Celadon Pharmaceuticals

Board and Governance

The Directors recognise the importance of sound corporate governance, which should be commensurate with the size and complexity of the Company, and in the interests of Shareholders. The Directors consider that the Company complies, so far as practicable, with the QCA Corporate Governance Code published by the Quoted Companies Alliance to the extent appropriate having regard to the size and nature of the Company. The Board is responsible for the overall management of the Group including the formulation and approval of the Group’s long-term objectives and strategy, the approval of budgets, the oversight of Group operations, the maintenance of sound internal control and risk management systems and the implementation of the Group’s strategy, policies and plans. While the Board may delegate specific responsibilities, there is a formal schedule of matters specifically reserved for decision by the Board. Such reserved matters include, amongst other things, approval of significant capital expenditure, material business contracts and major corporate transactions. The QCA Code recommends at least two members of the Board comprise non-executive directors determined by the Board to be independent. The Board comprises seven directors, two of whom are executive directors and five of whom are non-executive directors, reflecting a blend of different experience and backgrounds. Robert Barr, David Firth, Elizabeth Shanahan and Dr. Steven Hajioff are considered independent and as such, the Company complies with the requirements of the QCA Code in this regard. The Board meets regularly to consider strategy, performance and the framework of internal controls. To enable the Board to discharge its duties, all Directors receive appropriate and timely information. Briefing papers are distributed to all Directors in advance of Board meetings. All Directors have access to the advice and services of the Company Secretary, who is responsible for ensuring that the Board procedures are followed, and that applicable rules and regulations are complied with. In addition, procedures are in place to enable the Directors to obtain independent professional advice in the furtherance of their duties, as required.
NoPrincipalHow we comply
1Establish a strategy and business model which promote long-term value for shareholders

The Company has articulated its strategy and business model on its website, is also included in detail within its 2022 Admission Document, which can be found here.  A summary is included below.

The Company is a UK based pharmaceutical group that is focusing on growing highly controlled indoor hydroponic, high THC cannabis for use within medicinal products used to treat chronic pain. Through LVL, the Company has also commenced the planning of research into cannabinoids for use in chronic pain and, through Kingdom, has commenced research into the treatment of other conditions such as autism, within the UK’s highly regulated market.

The Company has received a Home Office Licence following approval from the Medicines and Healthcare products Regulatory Agency (the “MHRA”) to apply for the licence, allowing it to legally grow medicinal cannabis in the UK for the purpose of producing test batches of cannabis oil to support its application to the MHRA for registration as a manufacturer of medicinal product APIs.

The receipt of MHRA registration will enable the business to then supply medicinal cannabis (in the form of an API to manufacturers of finished medicinal products, which in this case is an extracted oil used in the finished pharmaceutical product) with a high THC content in the UK, allowing it an opportunity to enter what is expected to be a substantial, extensively regulated and fast-growing UK market.

Based upon the Company’s progress to date, the Directors believe it is ideally positioned to execute its strategy and in doing so, deliver long term value for shareholders.

2Seek to understand and meet shareholder needs and expectations

The Company recognises the importance of engaging with its shareholders and reports formally to them when interim and full year results are published.

The Board also seeks to engage with shareholders to understand their needs and expectations, primarily through meetings with the Executive Directors, both individually as required, and at annual general meetings, at which all shareholders are welcome.

The Non-Executive Directors may be contacted by shareholders who wish to raise matters with them, and the Non-Executive Chairman may attend meetings with institutional investors and analysts as required.

Investors may contact the Company directly through the investor enquiries email address noted on the Company’s website.

3Take into account wider stakeholder and social responsibilities and their implications for long-term success

As a UK based pharmaceutical company operating in a nascent and rapidly growing medicinal cannabis market, the Company recognises the significant benefit both the manufacturing of high content THC cannabis and research into the use of cannabinoids can have for the easing the pain and suffering of many patients afflicted by conditions such as autism.

By addressing the unmet needs of patients with chronic pain, the Company has the potential to dramatically improve to the quality of life for thousands of individuals across the UK.

The Company is therefore committed to the highest standard of corporate social responsibility in conducting its activities, and these are outlined further within its Admission Document, which can be found here.

4Embed effective risk management, considering both opportunities and threats, throughout the organisation

The Board has identified and implemented what it believes to be an appropriate approach to risk management for a company of its size, scale and complexity.

The Company’s approach to risk management and the principal risks it faces, along with what it does to mitigate those risks, is included in the Company’s Admission Document which can be found [here], and in due course will be included in its annual report and accounts.

As a result of the regulated environment the Company operates within, it takes a very prudent approach to managing risk across the business.  These risks are captured in a risk register which is reviewed monthly by the executive management team, and are reviewed by the Board at each Board meeting as required. The risk register is regularly updated and presented to the Board at the half year and year end.  Any proposed amendments to the register will be made and any action points identified from the review reported to the Board.

In addition to the Company’s risk register, it also has a comprehensive risk management framework in place to proactively manage operational risks.  This is driven by two principal Standard Operating Procedures (“SOP”), Risk Management Planning and Risk Assessment.  Risk Management Planning SOP establishes a procedure for the policy that outlines the Company’s approach to identifying, evaluating and managing the risks to the business and the operations and services it provides.  The Risk Assessment SOP establishes a procedure for the policy that outlines the Company’s approach to carrying out risk assessments and defining the actions thereafter.  In addition to these SOPs, there are a number of other SOPs covering the businesses operations, personnel, environmental matters.

The Company also receives regular feedback from its external auditors on the state of its risk management and internal controls.

5Maintain the Board as a well-functioning, balanced team led by the chair

The Board consists of a Non-Executive Chairman, Chief Executive Officer and Chief Financial Officer, and four Non-Executive Directors.  The biographies of the Directors can be found here.

The Board has determined that for the purposed of the QCA Code, Robert Barr, David Firth, Elizabeth Shanahan and Steven Hajioff are considered to be independent, and therefore represents a majority of the Board.  Robert Barr is the Company’s Senior Independent Non-Executive Director.

The Board intends to meet formally at least 6 times a year to consider strategy, performance and the framework of internal controls.  In addition to this, the Board calls are scheduled in between formal Board meetings, and the Board will also meet more regularly as required in and around certain corporate events.

To enable the Board to discharge its duties, all Directors will receive appropriate and timely information. Briefing papers will be distributed to all Directors in advance of Board meetings.

6Ensure that between them the Directors have the necessary up-to-date experience, skills and capabilities

The Nomination Committee identifies and nominates for the approval of the Board candidates to fill board vacancies as and when they arise.  The Nomination Committee also has responsibility to regularly review the structure, size and composition (including the skills, knowledge, experience and diversity) of the Board and make recommendations to the Board with regard to any changes. The Nomination Committee meets as and when required.

All Directors will have access to the advice and services of the Chief Financial Officer, who will be responsible for ensuring that the Board procedures are followed, and that applicable rules and regulations are complied with.

In addition, procedures will be in place to enable the Directors to obtain independent professional advice in the furtherance of their duties, if necessary, at the Company’s expense.  In particular, the members of the Audit Committee receive technical updates from the Company’s external auditors to keep them abreast of the latest accounting, auditing, tax and reporting developments.

The Directors also receive regular briefings and updates from the Company’s Nomad in respect of continued compliance with the AIM Rules, the Market Abuse Regulation.

7Evaluate Board performance based on clear and relevant objectives, seeking continuous improvement

An annual review of the effectiveness of the Board will be conducted through interviews with the Non-Executive Chairman.

The performance of individual Executive Directors is reviewed by the Non-Executive Chairman and also the Remuneration Committee, with more details provided in the annual report and accounts.

The Nomination Committee is responsible for succession planning of the executive leadership team and makes recommendations to the Board for the re-appointment of any Non-Executive Directors if and when necessary.

Succession planning is reviewed on an ongoing basis alongside the capability of the executive management team and Directors.

8Promote a corporate culture that is based on ethical values and behaviours

Morality and ethics are central to the Company’s values and define how the Company and its employees interact with all stakeholders of the business to ensure the Company builds an impactful and enduring organisation, which benefits both its shareholders and wider society.

The Company’s employee handbook, which is read by all employees as part of their induction, provides further specific detail of the policies in place to promote and support ethical behaviour and values.

9Maintain governance structures and processes that are fit for purpose and support good decision-making by the Board

The roles and responsibilities of specific Directors and Board Committees, as well as the list of matters reserved for the Board, are available on the Company’s website.

The Board meets formally at least 6 times per year. Each Committee has terms of reference outlining the specific responsibilities delegated to it.

The terms of reference of each Committee can be downloaded below:

Audit Committee Terms of Reference

Remuneration Committee Terms of Reference

Nomination Committee Terms of Reference

The appropriateness of the Board’s structures and processes are reviewed through the ongoing Board evaluation process and on an ad hoc basis by the Non-Executive Chairman together with the other Directors, and these will evolve in parallel with the Company’s objectives, strategy and business model as the Company develops.

10Communicate how the Company is governed and is performing by maintaining a dialogue with shareholders and other relevant stakeholders

The Company is committed to open communications with all its stakeholders.

The Company communicates progress and material developments throughout the year through Regulatory News Service announcements (both regulatory and non-regulatory) and in more detail in its interim financial statements and annual report and accounts.

Results of shareholder votes are made public on the Company’s website after the meetings concerned.