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Chairman's Introduction

Governance continues to be crucial to any company’s future development. The Board recognises that good governance can contribute to our ability to create shared value. Our governance framework promotes a culture of accountability and responsibility by actively managing the risks that we face, supported by our values and behaviours.

A good governance framework provides solid foundations. Strong systems and processes for informed decision-making ensures that the Board and its Committees are provided with clear agendas, timely information that is delivered through good quality briefing materials; and, which cover all relevant factors and that our deliberations consider the risks, as well as the opportunities, inherent in the topic before us.

As a Company admitted to AIM, our governance framework is underpinned by the Quoted Companies Alliance (“QCA”) Corporate Governance Code 2018 (the “Code”). The Board has adopted this Code and below we set out an overview of how the Company complies with the Principles of the Code and is supported by further information in our latest Annual Report and Accounts

David Cook
Chairman

Our governance principles

Principle 1: To establish a strategy and business model which promote long-term value for shareholders

The Board meets annually at a two-day strategy planning meeting to review and discuss the strategy for the Group. The strategic plan and business model are reviewed by the Senior Leadership Team monthly with relevant operational and management updates being reported to demonstrate delivery and progress. Decisions of the Board are made in line with the strategic plan and business model for the Group.

Further information on the Group’s strategy can be found on pages 17 to 22 of our 2021 Annual Report and Accounts.

Principle 2: To seek to understand and meet shareholder needs and expectations

The Directors are committed to open communication with the Group’s shareholders to ensure that they clearly understand its business, strategy, and performance. The Board actively seeks dialogue with its shareholders via investor roadshows, capital market days, one-to-one meetings, and regular reporting. The Board believes that open communication with investors and analysts is the best way to ensure it understands what is expected of the Group to allow it to drive its business forward. The Company also has a Head of Investor Relations.

Further information of the Boards shareholder engagement can be found on page 51 of the 2021 Annual Report and Accounts.

Principle 3: To take into account wider stakeholder and social responsibilities and their implications for long-term success

The Board values the opinions of key stakeholders in the business and regularly seeks to ensure that the views of its employees, suppliers, customers and partners are known and where relevant to the success of our business they are acted upon. The Board continues to be mindful of environmental, social and governance representation. Engaging with the Company’s stakeholders is well embeddedin the business as we continue to look after our relationships with employees, customers and suppliers and consumers and the wider communities.

The Company has also recently formed an ESG Committee whose primary role is to review the overarching ESG vision for the Company and ensure that the priorities are anchored and an integral part of the Company’s overall strategy.

Further information on our stakeholder engagement can be found on page 34 and 53 of the 2021 Annual Report & Accounts.

Principle 4: To embed effective risk management, considering both opportunities and threats, throughout the organisation

Oversight and reporting

The Board and the Audit and Risk Committee leads process for risk management

  • The Audit and Risk Committee reviews the framework for risk management and considers the Group’s principal risks and uncertainties.
  • The Audit and Risk Committee reports directly to the Board.

Identify and assess

Top-down/bottom-up review

  • The identification and assessment and management of risks in the business is driven and monitored by the Senior Leadership Team with the support of the Company Secretary.
  • The existence of a risk is identified from either a ‘bottom-up’ process involving line management or a ‘top-down’ review by the Senior Leadership Team. As well as a consolidated Group Risk Register, there are risk registers in place at a functional business level.
  • Risks are identified and assessed by the likelihood of them occurring and their potential impact on the business. This calculates the potential level of exposure on the business. These are then categorised to identify those that can be effectively managed at a functional or departmental level and those that need to be addressed at a cross-functional business level.
  • Risk registers are regularly reviewed to capture and identify new risks and identify opportunities to improve the mitigating actions.

Review and mitigate

The SLT reviews progress and mitigations

  • Each risk is allocated a business owner, who is responsible for implementing the mitigating actions and reporting on progress with those improvements and the status of those risks to the Senior Leadership Team. The Senior Leadership Team reviews all risks on a quarterly basis, with the principal risks being monitored monthly and, in the case of the principal risks and uncertainties, such risks are reported to and reviewed by the Audit and Risk Committee as well as the Board.
  • Actions being taken, or that should be taken, to help mitigate the potential exposure to the risks are regularly reviewed to ensure the appropriate individual ‘owns’ the risk and the actions being taken remain effective.

Report and review

The Audit and Risk Committee reviews and discusses key risks identified

  • The Company Secretary prepares an update report on risk and notifies the Audit and Risk Committee of key changes to the Group Risk Register.
  • Existing mitigations are considered for each risk and the residual levels of exposure assessed.

The responsibilities surrounding risk management and internal control systems are designed to meet the needs of the size and complexity of the business. It takes into account the applicable requirements of pharmaceutical regulators in the various markets in which the business operates and the regulatory and legal requirements as a UK AIM listed plc. The internal controls are designed to manage rather than eliminate risk and provide reasonable but not absolute assurance against material loss or misstatement.

The key components of the current system of internal control are:

Communicating our strategy and our values

Setting and communicating clear strategic goals to the business helps ensure all employees understand the objectives of the business and raises awareness.

Defining the Group’s values and maintaining a code of ethics for all employees to encourage a culture that promotes good behaviour.

Planning

Developing clear business plans and budgets in line with strategy, supported by intra-year forecasting. This provides the business with clear points of reference.

Policies, processes and procedures

Developing clear policies and procedures for all areas of the business which consider all aspects of legal, regulatory and ethical responsibility. Final implementation of the Enterprise Resource Planning (ERP) system will further strengthen and enhance the Group’s systems of internal control. This provides the business with an opportunity to review processes and reporting practices throughout the Group and provide consistency across the same.

Reporting, management information and discussion

Regular reporting of actual performance relative to those strategic goals, plans, budgets and forecasts. This ensures the business can track and trace factors that could impact on strategy and performance.

Organisational structure, accountability

Creating an appropriate structure of responsibility and accountability, including segregation of duties, appropriate reporting lines for key managers and regular line management communications and one-to-one meetings where performance is discussed, supported by an appraisal process.

Training and monitoring

Training and monitoring employees’ understanding of the external regulatory codes which are applicable to the Group’s business, as well as the Group’s internal policies and procedures.

Management monitoring of compliance with the external regulatory codes which are applicable to the Group business, as well as the Group’s internal policies and procedures, and responding appropriately to any breaches.

The internal controls are designed to manage rather than eliminate risk and provide reasonable but not absolute assurance against material loss or misstatement.

The Group’s Principal Risks and Uncertainties can be found on pages 39 to 45 of the 2021 Annual Report and Accounts.

Principle 5: To maintain the Board as a well-functioning, balanced team led by the Chair

The Board keeps under review its current balance and composition, which provides a sufficiently wide range of skills and experience to enable it to pursue its strategic goals and to address anticipated issues in the foreseeable future. Led by the Chair, deliberations are not dominated by one person or any group of people. In addition, to assist in discharging its responsibilities, the Board is supported by its Committees. Specifically, the Nomination Committee supports the Board with its responsibilities on the selection process for the appointment and re-appointment of all Board directors, succession planning and the review of the structure, size and composition of the Board and its Committees.

Further information on the roles and responsibilities and board effectiveness can be found on pages 53, 52 and 55 of our 2021 Annual Report and Accounts

Principle 6: To ensure that between them the Directors have the necessary up-to-date experience, skills and capabilities

The Nomination Committee reviews the mix of skills and experience on the Board by maintaining a skills matrix and discusses this in light of the Company’s strategy to ensure that skills are also refreshed or training is provided.

Further information on the work of the Nomination Committee can be found on pages 56 to 59 of our 2021 Annual Report and Accounts.

Principle 7: To evaluate Board performance based on clear and relevant objectives, seeking continuous improvement

The Chairman evaluates the performance of the Board through a blend of questionnaires and one-to-one meetings with each Director. This process offers Directors an opportunity to discuss their contribution in terms of their skills and experience as well as identifying improvements or development to enhance the capabilities of the Board as a whole.

Further information on Board evaluation and its effectiveness can be found on page 55 of our 2021 Annual Report and Accounts.

Principle 8: To promote a culture that is based on ethical values and behaviours

The Board aims to lead by example and make decisions that are in the best interest of the Group as a whole. Our culture is underpinned by a clear set of values, which guide decision making at all levels in the business. Both the SLT and the Board reviews and approves the Group’s policies which are then implemented and communicated internally and externally to those who are expected to adhere to them.

Further information on our values and how we invest in our people can be found on pages 4 and 5 and page 22 of our 2021 Annual Report and Accounts

Principle 9: To maintain governance structures and processes that are fit for purpose and support good decision-making by the Board

The Board reviews its assurance and governance framework at least annually to ensure that the Group’s governance structures remain appropriate and are fit for purpose. This framework sets out leadership and embeds delegated responsibilities to enable informed and confident decision-making.

Principle 10: To communicate how the Company is governed and is performing by maintaining a dialogue with shareholders and other relevant stakeholders

The Board ensures that all stakeholders across the business are actively engaged through the relevant areas of responsibility. This includes making sure that the business as, a whole upholds its values and monitors behaviour for acceptability.

Our business is based around our culture of working together to achieve more – working as one global team to create partnerships that unlock potential for brands, businesses, and people, thereby maximising the value we create, not just for our shareholders, but for all the key stakeholders in our business, recognising that each has a part to play in ensuring the business’s long-term success. For Alliance, regular engagement with our stakeholders is an integral part of how we operate as a business – actively seeking to understand the concerns and aspirations of our employees, how they perceive the business and their levels of engagement, the challenges faced by our suppliers and distributors and healthcare professionals – the users and recommenders of our products.

The Board recognises the importance of maintaining an engaged and motivated workforce, dependable supply chains, customer confidence in our products, close relationships with healthcare professionals, good returns for our shareholders and social impact in both our local and wider communities.