AIM rule 26 factsheet

AIM rule 26 factsheet

Velocys plc is listed on the Alternative Investment Market (AIM) of the London Stock Exchange. AIM Rule 26 requires that the company makes available on the website key facts about the company, its management, its business and its stock. Where this information is not provided elsewhere in the website it can be found below.

Directors
Chairman, Philip Holland
Chief Executive Officer, Henrik Wareborn
Chief Financial Officer, Andrew Morris
Senior Independent Director, Darran Messem
Non-Executive Director, Ann Markey
Non-Executive Director, Tom Quigley

Company Secretary
Jeremy Gorman

Corporate Governance
The directors recognise the value and importance of good corporate governance, and are committed to drawing upon best practice and maintaining high standards. Further to AIM Rule 26, the Board has determined to follow the QCA Code, published by the Quoted Companies Alliance, which sets out a minimum best practice standard for small and mid-size quoted companies, particularly AIM companies.

The following information is provided to describe how the Company applies the principles in the QCA Code and explain any departures from the specific provisions of that code. The date of the latest review was 1 October 2021.

The QCA’s Ten Principles of Corporate Governance
The ten principles of corporate governance set out under three headings in the QCA Code – Deliver Growth, Maintain a Dynamic Management Framework, and Build Trust – and applied by the Company are as follows:

Deliver Growth

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

The Board is responsible to shareholders for setting the Company’s strategy and overseeing its execution, and for the overall management, control and performance of Velocys’ business. Velocys’ strategy and business model can be found in the Chairman’s and CEO’s reports on pages 12 to 15 of the 2020 Annual Report and Accounts.

2. Seek to understand and meet shareholder needs and expectations.

The Board considers effective communication with shareholders to be very important, and encourages regular dialogue with investors.

At the Company’s Annual General Meeting, the whole board including the Chairman and Chief Executive Officer are normally available before and after the meeting for further discussions with shareholders. Due to the UK Government COVID-19 measures in force, it was not practical for shareholders to attend the 2020 and 2021 AGMs. The Chief Executive Officer and the Chief Financial Officer attend meetings with shareholders and analysts on various occasions during the year, primarily following the Company’s Annual Results and Interim Results announcements. Relevant feedback from shareholder discussions is advised to the Board. Other members of the Board including the Chairman and the Chair of the Remuneration Committee have also either met or consulted with shareholders from time to time. The Board considers that their policy on shareholder engagement has resulted in the considerable support demonstrated by major shareholders since the Company was originally admitted to AIM in 2006.

The Board responds promptly to questions received, which may be sent to info@velocys.com.

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

Velocys is committed to being a good employer and endeavours to train staff well, to pay them fair market value and to maintain a safe environment in which they can work. We are also committed to equal opportunities for all our employees. In addition, as an advanced biofuels company, we have a duty to limit the environmental impact of our own operations, and are careful to monitor and improve their environmental impact. Further information on our corporate social responsibility and KPI’s can be found on pages 19-22 of the 2020 Annual Report and Accounts.

There is an ongoing dialogue with our technology partners, customers, suppliers and other stakeholders which is continuously fed back into our knowledge base in relation to projects under development and, where relevant, integrated into the Company’s strategy and business model.

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

The Company employs directors and senior personnel with the appropriate knowledge and experience for a business active in its field of operations, and undertakes regular risk assessments and reviews of its activities.

The Risk & Sustainability Committee was established in July 2021 and is responsible for reviewing all of the Company’s principal risk management policies and for the ongoing development of a Group Risk Register. These responsibilities were formerly covered by the Audit & Risk Committee (now renamed the Audit Committee) which continues to be primarily responsible for internal financial controls and financial risks. Further information on Risk Management can be found on page 23 of the 2020 Annual Report and Accounts. This is reviewed and updated as required and adopted by the Board at least annually.

The principal risks and uncertainties that are considered to have a potentially material impact on the Company’s long-term performance and delivery of its strategy are set out on pages 23 to 26 of  the 2020 Annual Report and Accounts.

Maintain a Dynamic Management Framework

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

The Board comprises a Chairman and three part-time non-executive Directors with relevant experience to complement the two full time executive directors and to provide an independent view to the executive directors. Details of the Board can be found here. A time commitment of up to 4 days a month is expected of the non-executive directors. Further information on the number of meetings of the Board and the committees and the attendance record of each director can be found on page 29 of the 2020 Annual Report and Accounts.

At the time of Philip Holland’s appointment as Chairman, he met the independence criteria set out in the UK Corporate Governance Code. Thereafter the test of independence is not appropriate in relation to the chairman. The Board regards each of the other non-executive directors as being fully independent.

The roles of the Chairman and the Chief Executive Officer are separated, with clear written guidance to support the division of responsibilities. The role of the Senior Independent Director is also clearly set out.

The Chairman is principally responsible for leadership and effectiveness of the Board, for corporate governance matters, setting the Board agenda, ensuring adequacy of information flow to the Board, that due consideration is given to strategic issues, and promoting a culture of openness of debate at Board level, and between directors and the Executive Committee. The Chief Executive Officer is primarily responsible for the management of the business and implementation of the Company’s strategy and policies, maintaining a close working relationship with the Chairman, and leading the Executive Committee.

Darran Messem was appointed Senior Independent Director on 30 September 2021 , in place of Sandy Shaw.

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

The Board includes individuals with a deep knowledge of markets worldwide and relationships at the highest level of industry. The Board believes that, as a whole, it contains the necessary mix of experience, skills, personal qualities (including gender balance) and capabilities to deliver the strategy of the Company for the benefit of the shareholders over the medium to long term. This is an area which is maintained under constant review. Full details of the directors and their relevant skills are set out page 30 of the 2020 Annual Report and Accounts.

Internal Advisory Responsibilities

The Company Secretary, through the Chairman, is responsible for advising the Board on governance matters, and for ensuring that Board procedures are followed and that the Company complies with applicable rules and regulations. All directors have access to the advice and services of the Company Secretary. An agreed procedure exists for directors in the furtherance of their duties to take independent professional advice. During 2020, no director sought independent legal advice pursuant to the policy.

The Company regularly reviews the ongoing training requirements of directors as part of the annual board evaluation process. Directors keep their personal skillsets up to date through a combination of industry contact, reading of relevant material and, where appropriate, training courses. The Board has recently agreed that relevant training courses should be made available to Directors, and a formal record of training has been implemented.

There is a process for ensuring that any new director receives advice, including from the Company’s nominated adviser and external lawyers where appropriate, on his/her responsibilities as a director of an AIM company. The Board ensures that any new appointee benefits from an induction programme.

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

An annual evaluation of the Board and its committees is carried out by the Company Secretary, taking the form of comprehensive questionnaires which provide all directors with an opportunity to score (1=Dissatisfied; 5= Satisfied) their opinion on a series of questions in relation to inter alia the constitution, execution and performance of  the Board and the three Board sub-committees, and to comment on procedures or any relevant matters. Average scores for each question are measured against relevant scores in the previous two years to help identify trends, and are also assessed in absolute terms. The scoring and any comments are assimilated into a written report on an unattributed basis and the results of the evaluation are considered by the Board and each sub-committee in open session.

Where appropriate, actions arising from such reviews are implemented. Previous evaluations have resulted in improvements to timing and quality of management information; the provision to the Board of more detailed information on individual projects; and improvements to the structure and workings of committees. Following the 2020 Board evaluation, the Board has agreed to place a greater emphasis on strategic initiatives/business risk. In addition, there will be increased emphasis on making training courses available to Directors, and a formal record of training has been implemented.

An annual performance evaluation of the Chairman is carried out, led by the Senior Independent Director, and takes into account the views of all directors.

Succession planning at Board and committee level is formally reviewed on an annual basis, and the Board has reviewed a succession plan for all Board members and senior management.  In accordance with best practice, all directors are proposed for re-appointment at the Annual General Meeting, and due consideration is given by the Nomination & Governance Committee as to whether individual directors are recommended for re-election.

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

The Board believes that the business culture is consistent with the Company’s objectives, strategy and business model as set out in the strategic report and the description of principal risks and uncertainties.

The Board ensures that the Company has the means to determine that ethical values and behaviours are recognised and respected through the adoption of appropriate policies, including an Anti-corruption and bribery policy; a Whistle-blowing policy; and a Policy on Equal Employment Opportunity and Diversity

In addition, in response to the Market Abuse Regulations (“MAR”) which came into force on 3 July 2016, and which apply to AIM companies, the Company has adopted a Share Dealing Policy and Dealing Code which apply to all directors and employees of the Company.

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

The Board meets at least six times a year with a formal schedule of matters reserved for its decisionThe Board has also established a schedule of delegated authorities, which are reviewed to ensure they are commensurate with the level of the Company’s development. The governance structure in place is considered to be appropriate for the foreseeable future but will be evolved in line with the Company’s plans for growth.

Board Committees

The minutes of the Audit, Risk & Sustainabilty, Remuneration and Nomination & Governance Committees are circulated to the Board. The Committee Chairs also report to the Board on the outcome of committee meetings at the subsequent Board meeting. The committees have the following roles:

Audit Committee

The members of the Audit Committee with effect 30 September 2021 are Anne Markey** (Chair), Darran Messem and Tom Quigley**. Sandy Shaw was also a member until she retired on 30 September 2021. Ann Markey was appointed Committee Chair on 30 September 2021 in place of Darran Messem. Meetings are held not less than four times a year, and are based on the work programme set out in the Audit Committee Guide published by the QCA.

** Appointed as Committee member 26 July 2021.

Under its Terms of Reference, which can be found here, the Audit Committee reviews inter alia the Company’s audit planning, risk management systems and processes and effectiveness of internal controls, accounting policies and financial reporting, provides a forum through which the external auditors report, and reviews and monitors their independence and the provision of additional services. It normally meets at least once a year with the external Auditors without executive directors present.

Further information is set out in the Audit Committee report, which can be found on pages 33 and 34 of the 2020 Annual Report and Accounts.

Risk & Sustainability Committee

The former Audit & Risk Committee was renamed the Audit Committee on 26 July 2021, on which date the Company established a Risk & Sustainability Committee. The members of the Risk & Sustainability Committee are Darran Messem (Chairman), Philip Holland, Ann Markey and Tom Quigley.

Under its Terms of Reference, which may be found here, the Risk & Sustainability Committee advises the Board inter alia on the Company’s overall risk appetite, tolerance and strategy, and on the principal and emerging risks the Company is willing to take in order to achieve its long-term strategic objectives; the likelihood and the impact of principal risks materialising, and the management and mitigation of principal risks to reduce the likelihood of their incidence or their impact; and the risk aspects of proposed changes to strategy and strategic transactions including acquisitions or disposals.

Risks will be specific to the Company’s circumstances as identified from time to time and include but not be limited to the following:

  • Health & Safety
  • Geo and local political and economic risk
  • Growth
  • Strategy
  • Technology
  • Operational risk
  • Business Continuity
  • Environmental and climate change
  • Legal & Statutory
  • Social
  • Human Resources

Note: The Audit Committee continues to be primarily responsible for monitoring financial risks.

Remuneration Committee

The members of the Remuneration Committee are Tom Quigley **(Chair), Philip Holland** and Darran Messem. Tom Quigley was appointed Committee Chair on 30 September 2021 in place of Sandy Shaw who retired as a member and chair on that date. Meetings of the Committee take place not less than three times a year.

**Appointed as Committee member on 26 July 2021.

Due regard is paid to the Investment Association Principles of Remuneration. At the 2021 AGM, a resolution was approved by shareholders to approve the Directors’ Remuneration Report set out on pages 36 to 40 of the 2020 Annual Report and Accounts.

The committee reviews, inter-alia, the performance of executive directors and senior managers, setting the scale and structure of their remuneration and the basis of their service agreements, having due regard to the interests of shareholders. The committee also determines the allocation of share options to executive directors and senior managers. No executive director has a service agreement exceeding one year.

The remuneration of the non-executive directors is a matter for the Chairman and the Company’s executive directors. Under its Terms of Reference, which can be found here, no director is permitted to participate in decisions concerning his or her own remuneration.

Nomination & Governance Committee

The members of the Nomination & Governance Committee are Philip Holland (Chairman), Darran Messem (Senior Independent Director) and Henrik Wareborn (Chief Executive Officer)**. Sandy Shaw was a member of the committee until she retired on 30 September 2021. The committee met twice during 2020. Among its duties it reviews the composition of the Board and its succession planning, the Board evaluation process and the findings from recent evaluations, director performance and recommendations for re-elections at the AGM, and considerations of director independence under the corporate governance code. The Terms of Reference can be found here.

**Appointed as Committee member 26 July 2021.

Further information is set out in the Nomination & Governance committee report, which can be found on page 35 of the 2020 Annual Report and Accounts.

Build Trust

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

The Board considers effective communication with shareholders to be very important, and encourages regular dialogue with investors. Directors regularly attend meetings with shareholders and analysts throughout the year, and the Board responds promptly to questions received. Shareholders will be given at least 21 days’ notice of the Annual General Meeting, at which they have the opportunity to raise questions of the Board on the Company’s developments and performance although special arrangements were made in respect of the 2021 Annual General Meeting in light of the continuing COVID-19 health and safety requirements. Details of the arrangements for the 2021 Annual General Meeting are set out in the Company’s notice of 2021 AGM which can be found here.

Further information is shown under QCA Principle 2 above.

Copies of the Annual Report and Financial Statements are issued to all shareholders and copies are available on the Company’s website www.velocys.com, which provides information to shareholders and other interested parties. The website contains full details of the Company’s business activities, press releases and links to the London Stock Exchange website for share price information, share trading activities and graphs, as well as Regulatory News Service (RNS) announcements. The Company Secretary also deals with shareholder correspondence, and may be contacted at investors@velocys.com.

Locations

Velocys plc (Registered in England No. 5712187 with registered office at Magdalen Centre, Robert Robinson Avenue, The Oxford Science Park, Oxford, OX4 4GA, UK) trades through its subsidiaries Velocys, Inc. and YellowRock GTL Services, LLC, 7950 Corporate Blvd, Plain City, Ohio 43064, USA (Registered in the State of Delaware, USA) and Velocys Technologies Ltd (Registered in England No. 5258554 with registered office at Magdalen Centre, Robert Robinson Avenue, The Oxford Science Park, Oxford, OX4 4GA, UK).

Operations

The countries of operation are the United Kingdom and the United States.

Constitution

Follow the link to the company’s Articles of Association. The Company is subject to the UK City Code on Takeovers and Mergers.

Securities

As at 13 July 2021 there were in issue 1,065,756,057 shares of Velocys plc, none of which is held in treasury.

At the time of the last analysis of our share register on 30 September 2021, approximately 43.2% of our shares were classed as being not in public hands since these are held either by shareholders who own more than 10% of the Company or by Company directors.

Ownership

Shareholders owning more than 3% of the Company at 30 September 2021 were as follows:

Lansdowne Partners (17.2%)

Ervington Investments Limited (12.9%)

Hargreaves Lansdown PLC (12.7%)

Ruffer LLP (6.6%)

Interactive Investor (6.4%)

Amati AIM VCT plc (3.9%)

Restrictions

There are no restrictions on the transfer of VLS securities.

Reporting

The interim results for the period ending 30 June 2021 were reported on 23 September 2021. Follow the link to these and previous reports. Our 2020 final results were announced on 17 May 2021. Our 2020 Annual Report and Accounts was published on 27 May 2021.

Announcements

Follow the link to our RNS announcements.

Documentation

Follow the links to the Company’s admission documentplacing circulars and share option scheme amendment.

Registrars

Our registrar is Link Market Services Limited, 10th Floor, Central Square, 29 Wellington Street, Leeds LS1 4DL.

Advisors

Our nomad and joint broker is Panmure Gordon (UK) Limited, One New Change, London EC4M 9AF. Shore Capital Stockbrokers Limited, Cassini House, 57-58 St James’s Street, London SW1A 1LD also act as joint brokers.

Auditors

Our auditor is PricewaterhouseCoopers LLP, 3 Forbury Place, 23 Forbury Rd, Reading RG1 3JH.

Banker

Our banker is Barclays Bank Plc, PO Box 858, Wytham Court, 11 West Way, Oxford OX2 0JB.

Updated

This fact sheet was last updated on 1 October 2021.

Investors contact

Oxford Office
Magdalen Centre
Robert Robinson Avenue
The Oxford Science Park
Oxford,
OX4 4GA
United Kingdom
Office: +44 1865 800821