Principles of Corporate Governance

We are committed to applying the updated 2018 Quoted Companies Alliance Corporate Governance Code (the 2018 QCA Code) and its 10 principles from 28th September 2018. We recognise that this is essential to support the long-term sustainable growth of the business and that the Board is accountable to the Company’s Shareholders for its governance, which is critical to business integrity and maintaining investors’ trust. The Index below sets out how we comply with each of the 10 principles of the code.

Index

The following table sets out how Ceres Power complies with each of the 10 principles of the updated 2018 Quoted Companies Alliance Corporate Governance Code (the 2018 QCA Code).

  QCA Code 2018 principle Location

1

Strategy and business model which promote long-term shareholder value

Strategy and Business Model

2

Shareholder engagement

Shareholder Engagement

3

Stakeholder and social responsibilities

Stakeholder and Social Responsibilities

Corporate Social Responsibility

4

Effective risk management

Internal Controls

Principal risks and uncertainties

Corporate governance report

5

Balanced Board

Board of Directors & Executive team

Corporate governance report

6

Directors’ up to date experience, skills and capabilities

Board of Directors

Board of Directors & Executive team

7

Board performance evaluation and succession planning

Board Performance Evaluation

Corporate governance report - The Board of Directors

Corporate governance report - Committees

8

Ethical values and behaviours

Statement of Compliance with Criminal Finances Act 2017

Chairman’s Statement

Corporate Social Responsibility

9

Governance structures and decision making

Roles and Responsibilities

Board Committees

Chairman’s corporate governance report

10

How the Company is governed and performing

Regulatory news

Financial Reports

Presentations & Reports

Analyst & Brokers Notes

Shareholder Documents

Summary of Corporate Governance

The Board of Directors holds scheduled Board meetings approximately each quarter plus such other ad hoc meetings as are deemed necessary to deal with urgent business matters.

The Board is responsible for leading and controlling the Company, for creating value for shareholders and in particular for formulating, reviewing and approving the Company’s strategy, budget, significant items of capital expenditure, acquisitions and senior personnel appointments. Additionally the Board is responsible for ensuring the Company has the appropriate people, financial resources and controls in place to deliver its strategy and long-term objectives. The Company has established subcommittees of the Board, comprising an Audit Committee, Nominations and Governance Committee, Remuneration Committee and Technical and Operations Sub-Committee.

The directors believe that the Board and its committees have the appropriate balance of skills, experience, independence and knowledge of the Company to enable them to discharge their respective duties and responsibilities effectively. The Board is responsible for creating value for shareholders, determining strategy, investment policy, approving significant items of expenditure and consideration of significant financing, risk, and legal matters.

The Board and Committee agendas are shaped to ensure that discussion is focused on the Company’s strategic priorities and more immediate activities, as well as reviews of significant issues arising during the year. The Board and committees are provided with all the necessary high quality information, including regular management information, the Company’s ongoing financial and strategic performance, Health and Safety updates and Technological and Operations updates in a timely manner. The Board also maintains regular communication with shareholders, stakeholders and customers, to facilitate proper assessment of matters requiring decision or insight and to enable them to effectively discharge their duties.

Board of Directors

The Board comprises the Non-Executive Chairman, the Senior Independent Director, the Chief Executive Officer, Chief Finance Officer and three Non-Executive Directors. The Board considers that the Senior Independent Director and the Non-Executive Directors are independent in character and judgement and meet the criteria for independence set out in the Code. It is noted that one of the Non-Executive Directors is independent although he represents a significant shareholder.

The Company’s articles of association require that all Directors are subject to election by shareholders at the first Annual General Meeting (‘AGM’) following their initial appointment, and at each AGM one-third of the Directors retire by rotation and offer themselves for re-election.

The Company maintains directors’ and officers’ liability insurance cover, the level of which is reviewed annually.

Read about our Board

Board Performance Evaluation

External board reviews take place every three years and internally each year. Collectively and individually, the Directors monitor Board and directors’ performances on a range of measures and KPIs which align with a Company of its size and at its stage in its journey.
The Board agrees that the Chair continues to provide strong and purposeful leadership. It further agrees that it has the right balance of skills, experience and independence to evolve strategy and that it works effectively as a team.

The Board and Non-Executive Directors regularly visit the Horsham site, holding meetings with senior management and tracking progress against KPIs, identifying potential risks and reputational issues with a view to ensuring that the Company remains on track to grow and deliver in its market and maximises shareholder value.

The Committees also carry out their own annual internal evaluations taking into consideration their terms of reference which in the past year confirmed that their compositions, skills and experience are still considered effective for understanding and supporting the Company to implement its commercial strategy.

Evaluation processes have been evolving over recent years with a formal external effectiveness review in November 2016. Since then the Board led by the Chair and CEO have discussed and where appropriate taken additional advice with a view to implementing some of the recommended changes suggested in the review in particular improving the focus of the plc Board by moving to quarterly Board meetings while retaining monthly Executive meetings.

The Nominations and Governance Committee regularly considers succession planning. The Nominations and Governance Committee and Remuneration Committee continually consider senior management retention. On the 25 September 2018 the Company confirmed that Caroline Hargrove would join the Board as a Non-Executive Director on the 1 October 2018, recognising that she brings highly relevant experience to the Board. The Company provides inductions and any additional training required by any Board members.

Roles and Responsibilities

The Chairman

Alan Aubrey is the Company’s Chairman appointed in December 2012. The role of the Chairman is to lead and manage the business of the Board to provide direction and focus, while ensuring that there is a clear structure for the effective operation of the Board and its Committees. He sets the agenda for Board discussions to promote effective and constructive debate and to support a sound decision-making process, ensuring that the Board receives accurate, timely and clear information, in particular about the Company’s performance.

The Chairman and the Chairmen of the Board committees communicate regularly with the CEO and other Board and committee members. The Company is very clear that there is a division of responsibilities between the role of Chairman and the CEO.

The Chief Executive Officer

Phil Caldwell is the Company’s CEO appointed in September 2013. The CEO is responsible for the executive management of the Company’s operations in charge of the management team and to whom all other executive managers’ report. The CEO is answerable to the Board for the way the business is run and its performance. 

The Senior Independent Director

Stephen Callaghan was appointed Senior Independent Director (SID) with effect from March 2014. He also chairs the Remuneration Committee and is the Point of Contact for whistle-blowers in the Company. 

The SID is available as an additional point of contact for shareholders and leads the non-executive directors who are responsible for assessing the performance of the Chairman, taking into account the views of executive directors. The SID’s role is to act as a sounding board for the Chairman and a trusted intermediary for the other Directors.

The Company Secretary

Caroline Buchan was appointed Company Secretary with effect from October 2016. Under the direction of the Chairman, the Company Secretary’s responsibilities include ensuring good information flows within the Board and its committees and between senior management and non-executive directors, as well as facilitating induction and assisting with professional development as required. The Company Secretary is responsible for advising the Board through the Chairman on all governance matters. All directors have access to the advice and services of the Company Secretary, who is responsible to the Board for ensuring that Board procedures are complied with.

Governance Structures and Decision Making - Evolution of the governance framework

During 2018 Ceres has made key changes in the following areas:

  1. Ceres has considered the work of the Board of Directors and plans to move to a more formal plc Board holding quarterly meetings and strategy days with its focus on strategy and risk alongside an operational Executive Board reporting into the main plc Board.
  2. The diversity of the Board has been improved with the appointment of Caroline Hargrove, the new Non-Executive Director on the 1 October 2018.

Shareholder Engagement

Ceres actively communicates with its shareholders with public announcements and press releases through the London Stock Exchange’s Regulatory News Service (RNS), analyst briefings, face-to-face meetings with significant institutional shareholders, presentations at investor conferences and press interviews. Investors are encouraged to participate at the Annual General Meeting and any General Meetings. During 2018 Ceres has successfully engaged with shareholders to raise additional capital through a placing. This was approved by shareholders at the General Meeting on the 20 July 2018.

Shareholders are welcome to make contact with the Company and wherever possible their concerns or questions are responded to by a Director in person. In particular the Senior Independent Director Mr Stephen Callaghan and CFO Mr Richard Preston would be happy to deal with any shareholder queries.

Stakeholder and Social Responsibilities

Ceres recognises the importance of and that its long term success depends in great part on its relationship with various stakeholder groups including its employees, suppliers, customers and regulators. The Board acting through HR, procurement, the operations team and its advisers considers and acts on stakeholder feedback. In addition the operations team is considering the likely impact of Brexit. This overlaps with principle 4.

Additionally the development of the Company’s SteelCell technology shows our commitment to a cleaner and greener environment.

Ethical Values and Behaviours

The Board believes that it embodies and promotes a corporate culture and monitors ethical values and behaviours and ensures they are respected from the top down by way of good communication channels with HR, employees, suppliers and customers. This is visible in the actions and decisions of the CEO and senior management which guide the Company’s strategy. The culture is particularly visible in the work of the Nominations and Governance Committee and Remuneration Committee with regards to nominations and performance and reward systems. The Senior Independent Director and Company Secretary are available and can be contacted confidentially through a Whistleblowing email address.

Internal Controls

The Directors acknowledge their responsibility for establishing and maintaining the Group’s systems of internal control. These are designed to safeguard the assets of the Group and to ensure the reliability of financial information for both internal and external use.   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 Board reviews, identifies, evaluates and manages the significant risks that face the Group.   Any system of internal control can only provide reasonable, and not absolute, assurance that material financial irregularities will be detected or that risk of failure to achieve business objectives is eliminated. The Directors, having reviewed the effectiveness of the system of internal financial, operational and compliance controls and risk management, consider that the systems of internal control operated effectively throughout the financial year to 30 June 2018 and up to the date that the financial statements were signed.  

Statement of Compliance with Criminal Finances Act 2017

As a Company we value our reputation for ethical behaviour and for financial probity and reliability. We recognise that over and above the commission of any crime, any involvement in the facilitation of tax evasion will also reflect adversely on our image and reputation.

We do not tolerate tax evasion, or the facilitation thereof in any circumstances, whether committed by or facilitated by a client, personnel or associated persons/companies.

We are committed to working towards preventing tax evasion and have rigorous policies and procedures in place to detect and prevent the facilitation of tax evasion offences.

We provide training to appropriate personnel on the requirements of the Criminal Finances Act 2017.

We require all personnel to demonstrate the highest standards of honesty at all times and appropriate disciplinary action will be taken wherever tax evasion or the facilitation thereof by any personnel has been proven.

We undertake due diligence on all associated persons/companies to mitigate the risk of facilitation of tax evasion offences and, as part of our due diligence procedures, all agreements with third parties contain suitable provisions to enable termination of such agreements where associated persons/companies are not complying with the provisions of the Criminal Finances Act 2017.

Conflicts of Interest

The Companies Act 2006 (“the Act”) sets out directors’ general duties and confirms that a director must avoid a situation where he or she has, or can have, a direct or indirect interest that conflicts, or possibly may conflict, with the Company’s interests. The Act allows directors of public companies to authorise conflicts of interest and potential conflicts where appropriate, where the articles of association contain a provision to this effect. The Company’s Articles give the directors authority to approve such situations and to include other provisions to allow conflicts of interest to be similarly dealt with.

The Company has in place procedures for the disclosure and review of any conflicts of interest or potential conflicts that the Directors may have and for the authorisation of such conflicts by the Board. First, only directors who have no interest in the matter being considered will be able to take the relevant decision, and secondly, in taking the decision the directors must act in a way they consider, in good faith, will be most likely to promote the Company’s success. The directors will be able to impose limits or conditions when giving authorisation if they think this is appropriate.

The Company monitors attendance at board meetings and ensures early availability of board papers to protect a Director being in breach of duty if a conflict of interest or potential conflict of interest arises. It is the Board’s intention to confirm annually that the authorisation of conflicts are operated effectively and that procedures have been followed.

Role of External and Internal Advisors

The Board is able to utilise the services and call upon the advice of its external advisers including its Nominated advisor and broker (NOMAD), solicitor, auditor, and Communications advisor, details of which are available here . The Board is also able to call upon the internal advice and assistance of the Company Secretary, Senior Independent Director and supporting Chairman.

Board committees are authorised to obtain, at the Company’s expense, professional advice on any matter within their Terms of Reference and to have access to sufficient resources in order to carry out their duties. Committee members have access to the advice and services of the Company Secretary, Company’s legal advisers and its external auditors. The Remuneration Committee have independent remuneration advisory consultants - details of which are available in the Annual Report, to provide recommendations relating to executive remuneration policy and incentive schemes.

Read about our Advisors

The Corporate Governance information was updated on the 01/10/2018