Corporate Governance Statement

Corporate Governance

(This information was last reviewed on 27 September 2018)

Since admission to trading on AIM in 2006, the Company has adopted the UK Corporate Governance Code and at its Board meeting on 27June 2018, the Board of the Company resolved to apply the UK Corporate Governance Code, published by the Financial Reporting Council, as revised in July 2018 (the "Code").

The Code sets standards for good practice in relation to board leadership and effectiveness, remuneration, accountability and relations with shareholders. The provisions of the Code (the 2018 version of which the Board has resolved to adopt prior to it taking effect for Premium Listed Main Market Companies on 1 January 2019) which apply to Quadrise Fuels International plc are set out below.

Principles of the UK Corporate Governance Code

Board Leadership & Company Purpose

  1. Effective and entrepreneurial board promoting sustainable success, generating value for shareholders and contributing to wider society.
  1. Establish the company’s purpose, values & strategy. Directors to act with integrity and promote the desired culture.
  1. Ensure necessary resources to meet objectives and measure performance. Establish framework of controls which enable risk to be assessed and managed.
  1. Ensure effective engagement with and encourage participation from shareholders and stakeholders.
  1. Workforce policies and practices are consistent with the company’s values and support long term sustainable success. Workforce able to raise matters of concern.

Division of Responsibilities

  1. Chair responsible for board effectiveness. Promote a culture of openness and debate, facilitate constructive board relations and contribution of non-exec directors. Ensure accurate, timely and clear information.
  1. Appropriate combination of exec and non-exec (particularly independent) directors so that no one individual or group dominates. A clear division between board and company leadership.
  1. Non-exec directors to have sufficient time to meet responsibilities and provide constructive challenge, strategic guidance, specialist advice and hold executive management to account.

      9. Ensure policies, processes, information, time and resources required to function effectively and efficiently

Composition, Succession and Evaluation

  1. A formal, rigorous and transparent procedure to board appointment. Establish a succession plan for board and senior management, based on merit and objective criteria. Promote diversity of gender, social and ethnic backgrounds, cognitive and personal strengths.
  1. Board and committees to have a combination of skills, experience and knowledge. Review length of service of the board with membership regularly refreshed
  1. The annual board evaluation to consider its composition, diversity and effective working together. Individual evaluation to demonstrate whether each director continues to contribute effectively.

 

 

Audit, Risk and Internal Control

  1. Establish formal and transparent policies and procedures to ensure independence and effectiveness of internal and external audit functions. Satisfy itself on integrity of financial and narrative statements.
  1. Present a fair, balanced and understandable assessment of company’s position and prospects.

   15. Establish procedures to manage risk, oversee internal controls and determine nature and extent of principal risks in                 achieving its long-term strategic objectives.

Remuneration

  1. Policies and practices designed to support strategy and promote long-term sustainable success. Executive remuneration aligned to purpose and values and clearly linked to successful delivery of company’s long-term strategy.
  1. A formal and transparent procedure for developing policy on executive remuneration should be established. No director involved in deciding their own remuneration.
  1. Directors to exercise independent judgement and discretion when authorising remuneration outcomes, taking account of company and individual performance and wider circumstances.

Chairman's Corporate Governance Statement

This statement appears on page 23 in our 2018 Annual Report.

Dear Shareholders,

Since its original listing in April 2006, Quadrise Fuels International has applied strict corporate governance principles in all our endeavours. As an example, each year the Board has (albeit informally) tested itself against the then applicable UK Corporate Governance Code, and endeavoured to act on any perceived deficiencies.

With the implementation of the new AIM company corporate governance changes, effective 28 September 2018, it was without hesitation that the Board chose to apply the Code as revised in July this year. We will provide details of the Code on our website and explain where we comply, and if not, why and if appropriate what corrective steps we are taking to address any deficiencies. This information will be reviewed each year and our website will disclose the review date.

As Executive Chairman, it is my duty together with my fellow Board members to promote and apply good standards of corporate governance throughout our organisation. The Company is privileged to have a highly experienced Board, setting clear values and strategy in our annual Business Plan, adopting the highest standards of integrity whilst promoting a hands-on, friendly but professional culture.

The year has not been without considerable disappointments to ourselves and shareholders. Nevertheless, through a series of meetings with major shareholders, and the introduction of investor conference calls (29 March, 11 June, 1 August), we have endeavoured to keep shareholders fully informed (within the usual disclosure constraints) on the Company's strategic development plans.

The Company maintains a comprehensive suite of policies and practices appropriate for our size and stage of development. Each of these is reviewed and signed off by at least one nominated executive or non-executive director with considerable prior experience of the subject matter. The executive team frequently consult the chairmen of the audit and compensation committees on planning, finance, legal and human resource matters.

In May and June each year the Board undertakes a structured risk assessment and the outcomes of this are incorporated in the annual Business Plan and the associated financial modelling.

I trust these few examples illustrate that the Company has a healthy approach to oversight on behalf of all shareholders and that high standards of corporate governance are inherent in our culture.

I and my fellow directors look forward again to meeting you at the AGM in London on 30 November 2018 and would be delighted to discuss any element of our governance standards.

 

Application of the Code

In accordance with AIM Rule 26, the following describes how the Company complies with the Code and where it departs from the Code together with an explanation of the reasons for doing so. 

Board Leadership and Company Purpose

Principle A:

Effective and entrepreneurial board promoting sustainable success, generating value for shareholders and contributing to wider society.

Disclosure:

The Quadrise Board met formally on 14 occasions during the year ending 30 June 2018 in its endeavours to progress the "Production to Combustion" trial in the Kingdom of Saudi Arabia, and earlier in the year the marine fuel trial with Maersk. These were extraordinary entrepreneurial ventures for a company of our size but which unfortunately did not proceed for reasons largely outside our control. Nevertheless, we can apply this experience to the significant opportunities that we see going forwards, such as the potential of the agreements with JGC Corporation and Freepoint Commodities. The opportunity for the Company to generate future value for shareholders remains sound in our view. Refer to further information under Provisions 1 and 14, and Principles F, G and H (Board effectiveness, Independence)

The MSAR® technology has many environmental benefits as reported elsewhere on the company's website https://www.quadrisefuels.com/msar-technology/the-benefits-of-msar and in this way has considerable potential to contribute to wider society.

 

Principle B:

Establish the company’s purpose, values & strategy. Directors to act with integrity and promote the desired culture.

Disclosure:

Our mission is to be the world’s leading oil-in-water emulsion fuels company, providing best available technology, solutions, services and MSAR® synthetic fuel oil products for our major, market-leading customers.

Our strategy is to work with leading global companies in the refining, shipping and power-generation markets to develop, simultaneously, the capacity to both produce and consume MSAR® emulsion fuels on a commercial scale and world-wide.

The Quadrise team of twelve employees and directors can be described as tightly coherent and highly motivated with a very clear sense purpose. The Company is privileged to have a highly experienced Board, setting values and strategy in our annual Business Plan, and adopting the highest standards of integrity whilst promoting a hands-on, friendly but professional culture. For further information refer to Provisions 2 and 8.

 

Principle C:

Ensure necessary resources to meet objectives and measure performance.
Establish framework of controls which enable risk to be assessed and managed.

Disclosure:

During the period, we acted to reduce costs within the business, without impacting our ability to deliver our business development plans, including the required research and development support. This included changes to the executive structure where appropriate and the Company continues to look for opportunities to reduce costs where appropriate.  During the period the majority of the directors voluntarily deferred a significant proportion of their salaries/fees, and this has continued into the new financial year.

Refer to Provisions 28: Assessment of Risks, and 29: Internal Controls, as well as the disclosures under Principles I and O.

 

Principle D:

Ensure effective engagement with and encourage participation from shareholders and stakeholders.

Disclosure:

An extremely successful AGM was held on 8 December 2017 with some 70 shareholders in attendance. During 2018, through a series of meetings with major shareholders, and the introduction of investor conference calls (29 March, 11 June, 1 August) with in excess of 100 shareholders on each call, the executive team has endeavoured to keep shareholders fully informed (within the usual disclosure constraints) on the Company's strategic development plans. Refer to Provisions 4, 5, 6 and 7 for further information.

 

Principle E:

Workforce policies and practices are consistent with the company’s values and support long term sustainable success. Workforce able to raise matters of concern.

Disclosure:

As a small and coherent organisation, the Company is quickly alerted to any practices that are inconsistent with our values and drive towards long-term sustainable success. The Company nevertheless prides itself in having in place all of the standard procedures of a much larger corporation, together with a wealth of experience on the Board to address any workforce concerns. During the induction programme, new employees are encouraged to bring forward any concerns at any time including use of a Whistleblowing Policy. Refer to further disclosures in Provisions 2, 5 and 6.

Provision 1: Opportunities and risks to future success.

The Chairman's Statement in the Annual Report describes the MSAR® market opportunities in the power generation and marine bunker fuel sectors. The risks associated with our endeavours are amply illustrated by the disappointments of the Production to Combustion” trial project in KSA, and the suspension and then termination of the marine fuel trial by Maersk. Principal Business Risks are more fully covered on Page 11 in the Annual Report. Notwithstanding the challenges faced in our key markets, the Board firmly believes in the sustainability of the Company's business model. Progress will not always be smooth, but we are well positioned to capitalise on past experience and the significant opportunities that we see going forwards, such as the potential of the agreements with JGC Corporation and Freepoint Commodities. The Company would not be able to attract the attention of partners of this calibre without clear evidence of its standards of corporate governance.

Provision 2: Monitoring corporate culture

The Company does not formally assess and monitor culture – this being a small organisation, where any deviation from policy, practices and behaviour at odds with the Company's purpose and values would become quickly apparent to management. The Quadrise team can be described as coherent and highly professional with a very clear sense of purpose. Team meetings are held weekly where project progress is reviewed and remedial action taken. The performance of all employees is assessed annually together with a discussion on career development plans. The remuneration scheme for all employees includes the potential award of bonuses and options subject to company and personal performance.

Provision 3: Regular engagement with major shareholders

Refer to Disclosure under Principle D and Provision 7.

Provision 4: Action to be taken in the event there are 20% votes against a resolution

At the 2017 AGM, five ordinary resolutions and one special resolution were carried by at least 84% voting in favour. This provision did not therefore apply.

Provision 5: Stakeholder engagement mechanisms

Being a small organisation with 12 employees, it is relatively straightforward for the Company to consider and respond to views put forward from the workforce and other key stakeholders. In view of this, the Company does not have a director appointed from the workforce, a formal workforce advisory panel or a designated non-executive director to engage with the workforce.

Provision 6: A means for the workforce to raise concerns

During the induction programme, new employees are encouraged to bring forward any concerns at any time including use of a Whistleblowing Policy. If appropriate the chairman of the compensation committee would be asked to investigate and seek external advice should this be necessary.

Provision 7: Identify and manage conflicts of interest

Both executive and non-executive directors meet and consult major shareholders within the usual disclosure constraints to surface and manage any potential conflicts of interest. Any related party transactions are reported in Note 22 to the financial results.

Provision 8: Board Minutes to record issues that cannot be resolved

The Board works hard to resolve any concerns about the management of the company and the operation of the Board. On occasions a director will request that the Board minutes record his divergent opinion from the majority view. A resigning non-executive director would be encouraged to provide a written statement to the chair if his resignation resulted from such a concern.

Division of Responsibilities

Principles F, G & H:

Chair responsible for board effectiveness. Promote a culture of openness and debate, facilitate constructive board relations and contribution of non-exec directors.

Ensure accurate, timely and clear information. Appropriate combination of exec and non-exec (particularly independent) directors so that no one individual or group dominates. A clear division between board and company leadership.

Non-exec directors to have sufficient time to meet responsibilities and provide constructive challenge, strategic guidance, specialist advice and hold executive management to account.

Disclosure:

Quadrise is privileged to have a highly qualified and practiced Board of directors of an unusual level of seniority and standing given the Company's moderate size and still early stage of development. Refer to Director Profiles on page 14 of the Annual Report. The non-executive directors have a level of experience and gravitas that ensures a culture of openness and debate and provide the necessary challenge, guidance and advice. Detailed board papers are prepared a week ahead of meetings. For further information refer to Provision 8: Divergent opinions, Provision 10: Independence, Provision 15: Demands on time, and Provisions 16: Company Secretary.

With an Executive Chairman, there is not a clear division between board and company leadership. This is seen as appropriate for the Company at this time, though this will be reviewed as the Company progresses its development plans. Refer to Provision 9.

 

Principle I:

Ensure policies, processes, information, time and resources required to function effectively and efficiently.

Disclosure:

The Company has a digital Policies and Procedures Directory comprising some 100 policies in 22 business categories. The Policies and Procedures are intentionally kept very short so that these are easy to refer to and are "living" documents. Of note, each of these is reviewed and signed off by at least one nominated director (executive or non-executive) who is required to have considerable prior experience of the subject matter. Refer to Provision 29. QFI has a comprehensive disaster recovery plan which is tested on a regular basis.

 

Expenditure and other authorities are subject to a tight Authorities Matrix, reviewed regularly by the Audit Committee.

 

The Company has recently implemented a GDPR policy and has online training facilities for Bribery and Corruption, GDPR and General Data Protection. Completion of this training is compulsory for all employees and directors.

Provision 9: The roles of chair and chief executive

Mike Kirk is Executive Chairman of the Company and therefore the roles of chair and senior executive of the company are exercised by the same individual. This is seen as appropriate for the Company at this time, though this will be reviewed as the Company progresses its development plans.

Provision 10: Independence of non-executive directors

The profiles and experience of the non-executive directors are provided on Page 14 of the Annual Report.

Mr Dilip Shah is closely associated with significant shareholders and is not considered independent.

There are no circumstances that might cause the Board to question Mr Philip Snaith's independence, and he has the appropriate experience as a former senior executive of the Royal Dutch Shell Group to chair the compensation committee.

Mr Hemant Thanawala stepped down from his role as Finance Director in August 2017 and became a non-executive director. He is a significant shareholder and has share options, and has been an executive director of the Company from 2006 to 2017.  As a result, Mr Thanawala, cannot be formally considered independent.  However, Mr Thanawala, provides valuable input to the company and the board in a manner consistent with being an independent director.  He retires by rotation at the 2018 AGM and has put himself forward for re-election.

Non-executive director Laurence Mutch is also a Director of Laurie Mutch & Associates Limited, which has in the past provided consulting services to the Group. The total fees charged for the year amounted to £nil (2017: £30k). He is a shareholder and holds options in the Company, and has been a director since 2006. Mr Mutch has clearly indicated that these potential impairments do not and have not hindered his ability to be independent and after careful consideration the Board believes him to be independent. He was a former senior finance director of the Royal Dutch Shell Group and has the appropriate and current experience to chair the audit committee. He retires by rotation at the 2018 AGM and has put himself forward for re-election.

Provision 12: Appointment of a Senior Independent Director

In view of its size, the Company has not appointed a Senior Independent Director. This will be reviewed as the Company progresses its development plans.

Provision 13: Appointing and Removing Executive Directors

On the appointment of Executive Directors refer to Principle J. As discussed under Provision 41, the Compensation Committee reviews the performance of the Company and that of the Executive Chairman against previously determined corporate performance targets adopted by the Board. The non-executive directors meet frequently without the Executive Chairman to discuss any performance concerns.

Provision 14: Meetings of the Board

During the year, the Board comprised the Executive Chairman, Chief Operating Officer and the Finance Director (until 10 August 2017) as executive Directors and three non-executive Directors (four from 10 August 2017) who are independent of management. At each Annual General Meeting, one third of the Directors who are subject to retirement by rotation shall retire from office provided that if their number is more than three, but not a multiple thereof, then the number nearest to but not exceeding one-third shall retire. Appropriate Directors’ and Officers’ liability insurance has been arranged by the Company.

The Board met on 14 occasions during the year including four formal quarterly meetings to discuss a formal scheduled agenda covering key areas of the Group’s affairs including operational and financial performance and quarterly management accounts. All relevant information is circulated in good time. The attendance record of each director is shown below:

 

Director

Attendance

 

Mike Kirk

14

100%

Jason Miles

13

93%

Laurence Mutch

14

100%

Dilip Shah

8

57%

Philip Snaith

13

93%

Hemant Thanawala

11

79%

Provision 15: Demands on Directors' time

In addition to his role as Executive Chairman, Mike Kirk is Chairman of Portsmouth Water and Chair of VIVID Housing. Laurence Mutch is also a non-executive director and chairman of the audit committee at Georgian Mining, an AIM company. Hemant Thanawala and Dilip Shah have other disclosed external appointments. These positions have been disclosed to the Board and do not impact the time they need to commit to the Company.

Provision 16: Advice from the Company Secretary

In Audrey Clarke the Company has a highly experienced Company Secretary and, for example, both the chairman of the compensation committee and the chairman of the audit committee are in regular contact to seek her guidance.

Composition, Succession and Evaluation of the Board

Principle J:

A formal, rigorous and transparent procedure to board appointment. Establish a succession plan for board and senior management, based on merit and objective criteria. Promote diversity of gender, social and ethnic backgrounds, cognitive and personal strengths.

Disclosure:

The Board Nominations Committee is chaired by Mike Kirk and comprises Mike Kirk and Laurence Mutch. There is indeed a formal, rigorous and transparent procedure to board appointments with the use of external recruitment advisers as may be necessary. Refer to Provision 20. In view of its small size the Board does not have a formal succession plan, and this will be put in place as the Company progresses its development plans. The Board is keen to promote diversity as the Company develops.

 

Principle K:

Board and committees to have a combination of skills, experience and knowledge. Review length of service of the board with membership regularly refreshed.

Disclosure:

Refer to Director Profiles in the Annual Report page 14. Each of the members of the Audit Committee has considerable financial experience. The members of the Audit and Compensation Committees formerly held senior executive positions in large organisations. External guidance is used in setting remuneration policy guidelines.

Two of the directors have been on the Board for 12 years (since listing in April 2006). Whilst this is at odds with regularly refreshing the Board, their experience is highly valued by shareholders when the directors retire by rotation and are then re-elected. Refer to Provisions 18 and 19.

 

Principle L:

The annual board evaluation to consider its composition, diversity and effective working together. Individual evaluation to demonstrate whether each director continues to contribute effectively.

Disclosure:

An annual appraisal is undertaken of the contribution of each director, and the effectiveness of the Board and its committees. This involves the completion of a confidential evaluation matrix with 10 contribution attributes, together with an opportunity to propose improvements on board and committee performance. These are returned to the Company's Nomad and a consolidated review is provided to the Executive Chairman for review by the Board. Refer to "Evaluation of the board "under Provisions 21, 22 and 23 below.

The Executive Chairman oversees an annual evaluation of all employees with targets set for the following year. The Compensation Committee undertakes an evaluation of the Company's performance and that of the Executive Chairman. Refer to Provision 41.

Provision 17: The Nominations Committee

Refer to Principle J.

Provision 18: Re-election of Directors

In accordance with the Company's Articles of Association, at each Annual General Meeting, one third of the Directors who are subject to retirement by rotation shall retire from office provided that if their number is more than three, but not a multiple thereof, then the number nearest to but not exceeding one-third shall retire.

Provision 19: Nine year limitation of Chairman

Mike Kirk was appointed Executive Chairman on 1 April 2016, having been appointed as a director on 1 December 2015

Provision 20: External search consultant

The Company did not make any new appointments to the Board during the year and did not therefore appoint an external search consultant.

Provisions 21, 22 and 23: Evaluation of the board.

The Board did not use the services of an external evaluator during the year. However, under the direction of the Nominations Committee, the Board recently evaluated its performance, the contribution of each of the directors and the effectiveness of the committees by way of a confidential survey completed by each director. The Company's Nomad, Smith & Williamson aggregated the results and have provided a summary to the Executive Chairman for review by the Board.

Audit, Risk and Internal Control

Principle M:

Establish formal and transparent policies and procedures to ensure independence and effectiveness of internal and external audit functions. Satisfy itself on integrity of financial and narrative statements.

Disclosure:

Refer to the Corporate Governance Statement on pages 22 to 29 in the Annual Report. In view of its size the Company does not have an internal audit function. However, the Audit Committee is closely consulted on the drafting of the Annual Report and of course is integral to the preparation of the annual results. The Committee has considerable governance, control and finance experience. Refer to "The work of the Audit Committee" under Provisions 24, 25 and 26.

 

Principle N:

Present a fair, balanced and understandable assessment of company’s position and prospects.

Disclosure:

Refer to the Chairman's Statement in the Annual Report. Refer to Provision 24, 25 and 26: The work of the audit committee, Provision 27: Board responsibility in preparing the accounts, Provision 30: Going Concern and Provision 31: The prospects of the Company

 

Principle O:

Establish procedures to manage risk, oversee internal controls and determine nature and extent of principal risks in achieving its long-term strategic objectives.

Disclosure:

QFI performs a structured risk assessment on an annual basis. This involves a review of the probability and impact of adverse events in each operational unit. This culminates in the preparation of a risk dashboard for consideration by the Board. This is followed by a documented risk mitigation strategy that is subsequently incorporated into the annual Business Plan. Refer also to Provision 28: Assessment of the Company's Risks and Provision 29: Risk Management and Internal Control systems.

 

Provisions 24, 25 and 26: The work of the audit committee

The Audit Committee is chaired by Laurence Mutch and comprises Philip Snaith, Laurence Mutch and Hemant Thanawala, all of whom have recent and relevant financial experience and have competence in the oil sector. The chairman of the committee provides a written or detailed verbal report as necessary of every Audit Committee meeting at the next board meeting. The committee meets at least twice a year and is responsible for monitoring the integrity of the financial statements of the Company, keeping under review the scope and results of the audit, its cost effectiveness and the independence and objectivity of the auditors. The committee provides advice on whether the annual report and accounts are fair, balanced and understandable. Due to the size of the Company, there is currently no internal audit function, although the committee has oversight responsibility for public reporting, overall good governance and the Company’s internal controls. The committee annually assists management in the formal and robust assessment of the Company's risks. Other members of the Board, as well as the auditors, are invited to attend the Audit Committee meetings as and when appropriate. 

Significant Issues

The significant issues considered relating to the financial statements were Going Concern, the Valuation of Intangible Assets and Management override of controls. The subject of Going Concern is covered in the Strategic Report on Page 11 in the Annual Report, in the Auditors Report on Page 30 and in Note 3 to the Financial Statements. The Valuation of Intangible Assets is addressed in the Auditors Report on Page 32 and in Note 2.9 to the Financial Statements.

No Internal Audit function

An internal audit function is not appropriate at this time given the Company's current size, but in view of this, the Audit Committee and the Auditors view the risk of management override of controls a significant issue. In making their assessment the Auditors considered specifically the controls over journals, any indication of unusual transactions and any evidence of bias in the estimates made by management. The Auditors conclusion was that there is no evidence of inappropriate management override of controls, and the Audit Committee endorsed this conclusion.

Assessment and Safeguarding the Independence and Effectiveness of the external audit process

Following a selection process conducted by the Audit Committee, Crowe U.K. LLP were appointed as auditors on 23 May 2011, and are reappointed each year by ordinary resolution put before the AGM.

The committee has not identified any issues with regards to integrity, objectivity and independence of the Auditors and therefore consider them to be independent.

Provision 27: Board responsibility in preparing the accounts

The Board is responsible for the direction and overall performance of the Group with emphasis on policy and strategy, financial results and major operational issues. In addition, the Board is responsible for preparing the annual report and accounts, and considers this annual report and accounts, taken as a whole, to be fair, balanced and understandable, and that it provides the information necessary for shareholders to assess the company’s position, performance, business model and strategy.

Provision 28: Assessments of the Company's Risks

Each year in the second quarter, the Audit Committee assists the Executive Team in a structured zero-based re-assessment of the Company's emerging and principal risks. This is conducted for each project and organisational level including the Company's research and development facility, QRF, and then aggregated for the Company as a whole. The risk level is determined by its probability, impact on the Company, and whether the risk has increased or decreased over the last 12 months. A summary of "Principal Risks and Uncertainties" is reviewed at a board meeting. Subsequently a Risk Mitigation Strategy and Action Plan is incorporated into the annual Business Planning exercise conducted in June. The Risk Strategy and Action Plan is reviewed each year by the auditors who consider this to be a robust assessment to be regularly monitored.

Provision 29: Risk Management and Internal Control systems.

The Board is responsible for the effectiveness of the Group’s internal control system and is supplied with information to enable it to discharge its duties. Internal control systems are designed to meet the particular needs of the Group and to manage rather than eliminate the risk of failure to meet business objectives and can only provide reasonable and not absolute assurance against material misstatement or loss.

The Company has a digital Policies and Procedures Directory comprising some 100 policies in 22 business categories. The Policies and Procedures are intentionally kept short so that these are easy to refer to and are "living" documents. Of note, each of these is reviewed and signed off by at least one nominated director (executive or non-executive) who is required to have considerable prior experience of the subject matter. Expenditure and other authorities are subject to a tight Authorities Matrix, reviewed regularly by the Audit Committee. QFI has a comprehensive disaster recovery plan which is tested on a regular basis.

The Board has established a Bribery Policy, signed by all Directors and employees, to achieve compliance with the UK Bribery Act 2010, which came into effect on 1st July 2011. Agreements with third parties contain statements that the Company and its associates are required to adhere at all times to the UK Bribery Act 2010. The Company has recently implemented a GDPR policy and has online training facilities for Bribery and Corruption, GDPR and General Data Protection. Completion of this training is compulsory for all employees and directors.

Provision 30: Going Concern

The subject of Going Concern is covered in the Strategic Report on Page 5 of the Annual Report, in the Auditors Report on Page 16 and in Note 3 to the Financial Statements.

Provision 31: The prospects of the Company

The Outlook for the Company is addressed as part of the Chairman's Statement on Page 4 of the Annual Report

Remuneration

Principles P, Q & R: Remuneration

Policies and practices designed to support strategy and promote long-term sustainable success. Executive remuneration aligned to purpose and values and clearly linked to successful delivery of company’s long-term strategy.

A formal and transparent procedure for developing policy on executive remuneration should be established. No director involved in deciding their own remuneration.

Directors to exercise independent judgement and discretion when authorising remuneration outcomes, taking account of company and individual performance and wider circumstances.

 

Disclosure:

Refer to the Report on Directors' Remuneration in the Annual Report page 20.

With reference to Provision 41, the Compensation Committee reviews remuneration policy on an annual basis to assess its effectiveness, and on behalf of the Board conducts performance appraisals of the Company and the Executive Chairman each year. External guidance is sought as necessary in setting the terms of senior executive compensation. Refer to Provision 35: Remuneration Consultant. In consultation with the Executive Chairman, the committee prepares corporate targets for formal adoption by the Board to determine the award of bonuses and / or options. These are clearly linked to the delivery of long term objectives and corporate strategy. Refer also to Provision 37: Compensation Committee discretion.

Provision 32: Appointment of the Compensation Committee

The Compensation Committee is chaired by Philip Snaith and comprises Philip Snaith, Laurence Mutch and Hemant Thanawala. The chairman of the committee provides a written or detailed verbal report as necessary of every compensation committee meeting at the next Board Meeting. Philip Snaith served on the committee prior to taking over as chairman.

Provision 33: Remuneration Policy

Refer to Provision 41

Provision 34: Remuneration of Non-executive Directors

The Board determines the remuneration of the non-executive directors and no Director participates in discussions about his own remuneration. Hemant Thanawala holds share options resulting from his prior role as Finance Director. Laurence Mutch and Dilip Shah have been awarded share options for exceptional services to the Company.

Provision 35: Remuneration Consultant

At this time the committee does not make use of a remuneration consultant but the committee does make use of independent remuneration surveys when these become readily available.

Provision 36: The award of share options to Executive Directors

Options are granted by board resolution in line with one or more of the three QFI Share Option Schemes, a Schedule 5 Enterprise Management Incentive Share Option Plan (“EMIP”), a Schedule 4 Company Share Option Plan (“CSOP”) and an Unapproved Share Option Plan (“USOP”). The award of options is tightly linked to the delivery of long-term objectives and corporate strategy. The views of shareholders are taken into consideration.

Provision 37: Compensation Committee discretion

The committee retains an attitude of applying discretion when this is applicable in regard to outstanding individual performance

Provision 38: Only basic salary to be pensionable

Only basic salary is pensionable and pension contribution rates for executive directors are in line with those for other staff.

Provision 39: Contract periods and no reward for disappointing performance

The contracts for executive directors have no fixed end date. In view of the disappointing performance of the past year, no bonuses or share options were awarded to the Executive Team.

Provision 40: Remuneration Policy Principles

Refer to Provision 41.

Provision 41: The work of the Compensation Committee

The committee works within the framework of a regularly reviewed compensation policy approved by the Board. It meets at least twice a year and conducts performance appraisals of the Company and the Executive Chairman against previously determined corporate performance targets adopted by the Board. External guidance is sought as necessary in setting the terms of senior executive compensation including the award of bonuses and / or options.

In determining executive director compensation, the committee places considerable importance on proportionality, clearly linking remuneration to the delivery of long-term objectives and corporate strategy. In view of the disappointing performance of the past year, no bonuses or share options were awarded to the Executive Team. In designing remuneration policy, the committee has endeavoured to incorporate the principles of clarity, simplicity, and predictability. As an external measure, the committee refers to remuneration surveys of AIM companies of similar size and complexity, when these are readily available. Shareholder views on compensation have been expressed at the AGM and in other meetings, and the committee has taken these and the company's performance into account in its deliberations.

The Report on Directors' Remuneration is on Page 20 of the Annual Report.