Symphony Environmental
Technologies Plc

CORPORATE GOVERNANCE

CORPORATE GOVERNANCE STATEMENT

Overview

The Chairman of the Board of Directors of Symphony Environmental Technologies plc (Symphony, We, or the Company/Group as the context requires) has the responsibility to ensure that Symphony has both sound corporate governance and an effective Board. His duties include leading the Board effectively, overseeing the Company’s corporate governance model, and ensuring that good information flows freely between Executives and Non-Executives in a timely manner.

Symphony has adopted the principles of the Quoted Companies Alliance Corporate Governance (QCA Code) in accordance with the AIM Rules. 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 communication to promote confidence and trust.  This report follows the structure of these guidelines and explains how the Company has applied the guidance as well as disclosing any areas of non-compliance.

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

QCA Code Principles

  1. Establish a strategy and business model which promotes long-term value for shareholders

The primary business activities of Symphony are the development and supply of environmental plastic products to a global market. The Board has concluded that the highest medium and long-term value can be delivered to its shareholders through the Company’s strategy of driving sales of its d2w range of products accompanied by an increased, targeted communications programme. This communication strategy includes increasing Symphony’s social media presence, together with media campaigns, lobbying and engaging with governments and direct selling, explaining the benefits of using Symphony’s growing range of technologies to resolve the problem of persistent plastic pollution.  In addition, the Board is focused on increasing revenues generated by its d2p (designed to protect) range of products and in the longer term, commercialising the Group’s d2t (tag and trace) range of technologies.

The Board intends to deliver shareholder returns through capital appreciation. Challenges to delivering strategy and long-term goals are governmental policy (both preventative and adoptive), market competition, foreign exchange risks and raw material price volatility and availability, all of which are outlined on page 12 of the 2017 Annual Report and in the Risk Management section below, as well as steps the Board takes to protect the Group, mitigate these risks and secure a long-term future for the Group.

  1. Seek to understand and meet shareholder needs and expectations

Symphony places a great deal of importance on communication with its stakeholders and is committed to establishing constructive relationships with investors and potential investors in order to assist it in developing an understanding of the views of its shareholders. Beyond the Annual General Meeting, the Chief Executive Officer, Chief Financial Officer and, where appropriate, other members of the senior management team meet regularly with investors and analysts to provide them with updates on the Group’s business and to obtain feedback regarding the market’s expectations of the Group.

The Group’s Investor Relations activities encompass dialogue with both institutional and private investors.  In addition, the Company communicates with its shareholders through its website, RNS and RNS Reach announcements, Proactive Investor interviews and the Company’s Annual Report and Accounts.

The Annual General Meeting of the Company, normally attended by all the Directors, provides the Directors the opportunity to report to shareholders on current and proposed operations, and enables the shareholders to express their views of the Group’s business activities.  Shareholders are invited to ask questions during the meeting and to meet with Directors after the formal proceedings have ended. The CEO is considered the key contact for shareholder liaison.

Information on the Investor Relations section of the Group’s website, www.symphonyenvironmental.com/investors, is kept updated and contains details of relevant financial reports, presentations and other key information.

  1. Take into account wider stakeholder and social responsibilities and their implications for long-term success

Symphony recognises that the Group’s long-term future depends on environmental and social performance. Excellence in operational performance generates financial returns; however enduring sustainable growth depends on being a responsible global citizen and earning the continued support of our customers, shareholders, communities and staff.

All of Symphony’s stakeholders are encouraged to provide feedback to the Company by emailing info@d2w.net. The Company is open to receiving feedback from key stakeholders, and will take action where appropriate.

The Board recognises its responsibility to manage a business whilst acknowledging the Company’s responsibility for the environment and helping its customers make the most environmentally-beneficial purchasing decisions. As the whole concept of Symphony is built around sustainability and commitment to the environment, we are constantly searching for ways to continue to protect the natural and human world. The Company’s strategy is focused on providing environmentally-friendly plastic solutions, as well as plastic solutions which augment healthcare, food preservation and other human protection requirements, demonstrating the Company’s commitment to Corporate Social Responsibility. Furthermore, Symphony Environmental Limited (the Company’s trading subsidiary) is BSI certified to ISO 9001 and 14001. The Company also has an Environmental Policy in place.

All employees within the Group are valued members of the team, and the Board seeks to implement provisions to retain and incentivise its employees. The Group offers equal opportunities regardless of race, gender, gender identity or reassignment, age, disability, religion or sexual orientation. The Company’s Executive Directors regularly meet managers to discuss staff comments, progress and well-being, and employees are also encouraged to engage directly with Directors. This allows the Board to obtain feedback from employees. Symphony has Anti-Corruption and Health and Safety policies in place.

Further information in relation to the Company’s corporate social responsibility can be found on Page 9 of the 2017 Annual Report. Copies of the above-stated policies can be found on the Company’s website www.symphonyenvironmental.com/investors.

  1. Embed effective risk management, considering both opportunities and threats, throughout the organisation

The Board recognises the need for an effective and well-defined risk management process and it oversees and regularly reviews the current risk management and internal control mechanisms. The 2017 Annual Report also outlines the key risks to the business, see page 12.

The Executive Directors are responsible for identifying, monitoring and reviewing the Company’s risks, and assessing the systems of external control for effectiveness. They are also responsible for updating and maintaining the Company’s risk register, which evaluates the frequency and impact of identified risks, as well as their mitigations. The Executive Directors report any new or changed risks, and any changes in risk management/control to the Board.

The Board is satisfied that the procedures in place meet the particular needs of the Group in managing the risks to which it is exposed. The Board is satisfied with the effectiveness of the system of internal controls, but by their very nature, these procedures can provide reasonable, not absolute, assurance against material misstatement or loss.

The Board has delegated responsibility to the Audit Committee for ensuring that the Company’s management has designed and implemented an effective system of internal financial controls and for reviewing, monitoring and reporting on the integrity of the consolidated financial statements of the Company and related financial information. The Audit Committee will maintain effective working relationships with the Board of Directors, executive management, and the external auditors and will monitor the independence and effectiveness of the auditors and the audit. The Company has strict segregation of duties and authority controls which are reviewed annually by the auditors whom report their findings to the Audit Committee.

The table below sets out some of the Company’s key risks and outlines the mitigations that are in place.

Activity Risk Impact Mitigation
Political and Regulatory Risk Negative government policy The Group may not be able to market or sell products in areas where there are regulations in place which favour other technologies or are explicitly negative towards the Group’s technologies. The Group mitigates this risk by having a large and well established global footprint and by being active in international standards committees, as well as liaising with appropriate governmental departments.
Publicity Risk Negative media comments The Group’s products are in a high profile area with a number of organisations competing for mainstream technological acceptance. The may lead to negative comments in the media whom may prefer these other technologies over the Group’s. The Group mitigates this risk with active public relations activities both in house and use of external resources.
Market Risk Market competition The Group faces competition from suppliers of similar products which could affect revenues and/or gross margins. The Group mitigates this risk by having a large number of distributors globally who can concentrate on any competition issues within their market, and also by differentiating the Group and its products by branding and marketing activities.
Operational Risk Commodity pricing and availability The Group uses commodity and speciality materials in the make-up of its products. There is a risk of price volatility and material availability. The Group mitigates this risk by using more than one supplier of its raw materials and continually researching separate supply alternatives for the materials used.
Financial Risk Foreign Exchange rate fluctuation The Group sells products in many countries and generates revenues in US Dollars and Euros. Foreign exchange rates fluctuate and, as such, assets created in foreign currencies are liable to constant revaluations into their Sterling equivalent. The Group mitigates this risk by purchasing, where practicable, in currencies to match revenues. The Group also has exchange facilities with its bank to use as and when appropriate.

The Board has reviewed the need for an internal audit function and has decided that, given the nature of the Group’s business and assets and the overall size of the Group, the systems and procedures currently employed provide sufficient assurance that a sound system of internal controls are in place, which safeguards the shareholders’ investment and the Group’s assets.  An internal audit function is therefore considered unnecessary. However, the Board will continue to monitor the need for this function.

  1. Maintain the Board as a well-functioning, balanced team led by the Chair

The Board comprises of 3 Executive Directors, Michael Laurier, Ian Bristow and Michael Stephen, and 4 Non-Executive Directors, of which Nicholas Clavel and Bob Wigley are considered to be Independent whilst Nirj Deva and Shaun Robinson are not considered to be Independent. Nirj Deva is the Company’s Chair. The Non-Executive Directors devote such time as is necessary for the proper performance of their duties.

Nicolas Clavel and Bob Wigley are each regarded as Independent Directors by the Board notwithstanding that they hold a small number of shares and also hold options over Ordinary Shares. The Board considers that both Nicolas Clavel and Bob Wigley have demonstrated the utmost regard for independence, appropriately challenging the Board and maintaining high standards of corporate governance on the Board. Neither Nicolas nor Bob represent any shareholder on the Board and both have a background in finance within regulated industries. Accordingly, the Board believes that both Nicolas and Bob exercise independent judgement in all matters relating to the Company.

Nirj Deva has been a Director of the Company for 18 years and Shaun Robinson has an interest in Somerston Environmental Technologies Limited, which has a holding in excess of 20% in the Company. For these reasons they are not considered Independent as required by the QCA Code. Both Nirj Deva and Shaun Robinson add value with extensive knowledge of corporate, finance and public affairs. The Board is satisfied it has a suitable balance between independence on the one hand, and knowledge of the Company on the other.

Meetings are open and constructive, with every Director participating fully. Senior management are also invited to meetings when required, providing the Board with a thorough overview of the Company. The Board aims to meet at least four times in the year and, together with the Audit and Remuneration Committees, deals with all important aspects of the Group’s affairs. The Committees have the necessary skills and knowledge to discharge their duties effectively. The Group considers that, at this stage of its development and given the current size of its Board, it is not necessary to establish a formal Nominations Committee.  Instead, appointments to the Board are made by the Board as a whole.  This position however, is reviewed on a regular basis by the Board.

Attendance at Board and Committee Meetings so far for 2018:

Director Board meetings Audit committee Remuneration committee
Nirj Deva 4/4
Michael Laurier 4/4
Ian Bristow 4/4
Michael Stephen 4/4
Nicolas Clavel 3/4 1/1 1/1
Shaun Robinson 4/4 1/1 1/1
Bob Wigley 3/3

In order to be efficient, the Directors meet formally and informally both in person and by telephone. The Board receives timely information in a form and of a quality appropriate to enable it to discharge its duties. Board and Committee papers are collated into one document, compiled into a Board/Committee Pack, and circulated electronically, where possible, a week in advance, allowing time for full consideration and necessary clarifications before the meetings. Hard copies are made available at the physical meetings.

The Non-Executive Directors devote such time as is necessary for the proper performance of their duties and attend all Board meetings, unless prior good reason is provided in advance.

Directors’ conflict of interest

The Company has effective procedures in place to monitor and deal with conflicts of interest. The Board is aware of the other commitments and interests of its Directors, and changes to these commitments and interests are reported to and, where appropriate, agreed with the rest of the Board.

  1. Ensure that between them the Directors have the necessary up-to-date experience, skills and capabilities

The Company believes that the current balance of skills in the Board as a whole reflects a very broad range of personal, commercial and professional skills. The Directors’ varied backgrounds and experience give Symphony a good mix of the knowledge and expertise necessary to manage the business effectively.

Biographical details of the Directors can be found on pages 10-11 of the 2017 Annual Report and on the Company’s website.

Ian Bristow is Symphony’s Company Secretary and is responsible for ensuring that Board procedures are followed and that the Company complies with all applicable rules, regulations and obligations governing its operation, as well as helping the Chairman maintain excellent standards of corporate governance.

There are processes in place enabling Directors to take independent advice at the Company’s expense in the furtherance of their duties, and to have access to the advice and services of the Company Secretary.

In order to keep Director skill-sets up to date, the Board uses third parties to advise the Directors of their responsibilities as a Director of an AIM company, including receiving advice from the Company’s nominated adviser and external lawyers. The Board proposes to introduce a facility for Directors to receive training on relevant developments on a more regular basis. The Board reviews the appropriateness and opportunity for continuing professional development in order to keep each Director’s skillset up-to-date.

The Board will seek to take into account any Board imbalances for future nominations. The Company is committed to a culture of equal opportunities for all employees regardless of gender. The Board aims to be diverse in terms of its range of culture, nationality and international experience. All seven Board members are currently male. If it is agreed to expand the Board, the Board will, subject to identifying suitable candidates, look to fill at least one of the vacancies with a female Director.

Biographies of the Board members can be found on the Board of Directors page here 

  1. Evaluate Board performance based on clear and relevant objectives, seeking continuous improvement

The structure of the Board is subject to continual review to ensure that it is appropriate for the Company. The Board currently runs a self-evaluation process on Board effectiveness. It is intended that the Board will create a more formal Board evaluation process in the future, which will focus more closely on defined objectives and targets for improving performance.

In Board meetings/calls, the Directors discuss areas where they feel a change would be beneficial for the Company, and the Company Secretary remains on hand to provide advice.

The Company has not adopted a policy on succession planning, in particular with regard to the Company’s Chief Executive, Michael Laurier. The Chief Executive is however required to give one months’ notice under his contract of employment if he wishes to leave the Company. The Board will consider succession planning as part of its regular review of Board effectiveness.

  1. Promote a corporate culture that is based on ethical values and behaviour

The Board recognises that its decisions regarding strategy and risk will impact the corporate culture of the Company as a whole and that this will impact the performance of the Company. The Board is aware that the tone and culture set by the Board will greatly impact all aspects of the Company as a whole and the way that employees behave. The corporate governance arrangements that the Board has adopted are designed to ensure that the Group delivers long term value to its shareholders, and that shareholders have the opportunity to express their views and expectations for the Group in a manner that encourages open dialogue with the Board.

A large part of the Group’s activities are centred upon an open and respectful dialogue with employees, customers and other community and environmental stakeholders.  Therefore, the importance of sound ethical values and behaviour is crucial to the ability of the Group to successfully achieve its corporate objectives and successfully promote its eco-friendly products.  The Board places great importance on this aspect of corporate life and seeks to ensure that this flows through all that the Group does.

The Directors consider that at present the Group has an open culture facilitating comprehensive dialogue and feedback and enabling positive and constructive challenge. The Executive Directors regularly meet managers and discuss staff well-being, development and staff feedback. Employees are encouraged to engage directly with Directors, and the Group seeks to promote Group values and behaviour through a top-down approach. Symphony also has an employee handbook.

Furthermore, Symphony has a number of policies in place aimed to protect its staff, such as Anti-corruption and Health and Safety, as well as an Environmental policy. The Environmental Policy is focused on supplying the most environmentally-beneficial products to its customers, and to purchase and sell products which can be re-used, recycled and will biodegrade, demonstrating the Company’s commitment to its corporate social responsibility. As stated above, Symphony’s trading subsidiary is also BSI certified to ISO 9001 and 14001.

The Company has adopted a Share Dealing Policy which is intended to assist the Company and its staff in complying with their obligations under the Market Abuse Regulation which came into effect in 2016. The Policy addresses the share dealing restrictions set out in MAR and reflects the requirements for a securities dealing policy set out in the AIM Rules.

  1. Maintain governance structures and processes that are fit for purpose and support good decision-making by the Board

The Board is committed to, and ultimately responsible for, high standards of corporate governance, and has chosen to adopt the QCA Code. We review our corporate governance arrangements regularly and expect to evolve these over time, in line with the growth of the Group. The Board delegates responsibilities to certain Committees and individuals as it sees fit.

The Chairman’s principal responsibilities are to ensure that the Company and its Board are acting in the best interests of shareholders, and leadership of the Board is undertaken in a manner which ensures that the Board retains integrity and effectiveness, with the right Board dynamic and ensuring that all important matters, in particular strategic decisions, receive adequate time and attention at Board meetings.

The CEO has, through powers delegated by the Board, the responsibility for leadership of the management team in the execution of the Group’s corporate strategies and for the day-to-day management of the business. The CEO can be assisted in his duties by the other Executive Directors. The CEO for Symphony is also the principle contact for liaison with shareholders and, together with the CFO, all other stakeholders.

The Independent Non-Executives Directors are tasked with constructively challenging the decisions of executive management and satisfying themselves that the systems of business risk management and internal financial controls are robust. The Executive Directors seek regular counsel from the Non-Executive Directors outside of Board meetings.

Whilst the Board has not formally adopted appropriate delegations of authority setting out matters reserved to the Board, there is effectively no decision of any consequence made other than by the Directors. All Directors participate in the key areas of decision-making, including the following matters:

  • Oversee the Group’s strategic objectives and policies;
  • Review of performance and controls;
  • Oversee all aspects of the finances;
  • Decide on key business transactions;
  • Manage risk; and
  • Manage the interests of stakeholder groups.

The Board delegates authority to two Committees to assist in meeting its business objectives whilst ensuring a sound system of internal control and risk management. The Committees meet independently of Board meetings. The committees are currently being reviewed in relation to the number of independent members.

Audit Committee

The Audit Committee has 2 members, Nicolas Clavel (Chair) and Shaun Robinson. The Audit Committee’s main role and responsibilities are to:

  • Monitor the integrity of the financial statements of the Group;
  • Review the Group’s arrangements in relation to Whistle-blowing and fraud;
  • Make recommendations to the Board to be put to shareholders for approval at the AGM, in relation to the appointment of the Company’s external Auditor;
  • Discuss the nature, extent and timing of the external Auditor’s procedures and findings; and
  • Make to the Board whatever recommendations it deems appropriate on any area within its remit where action or improvement is needed.

The Committee is scheduled to meet twice in each financial year and at other times if necessary.

Going forward, there will be an Audit Committee Report in the Company’s Annual Report.

Terms of reference for the Audit Committee can be found here Audit Committee TOR 10 12 2015

Remuneration Committee

The Remuneration Committee has 2 members, Shaun Robinson (Chair) and Nicolas Clavel. The Remuneration Committee’s main role and responsibilities are to:

  • Determine and agree with the Board the remuneration of the Group’s Chief Executive, Executive Directors and such other members of the executive management as it is designated to consider;
  • Review the on-going appropriateness and relevance of the Remuneration Policy;
  • Approve any performance related pay schemes and approve the total annual payments made under such schemes; and
  • Review share incentive plans and for any such plans, determine each year whether awards will be made, and if so, the overall amount of such awards, the individual awards to Executive Directors and other senior executives and the performance targets to be used.

The Committee meets at least once a year.

Terms of reference for the Remuneration Committee can be found here Remuneration Committee TOR 10 12 2015

Members of each committee are shown in the Board of Directors page here

Nomination Committee

The Group considers that, at this stage of its development and given the current size of its Board, it is not necessary to establish a formal Nominations Committee.  Instead, appointments to the Board are made by the Board as a whole.  This position however, is reviewed on a regular basis by the Board.

The Chair and the Board continue to monitor and evolve the Company’s corporate governance structures and processes, and maintain that these will evolve over time, in line with the Company’s growth and development.

  1. Communicate how the company is governed and is performing by maintaining a dialogue with shareholders and other relevant stakeholders

The Board is committed to maintaining effective communication and having constructive dialogue with its shareholders and other relevant stakeholders. The Company intends to have ongoing relationships with both its private and institutional shareholders (through meetings and presentations) as well with shareholder analysts, and for them to have the opportunity to discuss issues and provide feedback at meetings with the Directors.

In addition, all shareholders are encouraged to attend the Company’s Annual General Meeting.  All 2018 AGM resolutions passed comfortably. The Board already discloses the result of general meetings by way of announcement and discloses the proxy voting numbers to those attending the meetings. The Company has not historically announced the detailed results of shareholder voting to the market but it intends to do so for future General Meetings. The Board intends that, if there is a resolution passed at a GM with 20% or more votes against, the Company will seek to understand the reason for the result and, where appropriate, take suitable action.

Information on the Corporate Information section of the Group’s website (www.symphonyenvironmental.com/investors/) is kept updated and contains details of relevant financial reports, corporate videos/ presentations and other key information.