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 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. It 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 principle and how they support the Company’s medium to long-term success.
The Board agenda is regularly reviewed to ensure that all matters which the Board should consider are addressed. This allows for presentations from senior management so that the Board benefits from their input.
The Company includes a Remuneration Committee Report and a Finance & Audit Committee Report in its Annual Report and Accounts.
The Board carries out a formal review of its effectiveness in January each year, which is reported on below under Principle 7. The evaluation of the Board’s effectiveness due to have been carried out in January 2021 was postponed until January 2022 considering the restructuring of the Board that was carried out in February 2021. Although the process was started in early 2022, it was agreed that it was appropriate to suspend the process until the Board is further strengthened with the expected appointment of an additional Non-executive Director and both a new CEO and a new Finance Director.
Save in respect of Principle 5 in consideration of the independence of the Non-executive Directors, which is considered in more detail below, the Board considers that it does not depart from any of the principles of the Code.
This information was last updated on 12 July 2022.
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 and Environmental applications, as well as niches in traditional small molecule markets. The Company intends to achieve its strategy with a business model built on customer focus, collaborations, and technology innovation.
Business Model:
The Company has moved from revenues in 2021 derived from the sale of its MS instruments, consumables and spare parts to deliver solutions for end-users, and in 2022 now operates a revenue sharing, hardware, software and micro-engineering design services business model. Working with collaboration partners is reducing the Company’s reliance on equipment sales (which depend on lengthy sales cycles) and in 2022 Microsaic has quickly moved towards a recurring revenue-based model, which is expected to increase the proportion of revenues from AI and analytical electronic sensor-based Internet of Things. These revenue streams are in addition to premium services relating to 24/7 operation and support and data analytics, in particular Industry 4.0 smart technology for the bioprocessing industry, which are also expected to form an increasing proportion of revenues. Other equipment developed in collaboration with partners, will shift towards the integration of sensors and analysers to solve specific problems for a range of industries, which our partners already operate in.
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 customer’s laboratory into production, and front-line operating environments. Microsaic will ensure that its strategic product development will remain focused on meeting demanding biopharmaceutical applications.
Remaining innovative in an advancing technological landscape
Microsaic has successfully developed and implemented advanced technology at the core of its design with over 80 patents to date. This has led to a solid foundation serving scientists in the laboratory in small molecule drug discovery, and increasingly in support of its endeavours in life and environmental science markets.
The Company continues to invest in product development projects which the Board believes will be attractive to the growing market for laboratory-based applications with larger biological molecules, such as peptides and small proteins.
The Company has extended its product capabilities further into Life Science applications, such as bioprocessing, potentially significantly reducing the cost of analysis and the cost of poor quality.
PRINCIPLE 2: Seek to understand and meet shareholder needs and expectations
The Company’s aim is to maintain and enhance good relations with 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 through its website, social media and regulatory news service announcements on technological, commercial and financial progress.
The Chief Executive Officer and the Finance Director are primarily responsible for maintaining dialogue with shareholders, supported by the Company’s brokers. The Chief Executive Officer and Finance Director hold live interactive meetings with shareholders following the announcement of the annual and interim results. Following these meetings, the Company receives feedback on shareholders’ views and concerns.
The AGM is the principal forum for dialogue with private shareholders, and we encourage all shareholders to attend and participate (subject to COVID-19 restrictions that may apply). The Chairman, Chief Executive Officer and Finance Director, together with other directors whenever possible, attend the AGM and are available to answer questions raised by shareholders. The Finance Director contacts larger shareholders before AGM’s and general meetings to ensure they have submitted their proxy voting forms, 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:
tel: (0) 1483 751 577
PRINCIPLE 3: Take into account wider stakeholder and social responsibilities and their implications for long-term success
Stakeholder: Staff
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:
- Regular staff briefings where there is a two-way dialogue where staff are updated on the progress of the business and the longer term strategy.
- Share options are granted to all staff, which link shareholder goals to longer term company performance.
- The Company is mindful of the importance of work-life balance for employees and their families and within the constraints of a small organisation offers flexible working hours and home working where-ever possible.
- Where-ever possible the Company offers training and career development opportunities which are very important in retaining staff.
- The Company provides a supportive work environment where dialogue is open and honest and where all staff are treated equally.
- Science is a creative discipline, and diversity of thought fundamentally underpins successful outcomes. The Company has an active Diversity and Inclusion program, initiated, promoted, and supported by the Chief Executive Officer directly.
Stakeholder: Clients
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 meetings with new and existing clients.
- Obtain fulfilment metrics employed by clients to measure on-going performance.
- Provide robust and reliable products which meet our rigorous quality standards. The Company is ISO 9001 2015 compliant.
- Ensure warranty terms on units are in line with industry standards.
This has led to an increase in new business development opportunities and collaborations, bringing to market products that customers have specifically asked for, and on-going improvements in our products and service.
Stakeholder: Suppliers
Our outsourced manufacturing partner is a key stakeholder.
Reason for engagement:
We outsource our manufacturing and assembly to a specialist high-technology manufacturing 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.
- We pay our suppliers in accordance with their terms.
This has resulted in a long-term relationship, founded on a large body of data, metrics and mutual trust.
Stakeholder: Shareholders
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. In accordance with the Market Abuse Regulation, where regulatory announcements include inside information this is indicated in the announcement itself.
- Keeping the investor relations section of the website up to date.
- Annual and half-year reports and presentations provided to analysts and key shareholders.
- The AGM gives shareholders the ability to ask questions of the Board (subject to COVID-19 restrictions).
- Social media. The Company is increasing its social media presence to better engage with shareholders and other stakeholders.
- Capital market events.
Stakeholder: Industry bodies
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.
Stakeholder: Environment
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.
Stakeholder: Health and Safety
As a Company we believe our employees have the right to come home safe and well from their job.
Reason for engagement:
It is our mission to prevent work related accidents, ill health and keep our employees safe.
How we engage:
- Assessing the risk to the health and safety of employees and others who may be affected and identifying what measures are needed to comply with its health and safety obligations.
- Providing and maintaining locations, equipment, protective clothing and systems of work that are safe and without risks to health.
- Ensuring that all necessary safety devices are installed and maintained on equipment.
- Providing information, instruction, training and supervision in safe working methods and procedures.
- Promoting the co-operation of employees to ensure safe and healthy conditions.
- Establishing a safety committee, safety representatives and accident investigations where applicable.
- Establishing emergency procedures as required.
- Monitoring and reviewing the management of health and safety at work.
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. These risks 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 Finance & Audit Committee and the Board.
The Company has 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 monthly 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. The Company has a Financial Procedures Manual which includes approval levels for authorisation of expenditure, potential fraud scenarios, payment approval process, expenses guidelines etc. This is updated on a regular basis.
The Company’s auditors are encouraged to raise comments on internal control in their management letter following the annual audit. The points raised and actions arising are monitored through to completion by the Finance & Audit Committee.