meetings. In addition, the Group’s stockbrokers provide independent feedback to the Board on shareholders’ views. The non-executive directors attend the AGM and have the opportunity to attend other meetings with shareholders and do so from time to time or as requested. The Board is kept informed on market views about the Group.

Page last up-dated: 27 March 2017