Corporate Governance

STATEMENT OF COMPLIANCE WITH THE 2018 CORPORATE GOVERNANCE CODE

THIS INFORMATION WAS LAST REVIEWED AND UPDATED on 27 FEBRUARY 2023

The Board recognise that high standards of corporate governance underpin our continuing success and as a Board we acknowledge our responsibility in leading this process.

We continually review the framework within which we operate, and the processes implemented to ensure that they reflect the complexities of our business and, whilst acknowledging our size, are also capable of adding value as the business grows. In line with the London Stock Exchange’s AIM Rules, the Board has adopted the 2018 Quoted Companies Alliance Corporate Governance Code (the “QCA Code”) as the basis of the Group’s governance framework.

We are not fully compliant with all of the requirements of the QCA Code; we consider our non-executive directors to be independent in character and judgement; some are not technically independent as defined by the QCA Code because they participate in the Company’s share option schemes.

Within Image Scan, we promote a culture of good governance in dealing with all key stakeholders: our employees, our customers, our suppliers and our shareholders. This section of the website alongside the disclosure in our annual report describes our corporate governance structures and processes and how they have been applied throughout the year.

TJ  Jackson
Chairman, Image Scan Holdings plc

 CORPORATE GOVERNANCE STATEMENT

The Board ensures that the Company maintains proper standards of corporate governance and that the principles of best practice, as set out in the QCA Corporate Governance Code, are followed so far as is practicable and appropriate to the size and nature of the Group and the constitution of the Board. Set out below is a summary of how, the Group is applying the key requirements of the Code and an explanation of where it has chosen not to fully comply.

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

The strategy and business operations of the Group are set out in the Strategic Report within the Annual Report. The Group’s strategy and business model are developed and approved by the Board. The management team is responsible for implementing the strategy and managing the business at an operational level. The Group’s overall strategic objective is focused on the development and commercialisation of market leading X-ray solutions for use in the global security and industrial inspection markets.

2. Seek to understand and meet shareholder needs and expectations

The Board recognises that Image Scan communicates with its shareholders principally through its website and the Annual Report. Shareholders can also sign up to receive news releases directly from the Company by email. The Chairman makes himself available to major shareholders on request and periodically attends meetings and gives presentations to shareholders. 

The Annual General Meeting of the Company, normally attended by all directors, gives the directors the opportunity to report to shareholders on current and proposed operations and enables the shareholders to express their views on the Group’s business activities.  Shareholders are invited to ask questions during the meeting and to meet with directors after the formal proceedings have ended.

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

The Board believes that, in addition to its shareholders, its main stakeholder groups are its employees, customers, suppliers and relevant Statutory Authorities in its areas of operation.

The Group’s operations and working methodologies take account of the need to balance the needs of all of these stakeholder groups while maintaining focus on the Board’s primary responsibility to promote the success of the Group for the benefit of its members as a whole. The Group endeavours to take account of feedback received from stakeholders, making amendments to working arrangements and operational plans where appropriate and where such amendments are consistent with the Group’s longer-term strategy.

Through the various procedures and systems it operates, the Group ensures full compliance with health and safety and environmental legislation relevant to its activities as well as maintain quality certification ISO9001:2015.

Further details are set out in the s172 Stakeholder Engagement Impact Statement of the annual report.

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

The Board is responsible for the Group’s internal control and risk management systems and for monitoring their effectiveness. The Board maintains a system of internal controls to safeguard shareholders’ investment and the Group’s assets, and has established a continuous process for identifying, evaluating and managing the significant risks the Group faces.

Details of the principal risks and how they are mitigated, alongside the Group’s internal control and risk management process, are set out in the Strategic Report within the Annual Report.

The Board considers risk to the business on an ongoing basis and the Group formally reviews and documents the principal risks at least annually. The Board is responsible for reviewing and evaluating risk in the business.

5. Maintain the Board as a well-functioning, balanced team led by the Chair

The Board of Image Scan is comprised of the Chairman and the Vice Chairman and one further Non-Executive Director all of whom are designated as Non-Executive Directors and two Executive Directors.  At every AGM, one-third of the Directors must retire by rotation.  

The Board’s role is to establish the strategic objectives and policies; oversee all aspects of the Group’s finances; continuously review performance and controls; manage risk; decide on key business transactions and manage the interests of stakeholder groups. 

The Board reserves for itself a range of key decisions such as strategy, acquisitions, significant contracts and internal controls, to ensure it retains proper direction and control of the Group, whilst delegating authority to individual Directors who are responsible for the executive management of the business.

Under the QCA code, some Non-Executive Directors are not considered independent by virtue of their participation in a share option scheme, as a result the Group is not compliant with the requirement for companies to have least two independent directors. At the same time, the Board considers that Non-Executive Directors act independently of the Executive and are well placed to appropriately police adherence to the Group’s strategy.

The Group does not have a director designated as the Senior Independent Director. In light of the size of the Board, and the Group’s stage of development, the Board does not consider it necessary to appoint a Senior Independent Director at this stage but will nevertheless keep this under review as part of the Board’s evaluation of Board effectiveness.

Attendance at Board and its Committee meetings

The following meetings were held during the last financial year .

*Indicates the Chair of the committee

The terms of reference of the Audit Committee stipulate that three meetings per year should be held, however, given the size of the board, some of the Audit Committee business was conducted at the full Board, including review of the Risk Management system and Internal Controls.

6. Ensure that between them, the directors have the necessary up-to-date experience, skills and capabilities

The Board is composed of three non-executive and two executive directors who regularly meet throughout the year and receive timely information in a form and of a quality appropriate to enable it to discharge their duties.

The structure of the Board is subject to regular review to ensure that it is appropriate for the Group. The Directors’ varied backgrounds and experience give Image Scan a good mix of the knowledge and expertise necessary to manage the business effectively.

The skills and experience of the Board are set out in their biographical details on the Investor Relations website https://www.3dx-ray.com/investor-relations/board-of-directors. The experience and knowledge of each of the Directors gives them the ability to constructively challenge the strategy and to scrutinise performance. The Board also has access to external advisors where necessary.

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

The Board undertakes an annual evaluation under a formal, self-evaluation process which was first put in place in 2018. This process has led to a number of actions, including improvements to information that the Board receives, and the creation of Board led initiatives which are reviewed regularly at Board meetings. The process focuses closely on objectives and targets for improving performance.

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

The Group is committed to a culture of equal opportunities for all employees. The Board aims to be diverse in terms of its range of culture, nationality and international experience.  If it is agreed to further expand the Board (or if new replacement directors are sought in the future), the Board will, subject to identifying appropriate candidates, consider the makeup of the Board in making further appointments.

The Board is acting to strengthen the culture of the business through a process that develops a set of values consistent with the vision and objectives of the Group and flows these down though a set of specific initiatives. These initiatives are driven personally by the Chief Executive and a report on the progress against each initiative is given to the Board regularly.

9. Maintain governance structures and processes that are fit for purpose and support good decision-making by the Board

The Board has twelve scheduled meetings a year, but meets more frequently if required, and, together with the Audit, Remuneration and Nominations Committees, deals with all important aspects of the Group’s affairs. The Board receives timely information in a form and of a quality appropriate to enable it to discharge its duties.  All Board Committees have their own terms of reference, which are available from the Company Secretary. 

Audit Committee

The Audit Committee comprises Tim Jackson, who acts as the Chairman, Richard Leaver and Sunil Vadgama. Tim Jackson is considered to have recent and relevant financial and legal knowledge and experience. 

The Audit Committee has three scheduled meetings per year.

The Audit Committee report can be found within the Annual Report.

Remuneration Committee

The Remuneration Committee comprises Richard Leaver, who acts as the Chairman, Tim Jackson and Sunil Vadgama.

The Remuneration Committee normally meets at least once a year.

The Remuneration Committee report can be found within the Annual Report.

Nominations Committee

The Nominations Committee compromises of Tim Jackson, who acts as the Chairman, Richard Leaver and Sunil Vadgama.

The Nominations Committee normally meets at least once a year.

The Nomination Committee report can be found within the Annual Report.

10. Communicate how the Group is governed and is performing by maintaining a dialogue with shareholders and other relevant stakeholders

The Board recognises that Image Scan communicates with its shareholders principally through its website and the Annual Report. Shareholders can also sign up to receive news releases directly from the Company by email.  The Chairman makes himself available to major shareholders on request and periodically attends meetings and gives presentations to shareholders. 

The Annual General Meeting of the Company, normally attended by all directors, gives the directors the opportunity to report to shareholders on current and proposed operations and enables the shareholders to express their views of the Group’s business activities.  Shareholders are invited to ask questions during the meeting and to meet with directors after the formal proceedings have ended.

The results of voting on all resolutions in general meetings are posted to the Group’s website.

The Group communicates with its staff in a number of ways including annual appraisals and staff briefings.

s172 STAKERHOLDER ENGAGEMENT IMPACT STATEMENT

The following disclosure describes how the Directors have acted to promote the success of the company for the benefit of its members as a whole, with regard to the factors set out in section 172(1)(a) to (f) of the Companies Act. When performing their duties under the Act, they have considered the long-term consequences of decisions, matters affecting the Company’s employees and other stakeholder relationships, and the need to act fairly between members of the Company. Furthermore, they have recognised that while companies are run for the benefit of their shareholders, the long-term success of a business is dependent on maintaining relationships with all significant stakeholders. The Board continuously reviews relationships that support the generation and preservation of value in the Company, including those with employees, suppliers, customers and distribution partners, and the Company’s shareholders.

How the Group engages with its key stakeholders

Principal decisions linked to our strategy and the stakeholders impacted

Share Dealing Code

The Company has adopted a share dealing code for the Directors and certain employees, which is appropriate for a company whose shares are admitted to trading on AIM (including relating to the restrictions on dealings during close periods in accordance with MAR and with Rule 21 of the AIM Rules for Companies) and the Company takes all reasonable steps to ensure compliance with the share dealing code by the Directors and all employees.

 Anti-Bribery Policy

The Group believes that it has robust policies and procedures for combating bribery and corruption which are periodically reviewed.

Company Directors