I am pleased to have the opportunity to address AVEVA’s shareholders as the Group comes to the end of a year of transformation following the combination of AVEVA and the Schneider Electric industrial software business.
During the year, the Board has continued to focus on providing effective leadership and oversight of the Company as it seeks to achieve its strategic priorities and create value for our shareholders during an ongoing period of regulatory and political uncertainty. In this regard, it was a year of future-proofing AVEVA’s governance framework and ensuring that it is accountable, robust and sustainable long-term.
Amongst the more significant futureproofing initiatives we undertook in the past year, I want to highlight the following:
The selection and appointment of an additional independent Non-Executive Director was a key focus for this year. Following a rigorous selection process, the Board was delighted with the appointment of Paula Dowdy on 1 February 2019. The Nomination Committee led the process covering the search, selection and nomination of the candidate and further detail on the process can be found on pages 54-55. With Paula joining the Board her international experience further strengthens the Board which has a rich depth of technological, industrial and financial expertise across our six Non-Executive Directors. With this appointment, we are now in compliance with the 2016 UK Corporate Governance Code (the “Code”), and have at least half the Board represented by independent Non-Executive Directors (excluding the Chairman).
Maintaining compliance with the Code
The Board believes that good corporate governance underpins good business performance and long-term value creation. It continually strives to maintain a governance framework that is easy to understand and agile, and which facilitates it leading AVEVA into the future whilst continuing to reflect the greater requirements for accountability, diversity and transparency that are expected of a modern global business. As reported in 2018, in compliance with the provisions of the Listing Rules of the Financial Conduct Authority, specifically where a listed company has a controlling shareholder, we have in place a Relationship Agreement with Schneider Electric SE, our majority shareholder. This is a legally binding agreement to ensure that Schneider Electric complies with the independence provisions of the Listing Rules and to allow AVEVA to carry on its business independently of Schneider Electric.
The Board has focused on addressing any matters of non-compliance with the Code which were reported in last year’s Annual Report. For the full year under review, and as a direct result of the terms of our Relationship Agreement with our majority shareholder, items of non-compliance are:
- Although Ron Mobed was appointed to the Nomination Committee in March 2019 as an additional independent member, the Committee’s membership
did not consist of a majority of independent Non-Executive Directors if the independence of the Chairman is excluded.
- Similarly, although Paula Dowdy was appointed to the Remuneration Committee in March 2019 as an additional independent member, the Committee’s membership did not consist of solely independent Non-Executive Directors.
With the above appointments, the Board has sought to ensure that Committee membership is as independent as possible notwithstanding the restrictions of the Relationship Agreement. With the support of the Company Secretary, the Board regularly monitors changes in the corporate governance landscape and continually reviews best practice. During the year under review, the Group applied the 2016 Code but in anticipation of adopting the 2018 Code and being compliant with other legislative changes, the Board and its Committees undertook a comprehensive review of its corporate governance framework and Terms of Reference. Further work will be undertaken to ensure that the Board and its Committees comply with the 2018 Code and other legislative changes and are able
to effectively report on these in 2020.
As the Company works through the integration of the two heritage businesses, extensive work has been undertaken to bring colleagues together, streamline processes and policies and create a fully joined up Group in line with our broader strategy. Consequently, during 2018, there was considerable focus on culture, enhanced behaviour and ethics training and on introducing updated policies and accessible reporting facilities.
The Board was proud to see the launch of the AVEVA LIFE values which embody the way AVEVA approaches its customers, partners, colleagues and stakeholders every day. These values are recognised across the Group and have become a vital part of AVEVA’s culture. Culture remains a matter of regular Board discussion. We fully support management’s ongoing commitment to maintaining a working environment based on integrity, respect and openness, which enables all colleagues to fully participate in AVEVA LIFE and is an important contributor to our ongoing success. For more information on how we live our AVEVA LIFE values, please see page 39.
Integration and transformation
Unsurprisingly, one of the most important matters demanding the Board’s attention over the past year was the continued integration of the combined Group’s activities, monitoring the achievement of synergies, creating new and valuable opportunities for our customers and ensuring long-term value creation for ourshareholders and stakeholders. A significant amount of the Board’s activities continues to be aimed at setting the strategic direction for integration and transformation activities and monitoring their implementation. I would like to thank my colleagues, the Executive Leadership Team (ELT) and all employees for their continued efforts and support with transforming AVEVA to be the global leader delivering digital transformation to the industrial sector. The Board looks forward to continuing
to oversee, govern and support AVEVA as it builds on the growth and transformation achieved this year. Our Corporate Governance Report demonstrates that AVEVA is ready to face any challenges that lie ahead.