INSPECS Group plc Corporate Governance Statement

Approved by the Board on January 10, 2020

The Board is responsible for the Group’s strategy and accountable for its implementation and management. The Company has a clear business model and defined 5-year strategy, which is considered in its wider context at each Board meeting and also formally reviewed, and revised as necessary, on an annual basis.

Strategy forms part of a formal schedule of matters reserved for Board approval and is a standing Board meeting agenda item.  Each year the Board will dedicate at least one day per year to meet and discuss strategy. The strategy day will be attended by the Board of Directors, executives and senior management, as appropriate.

Promoting long-term value for shareholders is at the heart of what the Company continually seeks to achieve, and its proven track record of sales growth and profitability is testament to this approach.

Our Strategic Plan provides that in the next 12-24 months the Company will, inter alia,:

  1. maintain investment in and development of our operating businesses, streamlining factory processes through technological advancement and lean management methodology;
  2. continue to utilise our business model blueprint and sustain the Company’s organic growth trajectory; and
  3. deliver long-term, sustainable value for shareholders.

The Company shares its vision and details of the implementation of its strategy through internal dialogue with employees, as well as external communications with investors and potential investors.  The Company will also do this by way of public announcements and dissemination of information through this website, the Investor Relations web pages and the Annual Report.

The first Annual Report of the Company as an AIM listed entity will describe in further detail how the business aims to build long-term shareholder value in a sustainable way.

The Company is committed to open and ongoing engagement with its shareholders, and other stakeholders. Throughout the year the Directors have proactively maintained regular dialogue with institutional investors and other potential stakeholders.

The Board has sought to ensure that shareholders aspirations and expectations of the group are understood and considered in light of the Company’s strategic aims.  The Chairman attends meetings with investors and analysts, as required.

Communication with shareholders is coordinated by the Chief Executive Officer and Group Chief Finance Officer, with assistance from FTI Consulting, who provide independent financial PR consultancy services, and the Company’s AIM-nominated advisers.

The Board is confident that it has an excellent understanding of the needs, interests and expectations of the Company’s stakeholders.  The Board is not complacent, however, and investor relations activity and a review of the shareholder register are standing items on the Board’s agenda schedule.

General information about the Group is available here on the Group’s website, which provides an overview of activities of the Group, and is accessible to retail and institutional investors alike.

The Company has established a dedicated Investor Relations website (“IRW”) and FTI Consulting has been engaged by the Company since early 2019, providing shareholders and other stakeholders opportunity to open dialogue with dedicated external representatives, in addition to the Company’s internal representatives. Contact details for shareholder enquiries can be accessed here.

As we move through the course of the coming year shareholders will be able to view all Group announcements, including trading updates, via the IRW, which can be accessed here.

The Board is aware of the need to protect the interests of minority shareholders, whilst balancing these interests with those of any substantial shareholders   All shareholders are encouraged to attend the Annual General Meeting (“AGM”) of the Company, which will be the principal opportunity for private shareholders to meet and discuss the Group’s business with the Directors.  There will be an open ‘question and answer’ session at the AGM, during which shareholders may ask the panel of directors questions.

The Board is sensitive to the fact that some shareholders may not wish to raise certain matters with a panel of Directors during this ‘open’ session, however.  The Board will, therefore, also make themselves available immediately following the AGM, should shareholders prefer a more personal, informal discussion with any of the Directors.

The Board recognises that the Group’s long-term success is reliant on the efforts of its employees, contractors, customers and suppliers.  It is also mindful of the responsibility to consider, where practicable, the social, environmental and economic impact of our business operations. Inspecs Group has continually strived to ensure that strong professional relationships are forged with all stakeholders, both internally and externally.

Long-standing relationships have been established, some for over twenty years, with many leading global retailers, including Specsavers, National Vision, Grand Vision (which includes Vision Express in the UK), Boots, TK Maxx, Costco, World Duty Free and Superdry retail outlets and global distributors, including Bode and Vistan Brillen.  This is testament to our staff actively maintaining collaborative relationships with customers and suppliers and the Company having continued to foster a culture of positive engagement from within.

The Company is proud of its organisational culture and corporate ethos.  The approach we take when dealing with clients, partners, advisors and other third parties has been instrumental in ensuring that we have low levels of staff turnover and few changes in the supply chain, which reduces risk to our businesses, maintains a high level of morale amongst staff and contributes to long-term shareholder value.

We engage regularly with our customers, suppliers and government authorities across the world on wide variety of matters, including health and safety and social environmental matters.

We actively solicit, consider and act on feedback from all stakeholder groups.  Key relationships with customers, suppliers, contractors and regulators are closely managed by the executive directors and senior management.

As part of our developing corporate social responsibility policies and to safeguard our employees and contractors, we follow the UK foreign office advice on travelling and working abroad in high risk countries and territories.  As a group we aim to minimise our carbon footprint; initiatives include the introduction of low energy LED lighting in our offices, waste recycling and the use of video-conferencing in place of international travel, where practical.

The Company also encourages all staff members to contribute to the success of the company and welcomes ideas and input from the wider teams with regard to continually seeking to drive the business model and maintain long-term value for shareholders.

Our staff engage with stakeholders when attending the various industry exhibitions and optical retail fairs held, which are six times during a calendar year.  Here we hear first-hand what stakeholders seek and understand how to deliver what they need.  These exhibitions provide valuable insight into our customers’ needs.

In addition, we request feedback on our products and services from our customers and receive copies of independent factory audits which are carried out on behalf of our customers.   The Board is appraised of any issues arising and any matters are dealt with expediently.

Feedback is an essential part of all control mechanisms.  Systems are in place to solicit, consider and act on feedback from all stakeholder groups.  All new suppliers and contractors complete our KYC process and all contractors must agree to the terms of our anti-bribery policies.

Recognising that more could be done to integrate corporate social responsibility matters, we revised our corporate governance framework significantly during the year following the 2019 governance assessment.

  • The Company has created a new Group Corporate Social Responsibility (“CSR”) Policy;
  • The Company has implemented, or is in the process of implementing, revised or new CSR-related policies and procedures;
  • CSR will become a greater focal point for strategy discussions in the forthcoming year;
  • We will be articulating our approach to CSR in more detail in our disclosures going forward and annual report.

The Board is responsible for identifying the major risks facing the Group.  The CEO is charged with ensuring that appropriate policies, controls and procedures are developed and implemented to manage those risks.

The Company receives regular feedback from its external auditors on the state of its internal controls and all independent audits have been unqualified to date.  Being acutely aware of the potential for risks to affect our businesses, however, we have:

  • Strengthened our risk management framework over the last year and will continue to do so over the coming year. To assist with this objective, we hired a number of additional staff and resources with extensive corporate governance, risk management, compliance, company secretarial and legal expertise gained within FTSE and AIM-listed international organisations;
  • The Board has established an Audit & Risk Committee and its remit includes risk management, taking into consideration the balance of risk and return, opportunity and threat; and
  • Developed a Group Corporate Risk Register.

The Company will provide an annual summary of the significant risks and uncertainties facing the group and detail more fully our approach to risk management in the Inspecs’ Annual Report, which will be published in 2020.

The Company’s Board comprises three independent Non-Executive Directors and two Executive Directors who, collectively, have over 127 years’ Board-level experience.  Their complementary skills and professional, dynamic and innovative approach set the tone of the Board, which will continue to function well and drive achievement of the Company’s corporate objectives.

The Company Chairman has a stellar track record of successfully leading plc companies through significant change.  He is responsible for the leadership and effective working of the Board, for setting the Board agenda, and ensuring that Directors receive accurate, timely and clear information.

The Chief Executive is responsible for the operational management of the business of the Group and for the implementation of strategy and policies as agreed by the Board.

The Non-Executive Directors are considered by the Board to be independent of management and free to exercise independence of judgement. This webpage provides information regarding the Company’s corporate governance policies and processes.  A description of the roles of the Directors is included within the Board of Directors’ page of this website.

As mentioned above, the Company undertook a corporate governance review in 2019 and continues to strengthen the group’s governance frameworks as part of our ongoing commitment to maintain the highest standards of governance.  In light of the assessment findings and our governance objectives the following actions have been taken:

  • We have recruited of number additional suitable qualified and highly-skilled resource, to assist the Board and Board sub-committees in meeting the group’s legal, regulatory and obligations;
  • The following committees and steering groups have been established:
  • Board Audit & Risk Committee
  • Board Remuneration & Nomination Committee
  • Board Group Projects & Acquisitions Committee
  • Executive Risk Management Committee
  • Regional Operational Management Committees
  • Information and Communications Technology steering group

Further action to be taken in 2020 include carrying out a formal Board and Board committee performance and effectiveness review and reviewing our succession plans for Board directors, executives and ‘key man’ staff.  These reviews will be undertaken annually, to ensure that the Board remains a well-functioning balanced team which is ably led by the Chair.

The individuals who have been appointed to the Board have been selected specifically because of the skills and experience they can offer.  The Board Directors have exemplary credentials and a broad range and balance of skills and experience, materially enhancing the collective knowledge of the Board.  We expect these attributes, will to continue to contribute to the overall performance of the Board and make significant contribution to the success of the Group.

Full biographical details of each of the current Directors are included within the Board of Directors page of our website, which can be accessed here.  We will expand upon the detail on the skills and experience each director brings to the Board, and training the directors have undertaken during the year in order to maintain an appropriate level of knowledge and skill, within the Inspecs Annual Report published in Q3 2020

Succession planning was discussed at the October 2019 Board meeting and will be discussed again in early 2020.  The Board will review succession plans on a regular basis in the future.  The Directors undertook professional development and education training in Q4 2019, and the Board intends to establish a formal Directors’ annual professional development and training program from 2020.

Whilst the balance of personal qualities of the Directors and collective capability of the Board to be appropriate, we are cognisant of the fact that the Board lacks diversity in respect of gender.  Inspecs does, however, have a strong pipeline of female talent with more than half of our staff and 33.33% of the Company’s senior management team being women, including the Company’s Special Advisor who was appointed in September 2019 to assist with licensing and brand management.  Having founded and led a company which became the largest licensing company in the world, with over $12Bln assets under management, she is well-qualified to assist with establishing the Company’s planned ‘Special Knowledge Division’ to further develop strategic relationships with brands and large retailers across the world.

Succession planning has been an area of focus and the following steps have been taken as part of the succession planning strategy:

  • The Board has appointed one of its NEDs to act as a Senior Independent Director (“SID”). The SID will act as Deputy Chair, and be able to step into the role of Board Chair in the future, should it be required and will also be another point of contact for shareholders; and
  • The Board sub-committee terms of reference have also been drafted to provide for rotation of the committee chairmen, thereby periodically refreshing the roles of members within each governance forum; and

Succession planning will continue to be a part of Board discussions this coming year.  The Board, with assistance from the Remuneration & Nomination Committee, will consider the need for the periodic refreshing of its membership, and ensure that the skill-sets and time commitment provided by the Board Members continues to be aligned with corporate strategy and risk management.

The Board have not conducted a formal Board performance evaluation to date but intend to instruct a full evaluation of the Board, Board sub-committees and individual directors to be carried out in the latter half of 2020.

Following these performance and effectiveness reviews the directors will reflect on all subsequent findings and, where areas for improvement are identified, specific actions will be set and completed within an appropriate timescale.  Progress of these actions will be monitored on a regular basis, through to completion. The process and results will be disclosed on our website, and in the subsequent Company Annual Report.

Inspecs has a strong ethical culture, which is promoted by the actions of the Board and executive team and mirrored by our staff.  Collaboration and commitment are recognised as central to the success of our strategy.  The Company operates an ‘open door’ policy and we promote an environment where all staff are regularly invited to contribute and voice their ideas or concerns.  All staff are treated equally and with respect for the role they play within the inspecs organisation.

We pride ourselves on our diverse pool of ‘home-grown’ talent and the values that our staff embody, mirroring the ‘tone from the top’.  A significant number of our employees having remained faithfully committed for many years, some in excess of ten years.  Our culture of positive engagement was evidenced by the accolade awarded by interior design consultancy Wylde Interior Architecture Ltd which named Inspecs as “the happiest workplace” in November 2018.

In 2019 the Company undertook a review of all key Group policies at the end of 2019 and embarked upon a staff training and development programme focussed, on areas where ethics and moral values play a significant part:

Anti-Bribery and Anti-Corruption

Whistleblowing

General Data Protection Regulations

Privacy notices, internal and externally facing

Group Disclosure of Information

Risk Management

Share Dealing Code

Conflicts of Interest

Corporate Gifts & Hospitality

Following the group policies assurance review we have implemented, or are currently in the process of implementing, new processes, procedures, guidance and training programmes across the group.  We seek to ensure we are well-placed to demonstrate risk management control and compliance with legal, regulatory and statutory requirements.

In 2019 the Company also carried out the following actions:

  • Established an executive risk management committee, whose membership is comprised of key personnel operating in each of the region across the world, ensuring collaborative effort and focus on subsidiary governance; and
  • Introduced a Group Corporate Gifts & Hospitality Register, following implementation of the Conflicts of Interest Policy and revision of the Anti-Bribery and Anti-Corruption Policy.

In 2020, with assistance from the Remuneration and Nomination Committee, the Company will also:

  • Further develop a long-term incentive plan (“LTIP”) plans and performance assessment criteria;
  • Establish the LTIP, ensuring that the programme rewards employees for reaching specific goals and performance target that lead to increased shareholder values;
  • Key Performance Indicators will also be established to provide for appropriate alignment between performance and reward; and

Communicating with our staff with regard to the LTIP programme objectives and benefits of the recognition of corporate culture and ethical behaviours to staff accordingly;

Enhanced disclosures in the relation to the above will be detailed in the 2019 Annual Report.

Corporate Governance may be described as the operational frameworks and groups of systems by which companies are directed and controlled. Such systems include policies, processes and procedures which are developed in line with a Company’s strategic aims.

A model for governance refers to how those policies, systems, structures, and frameworks interface with each other and outlines the responsibility for them, whether responsibility lies with the Board as a whole, or with the individual Board members, or the Company’s management and staff.

The Board is accountable for the governance arrangements of the Company and is aided by three Board sub-committees; Remuneration and Nomination Committee, Audit & Risk Committee and Group Projects and Acquisitions Committee.

The Company has largely operated within an ‘Anglo-American’ governance model, widely known as ‘the unitary system’ with shareholders’ interests’ emphasis.  The group has, however, increasingly co-ordinated its activities and evolved in line with the ‘multi-stakeholder’ model which recognises the interests of workers, managers, suppliers, customers, and the community, .as well as shareholders, reflecting the continued development of the Company.

The Company’s corporate governance arrangements facilitate the entrepreneurial drive of the Board and provides a platform for the group’s businesses to flourish within a controlled framework to mitigate risk and ensure effective control and prudent management, which brings long-term success.

The Board believes that appropriate governance structures are in place, based on the size, complexity and risk tolerance of the group.  The governance and risk management frameworks will continue to be monitored by the Board as the Company continues evolves over time, to ensure alignment with the Company’s objectives, business model, strategy, size and complexity, and changes to risk appetite.

Summary details of the Company’s corporate governance arrangements are provided within this Corporate Governance Statement.  Further detail, including the Schedule of Matters Reserved to the Board, Board and Board Committee Member biographies, roles and responsibilities, terms of reference for each of the Board sub-committees, can be found on our Investor Relations website, which can be accessed here.

The Company has engaged in extensive dialogue with a wide range of stakeholders, shareholders and potential shareholders over the last year, prior to listing its securities on the Alternative Investment Market (“AIM”).  Stakeholders have been provided with a plethora of Inspecs group information, in accordance with the guidelines of the AIM Rules for Companies, Market Abuse Regulations, Companies Act 2006 and all other relevant legislation, as required.

In 2020 the Company will:

  • Continue to encourage two-way communication with both institutional and private investors, and respond quickly to all queries received;
  • Enable the Company Chairman, Group CEO and Group CFO to liaise regularly with the Group’s major shareholders and ensure that their views are communicated fully to the Board;
  • Produce a series of updates throughout the year relating to the Company’s performance and make these publicly available via submission to the Regulatory News Service (“RNS”) of the London Stock Exchange Group plc (“LSEG”) distributed by RNS reach. Copies of all RNS announcements will  be found on the investor section of the Company’s website.
  • Provide further information in the Annual Report disclosing, inter alia, the nature of work undertaken by the board sub-committees during the year as well as annual Reports and information about shareholder voting at Annual General Meetings of the Company. These details will be set out in the Company’s aforementioned investor relations website; and
  • Recognising that the AGM as an important opportunity to meet private shareholders, the Directors will make themselves available to listen to the views of shareholders both formally and informally during the Company’s 2020 AGM and immediately following the AGM. Thereafter the Company will publish copies of all resolutions passed following the AGM, via its website.

The Board

The Board comprises five Directors, two of whom are executive Directors and three of whom are non-executive Directors, reflecting a blend of different experience and backgrounds. All of the non-executive Directors are considered to be independent. The Board meets regularly and is responsible for strategy, performance, approval of any major capital expenditure and the framework of internal controls. The Board has delegated specific responsibilities to the committees referred to below, all of which have written terms of reference and formally delegated duties.

Audit and Risk Committee

The Group has established an Audit and Risk Committee, which will comprise Christopher Hancock as chairman and Richard Peck. The Audit and Risk Committee is responsible for determining the application of the financial reporting and internal control and risk management principles, including reviewing regularly the effectiveness of the Group’s financial reporting, internal control and risk-management procedures and the scope, quality and results of the external audit.

Remuneration and Nomination Committee

The Group has established a Remuneration and Nomination Committee, comprising Lord MacLaurin as chairman and Christopher Hancock. The Remuneration and Nomination Committee will review the performance of the executive Directors and set the scale and structure of their remuneration and the basis of their service agreements with due regard to the interests of Shareholders. In determining the remuneration of executive Directors, the Remuneration and Nomination Committee will seek to enable the Group to attract and retain executives of the highest calibre. The Remuneration and Nomination Committee will also make recommendations to the Board concerning the allocation of awards under the Share Plans and for the administration of the Share Plans. No Director is permitted to participate in discussions or decisions concerning his or her own remuneration. In addition, the Remuneration and Nomination Committee will also be responsible for reviewing the structure, size and composition of the Board, preparing a description of the role and capabilities required for a particular appointment and identifying and nominating candidates to fulfil Board positions as and when they arise.

Group Projects and Acquisitions Committee

The Group has established a Group Projects and Acquisitions Committee, comprising Chris Hancock as chairman, Richard Peck, Robin Totterman and Christopher Kay. The Group Projects and Acquisitions Committee will be authorised to approve merger and acquisition transactions and investment transactions by the Company within the parameters set by the Board.

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