As Chairman I am responsible for the leadership of the board and for ensuring the board’s effectiveness. I also have the responsibility for conducting board meetings and making sure that there is effective and timely communication to our shareholders. In my role as chair I also provide advice, counsel and support to the executive.
I am committed to maintaining high standards of corporate governance throughout the Group. Whilst not previously required to comply with the UK Corporate Governance Code, the board has always drawn upon available best practice including those aspects of that Code which the board considered to be relevant to the Group. Now, with the introduction of the new AIM Rule 26 requiring the Group to follow a recognised corporate code of governance, the board after due consideration has agreed to follow the 2018 QCA Corporate Governance Code. It is our view that the QCA Code is the one best suited to SDI’s business, aims and ambitions.
I am therefore pleased to present below SDI’s corporate governance statement which sets out how we apply the 2018 QCA Code of Governance.
Ken Ford, Chairman
27th September 2018
Corporate Governance Statement
We have set out the ten principles from the QCA Code below and under each explain how we implement those principles in practice.
1) A strategy and business model which promotes long-term value for shareholders
The board has a shared view of SDI’s purpose, business model and strategy. Our vision is to develop our existing technologies and to grow through strategic acquisitions. We believe that acquiring companies which complement the capabilities within SDI will promote organic growth and give us the opportunity to explore challenges and new markets within the fast-evolving science and technology sectors.
More information about our strategy and business model can be found in our 2018 Annual Report, available here.
2) Understanding and meeting shareholder needs and expectations
Responsibility for shareholder liaison rests with our CEO supported by our CFO. However all our board members attach a high degree of importance to providing shareholders with clear and transparent information on the Group’s activities, strategy and financial position. Details of all shareholder communications are provided here.
The Board holds meetings with institutional investors and other large shareholders following the release of the interim and financial results.
We regard our annual general meeting as a good opportunity to engage directly with shareholders through a question and answer session. We provide the market and shareholders with the results of AGM and GM voting via RNS and other communication channels including this website.
SDI also participates from time to time in investor shows offering smaller and private investors insight into our business and also access to our management team.
3) Taking account of wider stakeholder and social responsibilities and their implications for long-term success
SDI’s vision involves encouraging our subsidiary businesses to work together to help advance medical and scientific knowledge, increase the technical capabilities of industry and ultimately improve the standard of living of the population as a whole.
As well as that overarching purpose, the Board recognises that long term business success relies on good relations with a range of different stakeholder groups both internal and external such as staff, suppliers and customers.
We also seek to understand the impact our business activities have on the communities in which we operate and consider our corporate social responsibilities and how these issues are integrated in to our long-term strategy.
We encourage feedback from all our stakeholders and where appropriate use that feedback to shape our future direction e.g new methods or product offerings.
4) Embed effective risk management, considering both opportunities and threats, throughout the organisation
We have addressed the principal risks we face by the appointment of an experienced executive board supported by experienced non-executive directors and a team of appropriately qualified professional advisers.
Our executive directors are closely involved in the day to day operations of the Group and of our operating subsidiaries and report to the board in detail at regular intervals. Relevant papers are distributed to members of the board in advance of board and committee meetings. Detailed financial reports of the Group’s financial performance are also provided on a regular basis.
Our directors’ knowledge and understanding of the Group is further enhanced by on-site visits to operational units; directors also receive presentations from senior management on the performance and strategies of their business units.
Directors also have the contractual right to take independent professional advice on any matter – at SDI’s expense – if they deem it necessary in order to carry out their responsibilities.
Our Annual Report sets out some of the principle risks and uncertainties faced by the SDI Group.
5) Maintaining the board as a well-functioning balanced team led by the chair
Our board consists of two executive directors (CEO and CFO) together with three non-executive directors. We believe this to be a good balance for a business of our size. The board is chaired by Ken Ford, a business person with 36 years of City experience and who was formerly CEO of an investment bank, Isabel Napper is a former commercial lawyer with 34 years’ experience advising technology businesses and David Tilston has 30 years’ experience in finance functions within public companies. Due to their working backgrounds and professional experience the non-executive directors provide a solid foundation for good corporate governance for the Group. They are also independent of management and ensure that no individual or group dominates the board’s decision-making process.
To ensure the board functions well, our non-executive directors are requested to attend eleven board and board committee meetings per year. They are also required to be available at other times between meetings when necessary for face-to-face and phone/web meetings. We also hold an annual strategy meeting at which directors’ attendance is mandatory. Each non-executive director continues to demonstrate that they have sufficient time to devote to our business.
To support the board we have put in place Audit, Remuneration and Nomination Committees all of which have agreed formal terms of reference set out here.
A summary of information about these committees is set out below:-
- This committee consists of three members, all of whom are independent non-executive directors. It is currently led by David Tilston, a highly experienced chartered accountant.
- The Committee meets at least three times a year to consider the scope of the annual audit and the interim financial statements and to assess the effectiveness of the Group’s system of internal controls.
- It also reviews the results of the external audit, its cost effectiveness and the objectives of the auditor.
- This committee has three independent non-executive directors and is currently led by Isabel Napper, a commercial lawyer.
- It meets at least once a year to determine policy on senior executive remuneration, to make detailed recommendations to the board regarding the remuneration packages of the executive directors and to consider awards under the Group’s option schemes.
- Our CEO is consulted on remuneration packages and policy but does not attend discussions regarding his own package.
- This committee also consists of three independent non-executive Directors. It meets at least once a year and at other times as required. This committee is also led by Isabel Napper
- The committee focuses on evaluating the board of directors, examining the skills and characteristics that are needed in board candidates, and on succession issues.
6) Ensuring the directors have the necessary up-to-date experience skills and capabilities
Our directors have been chosen because of the skills and experience they offer. Of our five directors one is female and four are male. All have listed company experience and one was the CEO of an investment bank, three are accountants, one a lawyer.
Our directors attend industry and regulatory learning and networking events in order to keep up to date with relevant developments.
Full biographical details of our directors are set out here.
7) Evaluate board performance based on clear and relevant objectives, seeking continuous improvement
We undertake annual monitoring of personal and corporate performance. The responsibility for assessing and monitoring the performance of the executive directors lies with the independent non-executive directors.
Agreed personal objectives and targets are set each year for the executive directors and performance measured against these metrics.
Going forward we intend to institute a more formal board evaluation process which will be carried out in the current financial year. The process will be led by our chair and will require directors to answer a set of questions setting out their views on the effectiveness of the board and on the value of their board contributions. The results of that assessment process will be used by the chair to facilitate discussions with each individual director and with the board as a whole. It is intended that the questions will be based around issues arising from the ten principles of the QCA Code.
8) Promote a corporate culture that is based on ethical values and behaviours
We believe it is the responsibility of the board and senior leaders to ensure that the culture of our organisation is based on ethical values and behaviours. As well as leading by example, our ethics-based culture is promoted through our business behaviours, decisions, processes and operations, as well as the management of the risk of ethical misconduct.
In addition, we have mechanisms to support high ethical standards – e.g for raising concerns and reporting misconduct. We also aim to include ethical criteria in recruitment and in performance appraisals, and have detailed policies relating to important issues such as such as discrimination, harassment, bribery and corruption, and conflicts of interest. We expect all our staff to adhere to these high standards.
We are keen to invest in our people not just our companies. With that in mind we seek to make our workplaces a better environment and to encourage all our staff to undergo relevant training and development.
9) Maintain governance structures and processes that are fit for purpose and support good decision making by the board
Our non-executive directors scrutinise the performance of management against the Group’s objectives and also monitor the reporting of performance.
The board has considered mechanisms by which the business and the financial risks facing the Group are managed and reported to the board. The principal business and financial risks have been identified and control procedures implemented. The board acknowledges its responsibility for reviewing the effectiveness of the systems that are in place to manage risk.
To achieve this aim the board has a formal schedule of matters specifically reserved to it for decisions including the approval of annual and interim results and recommendation of dividends, approval of annual budgets, approval of larger capital expenditure and investment proposals, review of the overall system of internal control and risk management and review of corporate governance arrangements.
Other responsibilities are delegated to the Board Committees, being the Audit and Remuneration committees, which as explained in section 5 above operate within clearly defined terms of reference, and which report back to the Board. More information on those terms of reference is provided here.
10) Communicate how the company is governed and is performing by maintaining a dialogue with shareholders and other relevant stakeholders
We have set out in section 2 above how we maintain a regular dialogue with our shareholders including welcoming all shareholders to our AGMs.
Further information and the resolutions put to a vote at annual general meetings can be found in our Annual Reports and here on our website.
This information was last reviewed and updated on 27th September 2018.