1. Generation of Long Term Growth and Shareholder Value

The Company is addressing markets which it believes have long term growth potential with industry growth rates of greater than GDP. The Security sector has traditionally grown ahead of GDP against a backdrop of political, economic, social and technological drivers. The Company provides highly relevant services to its clients to help them protect their organisations and consistently invests in innovation. The Company’s strategy is to generate sustainable cash flows and profits from predictable and growing recurring revenues

2. The Board

The Board comprises a non-executive Chairman, the Chief Executive Officer, the Chief Financial Officer, and one independent non-executive director. It is intended that Board will evolve as the Group grows to include at least one more independent non-executive director including a qualified accountant or similar as audit committee chair with a planned start in 2022. In March 2019 Alex Hambro was appointed as non-executive chairman.

The Board meets at least 11 times a year. The Chief Executive and the Chief Financial Officer are engaged full-time and the Chairman and independent non-executive Director are required to spend two days per month considering Company matters and attending the monthly Board meeting.  Executive directors along with senior management meet on at least monthly basis and they are in regular close communication as a matter of routine.  During the COVID pandemic, executives formally speak once per week and the board has bi weekly update calls.

The Group believes that in its Board it has at its disposal an appropriate range of skills, training and experience to ensure the interests of all stakeholders in the Group are fully accommodated at this stage in its evolution.

Directors biographies are on meet the board.

3. Board matters

The Board has a schedule of matters specifically reserved for its decision. It is responsible for formulating the Group’s corporate strategy, monitoring financial performance, acquisitions, approval of major capital expenditure, treasury and risk management policies.

Board papers are sent out to all directors in advance of each Board meeting including management accounts and accompanying reports from the executive directors. Annual budgets are approved by the Board. Operational control is delegated by the Board to the executive directors.

The Company Secretary acts as the conduit for all governance related matters and shareholder enquiries and passes them on to the Chairman to respond. The board maintains full and open communications and all members of staff have access to board members including the Chairman and CEO.

4. Corporate culture

The Board is responsible for ensuring a high standard of corporate conduct. The Board achieves this by ensuring that appropriate policies on behaviour and ethics are in place and signed up to by all employees. Performance is appraised taking into account not just the achievement of objectives, but the behaviour’s demonstrated to do so. All managers and the Board lead by example in their behaviour and ethical values demonstrated. The relevant senior management present to the Board at least quarterly (and mostly monthly) on their area’s performance The Company has a dedicated and professionally qualified HR manager who works to support the high standards expected. The Company has a dedicated Data Protection Officer who manages the specific risks around the Group’s operations. The Group continually invests in its IT and cyber security infrastructure. The Company seeks to minimize its environmental impact where possible, an example being the use of video conferencing to reduce travel costs and this is increased since the onset of COVID in March 2020. The group makes use of electronic as opposed to physical media in its communications and in 2016 changed its articles as allowed under BVI law, to allow the use of solely electronic media for distribution of annual reports, notices of meetings and other shareholder communications.

5. Board Performance and Delivering Growth

The performance of the Board is primarily measured by the achievement of certain KPI’s in the business which are aligned with the growth strategy. These include measures against budgeted gross margins, EBITDA, recurring revenues, forward contract book, customer satisfaction, debtor performance, cash usage and generation, project deliveries and return on invested capital.

6. Succession Planning

The board continually reviews its composition to maximise its effectiveness. This includes determining and reviewing the skills against current and expected business requirements of executive and non-executive directors as well as those of key senior management.

7. Company Secretary

All directors have access to the advice of the company secretary and the independent director and can take external independent company secretarial and legal advice on certain matters, if necessary, at the Company’s expense.

The CFO currently acts as the Group’s company secretary as it is appropriate for this stage in Falanx’s evolution. The board does not see any conflict at this stage but may in the future engage additional resources if appropriate.

8. Board Committees

The Board has a remuneration committee and an audit committee.

The audit committee comprises Alex Hambro (chairman) and Emma Shaw. The committee meets as necessary (but at least twice per year) to monitor the Group’s internal control systems and major accounting and audit related issues. There are plans to evolve the Company’s governance structure so that the audit committee has an independent chair who is a professionally qualified accountant or equivalent.

The remuneration and nomination committee is chaired by Emma Shaw and consists of her and Alex Hambro. It is responsible for determining the contract terms, remuneration and other benefits for executive directors, including performance-related bonus and share option schemes. The remuneration of non-executive directors is agreed by the board as a whole and is done in conjunction with external advisors. It also considers matters of nomination and succession. The Company continues to review the need for further committees.

9. Engagement with Shareholders

On 27 March 2019 the company announced a variation of its memorandum and articles of association to reduce directors’ powers to issue shares and to bring it more into line with typical UK structures. These changes were voluntarily done by the company and were not required under BVI law

The Board values the views of its shareholders. The company holds Annual General Meetings which are used to communicate with all investors, and they are encouraged to participate. The directors are available to answer questions. Separate resolutions are proposed on each issue so that they can be given proper consideration and there is a formal resolution to approve the Annual Report. Shareholders can also contact the Company Secretary or the Chairman via the Company’s website.

The Board takes full cognisance of the results of any poll or feedback from shareholders and the Chairman will respond as appropriate whether by email of by offering a chance to meet with the shareholder to explain the Board’s position. All shareholder communications are served by electronic media.

10. Internal control

Internal control systems are designed to meet the needs of the Group and the risks to which it is exposed, and by their nature can provide reasonable but not absolute assurance against material misstatement or loss. The key procedures which the directors have established with a view to providing effective internal financial control are as follows: –

• Management structure
  The Board has overall responsibility for the Group and there is a schedule of matters specifically reserved for decisions by the Board.
• Quality and integrity of personnel
  The integrity and competence of personnel are ensured through high recruitment standards including vetting of staff under relevant security standards, and subsequent training courses. High quality personnel are an essential part of the control environment.
• Identification of business risks
  The Board is responsible for identifying the major business risks faced by the Group and for determining the appropriate courses of action to manage those risks. The boards of our Group businesses also actively identify risks and are reviewed at most board meetings and are formally reviewed in greater depth on a quarterly basis, and ensure mitigating controls and appropriate insurances are in place. These are done at both a top level and are cascaded down through the organisation.
• Budgetary process
  Each year the Board approves the annual budget. Key risk areas are identified. Performance is monitored, and relevant action taken throughout the year through the monthly reporting to the Board of variances from the budget and preparation of updated forecasts on at least a quarterly basis for the year (and at together with information on the key risk areas.
• Authorisation procedures
  Capital and revenue expenditure is regulated by a budgetary process and authority limits for approval of expenditure are in place. For expenditure beyond specified levels, detailed written proposals are submitted to and approved by the Board. Once authorised, such expenditure is reviewed and monitored by the Board. Where the capital expenditure is against the development of software products or services it is reviewed against expected returns from future sales and delivery against agreed milestones

Reviews of specific industry and regulatory risk areas (for example maintenance of cyber security accreditations) are carried out on a periodic basis by staff separate from the operation of those areas.

11. Advisors

The Board selects advisory relationships based on their relevance of expertise, track record of success, ability to add value to the development of shareholder value and to support the Company in discharging its duties as a listed company.

This page was last updated on 21 March 2022.