CORPORATE GOVERNANCE STATEMENT

CORPORATE GOVERNANCE STATMENT

The Vegner Group bases its Corporate Governance around the QCA Corporate Governance Code.

The QCA Code (www.thegca.com) is constructed around ten broad principles (which for reference are reproduced below) and a set of disclosures which are required to be made respectively through either the company’s Website, Annual Report and Accounts or both.

THE QCA’s TEN PRINCIPLES OF CORPORATE GOVERNANCE

Companies need to deliver growth in long-term shareholder value. This requires an efficient, effective and
dynamic management framework and should be accompanied by good communication which helps to promote confidence and trust.

DELIVER GROWTH

1. Establish a strategy and business model which promote long-term value for shareholders
2. Seek to understand and meet stet needs and expectations
3. Take into account wider stakeholder and social responsibilities and their implications for long-term success
4. Embed effective risk management, considering both opportunities and threats, throughout the organisation

MAINTAIN A DYNAMIC MANAGEMENT FRAMEWORK

5. Maintain the board as a well-functioning, balanced team led by the chair
6. Ensure that between them the directors have the necessary up-to-date experience, skills and capabilities
7. Evaluate board performance based on clear and relevant objectives, seeking continuous improvement
8. Promote a corporate culture that is based on ethical values and behaviours
9. Maintain governance structures and processes that are flt for purpose and support good decision making by the board

BUILD TRUST

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

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

The purpose of the Group is to provide residential and commercial property management services to property owners with a current emphasis on the management of residential blocks owned or controlled by resident management companies. Our ambition is expressed in the mission statement: “Through excellent personal customer service, to be the leading independent professional property services company within the property management sector.”

The Group has developed a business model which offers clearly identifiable competitive advantages for property owners through a high quality management service supported by related specialised property services. This is based on:

a. A personalised and local high quality property management service
b. The effective cross-selling of our own specialists to deliver specialised property services to property owners
c. Training, developing and retaining well motivated and dedicated staff
d. Efficiency and cost competitiveness through investment in technology and economy of scale
e. The centralised provision of those elements of the company’s services that are more efficiently undertaken in that way without affecting our ability to deliver a personal and local service

Our strategy is to grow organically and through acquisition and deliver increasing shareholder value through additional revenue streams, an improvement in margins and the careful management of both strategic and incidental risks. The Board reviews the company’s strategy on a regular basis. The management of risk is addressed more specifically in section 4 below.

• Competition from unregulated smaller operations which is addressed by careful communication of the property owner’s legal obligations and the Group’s comprehensive capability to ensure that these obligations are met.
• Identifying suitable acquisitions. The Group’s experienced acquisitions team has the expertise to critically evaluate prospects carrying out due diligence and producing cash flow projections to ensure that any target is a suitable strategic fit and is financially sound.
• Restructuring and advancement of our technological capabilities which is achieved by significant investment in systems and the continuous review of work flows and processes to maximise efficiencies.
• Recruiting and retaining suitable staff. This is fostered by offering competitive remuneration packages. The Group also invests in training and development, adopting a fully integrated human resource strategy for all its staff. This includes the establishment of the Group’s Training Academy and the regular evaluation of employees’ engagement.
• Diversification based on leveraging the company’s current strengths. Cross-selling and diversification is encouraged by the group’s continuous review of its service offerings to clients, particularly in the light of a changing regulatory environment.

The Board believes it has the right strategy in place to deliver continued solid growth in shareholder value for the medium and long term. We expect our productivity and margins to increase over time as our investment in systems and economies of scale feed through to profitability.

2. Seek to understand and meet shareholder needs and expectations

The company is committed to communicating clearly and straightforwardly with its shareholders (along with other stakeholders) to ensure that its strategy and performance is understood and that the directors develop a good understanding of shareholders’ needs and expectations.

All shareholders are encouraged to attend the company’s Annual General Meeting where the Board allows a generous amount of time after the conclusion of the official business to further discuss the company’s progress and to address any specific queries.

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

In addition to our shareholders, the Group’s business model identifies and is designed to maintain good relations with, all our other key stakeholder groups. These are our workforce, clients, suppliers (primarily contractors who work on our clients’ properties) and our regulators.

Our Human Resources Strategy and internal communication and feedback programmes (also referred to in 8 below) are designed to create a supportive and developmental environment for our staff to enhance their skills, wellbeing and efficiency.

Questionnaires are sent to our client base on a regular basis to obtain their views on the quality of service delivered and suggestions for improvement.

The company screens all contractors retained to work on our clients’ properties through its Contractor Approval Process and feedback from contractors is obtained on an ongoing basis in relation to outcomes and procedures to ensure that we constantly improve our policies and procedures.

The Group’s regulators are the Royal Institution of Chartered Surveyors (RICS) and the Association of Residential Managing Agents (ARMA) professional property work and residential management activities respectively. The Group maintains strong links with these two professional bodies to ensure that we are up to date and fully comply with the high standards required.

Feedback received from all our stakeholders is reflected as appropriate in the design of our policies and procedures.

The Group understands the importance of being a responsible employer and member of the communities in which our businesses are based. Its Corporate Social Responsibility policy is set out on the company’s website and is consistent with its published Mission Statement and Core Values.

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

The executive management led by the CEO maintains the company’s Risk Register which identifies the main risks to the company across a range of both incidental and strategic issues which might potentially affect staff, clients, financial integrity and shareholder value. Procedures are in place to ensure that the health and safety of staff, clients and sub-contractors are paramount. All sub-contractors working on our clients’ properties are screened via the company’s Contractor Approval Process so that they meet minimum standards of safety and competence. Financial procedures are strictly enforced to maximise the integrity of client and company bank accounts and to minimise fraud for both parties.

Complaints in regard to the quality of work undertaken to the fabric of buildings or the quality of the Group’s service are carefully monitored and followed up quickly and professionally. The Group holds Professional Indemnity Insurance to cover downside risk in these areas and in regard to fraud.

The Board considers risks to the company at each Board Meeting, particularly when new risks have become evident.

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

The Board consists of four Directors, of which two are full time Executives – the CEO and CFO.

The members of the Board have a collective responsibility and legal obligation to promote the interests of the company, and are collectively responsible for defining the corporate governance arrangements. Ultimate responsibility for the quality of, and approach to, corporate governance lies with the Chair of the Board.

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

The Board is now constituted of four members and all bring a high level of relevant sector experience and knowledge to the Group. It is considered that the Board has the appropriate blend of financial skills, along with the necessary personal qualities to enable it to successfully  execute the Group’s strategy. All Directors attend regulatory seminars, regulatory conferences and trade events to make sure that their commercial knowledge remains current.

James Howgego – CFO and Company Secretary

James qualified as a Chartered Accountant at Smith & Williamson Limited in 1996. He subsequently worked at Ernst & Young and Grant Thornton Corporate Finance and a venture capital backed leisure group before being appointed as CFO of the Group 6 months prior to its floatation in 2006. His in-depth knowledge of client accounting systems and rigorous approach to cost control are key contributions to the company’s financial resilience. As well as completing the necessary training to maintain chartered accountant status, James regularly attends industry specific and general management training courses.

Time commitment: full time

Alec Guthrie – CEO

Alec has 30 years’ experience working in the property services industry including Estate Agency, Residential Lettings, Surveying and Residential and Commercial Property Management. Alec joined the Group through the acquisition of The Guthrie Partnership; a business he set up and as Managing Director of our largest group of businesses (formerly HML Andertons). His extensive and detailed frontline property management experience places him ideally to lead the business. Alec maintains his professional knowledge by fulfilling the annual requirements set out by RICS to complete continuous professional development and uses this to satisfy his membership of 1RPM and NAEA. He also attends a variety of industry lead seminars and conferences.

Time commitment: full time

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

The review of Board performance and effectiveness has been undertaken internally to date.

Succession planning at board level is a continuous process and reviewed to take into account both planned and unplanned circumstances.

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

Our corporate culture is underpinned by four core values:

• Outstanding customer service
• Integrity and professionalism
• Respect for fellow employees
• Engagement, recognition and innovation

These values are regularly communicated to staff through an annual all employee meeting, regular internal team briefings, staff communications via our Human Resources department and Staff Newsletters published on the intranet.

These values are entirely consistent with the company’s purpose and mission by encouraging a high standard and integrity of service to clients and fostering a workplace culture which supports this.

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

The Group’s governance structure is determined by the Board.

An Operations and Management Committee, comprising senior departmental heads and led by the CEO and CFO, meets monthly to report on key aspects of the business, review operational plans and to decide on key issues.

The principal matters reserved to the Board are as follows:

• Setting long-term objectives and commercial strategy.
• Approving annual operating and capital expenditure budgets.
• Changing the share capital or corporate structure of the Group.
• Approving full-year results and reports.
• Approving dividend policy and the declaration of dividends.
• Approving the company’s major policies including the remuneration policy and annual remuneration for senior employees.
• Approving major investments, disposals, capital projects or contracts.
• Approving resolutions to be put to general meetings of shareholders and the associated documents or circulars.
• Approving changes to the board structure and composition.

The Board has approved the adoption of the QCA Code as the basis of its corporate governance structure and is committed to the regular examination of its governance policy to ensure that it is consistent with the QCA Code (or appropriate alternative) going forward and that it evolves in response to the company’s plans for growth.

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

The governance of the company is set out in this statement and the approach taken to reporting structure and dialogue with stakeholders is described in sections 2 and 3 above.