Corporate Governance Statement
Principles of corporate governance The Board of Directors recognises the importance of good corporate governance to enhance and protect shareholder value. As the Company’s shares are listed on the Alternative Investment Market (‘AIM’) of the London Stock Exchange, the Company is not required to comply with the disclosure requirements of the 2008 Combined Code on Corporate Governance. However, the Board supports the principles contained in the 2008 Combined Code and is committed to applying its principles, where they are appropriate given the Company’s size. The following describes how these principles have been applied. Board of Directors The Company is controlled by the Board of Directors, which is headed by the Non-Executive Chairman and currently comprises the Senior Independent Non-Executive Director, two other Non-Executive Directors and two Executive Directors. On 31 December 2008, Dr Andrew Baker left the Board as Operations Director. On 16 February 2009, John Nicholas joined the Board as a Non-Executive Director. The size of the Board and the balance between Executives and Non-Executives is considered appropriate to the Company’s size and stage of development and is kept under regular review. The Board is responsible to shareholders for the proper management of the Group and meets regularly throughout the year, usually monthly, to set the overall direction and strategy of the Group and to review financial and operating performance. Financial policy and budgets, including major capital expenditure and treasury policy, are approved and monitored by the Board. The key operational decisions are subject to Board approval. The division of responsibilities between the Chairman and the Chief Executive Officer is clearly defined, documented and approved by the Board. The Non-Executive Directors are considered by the Board to be independent of management and are free to exercise their independent judgement. They have never been employees of the Group nor do they participate in any of the Group’s pension schemes, share option schemes or incentive arrangements. They receive no other remuneration other than Directors’ fees. The Non-Executive Directors hold regular meetings during the year with the Chairman, without the Executive Directors present. All Board members receive monthly management accounts and regular management reports to enable them to review the Group’s performance against agreed objectives. Regular reports and papers are circulated to all Directors in a timely manner to enable them to discharge their duties effectively. This information includes that specifically requested by the Non-Executive Directors from time to time. The performance of each Executive and Non-Executive Director is appraised annually. Audit Committee The Audit Committee is comprised of John Nicholas as Chairman (who replaced Dr Brian Count as Chairman on joining the Board), Dr Brian Count and Sir David Brown. The Committee oversees the monitoring of the Group’s internal controls, accounting and treasury policies and financial reporting and provides a forum through which the external auditors report. It also reviews the scope and results of the external audit; the independence and objectivity of the auditors; and makes recommendations to the Board on issues surrounding the auditors’ remuneration, appointment, resignation and removal. The Committee is authorised by the Board to seek and obtain any information it requires from any officer or employee of the Group and to obtain external legal or other independent professional advice. Remuneration Committee The Remuneration Committee is comprised of Sir David Brown as Chairman, Dr Brian Count, Alan Wood and John Nicholas. The Committee reviews the performance of the Executive Directors and sets the scale and structure of their remuneration and the basis of their service agreements with due regard to the interests of the shareholders. Non-Executive Directors’ fees are considered and agreed by the Board. Nomination & Governance Committee The Nomination & Governance Committee is comprised of Dr Brian Count as Chairman, Sir David Brown, Alan Wood and John Nicholas. The Committee is responsible for reviewing the composition and structure of the Board and for identifying and recommending candidates for Executive and Non-Executive Director. All Directors are subject to re-election by shareholders at the first Annual General Meeting following their initial appointment, and at each Annual General Meeting one-third of the Directors retire by rotation. Technical & Operational Risk Committee The Technical & Operational Risk Committee was established during the year. It is comprised of Alan Wood as Chairman, Sir David Brown and Jonathan Watkins, Chief Operating Officer. Phil Whalen, Technology Director joined the Committee in July 2009. The Committee is responsible for monitoring key technical and operational risks and the development and implementation of strategies to manage and mitigate these risks. Communication with shareholders The Board recognises the importance of effective communication with shareholders. Dialogue with institutional shareholders is conducted on a regular basis by the Chief Executive Officer and Finance Director. During the year, the views of major shareholders were communicated to the Board through briefings by the Company’s broker and face-to-face meetings with the Chairman. The Annual General Meeting provides an opportunity to communicate with other shareholders and gives the opportunity to put questions to the Chairman and other Directors. Internal controls The Board has overall responsibility for the Group’s systems of internal control, which are designed to safeguard the assets of the Group and to ensure the reliability of its financial information. The Group prepares detailed budgets and cash flow projections, which are approved annually by the Board and updated regularly throughout the year. Detailed management accounts and working capital cash flow projections are prepared on a monthly basis and compared to budgets and projections to identify any significant variances. The Group does not have an internal audit function and the Directors believe that this is appropriate given the Group’s size and stage of development.