INTRODUCTION

This Statement sets out the key corporate governance principles adopted by the Directors in governing Bazoco and reflects the corporate governance policies and procedures which applied during the financial period ending 31 December. We continue to review and enhance our corporate governance policies and procedures.

BAZOCO’S APPROACH TO CORPORATE GOVERNANCE

Corporate governance is the framework of rules, systems, processes and relationships by which the company’s business is conducted, directed and controlled. The Board has the responsibility for ensuring Bazoco is properly managed so as to protect and enhance shareholders’ interests in a manner that is consistent with the company’s responsibility to meet its obligations to all stakeholders. For this reason, the Board is committed to applying appropriate standards of corporate governance across the organisation.

GOVERNANCE PRINCIPLE 1: Lay Solid Foundations for Management & Oversight

The Role of the Board

The company’s Constitution vests management and control of the business and the company’s affairs in the Board. During the year the Board considered the functions reserved for the Board. In summary the Board’s accountabilities and responsibilities include:

• Providing a leadership role to the company
• Representing shareholders and effectively translating the market’s needs and aspirations into future direction.
• Balancing the diversity of market views to develop an overall future strategy
• Providing overall stewardship of the organisation and ensuring that sound financial management and accountability are achieved in relation to market finances.
• Reviewing and approving policies, goals, targets and budgets
• Monitoring business performance and ensuring that appropriate mechanisms are in place to deal with the prompt handling of concerns.
• Having an awareness of the statutory obligations imposed on Board members and ensuring there are appropriate standards of corporate governance.
• Practicing and exhibiting the company’s values (which include a customer focus, shareholder value, communication & co-operation, compliance with the code of conduct and internal controls, encouraging leadership & innovation, management by fact, providing a safe & healthy workplace and teamwork)
• Responsibility for day to day management and administration of the company is delegated by the Board to the COO.

Board Committees

To assist it in carrying out its responsibilities the Board has in place several committees and special groups including the:

• Audit and Governance Committee
• Finance Committee
• Master Planning Sub Committee
• Operations Committee

All of these bodies have written charters and their purpose is to make recommendations to the Board. Copies of committee minutes are circulated to all Board members and each committee chairman reports findings together with any recommendations to the full Board at its next meeting.

GOVERNANCE PRINCIPLE 2: STRUCTURE THE BOARD TO ADD VALUE

Board Expertise, Size and Composition

The Board has a broad range of relevant skills, experience and expertise to meet its objectives. The Board’s structure is determined by BAZOCO’s Constitution. While the Constitution allows for executive directors to be appointed, the Board has determined that a Board comprised solely of non-executive directors provides for the most robust corporate governance approach. The COO attends all Board and Committee meetings.

Nomination and Appointment of New Directors

Directors are appointed for a three year term. The Board as a whole undertakes the functions of a Nomination Committee including succession planning and the appointment and re-election of Directors. It assesses the eligibility of all nominations and also identifies people with relevant skills and expertise for nomination as independent directors. All new Directors are provided with an induction kit containing a range of relevant information.

Board Access to Records and Advice

All Directors receive regular detailed financial and operational reports from management as part of their meeting materials to assist them carry out their duties. In addition Directors are provided with unrestricted access to company records during business hours. Directors are permitted to take copies provided the access assists them discharge their duties as a Director. Any request from a Director for independent professional advice is considered by the whole Board on a case by case basis.

GOVERNANCE PRINCIPLE 3: PROMOTE ETHICAL AND RESPONSIBLE DECISION MAKING

Code of Conduct

The Board acknowledges its responsibility to set the ethical tone and standards of the company. Accordingly it has clarified the standards of ethical and professional behaviour required of Directors and employees through the establishment of a Code of Conduct.

GOVERNANCE PRINCIPLE 4: Independently Verify and Safeguard Integrity in Financial Reporting

Audit and Corporate Governance Committee

The company has an external auditor. Our current Auditors will be invited to tender for Audit services in the future.

GOVERNANCE PRINCIPLE 5: make timely and balanced disclosure of all material matters

The Board aims to keep stakeholders informed about the company’s state of affairs and progress through the distribution of the Annual Report.

GOVERNANCE PRINCIPLE 6: RECOGNIZE AND MANAGE RISK

Policies for the Oversight and Management of Risk

The Board acknowledges that risk management is a core component of director and executive duties and an essential element of good governance. The company utilities accounting controls and reconciliations, segregation of duties, documented policies and procedures, annual budgeting as well as physical security over company assets as part of its internal control environment. The review of internal controls is undertaken by the external auditor. In addition the Audit and Governance Committee expanded its terms of reference to include risk. The Committee assists the Board oversee the risk management framework, including the determination of the scope and the maintenance of internal control procedures.

Material Business Risks

Material business risks are those with significant areas of uncertainty that could have an impact on company objectives. BAZOCO’s property insurance underwriters undertake regular risk reviews of the company’s market operations. The Board recognizes that modern organizations face a variety of risks including strategic, reputation, compliance, and technological, environmental, financial as well as operational risks. It is anticipated that a wide ranging risk review will be undertaken in the future to provide the Board with a current assessment of the major risks facing the company.