Deltex Medical > Investor Relations > AIM Rule 26 > Corporate Governance

Chairman’s introduction
Our purpose is to provide returns for our shareholders by enabling improvements in outcomes by creating, validating and delivering innovative healthcare solutions. We aim to achieve this by:

• Investing in our products, services and people;
• Partnering with clinicians to adopt the TrueVue System driven haemodynamic management as routine practice across the whole hospital;
• Communicating openly and honestly with our customers and with each other;
• Providing excellent levels of support, education and training;
• Continuing to be thought-leaders to drive innovation; and
• Supporting evidence-based medicine to create sustainable health benefits.

It is the Board’s role to ensure that Deltex Medical Group plc (“Deltex” or the “Group”) is managed for the long-term benefit of all Deltex’s stakeholders with effective, efficient and timely decision making.

Corporate Governance is an important element of that task, and reduces risk and adds value to Deltex.

As your Chairman, I am committed that the Group should uphold the highest standards of governance commensurate to its size and the complexity of its business.

Nigel Keen
Chairman

Corporate governance regime
Following the changes made by the London Stock Exchange to the AIM Rules for Companies (AIM Rules) in March 2018, the Board of Deltex have chosen to adopt the QCA Corporate Governance Code (the QCA Code) that was published by the Quoted Companies Alliance in April 2018. This report sets out how the Group complies with the QCA code and will, in accordance with AIM Rule 26, be updated on an annual basis. In addition, certain disclosures as required by the QCA code will be provided in Deltex’s Annual Report & Accounts 2018 which will be published during H1 2019.

The QCA code is constructed around ten broad principles. Set out below, is the Board’s explanation of how Deltex complies with these principles.

1. Establish a strategy and business model which promote long-term value for shareholders
Deltex’s strategy and business model is disclosed on pages 5 and 6 of Annual Report & Accounts 2017 which is freely available on the Group’s website at www.deltexmedical.com

2. Seek to understand and meet shareholder needs and expectations
The Board’s primary contact with both private and institutional shareholders is through the Chairman, Chief Executive (CEO) and Group Finance Director (FD). The CEO and the FD typically engage with those institutional shareholders, who wish to meet with them, twice a year around the publication of the annual accounts and interim results. Larger private shareholders are normally invited to a separate meeting with the Executive Directors around the same time as the publication of these reports as well. More recently, investor events primarily aimed for retail investors have been held around the publication date of the annual report. In addition, the Group’s Annual General Meeting provides an ideal opportunity for retail shareholders to put their questions to the Board in person.

3. Take into account wider stakeholder and social responsibilities and their implications for long-term success.
Engaging with our stakeholders strengthens the Group’s relationships and helps it to make better business decisions to deliver on its commitments. The Board is regularly updated on wider stakeholder engagement feedback to stay abreast of stakeholder insights into the issues that matter most to them and, therefore, the Group’s business, and to enable the Board to understand and consider these matters when making decisions. Apart from our shareholders, suppliers and customers, our employees are an important stakeholder group and the Board carefully considers reports received from the CEO concerning employee related matters.

Employees
Deltex has established regular meetings with employees at its Chichester office and factory through a forum known as ‘Employee Voice’. These quarterly meetings enable various topics to be discussed and actions, wherever possible, taken to respond to them.

Customers
The CEO leads the Group’s ‘Key Opinion Leadership’ programme to help the Group to better understand the clinical needs that need to be addressed and how the Group should best respond through both product development and sales and marketing programmes.

Communities
The UK based employees chose to support The Sussex Snowdrop Trust as their charity of the year for 2017 and raised just over £500 for it through voluntary activities such as cakes sales and car washing. The Group did not make any charitable donations during the year.

For 2018, the chosen charity of the year is Cancer Research UK.

4. Embed effective risk management, considering both opportunities and threats, throughout the organisation.
The Board is responsible for the systems of risk management and internal control and for reviewing their effectiveness. The internal controls are designed to manage rather than eliminate risk and provide reasonable but not absolute assurance against material misstatement or loss. Through the activities of the Audit Committee, the effectiveness of these internal controls is reviewed annually.

A summary of the principal risks and uncertainties facing the Group, as well as mitigating actions, are set out on page 19 of the Group’s 2017 Annual Report & Accounts.

A comprehensive budgeting process is completed once a year and is reviewed and approved by the Board. The Group’s revenue performance, compared with the budget, is reported to senior management on a weekly basis and to the Board at each of its meetings.

The Group maintains appropriate insurance cover against material loss or claims against the Group as well as in respect of actions taken against the Directors because of their roles. The insured values and type of cover are comprehensively reviewed annually.

The executive management team meet at least monthly to consider new risks and opportunities presented to the Group, making recommendations to the Board and/or Audit Committee as appropriate.

5. Maintain the board as a well-functioning, balanced team led by the Chair.
The Group is led by the Board of Directors which comprises the Non-Executive Chairman, two Executive Directors and four Non-Executive Directors. Nigel Keen, the Non-Executive Chairman, is responsible for the running of the Board and Andy Mears, the Chief Executive Officer, has executive responsibility both for managing the Group’s business activities and implementing the Group’s strategy. The Group is satisfied that the composition of the current Board is sufficient to enable it to carry out its governance obligations on behalf of the Group’s stakeholders.

To allow the Board to discharge its duties effectively, all Directors are provided with relevant information on a timely basis. In this regard, management reports are provided to all Directors in advance of all Board and Committee meetings. All of the Directors have unfettered access to the services of the Group Finance Director who also fulfils the role of Company Secretary. In addition, if required, all Directors are freely able to obtain independent advice in the furtherance of their duties at the Group’s expense.

The Board considers that with the exception the Chairman all of the Non-Executive directors are independent notwithstanding their varying lengths of tenure in office. In this context, Sir Duncan Nichol and Julian Cazalet have served on the Board for around 14 years and 10 years respectively. However, the Board has concluded that their length of service has not impaired the independence of judgement they bear. All of the Non-Executive directors receive a fixed fee for their services which is usually settled by the issue of new ordinary shares in the Group. None of the Non-Executive directors have an interest in any of the Group’s share option schemes.

The Board is supported in its work by an Audit Committee and a Remuneration Committee. The Audit Committee is chaired by Julian Cazalet and the Remuneration Committee is chaired by Nigel Keen. The remaining Non-Executive directors are members of both committees. The Executive Directors are invited to attend meetings of these committees when appropriate.

The Board typically meets formally seven times a year. Two of these meetings are at the Group’s main office and the remainder are offsite. If necessary, additional Board meetings can be arranged as needs arise. Meetings of this nature typically are conducted by tele-conference calls. The Chairman speaks regularly to all Directors individually between formal Board meetings.

6. Ensure that between them the directors have the necessary up-to-date experience, skills and capabilities.
The Board comprises individuals with wide ranging commercial experience for business management in the healthcare market supported by members with careers in investment banking and the law. Each Director brings experience of other relevant businesses which helps the Board as a whole to benchmark Deltex’s progress.

7. Evaluate board performance based on clear and relevant objectives, seeking continuous improvement
The Board has chosen not to undertake formal reviews of board performance. Instead, the Chair periodically discusses the input of each director with the individual concerned to be satisfied that their contribution to the Board is and remains both effective and relevant and that they remain committed to the success of the Group.

8. Promote a corporate culture that is based on ethical values and behaviours
As a provider of regulated healthcare products to patients across the world ethical behaviour is key to everything that the Group does. Our products are designed and manufactured by our well-trained employees in Chichester who comply with our established Quality System. Our sales teams promote our products to the clinicians and healthcare systems using them in an open way and we provide extensive training to users to allow them to gain the maximum advantage for their use in the clinical setting.

9. Maintain governance structures and processes that are fit for purpose and support good decision making by the board
The Board has established a regular programme of Board Meetings at which the Executive Directors report on the progress of the business and of the risks and opportunities for the forthcoming periods and the Chair maintains contact both with the Board and the Executive Directors and employees between Board Meetings. As a result, Board decisions are made in the light of up to date and relevant information. The Group’s Quality System which is regularly audited by outside healthcare authorities provides a governance regime appropriate for the Group.

10. Communicate how the company is governed and is performing by maintaining a dialogue with shareholders and other relevant stakeholders
Extensive dialogue is maintained with shareholders and other stakeholders to describe the opportunities for the Group. Although the dialogue is built around the Group’s annual and interim results shareholders are informed of significant developments through the periodic Regulatory Announcements that the Group makes describing significant events in the business. Regular contact is maintained with the Group’s medical Key Opinion Leaders who often undertake clinical trials using the Group’s products and who publish the results of these trials.

Last updated 27th September 2018