Corporate Governance

The Governance of the Group is set out in a formal Operating Agreement. The Group has established its own policies and procedures as well as adopting the pre-existing processes from the shareholders where appropriate. The Group has appropriate internal controls and risk management programs which are subject to shareholder review.

The Companies (Miscellaneous Reporting) Regulations 2018 introduced new statutory reporting requirements for financial years beginning on or after 1 January 2019. Although the Group does not exceed the requirement thresholds, the directors of EthosEnergy have decided to provide a statement in the Report of the Directors stating which corporate governance code if any, EthosEnergy Group followed during the year, how it applied the code and any part of the code it did not follow.

For the financial year ended 31 December 2020, Ethos Energy Group Limited has chosen to report against the Wates Corporate Governance Principle for Large Private Companies, published by the Financial Reporting Council (FRC) in December 2018 and available on the FRC website (the Wates Principles). The disclosures below explain how Ethos Energy Group Limited has reported against the Wates Principles in the context of its corporate governance arrangements.

Purpose and leadership

EthosEnergy Group’s purpose is established by the Board of Directors who provide governance to the CEO and the leadership team. The CEO and leadership team introduced a new strategy in 2020 and has the Board’s full support to help achieve the long-term sustainable success of the business. The CEO and leadership team spend significant time on strategic development and planning and determine the leadership of the Group.

Board Composition

The Board has currently five directors, comprising the Chairman and four executive Directors.

The Board considers that the Chairman was independent on appointment and individual directors’ continuing contribution to Ethos Energy Group Limited are considered at least annually.

The role of the Chairman is to lead the Board and ensure its overall effectiveness. This is distinct and separate from that of the Chief Executive Officer (CEO) who manages the business day to day.

All directors receive accurate, timely and clear information on relevant matters have access to the advice and services of the Company Secretary.

The Board is structured to ensure that the directors provide Ethos Energy Group Limited with the appropriate balance of skills, experience and knowledge as well as independence. A number of the directors have substantial experience in the industry and this experience brings various insights on how the Group should perform.

The Board monitors the commitment of the Chairman and directors and is satisfied that they are able to allocate sufficient time to enable them to discharge their duties and responsibilities effectively. Any additional external appointments require prior Board approval.

Directors’ responsibilities

All directors receive guidance on their statutory duties under the Companies Act and are supported in the discharge of their duties by the Company Secretary.

The Board is the main decision-making forum for Ethos Energy Group Limited. The Board is collectively responsible for the long-term success of Ethos Energy Group Limited and the delivery of sustainable value to its shareholders. The Board’s role is to provide leadership to the Group, monitoring and maintaining the consistency of the Group’s activities.

The Chairman, CEO and Company Secretary are responsible for the quality and integrity of information provided to the directors. At each scheduled Board meeting the directors receive reports from the CEO, which are prepared by the CEO and the leadership team as appropriate and these members may attend certain Board meetings to provide an opportunity for the Board to engage directly with management on key issues and supports succession planning.

There are quarterly Board meetings each year where the CEO will present the Group’s current financial position, as well as, at the appropriate time each year, the annual budget for the forthcoming year which will be reviewed and approved by the Board. In between these meetings the CEO is in regular contact with the Board, with calls occurring to discuss key specific matters as appropriate.

Opportunity and risk

The role of the Board is to promote the long-term sustainable success of Ethos Energy Group Limited.

The Group’s risk strategy is informed and shaped by an understanding of the risk landscape including a range of significant risks and uncertainties in the external economic, political and regulatory environments. This strategy now also considers the impact of COVID 19 across the world and the impact it has had on all industries.

The Board regularly review and identify potential opportunities that will help create and preserve the value of the Group as well as considering any potential risks or issues that may arise which could prevent the continued success of the business.

Remuneration

Executive remuneration structures incentivise individuals to deliver sustainable performance based on strategic objectives for the Group. The approach to performance management provides clarity to employees about how their contribution links to the Group’s ambition and all employees have goals set against different measures. The Group continues to ensure employees are paid fairly for the work they do, and the pay is periodically compared against the external market to ensure that they are competitive.

Stakeholders

For details of the Board’s engagement with the different stakeholders see below in the S172 statement.

S172 statement

Section 172 of the Companies Act 2006 requires Directors to take into consideration the interests of

stakeholders in their decision making. The Directors continue to have regard to the interests of the Group and Company’s employees and other stakeholders, including the impact of its activities on the community, the environment and the Group’s reputation, when making decisions. Acting in good faith and fairly between members, the Directors consider what is most likely to promote the success of the Company for its members in the long term.

The S172 statement looks into the key matters as noted below:

– Likely consequence of any decision in the long term

– Employee engagement (including work performed for safety for COVID)

– Stakeholder and shareholder engagement

– Community and the environment

– Impact of strategic decisions

Likely consequence of any decision in the long term

The Directors understand the business and the evolving environment in which we operate. Based on EthosEnergy’s purpose ‘to make energy affordable and available for everyone, everywhere’, the strategy set by the Board is intended to strengthen our position as a leading Independent Service provider of rotating equipment supporting the Power Generation, Industrial and Oil and Gas sectors while keeping safety and social responsibility fundamental to our business approach.

In 2020, to help achieve its strategic ambitions, the Board refreshed our strategy to further focus on creating a more nimble and self-reliant organisation. During the year, there was a restructure of the business which created ‘OneEthos’. This restructure resulted in the Group becoming more focused, allowing for greater co-ordination and teamwork to occur in order to combat the effects of the COVID-19 pandemic and to improve the performance of the Group in certain areas. This restructure has allowed the Group to become more self-reliant in terms of cash and is currently forecasting the Group to continue to reduce the reliance on finance facilities.

Given the complexity of the energy sector, the Directors have taken the decisions they believe best support EthosEnergy’s strategic ambitions.

Employee engagement

Our employees are fundamental to the delivery of EthosEnergy’s services and therefore to the long-term success of the business. It is important to develop our employees and keep them engaged and motivated. We engage with our workforce so that we can understand and address areas where we need to improve to ensure we deliver rewarding careers and retain our talented people.

During the year constant contact has been maintained by the leadership of the Group providing updates on the business performance including significant contract wins, various items in relation to the COVID-19 pandemic and recognising the crucial performance of individuals within the business.

The Group utilised an employee survey to allow the leadership of the Group to gain insight into the matters that mean most to the employees by providing them the opportunity to voice their thoughts on five key people themes: Safety and Wellbeing, Engagement, Culture, Communication and Leadership. In all aspects the responses were positive with especially high scoring in Safety and Wellbeing and Engagement. These results were shared with the employees and work is continually being performed to ensure these standards are maintained or improved.

The safety of our employees during the COVID-19 pandemic has been of upmost importance to the Group with a variety of safety protocols utilised throughout the world to ensure any potential risks were minimalised and constant contact was maintained by the Group’s Health and Safety team. New safe working procedures were introduced with safe working areas ensuring employees were socially distanced and employee temperature checks were performed prior to admission to  buildings/workshops.

Stakeholder and shareholder engagement

The Board regularly reviews our principal stakeholders and how we engage with them. The stakeholder voice is brought into the boardroom by regular reporting from our CEO, CFO, and Heads of HSSE (Healthy, Safety, Security & Environment), HR and Legal and the Strategic Business Unit Leaders. The company has identified 5 Ethos principles (Safety, Service Excellence, People, Financial Responsibility and Integrity), as its driving principles.

The Group have identified employees, shareholders and lenders, customers and suppliers as the principal stakeholders in the business. The relevance of each stakeholder group may increase or decrease depending on the matter or issue in question, so the Board seeks to consider the needs and priorities of each stakeholder group during its discussions and as part of its decision making.

The Group understands the importance that our shareholders have confidence in the Group, how it is managed in its strategic objectives to ensure the Group has a stable and long term performance for the shareholders.

The Executive Leadership team and other employees are in regular contact with the lenders to the Group, ensuring they are provided with the up to date financial performance and there are opportunities to discuss any specific areas. This includes any recent meetings with regards to the renewal of the bank facilities for the Group until July 2022.

The Group’s long-term success is underpinned by our customers and the delivery of predictable project outcomes that are aligned to our customers’ requirements. To deliver a great service, we listen to our customers to make sure we are leveraging the full capabilities of our organisation, our global reach and technical depth. This insight from customer engagement helps to inform the Group’s operational, business development and long-term strategic direction. This has become more apparent during the ‘OneEthos’ restructure of the business during the year, which allowed us to fully educate our customers on all the different types of services the Group can provide resulting in future contracts being agreed and strengthening the relationships with these customers.

EthosEnergy also recognise the key role suppliers play in ensuring that EthosEnergy provide a high-quality service to their customers and the Group aims to maintain the strong relationships with their suppliers. The ‘OneEthos’ restructure has helped to build on these relationships with focused targets being provided by supply chain and understanding the full range of services that can be provided by our suppliers. During the COVID-19 pandemic, EthosEnergy worked closely with both its customers and suppliers to ensure services were still continually being provided when it was possible. This involved maintaining regular contact with customers and suppliers, making special arrangements to ensure safety protocols were being followed and ensured that there were no significant delays to work being performed where it was possible. This regular contact and close working with both customers and suppliers has helped to maintain the strong relations, which the Group look to develop even further in the future.

Community and the Environment

EthosEnergy as a large organisation recognises its duty to help both the community and the environment across the various locations the Group operates in. The Group has considered the positive actions it can perform in order to benefits these stakeholders and is continually challenging itself to make energy affordable and available for everyone.

Due to the pandemic, the environmental and community work carried out by Ethos and its employees have been restricted compared to previous years however there were donations to various local charities throughout the world to help combat poverty and to assist in the education of school children. There was also assistance provided to help create face visor frames for key workers in certain regions and employees took part in an event run that helps support local children advocacy centres designed to end child abuse.

In 2021, the Group will have in place an Environmental, Social and Governance (ESG) framework which is to build growth, financial sustainability and deliver long-term value through effective engagement with all stakeholders including the community and environment. Some aspects of this framework have already been introduced including the Inclusion and Diversity Council which was introduced in 2020 and is responsible for enforcing the equal opportunities policy within EthosEnergy ensuring all employees are treated in a fair and consistent manner and not to discriminate unlawfully. The Group have also worked with various customers to upgrade the customer’s assets in order to reduce the carbon emissions produced and to support customers with reliable low carbon power generation. The new framework will include various other aspects including environmental risk management, waste minimalization plans, carbon footprint and energy efficiency programs and details will be collated and reviewed to understand where EthosEnergy is performing well and where the Group can improve.

Impact of Strategic decisions

As mentioned previously, during the year there was a restructure of the business called ‘OneEthos’ and details of the impact of this restructure can be located above. This allowed for the leadership of the Group to be transformed with new appointments at senior levels to bring in talent and expertise that will benefit both the short and long term success of the business.

The ‘OneEthos’ restructure introduced the employee survey and was used to understand the key areas to the employees and to highlight where the business is performing well and where improvements can be made according to the employees. The survey results created a review of the goal setting procedures utilised within the Group and highlighted changes to be made to help develop our talented workforce to ensure high standards are always maintained and for employees to feel progression within their roles. This in turn generates greater accountability across the business as the entire workforce are driving towards the same overall goals.