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CORPORATE GOVERNANCE

CORPORATE GOVERNANCE CODE
The Board is committed to maintaining high standards of corporate governance and, with effect from 28 September 2018, the Board has adopted the Quoted Companies Alliance’s (QCA) Corporate Governance Code for small and mid-size quoted companies (the “Code”). 
The Code was revised in April 2018 to meet the new requirements of AIM Rule 26 and sets out ten broad principles of corporate governance, states what are considered to be appropriate corporate governance arrangements for growing companies and requires companies to provide an explanation about how they are meeting the principles through certain prescribed disclosures.
We have considered how we apply each principle and below we provide an explanation of the approach taken in relation to each.
 
The board considers that it does not depart from any of the principles of the Code.
 
Board composition and compliance
 
The Code requires that the boards of AIM companies have an appropriate balance between executive and non-executive directors of which at least two should be independent. Michael Butler (also Chairman), Juliet Rosenfeld and Julia Simpson all serve as independent non-executive directors, bringing a diverse range of industry and market knowledge to the board.
 
Board evaluation
 
We regularly review the effectiveness of the board’s performance as a whole, as well as that of its committees and individual directors, the most recent review being earlier in 2018. A number of refinements in working practices were identified as a result of this review and have since been adopted.
 
Shareholder engagement
 
We have made significant efforts to ensure effective engagement with our shareholders under the guidance of Nick Dashwood Brown, Head of Investor Relations. We have historically  undertaken roadshows as well as used our AGM to present to and meet with investors; more recently we have had regular interaction with the majority of our institutional and, where possible, private shareholders.
 
The board has ultimate responsibility for reviewing and approving the Annual Report and Accounts and it has considered and endorsed the arrangements for their preparation, under the guidance of its audit committee. The directors confirm that the Annual Report and Accounts, taken as a whole, is fair, balanced and understandable and provides the information necessary for shareholders to assess the group’s position and performance, business model and strategy.
 
The following paragraphs set out TPO’s compliance with the ten principles of the QCA Code.
 
Establish a strategy and business model which promote long-term value for shareholders
 
The Company provides mobile telecommunications services to subscribers in the UK and the US on the unique premise that 10% of the customer’s monthly spend is directed to a charity of the customer’s choice at no extra cost to themselves.
 
The Company’s strategy is to build a loyal and long-standing customer base committed to supporting their favourite causes through the simple premise of maintaining their mobile phone contract with us. The Company also seeks to acquire subscribers virally, by word of mouth customer to customer and by active engagement with the charities who are the ultimate beneficiaries of the business model.
 
To ensure the success of this strategy the group will continue to prioritise viral marketing to facilitate business growth.
 
The key challenges we face include:
 
Industry Competition – The mobile telecoms industry is highly competitive and margins are constantly under pressure. We seek to mitigate this by negotiating favourable long-term wholesale deals from our airtime and other suppliers and ensuring our customers have access to subscriptions which, while not the cheapest, are comparable to those offered by our competition.
 
• Customer Loyalty – Churn rates in the mobile telecoms space are traditionally high. Our churn rate has consistently been at or below the industry average but is watched closely. By definition our customers could be expected to stay with us due to their commitment to the charity or charities which they support. We seek to reinforce this with our marketing strategy of highlighting specific outcomes or achievements which result directly from the donations facilitated by our subscribers. 
 
Group Financial Position – The Company announced its suspension from trading on 2 July 2018 pending the approval and release of the 2017 Annual Report and Accounts. The Company announced on 19 July 2018 that it is currently involved in  discussions with a third party regarding a potential investment in the Company.  Such an investment would enable the Board to recommend to the Company’s auditors approval and publication of the 2017 Accounts. The Board would then be in a position to request a resumption of trading. There is no guarantee that the discussions, which remain ongoing as of 28 September 2018, will be successful.
 
We believe that, subject to the successful resolution of our current financial situation, we have the right strategy in place to maintain growth in sales and customer retention and to enable us to continue to promote long-term value to shareholders.
 
 
 
Seek to understand and meet shareholder needs and expectations
 
Responsibility for investor relations rests with Nick Dashwood Brown, Head of Investor Relations, who is not a Director of the Company. The Company has historically had frequent contact with its larger shareholders and, where possible, its private shareholders. This contact has taken the form of face-to-face meetings, emails and/or telephone calls, such meetings including Michael Butler, Chairman, and Sam Tillotson, Acting CEO, where appropriate.
 
The group is committed to communicating openly with its shareholders to ensure that its strategy and performance are clearly understood. We communicate with shareholders through the Annual Report and Accounts, full-year and half-year announcements, trading updates and the Annual General Meeting. A range of corporate information is also available to shareholders, investors and the public on our website.
 
Private shareholders: The Annual General Meeting is the principal forum for dialogue with private shareholders, and we encourage all shareholders to attend and participate. The Notice of Meeting is sent to shareholders at least 21 days before the meeting. The chairs of the board and all committees, together with all other directors, attend and are available to answer questions raised by shareholders. Shareholders vote on each resolution by way of a poll. For each resolution we announce the number of votes received for, against and withheld.
 
Institutional shareholders: The group receives feedback from institutional investors from its Head of Investor Relations and its Nomad, Finncap.
 
The directors actively seek to build a mutual understanding of objectives with institutional shareholders. We communicate with institutional investors through telephone calls or formal meetings, the majority of which are arranged by the Head of Investor Relations. Following The Corporate Broking function within our Brokers also provides anonymised feedback to the board from all fund managers met, from which sentiments, expectations and intentions may be gleaned. In addition, we have historically reviewed analysts’ notes to achieve a wide understanding of investors’ views. Currently there is no analyst coverage of the Company.
 
 
Take into account wider stakeholder and social responsibilities and their implications for long-term success
 
Stakeholder                                        Reason for                              How we engage
engagement
 
Staff
Our ability to fulfil                              Good communication             Regular staff meetings to
client services relies                           with staff is a key                    enable staff to question
on having talented and                       requirement for high              management.
motivated staff                                   levels of engagement            
                                                                                                                       
Clients
Our success and competitive              Understanding these              Seek feedback on services
advantage is dependent upon            requirements enables us to   
meeting clients’ requirements           develop, support and fulfil     Obtain requests for new
new and enhanced services   services and service
enhancements
 
Suppliers
Maintaining good supplier                  Ensuring quality of                  We operate systems to
relationships                                       services provided                    ensure supplier invoices
                                                                                                            are processed and paid
                                                                                                            promptly
Shareholders             
As a public company we                     Meeting regulatory                 Regulatory news releases
must provide transparent, easy-to-    requirements and
understand and balanced                   understanding shareholder    Keeping the investor
information to ensure support and    sentiments on the                   relations section of the
confidence                                          business, its prospects and     website up to date
                                                            management performance
                                                                                                            Half-year and annual
                                                                                                            presentations
 
                                                                                                            Annual General Meeting
 
We believe we successfully engage with our shareholders
 
 
Communities
 
We have participated in industry events, as well as hosting our own for our clients and staff. These types of activities ensure we are regarded as a key member within our business community and are engaged in a regular and ongoing dialogue with that community.
 
Embed effective risk management, considering both opportunities and threats, throughout the organisation
 
The Acting Chief Executive Officer and the Finance Team have identified key risks in the areas of corporate strategy, financial, clients, staff, environmental and the investment community. This is reviewed and updated periodically, and all members of the board are consulted.
 
Within the scope of the annual audit, specific financial risks are evaluated in detail, including in relation to foreign currency, interest rates, liquidity and credit.
 
We regularly review potential risks to all aspects of the business and to our customers. We do this to ensure as far as possible any potential risks are known and that in the event a risk should materialise, any impact is contained and minimised.
 
Staff are reminded that they should seek approval from the Chief Executive Officer if they, or their families, plan to trade in the group’s equities.
 
Maintain the board as a well-functioning, balanced team led by the chair
 
The members of the board have a collective responsibility and legal obligation to promote the interests of the group, and are collectively responsible for defining corporate governance arrangements. Ultimate responsibility for the quality of, and approach to, corporate governance lies with the chair of the board.
 
The board consists of four directors of which one is executive and three are independent non-executives, one of whom is also the Chairman. The board is supported by three committees: audit, nominations and remuneration.
 
Non-executive directors are required to attend board and board committee meetings and to be available at other times as required for face-to face and telephone meetings with the executive team and investors.
 
The board has a schedule of regular business, financial and operational matters, and each board committee has compiled a schedule of work to ensure that all areas for which the board has responsibility are addressed and reviewed during the course of the year. The chairman is responsible for ensuring that, to inform decision-making, directors receive accurate, sufficient and timely information. The company secretary compiles the board and committee papers which are circulated to directors prior to meetings. The company secretary provides minutes of each meeting and every director is aware of the right to have any concerns minuted and to seek independent advice at the group’s expense where appropriate.
 
Ensure that between them the directors have the necessary up-to-date experience, skills and capabilities
 
All four members of the board bring relevant sector experience. Two directors are female and two are male. 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 undertake training and attend other regulatory and trade events as required to ensure that their knowledge remains current.
 
Michael Butler, Non-Executive Chairman
 
Michael has held various senior roles in general management, sales and marketing in telecommunications businesses, including as President and Chief Operating Officer and an Executive Board Director of Inmarsat plc. He was previously Managing Director of MCI Worldcom UK. He is currently a director of several other companies, including Non-Executive Chairman of Broadband Satellite Services Limited, and is a Non-Executive Director of Synectics PLC, an AIM-listed provider of integrated security & surveillance systems.

Board Committee Membership: Member of Nomination Committee and Remuneration Committees.


Sam Tillotson, Acting Chief Executive Officer
 
Sam joined TPO in May 2012 as one of its first employees and is responsible for the operational aspects of the Group. Previously he worked at Blyk and Alcatel-Lucent where he worked on the development, launch and management of platforms for mobile operators across Europe, the Middle East and Africa. 
 
Juliet Rosenfeld, Non-Executive Director
 
Juliet is a psychoanalytic psychotherapist and corporate psychology consultant. She previously worked as an advisor to the Permanent Secretary on Marketing and Government Communications in the Cabinet Office and prior to that in advertising for St Luke's Advertising and J Walter Thompson. Juliet is the widow of the late Andrew Rosenfeld, co-founder of the Company.
 
Juliet is Chair of the Remuneration Committee
 
Julia Simpson, Non-Executive Director
 
Julia is Chief of Staff at International Airlines Group (IAG), a FTSE-100 company. She is responsible for global communications, government relations and executive administration and business services. Previously Head of Corporate Communications at British Airways, since 2007. Prior to British Airways, Julia was adviser to the UK Prime Minister on strategic communication issues. She held a number of key communication positions in government and the public sector, including: assistant chief executive at the London Borough of Camden; and head of communications at the Communication Workers Union. She started her career as a journalist. She is a graduate of Warwick University in Spanish and European Studies. She is on the Boards of British Airways and Iberia.
 
Julia is Chair of the Nomination Committee
 
Evaluate board performance based on clear and relevant objectives, seeking continuous improvement
 
A board evaluation process led by the chairman will take place in December 2018. All then current directors will begin by completing questionnaires about the effectiveness of the board, which will then be used as the basis for a collective discussion.
 
The review will consider effectiveness in a number of areas including general supervision and oversight, business risks and trends, succession and related matters, communications, ethics and compliance, corporate governance and individual contribution.
 
A number of refinements in working practices are likely to be identified as a result of this exercise and will subsequently be adopted.
 
As the business expands, the executive directors will consider identifying internal candidates who could potentially occupy board positions and set out development plans for these individuals.
 
Promote a corporate culture that is based on ethical values and behaviours
 
Our long-term growth is underpinned by our core values. We seek to be regarded as the partner of choice to our clients, which requires us not only to provide innovative and efficient solutions but also to be trustworthy, transparent and fair in our dealings with clients. We encourage behaviours to support those goals throughout the organisation.
 
The culture of the group is characterised by these values which are communicated regularly to staff through internal communications and meetings.
 
The board believes that a culture that is based on these values is a competitive advantage and consistent with fulfilment of the group’s mission and execution of its strategy.
 
 
Maintain governance structures and processes that are fit for purpose and support good decision-making by the board
 
The board provides strategic leadership for the group and operates within the scope of a robust corporate governance framework. Its purpose is to ensure the delivery of long-term shareholder value, which involves setting the culture, values and practices that operate throughout the business, and defining the strategic goals that the group implements in its business plans. The board defines a series of matters reserved for its decision and has approved terms of reference for its audit, nomination and remuneration committees to which certain responsibilities are delegated. The chair of each committee reports to the board on the activities of that committee.
 
The Audit Committee monitors the integrity of financial statements, oversees risk management and control, monitors the effectiveness of the internal audit function and reviews external auditor independence.
 
The Remuneration Committee sets and reviews the compensation of executive directors including the setting of targets and performance frameworks for cash- and share-based awards.
 
The Nomination Committee evaluates the board of directors and examines the skills and characteristics needed in board members.
 
The Executive Board, consisting of the executive directors, operates as a management committee, chaired by the Chief Executive Officer, which reviews operational matters and performance of the business, and is responsible for significant management decisions while delegating other operational matters to individual managers within the business.
 
The Chairman has overall responsibility for corporate governance and in promoting high standards throughout the group. He leads and chairs the board, ensuring that committees are properly structured and operate with appropriate terms of reference, ensures that performance of individual directors, the board and its committees are reviewed on a regular basis, leads in the development of strategy and setting objectives, and oversees communication between the group and its shareholders.
 
The Acting Chief Executive Officer provides coherent leadership and management of the group, leads the development of objectives, strategies and performance standards as agreed by the board, monitors, reviews and manages key risks and strategies with the board, ensures that the assets of the group are maintained and safeguarded, leads on investor relations activities (in conjunction with the Head of Investor Relations) to ensure communications and the group’s standing with shareholders and financial institutions is maintained, and ensures that the board is aware of the views and opinions of employees on relevant matters.
 
The Executive Director is responsible for implementing and delivering the strategy and operational decisions agreed by the board, making operational and financial decisions required in the day-to-day operation of the group, providing executive leadership to managers, championing the group’s core values and promoting talent management.
 
The Independent Non-Executive Directors contribute independent thinking and judgement through the application of their external experience and knowledge, scrutinise the performance of management, provide constructive challenge to the executive directors and ensure that the group is operating within the governance and risk framework approved by the board.
 
The Company Secretary is responsible for providing clear and timely information flow to the board and its committees and 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 to be put to general meetings of shareholders and the associated documents or circulars.
• Approving changes to the board structure.
 
The board has approved the adoption of the QCA Code as its governance framework against which this statement has been prepared and will monitor the suitability of this code on an annual basis and revise its governance framework as appropriate as the group evolves.
 
Communicate how the company is governed and is performing by maintaining a dialogue with shareholders and other relevant stakeholders
 
In addition to the investor relations activities described above, the following audit, nomination and remuneration committee reports are provided.
 
Audit Committee Report
 
The Audit Committee has a duty to focus on the effectiveness of the controls throughout the group. The composition of the Audit Committee is currently under review.
 
The external auditors are invited to attend meetings of the Audit Committee. Consideration is given in these meetings 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.
 
Nomination Committee Report
 
The Nomination Committee ensures there is a robust process for the appointment of new board directors, to keep a close eye on succession plans and also to evaluate the performance of the board. The Nomination Committee is chaired by Julia Simpson.
 
Remuneration Committee Report
 
The remit of the Remuneration Committee is to determine the framework, policy and level of remuneration, and to make recommendations to the board on the remuneration of executive directors. In addition, the committee oversees the creation and implementation of all-employee share plans. The Remuneration Committee is chaired by Juliet Rosenfeld.
 
In setting remuneration packages the committee ensured that individual compensation levels, and total board compensation, were comparable with those of other AIM-listed companies.
 
Share dealing code
 
The Company has adopted a share dealing code for Directors and applicable employees of the Group for the purpose of ensuring compliance by such persons with the provisions of the AIM Rules relating to dealings in the Company’s securities (including, in particular, Rule 21 of the AIM Rules). The Company will take proper steps to ensure compliance by the Directors and applicable employees with the terms of the share dealing code.
 
Takeover Code               
 
The Company is a public company incorporated in the UK and has its place of central management and control in the UK. Accordingly, the Takeover Code applies to the Company and, as a result, Shareholders are entitled to the benefit of the takeover offer protections provided under the Takeover Code.
 


The People's Operator plc is a company registered in England and Wales with a company number 09083874.
Registered office address 53/54 Chocolate Studios, 7 Shepherdess Place, London N1 7LJ

 


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