Corporate Governance

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

(The information in this statement was last reviewed on 25 September 2018)

Introduction

This Statement is issued in compliance with Rule 26 of the AIM Rules. Animalcare Group plc is incorporated in England and Wales and its shares are listed on the Alternative Investment Market of the London Stock Exchange (“AIM”).

The Principles of Corporate Governance

I am the chairman of Animalcare and I am responsible for leading the Board and upholding high standards of corporate governance throughout the group and particularly at Board level.

The Directors share the view that sound governance is fundamental to the successful growth of the business. 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 earlier in the year, the Board has decided to adopt the QCA Corporate Governance Code, an updated version of which was published in April 2018 (the “New QCA Code”).

As a result of changes to AIM Rule 26 during 2018, the Company is now required to provide a statement of its compliance with a recognised corporate governance code.

Compliance with the QCA Code:

The Board believes that it applies the ten principles of the New QCA Code but recognises the need to continue to develop our governance practices and disclosures in some areas, in order to ensure we continue to effectively apply the principles going forwards. The policies, procedures and relevant systems we have implemented to date provide a firm foundation for our governance structure, which is described in our 2017 Annual Report (available to download here).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. Our strategy is articulated in our 2017 Annual Report and Accounts and on our website. 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. Board evaluations have historically been undertaken annually although, during 2017, it was not considered appropriate due to the reverse takeover of Ecuphar NV and resulting changes to the composition of the Board. In future, the Board intends to continue to carry out a board evaluation process annually, to consider its performance over the previous year. The process for 2018 will be informed by a detailed questionnaire completed by each director. The responses will be analysed and fed back to the Board with a written plan to implement actions and recommendations.

Appointments to the Board will be on merit, but with due consideration to the need for diversity on the Board. All appointments will be 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. That said, we recognise this is an area for development, and we intend to further develop our assessment of the recognition of our corporate culture and ethical values during the course of the year.

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 institutional shareholders to ensure that the Group’s strategy is communicated and to understand the expectations of our shareholders.

The table appended to this Statement sets out details of our disclosures as required by the QCA Code, all of which we will continue to review and improve as the Group evolves.

Jan Boone
Chairman
Animalcare Group plc
25 September 2018

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

DELIVER GROWTH

PrincipleApplication

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 to 11 of the Animalcare Group plc Annual Report and Accounts for the year ended 31 December 2017 (“2017 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. /investors/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.co.uk. 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 2017 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 Committee is responsible for reviewing this framework to ensure that it operates effectively.

Principal Risks on pages 24 and 25 of our 2017 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 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

PrincipleApplication

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 2017 are set out on pages 26 and 27 of our 2017 Annual Report.

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

The Board comprises five Non-Executive Directors and two Executive Directors (and will comprise three when Jenny Winters is appointed on 1 October 2018). The Board considers that all Non-Executive Directors bring an independent judgement to bear notwithstanding the varying lengths of service.

Our 2018 Annual Report will set out, in more detail, the time commitment required by directors and it will confirm the number of board and committee meetings 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: /about-us/board-of-directors.

Our 2017 Annual Report was prepared prior to the New QCA Code being published. We intend to expand the disclosures on the detail on the skills and experience each director brings to the Board, director training, how the directors keep their skillset up to date and any other internal advisory roles.

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, and an explanation of the Company’s approach to succession planning will be included in our 2018 Annual Report and reflected on our website as appropriate.

Board evaluations have historically been undertaken annually although, during 2017, it was not considered appropriate due to the reverse takeover of Ecuphar NV and resulting changes to the composition of the Board. In future, the Board intends to continue to carry out a board evaluation process annually, to consider its performance over the previous year. The process for 2018 will be informed by a detailed questionnaire completed by each director. The responses will be analysed and fed back to the Board with a written plan to implement actions and recommendations. Further details of the 2018 process will be disclosed in our 2018 Annual Report and on our website in due course.

8

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

The Board recognises that a corporate culture based on sound ethical values and behaviours is an asset. In accordance with the Company’s values, it endeavours to conduct its business with integrity, in an ethical, professional and responsible manner, treating our employees, customers, suppliers and partners with courtesy and respect.

The Company ensures that ethical values and behaviours are followed with a set of internal policies and procedures on matters such as anti-bribery and whistleblowing and by ensuring that appropriate systems and controls are in place to ensure compliance with those policies and procedures.

The Board intends to further develop its assessment of the recognition of corporate culture and ethical values during the year, and will enhance disclosures in these areas on our website and in our 2018 Annual Report.

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 Committee and a Nomination and Remuneration Committee, which operate under written terms of reference.

The Audit 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 available on our website: /investors/boardandcommittees.

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

BUILD TRUST

PrincipleApplication

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 2017 Annual Report includes an Audit Committee report and a Nomination and Remuneration Committee report which give details of the work undertaken by these Committees during the year. We intend to include updated disclosures in these reports within our 2018 Annual Report.