Chairman’s Introduction
Governance continues to be crucial to any company’s future development. The Board recognises that good governance can help create value by reducing the risks that we face as we seek to create value for our shareholders and can be used to support our values and behaviours.
A good governance framework can provide solid foundations from which to support leadership, accountability, transparency, and disclosure. Strong systems and processes for informed decision-making ensures that the Board and its Committees are provided with clear agendas, timely information that is delivered through good quality briefing materials; and, which cover all relevant factors and that our deliberations consider the risks, as well as the opportunities, inherent in the topic before us.
The Board has chosen and adopted the Quoted Companies Alliance (QCA) Corporate Governance Code (the “QCA Code”). The following provides a general overview of how the Company complies with the QCA Code. The Board provides annual updates on our compliance with the code each year in its Annual Report and Accounts, links to which can be found below.
Camillo Pane
Chairman
Our governance principles
The Board meets annually at a two-day strategy planning meeting to articulate a robust strategy for the Group. The strategic plan and business model are reviewed by the Senior Leadership Team on a monthly basis with relevant operational and management updates being reported to demonstrate delivery and progress. Decisions of the Board are made in line with the strategic plan and business model for the Group. The Board emphasize a forward-looking approach that anticipates market dynamics and adapts to evolving trends, ensuring the creation of lasting shareholder value.
Further information on the Group’s strategy can be found on pages 12 to 17 of our 2022 Annual Report and Accounts.
The Directors are committed to open communication with the Group’s shareholders to ensure that they clearly understand its business, strategy and performance. The Board proactively seeks dialogue with its shareholders via investor roadshows, capital market days, one-to-one meetings and regular reporting. The Chairman addresses shareholders at the Group’s Annual General Meeting (“AGM”) where questions are encouraged. The Board believes that open and continuous communication with investors and analysts is the best way to ensure it understands what is expected of the Group in order to allow it to drive its business forward.
Throughout the year the CEO, CFO and COO meet with the institutional shareholders who hold the majority of the shares and the Board is provided with feedback from all meetings and communications with shareholders. The Board is provided with an analysis of the investor base at each meeting and research notes by sell-side analysts are circulated to all Directors. Further information on investor sentiment is provided to the Board by the Company’s brokers and financial PR advisors.
Further information on how the Group seeks to understand and meet shareholder needs and expectations can be found on pages 40 and 41 of our 2022 Annual Report and Accounts.
The Board values the opinions of key stakeholders in the business and regularly seeks to ensure that the views of its employees, suppliers, customers, and partners are known and where relevant to the success of our business they are acted upon. The Board continues to be mindful of environmental, social and governance representation. Engaging with the Company's stakeholders is well embedded in the business as we continue look after our relationships with employees, customers, suppliers, consumers, and the wider communities.
The Company has also recently formed an ESG Committee whose primary role is to review the overarching ESG vision for the Company and ensure that the priorities are anchored and an integral part of the Company's overall strategy.
Further information about our stakeholder engagement can be found on pages 40 and 41 and you can read the ESG Committee’s report on pages 86 – 88 of our 2022 Annual Report and Accounts.
The Board, assisted by the Audit and Risk Committee, is ultimately responsible for overseeing management’s activities in identifying, evaluating, and managing the risks facing the Group and records them on the Group risk register, which is reviewed quarterly. Where these risks are not ones which the Board is prepared to take, these are avoided, eliminated as far as possible and/or transferred to insurers. Whilst the Board is responsible for risk, our culture seeks to empower all colleagues to manage risk effectively. The management of both risks and opportunities feeds into the decision-making process.
Oversight and reporting
The Board and the Audit and Risk Committee leads process for risk management
- The Audit and Risk Committee reviews the framework for risk management and considers the Group's principal risks and uncertainties.
- The Audit and Risk Committee reports directly to the Board.
Identify and assess
Top-down/bottom-up review
- The identification and assessment and management of risks in the business is driven and monitored by the Senior leadership Team with the support of the Company Secretary.
- The existence of a risk is identified from either a 'bottom-up' process involving line management or a 'topdown' review by the Senior leadership Team. As well as a consolidated Group Risk Register, there are risk registers in place at a functional business level.
- Risks are identified and assessed by the likelihood of them occurring and their potential impact on the business. This calculates the potential level of exposure on the business. These are then categorised to identify those that con be effectively managed at a functional or departmental level and those that need to be addressed at a cross-functional business level.
- Risk registers are regularly reviewed to capture and identify new risks and identify opportunities to improve the mitigating actions.
Review and mitigate
The SLT reviews progress and mitigations
- Each risk is allocated a business owner, who is responsible for implementing the mitigating actions and reporting on progress with those improvements and the status of those risks to the Senior Leadership Team.
- The Senior leadership Team reviews all risks on a quarterly basis, with the principal risks being monitored monthly and, in the case of the principal risks and uncertainties, such risks are reported to and reviewed by the Audit and Risk Committee as well as the Board.
- Actions being taken, or that should be taken, to help mitigate the potential exposure to the risks are regularly reviewed to ensure the appropriate individual 'owns' the risk and the actions being taken remain effective.
Report and review
The Audit and Risk Committee reviews and discusses key risks identified
- The Company Secretary prepares an update report on risk and notifies the Audit and Risk Committee of key changes to the Group Risk Register.
- Existing mitigations are considered for each risk and the residual levels of exposure assessed.
The responsibilities surrounding risk management and internal control systems are designed to meet the needs of the size and complexity of the business. It takes into account the applicable requirements of pharmaceutical regulators in the various markets in which the business operates and the regulatory and legal requirements as a UK AIM listed plc. The internal controls are designed to manage rather than eliminate risk and provide reasonable but not absolute assurance against material loss or misstatement.
The key components of the current system of internal control are: | |
Communicating our strategy and our values | Setting and communicating clear strategic goals to the business helps ensure all employees understand the objectives of the business and raises awareness. Defining the Group's values and maintaining a code of ethics for all employees to encourage a culture that promotes good behaviour. |
Planning | Developing clear business plans and budgets in line with strategy, supported by intro-year forecasting. This provides the business with clear points of reference. |
Policies, processes and procedures | Developing clear policies and procedures for all areas of the business which consider all aspects of legal, regulatory and ethical responsibility. Final implementation of the Enterprise Resource Planning (ERP) system will further strengthen and enhance the Group's systems of internal control. This provides the business with an opportunity to review processes and reporting practices throughout the Group and provide consistency across the same. |
Reporting, management information and discussion
| Regular reporting of actual performance relative to those strategic goals, plans, budgets and forecasts. This ensures the business can track and trace factors that could impact on strategy and performance. |
Organisational structure, accountability | Creating on appropriate structure of responsibility and accountability, including segregation of duties, appropriate reporting lines for key managers and regular line management communications and one-to-one meetings where performance is discussed, supported by on appraisal process. |
Training and monitoring | Training and monitoring employees' understanding of the external regulatory codes which are applicable to the Group's business, as well as the Group's internal policies and procedures. Management monitoring of compliance with the external regulatory codes which are applicable lo the Group’s business, as well as the Group's internal policies and procedures, and responding appropriately to any breaches. |
The internal controls ore designed to manage rather thon eliminate risk and provide reasonable but not absolute assurance against material loss or misstatement.
A further explanation of our risk management, risks and internal controls can be found on pages 47 to 56 of our 2022 Annual Report and Accounts.
The Board keeps under review its current balance and composition, which provides a sufficiently wide range of skills and experience to enable it to pursue its strategic goals and to address anticipated issues in the foreseeable future. Led by the Chair, deliberations are not dominated by one person or any group of people and strive to maintain a dynamic and high performing Board that drives strategic excellence and upholds governance standards.
In addition, to assist in discharging its responsibilities, the Boord is supported by its Committees. Specifically, the Nomination Committee supports the Board with its responsibilities on the selection process for the appointment and re-appointment of all Board directors, succession planning and the review of the structure, size and composition of the Board and its Committees.
Further information on the board effectiveness, roles and responsibilities can be found on pages 63 to 68 of our 2022 Annual Report and Accounts.
The Nomination Committee review collectively balance and composition of the Board and its Committees, and ensuring a comprehensive blend of experience, expertise, and capabilities essential for the dynamic needs of the company.
Further information on the work of the Nomination Committee can be found on page 69 to 71 of our 2022 Annual Report and Accounts.
The Chairman evaluates the performance of the Board effectively through a blend of questionnaires and one-to-one meetings with each Director. This process offers Directors an opportunity to discuss their contribution in terms of their skills and experience as well as identifying improvements or development to enhance the capabilities of the Board as a whole.
Further information on Board evaluation and its effectiveness can be found on page 68 of our 2022 Annual Report and Accounts.
The Board aims to lead by example and make decisions that are in the best interest of the Group as a whole. Our culture is underpinned by our PRAISE ((Performance, Realism, Accountability, Integrity, Skill, Entrepreneurship) Values , which guide decision making at all levels in the business. Both the SLT and the Board review and approve the Group’s policies which are then implemented and communicated internally and externally to those who are expected to adhere to them.
Further information on people and culture can be found on pages 24 to 26 of our 2022 Annual Report and Accounts.
The Board reviews its assurance and governance framework at least annually to ensure that those governance structures remain appropriate and are fit for purpose. This framework sets out leadership and embeds delegated responsibilities to enable informed and confident decision-making. An annual agenda plan, regular business deep-dives and good information flows all contribute to the Board making well-informed and properly debated decisions.
The Board ensures that all stakeholders across the business are actively engaged through the relevant areas of responsibility. This includes making sure that the business as, a whole upholds its values and monitors behaviour for acceptability.
Our business is based around our culture of working together to achieve more - working as one global team to create partnerships that unlock potential for brands, businesses, and people, thereby maximising the value we create, not just for our shareholders, but for all the key stakeholders in our business, recognising that each has a part to play in ensuring the business's long-term success. For Alliance, regular engagement with our stakeholders is an integral port of how we operate as a business - actively seeking to understand the concerns and aspirations of our employees, how they perceive the business and their levels of engagement, the challenges faced by our suppliers and distributors and healthcare professionals - the users and recommenders of our products.
The Board recognises the importance of maintaining an engaged and motivated workforce, dependable supply chains, customer confidence in our products, close relationships with healthcare professionals, good returns for our shareholders and social impact in both our local and wider communities.
Further information on our dialogues and engagement with shareholders and other stakeholders can be found on pages 40 to 41, and page 68 of our 2022 Annual Report and Accounts.