This report sets out how the Directors comply with the requirements of Section 172 Companies Act 2006 and how these requirements have impacted the Board’s decision making throughout the year.

The Role of the Board

The Board’s primary role is to promote the long-term success of the Company, by creating and delivering sustainable shareholder value through the provision of high-quality services and jobs that sustain and enhance communities by ensuring they operate effectively and affordably. This relies on a number of factors, including maintaining positive relationships with a wide range of stakeholders.

A formal schedule of reserved matters is set out and reviewed regularly to ensure it remains fit for purpose. This will include decisions on the ongoing strategic direction of the group, approval of the business plan and budget, the acquisition or disposal of assets, entry into major new contracts and changes in key policies.

The Board also monitors the effectiveness of the Group’s internal controls, governance, and risk management processes.

The Board delegates the day-to-day running of the business to the Group Chief Executive, who is supported by members of the Executive Committee.  It also delegates certain responsibilities to the Audit Committee and Remuneration Committee. These committees are made up of Non-Executive Directors and provide the Board with independent oversight.

Board Governance

Back in 2020 we updated our approach to reflect changes in the reporting requirements, most notably the 2018 UK Corporate Governance Code and The Companies (Miscellaneous Reporting) Regulations 2018.

We continue to apply the Wates Corporate Governance Principles for Large Private Companies for the year ended 31 March 2023, which allow us to reflect on where we have done well, and where we can learn from best practice to raise our corporate governance standards to a higher level.

The Principles also support directors in meeting the requirements of Section 172 with guidance on the following areas:

• Purpose and leadership;
• Board composition;
• Director responsibilities;
• Opportunity and risk;
• Remuneration; and
• Stakeholders.

Our Corporate Governance Statement sets out how the Group has applied these principles.

Board Activity during the year

The strategy and strategic priorities of the Group were set out in a Business Plan which was signed off by our shareholders in Jan 2019.  In approving the plan, the Directors also considered external factors such as the market and our competitors, as well as economic and political conditions.

We provide quarterly reviews to staff on our progress against the plan, and any changes to our strategic direction where relevant. For FY23 those strategic priorities continued unchanged.

During the year, the Directors made the following key decisions:

• Following the acquisition of both AM Services Group and Orchard & Shipman Group in FY22, the board confirmed that FY23 was a year of consolidation whilst we integrated both businesses in the Group. This has now been achieved, including the decision to collapse the Orchard & Shipman brand into Pinnacle whilst retaining the AM Services brand to focus on B2B activities.
• To support Grain Connect’s interim funding round (alongside funds managed by Albion Capital and Equitix), as it continues to roll out full fibre hyperfast broadband services across the country.
• To dispose of Pinnacle Group’s majority interest in its District Heating Business, Pinnacle Power. On 31^st March 2023 the Group sold its interest to DIF Capital Partners (https://www.pinnaclegroup.co.uk/news/pinnacle-group-sells-district-heating-business-pinnacle-power-to-dif-capital-partners/).
• To renew focus on growth of the Homes division in response to increased interest from Institutional Investors in the sector and our operating platform. Since the year end, the new “Place by Pinnacle” brand has been launched.
• To take a minority interest as a founding member in Armadillo Analytics, a software-as-a-service tech company that provides a data hub for the built environment.
• Enter into a second “Meadowship” project with LB Bromley to purchase and manage up to 200 properties to provide settled homes to families and individuals currently living in temporary accommodation.
• To step into a 20 year contract with The Riverside Group to deliver Total FM Services on its Extra Care PFI scheme in Hull.
• Appoint a more central government focussed public relations consultancy – Headland – following the degree of reputational damage that Pinnacle Service Families suffered as a consequence of RAMS contractors service failures on the MOD FDIS contracts.
• To make a cost of living payment in Autumn 2022 to over 2,500 of our lower paid staff.

The business continues to develop and pursue growth opportunities consistent with our vision and purpose.

It is the Board’s priority to ensure that Directors have acted in the way that they consider, in good faith, would most likely to promote the success of the company and its members as a whole. This includes the matters set out in paragraphs a-f of Section 172 of the Companies Act 2006, as follows:

a) The likely consequences of any decision in the long term

• Decisions to enter new customer contracts follow a robust Investment Committee (IC) process.
• Decisions to enter any new Key Supplier arrangements are taken to and approved by ExCom.
• Decisions to make any material changes to Employee T&Cs, Pension Scheme arrangements, the Business Plan (and budget), dividends to parent companies, etc. are all reviewed by the Board.
• Final approvals for making any changes to the corporate structure / material changes to the Business Plan, and entering into major contracts, settling any material disputes or litigation are matters reserved to the Pinnacle Group board, and the shareholders.

b) The interests of the company’s employees

• The Directors recognise that our staff remain the lifeblood of the business and are essential to its long-term success. The Group is certified to Silver standard by Investors in People, and continually strives to improve the way it interacts with its staff.
• We have continued to embrace and embed hybrid working practices. At the same time as significantly reducing our office footprint, we have invested significantly in high quality spaces, with collaborative working (both internal and external) at the heart of the design, whilst providing private spaces for more focussed individual work. Feedback from staff has been extremely positive, and we will continue to roll out this approach when the opportunity arises. Going forward we encourage all our managers to engage with their teams and discuss how work can best be organised to meet the needs of individuals and the required contract deliverables, with flexibility at the heart of those discussions.
• The health & safety of staff remains a top priority, and the Directors review the performance in this area at each meeting.
• See our Corporate Governance Statement for further details.

c) The need to foster business relationships with suppliers, customers and others

• The Board regularly reviews how the Group maintains positive relationships with all key stakeholders.
• During the year, we maintained our ISO44001 accreditation, and continue to embed collaborative working arrangements with stakeholders into our contract mobilisation and contract management processes.
• Please also refer to our ESG Impact Report which showcases our progress across the four key pillars of our ESG Framework (https://www.pinnaclegroup.co.uk/esg/).
• A number of customer engagement surveys were carried out during the course of the year across our portfolio of Housing contracts – the results of these surveys are reported back through the Shareholder Control Group forum. Furthermore, we are a corporate member of the Institute of Customer Service and continue to work with the institute and other members to enhance the customer experience.
• We have rigorous processes in place to ensure that our suppliers are paid promptly, in accordance with contract terms. Quarterly reviews with key suppliers provide the mechanism for jointly seeking opportunities to develop our contractual arrangements for the benefit of both parties.

d) The impact of our operations on the community and the environment

• The Directors are committed to providing a secure, safe and healthy environment for all our stakeholders.
• During the year, we have maintained our ISO14001 accreditation, are ESOS compliant, and made good progress towards our challenging strategic target to achieve Net Zero on direct emissions by 2025 (Scope 1 and 2) and full emissions by 2035 (Scope 3), continuing with a number of exciting initiatives including Project Switch and Project Electrify. We also embarked on a partnership with Planet First Energy, who are helping us manage the transition to “green” energy across our estate. Our environmental targets are reviewed on an annual basis.
• Please also see sections on streamlined energy and carbon reporting.
• We have continued to take an active role in the communities we serve. Our involvement in a wide range of social value projects and community activities are published internally on our ESG Power BI Dashboard.
• The Group continued with its strategy for engaging with local supply chain partners on major contracts.
• Please also see more detail on our Community Impact and Protecting our Planet as set out in our ESG Framework and 2022 Impact Report (https://www.pinnaclegroup.co.uk/esg/).

e) Desirability of the company to maintain a reputation for high standards of business conduct.

• The reputation of the Group is of upmost importance to our Directors, and this is not just limited to financial and operational performance. To that end, the Board has approved the Group’s policies on Modern Slavery, and Anti-Bribery and Corruption.
• We monitor compliments and complaints from our customers, our key suppliers are signed up to a Code of Conduct, and all staff must adhere to our Core HR Policies and our staff handbook, which incorporates a section on “Living the Values”.
• The Board has also considered the findings of our Gender Pay Gap report, including areas to focus going forward.

f) The need to act fairly between members of the company.

• The shareholders and Board are committed to setting targets for and developing all the main areas of the group. This is reinforced through their approval of the annual budget.
• Decisions from the Board are filtered down through ExCom, whose membership includes all the statutory directors for the two largest operating businesses, Pinnacle Housing Ltd and Pinnacle FM Ltd.
• Group companies where Pinnacle Group does not have 100% ownership operate their own statutory boards whose makeup reflects the relevant shareholdings in those businesses, and decision making reflects the shareholder agreements in place.