GOVERNANCE

DEEPMATTER GROUP PLC

CORPORATE GOVERNANCE STATEMENT

The Board of DeepMatter Group plc (“DeepMatter”), or together with its subsidiaries, (the “Group”) is responsible for the Group's corporate governance policies and recognises the importance of this in creating a sustainable, growing and profitable business. The Board believe strongly in the value and importance of good corporate governance and in their accountability to all DeepMatter's 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 on 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 within the Group.

The following paragraphs set out the Group's compliance with the 10 principles of the QCA Code for the year ended 31 December 2019:-

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

The Group's business model is the digitisation of chemistry. As part of this process, DeepMatter has successfully 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. InfoChem complements and strengthens the DigitalGlassware™ platform, bringing strong cheminformatic capabilities to the Group.

The key challenges and risks faced by the Group are set out on in the Strategic Report within the Group’s Annual Report for the year ending 31 December 2019 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.

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 Germany and most of its sales are priced in GBP and Euros 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.

DeepMatter is a well-managed business with a robust growth strategy and growing market opportunity. While the COVID-19 situation will likely have an impact on the length of contract discussions, it is evident the opportunity for the Group’s technology is significant and long-term. Our priority at this time has been to ensure the well-being of our teams, and we have moved to remote working across our sites. To mitigate the impact of COVID-19 on the short-term conversion of the sales pipeline, cost-cutting measures have been implemented to preserve the Group’s resources. The Board is confident sufficient measures have been put in place to ensure the progression of the Group through this time and maintains a vigilant focus on costs and the end market.

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 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, investor_relations@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 suite of products at InfoChem and 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 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

Risk management at DeepMatter is an integral part of decision making and is embedded in normal business operations. It exists to help protect and safeguard volunteers, employees, clients, Company assets and reputation and to help achieve business objectives. The Group's Board of Directors is responsible for ensuring that the Group maintains an appropriate system of internal control. The system of control is designed to manage rather than eliminate the risk of failure to achieve business objectives.

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. Given the stage of development the Group is currently at, an internal audit function is not deemed required. This will be monitored as the company evolves.

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.

The monitoring and escalation of risks is a company-wide responsibility:

Board of Directors

Determines risk tolerance and ensures the Group maintains appropriate risk management and internal control systems. Oversees the implementation and operation of the risk management procedures and internal control infrastructure.

Audit Committee

Monitors and reviews risk management and internal control systems, ensuring adherence to financial reporting standards. During the year, the Company's Audit Committee, which comprises of Laurence Ede (Chair) and Bettina Goerner, has continued to focus on the audit of the financial statements and the effectiveness of the controls throughout the Group.

Remuneration Committee

The Remuneration Committee’s primary responsibilities are to review the performance of the executive directors of the Company and to determine the broad policy and framework for their remuneration and the terms and conditions of their service and that of senior management (including the remuneration of and grant of options to such persons under any share scheme adopted by the Company). The remuneration committee comprises Bettina Goerner (Chair) and Laurence Ede.

Management Team

Implements and manages the risk procedures, policies and controls. Supports the development and maintenance of effective compliance and risk management systems.

Employees

Understands, accepts and executes the risk management procedures. Expected to be alert to risks associated with the activities they perform and report inefficiencies, unnecessary or ineffective controls. 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.

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.

For the year ending 31 December 2019, the Board consisted of five directors of whom two are executive and three are non-executive. One non-executive director is an independent director.

On 15 March 2019, Bettina Goerner joined the board as a non-executive director.

On 28 June 2019, Michael Bretherton stepped down as Finance Director and Lauren Lees joined the board as executive finance director.

The Board may appoint additional directors as its business expands. Under the Articles of Association, all Directors must offer themselves for re-election at least once every three years. One third of the Directors retire by rotation at every Annual General Meeting and are eligible for re appointment.

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.

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 31 December 2019 and the attendance of the Directors at these meetings are summarised below:

Position Independence Board
(7)
Audit
(2)
Remuneration
(2)
Total Attendance
Executive Directors            
Mark Warne No 7/7 - - 7/7 100%
Lauren Lees (appointed 28 June 2019) No 3/3 - - 3/3 100%
Michael Bretherton (resigned 28 June 2019) No 4/4 - - 4/4 100%
Independent Non-Executive Directors / Committee Members            
James Ede-Golightly No 7/7 - - 7/7 100%
Laurence Ede Yes 7/7 2/2 2/2 11/11 100%
Bettina Goerner (appointed 15 March 2019) No 5/5 1/1 1/1 7/7 100%
Lee Cronin (resigned 12 April 2019) No 2/2 - - 2/2 100%
David Cleevely (resigned 12 April 2019) Yes 2/2 1/1 1/1 4/4 100%

 

Meetings held in the 3 months from 1 January 2020 to 31 March 2020 and the attendance of the Directors at these meetings are summarised below:

Position Independence Board
(7)
Audit
(2)
Remuneration
(2)
Total Attendance
Executive Directors            
Mark Warne No 2/2     2/2 100%
Lauren Lees No 2/2     2/2 100%
Independent Non-Executive Directors / Committee Members            
James Ede-Golightly No 2/2     2/2 100%
Laurence Ede Yes 2/2     2/2 100%
Bettina Goerner No 2/2     2/2 100%

 

The Board considers Laurence Ede to be an independent Non-Executive Director and reviews his independence on a regular basis. The Board have not identified any points that potentially impacts his independence.

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, Lauren Lees, 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.

All Directors have access to the advice and services of the Company Secretary and in the course of their duties, if necessary, are able to take independent professional advice at the Company's expense. Committees have access to such resources as are required to fulfil their duties.

The Board comprises the following directors who are all considered suitable for their roles given their backgrounds and experience as set out on pages 9 to 10 of the Company's Annual Report and Accounts for the year ended 31 December 2019.

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: Open Orphan Plc and Ixico Plc.

Time commitment: Full time.

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 and Audit Committee.

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

Time commitment: 1 to 2 days per month.

Lauren Lees, Finance Director

Term of office: Appointed as Financial Controller in October 2018, and appointed Finance Director on 28 June 2019.

Current external appointments: None

Time Commitment: Full time.

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 Audit Committee and is also a member of the Remuneration Committee.

Current external appointments: Rosa Biotech Limited, Ubiquigent Limited, Manor Road Lettings Limited

Time commitment: 1 to 2 days per month

Bettina Goerner

Term of office: Bettina Goerner was appointment as a Non-Executive Director in March 2019. She is chair of the Remuneration Committee and is also a member of the Audit Committee.

Current external appointments: Nevis GmbH

Time commitment: 1 to 2 days per month

Directors who served on the Board during the year ending 31 December 2019 and stepped down on the 12 April 2019 include:

David Cleevely, Independent Non-Executive Director

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

Current external appointments: Raspberry Pi Foundation, Cambridge Ahead, Cambridge Communication Systems Limited, Cambridge Science Enterprises Limited, Cambridge Science Centre, Controllis Limited, BDL Restaurant Ltd, BDL Property LLP, CFRS Limited, Cleevely & Partners Ltd.

Lee Cronin, Founding Scientific Non-Executive Director

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

Current external appointments: Chemify Limited.

Michael Bretherton served as Finance Director and stepped down on the 28 June 2019

Term of office: Appointed as Executive Finance Director in June 2015.

Current External Appointments:  E-Therpeutics Plc and Hardy Oil and Gas Plc

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.

Our staff handbook and standard operating procedures outline the fundamentals of our values to all staff (including business integrity, anti-bribery, gifts, intellectual property, etc). The Group is committed to providing equal opportunities in employment and the creation of a work environment where everyone is treated with dignity and respect. The Group has developed and implemented policies and processes to ensure that all job applicants and employees receive equal treatment regardless of gender, race, age, disability, sexual orientation, religion or belief, nationality or ethnic origin.

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. A staff performance appraisal and CPD process was implemented in the financial year ending 31 December 2019 which encompasses the Group's core values and business model goals, embedding them across the Company laying the foundation for the planned growth and commercialisation of our Digital Glassware ™ platform.

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 the Board and reviews proposals regarding employee remuneration.

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.

ADVISERS & REGISTERED OFFICE

 

Registrar and Transfer Agent

Neville Registrars
Neville House
Steelpark Road
Halesowen B62 8HD

Stockbroker

Canaccord Genuity Limited
88 Wood Street
London 
EC2V 7QR

Registered Office

St Brandon’s House
29 Great George St
Bristol BS1 5QT

Auditors

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

Nominated Adviser

Canaccord Genuity Limited
88 Wood Street
London 
EC2V 7QR
Page last updated: 29 May 2020
Copyright © 2020 DeepMatter Group Plc. Company Registered in England & Wales No. 05845469