Corporate Governance

The Group is firmly committed to business integrity, high ethical values, and professionalism in its activities and operations. As an essential part of this commitment, the Board endorses the highest standards of corporate governance and is accountable to the Group’s shareholders.

The role of the Board is to provide entrepreneurial leadership of the Group within a framework of prudent and effective controls, which enables risk to be assessed and managed. The Board sets the Group’s strategic aims, ensures that the necessary financial and human resources are in place for the Group to meet its objectives, and reviews management performance. The Board sets the Group’s values and standards and ensures that its obligations to its shareholders and others are understood and met.

More information on PuriCore's Corporate Governances in available in the most recent
Annual Report.

Board Structure

The Group is currently led and controlled by a Board comprising six Directors: the Executive Chairman, the Senior Independent Director, two Executive Directors (following the appointment of Mr Weiss as at 1 November 2009), and two Non-Executive Directors (following the resignation of Mr Anderson and Dr Walsh and the appointment of Mr Hammond as at 30 June 2010).

Mr Birkett is considered by the Board to be independent of management and free of any business or other relationship that could materially interfere with the exercise of his independent judgement. As the two Non-Executive Directors, Mr Sapountzoglou and Mr Hammond each are advisors to major shareholders, the Board does not consider them to be independent. The Board is not in compliance with the Combined Code (A.3, A.3.2) as there is not a balance of independent non-executive directors and as a company that qualifies as a “smaller company” by virtue of being outside of the FTSE 350 (which applies to PuriCore) is require to have at least two independent non-executive directors. The Senior Independent Director holds share options in the Group; however, the Board does not consider this to bias his independence. The Board has concluded the following behaviours are essential for the Board to consider a Director to be independent and assesses the Senior Independent Director against these criteria:

Provides objective challenge to management
Is prepared to challenge others’ assumptions, beliefs, or viewpoints as necessary for the good of the organisation
Questions intelligently, debates constructively, challenges rigorously, and decides dispassionately
Is willing to stand up to defend one’s own beliefs and viewpoints to support the ultimate good of the organisation
Has a good understanding of the organisation’s businesses and affairs enabling proper evaluation of the information and responses provided by management

The Board considers the issue of independence on an annual basis. The Board reviewed the independence of Mr Birkett in 2009 and concluded that he continues to demonstrate the characteristics it considers to be essential indicators of independence.

All Directors (biographies) are subject to re-election at least once every three years. The Board is responsible to shareholders for the proper management of the Group. The differing roles of Executive Directors and Non-Executive Directors are clearly delineated, with both having fiduciary duties towards PuriCore plc. The Executive Directors are responsible for the operation of the business, whilst the Non-Executive Directors bring third-party, objective judgement to bear on Board decisions by constructively challenging management and ensuring that the strategies proposed by the Executive Directors are fully considered. To enable the Board to discharge its duties, all Directors have full and timely access to all relevant information, and there is a procedure for all Directors, in furtherance of their duties, to take independent professional advice, if necessary, at the expense of the Group. All Board members have access to advice of the Company Secretary.

PuriCore’s products do not have the potential for industrial pollution. PuriCore’s main products are based on electrochemical technologies that produce hypochlorous acid solutions, which are considered safe for humans and the environment. We work to ensure all our offices minimise any potential environmental impact, and we are committed to working with our suppliers to help understand and reduce their environmental impact. The Board has appointed Ms Drucker, Senior Vice President, General Counsel, and Company Secretary, to ensure compliance with the Company’s environmental policy. Further information on PuriCore’s environmental policies are provided on the Corporate Social Responsibilities page of PuriCore’s investor website.

PuriCore maintains a strong and ongoing commitment to Quality, one of its five Core Values. PuriCore endeavours to provide safe and effective products and services that meet or exceed its customers’ expectations. Specifically, PuriCore is committed to continuous improvement and innovation, meeting or exceeding quality and regulatory requirements, and maintaining individual and collective accountability for realizing the goals of the Quality Policy. PuriCore’s Quality System is maintained through periodic evaluations and updates to meet the changing needs of our customers, employees, products, industry standards, and other stakeholders. Quality objectives are derived from PuriCore’s annual planning process and documented in a Quality Plan. Quarterly Quality Management Reviews evaluate the suitability, adequacy, and effectiveness of the Quality System; identify opportunities for improvement of the Quality System, processes, and products; assure compliance with corporate policies and government regulations; and identify resource needs. The results of these reviews are documented. Mr Bosch is the Director responsible for PuriCore ensuring compliance with its Quality Policy.

Board Responsibilities

The Board is responsible for overall Group strategy, approval of major capital expenditure projects, and consideration of significant financing matters. The roles of the Executive Chairman, Senior Independent Director, and Chief Executive Officer are separate. The Executive Chairman, Mr Wightman, is responsible for ensuring the efficient and effective working of the Board and leads the Board in the determination of the Company’s strategy and the achievement of its business objectives. Mr Wightman is currently the Chairman or Director of a number of other UK companies, including ASI Solutions plc, Clickstream Technologies plc, and Investec Structured Products Calculus VCT plc. He is also a partner in Mount Row Capital LLP. The Senior Independent Director, Mr Birkett, is responsible for assisting the Executive Chairman with meeting process, evaluations and agenda as needed, presiding at meetings of the Non-Executive Directors at least once per year, and meeting with shareholders and understanding their issues and concerns. The Chief Executive Officer, Mr Bosch, is responsible for implementing operational strategy of the Group and ensuring the effectiveness of executive functions.

The Board does not allow any full-time Executive Director to take on any non-executive directorship or chairmanship in an FTSE 100 Company.

Committees

Nomination Committee

The Nomination Committee comprises Mr Wightman (chairman), Mr Bosch, Mr Birkett, and Mr Sapountzoglou. Mr Birkett is the sole independent member of the Nomination Committee. The structure of the Nomination Committee does not meet the requirements of the Combined Code (A.4.1) as it should comprise a majority of Independent Non-Executive Directors. The Committee is responsible for proposing candidates for appointment to the Board, having regard to the balance and structure of the Board. In appropriate cases, recruitment consultants are used to assist the process.
Terms of Reference

Remuneration Committee

The Remuneration Committee comprises Mr Sapountzoglou (chairman) and Mr Hammond, both of whom are non-independent. There are only two members on the Remuneration Committee as is permitted, due to the Company qualifying as a “smaller company” by virtue of being outside of the FTSE 350. The Company is not in compliance with the Combined Code (B.2.1) as the Remuneration Committee should comprise entirely Independent Non-Executive Directors. The Remuneration Committee also utilises outside resources and experts as appropriate. The Committee is responsible for making recommendations to the Board on the Group’s framework of Executive remuneration and its cost. The Committee determines the contract terms, remuneration, and other benefits for each of the Executive Directors, including performance related cash and equity bonus schemes, pension rights, and compensation. The Board itself determines the remuneration of the Non-Executive Directors.
Terms of Reference

Audit Committee

The Audit Committee comprises Mr Birkett (chairman) and Mr Hammond. Mr Birkett qualified with Deloitte and Touche as an auditor early in his career and has also served as chairman of the Audit Committee of an AIM listed company. Mr Hammond has more than 13 years of financial analysis and advisory experience having served 11 years at Credit Suisse. There are only two members of the Audit Committee as is permitted due to the Company qualifying as a “smaller company” by virtue of being outside of the FTSE 350. Nevertheless, the Company is not in compliance with the Combined Code (C3:1) as there are no independent directors on the Audit Committee. The Audit Committee received reports from the Group’s external auditors (KPMG Audit Plc) and reviewed the half-yearly and annual accounts presented to the Board, focusing in particular on accounting policies and areas of management, judgement, and estimation. The Audit Committee is responsible for monitoring the controls that are in force to ensure the integrity of the information reported to the shareholders.

The Audit Committee acts as a forum for discussion of internal control issues, including review of the enterprise risk management programme and contributes to the Board’s review of the effectiveness of the Group’s internal control and risk management systems and processes. It advises the Board on the appointment of external auditors and on their remuneration for both audit and non-audit work and discusses the nature and scope of the audit with the external auditors. The Committee advises the Board on the need for an internal audit function. The Committee has concluded that an internal audit function is not appropriate at this time, given the current scale and structure of its operations. The Committee is responsible for overseeing the performance, as well as the independence and objectivity of the auditor, which it does by requiring reports from the auditor, by pre-approving fees for non-audit work, and by ensuring that fees for non-audit work remain lower than those for audit work.
Terms of Reference

Internal Control

In accordance with the Turnbull guidance, the Directors confirm that there is an ongoing process for identifying, evaluating, and managing the significant risks facing the Group and its subsidiaries. This process was in place during the period from 1 January 2009 to 31 December 2009 and up to the date of approval of the annual report and accounts. The Directors are responsible for the Group’s system of internal control and reviewing its effectiveness.

The Group’s system of internal control is designed to provide the Directors with reasonable assurance that the Group’s assets are safeguarded, that transactions are authorised and properly recorded, and that material errors and irregularities are either prevented or would be detected within a timely period. However, no system of internal control can eliminate the risk of failure to achieve business objectives or provide absolute assurance against material misstatement or loss.

The Directors confirm that the Board has acknowledged that it is responsible for the Group’s system of internal control and has reviewed the effectiveness of the Group’s system of financial and non-financial controls during 2009, including operational and compliance controls, risk management, and the Group’s high-level internal control arrangements. The key elements of the internal control system in operation are:

The Board meets regularly with a formal schedule of matters reserved to it for decision and has put in place an organisational structure with clear lines of responsibility defined and with appropriate delegation of authority. The Board receives periodic reports from all Committees.

Management is responsible for the identification and evaluation of significant risks and for the design, implementation, and monitoring of appropriate internal controls, including financial systems, computer environments, business operations, and compliance. Management regularly reports to the Board on the key risks inherent in the business and on the way in which these risks are managed.

There are established procedures for planning, approval, and monitoring of capital expenditure and information systems for monitoring the Group’s financial performance against approved budgets and forecasts.

Relations with Shareholders

The Group values its dialogue with both institutional and private investors. Effective two-way communication with fund managers, institutional investors, and analysts is actively pursued, and this encompasses issues such as performance, policy, and strategy.

The annual report contains a full business review and a description of existing core business and new markets. An interim business review is released to the public market and published on the Group’s website. With these documents and the Group’s press releases, the Board seeks to present a balanced and understandable assessment of the Group’s position and prospects. The Group’s website at http://www.puricore.com also provides extensive information about the Group.

PuriCore maintains regular contact with institutional shareholders through one-to-one visits and briefings. Additionally, Mr Bosch, Chief Executive Officer, and Mr Weiss, as Chief Financial Officer and Executive Director following his appointment as at 1 November 2009, gave presentations on the results to institutional investors, analysts, and the media in the UK and US throughout the year. Webcasts of major investor conference presentations are also linked on the Company’s website.

Private investors are encouraged to participate in the Annual General Meeting. The Executive Chairman and Chief Executive Officer will be available to review the results and comment on current business activity. The Chairmen of the Audit, Remuneration, and Nomination Committees will be available at the Annual General Meeting to answer any shareholder questions.

Contact with major shareholders is principally maintained by the Executive Chairman, who ensures that shareholder views are communicated to the Board as a whole. The Board believes that appropriate steps have been taken during the year to ensure that the members of the Board, and in particular the Non-Executive Directors, develop an understanding of the issues and concerns of major shareholders about the Company. The Board is provided regularly with brokers’ reports and feedback from shareholder meetings. The Board believes that these methods are a practical and efficient way both to keep the Executive Chairman in touch with major shareholder opinion on governance and strategy and for the Senior Independent Director to learn the views of major shareholders and to develop a balanced understanding of their issues and concerns. The Chief Executive Officer, Chief Financial Officer, and Senior Independent Director are available to attend meetings with major shareholders if requested.

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