QCA Code statement
Corporate Governance Code Compliance
Gamma Communications plc and subsidiaries (“Gamma”)
The information contained in this document was approved by the Board on 31 August 2023.
Gamma Communications plc has adopted the Quoted Companies Alliance Corporate Governance Code (the “QCA Code”), which it believes is the governance framework that is most suitable for the Company, having regard to its strategy as well as its size and growth potential.
The correct application of the QCA Code requires Gamma to apply the ten principles contained in the Code and to publish certain related disclosures.
References to our website throughout this document relate to: https://www.gammacommunicationsplc.com/investors/
Principle 1 – Establish a strategy and business model which promote long-term value for shareholders
Gamma is a leading provider of Unified Communications as a Service (UCaaS) to businesses in Western Europe. Gamma provides business communication products that solve customer problems and make their businesses more efficient. Gamma delivers these services from a scalable network and high quality operational and sales platforms; which enables it to develop a wide range of routes to market via indirect channel partners, direct sales teams and digitally. Gamma’s business model can be found on pages 4 and 5 of our Annual Report and Accounts 2022.
Gamma’s strategy for growth is to:
- Develop Multiple routes to market in each country in which we operate
- Develop a common pan-European product set for UCaaS and CCaaS for SME’s
- We will become a trusted partner to Enterprise across Europe, transforming their communications estates
- Create an organisation that engages all our people with a common set of values and goals
Our positive culture feeds directly into our strategy, which is being pursued both organically and, as opportunities arise, by relevant acquisitions of capabilities, products or entry into adjacent markets. More detail on our strategy can be found on pages 16 to 19 of our Annual Report and Accounts 2022 and on our website.
Principle 2 – Seek to understand and meet shareholder needs and expectations
Gamma is committed to listening and communicating openly with its shareholders to ensure that its strategy, business model and performance are clearly understood. Understanding what analysts and investors think about us, and in turn, helping these audiences understand our business, is a key part of driving our business forward and we actively seek dialogue with analysts, investors and potential investors. Communication with shareholders is undertaken through press releases, general presentations at the time of the release of the annual and interim results and face-to-face meetings (both at the time of results and on request).
There is regular dialogue with institutional shareholders to ensure that the members of the Board develop an understanding of their views and concerns, including meetings after the announcement of the Group’s annual and interim results to the markets. These meetings allow the Executive Directors to update shareholders on strategy, the Group’s performance and business evolution. The Chair also meets with shareholders separately from the executive. All board members receive copies of feedback reports from the investor meetings which are compiled independently by Gamma’s Nominated Advisor, thus keeping them in touch with shareholder opinion.
Our Senior Independent Director and Committee Chairs are also available to meet with shareholders on request.
The AGM is the main forum for dialogue between investors and the Board. Copies of our Annual Report and the notice of AGM are sent to all shareholders at least 21 days before the meeting. Copies of these and other information for shareholders is provided on our website. The Executive Directors, Chair of the Board, together with all other Directors, routinely attend the AGM and are available to answer questions raised by shareholders. As soon as practicable after the AGM has finished, the results of the AGM are released through a regulatory news service. The announcement also provides, for information, details of the total number of votes in favour of each resolution. At last year’s AGM, all resolutions put to shareholders were duly passed.
Gamma retains the services of Progressive Equity Research who provide independent research and commentary on Gamma. This can be accessed by any private investor via Progressive’s website. In addition, Gamma seeks to engage with publications which are used by private investors so that commentary on Gamma’s results becomes widely available.
Principle 3. Take into account wider stakeholder and social responsibilities and their implications for long-term success
Gamma has identified its key customers, suppliers and other advisers and recognises that its own staff have been instrumental in the growth and success of the business to date. Below is a summary with further details with reference to Section 172 of the Companies Act being found on pages 32 to 37 of our Annual Report and Accounts 2022.
Customers are key relationships for Gamma and the Group prides itself on its high standard of customer service. Gamma uses the net-promoter score to measure customer satisfaction as well as engaging with customers for input and feedback.
The business relies on a number of suppliers to provide elements of its products and services and develops strong relationships with these suppliers. Gamma works closely with relevant regulatory bodies as they shape policy to prevent harm to consumers and businesses.
A high priority is placed on employee engagement, regular staff surveys are performed, and the results reviewed and addressed. Gamma encourages development of existing staff and ensures that learning opportunities are available.
The Company is committed to engaging with the communities in which it operates; everyone at Gamma is entitled to additional leave each year to help a good cause or to work in the local community to give something back. As well as corporate support for organisations, Gamma also operates a “Double It” scheme. This is a scheme for Gamma employees, where money raised for a charity or good cause which is special to a particular employee is matched by Gamma.
The Board has regard to the feedback of relevant stakeholders in its decision-making and the formulation of strategy. The ESG Committee focusses in more detail on these important areas.
Principle 4. Embed effective risk management, considering both opportunities and threats, throughout the organisation
The Board has ultimate responsibility for the Group’s system of internal controls and for reviewing its effectiveness. Gamma operates a robust and well-established structure for risk management in each area of the business which is designed to identify actual and potential risks that may impact the Group’s strategy and the daily operation of the business.
This process includes the identification, evaluation and scoring of risks based on the likelihood of occurrence, the potential impact, and the adequacy of the mitigation or control actions in place. Pages 23 to 25 of our Annual Report and Accounts 2022 provide further details on this process.
Gamma’s principal risks are listed with a short description of their potential impact and what is being done to mitigate them on pages 26 to 31 of our Annual Report and Accounts 2022. This is not an exhaustive list as the risk profile of the business is constantly evolving.
The Company has an established framework of internal financial controls, the effectiveness of which is reviewed by the Audit Committee, the Board and the Executive Committee.
The Board is responsible for reviewing and signing off the overall Company strategy, including approving revenue, profit and capital budgets. A detailed monthly board pack is provided to and discussed by the Board, which includes amongst other things:
- the financial results of the Group (income statements, cash flows, capital expenditure and balance sheets)
- monthly variances to budget and prior year. Forecasts for the current financial year are regularly revised and presented to the Board, in light of actual performance, to ensure that information is up to date and any risks in meeting year-end numbers can be identified and mitigated as soon as possible
The Audit Committee assists the Board in discharging its duties regarding the financial statements, accounting policies and the maintenance of proper internal financial controls.
The Executive Directors and Executive Committee undertake a number of reviews on a weekly, monthly and quarterly basis, including performance against KPIs and other business measures.
There is a comprehensive annual budgeting process, producing a detailed integrated profit and loss, balance sheet and cash flow, which is approved by the Board.
The principal elements of the Group’s internal non-financial controls include:
- close management of the day-to-day activities of the Group by the Executive Directors and the Executive Committee;
- an organisational structure with defined levels of responsibility, which promotes entrepreneurial decision-making and rapid implementation while minimising risks; and
- existence of a business risk register. Risks facing the business are continually re-assessed, and mitigating actions are considered and implemented when necessary to help protect the business.
The Risk Committee, as described in Principle 9 below, is responsible on behalf of the board for ensuring that management have an appropriate risk management and internal control system with respect to non-financial risks.
Principle 5. Maintain the board as a well-functioning, balanced team led by the Chair
The Board comprises eight Directors, two of whom are Executive Directors and six of whom are Non-Executive Directors, reflecting a blend of different experience and backgrounds. Of the Non-Executive Directors, the Group regards Martin Hellawell, Henrietta Marsh, Charlotta Ginman, Xavier Robert, Shaun Gregory and Rachel Addison as Independent Non-Executive Directors within the meaning of the UK Corporate Governance Code 2018. Further details on the Board of Directors including their skills and experience are available on pages 54 and 55 of our Annual Report and Accounts 2022 and on our website. Details of the Board and Committee meetings held in 2022 and the attendance at these meetings are available on page 58 of our Annual Report and Accounts 2022.
Directors’ conflict of interest
The Company has effective procedures in place to monitor and deal with conflicts of interest. The Board is aware of the other commitments and interests of its Directors and changes to these commitments and interests are reported to and, where appropriate, agreed with the rest of the Board.
Principle 6. Ensure that between them the directors have the necessary up-to-date experience, skills and capabilities
Gamma has an experienced Board which blends industry expertise with public company experience. The Board also has a good knowledge of our product set and high level relationships with our key customers and suppliers. The members of the Board bring with them different experience, skills and personal qualities. The Board recognises that it needs to improve its diversity and this will be addressed through succession planning and future appointments. Further information on the Board can be found on pages 54 to 55 of our Annual Report and Accounts 2022.
All Directors can take independent professional advice in the furtherance of their duties, if necessary, at the Company’s expense. In addition, the Directors have direct access to the advice and services of the Company Secretary and the Nominated Advisor.
Principle 7. Evaluate board performance based on clear and relevant objectives, seeking continuous improvement
Board performance effectiveness process
The Company has a formal process of annual performance evaluation for the Board, its Committees, the Chair and individual Directors. The Board and its Committees are satisfied that they are operating effectively.
Performance evaluations will be conducted annually and the method for such reviews will continue to be reviewed by the Board to optimise the process.
In 2022, the Nomination Committee concluded that it would be beneficial for there to be an externally-facilitated Board performance review and this review, in conjunction with Board Excellence Limited, was completed at the start of 2023. The scope included evaluation of the performance of the Board, the Board Committees, individual Directors and of the Chair, through an independent assessment of the Board’s effectiveness, performance, and compliance with the QCA Code, the UK Financial Reporting Council Guidance on Board effectiveness, internationally recognised board best practices and Board Excellence’s own experience of best practices.
Further detail can be found on the Nomination Committee report on pages 62 and 63 of the Annual Report and Accounts 2022.
Approach to succession planning
Succession planning is regarded by the Board as vitally important to the continued success of the business. Through regular reviews and management discussions, the Company’s future business leaders are identified and personal development plans are put in place to harness their potential and plan for job growth and career progression.
Where a new appointment to the Board is required, the Nomination Committee (chaired by the Chair) considers the balance of skills, knowledge and experience on the Board and makes appropriate recommendations for consideration by the whole Board. Other senior appointments (which are not Board positions but which are vital to the running of the business) are made by the Chief Executive Officer in discussion with the Chair.
Principle 8. Promote a corporate culture that is based on ethical values and behaviours
The Board promotes a corporate culture that is based on sound ethical values and behaviours. The Board has a clear understanding of the business’s culture and works to ensure that these sound ethical values are reflected throughout the organisation.
Gamma’s culture is described by four aims for each employee –
- We’re there and we care
- We love to grow
- We step up and own it
- We do the right thing
Regular communication from the Chief Executive Officer via e-mail, video-conference and “roadshow” meetings sets the agenda for behaviour in the business.
Gamma is committed to protecting the environment and was the first network in the UK to be certified as Carbon Neutral.
Gamma has policies in place covering key matters such as ethical conduct; anti-bribery and corruption; data protection, equality, diversity and inclusion; and whistleblowing. These are communicated to all employees and rigorously enforced.
Gamma runs programmes to encourage women to develop and reach their full potential in an industry which has historically been male dominated. Gamma also runs an apprenticeship programme which encourages applications from young people of all backgrounds.
The policies set by the Board in this area are reflected in the actions and decisions of the Chief Executive Officer and the Executive Committee.
Principle 9. Maintain governance structures and processes that are fit for purpose and support good decision-making by the board
Board of Directors
The role of the Board of Directors is to promote the long-term success of the Company and sustainably grow shareholder value. The Board has responsibility for the management, direction and performance of the Group and for ensuring that appropriate resources are in place to achieve its strategy. The Board directs and reviews the Group’s operations within an agreed framework of controls. This allows risk to be assessed and managed within agreed parameters. There is a clear division of responsibility across the Board:
- the Chair of the Board is responsible for running the business of the Board and for ensuring appropriate strategic focus and direction; and
- the Chief Executive Officer is responsible for proposing the strategic focus to the Board, implementing it once it has been approved and overseeing the management of the Company through the Chief Financial Officer and Executive Committee.
The Board has established Audit, Nomination, Remuneration, Risk and ESG Committees with formally delegated duties and responsibilities. All of the Board Committees operate under approved Terms of Reference.
Roles of the Committees
Audit Committee: The Committee is responsible for ensuring the financial integrity of the Group through the regular review of financial processes and performance. It confirms to the Board that all material financial updates are fair, balanced and understandable and complies with all applicable UK legislation and regulation as appropriate. It is also responsible for oversight of the internal audit function and the relationship with the external auditor, monitoring their performance and reviewing the scope and terms of their engagements. Further details can be found on pages 64 and 65 of our Annual Report and Accounts 2022.
Risk Committee: The Risk Committee focuses on “non-financial” risks that are not within the remit of the Audit Committee. It assists the Board in its duty to carry out a robust assessment of the principal risks facing the Company. Its main function is to review the risk register prepared and maintained by management and to re-confirm that the principal risks have been identified and (where appropriate) mitigated. It is primarily responsible for ensuring that: management has implemented an appropriate and effective risk assessment, management and internal control system; there is an effective system in place for the identification and assessment of new and emerging risks; the nature and extent of the principal risks faced is understood and that they are effectively managed and mitigated; and that an appropriate risk management culture exists within the organisation. Further details can be found on pages 66 and 67 of our Annual Report and Accounts 2022.
Remuneration Committee: The Committee is primarily responsible for determining and making recommendations to the Board on the policy for the remuneration and employment terms of the Executive Directors, Chair and other senior executives, and for the effective implementation of that policy. Further details can be found on pages 70 to 88 of our Annual Report and Accounts 2022.
Nomination Committee: The Committee is responsible for overseeing succession planning for the Board and senior management and assists the Board in discharging its responsibilities relating to the composition and make-up of the Board and any Board Committees. It is primarily responsible for: leading the process and making recommendations to the Board for the appointment of new Directors; regularly reviewing the Board structure, size and composition (including the skills, knowledge, independence, experience and diversity), recommending any necessary changes and considering plans for orderly succession; making recommendations to the Board about suitable candidates for the role of Senior Independent Director, and membership of the Audit, Risk, ESG and Remuneration Committees in consultation with the Chairs of the relevant Committees; and external and internal Board and Committee evaluations. Further details can be found on pages 61 to 63 of our Annual Report and Accounts 2022.
ESG Committee: The Committee is primarily responsible for: overseeing the development of the Group’s ESG strategy and governance structures and associated goals and policies; ensuring that management establish appropriate ESG KPIs and related targets, and for overseeing their ongoing performance measurement and reporting; monitoring ESG trends and related standards and legislative requirements and how those are likely to impact on the Group’s strategy and financial performance; and making sure that the Group is transparent in its reporting of ESG matters to all its key stakeholders and that an ESG awareness is promoted throughout the organisation. Further details can be found on pages 68 and 69 of our Annual Report and Accounts 2022.
Matters Reserved for the Board
There is a formal schedule of Matters Reserved for the Board. The Board is responsible for overall group strategy and management, financial reporting and controls, group structure and capital, corporate governance, board membership and other appointments.
Plans for evolution of the governance framework
There are no current plans for the evolution of the governance framework.
Principle 10. Communicate how the company is governed and is performing by maintaining a dialogue with shareholders and other relevant stakeholders
The Company communicates with shareholders through the Annual Report and Accounts, full-year and half-year announcements, the AGM, and one-to-one meetings with large existing or potential new shareholders. A range of corporate information (including all Company announcements and presentations) is also available to shareholders, investors and the public on the Company’s corporate website.
Historical annual reports and other governance- related material
Reports from each of the Audit, Nomination, Remuneration, Risk and ESG Committees are contained in our Annual Report and Accounts 2022. Historic reports and accounts, along with all notices and circulars from October 2014, being the date the Company was admitted to trading on the AIM market of the London Stock Exchange, are available on our website.
Disclosure of AGM voting outcome
As soon as practicable after the AGM has finished, the results of the meeting are released through a regulatory news service. The announcement also provides details of the total number of votes in favour of each resolution. At the most recent AGM, held on 17 May 2023, all resolutions put to shareholders were passed.
Update to QCA Code in 2023
We are aware that the QCA is currently updating the QCA Code which is expected to be published in Autumn 2023. We will review the updated QCA Code and publish relevant disclosures in due course.