Governance

The purpose of the Netcall Group (‘Netcall’ or the ‘Group’) is to help organisations transform their customer engagement activities and enable digital transformation faster and more efficiently, empowering them to get a return by driving improved customer experiences and operational efficiencies.

We achieve this by developing powerful and intuitive software that addresses the core elements of best-in-class automation and
customer experience. Our industry-leading Liberty platform is a suite of automation, Customer Engagement and contact centre
solutions.

This is underpinned by our business model, which is to license our proprietary software and software-as-a-service marketed within a flexible and viable commercial framework.

Our key strategies are to:

– continue to enhance our Liberty platform;
– continue to invest in and transition to Cloud business while maintaining a lucrative premise-based business;
– leverage our enhanced product offering to unlock the potential from Netcall’s existing customer base with upsell and cross-sales;
– take advantage of the Cloud automation and Customer Engagement market opportunity to acquire new customers;
– enhance distribution, including international presence, via new channels including our AppShare;
– provide a flexible and viable commercial framework making it easy for customers to buy from us; and
– manage organisational and operational flexibility within a robust financial, control and compliance framework.

The objective is that this strategic framework will result in a growing, profitable and highly valued business that will benefit all stakeholders.

The key challenges, being addressed within the strategic framework, include:

– maintaining leading edge products in rapidly moving and changing technological markets – the Group stays in close contact with customers and leading industry analysts to assist in the creation of our technology roadmap, which is developed and delivered by our qualified staff;
– maintaining and improving high levels of quality across the business value chain – we have adopted a quality management system and are continuously increasing our use of technology to assist in improving quality. The quality management system is independently audited;
– ensuring security of our customers’ data – the safekeeping of customer data is of vital importance. Our IT services are regularly audited for security by external parties. Netcall is continuously developing its internal systems and framework to improve and reduce risks. In addition, features to reduce risks are implemented throughout our proprietary software and systems;
– delivering high availability – a failure in the Group’s systems could lead to an inability to deliver services. This is addressed by operating redundant systems across multiple availability zones, a comprehensive disaster recovery programme and employment of experienced staff; and
– recruiting and retaining suitable staff – the Group’s ability to execute its strategy is dependent on the skills and abilities of its staff. We undertake ongoing initiatives to foster good staff engagement and ensure that remuneration packages are competitive in the market.

The CEO and CFO are the key shareholder liaison contacts. Shareholders can approach the Chairman or Non-Executive Directors should they have any questions about Executive Directors.

The Company has open communications with its Shareholders about its strategy and performance. We communicate with shareholders through: the Annual Report and Accounts; full year and half-year results announcements; trading updates; the Annual General Meeting (‘AGM’); and meetings. A range of information is also available to Shareholders and the public on our website.

The AGM is the principal forum for dialogue with private shareholders. We encourage all shareholders to attend and take part subject to any conditions imposed by HM Government and otherwise to ensure netcall.com Netcall plc Annual Report and accounts for the year ended 30 June 2023 21 Governance Corporate governance statement the health and safety of our employees and shareholders. The Notice of AGM is sent to shareholders at least 21 clear days before the meeting. All Directors, whenever possible, attend the AGM and answer questions raised by investors. Shareholders vote on each resolution, by way of a poll. For each resolution, we announce the number of votes received for, against and withheld and publish them on our website.

The Directors seek to build a mutual understanding of objectives with institutional shareholders. Our CEO and CFO give results presentations to analysts and institutional investors. We communicate with institutional investors via meetings, conferences, roadshows and informal briefings with management. The Group’s Nominated Adviser arranges the majority of these meetings, following which it provides anonymised feedback from the fund managers met. This, together with direct feedback, allows us to understand investor motivations and expectations.

The long-term success of the Group relies upon good relations with a range of different stakeholders including our staff, customers, suppliers and Shareholders. We engage with these stakeholders to obtain feedback as follows:

• Staff – management’s close day-to-day connection with staff combined with periodic engagement surveys and town hall meetings ensure good relations with, and between, colleagues. These activities allow staff to share their views on ways in which the Group can improve products, processes and outcomes.

• Customers – delivering great customer service is a core attribute of the Group. Our success and competitive advantage are dependent upon fulfilling their requirements, particularly in relation to experience, integrity and quality of our software and services. We seek feedback on our software and services frequently including: via our account managers, product owners and executive sponsors; project delivery boards; as well as through a formal customer satisfaction survey programme.

• Suppliers – our key suppliers provide technology, which is incorporated into our software, and technology services, which enable the delivery of our Cloud platform and IT equipment support for on-premise solutions. We operate a formal supplier process covering supplier selection, onboarding and ongoing relationship management. This includes regular updates on our suppliers’ strategies and inputs into our product and services design and development.

• Shareholders – our approach to obtaining feedback is set out in Principle 2 above.

The Directors are responsible for risk assessment and the systems of internal control. Although no system of internal control can provide absolute assurance against material misstatement or loss, the Group’s systems are designed to provide the Directors with reasonable assurance that problems are identified on a timely basis and dealt with appropriately.

– Company management: The Board has put in place a system of internal controls, set within a clearly defined organisational structure with well understood lines of responsibility, delegation of authority, accountability, policies and procedures. Managers assume responsibility for running day-to-day operational activities with performance regularly reviewed and employees are
required to follow procedures and policies appropriate to their position within the business.
– Business risks: The Board is responsible for identifying, evaluating and managing all major business risks facing the Group. To facilitate the assessment of risks, monthly reports on non-financial matters are received by the Board covering such matters as sales and operations performance, and research and development progress.
– Financial management: An annual operating budget is prepared by management and reviewed and approved by the Board. Monthly accounts comparing current year performance with budget, together with key performance metrics, are received and discussed by the Board. The Group has in place documented authority levels for approving purchase orders, invoices and all bank
transactions.
– Quality management: The Group is focused on meeting the highest levels of customer satisfaction. Quality procedures for the development of products, services and maintenance support are documented and reviewed frequently.
– Internal audit: The Directors do not currently believe that an additional separate internal audit function is appropriate for the size and complexity of the Group but will continue to review the position. The Group is ISO9001 and ISO27001 accredited, which has been independently audited.

The members of the Board have a collective responsibility and legal obligation to promote the interests of the Group. They
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 consists of five Directors, of which two are Executives and three are Non-Executives. The Executive Directors work full-time for Netcall. The Chairman and Non-Executive Directors are expected to commit one to two days per month. The relevant experience and skills that each Director brings to the Board are set out below.

The QCA Code 2018 notes that it is usually expected that at least half of the directors on a board are independent nonexecutive
directors. The Company does not comply with the QCA Code 2018 as two Non-Executives are not deemed to be independent as:

– Michael Jackson became a Director and Chairman without the intervention of a Nomination Committee. He is also a participant in the Group’s Long Term Incentive Plan and a shareholder of the Company; and

– Michael Neville became a Director of the Company following the acquisition of Telephonetics plc, of which he was a Director. He is a Director of other companies in the Group and holds shares in the Company.

– Tamer Ozmen provides consulting services to Gresham House Asset Management Ltd (‘Gresham House’) in relation to their investments in private technology companies. His consultancy work does not extend to Gresham House’s investments in publicly listed companies, including Netcall. Through their managed funds, Gresham House is the Company’s largest shareholder. He does not believe his consultancy agreement with Gresham House interferes with his exercise of independent judgement, and therefore he considers himself to be an independent Director.

The Board has three committees: audit, remuneration and nomination. The Board does not comply with the QCA Code 2018’s recommendation that the Chairman of the Board should not sit on any of the Board’s committees. The Chairman’s participation is necessary due to the limited number of Non-Executive Directors.

Notwithstanding the above, the Non-Executive Directors have sufficient industrial and public markets experience in order to
constructively challenge the Executive team and help drive value for all stakeholders. Moreover, the Board considers that the length of service of Michael Jackson and Michael Neville to be a valuable asset to constructive Board discussion. There are currently no female directors. The Board remains confident both that the opportunities in the Company are not excluded or limited by any diversity issues (including gender) and that the Board nevertheless contains the necessary mix of experience, skills and other personal qualities and capabilities necessary to deliver its strategy. The QCA Code 2018 recognises that certain of its recommendations may not be suitable for growing companies and your Board considers that its present directors provide a wide range of expertise that benefits the Group and its stakeholders.

The Board meets regularly during the year. More meetings are arranged as necessary for specific purposes. It has a schedule of regular business, financial and operational matters. Each Board committee has a schedule of work to ensure that it addresses all areas for which it has responsibility during the year. To inform decision making the Chairman is responsible for ensuring that Directors receive accurate, sufficient and timely information. The Company Secretary provides minutes of each meeting. Every Director is aware of the right to seek independent advice at the Group’s expense where appropriate.

Meetings held during the period under review and the attendance of Directors is set out below:

⁽¹⁾ attended by invitation as not a member of the Audit Committee.

All five members of the Board bring relevant sector experience in technology, four members have at least nine years of public markets experience, and two members are chartered accountants. The Board believes that its blend of relevant experience, skills and personal qualities and capabilities is sufficient to enable it to successfully execute its strategy. Directors attend seminars, courses and other regulatory and trade events to ensure that their knowledge remains current.

Michael Jackson, Non-Executive Director
Term of office: Appointed as Chairman on 23 March 2009; Chairman of the Nomination Committee and member of the Audit and Remuneration Committees.

Background and suitability for the role: Michael Jackson studied law at Cambridge University, and qualified as a chartered accountant with Coopers & Lybrand before spending five years in marketing for various US multinational technology companies. He founded Elderstreet Investments Limited in 1990 and is its executive chairman where, for the past 30 years, he has specialised in raising finance and investing in the smaller companies quoted and unquoted sector. From 1983 until 1987 he was a director and from 1987 until 2006 was chairman of FTSE100 company The Sage Group plc. He was also chairman of PartyGaming plc, another FTSE100 company.

Michael Neville, Non-Executive Director
Term of office: Joined as Non-Executive Director on 30 July 2010; Chair of the Audit and Remuneration Committees and member of the Nomination Committee.

Background and suitability for the role: Michael Neville was appointed to the Netcall Board on 30 July 2010 following the acquisition of Telephonetics plc, where he served as a Non-Executive Chairman from July 2005. He has extensive experience in capital markets, corporate restructuring and strategic development, and serves as a Non-Executive Director for a number of companies across a wide spectrum of industry sectors. His background is in the telecommunications, technology and media arenas.

Tamer Ozmen, Non-Executive Director
Term of office: Joined as a Non-Executive Director on 21 November 2019.

Background and suitability for the role: Tamer Ozmen is an experienced technology professional with a background in the implementation of digital transformation projects. He has over 20 years’ experience in senior management positions including CEO of Microsoft Turkey and most recently as head of Microsoft Consultancy Services in the UK. Tamer has also been Group Vice President of Online and Multichannel at Orange S.A. and is a non-executive director of Charles Taylor.

Henrik Bang, CEO
Term of office: Appointed CEO on 13 February 2004.

Background and suitability for the role: Henrik was previously Vice President in GN Netcom 1999–2004, part of the Danish OMX listed GN Great Nordic Group. Before that, he held a number of international management positions in IBM and AP Moller-Maersk Line.

James Ormondroyd, Group Finance Director
Term of office: Joined as Group Finance Director on 30 July 2010.

Background and suitability for the role: James studied physics at University of Manchester, and qualified as a chartered accountant with PwC. He was appointed to the Netcall Board on the acquisition of Telephonetics plc, a speech recognition and voice automation software provider, on 30 July 2010, where he served as the Finance Director and Company Secretary for five years. Prior to that, he was the Finance Director and Company Secretary at World Television Group Plc, a multi-national media and technology business.

Directors are initially appointed until the following Annual General Meeting when, under the Company’s Articles of 2244 Netcall plc Annual Report and Accounts for the year ended 30 June 2023 Stock code: NET Association, it is required that they be elected by shareholders. The Company’s Articles require that one-third of the current Directors must retire as Directors by rotation. The QCA Code 2018 recommends that independent Directors, who have served for more than nine years, should be re-elected on an annual basis. The Company does not follow this recommendation due to the current size of the Board and considers the experience of the Company’s current Non-Executive Directors to be sufficient for the Company’s needs. However, Michael Neville,
a Non-Executive Director, has informed the Board that he intends to step down once the Board has recruited a new independent
Non-Executive Director, and following a transition period thereafter. Michael Neville, who has served on the Board for over 12 years, and as Chairman of Telephonetics plc for five years, prior to its acquisition by Netcall, has been a very active Non-Executive
Director and significant contributor to the Company’s progress toward a Cloud-driven intelligent automation business.

Michael Neville was proposed for reelection and reappointed in 2019 and Michael Jackson and Tamer Ozmen in 2020, and Tamer Ozmen will be proposed for reelection at the Company’s Annual General Meeting on 19 December 2023.

The performance and effectiveness of the Board, its Committees and individual Directors are reviewed by the Chairman and the Board on an ongoing basis. The performance and effectiveness of the Chairman is reviewed by the other Board members. Training is available should a Director request it, or if the Chairman feels it is necessary. The performance of the Board is measured by the Chairman with reference to the Company’s achievement of its strategic goals. The Board does not undertake a formal evaluation of its performance, as this is constantly under review given its size.

The Board continually assesses the candidacy of Netcall staff with respect to succession planning for Executive Management and has in place a short-term plan to be instigated in the event of the loss or incapacity of either CEO or CFO. A number of senior managers are directors of subsidiary company boards and we continue to evaluate their progress.

The Group’s long-term growth is underpinned by a set of value-based operating principles. These have regularly been reviewed and adapted as the Group has developed and centres on customer focus, innovation, integrity, quality and teamwork. The culture of the Group is characterised by these values, and they are communicated widely including within the Group’s competency framework (which sets out how we want our colleagues to work within Netcall) and promoted throughout the organisation by managers in their daily work.

We monitor the culture through the use of employee and customer surveys and have in place comprehensive policies and procedures to support ethical behaviour. The Board is updated on the findings of these and determines what action is required and considers its culture is positive.

The Board believes that a culture based on these core values is consistent with fulfilment of the Group’s mission and execution of its strategy.

The Board sets the Group’s vision, strategy and business model to deliver value to its shareholders. It maintains a governance structure appropriate for the Group’s size, complexity and risk, and ensures this structure evolves over time in line with developments of the Group.

The Board defines a series of matters reserved for its decision. It has terms of reference for its Audit, Remuneration and Nomination Committees, to which it delegates certain responsibilities. The Chair of each Committee reports to the Board on the activities of that Committee.

The Audit Committee monitors the integrity of the financial results. It reviews the need for internal audit and considers the engagement of external auditors including the approval of non-audit services. The Audit Committee comprises Michael Jackson and Michael Neville. It is Chaired by Michael Neville and meets at least twice per year. An Audit Committee Report is set out below. The terms of reference of the Audit Committee are available here.

The Remuneration Committee sets and reviews the compensation of Executive Directors including the targets and performance frameworks for cash- and share-based awards. The Remuneration Committee comprises Michael Jackson and Michael Neville. It is chaired by Michael Neville and meets at least once per year. The terms of reference of the Remuneration Committee are available here.

The Nomination Committee reviews the structure, size and composition of the Board. It considers succession and identifies and nominates Board candidates. It comprises Michael Jackson and Michael Neville. It is chaired by Michael Jackson. The Nomination Committee did not meet formally during the year; however, members of the committee discussed these matters regularly in Board meetings. The terms of reference of the Nomination Committee are available here.

The primary responsibility of the Chairman is to lead the Board and to oversee the Group’s corporate governance. He
ensures that:

– the Board’s agenda concentrates on key operational and financial issues with regular reviews of the Group’s strategy and its implementation;
– committees are properly structured and operate with appropriate terms of reference;
– regular performance reviews of the individual Directors, the Board and its committees are undertaken;
– the Board receives accurate, timely and clear information; and
– oversees communication between the Group and its Shareholders.

The CEO provides leadership and management of the Group. He:
– leads the development of objectives and strategies;
– delivers the business model within the strategy agreed by the Board;
– monitors and manages operational performance and key risks to ensure the business remains aligned with the strategy;
– leads on investor relations activities to ensure good communications with shareholders and financial institutions; and
– ensures that the Board is aware of the views and opinions of employees on relevant matters.

The Non-Executive Directors contribute independent thinking and judgement through the application of their external experience and knowledge. They scrutinise the performance of management and provide constructive challenge to the Executive Directors. They ensure that the Group is operating within the governance and risk framework approved by the Board.

The Company Secretary ensures that clear and timely information flows to the Board and its Committees. He supports
the Board on matters of corporate governance and risk.

The matters reserved for the Board are:

– setting long-term objectives and commercial strategy;
– approving annual operating and capital expenditure budgets;
– changing the share capital or corporate structure of the Group;
– approving half-year and full-year results and reports;
– approving dividend policy and the declaration of dividends;
– approving major investments, disposals, capital projects or contracts;
– approving resolutions and associated documents to be put to general meetings of Shareholders; and
– approving changes to the Board structure.

A copy of the Matters Reserved for the Board is available here.

Audit Committee Report

During the year, the Audit Committee has continued to focus on the effectiveness of the controls throughout the Group. The committee met three times, and the external auditor and the CEO and CFO were invited to attend these meetings. Consideration was given to the auditor’s pre- and post-audit reports and these provide opportunities to review the accounting policies, internal control and the financial information contained in both the Annual and Interim Reports. Matters considered included risk of revenue misstatement, management override of controls, going concern and impairment of intangible assets. The Committee reviewed the independence, taking into account fees for non-audit services, and performance of the external Auditor.

Remuneration Committee Report

During the period under review, the Remuneration Committee met five times and:

– undertook an annual review of the Executive Directors’ remuneration packages and ensured that individual compensation levels, and total Board compensation, were comparable with those of other AIM-listed companies;
– considered and set the financial and individual performance targets, in light of the strategic framework, for the Executive Directors’ annual bonus plans.

This Corporate Governance Report is available on the Netcall website. The Board will review and update it annually. Copies of the Annual Report and Accounts, AGM notices, outcomes of AGM votes and other governance materials are available on the Netcall website.

Michael Jackson
Chairman