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NORTHBRIDGE
Image of man working at a factory

Corporate governance

Corporate governance

The Directors acknowledge the importance of good corporate governance and, whilst not required to comply with the UK Corporate Governance Code, they apply its principles so far as is practicable taking into account the Company’s size and stage of development.

The Board meets regularly to monitor the current state of business and to determine its future strategic direction. The Board is currently comprised of a Non-executive Chairman, three Executive Directors and three Non-executive Directors. all of the Non-executive Directors are independent of executive management and do not participate in share option or other executive remuneration schemes, nor do they qualify for pension benefits.

The Company holds meetings from time to time with institutional shareholders to discuss the Company's strategy and financial performance. The Annual General Meeting is used to communicate with private and institutional investors.

THE QUOTED COMPANY ALLIANCE (QCA) CODE

The Directors recognise the importance of good corporate governance and have chosen to apply the Quoted Companies Alliance Corporate Governance Code (the ‘QCA Code’). The QCA Code was developed by the QCA in consultation with a number of significant institutional small company investors, as an alternative corporate governance code applicable to AIM companies. The underlying principle of the QCA Code is that “the purpose of good corporate governance is to ensure that the company is managed in an efficient, effective and entrepreneurial manner for the benefit of all shareholders over the longer term”. Further information on compliance with the QCA Code will be provided in our next annual report.

Peter Harris, Chairman

The decision to apply the QCA Corporate Governance Code (2018 Edition) was made by the board on 31 May 2018 and the information set out in this section of the Company’s website was last reviewed and updated on 27 September 2018.

THE PRINCIPLES OF THE QUOTED COMPANY ALLIANCE (QCA) CODE

DELIVER GROWTH

Application (as set out by QCA)

The board must be able to express a shared view of the company’s purpose, business model and strategy. It should go beyond the simple description of products and corporate structures and set out how the company intends to deliver shareholder value in the medium to long-term.  It should demonstrate that the delivery of long-term growth is underpinned by a clear set of values aimed at protecting the company from unnecessary risk and securing its long-term future.

What we do and why

The Group’s strategy is explained within our Strategic Report on pages 10 & 11 of our Annual Report and Accounts for the year ended 31 December 2017.

The Northbridge strategy is to consolidate and build its specialist industrial equipment businesses by:

  • driving growth organically through investing in the hire fleet and improving quality systems and customer service; and
  • using partnerships to increase geographical exposure.

When considering further acquisitions, the main criteria will be:

  • involvement in specialist electrical services or in drilling tools;
  • active in the oil and gas or power related industry; and
  • capable of supplying a worldwide customer base.

In achieving this strategy, we will be able to capitalise on the market opportunity to become a significant industrial services business serving an international market. The Board reviews this strategy periodically and believes it is still the correct one for the Group.

The key challenges to the business and how these are mitigated is detailed on pages 12 & 13 of our Annual Report and Accounts for the year ended 31 December 2017.

Application (as set out by QCA)

Directors must develop a good understanding of the needs and expectations of all elements of the company’s shareholder base.

The board must manage shareholders’ expectations and should seek to understand the motivations behind shareholder voting decisions.

What we do and why

The Group encourages two-way communication with both its institutional and private investors and responds quickly to all queries received.

The Chairman talks regularly with the Group’s major shareholders and ensures that their views are communicated fully to the Board.

Institutional investors are also able to communicate with the Senior Independent Director, should they wish to do so, on matters which they don’t wish to raise directly with the Chairman or executive team.

The Board recognizes the AGM as an important opportunity to meet private shareholders. The Directors are available to listen to the views of shareholders informally immediately following the AGM.

The Group’s CEO and FD as well as its broker and financial PR provider are responsible for shareholder liaison.

Contact details for shareholder liaison can be found in the Investor Relations section of the Company website.

Application (as set out by QCA)

Long-term success relies upon good relations with a range of different stakeholder groups both internal (workforce) and external (suppliers, customers, regulators and others). The board needs to identify the company’s stakeholders and understand their needs, interests and expectations.

Where matters that relate to the company’s impact on society, the communities within which it operates or the environment have the potential to affect the company’s ability to deliver shareholder value over the medium to long-term, then those matters must be integrated into the company’s strategy and business model.

Feedback is an essential part of all control mechanisms. Systems need to be in place to solicit, consider and act on feedback from all stakeholder groups.

What we do and why

The Group is committed to sustainable progress in all aspects of our business – for the environment, customers, suppliers and the communities we operate in.

The group’s stakeholders include shareholders, members of staff, customers, suppliers, regulators, industry bodies and creditors (including the Group’s lending banks).

The principal ways in which their feedback on the Group is gathered are via meetings, direct conversations and social media.

Application (as set out by QCA)

The board needs to ensure that the company’s risk management framework identifies and addresses all relevant risks in order to execute and deliver strategy; companies need to consider their extended business, including the company’s supply chain, from key suppliers to end-customer.

Setting strategy includes determining the extent of exposure to the identified risks that the company is able to bear and willing to take (risk tolerance and risk appetite).

What we do and why

Risk Management on pages 12 & 13 of our Report and Accounts for the year ended 31 December 2017 details risks to the business, how these are mitigated and the change in the identified risk over the last reporting period.

The Group formally reviews and documents the principal risks to the business at least annually.

Both the Board and senior managers are responsible for reviewing and evaluating risk and the Executive Directors meet at least monthly to review ongoing trading performance, discuss budgets and forecasts and new risks associated with ongoing trading.

MAINTAIN A DYNAMIC MANAGEMENT FRAMEWORK

Application (as set out by QCA)

The board members have a collective responsibility and legal obligation to promote the interests of the company, and are collectively responsible for defining corporate governance arrangements. Ultimate responsibility for the quality of, and approach to, corporate governance lies with the chair of the board.

The board (and any committees) should be provided with high quality information in a timely manner to facilitate proper assessment of the matters requiring a decision or insight.

The board should have an appropriate balance between executive and non-executive directors and should have at least two independent non- executive directors. Independence is a board judgement.

The board should be supported by committees (e.g. audit, remuneration, nomination) that have the necessary skills and knowledge to discharge their duties and responsibilities effectively.

Directors must commit the time necessary to fulfill their roles.

What we do and why

All Directors receive regular and timely information on the Group’s operational and financial performance. Relevant information is circulated to the Directors in advance of meetings. All Directors have direct access to the advice and services of the Company Secretary and are able to take independent professional advice in the furtherance of the duties, if necessary, at the company’s expense.

The Company Secretary is also the Finance Director. The Board feel this to be appropriate due to the Group’s size and the fact there are no other employees with the necessary skill within the Group. This arrangement is continually being reviewed.

The Board comprises three Executive Directors, three Non-Executive Directors and a Non-Executive Chairman. The Board considers that all Non-Executive Directors bring an independent judgement to bear notwithstanding the varying lengths of service, the varying length of service concurrent with Chief Executive or any previous part-time Executive Director roles previously held within the Group.

The Board is supported by the Audit, and Remuneration Committee.  Details of the Board committees and attendance records of all Directors at these meeting can be found on page 18 of the Annual Report and Accounts for the Year Accounts for the year ended 31 December 2017.

Application (as set out by QCA)

The board must have an appropriate balance of sector, financial and public markets skills and experience, as well as an appropriate balance of personal qualities and capabilities. The board should understand and challenge its own diversity, including gender balance, as part of its composition.

The board should not be dominated by one person or a group of people. Strong personal bonds can be important but can also divide a board.

As companies evolve, the mix of skills and experience required on the board will change, and board composition will need to evolve to reflect this change.

What we do and why

The Directors names and biographies can be found on pages 14 &15 of the Annual Report and Accounts for the year ended 31 December 2017

A Nomination Committee is convened to consider any new Board appointments.  The make-up of the committee will vary depending on the role to be discussed but will always include the Chairman. Where new Board appointments are considered the search for candidates is conducted, and appointments are made, on merit, against objective criteria and with due regard for the benefits of diversity on the Board, including gender.  The Nomination Committee also considers succession planning.

Application (as set out by QCA)

The board should regularly review the effectiveness of its performance as a unit, as well as that of its committees and the individual directors.

The board performance review may be carried out internally or, ideally, externally facilitated from time to time. The review should identify development or mentoring needs of individual directors or the wider senior management team.

It is healthy for membership of the board to be periodically refreshed. Succession planning is a vital task for boards. No member of the board should become indispensable.

What we do and why

The board composition and effectiveness are reviewed periodically with the last process carried out in May 2017 when the non-executive composition was refreshed.

The next process, which will take into account the Financial Reporting Council’s Guidance on Board Effectiveness will take place before later this year and every fourth quarter thereafter.

The Chairman and the Chief Executive Officer evaluate succession planning at the Board level and will discuss this with the Non-Executive Directors as appropriate.

Application (as set out by QCA)

The board should embody and promote a corporate culture that is based on sound ethical values and behaviours and use it as an asset and a source of competitive advantage.

The policy set by the board should be visible in the actions and decisions of the chief executive and the rest of the management team.

Corporate values should guide the objectives and strategy of the company.

The culture should be visible in every aspect of the business, including recruitment, nominations, training and engagement. The performance and reward system should endorse the desired ethical behaviours across all levels of the company.

The corporate culture should be recognisable throughout the disclosures in the annual report, website and any other statements issued by the company.

What we do and why

The Board promotes the highest level of behaviour and ethics.

The trading divisions adhere to the highest level of QHSE (Quality, Health, Safety and Environment).

Tasman, the oil tool division of Northbridge, sets out its QHSE policies here.

The Group’s anti-bribery policy can be found here.

Application (as set out by QCA)

The company should maintain governance structures and processes in line with its corporate culture and appropriate to its:

  • size and complexity; and
  • capacity, appetite and tolerance for risk.

The governance structures should evolve over time in parallel with its objectives, strategy and business model to reflect the development of the company.

What we do and why

Northbridge maintains strong governance structures from each subsidiary through to the Board of Directors.

The Chairman maintains an adequate separation from the company’s day-to-day business to be able to make independent decisions and focus on strategy. The Chair is supported by a Senior Independent Director who acts as a sounding board and intermediary for the chair or other board members as necessary.

The executive directors are tasked with executing the business model agreed with the Non-Executive directors.

The Audit and Remuneration Committees have vital roles within the governance structure and further details can be found here

BUILD TRUST

Application (as set out by QCA)

A healthy dialogue should exist between the board and all of its stakeholders, including shareholders, to enable all interested parties to come to informed decisions about the company.

In particular, appropriate communication and reporting structure should exist between the board and all constituent parts of its shareholder base. This will assist:

  • the communication of shareholders’ views to the board; and
  • the shareholders’ understanding of the unique circumstances and constraints faced by the company.

It should be clear where these communication practices are described (annual report or website).

What we do and why

The Company encourages two-way communication with both its institutional and private investors and responds quickly to all queries received. The Chairman talks regularly with the Group’s major shareholders and ensures that their views are communicated fully to the Board.

The Board recognizes the AGM as an important opportunity to meet private shareholders. The Directors are available to listen to the views of shareholders informally immediately following the AGM.

The Company will disclose outcomes of all votes at general meetings of shareholders in a clear and transparent manner either on the website or via an announcement.

Where a significant proportion of votes (20% of independent votes) have been cast against a resolution at any general meeting, the Company will provide an explanation of what actions it intends to take to understand the reasons behind that vote result, and, where appropriate, any different action it has taken, or will take, as a result of the vote.

The website includes historical annual reports and other governance-related material over the last five years.