Corporate Governance
Statement of Corporate Governance
All members of the Board believe strongly in the value and importance of good corporate governance and in our accountability to all of Velocity’s stakeholders, including investors, staff, customers and suppliers. The Board has adopted the Quoted Companies Alliance (QCA) Corporate Governance Code. The Board believes that the QCA Code is most appropriate for the size, risks, complexity and operations of the Company and is reflective of the Group’s values. Details of the Group’s compliance with the ten principles of the Code are set out below:
1. Establish a strategy and business model which promotes long-term value for the shareholders
Velocity’s strategy is to be the leading supplier of composite material kits to aerospace and other high-performance manufacturers, that reduce costs and improve sustainability.
Velocity manufactures advanced composite material kits for use in the production of carbon fibre composite parts for aerospace and other high-performance manufacturers, such as automotive OEM’s, and pioneers of renewable energy applications. There has been a step-change in the use of carbon fibre in aircraft as manufacturers have to reduce aircraft weight and improve their efficiency to deliver greater sustainability. By using Velocity’s proprietary technology, manufacturers can also reduce costs and free up internal resources to focus on their core business. Velocity has significant potential for expansion, both in the UK and abroad, including into new market areas, such as wind energy and electric vehicles, where the demand for composites is expected to grow.
Our core focus has predominantly been in the aerospace industry and our customer arrangements are almost exclusively based on long-term contracts, typically for a 3-to-5-year period. Our business strategy and business model are included in the strategic report section of our Annual Report, along with key performance indicators set out in the Financial Review to measure growth and profitability around our business model.
2. Seek to understand and meet shareholder needs and expectations
Under the current Board structure, Velocity is seeking to engage in regular dialogue with its shareholders through a structured Investor Relations programme. The Company seeks to provide effective communications through the Interim and Annual reports, as well as regular trading updates through Regulatory News Service announcements. Information is also made available to shareholders through the Company’s website (www.velocity-composites.com).
We offer to meet with those institutional and major private investors that wish to do so at least twice a year in the results period. These meetings include a presentation of the latest financial performance, a wider business update and discussion of the longer-term plan. These meetings are normally attended by the Chairman, Chief Executive Officer and Chief Financial Officer. The presentation given at these meetings is also made available on the Company’s website.
We welcome engagement with our other key shareholders. The Directors and other executives meet both private and institutional shareholders from time to time. The Annual General Meeting presents a further opportunity for all shareholders to meet the Board and other senior managers from across the business.
3. Take into account wider stakeholder and social responsibilities and their implications for long-term success
The Board and senior management seek to engage with all stakeholders including our employees, customers, suppliers, shareholders, industry bodies and local communities in a way to promote the longer-term success of the business.
The main mechanisms for wider stakeholder engagement and feedback can be summarised as follows:
- Customers
We have dedicated staff in the businesses that are responsible for customer relationships. In addition, the technical support and development teams will regularly engage with customers as a fundamental part of delivering ongoing services. Through these well-established channels, Velocity seeks to ensure that the needs of our customers are fully understood. We are then well positioned to initiate appropriate actions in response. - Suppliers
The third-party supply base can be the key to the success of the Velocity business. As such, there are processes in place within the business to actively manage supplier relationships in the normal course of business, taking appropriate feedback and developing actions as necessary. - Employees
We are an equal opportunity employer regardless of race, religion, gender, age, disability, sexual orientation, gender reassignment, marriage and civil partnership and pregnancy and maternity. With our staff we have implemented firm wide half yearly briefings following our results announcements, monthly departmental staff briefings, a quarterly all staff briefing, weekly brief updates as well as completing an annual engagement survey. - Industry Bodies
We are members of industry bodies such as Northwest Aerospace Alliance (‘NWAA’) and the National Aerospace and Defence Contractors (‘NADCAP’) who are influential in how the Group is perceived by clients. - Community
We actively participate in the community and in apprenticeships and other schemes to provide opportunities for young people, such as T-Levels for BTEC Engineering students and Work Experience opportunities. We are rm believers in supporting the local economies in which we operate and therefore always look to employ local people, having recently been awarded membership to the Lancashire Skills and Employment Hub as a business dedicated to supporting local skills and development. Velocity also operates within the Enterprise Advisor Network, supporting the development of the future generation of employees to ensure we are an employer of choice for the future, we also engage local trades where possible.
4. Embed effective risk management, considering both opportunities and threats, throughout the organisation
The Board has overall responsibility for the Group’s system of internal control and recognises that it has overall responsibility for ensuring the Group maintains proper accounting records and a system of internal control to provide it with reasonable assurance regarding effective and efficient operations, internal financial control and compliance with laws and regulations. The system of internal control is designed to manage rather than eliminate the risk of failure to achieve business objectives. In pursuing these objectives, internal controls can only provide reasonable and not absolute assurance against material misstatement or loss. As expected, a key control during the period was the day-to-day supervision of the business by the Executive Directors and regular oversight by the Non- Executive Directors. The Board performs a regular review of the effectiveness of the system of internal control and takes action as necessary to remedy any significant failings or weaknesses identified in the review. The processes used by the Board to review the effectiveness of the system of internal control include the following:
- An ongoing process of risk assessment to identify, evaluate and manage business risks;
- Management structure with clearly de ned responsibilities and authority limits;
- A comprehensive system of reporting financial results to the Board;
- The Audit Committee reviews the effectiveness of the Group’s risk management process and significant risk issues are referred to the Board for consideration;
- Appraisal and authorisation of general and capital expenditure as well as research and development projects;
- Dual signatories on all bank accounts.
5. Maintain the board as a well-functioning, balanced team led by the chair
We will be seeking a new Non- Executive Director to replace Margaret in the coming year, who has the financial and governance experience to support the Company. Currently Andy Beaden is acting Interim Audit Committee Chair.
At the date of this report the Board comprises of the Chairman, Chief Executive Officer, Chief Financial Officer, Deputy Company Secretary and a Non-Executive Director. During the year Margaret Amos resigned from her Non-Executive Director role to pursue other opportunities and we will be seeking a new Non- Executive Director in the coming year who has the financial and governance experience to support the Company. Group Financial Officer Chris Williams, our Finance Director was appointed Company Secretary in June 2021, replacing Adam Newton who left the Board to focus on his role as Group Financial Controller. Supporting Chris in his Company Secretary role is Kelly McGrath, HR Business Partner and Deputy Company Secretary.
The Chairman has overall responsibility for corporate governance and in promoting high standards throughout the Group. He leads and chairs the Board, ensuring that the committees are properly structured and reviewed on a regular basis, leads in the development of strategy and setting objectives, and oversees communication between the Group and its shareholders.
The Board meets on a regular (usually monthly) basis to deal with matters reserved for its decision. These include agreeing and monitoring strategic plans and financial targets, major decisions on resource, overseeing management of the Group and ensuring processes are in place to manage major risks, treasury matters, changes in accounting policy, corporate governance issues, litigation and reporting to shareholders.
The monthly Board meetings have a regular agenda with standing items of Health and Safety, HR and People update, Chief Commercial & Supply Chain Officer report, Chief Programmes Officer report, Chief Financial Officer report and management accounts. The Board also receives committee updates on a regular basis. To enable the Board to discharge its duties all Directors receive appropriate and timely information. Briefing papers are distributed by the Deputy Company Secretary to all Directors in advance of the meetings.
There are two formal Board committees that meet independently of Board meetings and one additional Executive management committee:
- Audit Committee
The Audit Committee currently has two members, Andy Beaden (Interim Chair) and Rob Soen. The Chief Financial Officer and external auditors attend by invitation. The Audit Committee responsibilities include the review of the scope, results and effectiveness of the external audit, the review of the Interim and Annual accounts, and the review of the Group’s risk management and internal control systems. The Audit Committee advises the Board on the appointment of the external auditors and monitors their performance. - Remuneration Committee
The Remuneration Committee has two members, Rob Soen (Chair) and Andy Beaden. The Committee is responsible for setting the remuneration arrangements, short term bonus and long-term incentives for the Executive Directors and senior management. In addition, the committee oversees the creation and implementation of all employee share plans. - Nomination Committee
The Nomination Committee has two members, Andy Beaden (Chair) and Rob Soen. The Nomination Committee meets as required and is responsible for proposing candidates for appointment to the Board and the structure and composition of the Board as a whole, as well as succession planning. The Committee’s responsibilities were discussed as a part of the Board meetings during the year. - Executive Committee
The Executive Committee handles the implementation of the Group strategy on behalf of the Board. The Committee comprises of four members, two of which are Executive Directors. It focuses on the long-term vision and strategy for the Group. Primary responsibilities include the oversight of the development, maintenance and implementation of the strategy, management of the overall financial results for the Group, directing operational management and managing shareholder, corporate governance and growth.
A summary of the attendance at board and committee meetings by the directors who served during the year is set out below.
| Board Meetings | Audit Committee | Remuneration Committee | Nomination Committee | |
|---|---|---|---|---|
| No Meetings in Year | 10 | 4 | 2 | 2 |
| Andrew Beaden | 10 | 4 | 2 | 2 |
| Robert Soen | 10 | 4 | 2 | 2 |
| Jon Bridges | 10 | n/a | n/a | n/a |
| Margaret Amos* | 8 | 3 | 2 | 2 |
| Chris Williams | 10 | 4 | n/a | n/a |
*Resigned as Director 15 September 2021
n/a - indicates that a Director was not a member of a particular committee
| Andrew Beaden | Rob Soen | Jon Bridges | Margaret Amos | Chris Williams | |
|---|---|---|---|---|---|
| Audit Committee (AC) | Member/Chair | Member | n/a | Chair | n/a |
| Remuneration Committee | Member | Chair | n/a | Member | n/a |
| Nominations Committee | Chair | Member | n/a | Member | n/a |
Non-members are invited to attend committees as appropriate
6. Ensure that between them the directors have the necessary up-to-date experience, skills and capabilities
Details on each of the directors, and their respective roles within the Company, are set out in the Annual Report 2021.
7. Evaluate board performance based upon clear and relevant objectives, seeking continuous improvement
Whilst the Board have continually looked to refine and improve working practices throughout the year, the COVID-19 pandemic continued to challenge the Board which led to some short-term crisis management processes being required. As a testament to the previous years’ focus on Board governance these were implemented swiftly and decisively.
These were particularly focussed around cash flows and the ongoing health of Velocity.
Now that business has a semblance of steady-state, the Board will continue to improve these working practices in-line with the business need in the months to come.
8. Promote a culture that is based on ethical values and behaviour
Our long-term growth is underpinned by our seven core values:
- We place our staff first, putting ourselves in their shoes to understand the current and future needs of those who work with us.
- We value our customers determining how to anticipate their current and future needs and how to exceed their expectations.
- We place importance on our suppliers and pay invoices promptly, are clear in negotiations and have an ongoing dialogue.
- We communicate with our shareholders and explain our strategy clearly and the challenges Velocity faces.
- We are team players who recognise that Velocity is a Company worth much more than the sum of its parts and we are committed to learning from one another.
- We are committed to innovation in what we do and how we do it, and to working smarter rather than harder to reduce costs, increase efficiency and help aircraft parts’ manufacturers to increase build rates.
- We respect one another and are courteous, honest and straightforward in all our dealings, we honour diversity, individuality and personal differences, and are committed to conducting our business with the highest personal, professional and ethical standards.
The culture of the Group is characterised by these values which are communicated regularly to staff through internal communications and forums. The core values are communicated to prospective employees in the Group’s recruitment programmes and are considered as part of the selection process.
The Board believes that a culture based on the seven core values is a competitive advantage and consistent with fulfilment of the Group’s mission and execution of its strategy. It is the responsibility of the Executive Management Committee to evaluate how the Company might better achieve these objectives, and report to the Board on a regular basis.
9. Maintain governance structures and processes that are fit for purpose and support good decision making by the board
Details of the governance structures and processes adopted by the Company are set out on the Company website (www.velocity-composites.com).
10. Communicate how the Company is governed and is performing by maintaining a dialogue with shareholders and other relevant stakeholders
The Board believes that corporate governance is more than just a set of guidelines; rather it is a framework which underpins the core values for running the business in which we all believe. The Board has formal responsibilities and agendas and three sub-committees; in addition, strong informal relations are maintained between Executive and Non-executive Directors.
Non-executive Directors meet with other senior managers and give advice and assistance between meetings.
The Chairman, Chief Executive Officer and the Chief Financial Officer make presentations to institutional shareholders and analysts each year immediately following the release of interim and full year results. They also attend retail shareholder events. The slides used for such presentations are made available on the Group’s website under the Annual Reports section. They also meet regularly with the Group’s Nomad/broker and discuss any shareholder feedback, the Board is briefed accordingly.
All Directors attend the Annual General Meeting and engage both formally and informally with shareholders during and after the meeting. The results of voting at the AGM is communicated to shareholders via RNS and on the Group’s website.
Andy Beaden
Chairman
23 January 2022