Governance

Corporate Governance

Introduction
Alliance Pharma plc is an AIM listed company and the Board is committed to achieving good standards of corporate governance, integrity and business ethics.

Governance Review
During the year the Board undertook a Governance Review. The Board concluded that the Company has in place the most appropriate governance methods, based on its corporate culture, size and business complexity. Recognising that the Company continues to evolve and grow, the Board decided that a Nominations committee will be formed to become responsible for board appointments when a vacancy occurs and to ensure that there is an appropriate balance of skills, experience, knowledge and independence. The Board confirmed that a Board evaluation will be conducted in 2012.

Responsibilities of the Board
The Board is responsible to the shareholders for:

• Setting the Group’s strategy;
• Maintaining the policy and decision-making process around which the strategy is implemented;
• Ensuring that necessary financial and human resources are in place to meet strategic aims;
• Monitoring performance against key financial and non financial indicators;
• Providing leadership whilst maintaining the controls for managing risk;
• Overseeing the system of risk management;
• Setting values and standards in corporate governance matters.

There is a list of matters reserved for the Board which may be updated by the Board and approved by the Board only.

The Chairman is responsible for leading the Board, facilitating the effective contribution of all members and ensuring that it operates effectively in the interests of the shareholders. The Chief Executive Officer is responsible for the leadership of the business and implementation of the strategy. The Company Secretary is responsible, on behalf of the Chairman, for ensuring that all Board and Committee meetings are conducted properly, that the Directors receive the appropriate information prior to the meeting, for ensuring that governance requirements are considered and implemented, and for accurately recording each meeting. The Directors may have access to independent professional advice, where needed, at the Group’s expense.

Management Teams
During 2011 the Board delegated management of the business to three Management Teams: the Corporate Performance Team, the Corporate Development Team and the Corporate Organisation Team. In January 2012 the Corporate Performance and Corporate Development Teams were restructured to reflect the emphasis on increasing the Group's International presence and now comprise the UK Review and Planning Team and the International Review and Planning Team.  The Corporate Organisation Team, which comprises Executive Directors and appropriate Senior Managers is the chief operating decision maker and attends the Review and Planning team meetings.

Reporting Structure

Committees
The Board has an Audit Committee and a Remuneration Committee, each with written terms of reference. The terms of reference are available on the Group website: Remuneration Committee - Terms of Reference and Audit Committee - Terms of Reference.

Meetings
The Board meets regularly on  pre-determined dates and has a strategy meeting each year consisting of the Board the other Senior Managers, the purpose of which is to discuss progress on the strategy, to review the long-term strategy and develop the strategic framework for the achievement of the Group’s targets. During 2011 the Board held ten scheduled meetings and all members of the board attended all of those meetings. In addition there were a number of ad-hoc meetings.

Non-Executive Directors
The role of the non-executive Directors is to:

• Challenge constructively and help develop proposals on strategy;
• Satisfy themselves as to the financial integrity of the financial information;
• Satisfy themselves as to the robustness of the controls;
• Ensure that the systems of risk management are robust and defensible.
• Review management performance and the monitoring and reporting of such performance.

They have a role in determining the pay and benefits of the executive Directors, to play a key role in the appointment and, if necessary, removal of executive Directors and Board succession.

Risk Management
The Board is ultimately responsible for the Group’s system of internal control and for reviewing its effectiveness. This includes having an ongoing process in place for identifying, evaluating and managing significant risks.

The Group’s established internal procedures include the following:

• The Management Team meetings cover in detail most, if not all, of the significant risks to which the Group is exposed, these deliberations are reported to the Board and further discussion considered.
• A table of significant risks has been prepared for the Board, splitting the categories by:
  • Trading - Significantly between Sales and Supply Chain.
  • Financial - In particular the integrity with which the Group is viewed as a public company and exposure to liquidity and interest and exchange rates.
  • General - Such as legal risk, the ability to recruit quality staff and the workload pressures existing on the current team.
• The Group prepares an annual budget, developed through a comprehensive strategic and operational process prior to commencement of the financial year. A revised forecast is also prepared each month, including a projection of performance against bank covenants, and is reviewed by the Board.  The Board and  management teams monitor the actual monthly performance of the Group against budget and forecasts with any significant variances highlighted and explained.

Relations with Shareholders
At each meeting, the Board is updated on the meetings and communications with the shareholders and an analysis of the shareholder base is presented. Research notes by brokers are circulated to all Board members. Throughout the year the Chief Executive Officer and Finance Director meet the large, institutional shareholders who hold the majority of the shares. Regular feedback is given to the Board following meetings with the shareholders from the financial PR advisors, and from the shareholders via the brokers.

The Group recognises that whilst the majority of the shareholders are large institutions, attention should be paid to the private shareholders and the Investor Relations section of the Group website is regularly updated and amended with the aim being to provide good information to all shareholders, particularly private investors. The website provides a facility to receive email alert notifications of Group news and stock exchange announcements. In addition the Chief Executive Officer and Finance Director regularly present at conferences attended by many potential and current private shareholders and meet with Private Client Fund Managers representing the interests of private investors following which feedback is given to the Group.

At the Annual General Meeting the Chairman issues a statement on current trading. All Directors are available following the meeting to answer questions and for informal discussions. The results of the proxy votes are announced at the meeting, including the abstentions and these are published on the website following the meeting.