The Directors recognise the value and importance of high standards of corporate governance and formally adopted the Quoted Companies Alliance (“QCA”) Corporate Governance Code for the Annual Report in 2018 (published May 2019) in line with the London Stock Exchange’s changes to the AIM Rules. The last formal review of Corporate Governance took place in Q1 2021.
Read more about our QCA code compliance here.
The Directors are committed to ensuring that the Company fully complies with the requirements of the QCA Code and to maintaining high standards of corporate governance. To ensure compliance, the Board agreed on a work plan for full implementation of the QCA Code at its meeting in July 2018. One area of particular focus was Board effectiveness.
To view committee membership please view the Board of Directors page.
During the year the Audit Committee had two Non-executive Director members: Bob Head (Chairman) and Mark Reilly. The Group’s external auditors and the Chief Financial Officer are invited to attend Audit Committee meetings. Following Mark Reilly’s resignation on 24 February 2021 Kelsey Lynn Skinner was appointed to the Audit Committee.
The Audit Committee has responsibility for, among other things, monitoring the financial integrity of the financial statements of the Group and the involvement of the Group’s auditors in that process. It focuses on compliance with accounting policies and ensuring that an effective system of audit and financial control is maintained, including considering the scope of the annual audit, the extent of the non-audit work undertaken by the external auditors and advising on the appointment of the external auditors. The ultimate responsibility for reviewing and approving the Annual Report and Accounts and the half-yearly reports remains with the Board.
The Audit Committee meets at appropriate times in the financial reporting and audit cycle, and at least twice a year. The terms of reference of the Audit Committee cover issues such as membership and the frequency of meetings, together with requirements of any quorum for, and the right to attend, meetings. The responsibilities of the Audit Committee include the following: external audit, financial reporting, internal controls and risk management. The terms of reference also set out the authority of the Audit Committee to carry out its responsibilities. Any non-audit services that are to be provided by the external auditors are reviewed in order to safeguard auditor objectivity and independence.
The external auditors have the opportunity during Audit Committee meetings to meet privately with Committee members in the absence of Executive management. The Group continued to update its risk register during 2020, with the most recent register being compiled in Q4 2020. This register was presented for consideration, review and amendment at the Audit Committee. Not all risks can be mitigated or would be expensive to do so. The approach is very much one to optimise the net risk. Following approval, the risk register was recommended to and adopted by the full Board.
During 2020, the Audit Committee reviewed and debated the report of the Company’s external auditors and requested appropriate follow-up by the Chief Financial Officer. The Committee also reviewed the terms of appointment of the external auditors and their proposed audit approach for the 2020 audit (undertaken in 2021).
At each meeting the Audit Committee reviews the progress to clear items noted by the auditors in their management letters. The Committee has discussed the risk management model. At this stage of development the Committee considers the three lines of defence model premature. However, this will be kept under review.
In the second half of 2020 the Financial Reporting Council wrote to the Company to inform it that the Company’s 2019 Annual Report and Accounts had been reviewed with a particular focus on the implementation of IFRS 15. More detail on this process and the findings of the review are reported under the Audit Committee Report on pages 42 to 44 of this Annual Report.
During the year the Remuneration Committee had three Non-executive Director members. It is chaired by Bob Head and the other Committee members were Alastair Kilgour and Mark Reilly. Following Mark Reilly’s resignation as a Director on 24 February 2021 Kelsey Lynn Skinner was appointed as the third Committee member.
The Company Chairman has a standing right to attend any Remuneration Committee meetings. The Committee meets periodically formally and informally as required and is responsible for overseeing the policy regarding staff and senior executive remuneration and for approving the remuneration packages for the Group’s Executive Directors. It is also responsible for reviewing incentive schemes for the Group as a whole and reviewing performance against KPIs and approving payments under the Company short-term incentive scheme. During 2020, the Remuneration Committee met to agree and sign off the incentive payments recommended by Executive management for the Company, agree and approve base salarychanges, agree and approve share option/long-term incentive scheme awards, and review and approve new packages prior to offer for other senior staff appointments (senior staff are defined as those with starting salaries of more than £100,000).
Due to the size and state of development of the Company, the Directors do not consider it necessary to set up a separate Nomination Committee. Appointments are considered by the Board as a whole. In that sense the Board is the Nomination Committee.
Risk management and internal controls
The Directors are responsible for the Group’s system of internal control and for reviewing its effectiveness; the role of management is to implement Board policies on risk management and control. The Group’s system of internal control is designed to manage, rather than eliminate, the risk of failure to achieve the Group’s business objectives and can only provide reasonable, and not absolute, assurance against material misstatement or loss. The Group operates a series of controls to meet its needs. These controls include, but are not limited to, a clearly defined organisational structure, written policies, a comprehensive annual strategic planning and budgeting process, and detailed monthly reporting. The Group prepares quarterly forecasts, which are reviewed and approved by the Board as part of its normal responsibilities. The quarterly forecasting process facilitates the Board’s understanding of the Group’s overall position throughout the year. The Audit Committee receives reports from management and the external auditors concerning the system of internal control and any material control weaknesses.
During 2020, the Company maintained and reviewed its comprehensive risk register with input from all areas of the Group. This was reviewed and discussed by the Audit Committee and ultimately adopted by the full Board. It was agreed that this risk register will be updated quarterly and presented to the Audit Committee. Any significant risk issues will be referred to the Board for consideration. The Board has considered the need for an internal audit function, but has concluded that, at this stage in the Group’s development, the internal control systems in place are appropriate for the size and complexity of the Group.
The Board has continued to review the system of internal controls periodically and has not identified, nor been informed of, any instances of control failings or significant weakness.