Last updated on 8 August 2024

As an AIM quoted company, we recognise the importance of applying sound governance principles in the successful running of the Group. Given the size and nature of the Group and composition of the Board, we have formally adopted the QCA Corporate Governance Code for Small and Mid-Size Quoted Companies (the QCA Code) and will report annually on our compliance with the QCA Code in our Annual Report. A new QCA Code came into effect in April 2024. The Board has discussed the key changes to this Code, and has agreed to have more detailed discussions during FY2025 regarding how to ensure compliance with the revised Code.

As the business continues to grow it needs a strong, effective, entrepreneurial and engaged Board with the right skills and experience to oversee the strategy, governance, risk and financial frameworks across the organisation. The Board was refreshed in January 2024 with the replacement of one Non-executive Director bringing relevant skills and experience to the Board.

We will continue to review the Board’s composition to ensure that it maintains appropriate skills, experience, independence, and particularly diversity and that it remains effective.

The sections below set out how we currently comply with the ten principles of the QCA Code which was in effect until 31 March 2024.

1. Establish a strategy and business model which promote long-term value for shareholders
The strategy and business operations of the Group are set out in the FY2024 Strategic Report on pages 9 to 28.

The Executive Directors are responsible for the leadership and day-to-day management of the Group. This includes formulating and recommending the Group’s long-term strategy for Board approval and then executing the approved strategy.

2. Seek to understand and meet shareholders needs and expectations
The Group seeks regular dialogue with both existing and potential new shareholders, ensuring our strategy, business model and performance are clearly understood as well as to understand the needs and expectations of shareholders. The Executive Chairman and Chief Financial Officer meet regularly with investors and analysts via investor roadshows, investor presentations and events and hosting tours of our development sites in order to provide them with updates on the Group’s business and obtain feedback regarding the market’s expectations of the Group.

The Board invites communication from its private investors and usually encourages participation by them at the Annual General Meeting (AGM). All Board members attend the AGM and are available to answer questions from shareholders. Notice of the AGM is in excess of 21 clear days and the business of the meeting is conducted with separate resolutions, voted on initially by a show of hands and with the result of the voting being clearly indicated. The results of the AGM are announced through a regulatory information service.

The normal channel of communication with shareholders is via our Chief Financial Officer and Executive Chairman.

3. Take into account wider stakeholder and social responsibilities and their implications for long-term success
Our technology has been designed to address social problems, particularly in emerging territories such as India where there are significant losses to the government in the electricity sector. Our technology is low-cost, low-power and seeks to prevent theft from electricity or tampering with electricity meters. These features allowed utilities to safely read meters and carry on business remotely during the COVID-19 pandemic. It also results in large savings and reductions in CO2 emissions by automating the advanced metering infrastructure.

The Group is mindful of its corporate social responsibilities and the need to build and maintain strong relationships across a range of stakeholder groups is a key principle in what we do. Engaging with our stakeholders allows us to create a positive legacy and create strong stakeholder relationships. Our project teams engage with stakeholders throughout the development life cycle to help enrich communities. Further information on how we engage with our stakeholders can be seen in the s.172 report on pages 15 to 18 of our FY2024 Annual Report.

Our employees are at the heart of our business and we consistently strive to ensure they have the opportunity to develop in a job they enjoy. We embrace diversity and employ people from a range of cultures and backgrounds across the group. Further information on our diversity policy can be found on page 27 of our Strategic Report in the FY2024 Annual Report.

The Group’s revenue is dependent on delivering complex projects to specific markets and therefore ensures that cross-functional teams including senior employees work together with customers and local, in-country employees and partners to ensure the successful integration of its products and technologies.

Our customers and partners are key to the Group’s success. The sales and delivery teams obtain feedback from customers regarding current products, product requirements and customer service through regular interactions with customers mainly comprising both face to face meetings and online discussions where travel is not possible.

Our Environmental policy and Health and Safety Management policy (see page 27 of the FY2024 Annual Report), provides information on the Group’s approach to the environment. The Group was awarded accreditation for the ISO14001, ISO9001 (2015) and ISO27001 standards in 2019 and has passed all audits for these accreditations since. These accreditations are updated as standards are replaced with new ones.

CyanConnode fully abides by the Modern Slavery Act 2015.

4. Embed effective risk management, considering both opportunities and threats, throughout the organisation
The Board is responsible for the Group’s system of internal controls and for reviewing its effectiveness. Such a system is designed to mitigate the risk of failure to achieve business objectives and can only provide reasonable, but not absolute, assurance against material misstatement or loss.

There is an ongoing process for identifying, evaluating and managing the Group’s significant risks and is regularly reviewed by the Board. This was of particular importance during the COVID-19 pandemic and the Group found its processes to be robust minimising any impact of the lockdown.

The internal control procedures are delegated to Executive Directors and senior management in the Group, operating within a clearly defined departmental structure. The Board regularly reviews the internal control procedures in light of the ongoing assessment of the Group’s significant risks.

On a regular basis, management accounts, including a comprehensive cash flow forecast, are reviewed by the Board in order to provide effective monitoring of financial performance. At the same time the Board considers other significant strategic, organisational and compliance issues to ensure that the Group’s assets are safeguarded, and financial information and accounting records can be relied upon. The Board formally monitors progress on each development.

Please see pages 23 to 26 of the FY24 Annual Report for a summary of the principal risks and uncertainties facing the Group, as well as mitigating actions.

The Group takes security of personal data seriously and ensures compliance with the GDPR which came into effect on 25 May 2018. The Group’s privacy policy can be found on the Company’s website at https://cyanconnode.com/about/privacy-policy/

The Group also takes security of all data and its intellectual property very seriously and in 2019 received accreditation for the ISO27001 standard. Quality of product and process are important to the Group. The Group has been accredited for ISO9001:2008 since 2008 and received accreditation for the ISO9001:2015 standard in 2019. The standards are updated as new standards become applicable.

The Group has adopted an Anti-Bribery policy which can be found on the Company’s website at https://cyanconnode. com/investors/bribery-act/. The Group Bribery Officer ensures that all partners and agents working for the Group sign acceptance of the terms of this policy prior to engagement with any Group company and provides training to employees on this policy.

5. Maintain the Board as a well-functioning, balanced team led by the Chair
The Company and Group are managed by a Board of Directors chaired by John Cronin. The Board is responsible for taking all major strategic decisions. In addition, the Board reviews the risk profile of the Group and ensures that an adequate system of internal control is in place. A formal schedule of Matters Reserved for the Board has been adopted and will be reviewed periodically.

It has been agreed that the Board will at any time consist of either two or three Executive Directors and three Non-Executive Directors. One of the Non-Executive Directors, Björn Lindblom, is considered by the Board to be independent of management and free from any business or other relationship that could materially interfere with the exercise of their independent judgement in accordance with the QCA Code. Both David Johns-Powell and Peter Tyler are only considered as non-independent due to their shareholdings in the Company.

The Non-Executive Björn Lindblom is available to shareholders where concerns have not been resolved through the normal channels of communication with the Board and for when such contact would be inappropriate.

The Board has sufficient members to contain the appropriate balance of skills and experience to effectively operate and control the business. No one individual has unfettered powers to make decisions.

The Roles of the Chairman and Chief Executive are not separate, however following consultation with the Company’s Nominated Adviser it is believed that this situation is appropriate for the Group’s current size and stage of growth. This position is reviewed regularly and discussed with advisers. The Executive Chairman’s main responsibility is the leadership and management, of the Group, the Board and its governance, including the planning and implementing of resources. The Group has an MD & CEO of its entity in India to manage the Indian operations and the Group Engineering function, which all reports into the MD & CEO of India. A Senior Vice President of International Sales handles all sales and opportunities outside of India. A Group Chief Financial Officer manages the finances of the Group while group engineering all reports into the MD & CEO of India. These executive managers are very experienced and it is therefore felt that there is no need for a separate Chief Executive Officer role.

The Executive Directors are responsible for the leadership and day-to-day management of the Group, including recruitment and management of resources. This includes formulating and recommending the Group’s strategy for Board approval and executing the approved strategy.

The Board meets at least 4 times a year and more frequently if necessary. It is expected that each non-executive director will dedicate sufficient time to the Company to understand the business, prepare for and attend Board and committee meetings and carry out other work that is necessary for them to fulfil their duties as a director.

There were no formal Remuneration Committee meetings during the year as one took place just before the commencement of FY2024, and another soon after the end of the financial year.

6. Ensure that between them, the directors have the necessary up-to-date experience, skills and capabilities
The Board considers that the skills, experience and knowledge of each director gives them the ability to constructively challenge strategy and decision making and scrutinise performance. Their biographical details are set out on the Company’s website at https://cyanconnode.com/about/team/ and on pages 29-30 of the FY2024 Annual Report.
As the business has developed, the composition of the Board has been under review to ensure that it remains appropriate to the managerial requirements of the group. At least one third of the directors retire annually in rotation in accordance with the Company’s Articles of Association. This enables the shareholders to decide on the election of the Company’s Board. During FY2024 Chris Jones stepped back from his role as Non-Executive Director and was replaced by Björn Lindblom. Björn is a serial entrepreneur with a strong managerial track record and over 25 years’ experience of starting and growing technology companies. He was previously Chief Executive of Connode AB prior to its acquisition by Cyan plc in 2016 to form CyanConnode and more recently, until 2021, has provided consultancy services to the Company. He has also served as Chairman and board member in several technology companies, including Allgon AB, listed on NASDAQ First North.
The Board takes decisions regarding the appointment of new directors as a whole and this is only done following a thorough assessment of a potential candidate’s skills and suitability for the role.
During the course of the year, directors’ skills and knowledge were kept up to date by receiving updates from the Company Secretary (who is a Member of the Governance Institute and receives regular updates from the Institute and other bodies) and external advisers, where relevant, on corporate governance matters. Corporate governance is an agenda item for all Board Meetings where updates are provided and discussed.

Directors have access to independent professional advice at the Group’s expense. In addition, they have access to the advice and services of the Company Secretary who is responsible to the Board for advice on corporate governance matters.

7. Evaluate Board performance based on clear and relevant objectives, seeking continuous improvement
The effectiveness of the Board and its committees are kept under review in accordance with corporate governance best practice and the performance of the Board is evaluated continuously.

Each Non-Executive Director’s value and input is continually monitored by the Executive Chairman to ensure they are actively contributing to the Company achieving its strategic and financial objectives. At the time of the appointment of Björn Lindblom, a discussion was had between the Board regarding composition. All agreed that the Board is still a well-balanced Board with a good mix of skills.

The Nominations Committee is responsible for succession planning of the Board. Further information on this is set out on page 39.

8. Promote a corporate culture that is based on ethical values and behaviours
We recognise that it is our people who make us different, and we strive to recruit, retain, engage and develop the best.

We continue to encourage our unique and supportive culture, which we believe sets us apart from competitors. The Group endeavours to ensure that its values are visible throughout its recruitment processes, internal communications and management style, corporate reports and external announcements. We expect that the Board and Senior Leadership Team demonstrate these values in their day-to-day work, setting the example for the rest of the Group. All policies and procedures are designed with these values at their core. The Company Secretary keeps in regular contact with teams in the UK and in India to ensure that these values are recognised and respected.

Upon commencement of an employee’s contract, they are given an induction programme to provide them with all
information relating to Company procedures and values. The Group operates from two offices, one in Cambridge in the UK and one in Gurgaon in India, and has a subsidiary in Stockholm, Sweden (which has no employees). Our comprehensive set of policies and procedures, many of which fall under the Company’s ISO accredited procedures, cover all of our operations. They are constantly updated and communicated to relevant employees and everyone else working on our sites. Details of these policies can be found on pages 26-28 of the FY2024 Annual Report.

9. Maintain governance structures and processes that are fit for purpose and support good decision-making by the Board
The Board is made up of two Executive Directors (Executive Chairman, who covers the role of the CEO, and the Chief Financial Officer), and three Non-Executive Directors. Further information on the composition of the Board and how it operates is set out in Principle 5 above. In addition to any matters that are expressly required by law to be approved by the Board, a number of areas are specifically reserved for the Board as set out in an agreed set of Matters Reserved for the Board which was adapted by the Board in March 2018.

The Group’s overriding principles are that the Board:
• Is established to govern by having the appropriate roles, skills and committees to oversee the governance framework under which it operates;
• Looks to the future: the Board will devote a large amount of its time to considering the future and providing strategic leadership;
• Is ultimately responsible to shareholders for the oversight and performance of the Group; and
• Is there to support and maintain a culture of governance, performance, accountability and communication within CyanConnode that embraces and establishes the principles that it has adopted.

The Board has an Audit Committee, a Remuneration Committee and a Nominations Committee to oversee and consider issues of policy outside of main Board meetings. Each Committee has written terms of reference setting
out its duties, authority and reporting responsibilities, also adopted by the Board in March 2018.

Board committees are authorised to engage the services of external advisers as they deem necessary in the furtherance of their duties at the Company’s expense. Details concerning the composition and meetings of the committees are
contained on pages 39 and 40 of the Corporate Governance Statement in the FY2022 Annual Report and on the Company’s website at https://cyanconnode.com/investors/governance/

10. Communicate how the Group is governed and is performing by maintaining a dialogue with shareholders and other relevant stakeholders
Communications with shareholders is through the Annual Report and Accounts, full-year and half-year announcements, periodic market announcements (as appropriate), the AGM, investor presentations, one-to-one
meetings and investor road shows.

The Group’s website www.cyanconnode.com is regularly updated in accordance with AIM Rule 26 and users can register at https://cyanconnode.com/investors/shareholder-information/investor-alert/ to be alerted when announcements or details of presentations and events are posted on the website. Annual reports and notices of meetings for at least the last five years can be found on the Group’s website.