CORPORATE GOVERNANCE STATEMENT

The primary responsibility of the Chair is to lead the Board effectively and to oversee the adoption, delivery and communication of the Company's corporate governance model. The Company Secretary assists and reports directly to the Chair on corporate governance matters. The Chair ensures that the Board as a whole plays a full and constructive part in the development and determination of the Company's strategy and overall commercial objectives.

The Board strives to follow best practice in corporate governance, recognising that good corporate governance is a vital component to support management in their delivery of the Company's strategic objectives and to operate a sustainable business for the benefit of all stakeholders. The Board have chosen to apply the QCA Corporate Governance Code (QCA Code) to the Company. The Board feel that the QCA Code is most appropriate to the size of the Company, the regulatory framework that applies to AIM companies and is best aligned to the expectations of the Company's stakeholders.

It is recognised that the process of identifying, developing and maintaining standards of corporate governance suitable for the Company is ongoing and dynamic, to reflect changes in the Company and its business, the composition of the Board and developments in corporate governance. It can be expected that this statement will be reviewed and updated in conjunction with the Company's 2018 Annual Report.

DELIVER GROWTH

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

  • Vision

Our vision is to be a leading international, specialist staffing group. Our purpose is to help people to realise their potential. We will achieve this by continuously developing our staff and in turn delivering a quality service to our clients and candidates.

  • Strategic Focus
  • The Group's strategy to deliver to the Vision is focused on the following areas:
  • Develop leading specialist brands within our sector expertise. Each brand should have sufficient scale and deliver significant profit to the Group.
  • The sectors we operate in are international and have good long-term growth prospects and we plan to increase our footprint in them.
  • Retain operational mix: professional and specialist job roles. The margins are highest in these roles and our tailored service from market experts adds the most value to clients and candidates.
  • Maintain diversification and balance by geography and sector. This reduces the reliance on any particular country or industry so minimises the impact from market fluctuations or other external factors.
  • Increase footprint in key economic centres. In the countries in which we operate we focus on economic centres which have the highest concentration of business and so the greatest need for recruitment services. Focusing on key economic centres ensures that we get the best return on our investment, and the key cities in a country typically have higher growth rates than national average.
  • We have access to both established mature markets and high growth emerging markets.
  • Develop a solid financial foundation. Having a solid financial foundation is key to the long-term sustainability of the Group.
  • Business Model

Our business model sets us apart from the rest of the staffing industry.

  • Multi-branded model

We target different segments of the market with different brands. Each brand has in-depth knowledge and expertise in their specific market, enabling them to help their clients and candidates to make the best matches. We think candidates and clients want to deal with experts who understand their industry and can advise both on the best match of experience, skills and job requirements.

  • Management Equity philosophy

The Group applies a philosophy of management equity to align the interests of shareholders and key management through the sharing of risk and reward, with operating company management teams owning shares directly in their own businesses. This helps attract and then retain ambitious and talented managers. Our decentralised structure and entrepreneurial culture enables managers to run their businesses effectively, reacting to local opportunities but also benefitting from being part of a global organisation and the support and advice this provides.

  • Focus on Growth Markets

We target businesses that operate in growth regions and sectors. We have a good spread across both established and emerging staffing markets and across different industry sectors. By having a balanced and diversified spread of operations across different markets we are not reliant on any single market and can mitigate the impacts of a slow-down in any particular market.

  • Operational bias towards temporary recruitment

Providing ongoing temporary and contract recruitment services develops long-term client relationships and helps financial planning through more predictable earnings. Temporary staffing is generally more stable throughout the economic cycle and provides clients and candidates with the flexibility to organise their business and careers.

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

The Board seek to engage with shareholders to maintain a mutual understanding of objectives between them and the Company and manage shareholders' expectations.Relations with shareholders and potential investors are managed principally by the Executive Directors, who are contactable both directly and via financial PR (see https://www.empresaria.com/investors/advisers).

Shareholders are encouraged to participate in the Company's Annual General Meetings and contact the Company's officers with any questions.The Executive Directors make regular presentations to institutional investors (both existing and potential shareholders), meet with shareholders to discuss long-term issues and obtain their views, present at externally run investor events and communicate regularly during the year.

The annual and interim presentations made to investors, as well as interviews with the Executive Directors, are available at https://www.empresaria.com/investors/investors-presentations. A description of the Company's investment case is available at https://www.empresaria.com/investors/investment-case.

The Company has also retained a Financial PR adviser (Alma PR), a house broker (Arden Partners plc) and analyst research (Allenby Capital Limited), who each provide feedback from existing shareholders and potential investors.

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

The key resources and relationships on which the Group's business model relies are those with internal staff, candidates / workers, clients and regulatory authorities. The Board is conscious of its responsibility towards all stakeholders and believes this is an important consideration for the long-term growth of the business.

Stakeholder engagement and feedback is taken seriously throughout the Group. Regular communication is made around the Group companies and internal staff. The Group places considerable value on the involvement of its internal staff and keeps them informed on matters affecting them as employees and on the various factors affecting the performance of the Group. This is achieved through formal and informal meetings, the Group's website and intranet. Additionally, the Group benefits from a highly de-centralised structure, which enables each operating subsidiary to develop its own strategy for internal staff communications and candidate / worker engagement. The operating subsidiaries use social media to engage directly with stakeholders, through various channels including Facebook, Twitter and LinkedIn. The Group also engages with regulators and Government agencies, for example in response to consultations or proposals, both directly and through membership of worldwide trade associations.

The Corporate social responsibility section of the 2017 Annual Report can be found at pages 34 to 35 (http://www.empresaria.com/financial-information/company-reports).

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

Risk management remains the responsibility of the Board. The Audit Committee has delegated responsibility to keep under review the adequacy and effectiveness of the Company's internal financial controls and internal control and risk management system. Risk management is reviewed at every Board meeting as part of the formal Board process.

The Board has identified and evaluated the significant risks faced by the Group for the delivery of the Group strategy. The Board has agreed how each risk is to be addressed and the necessary actions to be taken. Details of the principle risks identified are set out at pages 30 to 33 of the 2017 Annual Report ('Risks and uncertainties – Managing our risk"), which can be downloaded here: https://www.empresaria.com/financial-information/company-reports.

The Audit Committee meets specifically to review the effectiveness of the Group's risk management and internal control systems and to review the Group and subsidiary risks identified and progress of actions taken to manage the risks. Following the review, progress and actions are reported to the Board.

The Board requires that all Group companies and employees adhere to the Empresaria Code of Conduct, which can be found here: http://www.empresaria.com/governance/code-of-conduct.

MAINTAIN A DYNAMIC MANAGEMENT FRAMEWORK

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

The Board has a balance and depth of skills and experience, together with suitable knowledge of the Group, to enable them to discharge their respective duties and responsibilities effectively. The Board is comprised of a Non-Executive Chairman, two Executive Directors and two Non-Executive Directors.

Independence

The independence of all Non-Executive Directors is reviewed on an annual basis, with reference to their independence of character and judgement and whether any circumstances or relationships exist that could affect their judgement.

As a significant shareholder in the Company, the Chair is not considered to be independent. The independence of Penny Freer and Zach Miles is considered frequently by the Board, in particular having regard to their periods of tenure. The Board assesses what would be the most desirable number of Non-Executive directors for the Board, having regard to the size of the Group, the scope of its operations and the efficient functioning of the Board. The Board looks at the manner in which the component parts of the Board function together, the skills and external experiences of the Non-Executive Directors, their involvement and insight in Board and Committee meetings and their ability to objectively challenge management. Having regard to all such considerations, the Board is of the view that the number of Non-Executive Directors is appropriate and that Penny and Zach remain independent, notwithstanding their periods of tenure.

The Board is always conscious of the need to benefit from the fresh thinking that new directors can bring and 2018 has seen the appointment of Tim Anderson as Group Finance Director and a change in role for Spencer Wreford as he became Chief Executive Officer.

Commitment

The Executive Directors are full-time employees. The annual minimum time commitments of the Non-Executive Directors are as follows:

  • Chair – not less than 25 days
  • Non-Executive Directors – not less than 20 days

Meetings

During the year, formal scheduled meetings of the Board and Committees are held and individual attendance by the members is recorded. During 2017, there were 9 formal scheduled meetings of the Board, 5 of the Audit Committee, 3 of the Remuneration Committee and 1 of the Nomination Committee. During 2017 there was 100% attendance for all formal scheduled Board and Committee meetings.

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

Directors

Biographical details of each of the directors, detailing relevant experience, skills and personal qualities and capabilities can be found at https://www.empresaria.com/governance/directors. The Nomination Committee meets at least once a year to monitor and review the structure, size and composition of the Board. It considers succession planning and makes recommendations to the Board for any appointments, to ensure that the right skills and expertise are maintained by the Company for effective management. All members of the Board participate in the recruitment of members to the Board.

Development

On appointment, the Directors receive a tailored introduction to the Group. Throughout their period of office, Directors are provided with regular business updates including detailed financial and treasury information. Developments in corporate governance are reported to the Board by the Company Secretary. All Directors determine the training requirements appropriate to their role and the needs of the Company's business.

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

Formal Executive Director performance evaluations are conducted annually in preparation for the review and approval of annual remuneration packages. Each Non-Executive Director's performance is evaluated as an outcome of the formal performance evaluations of the Committee(s) of which they are a member.

Annual performance evaluations of both Executive Directors and Non-Executive Directors (via Committee evaluation) identify and record achievements and areas for improvement in relation to annual objectives and performance of their role, in order to consider effectiveness. Objectives for the forthcoming year are defined along with identification of how achievements will be met, target dates and details of resource constraints or issues to ensure that actions are planned and taken as a result of the evaluation process.

The Committees conduct a self-assessment of their performance during the year, measuring their performance against their Terms of Reference.

As described above, the Nomination Committee considers succession planning and makes recommendations to the Board for any senior appointments. All members of the Board participate in the recruitment of members to the Board.

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

The Company actively promotes integrity in its dealings with internal employees, candidates / workers, shareholders, customers and suppliers and the authorities of the countries in which our operating subsidiaries operate. The Board recognises that the reputations of the Company and each of the operating subsidiaries are valuable assets gained over a long period and must be protected.

The Group has Codes of Conduct, including those for dealing with gifts, hospitality, corruption, fraud and inside information. The Board requires that all Group companies and employees adhere to the Empresaria Code of Conduct, which can be found here: https://www.empresaria.com/governance/code-of-conduct.

All staff must comply with the laws and regulations of the country in which they operate and those responsible for the management of each operating subsidiary confirm their compliance to the Board annually. The Group's whistleblowing policy is publicised to internal employees and the Company's senior management visit each operating subsidiary on a regular basis, giving internal employees an opportunity to ask questions of and provide feedback directly to the Board.

Our operating subsidiaries are required to ensure that advertising and public communications avoid untruths or overstatements. They are also expected to build relationships with suppliers based on mutual trust and endeavours to pay suppliers on time and in accordance with agreed terms of business.

The Corporate social responsibility section of the 2017 Annual Report can be found at pages 34 to 35.

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

The Corporate governance statement and the Corporate governance framework sections of the 2017 Annual Report can be found at pages 36 to 41.

The Role of the Board

The Company is controlled through the Board, which has established Audit, Remuneration and Nomination Committees to which it delegates clearly defined powers. The Board is collectively responsible for the long-term success of the Company.

There is a formal schedule of matters reserved for consideration by the Board, which includes responsibility for the following:

  • approval of overall Group strategy and objectives
  • approval of the Group annual budget and monitoring progress towards its achievement
  • changes to the Group's capital structure
  • changes to the Group's principal activities
  • review and approval of the annual financial statements
  • changes to the senior management structure
  • approval of Group financing arrangements and treasury policy
  • approval of major investments, disposals and additional investments in existing operations
  • approval of major unbudgeted expenditure

The Schedule of Matters Reserved is reviewed by the Board, at least annually, to ensure it remains appropriate and complete. The Board also reviews an approved schedule of operational matters, which are delegated to management of the operating subsidiaries.

Prior to the beginning of each year, Board meetings are scheduled in line with the key financial reporting dates. A more detailed agenda, together with the Board papers, is distributed in a timely manner before each Board meeting. All Directors receive sufficient relevant information on financial, business and corporate issues to enable informed decisions to be taken by them at the Board meetings. Any specific actions arising during meetings are agreed by the Board and a follow-up procedure monitors their completion. Monthly financial and operational reviews are distributed to the Board, irrespective of whether a scheduled meeting is to take place. This assists the Board to keep informed of developments on a regular basis.

Time is allocated at all meetings to discuss any other business, which all Directors are invited by the Chair to raise. All Non-Executive Directors participate in strategy development and decisions required to implement actions to progress towards meeting the objectives of the Company.

During 2017, there were 9 formal scheduled meetings of the Board, 5 of the Audit Committee, 3 of the Remuneration Committee and 1 of the Nomination Committee. During 2017 there was 100% attendance for all formal scheduled Board and Committee meetings.

Chair

The Chair's primary role is to ensure the effective running of the Board and that the Board as a whole plays a full and constructive part in the development and determination of the Group's strategy and overall commercial objectives.

Chief Executive Officer

The Chief Executive Officer's primary role is to deal with the running of the Group's business and executive management of the Group.

Audit Committee

Monitors and reviews the integrity of financial statements, oversees the relationship with the external auditor and has oversight for internal control and risk. The Audit Committee Terms of Reference can be found here: https://www.empresaria.com/governance/committee-terms

Nomination Committee

Monitors and reviews the structure, size and composition of the Board and considers succession planning, to ensure the right skills and expertise are maintained for effective management. The Nomination Committee Terms of Reference can be found here: http://www.empresaria.com/governance/committee-terms

Remuneration Committee

Considers and sets remuneration policy for Executive Directors and the Chair and monitors the level and structure of remuneration for senior management. The Remuneration Committee Terms of Reference can be found here: http://www.empresaria.com/governance/committee-terms

Company Secretary

Advises the Board and reports directly to the Chair on Corporate Governance matters. James Chapman, a solicitor since 2001, also heads up the Group legal department and advises the Board on legal and compliance matters. The Directors are also able to take independent professional advice in the furtherance of their duties as necessary.

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

Historical annual reports and interim statements can be downloaded here: http://www.empresaria.com/financial-information/company-reports

The latest reports of the Audit Committee, Nomination Committee and Remuneration Committee can be found in the Company's 2017 Annual Report, which can be downloaded here: http://www.empresaria.com/financial-information/company-reports

Details of the historical annual general meetings of the Company, along with voting results for those meetings, can be found here: http://www.empresaria.com/governance/agm-details

The annual and interim presentations made to investors, as well as interviews with the Executive Directors, are available at https://www.empresaria.com/investors/investors-presentations

A description of the Company's investment case is available at http://www.empresaria.com/investors/investment-case

Shareholders are encouraged to participate in the Company's Annual General Meetings and contact the Company's officers with any questions.

The Company's main contacts and advisers can be found here: http://www.empresaria.com/investors/advisers

Empresaria:

Spencer Wreford, Chief Executive Officer (wrefords@empresaria.com)

Tim Anderson, Group Finance Director (andersont@empresaria.com)

James Chapman, Company Secretary & Head of Legal (chapmanj@empresaria.com)

Tel: +44 (0) 1342 711 430

Financial PR:

Alma PR, Rebecca Sanders-Hewett (empresaria@almapr.com)

Tel: +44 (0) 2080 044 217

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