As Chairman of the Cambridge Cognition Holdings plc (“the Company”) Board, it is my responsibility to ensure that the Board is performing its role effectively and has the capacity, ability, structure and support to enable it to continue to do so.
We believe that a sound and well understood governance structure is essential to maintain the integrity of the Group in all its actions, to enhance performance and to impact positively on our shareholders, staff, customers, suppliers and other stakeholders.
After due consideration, the Company has adopted the QCA Corporate Governance Code (“the QCA Code”) as the benchmark for measuring our adherence to good governance principles. These principles, as listed below, provide us with a clear framework for assessing our performance as a board and as a company, and the report below shows how we apply the Code’s ten guiding principles in practice.
The QCA Code requires that some disclosures are available on the Company website, whilst others are required in the Company’s Annual Report and Accounts and the Company has followed this recommendation.
All members of the Board of the Company believe in the value and importance of good Corporate Governance. The Chairman is personally responsible for establishing and monitoring Corporate Governance.
The Company is listed on the AIM Market of the London Stock Exchange (“AIM”).
Whilst the Board considers that it does not depart from any of the principles of the QCA Code, the Board will continue to develop its governance processes.
Page last updated: 26 January 2023
Principle 1: Establish a strategy and business model which promotes long-term value for shareholders
The Company has a rolling three-year detailed strategic plan that is updated and approved by the Board annually. This is supported by an annual operating plan, which is also subject to Board review.
The Company’s most recent Strategic Report, including an assessment of principal risks and uncertainties and key performance indicators can be found on pages 4 to 10 of the Company’s 2021 Annual Report and Accounts.
Principle 2: Seek to understand and meet shareholder needs and expectations
The Board seeks to develop a good understanding of shareholder needs and expectations. The Company has made significant efforts to ensure engagement with both institutional and private shareholders. These efforts include:
- Roadshows with shareholders (and potential shareholders) after each round of interim and full year results
- Promotion of the AGM as a forum where private investors in particular can hear first-hand from the Board (though special measures had to be adopted in 2020 and 2021 due to the Covid-19 pandemic)
- Our annual ‘Innovation Day’, introduced in 2016 to demonstrate and explain our key R&D developments
- Presentation at investor conferences and events
- Improving the Company’s website to maximise ease of use and ensuring that the information shareholders may like to see is easily accessible
Responsibility for shareholder engagement rests with the CEO, supported by the CFO. The Chairman and other non-executive directors also represent the shareholders at Board level.
Principle 3: Take into account wider stakeholder and social responsibilities and their implications for long-term success
The Board appreciates that long-term success of the Company comes through active and positive engagement of all stakeholders. Below is a summary of the key stakeholder groups with which the Company engages, and how feedback from them is solicited, considered, and acted upon. Our business model identifies the following groups as key stakeholders in addition to our shareholders.
Employees are key to the Company successfully executing its strategic and operational goals. The delivery of cutting edge products with excellent customer service is reliant on our employees being talented, committed, and motivated.
We engage with employees in the following ways:
- Results presentations. All employee meetings, led by the CEO. At these meetings the CEO talks through the latest results and future plans. Other relevant topics are covered by the CEO or the most appropriate member of the senior management team and employees are encouraged to ask questions either within this forum or privately. These meetings have increased in regularity since 2019, especially as our employees work remotely during the Covid-19 pandemic.
- Department meetings. Each member of the senior management team holds regular briefings with their teams. This is a two-way forum where up to date information is shared with employees, and employees can raise their own questions and concerns
- The six-monthly employee review process. Whilst being the process by which employee development is monitored, employees are also encouraged to raise any questions and concerns in this one to one forum with their line manager
- The Corrective and Preventative Action (“CAPA”) process. Given the level of regulation our work in the clinical area is subject to, we have a set quality process for the raising and resolution of any issues, whether they are related to our products, our processes or any other matter. Each employee is able to raise a CAPA, and all CAPAs are investigated by the Quality Manager and final resolution agreed by all affected parties
- Issue of share options. Share options are issued at least annually and generally fall into two categories: employment condition only options for all staff who have been with the Company for 1 year, and performance-measured options for key employees. We believe that share options remain a key way of linking individual performance with overall corporate success
- CEO awards. Additional spot rewards are available to employees based on a range of possible factors. These may be given both for exceptional performance but also for suggestions and work that brings about positive change in our business
Feedback from employees is brought back to senior management team meetings and incorporated as appropriate in operational and strategic plans. CAPAs invariably lead to improvements in products and processes.
Understanding client needs and responding appropriately is key to our business success. Being aware of our clients’ current and future needs, as well as seeking feedback on our performance forms a key part of this.
We engage with our clients in the following ways:
- Engagement at appropriate conferences. We attend numerous conferences to demonstrate our own capabilities, learn from others and engage with our customers. These conferences cover a range of clients, including large pharmaceutical companies, clinical research organisations (“CROs”), healthcare providers and academics
- Continuing academic research. Our science team works closely with key academics in our fields of expertise. This offers many mutual benefits, and key among them is the maintenance and understanding of what is required now and the kind of research that is likely to happen in the future
- Traditional sales activities. All members of our sales team undertake work across the full sales cycle, to which a proper understanding of customer needs is pivotal. Our sales team are supported by our marketing and product management teams who also undertake broader market research to identify market developments and predict future needs
- Feedback surveys. At the conclusion of all clinical studies, our clients are asked to complete a short survey to feed back their views and experiences. This has to date recorded at 90%+ satisfaction rating, but all comments are taken on board and areas for improvement considered
- Customer complaints. Where a complaint is received, a CAPA is automatically raised and all factors that led to the complaint are considered. The CAPA process will consider what improvements need to be made in the future to avoid similar complaints. Commercially, consideration of any further support the customer needs will be made
All of the above elements feed back into our product development and product management processes as we continually seek to provide the leading customer service and technology that the market demands.
The Company is reliant on suppliers to ensure that the needs of other stakeholders are met. Within our supplier group we have identified ‘critical suppliers’. Critical suppliers are those whose failure could result in notable disruption to our own business.
We engage with our suppliers in the following ways:
- Procurement and supplier engagement. The Company seeks to engage with both new and existing suppliers to ensure that we are benefitting from their latest products and that they are happy in their relationship with us. This is particularly relevant in the procurement process, where suppliers have a particular opportunity to demonstrate their credentials and understand more about the Company
- Critical supplier audits. Our critical suppliers are subject to periodic audit from our quality team. Whilst these audits focus on the Company’s needs ensuring that the supplier meets all the necessary quality and regulatory standards, they provide an excellent opportunity for two-way dialogue and mutual learning
- Reliable payment. We endeavour to ensure that all of our suppliers transact on agreed commercial terms
Through these processes we seek to establish a relationship with our suppliers that is characterised by mutual benefit and understanding. Feedback from suppliers contributes to setting our goals and expectations through understanding what improvements to products and processes are possible and at what cost.
The Company is conscious that it forms part of the local and national community. The Company seeks to support and engage with these communities in the following ways:
- Charitable leave. Each employee is given two additional days leave per year to allow them to participate in charitable or community-focussed activities
- Flexibility in working arrangements. As well as the two days above, employees are afforded flexibility in their working patterns to accommodate their desire to participate in charitable or community based activities
- Charity of the Year. The company selects a ‘Charity of the Year’. Typically this charity will have a link to mental health and be relatively local to the Company’s head office in Cambridgeshire. A range of sponsored activities take place each year to raise funds for the charity, and we also support them through publicity, product and professional resources
- Other charitable activities. The Company will often involve itself in local and national fundraising efforts, e.g. BBC Children in Need
- Internships and work experience. We offer summer internships and work experience to young people, typically between the age of 16 and the end of their university studies. This gives young people an insight to the world of work. All work experience students and interns are paid
- Re-use of expired equipment, when the Company has equipment (for example iPads) that have little or no commercial use, but are still useful, we seek to pass these onto local charities, schools and community groups.
Both the Company and its employees take great value from these activities and they are a key part of the Companies operations.
The Company’s environmental impact is limited as it is entirely office based - there are no production facilities or laboratory areas. The Company ensures that all paper and cardboard is recycled as far as possible and provides facilities to ensure a full range of recyclable materials can be collected on site, and sent to appropriate recycling facilities.
Industry based regulators
The Company has to comply with some significant regulations given its field of work and expertise. These include:
- ISO 9001:2015
- ISO 13485:2016
- GCP (Good Clinical Practice) – All employees receive training to ensure they have an overview of GCP
- GDPR (General Data Protection Regulation in the EU)
- US Health Insurance Portability and Accountability Act of 1996 (“HIPAA”). Note that the Company can not be formally certified for HIPAA compliance as it is not a US company, but nonetheless maintains quality processes and standards that would apply for HIPAA
The Company seeks to achieve and maintain compliance with these standards. The key feedback mechanism is the periodic review for compliance with these standards, which are undertaken by independent quality bodies. This feedback helps us improve our internal quality systems and achieve continuous improvement within the organisation.
Capital market and governmental regulators
As a listed company, we must provide transparent, understandable and balanced information to all stakeholders. Meeting both the letter and spirit of regulatory requirements is key to achieving this goal and our long-term business success. The Regulations in this area that we are subject to includes (but is not limited to):
- The Listing Rules as applicable to AIM-listed companies
- General business regulations particularly in the UK and the US (Federal and State) (e.g. The Companies Acts in the UK)
- Taxation authorities in the UK and the US (Federal and State)
- The General Data Protection Regulations (“GDPR”)
We seek to respond positively to the general and particular requirements of regulation. This includes:
- Ensuring that press releases and other information is appropriately distributed through the RNS network and on our website
- Engaging professional advisors to ensure that regulatory requirements are met
- Ensuring that Company filings are appropriate and timely
- Taking immediate and appropriate action if any filings are found to be delinquent or defective in any way
Appropriate engagement with these groups protects and grows the Company assets and market value. Such compliance also facilitates capital market activity when required, for example the share issues in April 2016, March 2019 and March 2020.
Principle 4: Embed effective risk management, considering both opportunities and threats, throughout the organisation
Risks are considered as part of the strategic planning process referred to above. The CEO is also ultimately responsible for the quality management of the company and reports to the Board on key matters. The Board will periodically receive presentations on specific operational and financial risks.
The principal risks and uncertainties of the Group are summarised on pages eight and nine of the Company’s 2021 Annual Report and Accounts.
Principle 5: Maintain the Board as a well-functioning, balanced team led by the Chair
Profiles of each of the Directors can be seen on our Board of Directors webpage.
The Board consists of two executive directors, the non-executive Chairman and two further independent directors. The non-executive Chairman holds some shares, especially from his time as the Group’s CEO. One non-executive director holds shares after the March 2020 placing. These holdings are not considered material.
All directors are expected to devote sufficient time to their duties as may be necessary. Typically, this would be around two days per month for the non-executive directors.
The Board is provided with monthly business and finance reports from the CEO and CFO respectively. Further information will be given to the Board for discussion at meetings as relevant.
The Board is supported by three sub-committees: the Audit Committee, the Remuneration Committee and the Nomination Committee. All non-executive directors sit on all sub-committees. Board and Committee attendance for 2020 is included on page 14 of the Company’s 2021 Annual Report and Accounts.
Principle 6: Ensure that between them the Directors have the necessary up-to-date experience, skills and capabilities
Profiles of each of the Directors can be seen on our Board of Directors webpage.
Principle 7: Evaluate board performance based on clear and relevant objectives, seeking continuous improvement
Since the Company’s listing in 2013, board evaluation has been an informal process led by the Chairman and principally consisting of one on one meetings to gather, compare and consider the views of each of the directors. This approach has, to date, been deemed appropriate given the small size of the Company.
Since the start of 2019 there have been a number of changes to the composition of the Board and 2020 has seen the added disruption of the Covid-19 pandemic. However, the Board proposes to adhere to its policy to conduct formal internal performance reviews every year supplemented by an external evaluation review every alternate year.
The Board’s approach to succession planning includes consideration of both potential replacements from within the Company, and others outside the Company known to the Board. As required, executive search agencies may be engaged to support this process in the short and long terms. Members of the senior management team (excluding current directors) are regularly asked to attend Board meetings to present and discuss appropriate topics for the Board’s consideration. In this way, the full Board gains exposure to potential succession candidates, in addition to the CEO and CFO working with these people on a day to day basis.
Principle 8: Promote a corporate culture that is based on ethical values and behaviours
The Board ensures that the Company culture is based on ethical values through the following means:
- The employee handbook clearly setting out values and employment codes
- All new employees benefit from an induction programme which emphasises our ethical values and behaviours
- These behaviours are re-iterated through the various employee communication and reward channels outlined above
- Particular training on topics relating to ethical behaviour, ranging from compliance in clinical trials to share dealing rules are given at regular intervals and attendance monitored
- Standard Operating Procedures (“SOPs”) that outline the Company’s process and the values that underpin them are required to be read by employees and documentation of compliance maintained
- Receiving monthly reports from human resources and other departments to ensure that any instances of behaviours not being recognised or respected are considered and resolved appropriately
Principle 9: Maintain governance structures and processes that are fit for purpose and support good decision making by the Board
The current roles and responsibilities of Board members, and the Board sub-committees are described in the 2021 Annual Report and Accounts, pages 15 and 16.
Matters reserved for the Board are:
- Final sign-off of strategic and operating plans, including related budgets
- Sign-off of particular items of high expenditure, or high-value contracts in accordance with the Company’s authorisation matrix
- Approval of all press releases
- Approval of all resolutions to be put to general meetings
- Approval of any changes to corporate structure or share capital
- Sign-off of executive and senior management remuneration (on recommendation of the Remuneration Committee)
- Share option plan details and offers to employees (on recommendation of the Remuneration Committee)
- Approval of interim and full year results and related reports (on recommendation of the Audit Committee)
- Approval of new Board members (on recommendation of the Nomination Committee)
The governance framework of two executive directors (supported by a senior management team) and three non-executive directors (including the non-executive Chairman) is appropriate at this time. As the Company plans for growth, the make-up of the Board will be reviewed, with additional directors a possibility, though the number of non-executive directors will continue to be equal to or greater than the number of executive directors.
Principle 10: Communicate how the Company is governed and is performing by maintaining a dialogue with shareholders and other relevant stakeholders
Descriptions of the work of the Board and its Committees are described in the 2021 Annual Report and Accounts, pages 15 to 16. The Remuneration Report is on pages 17 and 18.
Annual General Meeting notices and results statement of votes at the Annual General Meeting since the Company’s listing in 2013 can be seen on the Announcements page of our website.
The Company has not yet suffered a high proportion (20% or more) of votes cast against any resolution.
The results of the AGM for 2022 are available here.