Hybrid Software Group PLC Annual Report 2022 38 39 Hybrid Software Group PLC Annual Report 2022 Hybrid Software Group Strategic report Governance Financial statements Other information IT risk (a) The Company cannot guarantee that its disaster recovery and business continuity plans will adequately address any potential issue in the future The Company cannot guarantee that the Group’s disaster recovery and business continuity plans will be adequate in the future for its critical business processes nor that they will adequately address every potential event. Although the Group has insured major risks, the Company can give no assurance that the Group’s present insurance coverage is sufficient to meet any claims to which it may be subject, that it will in the future be able to obtain or maintain insurance on acceptable terms or at appropriate levels or that any insurance maintained will provide adequate protection against potential liabilities. Any losses that the Group incurs that are not adequately covered by insurance may decrease the Group’s future operating income. In addition, defending the Group against such claims may strain management resources, affect the Group’s reputation and require the Group to expend significant sums on legal costs. The Group’s business is currently operated from various locations across the UK, Europe, North America, China and Japan. Some business critical IT infrastructure is concentrated at one site in the UK with a continuous backup of those systems and data to a separate UK site. Business continuity plans are intended to ensure that business-critical processes and data are protected from disruption and will continue even after a disastrous event (such as a major fire or weather, political or war event). Without these plans, or if these plans prove to be inadequate, there is no guarantee that the Company or any of its operating subsidiaries would be able to compete effectively or even to continue in business after a disastrous event or major disruption to one or more of its operating subsidiaries. Accordingly, if critical business processes fail or are materially disrupted as a result of a disastrous event or otherwise and cannot recover quickly, this could have a material adverse effect on the Group’s business, financial condition and results of operations. Principal risks and uncertainties continued... KEY PERFORMANCE INDICATORS (KPIs) The board monitors progress on the overall Company strategy and the individual strategic elements by reference to financial KPIs; specifically revenue, gross margin, operating expenses, adjusted operating profit, EBITDA* and cash. These KPIs have been addressed in more detail in the Business review and future developments section above. SECTION 172 (1) The Directors have considered the requirements of section 172(1) of the Companies Act 2006 and it is a core duty of the Directors above. The key considerations are set out below. It is a core duty of the Directors to promote the success of the Company. To do so the Directors consider the main issues and stakeholders when making significant decisions. The Company has never paid a dividend, thus shareholders are invested for capital growth and due to the nature of the business, employees are critical to the success of the Company’s products. The CEO and CFO communicate regularly with analysts and shareholders are encouraged to participate in an annual meeting. Engagement with employees is two-way to ensure that employees are kept well-informed about the business and valuable feedback is received to ensure continuation of being a trusted employer. Initiatives to ensure the wellbeing of employees and their dependents are regularly reviewed and enhanced. Considering the capital growth aims of shareholders, the Directors are focused on growing the revenue and product portfolio to ensure that the Company continues to grow, whilst remaining profitable, with the continuing move to digital printing and manufacturing in the marketplace. This is done by development of new products, for example ScreenPro™,PrintFlat™ and SmartDFE in recent years and by strategic acquisitions such as Meteor, Xitron, HYBRID Software, ColorLogic and iC3D. Products are developed based on an identified market demand: in the case of ScreenPro™ and PrintFlat™, the identification of quality issues when printing with inkjet technology and in the case of SmartDFE, the evolution of smart factories and Industry 4.0. Acquisitions are evaluated not only for their financial merits, but on the basis that they fit within the strategy and culture of the Company and that synergies and further opportunities can be developed through integration. Relationships with customers and key suppliers are fostered through a collaborative approach through the use of technical services, evaluation software and products and customer-specific product development where appropriate. Commercial contracts are written to further strengthen those relationships. It is the Company’s policy to manage and operate worldwide business activities in conformity with applicable laws and regulations as well as with the highest ethical standards. Both the Company’s Board of Directors and executive management are determined to comply fully with the applicable law and regulations, and to maintain the Company’s reputation for integrity and fairness in business dealings with third parties. A strict compliance with the provisions of the Company’s Code of Ethics is mandatory for every member of the Company’s Board, executive officers, every senior executive and every employee at all locations. The Directors consider the impact of the Company’s operations on the environment and consider how it can reduce any negative impact it might have. The Company’s technology and products enable its customers to produce more efficient and less resource consuming products and services, thus saving energy and raw materials and the Company participates in a program to offset the carbon footprint of all its employees, in both their personal and work lives. For more information see page 48. * For the EBITDA calculation see page 31
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