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The Board is responsible for the long-term success of the Group and is committed to ensuring that it provides leadership to the business as a whole, having regard to the views of its shareholders and other stakeholders. It is also responsible for setting the Group’s business strategy, values and standards in its oversight of implementation plans and management of risk. The Board believes that good corporate governance is an integral part of the mid and long-term success of the Group and continues to apply the principles of the QCA Code.
As Chair, I lead the Board, which is collectively responsible for the long-term success of the Group. My role includes ensuring that we have a Board which contains the right balance of skills, sets the business strategy and provides oversight of its successful execution by the business.
As directors we understand the importance of corporate governance and have implemented frameworks which reflect the principles of the Corporate Governance Code for small and mid-sized companies issued by the QCA (“QCA Code”) to the extent that is appropriate for a business of the Group’s size and stage of development.
We are responsible for ensuring that the strategy, operations, financial reporting and management of risk are underpinned by processes which promote a culture of engagement, transparency and responsibility throughout the Group. Our business processes and practices seek to ensure that our expected standards of governance, corporate values and behaviour are consistently applied.
These standards are reflected in how we conduct our business and engage with our wide-ranging stakeholder base which includes our employees, partners, suppliers and the communities in which we do business. You can read more throughout this report about how we engaged with these groups during the period.
The Board’s role includes ensuring that our strategic objectives are delivered. Our board composition provides relevant experience to meet the Group’s challenges and opportunities as a public company, together with extensive product development and commercial expertise.
The Board comprises seven Directors including a Non-Executive Chair, two full-time Executive Directors and four Non-Executive Directors, of which three are considered to be independent. The board structure ensures that no individual (or a small group of individuals) can dominate the Board’s decision making.
The Board meets regularly to review the Group’s progress towards strategic goals and to approve corporate plans and actions, budgets and financial reporting. The Board is supported by committees which fulfil specific functions and have clear terms of reference of defined duties and responsibilities.
The Audit & Risk Committee and Remuneration Committee meet at least three times per year and otherwise as required. Both committees are chaired by independent Non-Executive Directors. The Nomination Committee meet each year and as required.
When the need arises, separate committees may also be set up by the Board to consider specific issues.
Andrew Richards
Chair
Last updated: 27 April 2023
Establish a strategy and business model which promote long-term value for shareholders
The Group is a revenue-generating, commercially focused business with the potential to derive significant future revenue from existing and future partnering opportunities. The Group’s strategy includes developing an in-house portfolio of enhanced proprietary products to optimal value inflexion points prior to partnering with major healthcare companies under a revenue-generating licence model with the potential for the Group to receive royalties and significant milestone payments.
The Group also operates under technology licensing arrangements when developing enhanced reformulations of its partners’ products, with the potential for milestone and royalty payments.
The Group’s proprietary product development can be divided into diabetes and specialty hospital care. In addition, the Group also develops novel enhanced formulations of its partners’ biological products that include biosimilars, biological products and vaccines, which are derived from the Group’s formulation development and technology licensing programmes and are referred to as Technology Partnerships.
The Board holds at least one session each year dedicated to strategy, including input from the leadership team and external advisers as appropriate.
Seek to understand and meet shareholder needs and expectations
The Board is committed to open and ongoing engagement with shareholders through:
• annual report and accounts;
• interim and full-year results announcements;
• trading updates;
• the Annual General Meeting; and
• the Company’s website, in particular, the Investor Centre pages.
Regular meetings are held between the Chief Executive Officer, Chief Financial Officer and institutional investors and analysts to ensure that the Company’s strategy, financial and business development activities are communicated effectively. The Chair is also available for discussions with shareholders as and when appropriate.
The Chief Financial Officer as Company Secretary is the primary contact for shareholders. There is a dedicated e-mail address for shareholder questions and comments.
Board members attend the Annual General Meeting (‘AGM’) and are available to answer questions raised by shareholders.
Take into account wider stakeholder and social responsibilities and their implications for long-term success
The Board recognises that the long-term success of the Company is reliant upon the efforts of all stakeholders.
The Arecor team is key to the business and regular company-wide meetings ensure that all staff are aware of the direction of the business, upcoming milestones and progress against business objectives.
The Group draws upon a range of different resources and relationships which includes working collaboratively in cross functional teams.
External relationships reflect our business objective of building and maintaining a network of relationships with pharma industry partners, academia, key opinion leaders, clinicians, and regulators. These relationships are underpinned by processes and systems to ensure that there is appropriate oversight and engagement.
Embed effective risk management, considering both opportunities and threats, throughout the organisation
The Board is responsible for establishing the system of internal control used by the Group and reviewing its effectiveness. This system is intended to understand and manage risk which could potentially impact the business. The Board also monitors expenditure and information used in decision making. Established controls include:
• Monthly management accounts issued to the Board
• Detailed board reports of progress against company goals
• Annual budget and rolling forecasts reviewed and approved by the Directors
• Authority limits approved by the Board, with matters reserved for the Board including approval of significant contracts and overall project expenditure
• Ongoing review of the IP strategy including status of IP applications and grants
In addition to its other roles and responsibilities, the Audit & Risk Committee is responsible to the Board for monitoring the effectiveness of internal controls and authorities across the Group. This includes a corporate risk register which sets out risks and mitigation steps in the normal course of business.
Maintain the board as a well-functioning, balanced team led by the chair
The Group is governed through its Board of Directors, comprising the Chair, Chief Executive Officer, Chief Financial Officer and four Non-Executive Directors. The names of the current Directors together with their biographical details, skills, experience and other directorships are set out on here.
All Directors are subject to election by the shareholders at the general meeting immediately following their appointment to the Board and at re-election intervals of not more than three years.
The Board believes that all Non-Executive Directors together with the Non-Executive Chair bring an independent judgement to bear. No Non-Executive Director has been an employee of the Group, has had a material relationship with the Group, receives remuneration other than Directors fees, has close family ties with any of the Group’s advisers, Directors or senior employees, or holds cross-directorships. The Non-Executive Chair and one of the Non-Executive directors have served on the board of directors for more than nine years and therefore do not meet the definition of independent in the QCA Code.
The Board is aware of the other commitments of its Directors and changes to these commitments are reported to the Board. The Group has procedures in place to deal with conflicts of interest, the Directors do not participate in any vote in which they have a conflict of interest and do not contribute to discussions involving such interests.
The Board comprises seven directors: Andrew Richards (Chair), Sam Fazeli, Alan Smith, Christine Soden and Jeremy Morgan as Non-Executive Directors; Sarah Howell (Chief Executive Officer) and Susan Lowther (Chief Financial Officer) as Executive Directors.
Christine Soden, Jeremy Morgan and Sam Fazeli are considered by the Board to be independent Non-Executive Directors and were selected with the objective of bringing experience and independent judgement. Andrew Richards, Sam Fazeli and Alan Smith bring extensive knowledge of the business, the sector it operates in and experience of public markets to the Board.
The Board is also supported by the Audit and Risk Committee, Nomination Committee and Remuneration Committee.
The Board meets regularly and at least eight times a year.
Ensure that between them the directors have the necessary up-to-date experience, skills and capabilities
The Board composition is to bring to bear a balance of skills, experience, independence and knowledge of the business. The board structure provides a breadth and depth of skills and experience to deliver the business strategy of the Group for the benefit of shareholders over the medium to long-term.
The Directors believe that the Board has an appropriate balance of sector, financial, and public markets skills and experience. Board members are kept up to date on a regular basis on key issues and developments pertaining to the Company as well as their responsibilities as members of the Board.
The Board are supported by an experienced Leadership Team which the Directors believe is appropriate for the Group’s size. During the year Shafiq Choudhary joined the Leadership Team representing the Tetris Pharma Ltd products and team.
The Board reviews the corporate governance framework to ensure it appropriately meets the needs of the business and the development of the Group.
Evaluate board performance based on clear and relevant objectives, seeking continuous improvement
On appointment each Director takes part in an induction programme in which they receive information about the Group and the role of the Board including matters reserved for its decision, the terms and reference of the Board and committees. They receive guidance about the responsibilities of AIM company directors as set out in the AIM Rules for Companies and relevant aspects of the Market Abuse Regulation legislation.
The Directors can access independent professional advice at the Group’s expense when it is considered necessary as part of meeting their responsibilities.
Evaluation of the Board and individual Directors is carried out to determine effectiveness and performance of the Board and the Directors’ continued independence and capacity. The criteria against which effectiveness is considered is aligned to the strategy and business plans of the Company.
The annual evaluation of Board performance is co-ordinated and led by the Chair. The process includes peer appraisal, completion of questionnaires and discussions. Succession planning for the Board is monitored and considered during the annual evaluation of Board performance.
Promote a corporate culture that is based on ethical values and behaviours
The Board recognises that decisions about business strategy and risk impact the culture of the Group which in turn will impact the performance of the Company. The tone and culture set by the Board is disseminated through the Company and influences behaviour.
The Board’s assessment of the culture within the Company is that there is respect for individuals, open dialogue and a commitment to building and maintaining stakeholder relationships.
The Group takes a zero-tolerance approach to bribery and corruption and is committed to acting professionally, fairly and with integrity in all business dealings and relationships wherever they occur. The Anti-Corruption and bribery policy provides clear guidance about recognising and handling potential bribery and corruption issues. This policy and approach applies to all persons working for the Group or on its behalf in any capacity, including employees at all levels, Directors, officers, consultants and agents.
Employees are at the heart of the Group’s corporate culture. Our employees know that they can make a positive contribution to people’s lives in the development of new treatments in areas of high unmet need. This is a strong motivator and drive for change, which is reflected in our core Company values of Ambition, Innovation, Creativity, Collaboration, Transparency and Integrity.
Maintain governance structures and processes that are fit for purpose and support good decision making by the Board
The ultimate authority for all aspects of the Company’s activities rests with the Board with the respective responsibilities of the Non-Executive Chair and Chief Executive Officer as delegated by the Board.
Non-Executive Chair – key responsibilities
• Responsible for the effectiveness and leadership of the Board
• Builds and maintains an effective and complementary Board of Directors
• Sets the agenda, style and tone of Board discussions
• Promotes a culture of openness and debate by facilitating the effective contribution of Non-Executive Directors
• Ensures active engagement in meetings, through effective relationships between the Executive and the Non-Executive Directors.
Chief Executive Officer – key responsibilities
• Is responsible for day-to-day management of the Group
• Develops the Group’s objectives and strategy for Board review and approval
• Creates and recommends to the Board an annual business plan, including an annual budget
• Delivers the annual business plan
• Executes the agreed Group strategy and other agreed objectives
Non- Executive Directors – key responsibilities
• Evaluate and appraise the performance of the Executive Directors and Leadership Team against agreed objectives
• Participate in the defining and developing the Group’s strategy
• Monitor the financial information, risk management and controls processes of the Group
• Meet together without the Executive Directors present
• Formulate Executive Director remuneration and succession planning
Board Committees
The Board’s principal committees are the Audit and Risk Committee, Remuneration Committee.
Each committee has written terms of reference that set out specific authorities and duties.
As required, separate committees are set up by the Board to consider specific issues.
Audit and Risk Committee
The Audit and Risk Committee assists the Board in discharging its responsibilities of corporate governance, financial reporting, external and internal audits and controls. This includes, reviewing the Company’s annual and interim financial statements, reviewing and monitoring the extent of the non-audit services undertaken by external auditors, and reviewing the effectiveness of the Company’s internal controls and risk management systems. The ultimate responsibility for reviewing and approving the annual report and accounts and the half yearly reports rests with the Board.
The Audit and Risk Committee meet not less than three times a year and otherwise as required.
Membership: Christine Soden, Jeremy Morgan and Sam Fazeli.
Committee Chair: Christine Soden.
Remuneration Committee
The Remuneration Committee is responsible for executive remuneration and the remuneration packages of individual Directors. This includes agreeing with the Board the framework for remuneration of the Executive Directors and members of the Leadership Team. The Committee is responsible for determining the total individual remuneration packages of each Director including, where appropriate, bonuses, incentive payments and share options. No Director is involved in any decision as to their own remuneration.
The Remuneration Committee meet not less than three times a year and otherwise as required.
Membership: Jeremy Morgan, Christine Soden and Sam Fazeli.
Committee Chair: Jeremy Morgan.
Nomination Committee
The Nomination Committee is responsible for the structure and composition of the Board and its committees, taking into account the balance of skills and diversity. This includes consideration of the appointment and succession planning of Executive and Non-Executive Directors.
The Nomination Committee meet each year and as required.
Membership: Andrew Richards, Christine Soden, Jeremy Morgan, Alan Smith and Sam Fazeli.
Committee Chair: Andrew Richards.
Board meetings
The Board meets at least eight times each year or any other time deemed necessary for the good management of the business. They meet at a location agreed between the Board members. Face-to-face meetings at the Company’s premises at Chesterford Research Park occur where practicable.
The Executive Directors attend for part of Committee meetings at the invitation of the Chair.
Communicate how the company is governed and is performing by maintaining a dialogue with shareholders and other relevant stakeholders
The Board is committed to open and ongoing engagement with shareholders through:
• annual report and accounts;
• interim and full-year results announcements;
• trading updates;
• the Annual General Meeting; and
• the Company’s website, in particular, the Investor Centre pages.
Regular meetings are held between the Chief Executive Officer, Chief Financial Officer and institutional investors and analysts to ensure that the Company’s strategy, financial and business development activities are communicated effectively. The Chair is also available for discussions with shareholders as and when appropriate.
The Chief Financial Officer as Company Secretary is the primary contact for shareholders. There is a dedicated e-mail address for shareholder questions and comments.
Board members attend the Annual General Meeting (‘AGM’) and are available to answer questions raised by shareholders.
Environmental and Social Governance
The Group recognises the importance of Environmental and Social Governance (ESG) matters.
ESG is at the heart of our vision to enhance existing therapeutic medicines to enable healthier lives. Our technologies and approach use known ingredients and simple manufacturing techniques. Where possible, we source our materials and services locally and manage our supply chain relationships in accordance with our health, safety and environmental objectives.
The Group’s product strategy has a strong social focus as we are aiming to develop and market products which improve the quality of life of people living with diabetes. We are developing rapid acting insulins to enable better control and management of the disease and facilitate the use of miniaturised insulin pumps.
Ogluo® the primary focus of the Tetris Pharma team, is a ready-to-use glucagon auto-injector pen to treat severe hypoglycaemia, a serious emergency condition for people living with Type 1 or Type 2 diabetes, and so meets a real medical need. This forms part of our speciality hospital franchise where we are developing ready-to-administer and ready-to-use injectable medicines.
The Group is committed to the equal treatment of all employees and applicants regardless of their gender, marital status, sexual orientation, age, race, colour, nationality, ethnic origin, disability, or religious or philosophical beliefs. The Group’s responsibilities as a company to our employees and the expectations of employees as representatives of the Company are set out in the Company Handbook. The Handbook is provided to all employees as part of their induction training. Employment policies are regularly reviewed and updated to ensure that they remain up to date and relevant. All employees are given appropriate training to enable them to fully and safely perform their roles and to develop within the organisation.
The terms of reference of our Health and Safety committee, which is run by our employees, include maintaining a safe and healthy working environment and ensure, so far as is reasonably practicable, that the Group is fulfilling its legal responsibilities. The terms of reference of our Social Committee, which is also run by employees, includes identifying opportunities to support our local community and charities. Many of our employees work as volunteers in our local area.
We remain committed behaving responsibly and introducing more formal processes to demonstrate our commitment to managing our environmental obligation and creating a sustainable environment. We work with suppliers who share our commitment to recycling and zero landfill. Where possible, we prioritise the sourcing our raw materials from suppliers recycling services. Employees are part of this commitment and identify ways to improve our environmental footprint.