Corporate Governance
The Directors recognise the value and importance of high standards of corporate governance and have adopted the QCA Corporate Governance Code (the “QCA Code”). At the present time, the Board believes the Group is fully compliant with the QCA Code.
James Wakefield, as non-executive director and Chairman, has assumed responsibility for ensuring that the Group has appropriate corporate governance standards in place and that these requirements are followed and applied within the Group as a whole.
There have been no changes to governance related matters that have occurred during the year.
The sections below set out the ways in which the Group applies the ten principles of the QCA Code in support of the Group’s medium to long-term success.
Last updated 30.05.2024
QCA Principles
1. Establish a strategy and business model that promote long-term value for Shareholders
The Board is responsible to Shareholders for setting the Group’s strategy by: maintaining the policy and decision making process around which the strategy is implemented; ensuring that necessary financial and human resources are in place to meet strategic aims; monitoring performance against key financial and non-financial indicators; providing leadership whilst maintaining the controls for managing risk; overseeing the system of risk management; and setting values and standards in corporate governance matters.
The Board has established a strategy and business model which seek to promote long-term value for Shareholders and the business is focussed on the twin objectives of portfolio development and geographic expansion underpinned by our credentials as a global first responder. In parallel the business will use its balance sheet to accelerate the strategy through licensing, partnerships or acquisitions.
2. Seek to understand and meet Shareholder needs and expectations
The Company has a strong commitment to market communication, with the Directors seeking to be accountable against the stated strategic objectives of the Group. The Company maintains regular contact with Shareholders through publications such as the Annual Report and Accounts, operational updates, regular press announcements made via a regulatory information service and the Company’s website.
The Company is responsive to Shareholder telephone and email enquiries throughout the year and the Board regards the AGM as a particularly important opportunity for Shareholders and members of the Board to meet and exchange views.
The Company receives occasional feedback direct from investors, which is carefully considered by the Board, with appropriate action being taken where the Board believes it is in the interests of Shareholders to do so.
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, clients, suppliers and relevant statutory authorities in its areas of operation.
The Group is committed to maintaining the highest standards of corporate social responsibility in its business activities by: aiming to comply with all applicable laws and regulations, wherever the Group operates; achieve and comply with relevant quality and people management standards; consult with and respond to the concerns of its stakeholders; work towards realising the Group’s mission and vision statements; and behave with honesty and integrity in all the Group’s activities and relationships with others and reject bribery and corruption in all its forms.
The Board recognises the benefits of a diverse workforce, which enables the Group to make better decisions about how to optimise resources and work by eliminating structural and cultural barriers and bias. It allows us to: protect and enhance our reputation by recognising and respecting the needs and interests of diverse stakeholders: deliver strong performance and growth by attracting, engaging and retaining diverse talent; and innovate by drawing on the diversity of perspectives, skills, styles and experience of our employees and stakeholders.
The Group is committed to ensuring that it treats its employees fairly and with dignity. This includes being free from any direct or indirect discrimination, harassment, bullying or other form of victimisation. The Group has policies in place to encourage employees to speak up about any inappropriate practices or behaviour.
The Group believes that having empowered and responsible employees who display sound judgement and awareness of the consequences of their decisions or actions, and who act in an ethical and responsible way, is key to the success of the business.
The operation of a profitable business is a priority and that means investing for growth as well as providing returns to its Shareholders. To achieve this, the Group recognises that it needs to operate in a sustainable manner and therefore has adopted core principles to its business operations, which provide a framework for both managing risk and maintaining its position as a good “corporate citizen”, and also to facilitate the setting of goals to achieve continuous improvement.
The Group encourages feedback from its clients through engagement with individual customers. As a consequence of such feedback, the Group has collaborated with multiple existing and prospective clients to develop and validate new products, workflows and know-how to improve accuracy, testing turnaround times, cost per test, and ultimately deliver improved clinical outcomes for millions of individual patients globally.
The Board is aware of the need to maintain good working relationships with the Group’s key suppliers and receives regular updates from the Executive team on key supply agreements.
Health & Safety
The Group is committed to complying with all relevant health and safety regulations in its operations. As such, all employees are trained on the relevant health & safety procedures upon commencement of employment within the Group. This training includes : emergency procedures; security recommendations; accidents/incidences and first aid; manual handling/lifting and moving; work-related upper limbs disorders (including strains to hands and arms) and display screen equipment/visual display equipment assessment. We also have a section in our employee handbook covering alcohol, drugs and smoking.
The Group is not aware of any orders made in respect of a breach of health and safety regulation during the period.
Environment
The Directors consider that the nature of the Group’s activities is not detrimental to the environment. The Group adopts a systematic approach to its environmental responsibility and has good knowledge of the environmental impacts caused by its operations. The Group aims to meet all relevant environmental standards in its production and products. The Group aims to establish, implement and maintain a risk-based programme to reduce or minimise any negative environmental impact caused by its operations, taking precautionary measures as soon as there is reason to believe that an action could harm the environment.
4. Embed effective risk management, considering both opportunities and threats, throughout the organisation
The Board has overall responsibility for the Group’s system of internal control and for reviewing the effectiveness of internal control to safeguard Shareholders’ investment and the Group’s assets. There is an ongoing process for identifying, evaluating and managing the significant risks the Group faces.
The Board delegates to the Executive team the responsibility for designing, operating and monitoring both the risk management and internal control systems, and the maintenance of effective internal controls within the Group. The Company also has a whistleblowing policy.
The systems and controls in place include policies and procedures, which relate to the maintenance of records that fairly and accurately reflect transactions, correctly evidence and control the Group’s assets, provide reasonable assurance that transactions are recorded as necessary to enable the preparation of financial statements in accordance with International Financial Reporting Standards (“IFRS”), and review and reconcile reported results.
The Group’s key internal controls are:
The Board monitors the activities of the Group through regular Board meetings and it retains responsibility for approving any significant financial expenditure or commitment of resources.
Risk management is focused around the operational areas of the Group. The Group has a dedicated Head of Quality Assurance/Regulatory Affairs, who has extensive operational experience, and particularly strong experience in quality system development and regulatory compliance. They are responsible for a Regulatory team operating across the Group, working at identifying and prioritising operational risks and working with the operational teams to mitigate the identified risks. This work is supported by the risk assessment procedure in place across the Group, with the objective to ensure that risk assessment of the Group’s equipment, procedures and processes is approached consistently across the Group.
With the assistance of the Audit Committee, the Board’s review process is principally based on reviewing regular reports from the Executive team to consider whether significant risks are identified, evaluated, managed and controlled effectively, and whether any significant weaknesses are promptly remedied. The system is designed to manage rather than eliminate the risk of failure to achieve the Company’s objectives, and can only provide reasonable and not absolute assurance against material misstatement or loss. In assessing what constitutes reasonable assurance, the Board considers the materiality of financial and non-financial risks and the relationship between the cost of, and benefit from, internal control systems.
The Board confirms that it has, during the reporting period, reviewed on an ongoing basis the effectiveness of the Company’s system of internal controls including financial, operational and compliance controls and risk management systems and has reviewed insurance provisions. No significant failing or weaknesses have been identified.
Maintain a Dynamic Management Framework
5. Maintain the Board as a well-functioning, balanced team led by the Chair
The Chairman, James Wakefield, is responsible for leadership of the Board, ensuring its effectiveness in all aspects of its role. The Company is 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 Chief Financial Officer / 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.
In between Board meetings, the Executive Directors maintain regular informal contact with the Non-Executive Directors. Whilst the Board retains overall responsibility for, and control of, the Group, day-to-day management of the business is conducted by the Executive Directors, who meet with the senior management team on a weekly basis.
Board of Directors
The Board comprises seven members, of which four are Non-Executive Directors, namely James Wakefield, Jean-Pierre Crinelli, Juliet Thompson and John Brown.
Independence of Directors
The Directors acknowledge the importance of the principles of the QCA Code that recommend that a company should have at least two independent Non-Executive directors. The Board has, therefore, considered and determined that, all Directors are independent of the Executive management and free from any relationship that could materially affect the exercise of their independent judgement. None have beneficial or non-beneficial shareholdings in the Company exceeding 3%.
All the Non-Executive Directors constructively challenge and help develop proposals on strategy and bring strong, independent judgement, knowledge and experience to the Board’s deliberations. The Non-Executive Directors are of sufficient experience and competence that their views carry significant weight in the Board’s decision making and when relevant, would record their concerns about the running of the Company. At each meeting the Board considers Directors’ conflicts of interest.
The Non-Executive Directors have regular opportunities to meet without Executive Directors being present (including time after Board and Committee meetings).
Time commitments
Non-Executive Directors receive a formal appointment letter on joining the Board which identifies the terms and conditions of their appointment.
A potential director candidate (whether an Executive Director or Non-Executive Director) is required to disclose all significant outside commitments prior to their appointment.
The Board is satisfied that both the Chairman and the Non-Executive Directors are able to devote sufficient time to the Company’s business.
If considered appropriate, the Board may authorise the Executive Director to take Non-Executive positions in other companies and organisations, provided the time commitment does not conflict with the Director’s duties to the Company, since such appointments should broaden their experience. The acceptance of appointment to such positions is subject to the approval of the Chairman.
Attendance at Board and Committee meetings
The Directors meet regularly for formal Board meetings to discuss and decide the Group’s business, financial performance and strategic decisions. In addition, and as required, the Board meets more frequently by conference call to discuss and decide on matters considered more urgent, such as those relating to acquisitive growth.
During the reporting period, the Board met in person or via conference calls eight times.
In advance of each meeting of the Directors, the Board is provided with relevant information to ensure that it can properly carry out its role. For each meeting, the Directors generally consider the minutes of the previous meeting and any action points, recent forecast and operations, cash flows and progress on any particular projects.
The attendance of each Director at Board and Committee meetings during the period is set out in the table below. Attendance is expressed as the number of meetings attended/number eligible to attend. Directors’ attendance by invitation at meetings of Committees of which they are not a member is not reflected in the following table.
| Director | Board | Audit Committee | Nomination Committee | Remuneration Committee |
|---|---|---|---|---|
| James Wakefield | 10/10 | 3/3 | ||
| James McCarthy | 10/10 | |||
| Dr Andrew Heath | 9/10 | 3/5 | 3/3 | 3/3 |
| Juliet Thompson | 9/10 | 5/5 | 3/3 | 3/3 |
| Jean-Pierre Crinelli | 9/10 | 5/5 | 3/3 | |
| *Lyn Rees | 4/4 | |||
| *Dr John Brown | 3/4 |
Lyn Rees and John Brown were invited to join the Board effective 8 September 2023 and their appointment ratified at the AGM on 26 October 2023.
6.Ensure that between them, the Directors have the necessary up-to-date experience, skills and capabilities
The Board currently comprises two Executives and five Non-Executive Directors with an appropriate balance of sector, financial and public market skills and experience to deliver the Group’s strategy for the benefit of Shareholders over the medium to long term. The Board considers that the Non-Executive Directors bring a wide experience at a senior level of business operations and strategy and have an expanse of knowledge and expertise gained from other areas of business.
The experience and knowledge of each of the Directors gives them the ability to constructively challenge the strategy and to scrutinise performance. The Board also has access to external advisors where necessary.
New Directors are presented with appropriate levels of background information on the Company, meet the management, visit sites and spend time with the Chairman and other Directors as required. The induction is tailored to meet each new Director’s specific needs.
Throughout their period in office the Directors are continually updated on the Group’s business, the industry and competitive environment in which it operates, corporate social responsibility matters and other changes affecting the Group by written briefings and meetings with senior Executives.
Each Director takes responsibility for maintaining his/her skill set, which includes roles and experience with other boards and organisations as well as attending formal training and seminars. The Executive Directors receive regular and ongoing updates from their professional advisors covering financial, legal, tax and the Euronext Growth Paris and AIM Rules.
The Company Secretary provides information and advice on corporate governance and individual support to Directors on any aspect of their role, particularly supporting the Chairman and those who chair Board Committees. The Company Secretary is also responsible for ensuring that Board procedures are followed, that the Company complies with company law and with the Euronext Growth Paris and AIM Rules.
The Company is a strong supporter of diversity in the boardroom and the Board comprises two female and five male Directors. The Company remains of the opinion that appointments to the Board should be made relative to a number of different criteria including diversity of gender, background and personal attributes, alongside the appropriate skill set, experience and expertise.
7. Evaluate Board performance based on clear and relevant objectives, seeking continuous improvement
Board evaluation
The Board is mindful that it needs to continually monitor and identify ways in which it might improve its performance. The Chairman routinely assesses the performance of the Board and its members and discusses any issues, problems, or shortcomings with the relevant Director(s). Likewise, the Senior Independent Director reviews the performance of the Chairman.
Although it is not an AIM requirement for an external Board appraisal to be undertaken, the Board believes that gaining independent input on a regular basis is best practice. The first of these appraisals was planned to take place in mid-2023 as part of a three-year rolling cycle. However, the acquisition of Yourgene Health changed the Board composition and we decided it was best to postpone the review to a later date. Further proposed changes to the Board means we will have added four new Board members within the last year.
8. Promote a corporate culture that is based on ethical values and behaviours
The Company recognises the importance of investing in its employees to provide foundations and leadership to drive performance further regardless of age, race, religion, gender or sexual orientation or disability. Our core Company values are the building blocks for developing our dynamic and challenging culture within the Group.
These values represent our philosophy which through our people and organisation will help the business deliver our Company goals. The values represent how each of us can contribute to the success of the Company both now and in the future as an individual and also as part of the wider team.
The Group recognises the importance of investing in its employees and, as such, the Group provides opportunities for training and personal development and encourages the involvement of employees in the planning and direction of their work. These values are applied regardless of age, race, religion, gender, sexual orientation or disability.
The Group believes that it has robust policies and procedures for combating bribery and corruption.
The Group recognises that commercial success depends on the full commitment of all its employees and commits to respecting their human rights, to provide them with favourable working conditions that are free from unnecessary risk and to maintain fair and competitive terms and conditions of service at all times. The performance and reward system endorses the desired ethical behaviours across all levels of the Group.
9. Maintain governance structures and processes that are fit for purpose and support good decision-making by the Board
The Chairman, James Wakefield, is responsible for leading the Board, facilitating the effective contribution of all members and ensuring that it operates effectively in the interests of the Shareholders. Lyn Rees, CEO, is responsible for the leadership of the business and implementation of the strategy. By dividing responsibilities in this way, no one individual has unfettered powers of decision-making.
The Board reserves for itself a range of key decisions to ensure that it retains proper direction and control of the Group, and a formal schedule of matters reserved for decision by the Board has been adopted by the Board since admission to AIM; a copy of which can be found at www.novacyt.com. Such matters include business strategy and management, financial reporting (including the approval of the annual budget), Group policies, corporate governance matters, major capital expenditure projects, material acquisitions and divestments and the establishment and monitoring of internal controls. This schedule may be updated by the Board and approved by the Board only. The day-to-day management of the business has been delegated to the CEO and the wider Executive team.
The appropriateness of the Board’s composition and corporate governance structures are reviewed through the ongoing Board evaluation process and on an ad hoc basis by the Chairman together with the other Directors, and these will evolve in parallel with the Group’s objectives, strategy and business model as the Group develops.
Build Trust
10. Communicate how the Company is governed and is performing
The Board has established a Nomination Committee, an Audit Committee and a Remuneration Committee.
The Board places its responsibility to the Company’s Shareholders and setting the Group’s strategy for achieving long-term success as a high priority. The Group’s website is regularly updated with all press releases, AGM and EGM results and investor presentations.
The results of the votes received in relation to the 2023 AGM and EGM are available on the Company’s website. All ordinary resolutions were passed at the 2023 General Assembly. As part of the AGM, the Company also met to hold an Extraordinary General Meeting. The meeting was not deemed quorate due to the minimum number of voting rights under French company law not being present or represented at the meeting. Consequently, the meeting did not take place.
The Board maintains a healthy dialogue with all of its stakeholders. Throughout the course of the year the Board communicates with Shareholders directly on any views, concerns and expectations they may wish to express.
Board Committees
The Board has established an Audit Committee, a Remuneration Committee and a Nomination Committee, the terms of these Committees reflect market practice on AIM. These Committees of the Board have formally delegated responsibilities.
Audit Committee
The Audit Committee is chaired by Juliet Thompson and she has primary responsibility for monitoring the quality of internal controls, ensuring that the financial performance of the Group is properly measured and reported on, and for reviewing reports from the Group’s auditor relating to the Group’s accounting and internal controls, in all cases having due regard to the interests of Shareholders. The Audit Committee meets at least twice a year. Jean-Pierre Crinelli is the other member of the Audit Committee.
Audit Committee’s Terms of Reference is available here to download.
Remuneration Committee
From 1st May 2024, the Remuneration Committee is chaired by Dr. John Brown CBE. His role is to review the performance of the Executive Directors, and determine their terms and conditions of service, including their remuneration, having due regard to the interests of shareholders. The Remuneration Committee meets at least twice a year. Juliet Thompson and Jean-Pierre Crinelli are the other members of the Remuneration Committee.
Remuneration Committee’s Terms of Reference is available here to download.
Nomination Committee
The Nomination Committee is chaired by James Wakefield, and identifies and nominates, for the approval of the Board, candidates to fill Board vacancies as and when they arise. The Nomination Committee meets at least once a year. Dr John Brown, CBE and Juliet Thompson are the other members of the Nomination Committee.
Nomination Committee’s Terms of Reference is available here to download.
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