Governance

Last reviewed on 23 September 2025

The Group is committed to maintaining high standards of corporate governance. The Board recognises the importance of good corporate governance under AIM Rule 50 and is accountable to the Company’s shareholders and stakeholders for its adoption throughout the Group. To facilitate this, we have adopted the ten high level principles in the Quoted Companies Alliance Corporate Governance Code 2023 (QCA Code) as a baseline, and we highlight areas where we are not yet aligned, along with our plans to address these gaps, or the reason why the Board believe they are not currently appropriate.

1. Establish a purpose, strategy and business model which promotes long-term value for shareholders

The Board has a core strategy to buy and build underperforming engineering companies in niche markets – ie companies operating in highly regulated markets; a strategy we call Pinpoint-Invest-Exit (“PIE”). This is regularly reviewed to ensure it remains aligned with market opportunities and shareholder interests. By focusing on sectors where we see consolidation potential and leveraging our proven PIE model, creating value through operational excellence, we aim to achieve resilient growth and long-term value for investors as set out within the Strategic Report in the latest Annual Report.

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

Culture

The Group fosters a strong ethical culture based upon its Code of Ethics and the Group values: Integrity, Quality and Agility. The Group’s reputation is built on our values, the values of our employees, and our collective commitment to acting at all times with integrity. By promoting transparency, trust and accountability throughout the organisation, we believe our culture supports our corporate purpose and long-term success.

We maintain a Code of Ethics and conduct regular communications to remind employees of our expected standards of behaviour. Part of the work of the Audit & Risk Committee involves reviewing the Group Whistle-Blowing Policy, by which employees of the Group may, in confidence, raise concerns about possible financial or other improprieties.

Compliance with laws

The Group has systems in place designed to ensure compliance with all applicable laws and regulations and conformity with all relevant codes of business practice.

Compliance with the Bribery Act 2010 involves an Anti-Corruption Policy and a Group Whistle-blowing Policy. Training is given to all appropriate employees through the use of online tools, to ensure that there is full understanding of the Bribery Act 2010 and awareness of the consequences of not adhering to Group policies.

The Group has taken the appropriate steps to comply with the provisions of the Market Abuse Regulation and the Modern Slavery Act. The Group has also taken appropriate steps to comply with the General Data Protection Regulation (GDPR) and has appointed a Data Protection Officer, who is responsible for managing information governance and implementing the requirements of GDPR.

The Group has a proactive approach to Safety, Health and the Environment and is committed to the highest practicable standards of safety and health management and the minimisation of adverse environmental impacts.

The Board ensures that Health and Safety issues for employees, customers and the public are of foremost concern in all Group activities. The Group Chief Executive, supported by external advice, is charged with overall responsibility. The Group encourages both internal and external training through a formal network of full-time officers and Health and Safety nominated “champions” at all levels. Statistical analysis is used to highlight any areas where additional training or improved working practices would be beneficial, and positive action is promptly implemented. All divisions have formulated safety management systems.

Insider trading

The Board has appropriate policies and procedures in place to guard against insider trading by employees including Directors.  Appropriate clearances are required in order that trades can be made and all applicable employees are made aware of relevant close periods prior to financial results being announced

3. Seek to understand and meet shareholder needs and expectations

The Board attaches a high level of importance to maintaining good relationships with shareholders, whether they are institutions or private investors and all other stakeholders, representing them and promoting their interests, as well as being accountable to them for the performance and activities of the Group. The Board believes it is important to engage with its shareholders and aims to do this through presentations, investor roadshows, conference calls, face-to-face meetings and the Annual General Meeting. Following the announcement of the Group’s half-year and year-end results, presentations are made to analysts and major shareholders to update them on progress and invite them to ask questions.

The Board is updated on the latest shareholder information by the receipt of shareholder register movements, analyst reports and feedback from the Group’s brokers, following investor road shows after half-year and year-end results.

The Board encourages all Directors to attend the Annual General Meeting as an opportunity to communicate directly with investors and actively encourages participative dialogue.

The Company provides contact details on its investor relations page on the Company’s corporate website.

Regular contact helps the Board understand shareholder priorities and concerns, ensuring that these are considered in our decision-making. By being responsive and transparent with our investors, we aim to build long-term supportive relationships.

4. Take into account wider stakeholder interests, including social responsibilities and environmental responsibilities, and their implications for long-term success

The Board recognise that our customers, suppliers and employees are crucial to the Group’s success. The Group’s responsibilities, policies and controls on Health, Safety and Environment (HSE) and Social Responsibility including SECR are set in the Strategic Report in the latest Annual Report.

We have established long-term relationships with key customers and suppliers. We encourage feedback from our employees to improve the culture and working environment of the Company and hold regular meetings to keep them informed on matters affecting them directly and on financial and broader economic factors affecting the Group. There are specific information channels in respect of health & safety matters. The Group has a proactive and rigorous approach to health, safety and the environment and is committed to the highest practicable standards of safety and health management and the minimisation of adverse environmental impacts.

By continuing to engage with all stakeholder groups (including local communities) and by developing our ESG initiatives, the Board is committed to balancing stakeholder needs with the Company’s long-term growth objectives.

5. Embed effective risk management, internal control and assurance activities, considering both opportunities and threats, throughout the organisation

The Board’s approach to risk is intended to protect the interests of our shareholders and other stakeholders whilst allowing the business to develop. Our risk appetite depends on the nature of an individual risk and it is considered in Board discussions and also as part of our risk review process in the Audit Committee. From time to time, we obtain advice from third party experts, in a cost effective manner, to complement in-house knowledge.

The long-term success of the Group relies, in part, on managing the risks to our business. Whilst the Group has risk management policies and practices in place, which address and monitor risk, we seek to improve those practices each year. The Chief Financial Officer is responsible for risk management on behalf of the Board and the Audit Committee reviews the risk register on a regular basis. Ultimately, our aim is to ensure that risk management is embedded within the core processes of our business units.

The Group uses a risk register to help coordinate its risk management process. The risk register identifies the key business risks and documents the policies and practices in place to mitigate those risks.

We classify the principal risks to the business into three groups, namely, strategic risk, operational risk and financial risk. The principal risks identified by the Directors under these groups are set out in the Strategic Report in the latest Annual Report. The risks considered during the Group-wide risk management process cover a wider range of issues than the key risks.

The Board, through the Audit Committee, reviews the operation and effectiveness of the systems of internal control throughout the accounting year and the period to the date of approval of the financial statements, although it should be understood that such systems are designed to provide reasonable, but not absolute assurance against material misstatement or loss. The Group’s system of controls includes:

• A comprehensive budgeting system with annual budgets approved by the Directors. Monthly monitoring of actual results against budget and regular review of variances.
• Close involvement of Directors, who approve all significant transactions.
• Internal management rules which include financial and operating control procedures for all management of the Group.
• Identification and appraisal by the Board of the major risks affecting the business and the financial controls.
• Bank facilities and other treasury functions, which are monitored and policy changes approved by the Board.

The Board has considered and reassesses periodically the need for an internal audit function and concluded that this would not be appropriate at present given the size and available resources of the Group.

6. Establish and maintain the board as a well-functioning, balanced team led by the chair

The Board of Avingtrans plc comprises of a Non-executive Chairman, two Executive Directors and three Non-executive Directors. The Board is chaired by R S McDowell and assisted by the Senior Independent Non-executive Director, L J Thomas, who have primary responsibility for running the Board. The Board and Nominations Committee regularly review the skills and industry experience of the combined Directors to ensure relevant experience/oversight of operating in a public company environment and specialist understanding of our key markets, creating a well-balanced leadership team, whilst ensuring that no single individual, or small group can dominate the Board’s decision making.

S McQuillan, has executive responsibilities for the remaining operations, results and strategic development of the Group. S M King is Chief Financial Officer and Company Secretary.

The Non-executive Directors are considered to be independent of management and from any business relationship which could materially interfere with their independent judgement. The Board believe that independence should not be exclusively determined by tenure or shareholding, and that these should be balanced with Shareholder alignment and experience, these matters are reviewed by the Board and its Advisors. However, it ensures that a minimum of two NED’s would be determined independent if the independence indicators were tenure, shareholding and commercial relationships. The Senior Independent Non-executive Director is available to shareholders if they have concerns.

The Board has a schedule of matters which are specifically reserved for its decision and meets regularly with no less than ten such meetings held in each calendar year rotating locations around different business units, enabling the Non-executives to engage with operations and employees first-hand. There is a formal schedule of matters specifically reserved to the Board for its decision to enable it to manage overall control of the Group’s affairs. Management has an obligation to provide the Board with appropriate and timely information to enable it to discharge its duties. The Chairman ensures that all Directors are properly briefed on issues arising at Board meetings.

The Nominations Committee is responsible for monitoring and reviewing the membership and composition of the Board, including the decision to recommend the appointment, or to re-appoint a director. It remains mindful of the evolving expectations around Board composition and diversity. At present, our Board’s diversity (in terms of gender) is limited, reflecting the historical makeup of the engineering industry. The Nominations Committee keeps Board succession and composition under regular review, to ensure a well-balanced leadership team.

The Company’s Articles of Association ensure Directors retire at the third Annual General Meeting after the Annual General Meeting at which they were elected and may, if eligible, offer themselves for re-election.

R S McDowell chairs the Nominations Committee, L J Thomas chairs the Audit Committee, J S Clarke chairs the Remuneration Committee and J S Reedman chairs the ESG Committee. The Non-executive Directors and the Chairman are members of all the above committees.

During the 2025 financial year, board attendance was as follows:

	Meetings held	Meetings attended	Attendance %
Roger McDowell	12	12	100
John Clarke	12	11	92
Les Thomas	12	12	100
Jo Reedman	12	12	100
Steve McQuillan	12	12	100
Stephen King	12	12	100

7. Maintain governance structures and ensure that, individually and collectively, directors have the necessary up-to-date experience, skills and capabilities

The Board regularly reviews its configuration to ensure it has the appropriate collective skills, experience and oversight capability in key markets and governance. Where necessary it will make adjustments or seek additional expertise as needed. For instance, if the Group enters new markets or faces new challenges, we will consider appointing directors or advisors with relevant experience, strengthening our ability to leverage shareholder value via the PIE strategy.

In addition to the full Board, we have four principal Board committees, Audit & Risk, Remuneration, Nominations, and ESG, each chaired by an independent Non-Executive Director. These committees operate under formal terms of reference and are composed mainly of Non-Executive Directors, which ensures robust independent oversight of key governance areas (such as financial reporting, executive remuneration, Board appointments, and sustainability strategy)

Remuneration Committee

The Remuneration Committee is responsible for making recommendations to the Board on the Group’s framework of executive remuneration and its cost. The Committee determines the contract terms, remuneration and other benefits for each of the Executive Directors, including performance-related bonus schemes, pension rights and compensation payments. The Board itself determines the remuneration of the Non-Executive Directors.

Audit & Risk Committee

The Audit & Risk Committee comprises the Non-Executive Directors. The Committee meetings are also attended, by invitation, by the Chief Executive and Chief Financial Officer. The Committee meets no less than two times annually.

The Committee is responsible for reviewing a wide range of financial reporting and related matters including the annual accounts before their submission to the Board. The Committee is required to focus in particular on critical accounting policies and practices adopted by the Group, and any significant areas of judgment that materially impact reported results. It is also responsible for monitoring the internal controls that are operated by management to ensure the integrity of the information reported to the shareholders.

The Committee provides a forum for reporting by the Group’s external auditors, and advises the Group Board on the appointment, independence and objectivity of the external auditors and on their remuneration both for statutory audit and non-audit work. It also discusses the nature, scope and timing of the statutory audit with the external auditors.

Nominations Committee

The Nominations Committee is responsible for reviewing the structure, size and composition required of the Board when compared to its current position, and it makes recommendations to the Board with regard to any changes. It considers and reviews annually succession planning for Board Directors and NED’s, taking into account the challenges and opportunities facing the Company. It identifies and nominates for Board approval suitable candidates to fill Board vacancies as and when they arise, and it keeps under review both the Executive and Non-Executive leadership needs of the Company, to enable the Company to compete effectively in the marketplace and to ensure it has the skills and oversight capabilities in our key markets.

The Nominations Committee also has responsibility for overseeing the re-election by shareholders of any director under the ‘retirement by rotation’ provisions in the Company’s articles of .

Environmental, Social and Governance (ESG) Committee

The ESG Committee plays a crucial role in supporting the Board, by helping to define and regularly review Avingtrans’ ESG (Environmental, Social, and Governance) strategy. It oversees the setting of objectives and key performance indicators for ESG matters, ensuring that essential metrics are monitored and reported. The committee is responsible for developing and regularly reviewing policies, practices, targets, and initiatives related to ESG activities, ensuring these are effective, up to date, and aligned with industry best practices.

Additionally, the committee provides oversight of the management of ESG matters, ensuring compliance with relevant legal and regulatory requirements, corporate governance principles, and industry standards. It reports on ESG-related issues to the Board and, where appropriate, makes recommendations for improvement. The committee also has a duty to communicate with the Company’s shareholders regarding its activities and remit, ensuring transparency in its actions.

Executive Management Committee

The Board is supported by Executives, who meet at least quarterly to review performance and governance for the Group and regularly perform site visits. A well-defined delegation of authority matrix enables the divisional management teams to operate with a degree of autonomy at a business unit level.

Evolution of governance framework

The Board continuously monitors its composition and governance framework, taking into account effectiveness and the Company’s plans for future growth.

All new Directors receive a full, formal and tailored induction on joining the Board, including meetings with senior management and advisers and visits to the Group’s operational locations. Training requirements are reviewed periodically in light of changing demands, and appropriate refreshers scheduled. We plan to formalize our Board skills matrix and continue periodic reviews of committee effectiveness to monitor that our governance processes and director capabilities keep pace with our strategic development.

The Board calendar is planned to ensure that Directors are briefed on a wide range of topics throughout the year and meetings are rotated around business units, ensuring the Non-Executive Directors have the opportunity to visit sites and discuss aspects of the business with employees.

All Directors have access to the services of the Company Secretary and may take independent professional advice at the Group’s expense in the furtherance of their duties.

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

The Chairman reviews the Board’s annual performance and measures its effectiveness and that of its Committees. Each Board/Committee member completes an assessment, which provides numeric scoring against specific categories. Each Board/Committee member also provides recommendations for improvement of the effectiveness of the Board/Committee forming a valuable tool for continuous improvement of our governance.

The criteria for effectiveness include assessing:

• Board/Committee composition (including succession planning);
• Board/external reporting and information flows;
• Board Process, Internal Control & Risk Management;
• Board Accountability;
• Executive management effectiveness;
• Standards of Conduct.

Alongside this review each Director receives an appraisal. The Chairman conducts appraisals in respect of the Group Chief Executive and Non-Executive Directors; the Non-Executive Directors (following discussions with the other Directors) conduct the Chairman’s appraisal; and the Group Chief Executive conducts appraisals in respect of the other Executive Directors.

Presently the Board does not consider a three year cycle external evaluation would be appropriate, due to the size of the Group.

9. Establish a remuneration policy which is supportive of long-term value creation and the company’s purpose, strategy and culture

Avingtrans’s remuneration policy is designed to support long-term value creation and to align the interests of senior executives with those of our shareholders.

The Remuneration Committee consists entirely of independent Non-Executive Directors, oversees executive compensation and makes recommendations to the Board on the framework of pay and incentive. The Committee seeks to ensure that remuneration arrangements are fair, competitive, and linked to performance, such that management is rewarded for delivering sustained growth in line with our strategic goals. Further details on the composition and work of the Remuneration Committee are set out in the Remuneration Report in the latest Annual Report.

Key elements of executive remuneration include a balance of fixed salary, performance-related annual bonuses, and longer-term incentives (share options), which aim to drive consistent improvement in the Company’s performance and shareholder value. Non-Executive Directors’ fees are set separately by the Board and reflect the responsibilities of their roles.

Our incentive schemes are designed to encourage business creativity (consistent with the PIE strategy) but within a framework that promotes prudent risk management and good governance. The Board believe the current policy has been effective in motivating management and delivering sustainable results for shareholders, as evidenced by the Group’s performance and returns in recent years.

Our bonus and Share Option metrics have historically been focused primarily on financial performance, with further bonus metrics for personal objectives and value generation, for example bonus alignment with the PIE strategy, which is payable only on shareholder returns following the disposal of a business. In the forthcoming year the Remuneration Committee will undertake a review of our remuneration framework in light of the updated QCA Code guidance, to evaluate whether any adjustments are needed to further align with strategic achievement and responsible business practices, eg ESG. We will continue to engage with major shareholders on pay matters and take their feedback into account.

Due to the size of the Group the Board presently does not consider a ‘no advisory’ shareholder vote at the AGM on the Remuneration Report to be appropriate.

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

The corporate governance principles are set out in this statement governance above and the performance of the Company is set out in the Strategic Report in the latest Annual Report.

The Board maintains a transparent and active dialogue with both its institutional and private investors and stakeholders through the Annual Report, full-year and half-year announcements, the Annual General Meeting, General Meetings and one-to-one meetings with larger existing, or potential new shareholders. In addition, we seek to keep smaller shareholders better informed by reaching out through appropriate communications channels (eg Vox Markets).

We also ensure that relevant stakeholder groups (such as employees, customers, and suppliers) are kept informed of significant Company developments through appropriate communication channels, as we recognise the importance of broader stakeholder engagement in line with Section 172 of the Companies Act.