Corporate Governance

Corporate governance

Chairman’s corporate governance statement

The Board is committed to maintaining high standards of corporate governance and, with effect from 26th September 2018, the Board has adopted the Quoted Companies Alliance’s (QCA) Corporate Governance Code for small and mid-size quoted companies (the “Code”).

The Code was revised in April 2018 to meet the new requirements of AIM Rule 26 and sets out ten broad principles of corporate governance, states what are considered to be appropriate corporate governance arrangements for growing companies and requires companies to provide an explanation about how they are meeting the principles through certain prescribed disclosures.

The Chairman leads the Board and is responsible for its overall effectiveness in directing the Company. He manages the Board agenda and ensures that all Directors receive accurate, timely and clear information and effectively contribute their various talents and experience in the development and implementation of the Company’s strategy. He ensures that the nature and extent of the significant risks the Company is willing to embrace in the implementation of its strategy are challenged and determined by the Board.  The Chairman is responsible for ensuring that the Board implements, maintains and communicates effective corporate governance processes and for promoting a culture of openness and debate designed to foster a positive governance culture throughout the Company.

The Board has considered how each principle is applied and provides below an explanation of the approach taken in relation to each and how they support the Company’s medium to long-term success.

In the last 12 months, the Board has introduced a rolling Board agenda plan to ensure that all matters which the Board should consider each year are addressed.  This allows for presentations from senior management so that the Board benefits from wider input than only from the Executive Directors.

The Company has not previously included an Audit Committee Report in its Annual Report and Accounts, but will do so for the 2018 Annual Report and Accounts.  Relevant disclosures pertinent to the 2017 Annual Report and Accounts are given below.

The Board has not previously carried out a formal review of its effectiveness.  This will be carried out for the first time in Q2 2019, when the current Board will have been through a full annual financial reporting cycle.

Apart from the above matters being addressed in the near future, the Board considers that it does not depart from any of the principles of the QCA Code.

PRINCIPLES TO DELIVER GROWTH

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

Strategy:

Microsaic’s strategic aim is to capitalise on its strengths in point of need MS detection, and access high-growth and emerging life science applications where its technology has strategic importance. The Company intends to achieve its strategy with a business model built on customer focus and technology innovation.

Business Model:

Microsaic believes its success lies in building long-term co-development partnerships, to establish greater competitive advantage.

Microsaic’s core strengths are its technical and product development capabilities and its experience in working with OEM partners to co-develop products.

The Company derives revenues from R&D collaboration agreements, sale of products, mainly to OEMs and distributors, and from after-sale services, consumables and spare parts.

The Company’s commercial approach is highly flexible to suit each partner’s needs, helping to craft the OEM’s application in the early stages of scientific proof of principle, or into a broader product concept. Microsaic has proven expertise in taking these ideas all the way through to development and commercialisation. Microsaic also brings expertise from its leading scientists, technologists, and engineers to meet the OEM’s near term or longer-term challenges.

In general, the Company’s strategy is to partner with OEMs which have established global sales and service channels.

Challenges:

Staying relevant with future customer needs
Customer needs evolve rapidly. Future product specifications will be driven by end-user requirements. This will inform Microsaic’s product strategy as its MS Detectors move from the lab into production, and front-line operating environments. Microsaic will ensure that its strategic product development will remain focused on meeting demanding bioprocessing applications.

Building partnerships over the long-term will establish greater competitive advantage for the Company, as its products are tailored to specific application needs.

Remaining innovative in an advancing technological landscape
Microsaic has successfully developed and implemented advanced technology at the core of its design with over 60 patents to date. This has led to a solid foundation serving scientists in the laboratory in small molecule drug discovery.

The Company continues to invest in several product development projects with its core MiD® MS Detector platform, which the Board believes will be attractive to the growing market for lab-based applications with larger biological molecules, such as peptides and small proteins.

In the longer-term, the Company will extend its product capabilities further into bioprocessing applications, where a range of biological entities, including monoclonal antibodies, can be analysed by direct analysis in minutes. This compares with traditional analysis in remote centralised laboratories sometimes taking many days or even weeks to deliver results.

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

The Company’s aim is to maintain and enhance good relations with all its shareholders. The Company’s interim and annual reports are supplemented by capital market presentations to analysts and shareholder groups. The Company is available to meet with shareholders outside these times if required. The Company keeps shareholders up to date with the latest developments by maintaining an up to date website and through public announcements through the regulatory news service on technological, commercial and financial progress. The Company’s CEO also participates in Directors Talk recordings (https://www.directorstalk.net/) updating shareholders following key announcements.

The Chief Executive Officer and the Financial Director are primarily responsible for maintaining dialogue with shareholders, supported by the Company’s broker and financial PR advisers. The CEO and FD hold one-to-one and sometimes group meetings with key shareholders and analysts following the announcement of the annual and interim results. The Chairman will also attend a number of these group meetings. Following these meetings, the Company’s brokers provide independent feedback to the Board on shareholders’ views and concerns. The Company’s financial PR adviser also provides anonymised feedback to the Board on the views of analysts who have met the Company.

The AGM is the principal forum for dialogue with private shareholders, and we encourage all shareholders to attend and participate. The Chairman, CEO and FD, together with all other directors whenever possible, attend the AGM and are available to answer questions raised by shareholders. Unfortunately, very few private shareholders attend the AGM which is a problem for AIM Companies generally.  The FD contacts larger shareholders before general meetings to ensure they have submitted their proxy voting forms if not attending, and this also provides an opportunity to hear any concerns.

Where feedback is received directly from shareholders or shareholder advisory groups, for example relating to voting intentions on general meeting motions, this is brought to the attention of and discussed by the Board.

Contact Details:

Glenn Tracey
Chief Executive Officer
[email protected]
tel: (0) 1483 751 577

Bevan Metcalf
Finance Director
[email protected]
tel:(0) 1483 751 577

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

Staff

Stakeholder:

Our ability to implement the long-term strategy is heavily dependent on hiring and retaining specialist technical and commercial staff.

Reason for engagement:

High quality communications with staff is a key requirement for high levels of engagement, fostering a culture of innovation.

How we engage:

  • Quarterly staff briefings.
  • Staff appraisal process, which is linked to company strategy.
  • Staff incentives, including share option schemes, which are linked to longer term company goals.
  • Staff feel closer to the company direction, and Director and management expectations.

Clients

Stakeholder:

Our success and competitive advantage are dependent upon fulfilling client requirements, both in the short term (shipping product), and in the longer-term (customised R&D specific to that customer).

Reason for engagement:

Understanding current and emerging requirements of clients enables the Company to develop new and enhanced product specification and application areas.

How we engage:

  • We specifically seek customer requirements during business development contacts with new and existing clients.
  • Obtain fulfilment metrics employed by clients to measure on-going performance.

This has led to an increase in successful new business development, bringing to market products that customers have specifically asked for, and on-going improvements in our products and service.

Suppliers

Stakeholder:

Outsourced fabrication is identified as a key stakeholder.

Reason for engagement:

We outsource our manufacturing and assembly to a specialist high-technology fabrication facility in the UK.

How we engage:

  • We have documented all assembly and sub-assembly processes, with a view to simplifying outsource and removing subjective communications.
  • We co-invest in supplier set-up and infrastructure.
  • We invest in regular supplier training.
  • We operate systems to ensure supplier quality, which are discussed on a regular basis.

This has resulted in a long-term relationship, founded on a large body of data, metrics and trust.

Shareholders

Stakeholder:

As a public company we provide transparent, easy-to-understand and balanced information to ensure support and confidence.

Reason for engagement:

Meeting regulatory requirements and understanding shareholder sentiments on the business, its prospects and performance of management.

How we engage:

  • Regulatory news releases.
  • Keeping the investor relations section of the website up to date.
  • Annual and half-year reports and presentations.
  • AGM.
  • Capital markets events.
  • We believe we successfully engage with our shareholders.

Industry bodies

Stakeholder:

The services we provide must meet certain requirements.

Reason for engagement:

The membership of certain industry groups, including certain regulatory standards (e.g. CE marking, ISO) are influential in the way the group is perceived by new and existing clients.

How we engage:

  • Ongoing product certification is central to our product development.

Environment

Stakeholder:

As a company dealing with a complex range of raw and processed materials, we must ensure that our business is conducted sustainably.

Reason for engagement:

Whilst not of substantial impact compared with many other manufacturing businesses, the Company recognises its activities have an impact on the environment and acknowledges its responsibility to ensure this is minimised.

How we engage:

  • In accordance with the requirements of the Waste Electrical and Electronic Equipment Regulations (WEEE), the Company is registered with the UK Environment Agency as a Small WEEE Producer and disposes of electrical equipment waste responsibly.
  • The Company reviews the substances it uses within its design and manufacturing processes with the aim of using environmentally friendly products commensurate with producing high quality products and the RoHS directive (Restriction of the use of certain hazardous substances).
  • Where possible, products are recycled within the Company.
  • Paper, cardboard, batteries and printer cartridge recycling collection facilities are in place and are regularly used in the Company’s offices.
  • Redundant computer equipment is disposed of in accordance with good practice.

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

The Board aims to ensure that the Company’s risk management framework identifies and addresses all relevant risks in order to execute and deliver the strategy.

The Directors recognise their responsibility for the Company’s system of internal control and have established systems to ensure that an appropriate and reasonable level of oversight and control is provided.  The Company’s systems of internal control are designed to help the Company meet its business objectives by appropriately managing, rather than eliminating, the risks to those objectives. The controls can only provide reasonable, not absolute, assurance against material misstatement or loss.

The Company’s Management Team, who report into the Executive, meets with the Executive at least quarterly to review commercial, operational and financial risks facing the business. They are assessed according to their nature and magnitude and given a score based on the seriousness of the risk and the likelihood of the risk occurring. The effectiveness of the controls implemented to minimise the risks are also reviewed. The aim of these reviews is to provide reasonable assurance that material risks are identified and appropriate action is taken at an early stage. From this review the Company maintains its internal risk register which on an annual basis is reviewed and updated by the Audit Committee and the Board.  New material risks which arise in the meantime, such as the potential effect of Brexit, are added to the risk register and discussed at Board level as they arise.

The Company has also implemented a system called PACE (Product and Cycle Time Excellence) as a key part of its evaluation and monitoring of R&D projects. PACE identifies the risks facing each of the Company’s projects and how to mitigate each risk.

The annual budget is reviewed and approved by the Board. Financial results, with comparisons to budget and latest forecasts are reported on a monthly basis to the Board together with a report on operational achievements, objectives and issues encountered. Significant variances from plan are discussed at Board meetings and actions set in place to address them.

Measures continue to be taken to review and improve internal controls and risk management procedures. In 2017 the Company implemented a Financial Procedures Manual covering all aspects of finance in the Company including the approval levels for authorisation of expenditure, potential fraud scenarios, payment approval process, expenses guidelines etc.

The Company’s auditors are encouraged to raise comments on internal control in their management letter following their audit, and the points raised and actions arising are monitored through to completion by the Audit Committee.

PRINCIPLES TO MAINTAIN A DYNAMIC MANAGEMENT FRAMEWORK

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

The Board currently consists of two executive and four non-executive directors. The Company has an equal opportunity policy to recruitment at Board level and within the Company at large and seeks diversity as opportunities arise, within the framework of selecting the most suitable person, based on relevant skills, abilities, experience and location, as required for the role.

The Board meets on a monthly basis. The majority of these are face to face.

The principal role of the Chairman of the Board is to manage and to provide leadership to the Board of Directors of the Company.  The Chairman is accountable to the Board and acts as a direct liaison between the Board and the management of the Company, through the CEO.  The Chairman acts as the communicator for Board decisions where appropriate.

The Chairman is independent from management and free from any interest and any business or other relationship which could interfere with the Chairman’s independent judgment other than interests resulting from Company shareholdings and remuneration.

The Chairman is responsible for the effective leadership, operation and governance of the Board and its Committees. He ensures that all Directors contribute effectively to the development and implementation of the Company’s strategy whilst ensuring that the nature and extent of the significant risks the Company is willing to embrace in the implementation of its strategy are determined and challenged.

The Chief Executive Officer is responsible for the management of the Company, providing executive leadership and for implementing the Company’s strategy.

The Chairman was considered independent upon his appointment in January 2018. The Board believes that the advice, behaviour and character of its other Non-Executive Directors (Messrs Yeatman, Holmes and Buckley) is independent and at all times in the best interests of the Company and all its shareholders. In addition, the skills and business judgement which they possess and regularly exercise contributes to the efficient and effective running of the Company. The Company’s Senior Independent Director, is Mr Eric Yeatman.

The Company appreciates that circumstances which might, or might appear, to affect a director’s judgement may well include financial dependence on the Company and whether the Director is, or represents, a major shareholder. None of the Non-Executive Directors or Non-Executive Chairman are financially dependent on the Company as they all have other jobs in either industry or academia. In addition, none of the Non-Executive Directors has a significant shareholding defined as greater than 3% in the Company, or represents a significant shareholder.

Under the QCA Guidelines the independence of the Chairman and Non-Executive Directors could be challenged under the following areas, but in all cases the Board believes that all the Non-Executive Directors act in an independent manner at all times:

PRINCIPLE 6: Ensure that between them the Directors have the necessary up-to-date experience, skills and capabilities

Peter Grant, Independent Chairman

Term of office: Non-Executive Chairman and Chairman of the Finance and Audit Committee on 1 January 2018.

Background and suitability for the role: Peter Grant had an executive career spanning 40 years, nearly half at listed company board level spanning the healthcare, electronics, software and engineering industries. His executive career included CEO of Skyepharma PLC, CFO of Skyepharma PLC, Group Finance Director at Eurodis Electron PLC, CFO at WorldPay Group plc, Group Chief Executive at Molins PLC and Finance Director at Molins PLC. Prior to this he held a variety of senior commercial, financial and general management roles in the General Electric Company PLC group of companies. He holds an MA in Mathematics from the University of Oxford and is a Chartered Accountant. He brings a combination of listed company and financial expertise, experience of developing, manufacturing and distributing electronic and software products and experience of the healthcare sector.

Current external appointments: Peter is Chairman and Chair of the Audit and Nomination Committees and member of the Remuneration Committee of LiDCO Microsaic Systems plc, Non-Executive Director and Chair of the Audit and Risk Committee and member of the Remuneration Committee of Abzena plc, and a Non-Executive Director of Labatec Pharma SA, a private Swiss company. In addition to chairing the Board of the Company, Peter chairs the Audit Committee and is a member of the Remuneration Committee of the Company.

Peter estimates that his current appointments, including that with the Company, comprise about 10 days a month, and he considers that he would have the time to be able to step up the commitment to the Company should temporary circumstances require him to do so.  Peter keeps his skills up to date by regularly reading various publications on changes in regulations and the business environment affecting companies, especially in the healthcare sector.

Glenn Tracey, Chief Executive Officer

Term of office: Joined March 2015 as Chief Operating Officer, appointed to the Board December 2015, and appointed as CEO September 2016

Background and suitability for the role: Glenn has more than 20 years’ experience leading operations, marketing and high technology collaboration, and research and development for small and large companies in sensing and detection instrumentation, across applications in human and environmental health. Glenn specialises in scaling new technology into emerging markets, especially transitioning contemporary high-end detection laboratory technologies to point of need or field-based sensing across a number of markets such as food, air, water and pharmaceuticals.

He holds a BSc in Applied Chemistry from Salford University, and an MBA from the Open University.

Bevan Metcalf, Part-time Finance Director

Term of office: Appointed to the role of Part-time Finance Director on 18 December 2015. Bevan Metcalf is employed for 13 days per month. Any additional days are paid on an agreed day rate on a quarterly basis. Bevan Metcalf has the flexibility to increase his time during busy periods as Microsaic is his only role.

Background and suitability for the role: Bevan has a Business Management Degree from the University of Waikato, Hamilton, New Zealand where he majored in Accounting. He is also an ACA Member of the Chartered Accountants of Australia and New Zealand.

Bevan Metcalf has 38 years’ of financial management experience with international companies primarily in the mining and pharmaceuticals sectors, including Beowulf Mining (2014-2017), Afferro Mining (2008-2013), African Eagle Resources (2004-2011), Orion Corporation (1995-2003), GlaxoSmithKline (1984-1995), Charles Parsons Ltd (1982-1983) and ICI (1980-1981). In the past 14 years he has been involved with companies listed on the AIM market of the London Stock Exchange and on the Toronto Stock Exchange as Finance Director, Company Secretary, Chief Financial Officer and in a Non-executive Director capacity. He therefore understands the Governance and MAR regulations impacting the Company.

Bevan Metcalf’s 20 years’ experience in the Pharmaceutical Industry is very relevant to the strategy the Company which is targeting the pharmaceutical industry for its miniaturised mass spectrometers.

Bevan Metcalf keeps his accounting skills up to date through his membership of the Chartered Accountants of Australia and New Zealand where he accesses their library of resources and receives journals and other reading materials on a regular basis.

Bevan Metcalf’s most recent re-appointment as a Director of the Company was on 4 May 2018, at the Company’s AGM, when he retired per Article 81.1 (c) of the Articles of Association.

Bevan Metcalf has no other external appointments.

Professor Eric Yeatman, Non-Executive Director

Term of office: Director since the foundation of the Company in 2001. Non-Executive Director during this period except:

  • Chairman: 2004 – December 2011
  • Interim CEO: December 2011 – November 2012
  • Chairman: November 2012 – June 2013
  • Interim Chairman: February 2017 – December 2017

Eric has been Chairman of the Remuneration Committee since 1 January 2018, and has previously chaired the Finance and Audit Committee. His most recent re-election as Director was on 20 June 2016.

Background and suitability for the role:

Eric Yeatman has been an active researcher in micro-technology, on which the Company’s unique products are based, since 1986. He obtained his PhD in 1989 and has since been a member of academic staff of Imperial College London, one of the world’s top 20 universities, becoming full Professor in 2005. He has published over 200 papers in related fields, with over 8000 citations, and is inventor or co-inventor on 10 patents. As a co-founder, he is intimately familiar with the evolution of the Company and its technology. He has served on the advisory boards of two venture capital funds and one high technology company. He is a Fellow of the Royal Academy of Engineering, and was awarded its Silver Medal in 2011, given “to recognise an outstanding and demonstrated personal contribution to British engineering”.

Current external appointments: Prof. Yeatman is Head of the Department of Electrical and Electronic Engineering of Imperial College London. He is a member of the Enterprise Committee of the Royal Academy of Engineering. He serves on a number of advisory committees and boards of international technical conferences and journals. These other commitments do not prevent him spending whatever time is needed to fully exercise his duties and responsibilities as a Non-Executive Director of the Company, and none creates a conflict of interest with, or imposes a relevant restriction on, his duties to the Company.

Chris Buckley, Independent NED

Term of office: Non-Executive Director appointed April 2016. Chris Buckley is also a member of the Finance & Audit committee and the Remuneration Committee.

Background and suitability for the role: Chris Buckley has 35 years of experience in the global healthcare industry, spanning international marketing and general management assignments. He has a proven track record of translating scientific innovations into competitive customer-focussed benefits. Chris holds a degree in pharmacology and biology from the University of Aston, UK.

Chris spent 27 years of his career with Novartis, predominantly in the Consumer Healthcare and Pharma divisions, where he progressed through a variety of local, regional and global roles. He brings to Microsaic, a wealth of wealth of strategic management experience, coupled with the pragmatic and commercial expertise to effectively grow brands.

Other current assignments: Chris is employed by Quotient SA, a diagnostics company in the global blood transfusion market, where he is appointed to the role of Head of Marketing and Value Creation.

Chris’s experience in the pharmaceutical and in-vitro diagnostics Industries is very relevant to Microsaic’s strategy, since the company is targeting the pharmaceutical industry for its miniaturised mass spectrometers.

Chris keeps his commercial skills up to date through his role as Head of Marketing and Value Creation for Quotient SA. He is also a Fellow of the Chartered Institute of Marketing (FCIM), where he has access to a marketing resource library and marketing training programmes.

Professor Andrew Holmes, Non-Executive Director

Term of office: Since the foundation of the Company in 2001. Andrew’s most recent re-election as Director was on 15 May 2017, at the Company’s AGM, when he retired per Article 81.1 (c) of the Articles of Association.

Background and suitability for the role: Andrew is Professor of Microelectromechanical Systems (MEMS) at Imperial College London. He holds a BA degree in natural sciences from Cambridge University, and a PhD degree in electrical engineering from Imperial College London. He has been an active researcher in micro-technology since 1987 and has published over 160 papers in this and related fields. He also has extensive experience of analogue and mixed signal electronic circuit design through industrial consultancy work over the past 30 years. He has acted as a technical adviser to the Company since its foundation, and has made key contributions to the development of both the core technology and its associated electronics. Andrew keeps his skills up to date by reading relevant technical publications and attending conferences. He is a Fellow of the IET.

Current external appointments: Andrew is Director of Postgraduate Studies and Deputy Head of the Optical & Semiconductor Devices Group in the Department of Electrical and Electronic Engineering Department at Imperial College London. He is an editor of the IEEE Journal of Microelectromechanical Systems (JMEMS) and a founding member of the MEMS Technical Coordination Committee within the IEEE Industrial Electronics Society. He also serves on the technical program committees of several international conferences. None of these commitments creates a conflict of interest with his duties to the Company.

The Company from time to time uses external advisers.

During 2018, The Board has retained the following advisers:

  • PhilipHare and Associates for advice on the handling of Venture Capital Trusts (VCT) and Enterprise Investment Schemes (EIS) during the Company’s fundraise, June 2018
  • N+1 Singer is Broker, NOMAD and corporate financial adviser on an ongoing basis, and for specific advice during the Company’s fundraise, June 2018
  • Dorsey & Whitney (Europe) LLP for specific advice during the Company’s fundraise, June 2018
  • Menzies LLP for ongoing advice on NED remuneration and tax treatment

PRINCIPLE 7: Evaluate Board performance based on clear and relevant objectives, seeking continuous improvement

Board Evaluation Process

The Board believes that, in addition to dealing with any matters as they arise, it is appropriate to carry out a formal evaluation of the performance of the Board each year. This is intended to ensure that the Board remains effective, well-informed and able to make high quality and timely decisions for the benefit of all stakeholders in the Company.

The first such evaluation will be carried out in Q2, 2019, as the current Board will then have operated throughout a full annual financial reporting cycle.  This will involve each Director completing an evaluation questionnaire which covers effectiveness from multiple angles including: Board structure and committees; Board arrangements, frequency and time; content of Board meetings; Board culture; Board evaluation and succession; and Individual contributions. The completed questionnaires will be anonymised and collated independently into a summary, and comments and any areas of concern will be highlighted for discussion with the whole Board.

Succession planning

As is common with many small AIM listed companies, the Company does not have internal candidates to succeed existing Executive Directors. This will be kept under review, especially when recruiting for senior roles as vacancies arise. However, the Board does not believe it is appropriate to recruit additional Directors or senior personnel solely for the purpose of board succession planning.

Training of Directors 

It was recognised that there continues to be more regulation of which Directors need to be aware. The Board will continue to ensure that Directors receive appropriate support to keep up to date.

In 2017 the CEO completed an Institute of Directors course in Company Direction.

In 2018 the CEO undertook one to one Executive Coaching and as part of that coaching anonymised feedback was taken from key stakeholders which in turn was discussed with the CEO.

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

The Company is committed to achieving the highest possible ethical standards in conducting its business. The Company expects all employees and Directors to maintain the same high standards. To achieve these ends, Microsaic encourages freedom of expression and speech.

Ethics is based on a set of principles and clear moral and ethical values. The Company takes its principles and values very seriously and when all else fails, expects staff at all levels to look to these principles and values for guidance.

The Company is in the process of implementing an ethical value system and discussing its principles and core values with its employees.

Principles:

The Board as adopted the following four Principles:

  1. Management must lead by example. Good ethics should be most noticeable at the top. Every employee must be accountable to the same rules.
  2. Corporate values must be implemented throughout the company. Every forum and medium should be used to spread the message and, most of all, the Company must practice what it preaches.
  3. Meetings with staff (both one on one and group) to discuss the values and what they mean to each employee must be undertaken when implementing a value system. This will help to get everyone in the Company on the same page and committed.
  4. The values of the Company must endure changes in leadership. The longer ethical values last, the more ingrained they will become.

Values

The Company conducts its business around 7 core values:

  1. Integrity – applying high ethical standards and being honest. The old adage, “honesty is the best policy” is true today more than ever. The Company will conduct its business with honesty to all stakeholders and will uphold high moral principles.
  2. Mutual respect, empathy and trust in dealing with others. An environment of mutual respect, empathy and trust is necessary if a Company is to promote integrity. Trust in the workplace is critical to organizational success. You cannot optimize results by yourself; you need others’ support and assistance. Trust is something that must be gained over time. We are not “entitled” to others’ trust; we have to earn it. Respect is a term that defines the feeling of holding a company or person in high esteem.
  3. Innovation – a passion to experiment and deliver new solutions. A focus on research and development is extremely important to the future success of the Company. The Company is looking to introduce new technologies, products, processes or upgrades that are designed to achieve both product differentiation and lower costs while at the same time delivering innovative solutions to meet customer needs.
  4. Teamwork – drives high performance. As a small Company, Microsaic relies heavily on team work. No one person is bigger than the Company. A team approach is more efficient, faster, benefits from multi-skills especially in problem solving, increases learning opportunities and encourages a sense of belonging, which often translates to a greater sense of ownership and accountability for the work. The teams’ communication principles are to listen effectively and deliver; open, clear, complete, consistent and timely communication.
  5. Quality – we take pride in everything we do. The Company is strongly focused on quality from the products it produces to the processes it operates. The Company has recently transitioned to ISO9001-2015. Focusing on the quality of our people, products and services will ultimately create a quality image for the Company.
  6. Customer focus – go the extra mile for our customers. The Company assigns highest priority to customer satisfaction. We listen to our customers’ needs and create solutions for unmet customer needs.
  7. Shareholder value – striving to deliver value to shareholders. The key objective of the Company is achieving sustainable profitability. Every employee should understand how he or she fits into the profitability picture. Everyone’s common goal should be to build a strong, profitable Company that will endure and provide reasonable returns to shareholders.

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

The Board of Directors holds regular meetings on a monthly basis (12 annually) and additional meetings at any other time as may be necessary to deal with any urgent matters. Of the regular meetings, one or two are held by telephone conference with the remainder being face to face. The agenda for Board meetings is prepared by the Executive Directors (following an established framework) and agreed with the Chairman. In addition, a rolling agenda plan is in place with the aim of ensuring that the Board considers all the matters that it should, whilst allowing for the unexpected.  The rolling 12 month board agenda plan is reviewed at least annually and updated as appropriate.

The Executive Directors prepare regular reports for each Board Meeting, typically this includes a: CEO Report, Health and Safety Report, Finance Report and other papers to support matters for consideration e.g. budget papers in November etc., which allow the Board to assess the Company’s activities and review its performance. The reports are submitted at least 2-3 working days before the meeting. Non-Executive Directors are able to have discussions with other employees where they feel it is appropriate. Non-Executive Directors also have the authority (following discussions with the Chairman) to seek external independent advice as they think fit at the expense of the Company.

The attendance of the individual directors at the regular Board Meetings and the Finance and Audit and Remuneration Committee Meetings during the last financial year ended 31 December 2017 were as follows:

Name Position Regular Board Meetings Finance & Audit Committee Remuneration Committee
Peter Grant Non-Executive Chairman Not appointed until 1.1.18
Eric Yeatman Interim Chairman 12 (12) 2(2) 2(2)
Glenn Tracey CEO 12 (12) n/a n/a
Bevan Metcalf FD 12 (12) n/a n/a
Chris Buckley Non-Executive Director 10 (12) 2 (2) 2 (2)
Andrew Holmes Non-Executive Director 10 (12) 2 (2) 2 (2)

Numbers in brackets denote the total number of meetings that each Director was eligible to attend during the year.

Conflict of Interest

The Directors must keep the Board advised of any interest that could potentially conflict with those of the Company. At any time when a Director believes that there may be a conflict, this should be disclosed to the Chairman and Chief Executive without delay and at the start of the next Board meeting to the Board as a whole. Where a material conflict exists, the Director concerned must not participate in discussions or vote on that subject matter.

Finance and Audit Committee

The remit of the Finance and Audit Committee is documented in its terms of reference which have been adopted the Board of Directors.

The purpose of the Committee is to assist the Board in the effective discharge of its responsibilities for corporate governance, financial reporting, corporate control and risk management. The Committee normally meets at least twice a year and, amongst other things, reviews the annual report and accounts with the external auditors and interim statements.

The Committee also approves external auditors’ fees and ensures auditors’ independence as well as focusing on compliance with legal requirements and accounting standards. The ultimate responsibility for reviewing and approving the annual financial statements and interim financial statements remains with the Board.

The members of the Finance and Audit Committee are: A S Holmes, C J Buckley, E M Yeatman and P W Grant. Mr Grant is the Chair of the committee. The external auditors, Chief Executive Officer, Finance Director and other executives may be invited to attend Committee meetings at the discretion of the Committee.

The terms of reference can be found here.

Remuneration Committee

The remit of the Remuneration Committee is documented in its terms of reference which have been adopted by the Board of Directors.

The Remuneration Committee meets as required and at least once a year. Its responsibilities include reviewing the performance of the Executive Directors, setting their remuneration levels, determining the payment of bonuses (if applicable) and other benefits and considering the grant of options under the Company share option schemes.

The members of the Remuneration Committee are: E M Yeatman (Chair), G J Buckley, P W Grant and A S Holmes.

The terms of reference can be found here.

Nomination Committee

At this stage, it is not considered appropriate for the Company to have a formally constituted Nominations Committee, however, this will be kept under review. Board appointments are considered by the Board as a whole.

Matters Reserved for the board

The matters reserved for the board are detailed below:

Responsibilities of the Board

The Board has approved the following list of areas and matters for which it has reserved responsibility (together with its committees).

Management structure and appointments

  • Senior management responsibilities
  • Board and other senior management appointments or removals
  • Board senior management succession, training, development and appraisal
  • Appointment or removal of Company Secretary
  • Appointment or removal of internal auditor
  • Remuneration, contracts, grants of options and incentive arrangements for senior management
  • Delegation of the Board’s powers
  • Agreeing membership terms of reference of board committees and task forces
  • Establishment of managerial authority limits for smaller transactions.
  • Matters referred to the Board by the board committees.

Strategic /Policy considerations

  • Business strategy
  • Diversification/retrenchment policy
  • Specific risk management policies including insurance, hedging, borrowing limits, treasury policy and corporate security
  • Agreement of codes and ethics and business practices
  • Receipt and Review of regular reports on internal controls
  • Annual assessment of significant risks and effectiveness of internal controls
  • Calling of shareholders’ meetings
  • Avoidance of wrongful or fraudulent trading

Transactions

  • Acquisitions and disposals of subsidiaries or other assets over £25,000
  • Investment and other capital projects over £25,000
  • Substantial commitments including:
  • Pension funding
  • Contracts in excess of one year’s duration
  • Giving security over significant group assets (including mortgages and charges over the groups’ property)
  • Contracts not in the ordinary course of business
  • Actions or transactions where there may be doubt over propriety
  • Approval of certain announcements, prospectuses, circulars and similar documents
  • Disclosure of Directors’ interests
  • Transactions with Directors or other related parties

Finance

  • Raising new capital and confirmation of major financing facilities
  • Treasury policies including foreign currency and interest exposure
  • Discussion of any proposed qualification to the accounts
  • Final approval or annual and interim reports and accounts and accounting policies
  • Appointment/proposal of auditors
  • Charitable and political donations
  • Approval and recommendations of dividends (currently not applicable)
  • Approval of budgets for the year and periodic review during the year

Internal controls

The Board is ultimately responsible for the Company’s system of internal control and for reviewing its effectiveness. This includes financial, operational and compliance controls and risk-management systems. Internal control systems are designed to meet the Company’s particular needs and the risks to which it is exposed. The internal control systems are designed to minimise rather than eliminate the risk of failure to achieve business objectives and by their nature can only provide reasonable and not absolute assurance against misstatement and loss.

General

  • Governance of Company Pension Scheme
  • Allotment, calls or forfeiture of shares
  • Approval of Health and Safety policy.
  • Anti-Bribery policy


PRINCIPLE TO BUILD TRUST

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

Remuneration Committee Report

The report for 2017 is detailed in the 2017 Annual Report which can be found under Documents in the Investors section of the website.

Audit Committee Report

The Company has not traditionally published an Audit Committee Report relying on the Independent Auditors’ Report published in the Annual Report.  An Audit Committee Report will in future be included in the Annual Report.

Detailed below is a summary of the key audit matters discussed by the Audit Committee during the 2017 audit process:

  1. Risk of material misstatement arising from the going concern status of the company.
    Due to the operating losses made in recent years and the low level of sales, the going concern assumption had been identified as a significant risk to the Company. The Company prepared a 5 Year Annualised Plan supported by a 3 year detailed plan (by month) of how the Company will achieve its strategic goals including profitability. In addition, sensitivities were applied to the base case in order to stress test the numbers. The Plan identified the requirement for additional funds to achieve the plan numbers; this included investment in key areas such as R&D and marketing. The auditors critically appraised the going concern and were satisfied that, on the basis of the forecasts and discussions with our brokers, the adoption of the going concern basis and the disclosures were appropriate.
  2. Risk of Material Misstatement arising from valuation of stockIn 2017 there was the risk of obsolescence of stock arising from the planned introduction in 2018 of the 4500 MiD mass spectrometer (“MS”) which would supersede the current 4000 MiD. The Company had ten 4000 MiDs in stock at year end 2017 and provided for four of these detectors becoming obsolete plus additional spare parts. The amount of the provision was £86,055.

There were no identified uncorrected misstatements which would have a material effect on the financial statements. Also the auditors did not identify any misstatements in financial statement disclosures which remain uncorrected.

The tax compliance work is review and filing work rather than preparation (the initial tax computation being prepared by management and audited by the audit team) and carried out by a team wholly separate from the audit team.

The advisory work is in relation to VAT and corporation tax matters. With each request for advisory services the auditors assess the impact on the audit and their independence.  This work has been carried out by teams wholly separate from the audit team.

The Committee is satisfied that the auditors remain independent for the purposes of the annual audit. In order to comply with Financial Reporting Council rules, concerning the responsible individual for audits of listed companies and the maximum length of 5 years that any one partner can act in this role, the audit partner was last rotated ahead of the 2013 audit. The next rotation will commence prior to the 2018 audit.

The Committee also considers internal controls. During 2017 management prepared a Financial Procedures Manual to document and help to reinforce internal controls.

The Committee considers that given the size of the Company and its current stage of development a separate internal audit function is not required, but the matter is reconsidered annually by the Committee.

Disclose voting at the AGM

The AGM was held on 4 May 2018. Apart from Chris Buckley who was unable to attend due to other commitments, all Directors attended the AGM. All shareholders are invited to make use of the Company’s Annual General Meeting to raise any questions regarding the management or performance of the Company. The Notice of AGM is always printed in the back of the Annual Report.

All resolutions were passed by a show of hands at the AGM. The outcome of the proxy voting is as follows:

Chairman of the meeting Chairman of the meeting Chairman’s
FOR AGAINST Discretion Abstain
Votes Votes Votes Votes
Ordinary Resolution 1 105,329,035 0 50,000 1,628
Ordinary Resolution 2 105,329,535 0 50,000 1,128
Ordinary Resolution 3 105,329,535 0 50,000 1,128
Ordinary Resolution 4 105,329,535 0 50,000 1,128
Ordinary Resolution 5 105,329,535 50,000 0 1,128
Special Resolution 6 105,329,535 50,000 0 1,128
Special Resolution 7 105,329,535 50,000 0 1,128
MAXIMUM VOTES WHICH MAY BE CAST 181,365,146
MAXIMUM VOTES WHICH MAY BE CAST 181,365,146

 

Interim Results and Annual Reports

These can be found on the Company’s website going back to 2010.

www.microsaic.com/investors/documents

Other Governance Related Material

Other materials such as AGM Notices, our 2011 Admission Document and Circulars when raising funds can also be found at:

www.microsaic.com/investors/documents