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CORPORATE GOVERNANCE

Corporate Governance Statement

Overview

The Chairman of the Board of Directors of Symphony Environmental Technologies PLC (“Symphony”, the “Company”, or, together with the subsidiary companies, the “Group”), has the responsibility to ensure that Symphony has both sound corporate governance and an effective Board. The Chairman’s responsibilities 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. Nicolas Clavel is the Company’s Chairman.

It is the Board’s job to ensure that Symphony is managed for the long-term benefit of all shareholders, with effective and efficient decision-making. Corporate governance is an important part of that role, reducing risk and adding value to our business. Our role as a Board is to create the conditions in which a resilient and successful business can continue to grow. Annually we review and determine our strategy and business model and then continuously monitor how management is implementing those plans. We review performance to ensure those plans remain on track or else are modified to take account of unforeseen circumstances.

The Directors of Symphony recognise the value of good corporate governance in every part of its business. As Symphony is an AIM listed company, it is required to adopt a recognised corporate governance code and disclose how it complies with that code and, to the extent Symphony departs from the corporate governance provisions outlined by that code, it must explain its reasons for doing so. The Directors have resolved to adopt the Quoted Companies Alliance Corporate Governance Code (the “QCA Code”), which we believe is the most appropriate for a company of the size and stage of development of Symphony. The Board considers that compliance with the QCA Code will enable us to serve the interests of all our key stakeholders, including our shareholders, and will promote the maintenance and creation of long-term value in the Company. This statement describes our approach to governance, including information on relevant policies, practices and the operation of the Board and its Committees.

The Board considers that Symphony complies with the QCA Code so far as is practicable, having regard to the Company’s current stage of evolution. A statement detailing both how the Company complies with the QCA Code, and areas of non-compliance, is outlined below.

QCA Principles:

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

The primary business activity of Symphony is the development and supply of environmental plastic additives and masterbatches, together with plastic and rubber 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 Group’s strategy of driving sales of its d2w range of products through its network of distributors. In addition, the Board is focused on increasing revenues generated by its d2p (designed to protect) range of products and 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 in Principle Risks and Uncertainties as detailed in Section 4 of this statement. 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 (CEO), Chief Financial Officer (CFO) 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, investor relation web interviews, investor shows, 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 Corporate Information section on the website 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 Group’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 Group’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 Group’s commitment to Corporate Social Responsibility. Furthermore, Symphony Environmental Limited (the Company’s trading subsidiary) is BSI certified to ISO 9001 and 14001. The Group 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 and copies of the above-stated policies can be found on the Company’s website

  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 Company’s identified Principle Risks and Uncertainties are as follows:

PRINCIPAL ACTIVITY PRINCIPAL 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. This may lead to negative comments in the media who 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 foreign exchange forward contracts and other facilities with its bank to use as and when appropriate.
Other Risks Pandemics

 

 Pandemics cause general uncertainty which affects supply, shipping costs and transit times as well as causing delays in trials being undertaken. The Group uses multiple supply sources and manufactures products in multiple locations.

 

The Board has overall responsibility 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 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 discusses all business matters having regard to the risk for the Group and to the extent that risks inherent in a particular activity are considered significant, appropriate action is taken and steps taken to mitigate the issue.

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 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 THREE Executive Directors, Michael Laurier, Ian Bristow and Michael Stephen and two Non-Executive Directors, Nicolas Clavel and Michael Kayser. Nicolas Clavel is the Company’s Chairman. See statement in Overview 1st Paragraph.

Board 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 Group. 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.

Current directors’ attendance at Board and Committee Meetings for 2023  is shown below:

Director Position Board Meetings Attended in 2023 Audit Committee Meetings Remuneration Committee Meetings
Nicolas Clavel Non-Executive Chairman 5/5 1/1 1/1
Michael Laurier Chief Executive Officer 5/5
Ian Bristow Chief Financial Officer 5/5
Michael Stephen

 

 

Michael Kayser

 Commercial Director & Deputy Chairman

 

Independent non-Executive Director

(appointed 2 January 2024)

 5/5

 

 

n/a

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 papers are circulated by email with sufficient time before meetings, allowing time for full consideration and necessary clarifications before the meetings. Board papers are compiled into a board pack for the meetings themselves.

All Directors of the Board have sufficient time, availability, skills and expertise to perform their roles and this is regularly reviewed by the Board. 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.

The Company has two Committees, an Audit Committee and a Remuneration Committee. The Committees have the necessary skills and knowledge to discharge their duties effectively. As with Board papers, Committee papers are drafted and circulated to members of the Committee with sufficient time before the meeting.

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.

     6. 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.

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 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 skillsets up to date, the Board uses third parties to advise the Directors of their responsibilities as a Director of an AIM company, which includes 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.

If required, the Directors are entitled to take independent legal advice and if the Board is informed in advance, the cost of the advice will be reimbursed by the Company. In addition to their general Board responsibilities, Non-Executive Directors are encouraged to be involved in specific workshops or meetings, in line with their individual areas of expertise. The Board shall review annually the appropriateness and opportunity for continuing professional development, whether formal or informal.

     7. 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 Group taking appropriate advice when required.

The Company has not yet 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.

The Chairman will annually assess the individual contributions of each of the members of the team to ensure that:

– their contribution is relevant and effective;

– that they are committed; and

– where relevant, they have maintained their independence.

The Board is committed to undertaking reviews of Board and Committee performance and of individual Board members which will be carried out every year as part of a board performance evaluation.

     8. 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 Group as a whole and that this will impact performance. The Board is aware that the tone and culture set by the Board will greatly impact all aspects of the Group 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 (“MAR”) which came into effect in 2016. The Policy addresses the securities dealing restrictions set out in MAR and reflects the requirements set out in the AIM Rules.

     9. 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 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

Committee members and attendance

The Audit Committee currently comprises Michael Kayser (Chair) and Nicolas Clavel.

The Board considers that Michael Kayser has sufficient relevant financial experience to chair the Audit Committee given that he has over 40 years experience as Chief Accountant and non-executive director in many listed and non-listed entities.

The Committee is required by its terms of reference to meet at least twice a year. The Committee Chairman may invite other Directors or executives of the Company and any external advisors to attend all or part of any meetings as and when deemed appropriate.

Objectives and responsibilities

The Committee is responsible for monitoring the integrity of the Group’s financial statements, including its Annual and Interim Reports, preliminary results announcements and any other formal announcements relating to its financial performance prior to release.

The Committee’s main responsibilities can be summarised as follows:

  • to review the Group’s internal financial controls and risk management systems;
  • to monitor the integrity of the financial statements and any formal announcements relating to the Group’s financial performance, reviewing significant judgements contained in them;
  • to make recommendations to the Board in relation to the appointment of the external auditors and to recommend to the Board the approval of the remuneration and terms of engagement of the external auditors;
  • to review and monitor the external auditors’ independence and objectivity, taking into consideration relevant UK professional and regulatory requirements;
  • to develop and implement policy on the engagement of the external auditors to supply non-audit services, taking into account relevant ethical guidance regarding the provision of non-audit services by the external auditors; and
  • to report to the Board, identifying any matters in respect of which it considers that action or improvement is needed, and to make recommendations as to steps to be taken.

Remuneration Committee

Committee members and attendance

Symphony’s Remuneration Committee currently comprises Michael Kayser (Chair) and Nicolas Clavel.

The Committee is required by its terms of reference to meet at least once a year. The Committee Chairman may invite other Directors or executives of the Company and any external advisors to attend all or part of any meetings as and when deemed appropriate.

Objectives and Responsibilities

The Remuneration Committee’s main responsibilities can be summarised as follows:

  • To determine the framework or broad policy for the remuneration of the Executive Directors, and such other senior executives as it is requested by the Board to consider. The remuneration of the Non-Executive Directors shall be a matter for the executive members of the Board. No Director shall be involved in any decisions as to their own remuneration;
  • To determine such remuneration policy, taking into account all factors which it deems necessary (including relevant legal and regulatory requirements);
  • To review the ongoing appropriateness and relevance of the remuneration policy, including policy comparisons with market competitors;
  • To design and determine targets for any performance related pay schemes operated by the Company and approving the total annual payments made under such schemes;
  • To review the design of, and any changes to, all share incentive plans;
  • To advise on any major changes in employee benefits structures throughout the Company or Group; and
  • To consider any matter specifically referred to the Committee by the Board.

 Terms of reference for the Audit Committee and Remuneration Committee.

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.

     10. 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 a constructive dialogue with its shareholders, other relevant stakeholders and prospective investors. 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 next Annual General Meeting. All 2023 AGM resolutions were passed comfortably. The Board already discloses the result of general meetings by way of announcement and discloses the proxy voting numbers. The Board intends that, if there is a resolution passed at a General Meeting with 20% or more votes against, the Company will seek to understand the reason for the result and, where appropriate, take suitable action.

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

9th April 2024