The information below is disclosed in accordance with Rule 26 of the AIM Rules for Companies and was last updated on 27 September, 2018.
NetScientific plc is incorporated in England and Wales under registered no. 08026888. Its main country of operation is the United Kingdom.
Please click here for a description of the business.
Please click here for a description of the investment strategy.
For a list of the members of the board of directors and their biographies, please visit the Team section.
The Board of Directors of the Company (the “Board”) is responsible for the governance of the Company, governance being the systems and procedures by which the Company is directed and controlled. High standards of Corporate Governance are a key priority of the Board and the Directors believe that they govern the Company in the best interests of the shareholders.
The Board has delegated certain of its functions and responsibilities to the following committees:
The corporate governance framework which NetScientific plc has set out, including board leadership and effectiveness, remuneration and internal control, is based upon practices which the Board believes are proportionate to the risks inherent to the size and complexity NetScientific’s operations.
The Board considers it appropriate to adopt the principles of the Quoted Companies Alliance Corporate Governance Code (“the QCA Code”) published in April 2018, which is the standard deemed appropriate by independent bodies for small and mid-size quoted companies in the UK,. The extent of compliance with the ten principles that comprise the QCA Code, together with an explanation of any areas of non-compliance, and any steps taken or intended to move towards full compliance, are set out below:
|1. Establish a strategy and business model which promote long-term value for shareholders||The Board must be able to express a shared view of the Company’s purpose, business model and strategy. It should go beyond the simple description of products and corporate structures and set out how the Company intends to deliver shareholder value in the medium to long-term. It should demonstrate that the delivery of long-term growth is underpinned by a clear set of values aimed at protecting the Company from unnecessary risk and securing its long-term future.||The Company’s vision is based on funding and building game changing healthcare technology companies towards value inflection points. Further details of the Company’s business model and strategy can be found in its Annual Report – Business Model section and Risks and Uncertainties section.|
|2. Seek to understand and meet shareholder needs and expectations||Directors must develop a good understanding of the needs and expectations of all elements of the Company’s shareholder base. |
The Board must manage shareholders’ expectations and should seek to understand the motivations behind shareholder voting decisions.
|The Board aims to meet with its shareholders periodically. For those shareholders who cannot meet in person, the Board communicates via various means, including RNS announcements and web-site updates, all of which are published in the Investor section of the Group’s website..
The Board is aware of the need to protect the interests of minority shareholders and balancing these interests with those of any more substantial shareholders.
For further information relating to shareholder relations, see QCA Principle 10 below.
|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 (workforce) and external (suppliers, customers, regulators and others). The Board needs to identify the Company’s stakeholders and understand their needs, interests and expectations.|
Where matters that relate to the Company’s impact on society, the communities within which it operates or the environment have the potential to affect the company’s ability to deliver shareholder value over the medium to long-term, then those matters must be integrated into the Company’s strategy and business model.
Feedback is an essential part of all control mechanisms. Systems need to be in place to solicit, consider and act on feedback from all stakeholder groups.
|The Board is aware of the impact the business activities have on the communities in which the Group's businesses operate particularly within the medical technology start-up community, research hospitals and patient testing facilities.
The Group's responsibilities to stakeholders including staff, subsidiaries, creditors, patients and wider society are also recognised.
NetScientific engages with its employees informally as well as through periodic formal employee reviews. Employees are updated via regular meetings, emails and internal systems.
NetScientific also maintains continual dialogue with portfolio companies and ensures that the Company is involved in important decisions through having a seat on the Board of our portfolio companies.
|4. Embed effective risk management, considering both opportunities and threats, throughout the organisation||The Board needs to ensure that the company’s risk management framework identifies and addresses all relevant risks in order to execute and deliver strategy; companies need to consider their extended business, including the Company’s supply chain, from key suppliers to end-customers|
Setting strategy includes determining the extent of exposure to the identified risks that the Company is able to bear and willing to take (risk tolerance and risk appetite).
|The Directors review the principal risks faced by the Company as part of the internal controls process.
The Board maintains a register of risks and publishes an annual summary of the significant risks and uncertainties in the Annual Report.
For information on the Company’s risk management framework, see the following sections of the Company’s Annual Report – Chairman’s and CEO’s Statement, Corporate Governance Report, Risks and Uncertainties and Financial Risk Management.
|5. Maintain the Board as a well-functioning, balanced team led by the chair||The Board members have a collective responsibility and legal obligation to promote the interests of the company, 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 (and any committees) should be provided with high quality information in a timely manner to facilitate proper assessment of the matters requiring a decision or insight.
The Board should have an appropriate balance between executive and non-executive directors and should have at least two independent non-executive directors. Independence is a Board judgement.
The Board should be supported by committees (e.g. audit, remuneration, nomination) that have the necessary skills and knowledge to discharge their duties and responsibilities effectively.
Directors must commit the time necessary to fulfil their roles.
|The Board is comprised of two executive Directors, and three non-executive Directors.
The Board has established Audit, Remuneration and Nominations committees, a summary of each of which is set out above.
The roles of the Chairman and Chief Executive Officer are clearly separated. The non-executive directors are considered by the Board to be independent of management and free to exercise independence of judgement.
A description of the roles of the Directors and their time commitments is included in the Company’s Annual Report – Board of Directors section and Corporate Governance section.
|6. Ensure that between them the directors have the necessary up-to-date experience, skills and capabilities||The Board must have an appropriate balance of sector, financial and public markets skills and experience, as well as an appropriate balance of personal qualities and capabilities. The Board should understand and challenge its own diversity, including gender balance, as part of its composition.|
The Board should not be dominated by one person or a group of people. Strong personal bonds can be important but can also divide a Board.
As companies evolve, the mix of skills and experience required on the Board will change, and Board composition will need to evolve to reflect this change.
|Directors appointed to the Board are chosen because of their skills and experience they offer. Full biographical details of the Directors are included in the Company’s Annual Report – Board of Directors section and Corporate Governance section.|
|7. Evaluate Board performance based on clear and relevant objectives, seeking continuous improvement||The Board should regularly review the effectiveness of its performance as a unit, as well as that of its committees and the individual directors. |
The Board performance review may be carried out internally or, ideally, externally facilitated from time to time. The review should identify development or mentoring needs of individual directors or the wider senior management team.
It is healthy for membership of the Board to be periodically refreshed. Succession planning is a vital task for Boards. No member of the Board should become indispensable.
|The Directors are responsible for establishing and maintaining the Group’s system of internal control and reviewing its effectiveness. The system of internal control is designed to manage, rather than eliminate, the risk of failure to achieve business objectives and can only provide reasonable but not absolute assurance against material misstatement or loss.
The main features of the internal control system are as follows:
• A control environment exists through close management of the business by the executive directors. The Group has a defined organisation structure with delineated approval limits. Controls are implemented and monitored by personnel with the necessary qualifications and experience.
• A list of matters reserved for Board approval
• A regular management reporting and analysis of variances
• Standard financial controls operate to ensure that the assets of the Group are safeguarded and that proper accounting records are maintained.
Succession planning and the need for the periodic refreshing its membership is considered by the Board through its Nominations Committee.
Given the Group’s size, the Board evaluates the performance of its committees and individual directors internally through KPIs, financial reports and appraisals.
|8. Promote a corporate culture that is based on ethical values and behaviours||The Board should embody and promote a corporate culture that is based on sound ethical values and behaviours and use it as an asset and a source of competitive advantage.|
The policy set by the Board should be visible in the actions and decisions of the chief executive and the rest of the management team. Corporate values should guide the objectives and strategy of the company.
The culture should be visible in every aspect of the business, including recruitment, nominations, training and engagement. The performance and reward system should endorse the desired ethical behaviours across all levels of the company.
The corporate culture should be recognisable throughout the disclosures in the annual report, website and any other statements issued by the company.
|The Board continually reviews and promotes a corporate culture based on ethical values and behaviours. The Group adopts several policies including anti-bribery, whistleblowing and a share dealing policy for trading in NetScientific shares. Compliance with all policy is monitored and reported on to the Board.
For further information on how the culture is consistent with the Company’s objectives, strategy and business model in the strategic report and with the description of principal risks and uncertainties, see the Annual Report – Corporate Governance and Risks and Uncertainties sections
|9. Maintain governance structures and processes that are fit for purpose and support good decision-making by the Board||The Company should maintain governance structures and processes in line with its corporate culture and appropriate to its:|
• Size and complexity; and
• Capacity, appetite and tolerance for risk
The governance structures should evolve over time in parallel with its objectives, strategy and business model to reflect the development of the Company.
|Details of the Company's corporate governance arrangements are provided in this section Corporate Governance above. See also the Corporate Governance section on page 29 of the Company’s Annual Report.|
|10. Communicate how the Company is governed and is performing by maintaining a dialogue with shareholders and other relevant stakeholders||A healthy dialogue should exist between the Board and all of its stakeholders, including shareholders, to enable all interested parties to come to informed decisions about the Company.|
In particular, appropriate communication and reporting structures should exist between the Board and all constituent parts of its shareholder base. This will assist:
• The communication of shareholders’ views to the Board; and
• The shareholders’ understanding of the unique circumstances and constraints faced by the Company.
|The Board attaches great 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 on the Group's website.
The executive members of the Board hold regular meetings with significant institutional shareholders and the Board regards the annual general meeting as a good opportunity to communicate directly with shareholders via an open question and answer session.
The Company lists contact details on its website and on all announcements released via RNS, should shareholders wish to communicate with the Board.
The resolutions put to a vote at the next and past AGMs can be found in the Investors section of this website. The results of votes at AGMs are published via RNS.
|Nominated Adviser and Broker:||WH Ireland Limited 24 Martin Lane London EC4R 0DR|
|Solicitors:||UK: Ashurst LLP Broadwalk House 5 Appold Street London EC2A 2HA
USA: DLA Piper LLP One Liberty Place 1650 Market Street Suite 4900 Philadelphia Pennsylvania 19103-7300 USA
|Independent Auditors:||BDO LLP Arcadia House Maritime Walk Ocean Village Southampton Hampshire SO14 3TL|
|Reporting Accountants:||BDO LLP 55 Baker Street London W1U 7EU|
|Registrar:||Link Asset Services The Registry 34 Beckenham Road Beckenham Kent BR3 4TU|
|Public Relations:||Consilium Strategic Communications 41 Lothbury London EC2R 7HG|
The Company’s ordinary shares are admitted to trading on AIM. There are no other exchanges or trading platforms on which the Company has applied or agreed to have any of its securities (including its AIM securities) admitted or traded.
There are no restrictions on the transfer of the Company’s ordinary shares.
The Company is subject to the UK City Code on Takeovers and Mergers.
As at 28 February 2018, the Company’s issued share capital consists of 78,561,866 ordinary shares of 5p and the following interests of shareholders in excess of 3 per cent have been notified to the Company:
|Shareholder||Number of Shares||Percentage|
|Woodford Investment Management||36,787,187||46.83%|
|AB Group Limited||23,549,386||29.98%|
|Cyrus Holdings Limited||9,910,453||12.61%|
A total of 80% of the issued share capital is not in public hands as defined for Rule 26 purposes being directors, management and those shareholders holding more than 10% of the issued share capital.