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Corporate Governance.

The Board and its Committees have a fundamental role in the governance framework by using their wide experience in providing independent challenge and support and ensuring that good governance is promoted across the different businesses within the Group. The Board is responsible for the success of the Group and providing leadership within the framework of existing controls and ensures that its duties to shareholders and other stakeholders are understood.

We have adopted the Quoted Companies Alliance Corporate Governance Code (“QCA Code”) to assist in putting into place an effective corporate governance framework which will deliver results. Your Board understands that good governance is one of the foundations of its sustainable growth strategy. The Chairman’s corporate governance statement is included in the Company’s latest annual report.

Details on how the Company applies the principles of the QCA Code are set out below. These details will be updated annually at the time of publication of the annual report and accounts. The last update was on 3 October 2018.

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

Newmark is a leading provider of electronic and physical security systems through its subsidiaries, Grosvenor Technology Limited and Safetell Limited, in the UK with exports to Europe and USA, and worldwide through our established customer base. The Company aims to help address some of the major challenges facing corporations in an environment of ever-increasing global security concerns and add value for all of our stakeholders through partnership and innovation. We will continue to develop exceptional and secure products backed up by industry leading support. The Company strategy is focused on delivering growth through the development of new products, providing its customers with much-needed peace of mind whilst also improving business efficiency and flexibility through innovative technology. The three core markets served, Electronic Access Control, Human Capital Management (HCM) and Counter Terror Equipment, are anticipated by industry analysts to grow significantly in the medium to long-term. The company takes a ‘deep and narrow’ approach in each of these markets through the provision of products and services that are highly developed and specialist, thus delivering tangible added-value to its downstream partners and creating barriers to entry to potential competitors.

Grosvenor Technology’s products are at the cutting edge of access control and human capital management technology. The business is well positioned to capitalise on the crossover between these two aspects of electronic security and continued investment ensures that it stays at the forefront of this marketplace. Long term strategies are in place to increase recurring revenues through the provision of more cloud-based services on an ongoing basis, particularly in the HCM sector. This is envisaged to deliver greater shareholder value over time as both quantity and quality of earnings increase through this strategy.

Safetell is one of the industry leaders in a number of high-demand physical security products and is perfectly placed to service the industry. The market for asset security products and services is fast growing with the ever-increasing threat of terrorism and crime placing security high on the priority list for corporate clients. It is the policy of the Company to maintain the highest standards of product quality meeting statutory and regulatory requirements by the control of its sales, purchasing, production, delivery, installation and service activities.

Further details on the Company’s business model and strategy are set out in the latest annual report and accounts on pages 10-17.

Principle 2: Seek to understand and meet shareholder needs and expectations

The Company engages with shareholders through a variety of traditional and digital media. In addition to regulatory announcements and reports, the Company communicates through a variety of channels. The CEO participates in periodic interviews with online investor news platforms and channels as well as giving weekly non-material updates on social media platforms. The Company makes announcements in industry, trade and general business publications and through RNS feeds.

Our broker’s research is freely available on its website and circulated in the same way as it was previously. They continue to speak to investors and arrange investor meetings for our corporate clients when requested.

The website contains an overview of the markets operated in, the Company’s vision and strategy and multi-media detail of the separate Physical Security and Electronic Divisions. Historic reports, statements, announcements and share price information are also accessible within the website.

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

The Company recognises that there are several resources and relationships that are considered to be strategically important. These include major clients and key suppliers and these relationships are managed at a senior level within each division with the most important receiving additional executive attention.

The Company further identifies the need to nurture and develop relationships with all stakeholder groups. Feedback is gathered from customers through sales and marketing functions with face to face key customer meetings. Regular supplier reviews are conducted to ensure the company’s and vendor’s needs and ambitions are met.

The Company recognises the importance of its employees to its achievements. Regular internal communication meetings are conducted across all sites to ensure employees are knowledgeable about a number of topics. Questions and suggestions are encouraged through a range of formal and informal channels directly to Divisional Managing Directors. These employee feedback channels have led to a number of tangible outputs and changes to working practices. Our staff expect to be able to work in a safe and comfortable environment, and to be provided with the necessary skills and knowledge to perform their work to the required standard. We provide ongoing training wherever required and conduct routine appraisals with the staff.

Revised employee handbooks have been issued to all staff during the year which include updated policies, amongst others, on the following:

• Equal opportunities including fair and equal pay
• Anti bribery commitment
• GDPR Data protection
• Bullying and harassment
• Whistle blowing

The Vehicle and Drivers Handbook has also been reviewed to ensure that our vehicles meet current CO2 emission parameters and steer away from diesel due to the impact on the environment. The Group contributes to the Apprenticeship Levy and works with local training providers to provide apprenticeship opportunities to young people.

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

The Board has overall responsibility for the Group’s systems of internal control and risk management. The Board identifies the major business risks with management and establishes appropriate procedures to measure and manage those risks. These involve a system of measurement, control and reporting on a variety of internal and external factors. There are detailed procedures for the production of budgets covering profit and loss accounts, balance sheets and cash flows. Monthly subsidiary and group management accounts are produced with comparisons against budget and prior year.

Management also reports on major changes in the business environment including any possible impact on forecasts.

Principle risks and uncertainties associated with the business activities are set out in the Company’s latest annual report and accounts on page 16.

Principle 5: Maintaining the Board as a well-functioning, balanced team led by the Chair

The Chairman’s role is to ensure that the Board operates effectively to deliver the long term success of the Group. This includes ensuring that the Non-Executive Directors always have access to the executive management team to provide both support and challenge, all directors are able to express their views openly at Board meetings and that all directors are encouraged to bring independent judgement to bear on all issues. There are specific instructions in place for the timetable and content of Board papers so that the directors are properly briefed before the Board meetings. The Board has a number of matters reserved for its consideration, with the principal responsibilities being to monitor performance and to ensure that there are proper internal controls in place, to agree overall strategy, to approve major capital expenditure and to review budgets.

At 30 April 2018, the Board comprised a Non-Executive Chairman, two Executive Directors and two Non-Executive Directors. Under the Company’s Articles of Association, the appointment of all Directors must be approved by the shareholders in General Meeting, and additionally one-third of the Directors are required to submit themselves for re-election at each Annual General Meeting. Additionally, each Director has undertaken to submit themselves for re-election at least every three years.

All of the directors are considered to be independent apart from Maurice Dwek in view of his substantial shareholding in the Company. However the board considers that Mr Dwek brings a wealth of experience from across a range of businesses, as well as his knowledge of being a chairman of listed and other companies together with his experience of the electronic division gained over 21 years.

Any Director may, in furtherance of his duties, take independent professional advice where necessary, at the expense of the Company. All Directors have access to the Company Secretary whose appointment and removal is a matter for the Board as a whole, and who is responsible to the Board as a whole for ensuring that agreed procedures and applicable rules are observed.

Principle 6: Ensure that between them the Directors have the necessary up-to-date experience, skills and capabilities

The CEO works closely with the senior management teams of the subsidiary companies to keep abreast of market trends, economic trends, technological advances and customer expectations to remain agile and adjust to the changing times. She meets with customers and suppliers on a regular basis. She also regularly attends security exhibitions in the UK and worldwide as well as forums, corporate and networking events, and keeps the Board up to date with all developments.
Changes in the business and economic environment are discussed fully at Board meetings. The Board is informed of changes in accounting requirements by the company auditors and in regulatory requirements by the NOMAD’s via the Group Financial Director.

A brief summary of the career history of each of the directors is given below showing their vast experience in senior management positions across a wide variety of industries.

Maurice Dwek was the founder of the Dwek Group in 1963 as a distributor of PVC products with factories involved in engineering and other consumer products. The company was listed on LSE in 1973 and he was director of subsidiary companies and subsequently responsible for Group acquisitions and disposals. He disposed of this interest in 1988 through a management buyout. Subsequently he was chairman of Arlen PLC (electronics) and Owen & Robinson PLC (sports footwear, retailing and jewellery) and floated Newmark Security on the Alternative Investment Market of the London Stock Exchange in 1997 and was Executive Chairman until 2005.

Michel Rapoport held various senior positions in Ripolin (paint) in Paris between 1974-79 including President 1976-79. He then worked at Alcatel (telephony and electronics) 1979-91 including President Mailing and Shipping products division 1990-91. He moved to Pitney Bowes between 1991-95 where he was Chairman Pitney Bowes France and Vice President Pitney Bowes International. Michel was president and CEO of Mosler ($300m revenue physical and electronic security products and services) 1995- 2001 and was President and CEO at Laroche Industries Inc., (chemical product manufacturer and distributor) between 2001 and 2005. He has been managing partner of SAR Industries (real estate holdings) since 2007.

Robert Waddington qualified as a Chartered Accountant in 1964. He was a director of Hambros Bank Ltd from 1984 to1997, and director/chairman of a number of private companies involved in engineering, property, and steel stockholding between 1996 and 2008. He was also a director from 1997 to 2006 of Stanley Leisure PLC, a UK Stock Exchange listed company operating in the Betting and Gaming industries.

Marie–Claire Dwek was marketing director of Newmark Technology Limited (specialised electronic security systems) 1996-2000, responsible for the planning, leadership and strategic marketing. Between 2002–2013 Marie-Claire was responsible for the management and investment in various property portfolios for Motcomb Estates and joined Newmark Security as Chief Executive officer in 2013.

Brian Beecraft qualified as a chartered Accountant in 1973 with Touche Ross and was a senior manager there until leaving in 1985 to become Group Chief Accountant at United Transport International (transport division of BET PLC with freight and passenger transport companies in UK, Europe and Africa). He left United Transport as Group Financial Controller, having been responsible for all aspects of financial control and accounting for the Group, after Rentokil acquired BET in 1994. He worked for himself providing freelance financial services until joining Newmark in 1998. During his career he has been involved in numerous acquisitions and disposals.

Marie-Claire Dwek and Brian Beecraft, as executive directors, are full time employees of the company. There are no minimum time commitments for the three non-executive directors who spend whatever time is required to fulfil their duties and responsibilities.

Principle 7: Evaluate Board performance based on clear and relevant objectives, seeking continuous improvement

The Chairman carried out an evaluation of the Board during the year and deemed that it was working satisfactorily in particular:
1) The good mix of skills and experience of the Board members,
2) The amount of challenge and expression of views at meetings,
3) The attendance of all the Company Board members at the subsidiary company Board meetings,
4) The level of information, both financial and operational, available prior to and at the Board meetings,
5) Matters arising at each meeting are followed up promptly and the results reported back to Board members.

The performance of the Board is kept under continuous review. The Board does not consider that it is appropriate to perform a more formal board appraisal process utilising third parties at the current date, taking into consideration the size and nature of the Company. However, this will be kept under review and the board will consider on an annual basis whether to implement a more formal appraisal process.

In view of the size of the Company, no consideration has been given to succession planning at this stage.

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

The Group is committed to maintaining high standards for the environment, and our relationship with employees, customers and suppliers.

The Group is committed to being environmentally friendly and we have identified the key waste streams from our businesses so that the amount of landfill is reduced by separating waste into these different streams. Records are maintained as evidence that these forms of waste are separated and collected by licensed waste collection companies and these are reported at management meetings

Our efforts with stakeholder groups are detailed under principle 3 above.

All senior management members (including Group Human Resources manager) attend monthly management meetings, attended by both executive directors, to report on their department’s activities and where relevant to highlight any issues with customers, suppliers, employee or other stakeholders.

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

The Chief Executive Officer, Marie-Claire Dwek, is responsible for the day-to-day management of the business, developing the Group’s strategy for discussion with the Board and then implementing that strategy. The Group Finance Director, Brian Beecraft, is responsible for the financial reporting of the Group and supporting the CEO in developing and implementing the Group strategy. The two executive directors have prime responsibility for engagement with shareholders.

The Non -Executive Directors, Michel Rapoport and Robert Waddington, are responsible for bringing their expertise and judgement in assisting in the development of strategy and measuring its performance, challenging the Executive Directors and reviewing their performance.

Board meetings are held a minimum of four times a year and the Board of the parent company also attend the Board meetings of the subsidiary companies on the same day. All members of the Board attended all the Board meetings held over the last year. The Board members also have discussions during the year on the progress of the Group and any particular issues which arise.

All directors are required to notify the Company Secretary of any conflicts of interest and there have been no such relationships declared.

The Audit Committee assists the Board and its terms of reference are included on the company web site. Its composition, duties and main activities during the year will be included in the Report of the Directors within the annual report to be issued shortly.

The terms of reference of the Remuneration Committee are included on the company web site. Its composition, duties and main activities during the year are included in the Report of the Remuneration Committee within the latest annual report and accounts on page 22.

There is no Nomination Committee. Given the size of the business, all senior appointments are considered by the Board as a whole.

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

The Board communicates with shareholders through the annual report and accounts, interim report other regulatory announcements, the Annual General Meeting (AGM) and one-on-one meetings with both existing and potential shareholders. At the end of the Annual General Meeting shareholders are encouraged to express their views to the Directors. Corporate information is available to shareholders and other stakeholders on the Company website including details of the activities of the different businesses, and announcement. The Company also receives updates from its brokers on the views of shareholders.