The board of e-therapeutics plc (the “Company”) is responsible for the Company’s corporate governance policies and recognises the importance of high standards of integrity. The Company has adopted the Quoted Companies Alliance Code for Small & Mid-sized Quoted Companies 2018 (the “QCA Code”). This statement sets out how the Company complies with the 10 principles of the QCA Code.
We set out below how we comply with the QCA Code, and further information can be found in our 2020 Annual Report and Accounts.
1. Establish a strategy and business model which promote long-term value for shareholders
We bring to the biotechnology and pharmaceutical industries the power to discover new and better drugs in a more efficient and effective way - our proprietary network-driven approach is disruptive to the conventional pharmaceutical R&D model.
Our strategy is designed to increase growth and improve our long-term financial performance, with our key long-term objectives being:
a) To invest in our people and our technologies
b) To develop our own assets
c) To deliver commercial deal
We also remain committed to understanding, analysing and addressing risk and identifying procedures to minimise risk impact.
The Executive Committee, which is made up of the Executive Chairman and certain key members of senior staff, are accountable for identifyign procedures to minimise risk and the day-to-day implementation of such procedures throughout every level of the business, reporting into the Board in an ongoing process overseen by the Audit Committee.
2. Seek to understand and meet shareholder needs and expectations
The Board is keen to promote greater awareness of the Company, and recent Company announcements may be found here.
Responsibility for shareholder liaison ultimately lies with the Executive Chairman.
The Board communicates with shareholders regularly throughout the year, seeking to build on a mutual understanding of objectives and providing information in a balanced and understandable way.
The Board is always willing to discuss long-term issues with shareholders and obtain their views. The Annual General Meeting offers an opportunity for all shareholders to ask questions of the Board.
The Non-Executive Directors are available to discuss any matter stakeholders might wish to raise and thwill attend meetings with investors and analysts if required.
At every Board meeting, the Executive Chairman provides a summary of the content of any engagement he has had with investors to ensure that major shareholders’ views are communicated to the Board as a whole. The Board is also provided with brokers’ and analysts’ reports on a regular basis. This process enables the Non-Executive Directors to be kept informed of major shareholders’ opinions on strategy and governance, and for them to understand any issues or concerns.
The Company maintains an email address and telephone number which investors may use to contact the Company which, together with the Company’s address, are prominently displayed here.
3. Take into account wider stakeholder and social responsibilities and their implications for long-term success
In addition to its shareholders, the Company believes its main stakeholder groups are its employees and suppliers.
The long-term success of the Company relies upon the knowledge and dedication of the staff.
Our staff give us the knowledge that feeds into our network biology expertise and our core technological capabilities, and that knowledge flows through our business model to directly create value for our shareholders. Accordingly, the long-term success of the Company relies upon the knowledge and dedication of our staff, as reflected in our strategic objectives above. The Board, therefore, understands the importance of employee engagement. This is not only by offering a beneficial remuneration package and professional development support, but in engaging employees with the strategy of the Group. The Board benefits from the fact that e-therapeutics has a relatively small number of employees and, therefore, the Directors have the opportunity to know every individual employee and promote a culture of openness. We want each employee to understand that they play a vital role in the business and that talent recruitment and retention is both a key risk and a key opportunity to the Group.
The Board understands that the inherent uncertainty around the long-term outlook of an R&D company can impact moral and addresses this by being honest about the Group’s prospects, emphasising that the contribution of each individual counts and is recognised. Employees are encouraged to provide any feedback on any issues, whether it be to a member of the Executive Committee, the Executive Chairman, a Non-Executive Director or to our independent HR consultant who is available to offer confidential support and advice.
We engage in open discussions with key suppliers and expert advisors to review progress made on internal discovery programmes, platform technology and corporate functions to ensure that we remain aligned with our strategic objectives. The aim is that such stakeholder engagement ensures that the work undertaken fits with the Company's long-term success. An important part of our culture is to establish and maintain relationships of trust.
We approach all of our commercial collaborations with honesty and transparency. A successful working relationship is beneficial to all parties involved as successful projects can lead to further deals that would add value to both our shareholders and our customers, either through advancing as asset further through the drug discovery process or by applying our expertise and technologies, such as our NDD or GAINs technologies, to a different area of biology or in a different way to the same area of biology.
Health and safety
We are committed to high standards of health and safety at work. The Company seeks to meet legal requirements aimed at providing a healthy and secure working environment to all employees and understands that successful health and safety management involves integrating sound principles and practice into its day-to-day management arrangements and requires the collaborative effort of all employees. All employees are positively encouraged to be involved in consultation and communication on health and safety matters that affect their work.
4. Embed effective risk management. considering both opportunities and threats, throughout the organisation
The Board has overall responsibility for the Company’s internal control systems and for monitoring their effectiveness. The Board is committed to understanding, analysing and addressing risk. The Executive Committee is accountable for identifying procedures to minimise risk impact and implementing these at every level of the business, reporting to the Board in an ongoing process overseen by the Audit Committee. Risks are not only assessed by a bottom-up approach, but also examined from a top-down perspective which is closely aligned with the Company’s strategy.
Business Continuity Management strategy, including business impact analysis, business continuity plan, IT disaster recovery plan and a categorised and ranked risk register is reviewed at least annually by the Executive Committee and the Board and is distributed to all employees.
As part of the risk management process the Company engages with a number of external experts including the areas of: Health and Safety, Legal (including IP), IT Security and Auditing. When expert reports are received by the Company they are made available to the Board and the report recommendations are discussed.
The Company’s system of risk management and internal control is designed to safeguard the Company’s assets and to ensure the reliability of information within the business, ensuring that opportunities as well as risks are identified and that the Board has the correct information to drive shareholder value.
5. Maintain the Board as a well-functioning, balanced team led by the chair
Ali Mortazavi, as Executive Chairman, is responsible for organising the business of the Board, ensuring its effectiveness and setting its agenda in consultation with the other Directors. Ali facilitates the effective contribution of the Directors and ensures that they receive accurate, timely and clear information and that they communicate effectively with shareholders. An Executive Committee has been set up to include Ali and senior management, and the Committee as a whole has responsibility for the day-to-day business of the Company. The Directors are satisfied that the current Board is sufficiently resourced to discharge its governance obligations on behalf of all stakeholders.
To enable the Board to discharge its duties, all Directors receive appropriate and timely information. Briefing papers are distributed to all Directors in advance of Board and Committee meetings. All Directors have access to the advice and services of the Company Secretary, who is responsible for ensuring that the Board procedures are followed, and that applicable rules and regulations are complied with. In addition, procedures are in place to enable the Directors to obtain independent professional advice in the furtherance of their duties, if necessary, at the Company’s expense.
The Board is responsible to the shareholders and sets the Company’s strategy for achieving long-term success. It is ultimately responsible for the management, governance, controls, risk management, direction and performance of the Company. The Directors’ attendance records for the year ended 31 January 2020 at Board and Committee meetings are set out below.
|Maximum possible attendance||Meetings attended||Remuneration||Audit||Considered independent|
|Ali Mortazavu||Executive Chairman||-||-||No||No||No|
|Iain Ross||Non-Exec Chairman||8||8||No||Yes (until resignation on 10 February 2020)||No|
|Professor Trevor Jones||Non-Exec Director||8||8||Yes||Yes||Yes|
|Christine Soden||Non-Exec Director||8||8||Yes (until resignation on 10 February 2020)||Yes (until resignation on 10 February 2020)||Yes|
|Michael Bretherton||Non-Exec Director||-||-||Yes (from appointment on 10 February 2020)||Yes (from appointment on 10 February 2020)||Yes|
6. Ensure that between them the Directors have the necessary up-to-date experience, skills and capabilities
The Board currently comprises one Executive and two Non-Executive Directors with an appropriate balance of sector, financial and public market skills and experience. The individual Directors skills and experience are set out below. The experience and knowledge of each of the Directors gives them the ability to constructively challenge the Company’s strategy and to scrutinise performance. Directors may also take independent professional advice at the Company’s expense where necessary in the performance of their duties. The Directors relevant skills and experience are set out below.
|Name||Position||Committee membership||Relevant skills and experience|
|Ali Mortazavi||Executive Chairman||No||No||Read the biographies of our Board here|
|Professor Trevor Jones||Non-Exec Director||Yes||Yes||Read the biographies of our Board here|
|Michael Bretherton||Non-Exec Director||Yes||Yes||Read the biographies of our Board here|
Throughout their period in office the Directors are continually updated on the Company’s business, the competitive and regulatory environments in which it operates, corporate social responsibility matters and other changes affecting the Company and the industry it operates in as a whole by written briefings and meetings with senior executives. Directors are also advised on appointment of their legal and other duties and obligations as a Director of a listed company, both in writing and in face-to-face meetings with the Company Secretary. They are reminded of these duties and they are also updated on changes to the legal and governance requirements of the Company and upon themselves as Directors.
Resources are made available to the Board to undertake regular and ad hoc conferences, seminars and training courses as part of their professional and personal development.
7. Evaluate board performance based on clear and relevant objectives, seeking continuous improvement
The Board is mindful that it needs to continually monitor and identify ways in which it might improve its performance and recognises that board evaluation is a useful tool for enhancing a board’s effectiveness.
Any performance-related remuneration is determined by the Remuneration Committee. The Non-Executive Directors are responsible for the evaluation of Ali Mortazavi's performance as Executive Chairman.
In conducting the formal annual evaluation, the Board undertakes a rigorous assessment of its own performance, balance of skills, experience, independence, diversity (including gender diversity) and other factors relevant to its effectiveness (and also of that of its Committees) and the performance of its individual Directors.
The Board commenced a formal evaluation of its performance in early 2020 but, in view of the restructuring of the Board on 11 February 2020, the process was not concluded. A formal evaluation of the current Board and its Committee will be undertaken in due course.
With regard to the evaluation of the Board itself, the discussions focus in particular on:
Board roles and responsibilities;
- the Board’s contribution to developing and testing strategy and to risk management;
- the composition of the Board (i.e. mix of skills, experience and expertise);
- the effectiveness of internal and external relationships and communication;
- the effectiveness in anticipating and responding to challenges and crises;
- the effectiveness of Board Committees; and
- the flexibility of the Board in dealing with a wide range of
The evaluation of the performance of individual Directors encompasses:
- preparation and meeting attendance;
- preparedness to understand key Company issues;
- quality of contribution at Board and Committee meetings;
- contribution to the development of strategy and risk management;
- use of previous experience to contribute to key issues and strategy;
- effectiveness in challenging assumptions, in maintaining own views and opinions and in following up main areas of concern;
- building successful relationships with other Board members, management and advisers; and
- communication with and influence on other Board members, management and key
In addition to the above, the Executive Chairman is evaluated on his:
- effective leadership of the Board;
- management of relationships and communications with shareholders;
- identification of development needs of individual Directors with a view to enhancing the overall effectiveness of the Board as a team;
- promotion of the highest standards of corporate governance;
- management of Board meetings and ensuring effective implementation of Board decisions.
The Board as a whole is responsible for succession planning of the executive leadership team and for the appointment and re-appointment of any Non-Executive Directors if and when necessary. Succession planning is reviewed on an ongoing basis alongside the capability of the senior management and Directors.
8. Promote a corporate culture that is based on ethical values and behaviours
The Company adopts a policy of equal opportunities and diversity in the recruitment and engagement of staff, as well as during the course of their employment. It endeavours to promote the best use of its human resources on the basis of individual skills and experience, matched against those required for the work to be performed.
The Company recognises the importance of investing in its employees and, as such, it provides opportunities for training and personal development and encourages the involvement of employees in the planning and direction of their work.
The Company also recognises that commercial success depends on the full commitment of all its employees, and commits to respecting their human rights, to providing them with favourable working conditions that are free from unnecessary risk, and to maintaining fair and competitive terms and conditions of service at all times. These values are applied regardless of age, race, religion, gender, sexual orientation or disability.
The benefits of diversity in the workforce are also recognised and, whilst the Company will continue to make all appointments based on the best candidate for the role, it is acknowledged that it is not just gender diversity that supports the strength and future success of the business, and the Company remains focused on achieving the right level of diversity whether related to ethnicity, gender, creed or culture.
We understand that the inherent uncertainty around the long-term outlook of an R&D company can impact morale and we address this by being honest about the Group's prospects and emphasising that the contribution of each individual counts and is recognised.
9. Maintain governance structures and processes that are fit for purpose and support good decision-making by the Board
The Executive Chairman, Ali Mortazavi, is responsible for leadership of the Board, ensuring its effectiveness on all aspects of its role, setting its agenda and ensuring that the Directors receive accurate, timely and clear information. He also ensures effective communication with shareholders and facilitates the effective contribution of Non-Executive Directors. Since Ray Barlow stepped down as Chief Executive Officer on 11 February 2020, there is no Chief Executive in place. An Executive Committee has been set up between senior management and Ali Mortazavi, which is responsible for the operational management of the Company and the implementation of Board strategy and policy. Sarah Clare, as Company Secretary, is responsible for health and safety matters of the Company and acts as the Company’s Data Protection Officer.
There is a formal schedule of matters reserved for decision by the Board in place which enables the Board to provide leadership and ensure effectiveness, a copy of which may be found here. Such matters include business strategy and management, financial reporting (including the approval of the annual budget), Company policies, corporate governance matters, major capital expenditure projects, material acquisitions and divestments and the establishment and monitoring of internal controls.
The Board has established Audit and Remuneration Committees. Given the size of the Board a nomination committee has not been established. New appointments of Directors are considered by the Board as a whole. The appointment of senior executives is considered by the Board upon the recommendation of the Executive Directors.
The Audit Committee’s primary responsibilities are to review the financial statements, to ensure that there are suitable internal control and risk management systems in place, to consider the appointment of the external auditor and their independence and to review audit effectiveness. The Audit Committee consists entirely of Non-Executive Directors, the majority of whom are independent. Michael Bretherton, a Chartered Accountant, chairs the Audit Committee. The other member of the Committee is Trevor Jones. With the consent of the Committee chairman, meetings are attended by representatives of the Company’s independent auditor. Time is set aside for discussions between the Non-Executive Directors and the independent auditor in private. The Audit Committee’s terms of reference are available here.
The Remuneration Committee makes recommendations to the Board on strategy and policy for executive remuneration. It also sets the remuneration packages for the Executive Chairman and is also responsible for the granting of options under the Company’s share option schemes to Executive Directors. The Executive Director does no take part in discussions regarding his own remuneration. The Remuneration Committee considers that inclusion of fluctuating emoluments, which include performance bonuses, is an important element of the Company’s employment of the Executive Director and senior managers. The remuneration of the Non-Executive Directors is set by the Board, led by the Executive Directors. The Chairman of the Remuneration Committee is Trevor Jones and the other member is Christine Soden. The Remuneration Committee’s terms of reference are available here.
The corporate governance framework adopted is appropriate for the relatively small Company that e-therapeutics’ is, at a pre-revenue generating stage of development. The Board considers that this framework can grow with the Company, yet it is considered premature to plan for an evolution of the governance framework at this stage. If the Company undertakes significant transactions that would require growth, then the Board will consider the implication of this on the corporate governance structure at that point in time.
10. Communicate how the Company is governed and is performing
The Board has established an Audit Committee and a Remuneration Committee.
The results of the proxy votes received in relation to the 2019 Annual General Meeting are available here. No resolutions had a significant proportion (>20%) of votes cast against them at that meeting.
The Board has a healthy dialogue with all of its stakeholders. Throughout the course of the financial year the Board communicates with shareholders to seek their views, concerns and expectations.
The following range of corporate information is available in the Investors’ section of the Company’s website:
- Share price information
- Reports, Results and Presentations, including documents circulated
- AIM Rule 26
- Shareholder information, including significant shareholdings, advisors and research
- Regulatory announcements
- Corporate Governance
Last updated: 13 March 2020