Corporate Governance

The Board meets bi-annually to review and approve the strategy for the Company. The strategic plan and business model are reviewed by the senior leadership team on an ongoing basis with relevant operational and management updates being reported to demonstrate delivery and progress. Decisions of the Board are made in line with the strategic plan and business model for the Group. The Company’s purpose is to focus on developing innovative drugs for diabetes and other cardiometabolic diseases that deliver meaningful improvements in patient outcomes, and the strategy is to concentrate resources on two core product areas: diabetes and the oral development of peptides, both of which are high growth multi-billion-dollar markets where our technology gives us an edge. Key challenges in executing the strategy, and how these are being addressed, are reflected in the principal risks and uncertainties, which are set out on pages 18 to 19.

The Company’s culture is founded on its purpose of transforming patient lives and is guided by the core values: passionate innovation, accountable ownership, smart & dynamic, bold & courageous, and respect & trust. These values shape decisions and behaviours across the Group and support the Company’s purpose, strategy and business model.

The Board, supported by the CEO and the senior leadership team, recognises its role in establishing ethical values and behaviours and as such sets the tone from the top displaying visible commitment to these values, as well as ensuring communication and accountability for the conduct of the Company. The Board seeks to make sure that responsible business practice is fully integrated into the management of all its operations and into the culture of all parts of its business. It believes that the consistent adoption of responsible business practice is essential for operational excellence, which in turn is expected to ensure the delivery of its core objectives of bringing innovative new drugs to market.

The Board remains committed to transparent and ongoing engagement with shareholders. During the year, engagement took place through:

• Formal reporting: publication of the Annual Report and Accounts, interim and full-year results, and regular business updates.
• Engagement with significant shareholders: the Chair, Chief Executive Officer and Chief Financial Officer held numerous meetings with institutional investors and analysts, as well as attending multiple investor and sector conferences where shareholders met in a networking environment.
• Annual General Meeting (AGM): formal shareholder presentation, with shareholders provided the opportunity to ask questions and engage directly with the Board.

Formal feedback as to the views of shareholders during shareholder meetings is provided by the Company’s broker and NOMAD and discussion of this feedback is a regular item on the Board’s agenda. Key topics discussed with shareholders included execution of the Group’s strategy, realisation of value from its innovative products, financing options, and Board development. In response to feedback from shareholders, the Board sharpened its focus on gaining optimal value from AT278 and in exploring and then progressing with royalty financing as an alternative to equity financing to support AT278 development and partnerships during 2025. The Chair remained available for discussions with shareholders as required, and feedback from engagement activities was reported to the Board to inform its decision-making.

The Board values the opinions of key stakeholders in the business and regularly seeks to ensure that the views of its employees, suppliers, customers, patients and partners are known and where relevant to the success of our business they are acted upon. In addition, whilst Arecor does not have direct contact with patients the company aims through its innovations to improve outcomes for patients and the healthcare professionals who look after them.

The Company recognises its responsibility to promote its success for the benefit of its stakeholders and understands that the business has a responsibility towards its shareholders, employees, patients, partners, customers, suppliers and to the local community. The Board seeks to maintain and improve its relationships with these groups and regularly obtains, and acts on, feedback as to how best it can maintain and improve its interactions. During the year, this included initiatives focussed on employee wellbeing and training.

The Board has assessed the relevance of environmental, social and governance (“ESG”) matters to the Group’s purpose, strategy, business model and current operations. At present, given the nature and size of its operations, ESG factors are not deemed to have a significant impact on the Group.

The Board will continue to monitor ESG and CSR developments and will report proportionately, reassessing their significance as expectations and regulatory requirements evolve.

The Audit and Risk Committee, on behalf of the Board, is responsible for overseeing management’s activities in identifying, evaluating and managing the risks facing the Group and recording them on the Group risk register, and overseeing and reviewing the effectiveness of the Company’s system of internal controls. The system is designed to manage, rather than eliminate, the risk of failing to achieve the execution of the Company’s strategic objectives and business model. The Board monitors financial controls through the setting and approval of an annual budget and the regular review of management accounts.

The Board recognises that sound risk management and internal controls are essential to delivering the Group’s strategy and fulfilling its corporate purpose. Risk management is embedded in decision-making to ensure that the Group can pursue its objectives while managing potential threats effectively.

The Board has identified the principal risks facing the Group, which are set out in the Strategic Report on pages 18 to 19. Risk management is embedded into decision-making through:

• A structured review process to identify, assess, and monitor both current and emerging risks across the business;
• Allocation of clear ownership of risks to the senior leadership team, with regular reporting to the Board; and
• Consideration of risk and internal control implications as part of investment, operational, and strategic decisions.

The Board’s risk governance framework also encompasses non-financial considerations, ensuring that any factors which could affect the Group’s future prospects, resilience, and ability to deliver its strategy are identified and monitored. This framework supports the Board’s assessment of the Group’s viability over the medium term.

Based on the review undertaken since the last Annual Report, the Board is satisfied that the Group’s risk management and internal control framework is effective and provides a sound basis for the delivery of its strategic objectives and corporate purpose.

The purpose of the Board is to ensure that the business is managed for the long-term benefit of all shareholders, whilst at the same time having regard for employees, customers, suppliers and our impact on the environment and the patient communities in which Arecor operates. The full Board is responsible and accountable to the shareholders for the management and success of Arecor and to provide effective controls to assess and manage risks in the Company.

There is a formal schedule of matters specifically reserved for the Board that includes matters relating to strategy and management; structure and capital; financial reporting and controls; internal controls; contracts; communications; board membership and other appointments; delegation of authorities and corporate governance.

Key details of each Director’s skills, experience, external appointments and Committee memberships are set out on pages 23 to 24. The Board has a collective responsibility and legal obligation to promote the interests of the Group and to define the corporate governance framework. At 31 December 2025, the Board comprised six directors: the Chair, Chief Executive Officer, the Chief Financial Officer and three Non-Executive Directors. In accordance with the principles of the QCA Code, Simon Ormiston, Jeremy Morgan, and Sam Fazeli are regarded as independent. Andrew Richards has served on the Board for more than nine years and is not considered independent.

Board and Committee attendance is set out on pages 31 and 32.

The Board believes it has an appropriate mix of experience, skills, and capabilities to inform and oversee the execution of the Group’s strategy for the benefit of shareholders over the medium to long term. The collective competencies of the Board include sector and innovation knowledge, financial and accounting expertise, as well as risk management, governance, commercial and operational experience.

The QCA code states that it is healthy for membership of the Board to be periodically refreshed: during 2025 two new Directors were appointed to the Board and two existing Directors departed. In line with QCA code recommendations, all Directors are put forward for re-election at the Company’s AGM. The Nomination Committee is also seeking to nominate a further Non-Executive Director with experience of either the US Medical Device industry or international business development.

Succession planning is considered at every Nomination Committee meeting and throughout the year succession has been discussed in individual meetings between Board members and the Chair.

The composition of the Board of Directors in relation to diversity is set out in the Nomination Committee Report.

The Board is supported by its principal committees, which are the Audit and Risk Committee, Remuneration Committee and Nomination Committee. During the year the Board and its committees did not seek external advice on any significant matters, with all decisions and oversight undertaken using the Board’s own experience, skills and judgement. Each committee has written terms of reference that set out specific authorities and duties.

The Board has established effective processes to sustain its governance structures and works to ensure Directors maintain the skills and knowledge necessary to discharge their responsibilities effectively.

Professional development is supported through regular updates from the Company Secretary, as well as external advisers where appropriate, including the Nominated Advisor. During the year, Directors received various updates including on the QCA Code. Directors with professional qualifications are also required to continue their independent professional development.

The Chief Financial Officer and Company Secretary acts as secretary to the Board and the majority of the Committees, advising on governance and ensuring effective information flow. All Directors are able to take independent professional advice in the furtherance of their duties.

Updates on employment law, accounting and auditing standards and other regulatory matters were provided by external advisers and members of the senior leadership team.

The Board has established Committees, including Audit and Risk, Remuneration and Nomination, details of which are set out on pages 34 to 45. These Committees are supported by independent advisers as required. The Board annual assessment specifically identifies aspects of governance that could be improved and also assesses along with the Nomination Committee discussions any additional skills or expertise that would benefit the Board and the Company.

Through these arrangements, the Board ensures it has the resources and advice necessary to remain effective and well informed.

The Board is clear that it benefits from continually monitoring its performance and identifying ways in which it can improve its effectiveness and its impact on the success of the Company.

Evaluation of the Board and the contributions of individual Directors is carried out annually through an internally managed annual assessment process plus feedback from individual directors in one-on-one sessions sought by the Chair. The output of the annual review, along with suggested actions and areas for improvement is collated and circulated to all Board members before being openly discussed, with agreed actions.

During the past year, the Board assessed that it continues to operate effectively, with strong engagement and constructive challenge from all members. A review of actioned outcomes of the past 4 years of annual assessments has identified a significant number of impactful implemented changes. Recent implemented actions have included:- enhanced Board engagement on specific transactions, improved agenda setting to focus on strategic issues and updated structuring of Board papers and financial reports. No in-year events triggered a separate review.

The Board has concluded that the current evaluation process is robust, effective and cost effective with an updated Board assessment questionnaire covering areas for improvement identified in 2025. It was concluded that an externally facilitated board review was not necessary at the current time.

The Board is supported by a Remuneration Committee that is formed of independent Non-Executive Directors, and which establishes appropriate policies aligned to long-term value creation.

The Company’s Remuneration Policy is disclosed in its Annual Report as part of the Remuneration Committee’s report. The Committee reviews the Remuneration Policy of the Company on an annual basis to ensure that it is aligned to the Company’s purpose and strategy, provides incentive and performance-related reward across the business, including that of the senior leadership team, and motivates the Arecor team in the creation of long-term shareholder value. Further details are set out in the Remuneration Committee Report on pages 34 to 40 of this Annual Report. The remuneration report and remuneration policy are put to an advisory vote at the AGM each year.

The Board ensures that all stakeholders relevant to the business are actively engaged with through the most suitable communication channel, and in the most appropriate manner. This includes making sure that the business as a whole upholds its values and monitors behaviour for acceptability.

The Company recognises that meaningful engagement with its shareholders is integral to the continued success of the Group and the Company has actively engaged with both larger and smaller shareholders through meetings, presentations and roadshows. All shareholders are encouraged to attend the AGM.

The Board considers that the Annual Report and the Interim Report published at the half-year play an important part in presenting all shareholders with an assessment of the Company’s position and prospects.

All RNS press releases are published on the Company’s website. The Annual General Meeting is an opportunity for shareholders to meet and discuss the Company’s business with the Directors. Within the Annual Report, a report from each of the Committees of the Board is included which explains the role of each Committee, the activity it has undertaken throughout the year, its delegated responsibility and how it interacts with the Board.