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Statement of Corporate Governance.

Inspiration Healthcare Statement of Compliance with QCA Corporate Governance Code

The Group has adopted the Quoted Companies Alliance Corporate Governance (the “QCA Code”) and this report follows the structure of these guidelines and explains how we have applied the guidance. The Board considers that the Group complies with the QCA Code in all respects.

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, including a commitment to open and transparent communications with stakeholders. We believe that good corporate governance improves performance while reducing or mitigating risks.

QCA Principles

DELIVER GROWTH

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

The Group’s purpose is defined by our mission: To develop outcome-enhancing products for intensive care patients and to promote these globally. Our strategy is defined clearly in our 2018 Annual Report. Our business model is set out clearly in our annual report and on our website (click here) and explains four stages: defining the product proposition based on clinical need, creating the products to fulfil the proposition, sale & service of the products and focusing closely on our clinical customers. Our strategy and business model are underpinned by a clear set of values: patient focus, outcome changing, pioneering and research driven, which reflect our long-term objective of enhancing patient care and delivering business growth and profitability.

Our KPI’s, which are set out in the Chief Executive Officer’s Review in our annual report and measure growth and profitability reflecting our business model.

2. Seek to understand and meet shareholder needs and expectations

Relationships with our shareholders are important to us and we seek to provide effective communications through our Interim and Annual Reports along with Regulatory News Service announcements, including RNS Reach. We also use the Group’s website, www.inspiration-healthcare.com for both financial and general news relevant to shareholders. The Executive Directors meet shareholders and other investors/potential investors at regular intervals during the year and hosted an investor meeting during the year.  The 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.

The Group’s NOMAD and broker, Cenkos Securities, is briefed regularly and updates the Board during the year on shareholder expectations.  The Group retains a professional investor relations company, Cadogan PR, to be the main contact point for our shareholders and to assist us with communicating with and receiving feedback from shareholders and financial analysts.

The Annual General Meeting (“AGM”) is regarded as an opportunity to meet, listen and present to shareholders and their participation is encouraged; all Directors attend the AGM and are available to meet shareholders individually or as a group.  For each resolution the number of proxy votes received for, against and withheld is circulated to all attendees.  The results for the AGM are subsequently published on the Group’s corporate website.  All 2018 AGM resolutions were passed comfortably.

The Non-executive Chairman, Mark Abrahams and the Senior Independent Director, Bob Beveridge, are available to meet major shareholders if required to discuss issues of importance to them.

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

Our continued success is built on the talented people who work here, and employee engagement forms a major part of our strategy. Everyone at Inspiration Healthcare Group is a valued member of the team, and our aim is to help every individual achieve their full potential. We offer equal opportunities regardless of race, gender, gender identity or reassignment, age, disability, religion of sexual orientation. We hold regular all-staff gatherings, including an annual conference, to keep employees updated on business progress and we also operate an incentivised Improvement Ideas scheme.  We are a living wage employer.

A key element of the/our business model is to work closely with thought leaders in the healthcare system and to develop, evaluate and enhance our propositions in full co-operation with those partners. Our reputation for innovative, outcome-enhancing products and excellent service is key and we regularly seek feedback on the performance of our products.

Our key strategic suppliers are long-term in nature and work with the Group on product innovations. As a medical device company, we regularly assess key supplier performance and engage with them to discuss and agree objectives and to enhance product capability and performance.

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

The Board recognises the need for a robust system of internal controls and risk management. The assessment of risks and the development of strategies for dealing with these risks are achieved on an ongoing basis through both a quarterly review of risks by the Board and the way in which the Group is controlled and managed internally. Risk management is integral to the ability of the Group to deliver on its strategic objectives and the Board’s appetite for risk is communicated to shareholders in our annual report.

The system of internal control is structured around an assessment of the various risks to the business and is designed to address those risks that the Board considers to be material, to safeguard assets against unauthorised use or disposition and to maintain proper accounting records which produce reliable financial and management information.  However, any such system of internal control can provide only reasonable, but not absolute, assurance against material misstatement or loss. The Board considers that the internal controls in place are appropriate for the size, complexity and risk profile of the Group.

The Board is responsible for reviewing and approving overall Group strategy, approving revenue and capital budgets and plans, for determining the financial structure of the Group including treasury, tax and dividend policy.  Monthly results and variances from plans and forecasts are reported to the Board. 

The Audit Committee assists the Board in discharging its duties regarding the financial statements, accounting policies and the maintenance of proper internal business and operational and financial controls, including liaison with the Group’s external auditors.

The key features of the Group’s system of internal control are as follows:

  • an ongoing process of risk assessment to identify, evaluate and manage business risks;
  • management structure with clearly defined responsibilities and authority limits;
  • a comprehensive system of reporting financial results to the Board;
  • Quality Management Systems certified to ISO 13485 and CMDCAS;
  • appraisal and authorisation of major capital expenditure, research & development projects; and
  • dual signatories on all bank accounts.

Additionally, the Group operates a number of non-financial controls including regulatory compliance, our Business Management System, as well as Health and Safety.

MAINTAINING A DYNAMIC MANAGEMENT FRAMEWORK

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

The Board is made of up three Executive Directors and three independent Non-executive Directors and is chaired by Mark Abrahams who has held this post since the reverse take-over of Inditherm plc by Inspiration Healthcare Ltd in June 2015.  Meetings are open and constructive, with every Director participating fully. Meetings alternate between our Crawley head office and the Leicester distribution centre, enabling the Board to meet the senior teams.

The Chairman is responsible for the leadership of the Board and ensuring its effectiveness in all aspects of its role. He is also responsible for creating the right Board dynamic and for ensuring that all important matters, in particular strategic decisions, receive adequate time and attention at Board meetings. The Executive Directors are responsible for the day-to-day running of the business and developing corporate strategy while the Non-executive Directors are tasked with constructively challenging the decisions of executive management and satisfying themselves that the systems of business risk management and internal financial controls are robust. The Non-executive Directors give informal advice to the Executives between meetings and devote sufficient time to be effective in this regard.

The Board meets regularly during the year (10 times in 2017/18); a calendar of meetings and principal matters to be discussed is agreed at the beginning of each year.  Board papers are circulated at least one week before meetings, allowing time for full consideration and necessary clarifications before the meetings. Board dinners are held from time to time on the evening before meetings and allow broader discussion and development of effective Board relations.

The Group 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. Changes to these commitments and interests are reported to and, where appropriate, agreed with the rest of the Board.

The Chief Financial Officer is also the Company Secretary and is responsible for ensuring that Board procedures are followed and that the Group complies with all applicable rules, regulations and obligations governing its operation. If required, the Directors are entitled to take independent legal advice and, if the Board is informed in advance, the cost of such advice will be reimbursed by the Group.

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

The Non-executive Directors have both a breadth and depth of skills and experience to fulfil their roles.  The Chairman is a highly experienced quoted company Director having formerly been Chief Executive Officer of Fenner plc, which was a FTSE 250 constituent. Details of the Directors’ experience and areas of expertise are outlined in our Annual Report and in their biographies on our website, which can be found here.  They typically meet each year without Executives present and maintain ongoing communications with Executives between formal meetings.

The Board is satisfied that, between the Directors, it has an effective and appropriate balance of skills and experience, needed at this stage of the Group’s development, including in the areas of medical devices, sales and marketing, product development, finance, innovation, international trading, risk management, corporate governance and M&A.

The Audit Committee Chairman updates his technical and financial experience by attending workshops held by the major accounting firms. The Chairman of the Remuneration Committee obtains regular updates on best practice for executive remuneration packages and initiates periodic reviews, taking account of changes to the business.  Other Directors are regularly kept up to date via the latest governance and business updates from major accountancy or legal firms and via membership of various professional bodies. Click here for the latest Audit Committee report.

All Directors stand for re-election by shareholders each year.

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

More formal board evaluation processes have been introduced during 2018. The Senior Independent Director facilitates internal feedback on board performance via a questionnaire, which is summarised by an independent third party who provides feedback for discussion and review by the Board.  The learnings from the 2018 process will be included in the 2019 Annual Report together with plans for future assessments.

The Board considers succession planning for the Executive Directors on an ad-hoc basis. With further development the Board considers the Group Sales Director and the Chief Financial Officer as potential successors to the Chief Executive Officer. Potential successors to the Group Sales Director and the Chief Financial Officer have been identified although are not considered immediate replacements. However, external recruitment is currently the most likely source of immediate replacements for any of the Executive Directors.

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

The Group’s culture is understood and led by the example set by the behaviours of the three Executive Directors, two of who were founders of the original business. Taking into account that the Group is relatively small with c.65 employees, this is considered an effective means of conveying the Group’s approach to ethical behaviour. The common culture is based upon four core values:

  • Patient focus
  • Outcome changing
  • Pioneering
  • Research driven

By visiting sites during the year, the Board is able to talk to staff and observe behaviours in order to satisfy itself on the status of the culture.

The Group places the health and safety of its workforce as its top priority with health and safety updates being provided at every Board meeting and actions arising are followed up by the CEO.

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

The Board is committed to high standards of corporate governance. It has joined the QCA and has chosen to adopt the QCA Corporate Governance Code. We review our corporate governance arrangements regularly and expect to evolve these over time as the business grows. There is a clear division of responsibilities between the Chairman and the Chief Executive Officer. The Chairman is responsible for leading the Board, setting its agenda and monitoring its effectiveness. He meets regularly and separately with the Chief Executive Officer and the other Non-Executive Directors.

The Board has revised its a schedule of matters reserved for its decision during the year. These matters include:

  • overall business strategy;
  • review of key operational and commercial matters;
  • review of key finance matters, including approval of financial plans, changes to capital structure, acquisitions and disposals of businesses, material capital expenditure, treasury policy and dividends;
  • governance, including the appointment and removal of Board members, remuneration of Directors, set up and delegation of matters to committees and the reviewing of reporting back thereof;
  • approval of financial statements; and
  • stock exchange related issues including the approval of communications.

All Directors receive regular and timely information on the Group’s operational and financial performance which is circulated to the Board in advance of meetings. 

The Board delegates authority to three committees to assist in meeting its business objectives while ensuring a sound system of internal control and risk management. The committees meet independently of Board meetings.

Audit Committee

The Audit Committee has two members, Bob Beveridge (Chairman) and Brook Nolson. The Chief Financial Officer and external auditors attend meetings by invitation. The Audit Committee’s responsibilities include the review of the scope, results and effectiveness of the external audit, the review of half-year and Annual Financial Statements and the review of the Group’s risk management and internal control systems. The committee met twice during the year with full attendance. A separate report of the Audit Committee activities is provided elsewhere in this section of our website.

A more detailed terms of reference for the Audit Committee can be found here on the Group’s website.

Remuneration Committee

The report of the Remuneration Committee is set out in our annual report. The Remuneration Committee has two members, Brook Nolson (Chairman) and Bob Beveridge. The Committee is responsible for setting the remuneration arrangements, including short term bonus and long-term incentives, for Executive Directors as well as approving, the remuneration principles for senior staff. The committee met four times during the year.

A more detailed terms of reference for the Remuneration Committee can be found here on the Group’s website.

Nominations Committee

The Nominations Committee has four members, Mark Abrahams (Chairman), Bob Beveridge, Brook Nolson and Neil Campbell. The Nominations Committee considers succession planning, reviews the structure, size and composition of the Board and nominates candidates to fill Board vacancies. It did not meet this year.

A more detailed terms of reference for the Nominations Committee can be found here on the Group’s website.

Membership of the committees is as follows:

 

Mark Abrahams

Brook Nolson

Neil Campbell

Bob Beveridge

Nominations Committee

Chair Member Member Member

Remuneration Committee  

n/a Chair n/a Member

Audit Committee

n/a Member n/a Chair

BUILD TRUST

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. Board dinners are held from time to time to provide opportunities for broader discussions.

The Chief Executive Officer and Chief Financial Officer regularly meet with investors after results announcements have been made and at other shareholder participant events. 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.

The 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.

The Group has engaged a professional investor relations company to be the main contact point for our shareholders and to assist us with communicating with and receiving feedback from shareholders and financial analysts.

Date of Review: 28 September 2018

Principal Risks and Uncertainties

Please click here to see the full Principal Risks and Uncertainties faced by the Group.

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