(Incorporated and registered in England and Wales under Companies Act 2006 and with registered number 04220106)
Corporate Governance
As a company admitted to trading on AIM, EnSilica Plc (“EnSilica” or the “Company”) is not required to adopt a specific corporate governance code. However, the Company is required to provide details of the corporate governance code it has decided to adopt, state how it complies with that code and provide an explanation where it departs from compliance with that code.
The directors of the Company (the “Directors” or the “Board”) support a high standard of corporate governance and has adopted the Quoted Company Alliance (the “QCA”) Corporate Governance Code (the “Code”), published by the QCA in April 2018.
The Directors believe that the QCA Code provides the Company with the framework to help ensure that a strong level of governance is maintained, enabling the Company to embed the governance culture that exists within the organisation as part of building a successful and sustainable business for all of its stakeholders.
The QCA launched an updated version of the Code in November 2023. The revised Code gives greater prominence to themes which are increasingly relevant to business practices and investor focus such as Director remuneration, succession and contingency planning, risk management and Board independence and composition.
The QCA has recommended that companies start applying the revised Code in respect of accounting periods commencing on or after 1 April 2024. So, while the revised Code will not apply to EnSilica until the 2025 financial year, the Board is fully cognisant of the revised Code and will be looking to implement the new aspects of the Code in due course.
The Code is constructed around ten broad principles and a set of disclosures. The Code states 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. We have considered how we apply each principle to the extent that the Board judges these to be appropriate in the circumstances, and we provide an explanation of the approach taken in relation to each principle on our website and a summary is set out below.
Principle 1: Establish a business strategy and business model which promote long-term value
for Shareholders
The Company’s business model and strategy is set out in the strategic report of the Company’s annual report and consolidated financial statement for the year ended 31 May 2023 (the “Annual Report”) as well as Part I of the Company’s AIM Admission Document (the “Admission Document”). The Directors believe that the Company’s model and growth strategy will help to promote long-term value for shareholders of the Company (“Shareholders”). An update on strategy is given from time to time in the strategic report that is included in the annual report and accounts of the Company.
The principal risks facing the Company are also set out in the strategic report of the Annual Report and Part II of the Admission Document. The Directors will continue to take appropriate steps to identify risks and undertake a mitigation strategy to manage these risks. In this respect, the Company has implemented a risk management framework.
Principle 2: Seek to understand and meet Shareholder needs and expectations
The Company remains committed to listening and communicating openly with its Shareholders to ensure that its strategy, business model and performance are clearly understood. Understanding what stakeholders think about the Company, and in turn, helping these audiences understand our business, is a key part of driving our business forward and we actively seek dialogue with all stakeholders.
Shareholders are kept up to date via announcements made through a Regulatory Information Service on matters of a material substance and/or a regulatory nature. Updates are provided to the market from time to time, including any financial information, and any expected material deviations to market expectations will be announced through a Regulatory Information Service. The Company’s annual general meeting is also an opportunity for Shareholders to meet with the Chairman and other members of the Board including the Senior Independent Director. In this respect, the Company’s annual report and notice of annual general meeting (“AGM”) is sent to all Shareholders and is available for download from the Company’s website.
The Company’s AGM is open to all Shareholders, giving them the opportunity to ask questions and raise issues during the formal business or, more informally, following the meeting. The results of the Company’s AGM are announced through a Regulatory Information Service.
The Board is keen to ensure that the voting decisions of Shareholders are reviewed and monitored, and the Company engages with Shareholders who do not vote in favour of resolutions at AGMs.
All contact details for investor relations are included on the Company’s website.
Principle 3: Take into account wider stakeholder and social responsibilities and their implications for long-term success
The Company takes its corporate social responsibilities very seriously and is focused on maintaining effective working relationships across a wide range of stakeholders including shareholders, staff, and customers part of its business strategy. The Directors maintain an ongoing and collaborative dialogue with such stakeholders and take all feedback into consideration as part of the decision-making process and day-today running of the business.
The Company’s operations are located in the UK, Brazil and India and local directors and managers provide a first point of contact for stakeholders to receive information on the Company’s activities and provide feedback on any issues or concerns they may have. The Company’s local employees and directors are able to communicate with stakeholder groups such as local and regional government officials, central government departments, community groups and local suppliers to keep them updated on project activities and plans.
Further details of the Company’s environmental, social and governance (“ESG”) engagement is set out in the corporate governance section of the Annual Report.
Principle 4: Embed effective risk management, considering both opportunities and threats,
throughout the organization
The principal risks facing the Company set out in the strategic report of the Annual Report and Part II of the Admission Document. The Directors seek to take appropriate steps to identify risks and undertake a mitigation strategy to manage such risks. A review of these risks is carried out at least on an annual basis, the results of which are included in the Company’s annual report and accounts.
The Board has overall responsibility for the determination of the Company’s risk management objective and policies and has also established the Audit Committee.
Principle 5: Maintain the Board as a well-functioning, balanced team led by the Chairman
The Board comprise three Executive Directors, including the Executive Chairman, and four Non-Executive Directors. The biographies of the Directors are set out in the corporate governance section of the Annual Report and on its website. The Board considers that it combines a blend of sector and market expertise, with an effective executive management team and appropriate oversight by independent Non-Executive Directors.
The Company is satisfied that the current Board is sufficiently resourced to effectively discharge its governance obligations on behalf of all its shareholders and other stakeholders in the Company.
The Board meets regularly, and processes are in place to ensure that each Director is, at all times, provided with such information as is necessary to enable each Director to discharge their respective duties. The Board is also supported by the Audit Committee and the Remuneration Committee. The Company has not established a separate nomination committee and the Board as a whole has responsibility for reviewing the structure, size and composition of the Board, giving consideration to succession planning and reviewing the leadership needs of the organisation.
The QCA Code recommends that the Board should comprise of a balance of executive and non-executive directors, with at least two non-executive directors being independent. The QCA Code suggests that independence is a board judgement, but where there are grounds to question the independence of a director, through length of service or otherwise, this must be explained. Each of the Non-Executive Directors, are considered to be independent and were selected with the objective of bringing experience and independent judgement to the Board. Janet Collyer has also been appointed the Senior Independent Director. None of these Directors are employees, have significant business relationships with the Company, or are significant shareholders in the Company.
As recommended by the QCA Code guidance, the independent Non-Executive Directors will not participate in performance-related remuneration schemes.
Principle 6: Ensure that between them the Directors have the necessary up to date experience,
skills and capabilities
The skills and experience of the Directors are summarised in their biographies set out in the corporate governance section of the Annual Report.
The Directors believe that the Board has a balance of sector, financial and public market skills and experience appropriate for the size and stage of current development of the Company and that the Board has the skills and requisite experience necessary to execute the Company’s strategy and business plan whilst also enabling each director to discharge his or her fiduciary duties effectively. Experiences are varied and contribute to maintaining a balanced board that has the appropriate level and range of skill to develop the Company. The Board is not dominated by one individual and all Directors have the ability to challenge proposals put forward to the meeting, democratically.
While the Board has not yet adopted any formal policy on gender balance, ethnicity or age group, it is
committed to fair and equal opportunity and fostering diversity subject to ensuring appointees are appropriately qualified and experienced for their roles.
The Company retains the services of independent advisors including financial, legal, and investor relations advisers that are available to the Board and who provide support and guidance to the Board and complement the Company’s internal expertise. The Directors have also received a briefing from the Company’s Nominated Adviser in respect of continued compliance with, inter alia, the AIM Rules and the Company’s solicitors in respect of continued compliance with, inter alia, MAR.
Principle 7: Evaluate board performance based on clear and relevant objectives, seeking
continuous improvement
The Directors considers the effectiveness of the Board, Audit Committee, Remuneration Committee, and individual performance of each Director. The outcomes of performance are described in the corporate governance section of the Company’s Annual Report.
The Board considers that the corporate governance policies it has currently in place for Board performance reviews is commensurate with the size and development stage of the Company.
Principle 8: Promote a corporate culture that is based on ethical values and behaviours
The Board recognises that their decisions regarding strategy and risk will impact the corporate culture of the Company and that this will impact performance. The culture is set by the Board and is considered and discussed at Board meetings and the Board is aware that the tone and culture its sets impacts all aspects of the Company and the way that employees behave. The Board promotes a culture of integrity, honesty, trust and respect and all employees of the Company are expected to operate in an ethical manner in all of their internal and external dealings.
The staff handbook and policies promote this culture and include such matters as whistleblowing, social media, anti-bribery and corruption, communication and general conduct of employees. The Board takes responsibility for the promotion of ethical values and behaviours throughout the Company, and for ensuring that such values and behaviours guide the objectives and strategy of the Company. The Company also has an established code for directors’ and employees’ dealings in securities which is appropriate for a company whose securities are traded on AIM, and is in accordance with Rule 21 of the AIM Rules and MAR.
The Directors believe that a long-term sustainable business model is essential for discharging the Board’s responsibility to promote the success of the Company, its employees, shareholders and other stakeholders of the business. In considering the Company’s strategic plans for the future, the Directors proactively consider the potential impact of its decisions on all stakeholders within its business, in additional to considering the broader environmental and social impact as well as the positive impact it can have within the local community in which the Company operates.
The Company has implement a formal ESG strategy and committee, which monitors the implementation of ESG practises to ensure the Company conducts its business with a view of long-term sustainability for its customers, employees, communities, the environment as well as its shareholders. Details of the committees findings are outlined in the corporate governance section of the Annual Report.
The Company fully endorses the aims of the Modern Slavery Act 2015 and takes a zero-tolerance approach to slavery and human trafficking within the Company and supply chain.
Principle 9: Maintain governance structures and processes that are fit for purpose and support
good decision-making by the Board
The Chairman leads the Board and is responsible for its governance structures, performance and effectiveness. The Board retains ultimate accountability for good governance and is responsible for monitoring the activities of the executive team.
The roles of Chairman and Chief Executive are split, and Ian Lankshear is Chief Executive who, supported by the other Executive Directors, is responsible for the operation of the business and delivering the strategic goals agreed by the Board. The Non-Executive Directors are responsible for bringing independent and objective judgement to Board decisions and are all considered to be independent and were selected with the objective of bringing experience and independent judgement to the Board. Janet Collyer has also been appointed the Senior Independent Director, which reflects that the Chairman is also an executive director of the Company.
The Board is supported by the Audit Committee and Remuneration Committee, further details of which are set out in the corporate governance section of the Annual Report. There are certain material matters which are reserved for consideration by the full Board. Each of the committees has access to information and external advisers, as necessary, to enable the committee to fulfil its duties.
The Board seeks to review the Company’s governance framework on an annual basis to ensure it remains effective and appropriate for the business going forward.
Principle 10: Communicate how the Company is governed and is performing by maintaining a
dialogue with Shareholders and other relevant stakeholders
The Board is of the view that the annual report and accounts as well as its half year report are key communication channels through which progress in meetings the Company’s objectives and updating its strategic targets is given the Shareholders.
Additionally, the Board uses the Company’s annual general meetings as a mechanism to engage directly with Shareholders, to give information and receive feedback about the Company and its progress.
The Company’s website in compliance with the AIM Rules, www.ensilica.com, and is updated on a regular basis with information regarding the Company’s activities and performance, including financial information.
All contact details for investor relations are included on the Company’s website.
24 September 2024
