ANIMALCARE GROUP PLC (“Animalcare” or the “Company”)

(The information in this statement was last reviewed on 29 May 2020)

An Introduction from our Chairman

As Chairman, I am responsible for leading the Board and upholding high standards of corporate governance throughout the Group and particularly at Board level. As a Board, we recognise that applying sound governance principles is essential to the successful running of the Group, and supports its long-term success and strategy for growth. I am therefore pleased to introduce our Corporate Governance Statement which summarises our approach to governance and provides information about how the Board and its committees operate.

The Company is listed on AIM and from September 2018 has been required to provide a statement of its compliance with a recognised corporate governance code. After the Company’s admission to AIM in 2014, the Board continued to follow the principles of the UK Corporate Governance Code, as appropriate to the size and nature of the Company. Following a review during 2018, the Board adopted the QCA Corporate Governance Code, an updated version of which was published in April 2018 (the “QCA Code”).

The Principles of Corporate Governance

Compliance with the QCA Code

The Board believes that it applies the ten principles of the QCA Code. We recognise the need to continue to develop our governance practices and disclosures in some areas, in order to ensure we continue to apply the principles effectively going forwards. The policies, procedures and relevant systems we have implemented to date provide a firm foundation for our governance structure and the Board regularly reviews the structure to ensure that it develops in line with the growth and strategic plans of the Group.

Deliver Growth

The Board has collective responsibility for setting the strategic aims and objectives of the Group and our strategy is articulated on pages 12 to 13 and on our website, along with our business model on pages 8 to 9. In the course of implementing our strategic aims, the Board takes into account expectations of the Company’s shareholder base and also its wider stakeholder and social responsibilities.

The Board also has responsibility for the Group’s internal control and risk management systems. The Board regularly considers and reviews the risks and opportunities for the business and ensures that the mitigation strategies in place are the most effective and appropriate to the Group’s operations.

Dynamic Management Framework

As Chairman, I consider the operation of the Board as a whole and the performance of the Directors individually. The Directors attend seminars from time to time and have regular updates at Board meetings to assist with training and awareness of compliance issues facing boards of quoted companies. Following the reverse takeover of Ecuphar NV in 2017 and resulting changes to the composition of the Board, the Board has re-established its annual board evaluation process. This involves the completion of a detailed questionnaire completed by each Director, the responses to which have been analysed and fed back to the Board with planned implementation of actions and recommendations.

Appointments to the Board are made on merit, but with due consideration to the need for diversity on the Board. All appointments are made to complement the existing balance of skills and experience on the Board.

The Company operates an open and inclusive culture and this is reflected in the way that the Board conducts itself. The Non-Executive Directors attend the Company’s offices and other Company events. With a relatively small employee base, such interactions mean it is relatively straightforward for the Board to promote and assess the desired corporate culture. We do, however, recognise this is an area for continuing development, and we intend to further develop our assessment of the recognition of our corporate culture and ethical values going forwards.

Build Trust

During the year the Board has continued to review governance and the Group’s corporate governance framework. The Board will continue to monitor its application of the QCA Code and revise its governance framework as appropriate as the Group evolves.

The Board recognises the importance of maintaining regular dialogue with shareholders to ensure that the Group’s strategy is communicated and to understand the expectations of our shareholders.

Board Capabilities

The Board consists of eight experienced Directors who between them have considerable experience in the following areas:

  • Strong animal health and pharmaceuticals sector experience
  • Leading international change programmes
  • Managing a global supply chain
  • New product development
  • Business planning and development
  • Acquisitions
  • Financial and audit
  • Marketing
  • Governance

Jan Boone
Non-Executive Chairman
Animalcare Group plc
29th May 2020

Application of the QCA Corporate Governance Code published in April 2018 (“the New QCA Code”)

DELIVER GROWTH

  Principle Application

1

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

An explanation of the Group’s business model and strategy is included on pages 8, 12 and 13 of the Animalcare Group plc Annual Report and Accounts for the year ended 31 December 2019 (“2019 Annual Report”). This is also available on our website on the Business Model page.

2

Seek to understand and meet shareholder needs and expectations

The Company welcomes contact with its shareholders and the CFO’s and the Company’s Financial PR adviser’s contact details are set out in the Investors section of our website. ir contacts.

Directors are available to discuss any matters that shareholders might wish to raise. They maintain communication with institutional shareholders, other investors and analysts through meetings, particularly following publication of the Group’s interim and full year preliminary results.

All shareholders are encouraged to attend the Annual General Meeting at which the Group’s activities will be considered and questions answered. The Directors are available to listen to the views of shareholders informally immediately following the AGM.

Investor relations activity and a review of the shareholder register are quarterly items on the Board’s agenda.

General information about the Group is available on our website: www.animalcaregroup.com. This includes an overview of activities of the Group and details of all recent Group announcements.

3

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

The Company’s business model which is available on our website and on page 8 of our 2019 Annual report describes the key resources and relationships on which the business relies.

The Group conducts employee surveys and a talent management programme in the UK which are expected to be implemented across the Group. We also seek customer feedback through regular contact between account managers and our customers.

The Board has a good understanding of the needs, interests and expectations of the Company’s stakeholders and we will articulate this in more detail in our disclosures going forward.

4

Embed effective risk management, considering both opportunities and threats, throughout the organisation

The Group has an established framework of risk management and internal control systems, policies and procedures. The Audit and Risk Committee is responsible for reviewing this framework to ensure that it operates effectively.

Principal Risks on pages 24 to 26 of our 2019 Annual Report and details risks to the business, their potential impact, how these are mitigated and the trend for each identified risk since the last reporting period.

Executive Directors meet at least monthly to review ongoing trading performance versus budget and forecasts and risks associated with ongoing trading and to consider opportunities to develop and grow the business. Senior management conduct quarterly business reviews and consider new risks and opportunities for the business. The Audit and Risk Committee considers risk at its meetings and reports its findings to the Board. The Board considers opportunities to develop and grow the business at regular meetings and formally reviews the principal risks to the business at least annually.

MAINTAIN A DYNAMIC MANAGEMENT FRAMEWORK

  Principle Application

5

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

The names of the directors who served during the year ended 31 December 2019 are set out on pages 28 to 30 of our 2019 Annual Report.

The names of the current directors is available on our website: board-of-directors.

The Board comprises five Non-Executive Directors and two Executive Directors. The Board considers that all Non-Executive Directors bring an independent judgement to bear notwithstanding the varying lengths of service.

Our 2019 Annual Report sets out the number of Board and Committee meetings held during the year and the attendance of directors at those meetings.

6

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

The names, background and experience of the current directors is available on our website: board of directors.

Our 2019 Annual Report will sets out the skills and experience each director brings to the Boards.

7

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

Succession planning continues to be an area for consideration by the Nomination and Remuneration Committee and the Board during the year. The Remuneration and Nomination Committee is reviewing the boards approach to succession. Planning and further details will be set out in our 2020 Annual Report. A Board evaluation process is undertaken each year. 

The 2019 evaluation process was conducted by means of a detailed questionnaire completed by each director. The responses were fed back to the board and actions agreed to implement the further recommendations. Further details of the 2019 are set out on page 36 of our 2019 Annual report.

8

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

The Board sets clear expectations concerning the Group’s culture and values. During the year we established the values and behaviours for the organisation and rolled out group wide policies, including a new Code of Conduct, to strengthen compliance, which have all been cascaded throughout the organisation.

We believe that by encouraging the right way of thinking and behaving across the Group, we will reinforce our corporate governance culture, enabling us to conduct business ethically and responsibly, drive our growthand customer-focused, people-led strategy and deliver value for our shareholders.

The Board understands how important it is that it leads by example Members of the Board engage with members of the Leadership Team and wider employee base, in particular, through holding Board meetings at different business units. During the year we established the values and behaviours for the organisation and rolled out group wide policies, including a new Code of Conduct, to strengthen compliance, which have all been cascaded throughout the organisation. communicate regularly with staff through such interactions provide valuable insight into our corporate culture and assists the Board in monitoring and promoting a healthy corporate culture throughout the business.

9

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

The Board continues to develop procedures to ensure effective corporate governance of the Group.

The Chairman and Chief Executive Officer have separate, clearly defined roles. The Chairman is responsible for overseeing the Board and the Chief Executive Officer is responsible for implementing the Group’s strategy and for its operational performance.

The Board is responsible for taking all major strategic decisions and also addressing any significant operational matters. The Board has a schedule of matters reserved for the Board which requires the following key matters to be considered and approved by the Board:

  • Strategy and Management
  • Structure and Capital
  • Financial Reporting and Controls Internal Controls
  • Contracts
  • Communication
  • Board membership and other appointments
  • Remuneration
  • Delegation of authority
  • Corporate Governance matters
  • Policies

The Board has an Audit and Risk Committee and a Nomination and Remuneration Committee, which operate under written terms of reference.

The Audit and Risk Committee has the primary responsibility for monitoring the quality of internal financial controls and risk management systems, ensuring that the financial performance of the Group is properly measured and reported on, having due regard to the interests of its shareholders and other stakeholders. It reviews reports from the Group’s auditors relating to the Group’s accounting and internal controls and challenges both the external auditors and the Executive team, reporting its findings to the Board after each meeting.

The Nomination and Remuneration Committee works closely with the Board to consider succession planning and remuneration policy, having regard to the interests of its shareholders and other stakeholders.

The Schedule of Matters Reserved for the Board and the Board committees’ Terms of Reference are reviewed regularly and available on our website: board and committees.

The Board will continue to develop its governance framework as the Company evolves.

BUILD TRUST

  Principle Application

10

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

Copies of previous Annual Reports and information about shareholder voting at previous Annual General Meetings of the Company are set out on our website: investors.

Our 2019 Annual Report includes and Audit and Risk Committee report which gives details of the work undertaken during this year. These disclosures will be updated in our 2020 Annual Report.

The information in this statement was last reviewed on 29 May 2020