All members of the board believe strongly in the value and importance of good corporate governance and in our accountability to all of Adams Plc (“Adams” or the “Company”) stakeholders including our shareholders, advisers, regulators and other suppliers. Robust corporate governance improves performance and mitigates risk and therefore is an important factor in achieving the medium to long term success of the Company. In the statement which follows, we explain our approach to governance, and how the board and its committees operate.

Changes to the AIM Rules on 30 March 2018 required AIM companies to apply a recognised corporate governance code from 28 September 2018. Adams has chosen to adhere to the Quoted Company Alliance's (“QCA”) Corporate Governance Code for Small and Mid-Size Quoted Companies (revised in April 2018) to meet the new requirements of AIM Rule 26.

The QCA Code is constructed around ten broad principles and a set of disclosures. The QCA has stated 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 below we provide an explanation of the approach taken in relation to each.

The Chair has the overall responsibility for implementing an appropriate corporate governance regime at the Company.

The following paragraphs set out Adams' compliance with the 10 principles of the QCA Code and were last updated on 19 September 2018.

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

    The business model of the Company is an investing company whish seeks to deploy its resources in line with its investment strategy with the primary strategic aim being the achievement of capital growth for shareholders over the medium to long term. This strategy includes focusing on investment opportunities which are considered to be undervalued and which are expected to accrete value to investors. The business model seeks to minimise costs by outsourcing routine operational functions, such as company secretary and registrar, wherever possible so there is no need for direct employees other than board members.

    The key challenges faced by the Company include:

    • Sourcing Suitable Investments – The Company's ability to source suitable investment opportunities which will deliver value for the Company's shareholders over the long term poses the key risk to the Company delivering on its strategy. The qualifications and experience of the board, the pre-investment research conducted together with the leveraging of our strategic network and ongoing monitoring procedures help in mitigating this risk.
    • Ensuring Safe Custody of Company Assets – The Company's key assets comprise equity investments and cash balances, both of which are held with counterparties. This counterparty risk is mitigated through only using reputable and appropriate counterparties and ensuring a diversified custody policy where appropriate.
    • Exposure to Market and Macro Risks – The Company is exposed to global and national political and economic policy, the implications for investor sentiment, more general micro and macro risks and their implications for listed equity prices and market trends. The Company mitigates these risks through seeking to invest in opportunities with talented management teams which have good long term fundamentals and growth potential.
    • Ensuring Compliance with Regulations – a failure in the Company's compliance with relevant regulatory requirements could lead to potential fines or restrictions placed on the Company's ability to operate. This is addressed by ensuring the board and staff are up to date with regulatory developments and maintaining close contact with the Company's NOMAD and other advisers.
    • Maintaining Liquidity and Treasury Considerations – the Company's ability to finance day to day operations, maintain investment positions and take advantage of potential investment opportunities is dependent upon maintaining a level of liquidity appropriate to enable the delivering of the Company strategy. Cash balances and liquidity requirements are reviewed by the board regularly and action taken as necessary.
    • Recruiting and Retaining Skilled People – the Company's ability to execute its strategy is dependent on the skills and abilities of its board.
  2. Seek to understand and meet shareholder needs and expectations

    The board attaches great importance to providing shareholders with clear and transparent information on the Company's activities, strategy and financial position.

    Responsibility for investor relations rests with the Executive Chairman, supported by the board.

    The board has made efforts to ensure effective engagement with both institutional and private shareholders, and believes that it has been successful in doing so. In addition to the communications contained with the full year and interim results, we have also in recent years distributed a number of circulars to shareholders containing proposals to enhance the operations and strategy of the Company. We encourage shareholders to attend the AGM as a forum to present to and meet with investors and ensure that timely and useful information is included on the Company website to keep shareholders abreast of corporate developments.

    The Company is committed to communicating openly with its shareholders to ensure that its strategy and performance are clearly understood. We communicate with shareholders through the interim and full year Annual Report and Accounts, trading updates, shareholder circulars, RNS disclosures as required by regulation and the annual general meeting (AGM). A range of corporate information (including all Adams RNS announcements) is also available to the public on our website.

    The board has ultimate responsibility for reviewing and approving the Annual Report and Accounts and it has considered and endorsed the arrangements for their preparation, under the guidance of its Audit Committee. The Directors confirm the Annual Report and Accounts, taken as a whole, are fair, balanced and understandable and provides the information necessary for shareholders to assess the Company's position and performance, business model and strategy.

    The Company maintains a dedicated email address which investors can use to contact the Company which is prominently displayed on the Company website together with the Company's address. The size of the Company does not warrant a dedicated investor relations department but all communications received from members are reviewed and responded to as appropriate.

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

    Stakeholder Reason for Engagement How we engage
    Regulators The Company recognises the need for regulation and rules for AIM quoted companies in order to maintain markets in which investors can trust and ensure that the Company acts in accordance with best practice. All appropriate Company releases and disclosures are filed with and notified to the relevant authorities as required.
    Any enquiries from regulators are responded to in a complete and timely fashion.
    Advisers / Suppliers The Company's key advisers and suppliers such as the NOMAD, legal advisers, registrar, financial services providers assist the Company in delivering the operations of the Company. The Company's key advisers attend board meetings where considered appropriate.
    Input regarding important transactions and public information is run past key advisers prior to release.
    The Company has regular contact with its advisers and makes them aware of any relevant developments at the Company as deemed appropriate.
    Shareholders The Company wishes to engage with investors and potential investors in order to keep them informed of the Company's results and progress and ensure a congruence of objectives between the shareholders and the board. Maintenance of the Company website and responding to any shareholder enquiries.
    Periodic investor and pertinent information and news releases.
    Publishing and posting of the Annual and half-year reports, circulars.
    Engagement with shareholders at the AGM.
  4. Embed effective risk management, considering both opportunities and threats, throughout the organisation

    The Executive Chairman has prepared a risk register for the Company that identifies key risks in the areas of investment and operational strategy, financial, regulatory, environmental and the investment community. All members of the board are provided with a copy of the register. The register is reviewed periodically and is updated as and when necessary. The board considers the risk register when assessing new investments and to monitor its current investment portfolio.

    Within the scope of the annual audit, specific financial risks are evaluated in detail, including in relation to market price risk, liquidity, credit, foreign currency, interest rates and external political and economic risks.

    Stakeholders are encouraged to report, anonymously or otherwise, any security risks or threat they perceive in the operations of the business. On receipt of any such notification, the board shall assess and take remedial action as appropriate in the circumstance.

    In accordance with the AIM Rules, the Company has adopted a Share Dealing Code in relation to the securities of Adams Plc. As such all board members and their families are required to gain clearance prior to any dealings in the Company's equities.

  5. Maintain the board as a well-functioning, balanced team led by the chair

    The members of the board have a collective responsibility and legal obligation to promote the interests of the Company, and are collectively responsible for defining corporate governance arrangements. Ultimate responsibility for the quality of, and approach to, corporate governance lies with the chair of the board.

    The board consists of three directors of whom one is executive and two are independent non-executives. The board is supported by two committees: audit and remuneration. The board does not consider that it is of a size at present to require a separate nominations committee, and all members of the board would be involved in the appointment of new Directors. The board may appoint additional directors as its business expands.

    Non-executive Directors are required to attend all board and relevant board Committee meetings and the AGM each year and to be available at other times as required for face-to-face and telephone meetings with the executive team and investors as reasonable.

    Meetings held in the last 12 months up to the publication of this document and the attendance of the Directors are summarised below:

    Board (7) Audit (1) Remuneration (1) Total Attendance
    Executive Directors
    Michael Bretherton 7/7 7/7 100%
    Independent Non-Executive Directors / Committee Members
    Andrew Mitchell 7/7 1/1 1/1 9/9 100%
    Nick Woolard 7/7 1/1 1/1 9/9 100%

    The Company has no directly employed staff other than the directors, who are responsible for all investment and strategic decisions, and most of the routine operational functions are outsourced to advisers and suppliers.

    It was not considered appropriate to amend the terms of the director's remuneration in the period.

    The board has a schedule of regular business, financial and operational matters, and each board Committee ensures that all areas for which the board has responsibility are addressed and reviewed during the course of the year. The Chairman is responsible for ensuring that, to inform decision-making, Directors receive accurate, sufficient and timely information. The board and Committee papers are compiled and circulated in good time to Directors prior to meetings. Minutes of each meeting are provided to the board and every Director is aware of the right to have any concerns minuted and to seek independent advice at the Company's expense where appropriate.

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

    All members of the board bring significant and varied sector experience, and have board and public markets experience. The board's members have finance, compliance, technological and healthcare experience and one member is a chartered accountant. The board believes that its blend of relevant experience, skills and personal qualities and capabilities is sufficient to enable it to successfully execute its current strategy. Directors attend seminars and other regulatory and trade events as considered appropriate to ensure that their knowledge remains current.

    Michael Bretherton, Executive Chairman

    Term of office: Appointed as a non-executive Director in May 2015 and subsequently took on the role of Chairman in September 2015.

    Current external appointments: DeepMatter Group Plc, Sarossa Plc, ORA Limited, Blake Holdings Limited.

    Time commitment: 3 to 4 days per month.

    Andrew Mitchell, Independent Non-Executive Director

    Term of office: Joined as Non-Executive Director on 11 September 2015; Chair of the Remuneration Committee and member of the Audit Committee.

    Current external appointments: AM Medical Limited / Heart For Life Limited

    Time commitment: 1 to 2 days per month.

    Nick Woolard, Independent Non-Executive Director

    Term of office: Nick Woolard was appointed as a Non-Executive director of Adams on 8 March 2013; Chair of the Audit Committee and member of the Remuneration Committee.

    Current external appointments: None.

    Time commitment: 1 to 2 days per month

  7. Evaluate board performance based on clear and relevant objectives, seeking continuous improvement

    No formal board evaluation process is undertaken at present due to the acumen of the board and the size of the Company. All members of the board were assessed rigorously prior to joining the Company and the board work together closely and in a collaborative culture.

    The Board will consider the use of a formal board evaluation process in future, however this is not deemed appropriate, beneficial or cost effective at present. The board will seek to implement a nominations committee when it is an appropriate size and time to do so, which will in future evaluate board performance.

  8. Promote a corporate culture that is based on ethical values and behaviours

    Our long-term growth is underpinned by our core values, which are considered to be:

    1. We place our shareholders first and seek to place their long term financial interests at the forefront of all strategic and investment decisions.
    2. All of our dealings are characterised by integrity and respect for those with whom we deal.
    3. We are fair and respectful in our dealings with each other.

    The board aims for the culture of the Company to be characterised by these values, and believe that a culture that is based on these values provides a competitive advantage and is consistent with fulfilment of the Company's mission and execution of its strategy.

    An open culture of discussion is fostered and given the size of the Company it is not considered necessary to monitor stakeholder satisfaction through the use of satisfaction or engagement surveys.

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

    The board provides strategic leadership for the Company and operates within the scope of its chosen corporate governance framework. Its purpose is to ensure the delivery of long-term shareholder value, which involves setting the culture, values and practices that operate throughout the business, and defining the strategic goals that the Company implements in its business plans. The board defines a series of matters reserved for its decision and has approved terms of reference for its Audit and Remuneration Committees to which certain responsibilities are delegated. The chair of each committee reports to the board on the activities of that committee.

    The Audit Committee monitors the integrity of financial statements, oversees risk management and control and reviews external auditor independence.

    The Remuneration Committee sets and reviews the compensation of all employees.

    The Executive Chairman reviews operational matters and the performance of the business, and is responsible for significant management decisions. The Executive Chairman provides coherent leadership and management of the Company, leads the development of objectives, strategies and performance standards as agreed by the board, monitors, reviews and manages key risks and strategies with the board, ensures that the assets of the Company are maintained and safeguarded, leads on investor relations activities to ensure communications and the Company's standing with shareholders and financial institutions is maintained, and ensures that the board is aware of the views and opinions of stakeholders where relevant.

    The Executive Chairman has overall responsibility for corporate governance and in promoting high standards throughout the Company. He leads and chairs the board, ensuring that committees are properly structured and operate with appropriate terms of reference, ensures that performance of individual Directors, the board and its committees are reviewed on a regular basis, leads in the development of strategy and setting objectives, and oversees communication between the Company and its shareholders.

    The Executive Chairman is responsible for implementing and delivering the strategy and operational decisions agreed by the board, making operational and financial decisions required in the day-to-day operation of the Company, providing executive leadership, championing the Company's values.

    The Independent Non-Executive Directors contribute independent thinking and judgement through the application of their external experience and knowledge, scrutinise the performance of management, provide constructive challenge to the Executive Chairman and ensure that the Company is operating within the governance and risk framework approved by the board.

    The Executive Chairman is responsible for providing clear and timely information to the board and its committees and supports the board on matters of corporate governance and risk.

    The matters reserved for the full board include:

    • Setting long-term objectives and commercial strategy;
    • Approving annual operating and capital expenditure budgets;
    • Changing the share capital or corporate structure of the Company;
    • Approving half year and full year results and reports;
    • Approving dividend policy and the declaration of dividends;
    • Approving major investments, disposals, capital projects or contracts;
    • Approving resolutions to be put to general meetings of shareholders and the associated documents or circulars; and
    • Approving changes to the board structure.

    The board has approved the adoption of the QCA Code as its governance framework against which this statement has been prepared and will monitor the suitability of this Code on an annual basis and revise its governance framework as appropriate as the Company evolves.

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

    In addition to the investor relations activities described above, under the principles item number 2, the Company encourages two-way communication with both its institutional and private investors and responds quickly to all queries received. The Executive Chairman talks regularly with the Company's major shareholders and ensure their views are communicated fully to the board.

    Remuneration Committee Report

    The remit of the Remuneration Committee is to determine the framework, policy and level of remuneration, and to make recommendations to the board on remuneration. The Remuneration Committee consists of Andrew Mitchell, chair, and Nick Woolard. The committee met once during the year, to review the appropriateness of executive remuneration.

    In setting remuneration packages, the Committee ensures that individual compensation levels, and total board compensation, are appropriate for the size and complexity of the Company.

     

    By order of the board

    Michael Bretherton
    Chairman
    19 September 2018

Page last updated: 23 May 2019