The Board believes that good governance is fundamental to the successful growth of our business.
Dr Christopher Richards, Nanoco’s Chairman
The Board’s views on corporate governance
The UK Corporate Governance Code embodies core principles of accountability, transparency, probity and a focus on long-term success. As I said in my letter to shareholders in last year’s report, the Board firmly believes that a company governed in accordance with these principles will be a successful and well-managed business.
The Board and its Committees play a central role in the Group’s governance by providing an external and independent perspective on matters material to Nanoco’s stakeholders, and by seeking to ensure that effective internal controls and risk management processes are in place.
The Board also promotes a culture of good governance throughout the Group by creating an environment of openness, transparency, accountability and responsibility.
The members of the Board bring a wide range of skills and experience to the Group. This diverse skill set allows the Board to appropriately challenge and lead the Group’s strategy.
Board focus during the year
During the year, the Board has focused on a number of key areas:
Agreeing strategic priorities with the Executive Directors
This has been particularly important in the current year as we have reemphasised the platform nature of our technology and moved closer to a “dot only” strategy. This seeks to leverage our core skills and IP in the creation of novel nanomaterials for use in a wide range of applications.
Monitoring the performance of the new Executive team structure
Last year we announced a change in the Executive team to combine the roles of COO and CFO. It was important to ensure this year that those changes were effective and that the new member of the Executive team (Brian Tenner) was enhancing the overall performance.
Overall management of change within the Group
With the Group delivering significant operating revenues for the first time, it was critical to ensure that the impact of the necessary changes to transition from an R&D focus to a more operational footing was being properly managed. This included new organisational structures, roles and responsibilities, as well as new systems.
These focus areas were in addition to the normal ongoing responsibilities for approving the annual operating and capital expenditure budgets and any material changes to them. Finally, the Board continues to play an active role in approval of the half-yearly report, trading updates, the preliminary results announcement and the Annual Report and Accounts.
Board Composition And Committees
The board consists of six directors, three of whom are non-executive and are considered by the board to be independent. The board will be responsible for, among other things, strategy, budget, performance, approval of major capital expenditure and the framework of internal controls. The board has established an Audit Committee, Remuneration Committee and a Nomination Committee, with formally delegated duties and responsibilities.
The Audit Committee comprises Alison Fielding and Brendan Cummins. Alison Fielding is Chair, and she brings an exceptional breadth of relevant skills to the Nanoco Board, with her background in chemistry and her extensive commercial, financial and international experience across the technology sector.
The Audit Committee’s primary responsibilities are to review and monitor:
- the annual report and accounts and preliminary and interim results and statements of the Company;
- the appropriateness of accounting policies and the critical judgements and estimates;
- the relevance of developments in accounting and reporting requirements;
- the effectiveness of internal controls and risk management systems;
- the auditor’s plan for the year-end audit;
- the formal engagement terms, performance, objectivity and independence of the auditors including the extent of non-audit work undertaken by the auditors; and
- the audit and non-audit fees of the auditors.
The Remuneration Committee comprises Alison Fielding, who is Chair of the Committee, and Brendan Cummins. The Committee is responsible for establishing a formal and transparent procedure for developing policy on executive remuneration and for setting the remuneration of individual directors.
The Nominations Committee comprises Christopher Richards, who is Chairman of the Committee, Alison Fielding and Brendan Cummins. Under normal circumstances, the Nominations Committee will meet not less than twice a year to assist the Board in discharging its responsibilities relating to the composition and make-up of the Board and any Committees of the Board. It is also responsible for periodically reviewing the Board’s structure and identifying potential candidates to be appointed as Directors or Committee members as the need may arise. The Nominations Committee is responsible for evaluating the balance of skills, knowledge and experience and the size, structure and composition of the Board and Committees of the Board, retirements and appointments of additional and replacement Directors and Committee members, and makes appropriate recommendations to the Board on such matters.
The board is responsible for establishing and maintaining the Group’s system of internal controls. Internal control systems are designed to meet the particular needs of the group, and to address the risks to which it is exposed. By their nature, internal control systems are designed to manage rather than eliminate risk, and can provide only reasonable and not absolute assurance against material misstatement or loss. As stated, primary responsibility for monitoring the quality of internal controls has been delegated to the Audit Committee.
The directors seek to visit institutional shareholders at least twice a year. In addition, all shareholders are welcome to attend the Company’s annual general meeting, where there is an opportunity to question the directors as part of the agenda, or more informally after the meeting. Communication with shareholders is seen as an important part of the board’s responsibilities, and care is taken to ensure that all price sensitive information is made available to all shareholders at the same time.