Corporate Governance Statement

Corporate Governance Statement

(the information in this statement was last reviewed on 18 September 2018)

Introduction
This statement is issued in compliance with Rule 26 of the AIM Rules. ThinkSmart Limited is incorporated in Australia and its shares are listed on AIM.

The Principles of Corporate Governance
As Chairman of ThinkSmart, my role includes upholding the highest levels of corporate governance throughout the Company, particularly at Board level. As a Board we recognise the importance of high standards of corporate governance and their importance and support to our strategic goals and long-term success. The Company is listed on AIM and is therefore be required from 28 September 2018 to provide details of a recognised corporate governance code that the Board of directors have decided to apply. We have, since listing, acknowledged the importance of the principles set out in the Quoted Companies Alliance corporate governance code for small and mid-sized companies 2013 (the QCA Code). We will therefore apply its replacement the QCA Corporate Governance Code that was published in April 2018 (the New QCA Code).

Compliance with the New QCA Code
The Board believes that it applies the majority of the ten principles of the New QCA Code. We recognise the need to continue to develop our governance practices whilst ensuring they are fit for our structure and size.

Deliver Growth
The Board has collective responsibility for setting the strategic aims and objectives of the Group. This strategy is set out in the Group Strategy section of the Directors’ Report of the Annual Report.

Dynamic Management Framework
As Chairman, I consider the operation of the Board as a whole and the performance of the directors individually regularly. We have not, so far however, carried out a board performance evaluation so we have not complied with principle 7 of the QCA Code which requires the Company to carry out a board performance evaluation.

Responsibility for the overall leadership of the Group and setting the Group’s values and standards sits with the Board. We understand that these values influence and shape our business. Our Company values of being Accountable, Straightforward, Challenging and operating with Dignity and Respect are taught to all employees and ensure the customer is at the centre of everything we do. These values also ensure a unified culture and consistent behaviours across our business.

Build Trust
During the year ThinkSmart has undertaken a number of investor relations activities. These include investor roadshows, participation at investor conferences and attending other events where investors have the opportunity to meet and talk to the Directors and senior management. During the year the Board has continued to review governance and the Group’s corporate governance framework. We have reviewed our governance against the new QCA Code and will do so annually as required by AIM Rule 26. We believe that we apply nine of the ten principles of the New QCA Code.

Ned Montarello
Executive Chairman, 18 September 2018

Governance structures and Processes
The Board comprises two Executive Directors being Ned Montarello (Chairman) and Gary Halton (CFO), and four Non-Executive Directors, being David Adams, Peter Gammell, Roger McDowell and Keith Jones, whom the Board believe are independent. It is considered that this gives the necessary mix of industry specific and broad business experience necessary for the effective governance of the Group.

There are certain matters specifically reserved to the Board for its decision (link) which includes approvals of the annual budget, major expenditure and investments and key policies. Board meetings are held on a regular basis and effectively no decision of any consequence is made other than by the Board. Directors also have ongoing contact on a variety of issues between formal meetings. All Directors participate in the key areas of decision making, including the appointment of new Directors. The agenda for the board meetings is prepared by the Company Secretary in consultation with the Chairman and the Board.

The Board is responsible to shareholders for the proper management of the Group. The Non-Executive Directors have a particular responsibility to ensure that the strategies proposed by the Executive Directors are fully considered. To enable the Board to discharge its duties, all Directors have full and timely access to all relevant information. All Directors have access to the Company Secretary. The Directors who served during the year, and a brief biography of each, is set out here.
The Board is supported in its work by Board Committees which are responsible for a variety of tasks delegated by the Board.

Training and Development
Directors are encouraged to attend training and continuing professional development courses as required. The Company Secretary provides updates at each Board meeting on governance and regulatory matters.

Time Commitment
The nature of the role of Non-Executive Directors makes it difficult to place a specific time commitment however, a minimum of two days per month is what the Company anticipates as reasonable for the proper performance of duties. Directors are expected to attend all Board and Committee meetings.

External Advisers
The Board seeks advice on various matters from its Nominated Adviser (FinnCap) and lawyers (Shoosmiths). The Board also uses the services of an external company secretarial provider, Prism Cosec.

ThinkSmart Limited is not subject to the UK City Code on Takeovers and Mergers. ThinkSmart Limited is, however, subject to Chapter 6 of the Corporations Act 2001 of the Commonwealth of Australia (the “Corporations Act”). Chapter 6 of the Corporations Act regulates the acquisition of control over the voting shares in ThinkSmart Limited.


Committees

Audit Committee

The Audit Committee consists entirely of Non-Executive Directors. The Chairman, David Adams, has extensive financial experience and is a Chartered Accountant. Other Members are Peter Gammell and Roger McDowell. The Audit Committee meets as often as it deems necessary but in any case at least three times a year, with meetings scheduled at appropriate intervals in the reporting and audit cycle. Although only members of the Committee have the right to attend meetings, standing invitations are extended to the Executive Chairman and the Chief Financial Officer who attend meetings as a matter of practice. Other non-members generally attend all or part of any meeting as and when appropriate. The external auditors attend all meetings and also have the opportunity to meet in private with the Committee on each occasion. In addition, the Chairman of the Audit Committee has regular contact with the external auditors throughout the year.

Duties
The main duties of the Audit Committee are set out in its Terms of Reference and include the following:

  • To engage in the pro-active oversight of the Company’s financial reporting and disclosure processes and overseeing and reviewing the outputs of the process
  • To monitor the integrity of the consolidated financial statements of the Company, including its annual and half-year reports
  • To review and challenge where necessary the consistency of and any changes to significant accounting policies, whether the Company has followed appropriate accounting standards and made appropriate estimates and judgements, the going concern assumption and all material information presented with the consolidated financial statements
  • Ensure procedures are in place which are designed to verify the existence and effectiveness of accounting and financial systems and other systems of internal control which relate to financial risk management
  • Establish procedures for the receipt, retention and treatment of complaints received by the Company regarding accounting, internal controls and auditing matters and the procedures for the confidential, anonymous submission of concerns by employees
  • To consider and make recommendations to the Board, to be put to shareholders for approval at the Annual General Meeting, in relation to the appointment, reappointment and removal of the Company’s external auditor
  • To oversee the relationship with the external auditor including approval of their remuneration, approval of their terms of engagement, annual assessment of their independence and objectivity taking into account relevant professional and regulatory requirements and the relationship with the auditor as a whole, including the provision of any non-audit services
  • To meet regularly with the external auditor and at least once a year, without any Executive Director or other member of management present to discuss any issues arising from the audit
  • To review and approve the Audit Plan and review the findings of the audit

Audit and Risk Committee Terms of Reference


The Remuneration and Nomination Committee

The Nomination and Remuneration Committee is comprised of Keith Jones (Chairman of the committee with effect from 14 August 2017) Peter Gammell, David Adams and Roger McDowell. The Committee is responsible for making recommendations to the Board on the Group’s framework of Executive remuneration and its cost, and recommendations on Board recruitment and succession planning. The Committee determines the contract terms, remuneration and other benefits for each of the Executive Directors. The Board itself determines the remuneration of the Non-Executive Directors. The report on Directors’ remuneration is set out on page 19.

The main duties of the Remuneration and Nomination Committee are set out in its Terms of Reference and include:

  • Have responsibility for setting the remuneration policy for the Executive Directors and the Company’s Chairman;
  • Recommend and monitor the level and structure of remuneration for senior management;
  • The authority to appoint remuneration consultants and commission any reports or surveys required to fulfil its remit;
  • Approve the design of and determine the targets for any schemes of performance-related remuneration;
  • Oversee any major changes in employee benefit structures throughout the Company or Group;
  • Agree the policy for authorising claims for expenses from the Executive Directors and Chairman;
  • Ensure that contractual terms on termination, and any payments made, are fair to the individual, and the Company and that failure is not rewarded and that the duty to mitigate loss is fully recognised;
  • Review the structure, size and composition (including the skills, knowledge, experience and diversity);
  • Consider succession planning for directors and other senior executives in the course of its work, taking into account the challenges and opportunities facing the Company, and what skills and expertise are therefore needed on the Board in the future; and
  • Be responsible for identifying and nominating for the approval of the Board, candidates to fill board vacancies as and when they arise.

Remuneration and Nomination Committee Terms of Reference

Shareholder Relations
The Executive Chairman and the CFO are the Company’s main contacts with investors, fund managers, the press and other interested parties. Following the announcement of the full year results, investor roadshows are carried out and at the Annual General Meeting, private investors are given the opportunity to question the Board. An AGM venue is provided both in the UK and in Australia.

All resolutions for the AGM have in the past received strong support from shareholders. Should voting on a resolution receive a significant number of votes against it, the Company would seek to engage with shareholders to understand the reasons behind the result.

Board Evaluation
The Company does not currently comply with principle 7, which requires the Company to carry out a formal Board performance evaluation. Given the changes to the Board during the year it has not been felt appropriate to carry out an evaluation over this time. The Board will however, in consultation with the Company Secretary, consider the best approach to assess the Board both individually and collectively and work towards compliance with this principle.

Succession planning
The Company through its Remuneration and Nomination Committee has a formal process in place for succession on the Board and for Board appointments. When vacancies arise the Remuneration and Nomination Committee assesses the skills and expertise already on the Board and any additional skills and expertise required. External head hunters are appointed to search for appropriate candidates.

Culture and Ethics
Our Company values of being Accountable, Straightforward, Challenging and operating with Dignity and Respect are taught to all employees and are central and visible in all aspects of our business. This ensures that the customer is at the centre of everything we do. These values also ensure a unified culture and consistent behaviours across our business.