Corporate Governance Statement

Plant Health Care plc (the “Company”) is committed to maintaining the highest standards of corporate governance throughout its operations and to ensuring that all of its practices are conducted transparently, ethically and efficiently. The Company believes that continual review of all aspects of its business and reflecting, analysing and improving its procedures will result in the continued success of the Company and improve shareholder value. Therefore, and in compliance with the updated AIM Rules for Companies, the Company has chosen to formalise its governance policies by complying with the UK’s Quoted Companies Alliance Corporate Governance Guidelines for Small and Mid-Size Quoted Companies (the “QCA Code”).

In assessing its compliance with the QCA Code, the Company’s Board of Directors (the “Board”) is mindful that in some areas it does not fully comply with the QCA Code. Such non- compliance, particularly with regard to the combined roles of Chairman and Interim CEO, reflects the size of the Company, its stage of development and the complex scientific/specialist nature of certain of its activities. The Board is alert to the potential risks this may create and has therefore provided the following background and explanation.

Prior to November 2016, the Board had a separate Chairman and CEO and therefore maintained a separation of duties and also half of the Board was independent. During 2015-2016 the Company materially increased its investment into its New Technology business. Dr Webb took on certain executive responsibilities to develop and lead the New Technology segment of the Company’s business and was no longer an independent director. Following the departure of the then CEO in November 2016, it was considered by the Board that the Chairman had the right balance of Board, executive leadership and industry experience to lead the Company through a critical transition phase of its development. This phase included the investment in the leading position in the development of the New Technology segment of the Company’s business whilst also aggressively seeking to develop the position of its proprietary Commercial products. These two areas require several leadership and operational capabilities as well as a detailed appreciation of the science and market potential for the Company’s New Technology. Utilising the skills of an existing Board member has been a pragmatic way of managing continuity during this period. This combined position continues today and is regularly reviewed by the Board. The Chairman taking on the additional responsibility of Interim CEO has also meant that the Board no longer had the ideal split of independent and non-independent directors.

The two independent non-executives, William Lewis with extensive commercial experience in the industry and Michael Higgins the senior independent director who has extensive Board experience and a financial background, are content that this is an appropriate position for the Company currently. However, it is kept continuously under review and will change when appropriate for the Company given its size and development. Mr Higgins has also stepped into the Chairman’s role for purposes of corporate governance and takes the lead for the Company on all corporate governance matters.

Messrs Lewis and Higgins chair the Company’s two key committees and also meet with the Chairman separately on a regular basis. Board meetings have appropriately robust agendas and are held face to face in the US between 5 and 6 times a year over one and a half days each. The US is the main centre of activity and management of the Company. Each Board meeting also includes involvement of the key executive leadership not on the Board. Messrs Lewis and Higgins are satisfied that the current Board has the right mix of skills that are relevant to the Company’s current position and stage of development. They are also satisfied that they present effective challenges to the executive Directors and management team.

The Company has established specific committees and implemented certain policies and practices to ensure that:

  • it is led by an effective Board which is collectively responsible for the long-term success of the Company;
  • the Board and the committees have the appropriate balance of skills, experience, independence, and knowledge of the Company to enable them to discharge their respective duties and responsibilities effectively;
  • the Board establish a formal and transparent arrangement for considering how it applies the corporate reporting, risk management, and internal control principles and for maintaining an appropriate relationship with the Company’s auditors;
  • there is a dialogue with shareholders based on the mutual understanding of objectives; and
  • all aspects of the Company are run in a robust and responsible way.

Board of Directors

The Board of directors is responsible for the proper management of the Company by formulating, reviewing and approving the Company’s strategy, budgets, and corporate actions. In order to achieve its objectives, the Board adopts the ten principles of the QCA Code. Through successfully implementing these principles, the Company believes it is able to deliver long-term growth for shareholders and maintain a flexible, efficient and effective management framework within an entrepreneurial environment.

It is important that the Board itself contains the right mix of skills and experience in order to deliver the strategy of the Company. As such, the Board is currently comprised of:

  • Dr. Christopher G J Richards, Executive Chairman and Interim CEO;
  • Dr. Richard Webb, Executive Director;
  • Michael J. Higgins, Senior Independent Director; and
  • William M. Lewis, an independent Non-executive Director.

The backgrounds and relevant experience of these directors is set out on the website.

Additionally, the Company has appointed a professional Company Secretary who is also our General Counsel who assists the Chairman and Committee Chairmen in preparing for and running effective Board meetings and Committee meetings, including the timely dissemination of appropriate information prior to meetings and minutes following the meetings. The Company Secretary provides advice and guidance to the extent required by the Board on the legal and regulatory environment.

Each Director serves on the Board from appointment until the next annual general meeting at which he or she stands for election. Thereafter he or she stands for reelection in accordance with the Company’s Articles of Association which is no less than once every three years.

Committees

In compliance with UK best practice, the Board has established the following committees.

Audit Committee

The purpose of the Audit Committee is to monitor the integrity of the financial statements of the Company.

Some of the Audit Committee’s duties include:

  • reviewing the Company’s accounting policies and reports produced by internal and external audit functions;
  • considering whether the Company has followed appropriate accounting standards and made appropriate estimates and judgments, taking into account the views of the external auditor;
  • reporting its views to the Board of Directors if it is not satisfied with any aspect of the proposed financial reporting by the Company;
  • reviewing the adequacy and effectiveness of the Company’s internal financial controls and internal control;
  • reviewing the adequacy and effectiveness of the Company’s anti-money laundering systems and controls for the prevention of bribery and receive reports on non-compliance; and
  • overseeing the appointment of and the relationship with the external auditor.

The Audit Committee has two members, each of whom is an independent, non-executive director and at least one member who has recent and relevant financial experience. The current members of the committee are Michael Higgins as the Chairman and William Lewis.

Remuneration Committee

The purpose of the Remuneration Committee is to determine and agree with the Board regarding the framework or broad policy for the remuneration of the Company’s chairman and the executive directors as well as the composition of the Board itself.

Some of the Remuneration Committee’s duties include:

  • reviewing the pay and employment conditions across the Company, including the Executives on the Board;
  • approving targets and performance related pay schemes operated by the Company and all share incentive plans and pension arrangements;
  • regularly reviewing the structure, size, and composition (including the skills, knowledge, experience and diversity) of the Board and make recommendations to the Board with regard to any changes, succession planning and vacancies; and
  • identifying suitable candidates from a wide range of backgrounds to be considered for positions on the Board.

The Remuneration Committee has two members, each of whom is an independent, non-executive director. The current members of the committee are William Lewis as the Chairman and Michael Higgins.

In light of the current composition of the executive leadership and the Board, the Board as a whole has retained overall responsibility for the review of the overall risk management processes and principles. The Board as a whole constitutes the Nomination Committee and will appoint a sub committee if considered appropriate; the Board also determines remuneration for the Non-Executive Directors.

Share Dealing Code

The Company has adopted a share dealing code to ensure Directors and certain employees do not abuse, and do not place themselves under suspicion of abusing inside information of which they are in possession and to comply with its obligations under the Market Abuse Regulation (“MAR“) which applies to the Company by virtue of its shares being traded on AIM. Furthermore, the Company’s share dealing code is compliant with the AIM Rules for Companies published by the London Stock Exchange (as amended from time to time).

Under the share dealing code, the Company must:

  • disclose all inside information to the public as soon as possible by way of market announcement unless certain circumstances exist in which the disclosure of the inside information may be delayed;
  • keep a list of each person who is in possession of inside information relating to the Company;
  • procure that all persons discharging managerial responsibilities and certain employees are given clearance by the Company before they are allowed to trade in Company securities; and
  • procure that all persons discharging managerial responsibilities and persons closely associated to them notify both the Company and the Financial Conduct Authority of all trades in Company securities that they make.

QCA Code

The QCA Code identifies ten principles to be followed in order for companies to deliver growth in long term shareholder value, encompassing an efficient, effective and dynamic management framework accompanied by good communication to promote confidence and trust.

The sections below set out the ways in which the Company applies the ten principles of the QCA Code in support of the Company’s medium to long-term success.

The strategy and business operations of the Company are set out in the Strategic Report on pages 1-15 of the Company’s 2017 Annual Report.

The Company’s strategy and business model and amendments thereto, are developed by the Interim CEO and his senior management team, and approved by the Board. The management team, led by the Interim CEO, is responsible for implementing the strategy and managing the business at an operational level. A comprehensive budgeting process is completed once a year and is reviewed and approved by the Board. The Company’s results, compared with the budget, are reported to the Board on a bi-monthly basis.

The Company’s overall strategic objective is to be a leading provider of proprietary biological products.

The Company’s business is subject to a number of potential risks and uncertainties, including those listed on page 13 of its 2017 Annual Report. The occurrence of any of these risks may materially and adversely affect the Company’s business, financial condition, results of operations and future prospects. The Company manages and mitigates these risks by executing its strategy and operational plans.

The Company seeks to maintain a regular dialogue with both existing and potential new shareholders in order to communicate the Company’s strategy and progress and to understand the needs and expectations of shareholders.

Beyond the Annual General Meeting, the Chairman and Interim CEO and, where appropriate, other members of the board and senior management team meet regularly with investors and analysts to provide them with updates on the Company’s business and to obtain feedback regarding the market’s expectations of the Company.

The Company’s investor relations activities encompass dialogue with both institutional and private investors.

The Company is aware of its corporate social responsibilities and the need to maintain effective working relationships across a range of stakeholder groups. These include the Company’s employees, partners, customers, suppliers, regulatory authorities. The Company’s operations and working methodologies take account of the need to balance the needs of all of these stakeholder groups while maintaining focus on the Board’s primary responsibility to promote the success of the Company for the benefit of its shareholders as a whole. The Company endeavours to take account of feedback received from stakeholders, making amendments to working arrangements and operational plans where appropriate and where such amendments are consistent with the Company’s longer term strategy.

The Company takes due account of any impact that its activities may have on the environment and seeks to minimise this impact wherever possible, especially focusing on biological products which promote the yield and productivity of agricultural crops in ways which are more environmentally benign than conventional chemical products. Through the various procedures and systems it operates, the Company ensures full compliance with health, safety and environmental laws, rules and regulations relevant to its activities.

The Board is responsible for the systems of risk management and internal control and for reviewing their effectiveness. The internal controls are designed to manage rather than eliminate risk and provide reasonable but not absolute assurance against material misstatement or loss. Through the activities of the Audit Committee, the effectiveness of these internal controls is reviewed annually.

A summary of the principal risks and uncertainties facing the Company are set out on page 13 of the Company’s 2017 Annual Report.

The Company maintains appropriate insurance cover in respect of actions taken against the Directors because of their roles, as well as against material loss or claims against the Company. The insured values and type of cover are comprehensively reviewed on a periodic basis.

The senior management team meet at least twice annually to review the Company’s risk register, along with potential causes and impact, controls and actions to minimize the probability of those risks materializing, and consider new risks and opportunities presented to the Company, making recommendations to the Board as appropriate at least once annually.

The Company’s Board is currently comprised of 2 Non-executive Directors and 2 Executive Directors. The Chairman is non-independent.

Each Director serves on the board from appointment until the next annual general meeting at which he or she stands for election.Thereafter he or she stands for reelection in accordance with the Company’s Articles of Association which is no less than once every three years.

Directors’ biographies are set out on page 17 of the Company’s 2017 Annual Report. The Board is responsible to its shareholders for the proper management of the Company and meets at least six times a year to set the overall direction and strategy of the Company, to review scientific, commercial, operational and financial performance and to advise on management appointments. All key operational and investment decisions are subject to Board approval. A summary of Board and Committee meetings held in the year ended 31 December 2017, and Directors’ attendance records, is set out on page 26 of the Company’s 2017 Annual report.

The Board considers itself to be sufficiently independent. The QCA Code suggests that a board should have at least two independent Non-executive Directors. Both of the Non-executive Directors who currently sit on the Board of the Company are regarded as independent under the QCA Code’s guidance for determining such independence. Non-executive Directors receive their fees in the form of a basic cash fee.

The Board considers that all of the Non-executive Directors are of sufficient competence and calibre to add strength and objectivity to its activities, and bring considerable experience in scientific, commercial, operational and financial development of products and companies.

The Board regularly reviews the composition of the Board to ensure that it has the necessary breadth and depth of skills to support the ongoing development of the Company.

The Chairman, in conjunction with the Company Secretary, ensures that the Directors’ knowledge is kept up to date on key issues and developments pertaining to the Company, its operational environment and to the Directors’ responsibilities as members of the Board. During the course of the year, Directors received updates from the Company Secretary and various external advisers on a number of corporate governance matters. Furthermore the key commercial executives and the New Technology team regularly present at Board meetings and attend dinners with Board members. Also once a year the Board visits the Research and Development centre in Seattle and are briefed by the team.

Directors’ service contracts or appointment letters make provision for a Director to seek personal advice in furtherance of his or her duties and responsibilities, normally via the Company Secretary.

The Board has a process for evaluation of its own performance, that of its committees and individual Directors, including the Chairman. This process is conducted on a regular basis and last took place in October 2017, with no substantive issues arising. Evaluation criteria include Board Composition, Strategy, Board Meetings, Training and Development, Governance, Risk, Company Secretary and Leadership. The Board may utilise the results of the evaluation process when considering the adequacy of the composition of the Board and for succession planning.

The Board seeks to maintain the highest standards of integrity and ethics in the conduct of the Company’s operations. These values are exhibited in the written policies and working practices adopted by all employees in the Company. An open culture is encouraged within the Company, with regular communications to staff regarding progress and staff feedback regularly sought. Employees are expected to behave and to execute the Company’s strategy and objectives in an ethical, compliant manner as well as to ask questions and raise concerns openly. The Interim CEO and senior management team monitors the Company’s cultural environment and seeks to address any concerns that may arise, escalating these to Board level as necessary.

The Board has overall responsibility for promoting the success of the Company. The Executive Directors have day-to-day responsibility for the operational management of the Company’s activities. The Non-executive Directors are responsible for bringing independent and objective judgment to Board decisions.

The role of Chief Executive Officer is currently filled by the Chairman on an interim basis, which has been deemed to be in the best interest of the company and its shareholders.

The Chairman is responsible for overseeing the running of the Board, ensuring that no individual or group dominates the Board’s decision-making and ensuring the Non-executive Directors are properly briefed on matters. The Interim CEO (currently also Executive Chairman) has the responsibility for implementing the strategy of the Board and managing the day-to-day business activities of the Company.

The Senior Independent Director has overall responsibility for corporate governance matters in the Company. The Company Secretary is responsible for ensuring that Board procedures are followed and applicable rules and regulations are complied with.

The Board has established an Audit Committee and Remuneration Committee with formally delegated duties and responsibilities. The Board as a whole constitutes the Nomination Committee and will appoint a sub committee if considered appropriate.

The Audit Committee normally meets at least three times a year and has responsibility for, amongst other things, planning and reviewing the annual report and accounts and interim statements involving, where appropriate, the external auditors. The Committee also approves external auditors’ fees and ensures the auditors’ independence as well as focusing on compliance with legal requirements and accounting standards. It is also responsible for ensuring that an effective system of internal control is maintained. The ultimate responsibility for reviewing and approving the annual financial statements and interim statements remains with the Board.

A summary of the work of the Audit Committee undertaken in the year ended 31 December 2017 is set out in the Audit Committee Report on page 20 of the Company’s 2017 Annual Report.

The Remuneration Committee, which meets as required, but at least three times a year, has responsibility for making recommendations to the Board on the compensation of senior executives and determining, within agreed terms of reference, the specific remuneration packages for each of the Executive Directors. It also supervises the Company’s share incentive schemes and sets performance conditions for share options granted under the schemes.

A summary of the work of the Remuneration Committee undertaken in the year ended 31 December 2017 is set out on pages 21-24 of the Company’s 2017 Annual Report.

The terms of reference of the above Committees are set out in the Corporate Governance section of the Company’s website.

The Company places a high priority on regular communications with its various stakeholder groups and aims to ensure that all communications concerning the Company’s activities are clear, fair and accurate. The Company’s website is regularly updated and users can register to be alerted when announcements or details of presentations and events are posted onto the website.

The Company’s financial reports, including the 2017 Annual Report, can be found in the Shareholder Reports section of the Company’s website. Notices of General Meetings of the Company can be found in the Shareholder Meetings section of the Company’s website.

The results of voting on all resolutions in future general meetings will be posted to the Company’s website, including any actions to be taken as a result of resolutions for which votes against have been received from at least 20 per cent of independent shareholders.

Date on which this information was last reviewed: 27 September 2018