The Directors are committed to practising good corporate governance and recognise that they are accountable to Shareholders for the Group’s standard of governance. The Directors recognise the value of the principles of good corporate governance and the principles embodied in the UK Corporate Governance Code and intend to take into account the Corporate Governance Guidelines of the Quoted Companies Alliance so far as is practicable and appropriate in the Board’s determination for a public company of the Company’s size, board structure, stage of development and resources. The principles set out in the UK Corporate Governance Code cover five areas: leadership, effectiveness, accountability, remuneration and relations with shareholders.
Board comprises six directors, four of whom are non-executive. The Board is chaired by Charles Spicer. He, John Bradshaw and Tim Sharpington are considered to be independent of the executive directors and free from any relationship which could materially affect the exercise of their independent judgment. Mark Warne is not considered independent.
The Board typically has six scheduled meetings during the year. In addition, further meetings are held when circumstances and urgent business dictate. All directors receive an agenda and Board papers in advance of the Board meetings to facilitate an effective contribution at the meetings. The executive directors maintain regular informal contact between the Board meetings with non-executive directors.
The Board is responsible for the overall direction and strategy of the Group and for securing the optimum performance from Group assets. At each meeting, the Board will review strategy and progress of the Group towards its objectives, particularly in respect of research and development projects, and monitors financial progress against budget.
While the Board retains overall responsibility for, and control of, the Group, day-to-day management of the business is conducted by the Executive Directors.
The Board has agreed a schedule of items that are specifically reserved for its consideration, which is reviewed on an annual basis. This schedule includes:
- strategy and management
- structure and capital
- financial reporting and controls
- internal controls
- approval of significant contracts
- approval of shareholder communications
- board composition
- corporate governance
- health and safety policy
Division of responsibilities between Chairman and Chief Executive Officer
There is clear separation of the roles of Chairman and Chief Executive Officer on terms which have been agreed and set out in writing by the Board of the Group and which will be reviewed on an annual basis. The Chairman is responsible for overseeing the running of the Board of the Group, encouraging all Directors to participate fully in discussions with the aim of reaching a consensus and ensuring that the Non-Executive Directors are properly briefed on matters. The Chief Executive has responsibility for implementing the Group’s strategy and managing day-to-day business activities with the Executive Directors and senior managers. The Company Secretary, through the Chairman, is responsible for advising the Board of the Group on all governance matters.
The Group has established Audit and Remuneration Committees with written terms of reference stating their authorities and duties.
The Audit Committee is chaired by John Bradshaw. The current members are Tim Sharpington and Mark Warne. The terms of reference of the Audit Committee will be reviewed on an annual basis and include the following responsibilities:
- to monitor the integrity of the Group’s financial statements and make recommendations to the Board
- to review annually the need for an internal audit function
- to review the effectiveness of the Group’s internal control and risk management systems
- to consider and make recommendations to the Board regarding the appointment of the Group’s external auditors
The Remuneration Committee is chaired by Tim Sharpington. The other members are John Bradshaw and Mark Warne. The terms of reference of the Remuneration Committee will be reviewed on an annual basis and include the following responsibilities:
- to determine and agree with the Board the framework and policy for the remuneration of the Executive directors and other members of the Executive Team
- to determine targets for any performance related pay scheme
- to approve overall remuneration structure
- to review employee benefit structures
Internal controls and risk management
The Board acknowledges that it is ultimately responsible for the Group’s system of internal control and reviews its effectiveness at least annually. However, the Board acknowledges that such a system can only provide reasonable and not absolute assurance against material misstatement or loss, as it is designed to manage rather than eliminate the risk of failure to achieve business objectives.
The key procedures that the Board has established are designed to provide effective internal controls within the Group and comply with the Internal Control Guidance for Directors on the UK Corporate Governance Code (Turnbull Guidance 2005) issued by the Financial Reporting Council. There will be an ongoing process for identifying, evaluating and managing significant risks faced by the Group.
The Company has adopted a code of securities dealings in relation to the securities of the Company which is based on, and is at least as rigorous as, rule 21 of the AIM Rules for Companies.