Chairman’s Introduction

As Chairman of the board of Directors of essensys (“essensys” or the “Company”), it is my responsibility to ensure that essensys has both sound corporate governance and an effective board of directors (the “Board”). As Chairman, my responsibilities include leading the Board effectively, overseeing the Company’s corporate governance model, and ensuring that good information flows freely between Executive Directors and Non-Executive Directors in a timely manner.

It is the Board’s job to ensure that essensys is managed for the long-term benefit of all shareholders, with effective and efficient decision-making. Corporate governance is an important part of that role, reducing risk and adding value to our business.

The Directors of essensys (the “Directors”) recognise the value of good corporate governance in every part of its business. As essensys was admitted to AIM in May 2019, it is required to adopt a recognised corporate governance code and disclose how it complies with that code and, to the extent essensys departs from the corporate governance provisions outlined by that code, it must explain its reasons for doing so. The Directors have resolved to adopt the Quoted Companies Alliance Corporate Governance Code (the “QCA Code”), which they believe is the most appropriate for a company of the size and stage of development of essensys.

Key governance related matters that have occurred during the year include the Company’s admission to AIM in May 2019 as referenced above, the formation of Audit and Remuneration Committees to the Board, my appointment as Non-Executive Chairman and the appointment of the other Non-Executive Director, Charles Butler, to the Board.

The Board acknowledges that corporate governance is key in reducing risk and adding value to our business. essensys is committed to ensuring high standards of corporate governance and as a result the Board has adopted the 2018 Quoted Companies Alliance Corporate Governance Code (the “QCA Code”) as the basis of the Group’s governance framework.

The Board will be responsible for setting and approving the Group’s long-term objectives and overall strategy as well as overseeing performance. The following table is an overview of essensys' compliance with the QCA Code principles as of the date of this statement. The Board is of the opinion that the Company complies with the QCA Code so far as practicable having regard to size, nature and current stage of the development of the company. The Board understands that the application of the QCA Code supports the Group’s medium to long-term success whilst simultaneously managing risks and provides an underlying framework of commitment and transparent communications with stakeholders.

Jon Lee,
Chairman

QCA Compliance Table

QCA Code PrincipleWhat we do and why
1. Establish a strategy and business model which promote long-term value for shareholders

essensys' software was designed and developed to serve the specific requirements of flexible workspace providers, removing operational complexity and enabling them to operate and scale more efficiently. essensys' platforms achieve this by helping operators save time, reduce costs, increase customer satisfaction and engagement, grow revenues and increase profits.

essensys' two SaaS platforms, Connect and Operate, address these complex operational challenges, and reduce costs by simplifying the day-to-day management of flexible workspaces and the provision of on-demand IT, technology and infrastructure services to tenants. essensys' platforms automate key tasks and processes and help flexible workspace providers deliver highly efficient, customer-centric workspace solutions and member experiences with enterprise class services.

Further details of the Company’s strategy and business model can be found in Part I of the admission document used for the admission of its entire share capital to trade on AIM, which is available on the Company’s website here.

In compliance with the QCA Code, updated details will be provided in the Annual Report and Accounts for financial years ending on and after 31 July 2019.

2. Seek to understand and meet shareholder needs and expectations

The Board is committed to providing shareholders with clear and transparent information on essensys’ financial position and strategy. Any published announcements, financial reports and key documents are publicly available and will be regularly updated on essensys’ website.

Directors will meet with selected key shareholders and research analysts following the announcement of results and obtain appropriate feedback.

essensys will review the success of shareholder engagement on an ongoing basis and will take appropriate steps to improve engagement based on shareholder feedback.

essensys encourages its shareholders to attend the annual general meeting and will provide the shareholders with the opportunity to ask questions of the Board.

The Board will also make itself available to shareholders on an ad hoc basis and encourages an open dialogue.

The Company Secretary, One Advisory Limited (company.secretary@essensys.tech) is the main point of contact for such matters and the Chief Executive Officer is principally responsible such communication with shareholders.

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

essensys recognises that it is responsible not only to its shareholders, but to a wider group of internal (members of staff) and external (customers, suppliers, regulators and others) stakeholders. essensys acts with integrity and values people, from its members of staff to those who form the communities with which it engages.

The Board is regularly updated on wider stakeholder engagement feedback to stay abreast of stakeholder insights into the issues that matter most to them and to essensys’ business and the Board takes account of such feedback when in discussions relating to the Company’s strategy.

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

The Board is responsible for determining the nature and extent of significant risks that may have an impact on essensys’ operations, and for maintaining a risk management framework.

The Board has carried out a robust assessment of the principal risks and uncertainties affecting essensys’ business, considered how these could affect operations, performance and solvency and what mitigating actions, if any, can be taken. The principal risks identified are set out in a risk register which includes the risk description, risk owner, a description of the control mechanism and the mitigating action.

essensys’ Admission Document also outlines the key risks to the business, in Part II.

Whilst a review of the risk register is a scheduled item on the annual calendar of Board agenda items, risks and opportunities are continually considered when the Board is making considerations about the business and strategy of the Company.

The Audit Committee assists the Board in this process by reviewing the risk register as well as the effectiveness of the current internal and financial control environment. When the Company receives any comments or feedback from its auditors in relation to its internal controls, the Audit Committee ensures that these are actioned by the Company.

In compliance with the QCA Code, the Company will provide updated information on its principal risks and how it mitigates them in the Annual Report and Accounts for financial years ending on and after 31 July 2019.

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

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

The Board and the committees of the Board are provided with high quality information, in a timely manner, to facilitate proper assessment of the matters requiring a decision or insight. The Chairman ensures that any feedback or suggestions for improvement on Board papers is provided to management.

The Board considers that it has an appropriate balance, and is currently comprised of two Executive and two Non-Executive Directors. Jon Lee is the Company's independent Non-Executive Chairman and Charles Butler is the other independent Non-Executive Director. Mark Furness (Chief Executive Officer) and Alan Pepper (Chief Financial Officer) are the Company's Executive Directors. The Executive Directors work full time for the business. The independence of the Board will be improved by the appointment of a third independent Non-Executive Director in 2019, resulting in the majority of the Board comprised of independent Directors.

Non-Executive Directors are considered to be independent in character and in judgement and have no business relationships which impact on their independence. However they have the granting of share options and other equity incentives pursuant to any share option scheme or equity incentive scheme in operation from time to time.

The Board has delegated specific responsibilities to the Audit Committee and the Remuneration Committee to facilitate and improve the effectiveness of the Board, further details of which are provided under Principle 9 below.

The Chairman and the Non-Executive Directors have been advised of the time required to fulfil their roles prior to appointment and were asked to confirm that they can make the required commitment before they were appointed.

The Board is satisfied that the Chairman and all the Directors are able to commit the time necessary to fulfil their respective roles.

Directors’ conflict of interest

The Company has effective procedures in place to monitor and deal with conflicts of interest. The Board is aware of the other commitments and interests of its Directors, and changes to these commitments and interests are reported to and, where appropriate, agreed with the rest of the Board.

In compliance with the QCA Code, details on the number of meetings of the Board (and any committees) during the year, together with the attendance record of each Director will be provided in the Annual Report and Accounts for financial years ending on and after 31 July 2019.

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

A profile of each Director is provided on the Company’s website.

The Board deems that each of the Directors has the experience and knowledge to constructively challenge the strategy and to scrutinise performance.

The Company Secretary will ensure that all Directors are kept abreast of changes in relevant legislation and regulations, with the assistance of the Company’s advisers where relevant.

All Directors have been given AIM Rules and Directors Responsibilities training as part of the IPO process.

The Executive Directors will be subject to the Company’s performance and development review process though which their performance against predetermined objectives will be reviewed and their personal and professional development needs considered. The Directors will be encouraged to raise any personal development or training needs with the Chairman.

The Non-Executive Directors have a breadth and depth of skills and experience across many different sectors enabling them to provide the necessary guidance, oversight and advice for the Board to operate effectively.

The Company believes that the balance of skills in the Board as a whole will reflect a very broad range of personal, commercial and professional skills, providing the ability to deliver the Company’s strategy for the benefit of shareholders over the medium and long-term. The Board will not be dominated by any person or group of people. The Non-Executive Directors will meet without the presence of the Executive Directors during the year, and will also maintain ongoing communications with Executives between formal Board meetings.

In order to keep Director skill-sets up to date, the Board uses third parties to advise the Directors of their responsibilities including receiving advice from the Company’s external lawyers. The Board proposes to introduce a facility for Directors to receive training on relevant developments on a more regular basis. The Board reviews the appropriateness and opportunity for continuing professional development in order to keep each Director’s skillset up-to-date. In addition to their general Board responsibilities, Non-Executive Directors are encouraged to be involved in specific workshops or meetings, in line with their individual areas of expertise. The Board shall review annually the appropriateness and opportunity for continuing professional development, whether formal or informal.

The Board has an ongoing commitment, as the Company develops and grows, to:

- assess the mixture of skills and experience of the Board;

- determine whether the current composition is sufficient to achieve the Company’s strategic goals and objectives; and

- evolve the composition of the Board in response to any changes to requirements or developments where deemed necessary.

In compliance with the QCA Code, an update on compliance with this Principle, including details of where the Board or any committee has engaged any external advisers or has sought external advice on a significant matter, will be provided in the Annual Report and Accounts for financial years ending on and after 31 July 2019.

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

A process of formal evaluation of the Board will take place on an annual basis. In compliance with the QCA Code, in the Annual Reports and Accounts for periods ending on and after 31 July 2019, a summary will be provided of the Board performance evaluation results and recommendations, as well as progress against any prior recommendations.

The performance review of each Executive Director will be undertaken by the Remuneration Committee through recommendations to the Board on matters relating to their remuneration and terms of employment.

The Non-Executive Directors will meet, without the Chairman present, to evaluate the Chairman’s performance, taking into account input from all the Directors.

The criteria against which the Board, its Committees and individual effectiveness is considered includes:

- effectiveness in setting strategy

- rigour and extent of debate

- balance and objectivity of decision making

- responsiveness to new events and new information

- appropriateness of the Board composition and sufficiency of skills to discharge duties

The Board is collectively responsible for succession planning of the executive team. The succession planning will be reviewed on an ongoing basis alongside the evaluation of the capabilities of the senior management team and the Directors.

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

The Board promotes a corporate culture that is based on sound ethical principles and behaviours.

The Company supports a transparent and communicative culture in which individuals are encouraged to offer suggestions for improvement, the Directors regularly observe this occurring in practice.

The Company has a whistleblowing policy which emphasises the importance to the business that any fraud, misconduct or wrong doing by staff or officers of the Company is reported and properly dealt with. The policy applies to all employees and officers of the Company. Other individuals performing functions in relation to the Company, such as agency workers and contractors, are encouraged to use it.

The Employee Handbook includes an anti-bribery policy and personal conduct policy. Any fundamental breach of the Employee Handbook will be reported to the Board. The Employee Handbook is to be reviewed and updated in the current financial year ending 31 July 2019.

essensys is accredited to ISO 9001 (Quality Management System) and ISO 27001 (Information Security Management System).
The terms of reference of the Audit Committee include:

- reviewing the adequacy of the Company’s whistleblowing arrangements

- reviewing the Company’s systems and controls for the prevention of bribery

- receiving reports on non-compliance.

In compliance with the QCA Code, an update in respect of the Company’s culture will be provided in the Chairman’s corporate governance statement in the Annual Report and Accounts for financial years ending on and after 31 July 2019.

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

The roles of the Chairman, Chief Executive Officer and the other Directors are set out on our website here.

The Board will generally meet formally once a month.

The Board has delegated specific responsibilities to the Audit Committee and the Remuneration Committee. These committees have only recently been established in connection with the admission to AIM. Each committee reports to the Board and has written terms of reference setting out its duties, authority and reporting responsibilities. The terms of reference will be kept under continuous review to ensure that they remain appropriate and to reflect any changes in legislation, regulation or best practice.

The Chairman’s principal responsibilities are to ensure that the Company and its Board are acting in the best interests of shareholders, and leadership of the Board is undertaken in a manner which ensures that the Board retains integrity and effectiveness, with the right Board dynamic and ensuring that all important matters, in particular strategic decisions, receive adequate time and attention at Board meetings.

The CEO has, through powers delegated by the Board, the responsibility for leadership of the management team in the execution of the Group’s corporate strategies and for the day-to-day management of the business. The CEO can be assisted in his duties by the other Executive Directors. The CEO for essensys is also the principle contact for liaison with shareholders and, together with the CFO, all other stakeholders.

The Independent Non-Executives Directors are tasked with constructively challenging the decisions of executive management and satisfying themselves that the systems of business risk management and internal financial controls are robust. The Executive Directors seek regular counsel from the Non-Executive Directors outside of Board meetings.

The Audit Committee is chaired by Charles Butler and its other members will be Jon Lee and the third Non-Executive Director, once appointed. The Audit Committee will meet at least three times a year at appropriate intervals in the financial reporting and audit cycle and otherwise as required. It will have the responsibility for ensuring that the financial performance of the Company is properly reported on and reviewed and its role includes monitoring the integrity of the financial statements of the Company (including annual and interim accounts and results announcements):

- reviewing internal control and risk management systems;

- reviewing any changes to accounting policies; reviewing the Company’s whistleblowing arrangements and the systems and controls for the prevention of bribery and receiving reports on non-compliance;

- monitoring the extent of the non-audit services undertaken by external auditors; and advising on the appointment of external auditors.

The Remuneration Committee will be chaired by Jon Lee. Its other members will be Charles Butler and the third Non-Executive Director, once appointed, all are independent. The Remuneration Committee will meet at least two times a year and otherwise as required. It will have responsibility for setting the remuneration policy of all Executive Directors and other designated senior management, including pension rights and any compensation payments; and making recommendations to the Board relating to any performance related pay schemes and all share incentive plans.

The summarised terms of reference of the Audit Committee and the Remuneration Committee are set out on our website here: ([website address]). These terms of reference will be kept under review to ensure that they remain appropriate and reflect any changes on legislation, regulation or best practice.

The reports of the Audit and Remuneration Committee will be provided in the Annual Report and Accounts for financial years ending on and after 31 July 2019.

There is a formal schedule of “Matters Reserved for the Board” which include matters relating to

- strategic aims and objectives and approval of budgets

- structure and share capital

- financial reporting and controls and dividend policy

- maintenance of a sound system of internal controls and risk management

- banking and financing arrangements

- significant contracts

- communication with shareholders

- changes to Board structure and composition

The appropriateness of the Board’s structures and processes will be reviewed through the ongoing Board evaluation process and on an ad hoc basis by the Chairman (see Principle 7). These will evolve in parallel with the Company’s objectives, strategy and business model as it develops, to include a regular assessment of governance arrangements.

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

In compliance with the QCA Code, reports providing details of the work of the Board and reports of the Audit Committee and the Remuneration Committee will be provided in the Annual Report and Accounts for financial years ending on and after 31 July 2019.

The Company communicates progress with shareholders and stakeholders throughout the year by publishing announcements via a Regulatory Information Service and through its Annual and Interim reports and accounts.

The results of Shareholder votes are notified on the Company’s website where a significant proportion of votes are cast against a resolution at any general meeting, the Company shall include an explanation of what actions it intends to take to understand the reasons behind that vote result, and, where appropriate, any different action it has taken, or will take, as a result of the vote.

See also Principles 2 and 3 for further information on how the Company maintains dialogue with shareholders and other stakeholders.

Last reviewed on 29 May 2019