Governance

Governance

DEEPMATTER GROUP PLC

CORPORATE GOVERNANCE STATEMENT

All members of the Company's board of directors (the "Board") believe strongly in the value and importance of good corporate governance and in their accountability to all of DeepMatter Group Plc's ("DeepMatter" or the "Group") stakeholders, including its shareholders, employees, customers, suppliers, advisers and regulators. Robust corporate governance improves performance and mitigates risk and therefore is an important factor in achieving the medium to long term success of the Group. In the statement which follows, the Board explains its approach to corporate governance and how the Board and its committees operate.

Changes to the AIM Rules for Companies (the "AIM Rules"), first announced in 30 March 2018, require AIM quoted companies to apply a recognised corporate governance code from 28 September 2018. DeepMatter has chosen to adhere to the Quoted Company Alliance's Corporate Governance Code for Small and Mid-Size Quoted Companies (revised in April 2018) ("QCA Code") to meet the new requirements of AIM Rule 26.

The QCA Code is constructed around ten broad principles and a set of disclosures. The QCA has stated what it considers to be appropriate arrangements for growing companies and asks companies to provide an explanation about how they are meeting the principles through the prescribed disclosures. The Board has considered how it applies each principle to the extent that it judges these to be appropriate in the circumstances, and below we provide an explanation of the approach taken in relation to each.

The Chairman has the overall responsibility for implementing an appropriate corporate governance regime at the Group.

The following paragraphs set out DeepMatter's compliance with the 10 principles of the QCA Code:-

1. Establish a strategy and business model which promote long-term value for shareholders

The business model of the Group is the digitization of chemistry. As part of this process, DeepMatter has developed and operates DigitalGlassware™, a big data analysis platform focused on enabling reproducibility in chemistry. DigitalGlassware™ comprises an easy-to-use software interface and sensor array to collect, store and process data generated from chemical experiments.

The key challenges and risks faced by the Group are set out on page 5 of the Company's Annual Report and Accounts for the year ended 31 December 2017 and include early stage operations, technology and development, commercial success and market acceptance, intellectual property and the attraction and retention of key employees.

The Board believes that it has the right team and strategy in place, appropriate to the current size and complexity of the Group, in order to deliver the strategic aims of the Group over the medium to long term.

2. Seek to understand and meet shareholder needs and expectations

The Board attaches great importance to providing shareholders with clear and transparent information on the Group's activities, strategy and financial position.

Responsibility for investor relations rests with the Chairman and Chief Executive, supported by the Board.

The Board has made efforts to ensure effective engagement with both institutional and private shareholders and believes that it has been is successful in doing so. The Board encourages shareholders to attend the Company's AGM as a forum to present to and meet with investors and ensures that timely and useful information is included on the Group's website to keep shareholders abreast of corporate developments.

The Group is committed to communicating openly with its shareholders to ensure that its strategy and performance are clearly understood. We communicate with shareholders through the interim results statement and the Annual Report and Accounts, trading updates, shareholder circulars, announcements as required by regulation and the annual general meeting (AGM). A range of corporate information (including all DeepMatter announcements) is also available to all stakeholders on our website www.deepmatter.io

The Board has ultimate responsibility for reviewing and approving the Company's Annual Report and Accounts and has considered and endorsed the arrangements for their preparation, under the guidance of its Audit Committee. The Directors confirm that the Company's Annual Report and Accounts, taken as a whole, are fair, balanced and understandable and provides the information necessary for shareholders and investors to assess the Group's position and performance, business model and strategy.

The Group maintains a dedicated email address, enquiries@deepmatter.io, which investors can use to contact the Group, and which is prominently displayed on the Group's website together with the Group's address. The size of the Group does not warrant a dedicated investor relations department, however, all communications received are reviewed and responded to promptly.

3. Take into account wider stakeholder and social responsibilities and their implications for long term success

Long term success relies upon good relations with a range of different stakeholder groups, both internal (staff) and external (suppliers, customers, regulators and others). The Board aims to understand the needs and expectations of each of the stakeholder groups and engages with them in the manner set out below:

Stakeholder Reason for engagement How we engage
Staff Good two-way communication with staff is a key requirement for high levels of engagement, fostering a culture of innovation and helping deliver the Group's operations. Regular staff meetings.
Flat management structure and clear reporting lines.
Attendance of key staff at certain Board meetings.
Periodic engagement surveys.
Customers and users Our success and competitive advantage are dependent on fulfilling customer and user requirements, particularly in relation to quality of service, simplicity and speed of use. Seek feedback on services and software systems.
Obtain fulfilment metrics to measure performance and encourage requests for service enhancements.
Suppliers Rely on suppliers for a variety of goods and services that are incorporated into our DigitalGlassware™ platform. Provide feedback on the quality of goods and services supplied.
We operate systems to ensure that supplier invoices are processed and paid properly.
Advisers The Group's key advisers and suppliers, including the NOMAD, legal advisers and registrar, assist the Group in its operations. The Group's key advisers attend Board meetings where considered appropriate.
Input regarding important transactions and public information is run past key advisers prior to release.
DeepMatter has regular contact with its advisers and makes them aware of any relevant developments at the Group as deemed appropriate.
Regulators The Group recognises the need for regulation and rules for AIM quoted companies in order to maintain markets in which investors can trust and ensure that the Company acts in accordance with best practice. All appropriate DeepMatter releases and disclosures are filed with and notified to the relevant authorities as required.
Any enquiries from regulators are responded to in a complete and timely fashion.
Shareholders The Group wishes to engage with investors and potential investors in order to keep them informed of the Group's results and progress and ensure a congruence of objectives between the shareholders and the Board. Maintenance of the Group's website and responding to any shareholder enquiries.
Periodic investor and pertinent information and news releases.
Publishing and posting of the Annual and half-year reports and circulars.
Engagement with shareholders at the AGM.

4. Embed effective risk management, considering both opportunities and threats, throughout the organisation

The Board has prepared a risk register for the Group that identifies key risks in the areas of operational strategy, financial, regulatory, environmental, research and development and the wider macro-economic considerations. All directors are provided with a copy of this register, which is reviewed periodically and updated as and when necessary. The Board considers the risk register when assessing the current status of the Group and its operations as well as the intended strategic aims and progress of the Group.

The Board has reviewed the potential impact of Brexit on the Company and its operations under various scenarios. In summary, the Company's operations and key subcontractors are based in the UK and the majority of its sales are priced in GBP to customers globally. Apart from the effect of any potential macro economic impact, the Board does not currently anticipate that there will be a significant impact of Brexit on the Company's operations or financial performance. The Board will keep this matter under review, as more information becomes available.

Within the scope of the annual audit of the Company's financial statements, specific financial risks are evaluated in detail, including in relation to liquidity, credit, foreign currency, interest rates and external political and economic risks.

During the year, the Company's Audit Committee, which comprises of David Cleevely (Chair) and Laurence Ede, has continued to focus on the audit of the financial statements and the effectiveness of the controls throughout the Group.

Stakeholders are encouraged to report, anonymously or otherwise, any security risks or threats they perceive in the operations of the business. On receipt of any such information, the Board shall assess and take remedial action as appropriate in the circumstance.

In accordance with the AIM Rules, the Group has adopted a Share Dealing Code in relation to the securities of DeepMatter Group Plc. As such all Board members, PDMRs, and their families are required to gain clearance prior to any dealings in DeepMatter's shares. The Group's staff have been briefed in relation to their responsibilities in this area.

5. Maintain the Board as a well-functioning, balanced team led by the Chair

The members of the Board have a collective responsibility and legal obligation to promote the interests of the Group and are collectively responsible for defining corporate governance arrangements. Ultimate responsibility for the quality of, and approach to, corporate governance lies with the Chair of the Board.

The Board consists of six directors of whom two are executive and four are non-executive. The Board is supported by two committees: audit and remuneration. The Board does not consider that it is of a size at present to require a separate nominations committee, and all members of the Board would be involved in the appointment of any new Directors. The Board may appoint additional directors as its business expands.

All Directors are required to attend Board and relevant Board Committee meetings and, where possible, the AGM each year and to be available at other times as required for face-to-face and telephone meetings with the executive team and investors as reasonable.

Meetings held in the 12 months to 25 September 2018 and the attendance of the Directors are summarised below:

 

Board
(11)
Audit
(1)
Remuneration
(3)
Total Attendance
Executive Directors          
Mark Warne 11/11     11/11 100%
Michael Bretherton 9/11     9/11 82%
Independent Non-Executive Directors / Committee Members          
James Ede-Golightly 11/11   3/3 14/14 100%
David Cleevely 8/11 1/1   8/12 67%
Lee Cronin 11/11   3/3 14/14 100%
Laurence Ede 11/11 1/1 3/3 15/15 100%

The Board has a schedule of regular business, financial and operational matters, and each Board committee ensures that all areas for which the Board has responsibility are addressed and reviewed during the course of the year. The Chief Executive is responsible for ensuring that, to inform decision-making, the Directors receive accurate, sufficient and timely information. Board and committee papers are compiled and circulated to Directors prior to meetings. Minutes of each meeting are provided to the Board and every Director is aware of the right to have any concerns minuted and to seek independent advice at the Group's expense where appropriate.

6. Ensure that between them the directors have the necessary up-to-date experience, skills and capabilities

All members of the Board bring significant and varied sector experience, and many have board and public markets experience. The Board's members have chemical, technological, financial, regulatory, and venture stage operational experience and one member, Michael Bretherton, is a chartered accountant. The Board believes that its blend of relevant experience, skills and personal qualities and capabilities is sufficient to enable it to successfully execute its current strategy. Directors attend seminars and other regulatory and trade events as considered appropriate to ensure that their knowledge remains current.

The Board comprises the following directors who are all considered suitable for their roles given their backgrounds and experience as set out on page 8 of the Company's Annual Report and Accounts for the year ended 31 December 2017:

Mark Warne, Chief Executive

Term of office: Appointed as a Non-Executive Director in September 2015, subsequently took on the role of Executive Chairman in April 2017 and appointed Chief Executive in July 2018.

Current external appointments: hVivo Plc, Gemonics plc, Ixico Plc, Capsant Neurotechnologies Limited.

Time commitment: Full time.

Michael Bretherton, Finance Director

Term of office: Appointed as a Non-Executive Director in June 2015 and subsequently took on the role of Finance Director in April 2017.

Current external appointments: Sarossa Plc, ORA Limited, Blake Holdings Limited.

Time commitment: 3 to 4 days per month.

David Cleevely, Independent Non-Executive Director

Term of office: Appointed as a Non-Executive Director in November 2017. He is Chair of the Audit Committee.

Current external appointments: BDL Property LLP, Bocca Di Lupo Restaurant, Byard Art, Cambridge Communications Systems Limited, Cambridge Network, Cambridge RF Systems Limited, Cambridge Science Centre, Cambridge Wireless, Cleevely & Partners, Code Club World, Controllis Limited, Raspberry Pi Foundation, Raspberry Pi Trading, Vico Restaurant Limited, The Cleevely Family Charitable Trust.

Time commitment: 1 to 2 days per month.

Lee Cronin, Founding Scientific Non-Executive Director

Term of office: Appointed as a Non-Executive Director in July 2014. He is a member of the Remuneration Committee.

Current external appointments: None.

Time commitment: 1 to 2 days per month.

James Ede-Golightly, Non-Executive Chairman

Term of office: Joined as Non-Executive Director on 11 September 2015 and was subsequently appointed Non-Executive Chairman in July 2018. He is a member of the Remuneration Committee.

Current external appointments: Oxford Advanced Surfaces Limited, Oxehealth Limited, Gulfsands Petroleum Plc, Quoram Limited, East Balkan Properties Plc (IoM), Sarossa Plc (Jersey), Serendipity Capital Ltd (Guernsey), Dunheved Ltd (Guernsey)

Time commitment: 1 to 2 days per month.

Laurence Ede, Independent Non-Executive Director

Term of office: Laurence Ede was appointed as a Non-Executive Director in April 2017. He is Chair of the Remuneration Committee and is also a member of the Audit Committee.

Current external appointments: Ubiquigent Limited, Manor Road Lettings Limited

Time commitment: 1 to 2 days per month

7. Evaluate board performance based on clear and relevant objectives, seeking continuous improvement

Whilst the Company does not currently have an externally facilitated appraisal process for Directors, the Chairman engages with all Directors to ensure that their individual contribution is relevant and effective and that they are committed members of the Board.

Furthermore, at the end of each Board meeting the Chairman and Non-Executive Directors meet to identify areas to provide constructive feedback to the Executive Directors as part of continuous improvement. This process of evaluation will be kept under review and the Board will consider whether formal evaluations are appropriate in the future.

8. Promote a corporate culture that is based on ethical values and behaviours

Our long-term growth is underpinned by our core values, which are considered to be:

  1. We place our customer users first and ensure that we understand the current and future needs of those who use our products and services, and always strive to exceed their expectations.
  2. We are committed to innovation in what we do and how we do it, by being creative, pragmatic and different.
  3. We focus on creating an environment where people want to work and give their best and feel empowered to make a difference.
  4. We expect all our directors and employees to respect each other, to act honourably, to follow the law and to conduct business with the highest professional and ethical standards.

We aim for the culture of the Group to be characterised by these values. The Board believes that a culture that is based on these values provides competitive advantage and is consistent with fulfilment of the Group's mission and execution of its strategy.

An open culture of discussion is fostered and, given the size of the Group, it is not considered necessary to monitor stakeholder satisfaction through the use of satisfaction or engagement surveys at this stage, other than for staff engagement surveys which are undertaken periodically.

9. Maintain governance structures and processes that are fit for purpose and support good decision-making by the Board

The Board provides strategic leadership for the Group and operates within the scope of our chosen corporate governance framework. Its purpose is to ensure the delivery of long-term shareholder value, which involves setting the culture, values and practices that operate throughout the business, and defining the strategic goals that the Group implements in its business plans. The Board defines a series of matters reserved for its decision and has approved terms of reference for its Audit and Remuneration Committees to which certain responsibilities are delegated. The chair of each committee reports to the Board on the activities of that committee.

The Audit Committee monitors the integrity of financial statements, oversees risk management and control and reviews external auditor independence.

The Remuneration Committee sets and reviews the compensation of all employees.

The Non-Executive Chairman has overall responsibility for corporate governance and in promoting high standards throughout the Group. He leads and chairs the Board, ensuring that committees are properly structured and operate with appropriate terms of reference, leads in the development of strategy and setting objectives, and oversees communication between the Group and its shareholders.

The Chief Executive reviews operational matters and the performance of the business and is responsible for significant management decisions. The Chief Executive provides coherent leadership and management of the Group, leads the development of objectives, strategies and performance standards as agreed by the Board, monitors, reviews and manages key risks and strategies with the Board, ensures that the assets of the Company are maintained and safeguarded, leads on investor relations activities to ensure communications and the Company's standing with shareholders and financial institutions is maintained, and ensures that the Board is aware of the views and opinions of stakeholders where relevant.

The Chief Executive is responsible for implementing and delivering the strategy and operational decisions agreed by the Board, making operational and financial decisions required in the day-to-day operation of the Group, providing executive leadership and championing the Group's values.

The Non-Executive Directors contribute independent thinking and judgement through the application of their external experience and knowledge, scrutinise the performance of management, provide constructive challenge to the Non-Executive Chairman and ensure that the Company is operating within the governance and risk framework approved by the Board.

The Chief Executive is responsible for providing clear and timely information to the Board and its committees and supports the Board on matters of corporate governance and risk.

The matters reserved for the full Board include:

  • Setting long-term objectives and commercial strategy;
  • Approving annual operating and capital expenditure budgets;
  • Changing the share capital or corporate structure of the Group;
  • Approving half year and full year results and reports;
  • Approving dividend policy and the declaration of dividends;
  • Approving major investments, disposals, capital projects or contracts;
  • Approving resolutions to be put to general meetings of shareholders and the associated documents or circulars; and
  • Approving changes to the board structure.

The Board has approved the adoption of the QCA Code as its governance framework against which this statement has been prepared and will monitor the suitability of this Code on an annual basis and revise its governance framework as appropriate as the Group evolves.

10. Communicate how the company is governed and is performing by maintaining a dialogue with shareholders and other relevant stakeholders

In addition to the investor relations activities described above under the principles item number 2, the Group encourages two-way communication with both its institutional and private investors and respond quickly to all queries received. The Chairman and Chief Executive talk regularly with the Group's major shareholders and ensure their views are communicated fully to the Board.

By order of the Board

Mark Warne
Chairman
25th September 2018

 

ADVISERS & REGISTERED OFFICE

Registrar and Transfer Agent

Neville Registrars
Neville House
Steelpark Road
Halesowen B62 8HD

Registered Office

The Walbrook Building
25 Walbrook
London
EC4N 8AF

Nominated Adviser and Broker

Stockdale Securities Limited
100 Wood Street
London
EC2V 7AN

Auditors

Nexia Smith & Williamson
Portwall Place
Portwall Lane
Bristol BS1 6NA

 

 

Page last updated: 25 September 2018