The Board of Telit Communications PLC (“Telit”) believes that Telit and its subsidiaries (together, the “Group”) and the delivery of its strategy should be based on strong corporate governance. The Board also believes that good governance is essential to the way in which the Group operates on a day-to-day basis. The Board is committed to developing a culture of openness, transparency, constructive challenge and support.
As an AIM-listed company, Telit follows the requirements of the AIM Rules for Companies. In accordance with AIM Rule 26, Telit has adopted the Quoted Companies Alliance’s Corporate Governance Code for small and mid-size quoted companies (the “QCA Code”). The Board considers that Telit complies with the principles of the QCA Code, except as set out below.
The sections below set out how we currently comply with the ten principles of the QCA Code.
The strategy and business operations of the Group are set out in the Strategic Report on pages 6 to 29 of the Group’s Annual Report for the year ending 31 December 2017.
The Board realises that effective communication with shareholders on strategy and governance is an important part of its responsibilities. The Group’s Investor Relations Manager has responsibility for ensuring that Telit communicates openly with shareholders and that shareholder views are communicated back to the Board. Following their release to the market, interim and final results are presented to institutional shareholders and analysts. The CEO and Finance Director meet regularly with investors and analysts via investor roadshows, participation in conferences and additional dialogue with key investor representatives held in the intervening periods.
The Board uses the AGM to encourage communication with private shareholders. Where voting decisions are not in line with Telit’s expectations the Board will engage with those shareholders to understand and address any issues.
Care is taken to ensure that all price sensitive information is made available to all shareholders at the same time.
The Senior Independent Non-Executive Director also makes himself available to shareholders if they have concerns, where contact through the normal channels of Chairman, CEO or other executive directors has failed to resolve, or for which such contact is inappropriate.
Telit understands that its relationship with its staff, shareholders, customers, partners and suppliers is critical to achieving its goals.
Telit’s staff is located world-wide. Despite the breadth of the location of staff, Telit strives to bring staff together through communication, engagement and empowerment. Telit’s technological infrastructures enable staff to easily communicate with colleagues, wherever they are located. An intranet portal provides staff with relevant information and discussion opportunities.
Telit works with customers to provide them with products and solutions that will be right for their needs and, in turn, continuously assesses how it can bolster its operations and business to better serve its customers. Throughout the customer relationship life-cycle, different Telit departments engage with customers including sales, product marketing and customer support at varying stages of the customer relationship, so that the customer is always supported.
Telit nurtures a panel of strategic suppliers and partners able to deliver top-tier technologies with a focus on quality. Telit operates a best in class system of category management, performance assessment (cost, quality, delivery), costing, and measures in near real-time its supply chain performance. Regular management meetings, roadmap reviews, technical workshops, and risk assessments are performed to ensure the health and proper functioning of the entire supply chain.
Telit operates and is building its supplier compliance program which includes modern slavery and conflict mineral checks.
The Board has responsibility for establishing and maintaining the Group’s internal control systems. The Board regularly reviews and evaluates internal controls, ensuring they meet the needs of the Group.
The internal controls are designed to manage risk rather than eliminate it and therefore cannot provide absolute assurance against material misstatement or loss.
The Board engaged Grant Thornton to perform a risk analysis which, when complete, will form the basis for the audit committee to present a plan for a systematic internal audit.
A summary of the principal risks and uncertainties facing the Group, as well as mitigating actions, are set out on pages 25 to 28 of the Group’s Annual Report for the year ending 31 December 2017.
The board comprises the Executive Chairman, two non-executive directors, one of whom is the senior independent director, and one executive director.
Paolo Dal Pino, Executive Chairman
Yariv Dafna, Finance Director and Chief Corporate Development Officer
Simon Duffy, Senior Independent Director
Lars Reger, Non-executive Director
The Chairman was appointed as an independent non-executive Chairman but is currently acting as executive Chairman on an interim basis until the board appoints a new chief executive officer. The Board deems that Simon Duffy is an independent director in accordance with the QCA guidelines.
Recently, Telit has been working with its shareholders to appoint new directors to the Board and its committees, with the aim of bolstering the current Board with non-executive directors who have relevant experience and expertise.
Immediately upon the new non-executive directors joining the board, the process to recruit a new chief executive officer is expected to begin, whereupon the roles of chairman and chief executive officer will be separated. The composition of the Board does not currently comply with the QCA Code, however, Telit hopes to be in compliance before the end of the 2018 financial year.
The Board is supported by its committees, as set out against principle 9 below.
Details of directors’ attendance at scheduled Board and committee meetings during the financial year ending 31 December 2017 can be found on page 34 of the Group’s Annual Report for the year ending 2017.
The directors are expected to commit adequate time to their Board duties.
Telit is working with its shareholders to appoint additional directors to the Board to ensure it has an appropriate balance of sector, financial and public markets skills and experience, as well as an appropriate gender balance and balance of personal qualities and capabilities. Until such appointments are made, the Board is not compliant with the QCA Code in this regard.
Details of each of the current Board’s skills and experience can be found here.
Training and support
On appointment to the Board, new directors receive a comprehensive and tailored induction programme, the aim of which is to introduce them to key management and personnel across the business and to enhance their knowledge and understanding of the Group’s business, strategy and governance structure, as well as their own duties and responsibilities. This includes time with each of the executive directors, and with a wide range of senior management from across the business.
The directors have access to the advice and services of the Chief Legal Officer who is responsible for ensuring that all Board procedures have been complied with. Individual directors are also able to take independent legal advice at Telit’s expense where they judge it necessary to support the performance of their duties as directors.
Appointment and re-election
Directors are appointed by the Board or at the AGM. Pursuant to Telit’s articles of association, any director appointed by the Board, only holds office until the next AGM, where such director may be recommended for re-election. Telit’s articles of association also require that at each AGM any director who was elected or last re-elected as a director at or before the AGM held in the third calendar year before that AGM, shall retire by rotation and, if required, such further directors shall retire by rotation as would bring the number retiring by rotation up to one-third of the number of directors in office at the date of the notice of AGM. However, in line with best corporate governance practice all directors elect to resign and if, they so wish put themselves forward for re-appointment by the shareholders at each AGM.
Since the appointment of Paolo Dal Pino as Chairman, he has been assessing the individual contributions of each of the members of the Board to ensure their individual contribution is relevant and effective and that they are committed members of the Board. Given the recent changes to the Board, Telit intends to undertake a formal evaluation of the performance of Board in 2019 to ensure that the members of the Board collectively function in an efficient and productive manner.
The Nomination Committee is responsible for proposing candidates for appointment to the Board having regard to the balance of skills, structure and composition of the Board and ensuring the appointees have sufficient time available to devote to the role.
Telit recognises that it has a social responsibility to ensure that all of its business dealings are ethical and that all employees operate to a high standard. In doing so, Telit promotes a commercial environment that does not tolerate social abuses or unethical business.
Telit aims to attract, retain and motivate the best people and takes responsibility for staff welfare, training and development. In addition, Telit aims to be an inclusive and professional workplace. Telit is opposed to discrimination and is committed to sustaining equality in all employment matters.
Telit believes that personal and business integrity is an essential part of delivering strong financial performance and expects every person working for or on behalf of Telit to operate to a high ethical standard. Telit’s efforts to operate ethically, include on-going projects to detect and prevent anti-bribery and corruption, modern slavery and ethical sourcing of materials. In addition, Telit recognises that as a major, global corporation it has a duty to conduct its business with concern on its impact on the environment.
Telit has a whistleblowing policy in place, which includes arrangements by which staff can, in confidence, raise concerns about possible improprieties in financial or other matters. The policy aims to encourage staff to report suspected wrongdoing in the knowledge that their concerns will be taken seriously; to provide staff with guidance as to how to raise concerns and to reassure staff that they can raise concerns without fear of reprisals.
Further details in relation to Telit’s corporate social responsibility policies can be found here.
Roles of the Board, Chairman and Chief Executive Officer
The Chairman is responsible for running the business of the Board and for ensuring appropriate strategic focus and direction. This responsibility includes ensuring that the principles of good corporate governance are applied and promoted throughout the Group. The role of the Senior Independent Non-Executive Director is to provide a sounding board to as the chairman and to serve as an intermediary for the other directors when necessary. The chief executive officer is be responsible for proposing the strategic focus to the Board, implementing it once it has been approved and overseeing the management of Telit operations and business.
It is the Board’s responsibility to:
- i) formulate, review and approve Telit’s long term strategy and annual plan;
- ii) monitor Telit’s performance against strategy and the annual plan;
- iii) identify principal risks, ensure systems of risk management and control are in place and monitor them; and
- iv) review succession plans for the Board and management.
A number of matters are reserved specifically to the Board including approval of the annual report, adoption of budgets, material financial commitments and any M&A activity. To ensure the Board is the decision-making body for those matters that are considered of significance to the Telit Group owing to their strategic, financial or reputational implications or consequences and to retain control of these key decisions, the Board has adopted a schedule of matters reserved for the decision of the Board or a duly authorised committee thereof.
The Board generally meets a minimum of once every quarter and receives appropriate and timely information prior to each meeting. Board and committee papers are distributed several days before meetings take place. Any director can challenge proposals and decisions are taken democratically after discussion. Any director who feels that any concern remains unresolved after discussion may ask for that concern to be noted in the minutes of the meeting, which are then circulated to all directors. Specific actions arising from such meetings are agreed by the Board or relevant committee and then followed up by management.
The Board is normally supported by the Audit, Remuneration and Nomination Committees, each of which has access to the resources, information and advice that it deems necessary, to enable the committee to discharge its duties. However, as stated above, the Board is temporarily short of sufficient independent non-executive directors to fill these committees. This is being resolved presently with a process to add four non-executive directors to the existing Board.
The duties of the Audit and Remuneration Committees are set out in the Terms of Reference of each of these committees, which are available here. The Board is further supported by a Nomination Committee as well as PDMR and Investigation Committees responsible for the application of the Market Abuse Directive and overseeing any regulatory or other investigations being conducted into or by Telit respectively.
Executive directors are not members of the Board committees, although they may be invited to attend meetings. The Chief Legal Officer acts as secretary to each committee. The minutes of committee meetings are circulated to all committee members.
In addition to the steps taken by Telit to communicate with shareholders and stakeholders described above, Telit makes a range of corporate information, including recent announcements, notices for, and results, of any general meetings and its financial statements, available to the public on its website www.telit.com.
The Board receives regular updates on the views of shareholders through briefings and reports from Investor Relations, the Chief Executive Officer, the Finance Director and the Company’s brokers. Telit communicates with institutional investors frequently through briefings with management. In addition, analysts’ notes and brokers’ briefings are reviewed to understand the external view of the Group.
This statement was last updated on 27 September 2018.