Statement of Compliance with the QCA Corporate Governance Code

Corporate Governance Statement

The Chairman is responsible for leading the board in the setting and monitoring of its strategic objectives.  The Chairman ensures that the executive directors and non-executive directors work as a team to fulfil their objectives, and is responsible for organising the business of the Board, ensuring its effectiveness and setting its agenda.  This includes following best practice in corporate governance appropriate to the Company’s size and in accordance with the regulatory framework that applies to AIM companies. The Company has adopted the Quoted Companies Alliance Corporate Governance Code 2018 (“QCA Code”).

The board’s main objectives are to create value for the Shareholders in an ethical and sustainable manner, and to ensure the appropriate resources are in place to meet the objectives.  The board meets regularly and at least nine times per year for formal board meetings. It will set strategy, consider performance and approve financial statements, dividends and significant changes in accounting practices and key commercial matters.  The Company has an audit committee and remuneration committee. Decisions regarding the appointment of new directors are taken at board level as the board does not consider it appropriate to establish a nomination committee at this stage of the Company’s development. Appointments are made following a thorough assessment of need and of how a potential candidate’s skills and experience meet the identified need.

Principles of Corporate Governance

Compliance with the QCA Code is set out in broad terms below. Annual updates on compliance will be provided.

DELIVER GROWTH

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

Fusion is a CRO providing a range of antibody engineering services for the development of antibodies for both therapeutic drug and diagnostic applications. The Company’s mission is to enable biopharmaceutical and diagnostic companies to develop innovative products in a timely and cost-effective manner for the benefit of the global healthcare industry.

The Board has set a strategy and prepared a business plan for the development and introduction of new services and the expansion of the business as a CRO. This strategy uses the Company’s proven technology and expertise to target expansion both in the UK market and internationally. Regular strategy reviews are held and the business plan and budgets are kept up to date as appropriate.

This strategy covers company growth in revenues and profitability and the development and introduction of new services to enhance shareholder value.

Further details on the Company’s business model and strategy are set out on pages 8 to 12 of the Company’s annual report for the year ended 31 March 2020, available here.

Principle 2: Seek to understand and meet shareholder needs and expectations

The AGM is the main forum for dialogue with private shareholders. All members of the Board routinely attend the AGM and are available to answer questions raised by shareholders. Although shareholders are asked not to attend the 2020 AGM in line with government advice regarding COVID-19, there will be an opportunity to submit questions in advance.

The CEO and CFO keep in touch with significant investors throughout the year, augmented by certain regional investor meetings. As a result of the government response to the global health emergency, it has not been possible to hold regional meetings since March 2020. However, the Company has maintained its contact with significant investors through telephone and online calls and alternative methods of engaging with private investors and potential investors are currently being evaluated.

The details of Private shareholder events which are held on an ad-hoc basis, are announced in advance and the relevant presentations are added to the Company’s corporate website.

This approach provides an opportunity for the Board to engage with a range of investors.

The Chair of the Remuneration Committee liaises with selected shareholders to ensure that performance packages align with shareholder expectations.

Contacts: [email protected]

Principle 3: Take into account wider stakeholder and social responsibilities and their implications for long-term success

The Company’s business model and operations enable the directors to clearly identify key stakeholders on which the Company’s business relies. In addition to communication with shareholders, the Company has established systems in place for feedback from staff, customers and suppliers which are fed back to senior management as part of the ISO9001:2015 programme. This ensures that stakeholder responsibilities are taken into account in company decisions and strategy.  In particular, customer feedback is sought which allows us to continuously improve the quality and range of services. The introduction of the RAMPTM service was a result of such feedback.

The Company believes in protecting the wider community and appropriate environmental policies are in place.  The Company is an equal opportunities company and encourages applicants for positions irrespective of age, disability, gender, race, religious or political views or sexual orientation and are committed to providing an inclusive working environment. With particular reference to Northern Ireland legislation, we comply with the Fair Employment and Treatment (NI) Order 1998.

No material changes to the Company’s working practices were required over the year to 31 March 2020, or more recently, as a result of feedback received by the Company from the stated key resources and relationships on which the business relies.

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

The Company has compiled and maintains a Risk and Opportunities Register through the operational assessment of the activities of each department, and the Company as a whole, by senior management. This is reviewed as part of the ISO management programme. Risk identification can come from several sources: employee or other stakeholder feedback; ISO management processes; executive meetings; and decisions taken at Audit Committee and Board. Senior management evaluate potential risks in terms of both the assessed impact and likelihood of occurrence and as then take actions to mitigate the risk as far as is practicable. These evaluations and actions are assessed by the Audit Committee and any amendments are recommended to the Board.   

The Audit Committee also considers the risks of the Company in conjunction with the Risk and Opportunities Register as well as the internal controls in place and whether they are sufficient in light of the risks.  Executive Directors meet at least monthly to review ongoing trading performance and forecasts, and any new risks associated with ongoing trading.

Risk management is considered at every board meeting so that risk appetite can be evaluated and the impact of any developments are properly identified and managed.

MAINTAIN A DYNAMIC MANAGEMENT FRAMEWORK

Principle 5: Maintaining the board as a well-functioning, balanced team led by the Chair

The board has three executive and five non-executive directors (including the Chairman) providing a balanced mix of skills and experience. Remuneration and audit committees are in place and are chaired by suitably experienced non-executive directors. The board meets at least nine times per year and the sub-committees three times per year. Sonya Ferguson and Tim Watts are considered to be independent directors with Sonya Ferguson the Senior Independent Director.

The Corporate Governance report on pages 22 to 37 of the FY 2020 annual report contain further details on the board.

Principle 6: Ensure that between them the directors have the necessary up to date skills and capabilities

The ability of individual members and the board as a whole to deliver the company strategy is reviewed annually in an exercise undertaken by the Chairman. As a result of these reviews the board composition last changed in FY2018 in preparation for the admission of the Company’s shares on AIM. The chairman and sub-committee chairpersons can call on external advisers as the need arises.

The Corporate Governance report on pages 22 to 37 of the FY 2020 annual report contains further details on the board.

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

The chairman performs an annual review of the board and the contribution of individual board members. The board composition last changed in FY 2018.

The most recent review was performed in January 2020. Performance criteria of the board review includes: contribution; strategy; market development; service development and innovation; sector experience; financial stewardship; and public company requirements.

The performance criteria may evolve each year and are based on the Company’s needs and projected needs at the time of each annual review.

The board has a succession plan in place for the Chairman and executive directors, to ensure continuity in the event of an unexpected absence. Planned succession is taken into consideration at the annual board evaluation and when considering board and senior management appointments.

Principle 8: Promote a culture that is based on ethical values and behaviours

The Company conducts its business in a socially responsible manner, acting with integrity and professionalism. This attitude is lead from the board, demonstrated by our actions, and communicated to all staff. Where appropriate formal policies and the staff handbook will outline these principles in detail to all staff.

The Board regularly monitors the Company’s cultural environment and seeks to address any concerns that may arise. The Board will consider the Company’s cultural environment when seeking to recruit staff, and board directors.

Principle 9: Maintain governance structures and processes that are fit for purpose and support good decision-making by the board

The chairman is responsible for leading the Company and board in setting strategy and developing approaches to deliver that strategy. The CEO leads the executive team and is responsible for implementing those actions required to deliver on the agreed strategy. The CEO is also responsible for engagement with shareholders, customers and developing strategic alliances within the industry.

The remuneration committee reviews the performance of the executive directors and makes recommendations to the Board on matters relating to their remuneration and terms of employment. The committee also makes recommendations to the Board on proposals for the granting of share options and other equity incentives pursuant to any share option scheme or equity incentive scheme in operation from time to time. In exercising this role, the members of the remuneration committee shall have regard to the recommendations put forward in the Corporate Governance Code and the QCA Code. The remuneration committee meets not less than twice in each financial year. The members of the remuneration committee are Colin Walsh, (chairman of the committee) and Sonya Ferguson.

The audit committee has primary responsibility for monitoring the quality of internal controls and ensuring that the financial performance of the Company is properly measured and reported on. As well as ensuring compliance with the AIM Rules, it receives and reviews reports from the Company's management and auditors relating to the interim and annual accounts and the accounting and internal control systems in use throughout the Company. The audit committee meets not less than three times in each financial year and has unrestricted access to the Company's auditors. The members of the audit committee are Timothy Watts (chairman of the committee) and Alan Mawson.

Matters reserved for the board fall under the following headings:

  • Setting values, standards, strategic aims and objectives
  • Approval of operating budgets
  • Oversight of company operations
  • Changes to capital structure
  • Approval of half-yearly report and annual report and accounts
  • Setting dividend policy
  • Ensuring maintenance of a sound system of control and risk management
  • Approval of capital contracts and expenditure action in excess of £20,000
  • Approval of loans or capital repayments in excess of £20,000
  • Ensuring a satisfactory dialogue with shareholders
  • Membership, evaluation and remuneration policy of the board
  • Approval of company policies
  • Appointment of principal advisers
  • Approval of overall levels of insurance
  • Any decisions likely to have a material impact on the group.

As is common for companies of this size, the board does not have a nominations sub-committee so responsibility for appointments and succession planning rests with the full board. This is being kept under review as the Company grows.

The position of Company Secretary is currently held by the Chief Financial Officer. As the Company grows this will be kept under review with an expectation that the roles will be separated when the size of the Company will support this. Sonya Ferguson is the Company’s Senior Independent Director, acting as a sounding board and intermediary for the chair or other board members, as necessary.

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

The Company discloses all relevant information in its annual report, copies of which are available on the Company website along with governance related information issued from the date of admission to trading on AIM (www.fusionantibodies.com).

The Company also discloses the outcomes of votes at general meetings, and where more than 20% of independent votes have been cast against a resolution at any general meeting the Company will indicate its actions to understand the reason for that vote and any decisions or actions taken as a result.

For the most recent voting results click here.

This statement was last updated on 28 August 2020