STATEMENT FROM GENTOO CHAIRMAN

In a statement Gentoo chairman Mr Loraine said: “The Gentoo Group Board recently identified a legacy issue concerning a governance matter that we immediately self-reported to our regulator the Homes and Communities Agency. “This matter related to the governance of executive remuneration under previous leadership and in particular, a severance payment made to a senior staff member. “As a result, the regulator informed us that our governance grading was under review and has now subsequently downgraded Gentoo to G3. “We are bitterly disappointed that this flaw in past governance practices has led to this downgrade. “Our historical checks and internal controls in this area have been found to be inadequate. “We are now seeking further legal advice about the possibility of obtaining redress or recovery. “Such payments are not in keeping with the Group’s ethics as a responsible business, and it will not happen again. “We intend to commission further external advice targeted on any weaknesses in our governance structures, and in particular to look at delegations and authorisations. “Our business plans continue to deliver excellent services to our customers and we are developing approximately 200 new homes every year, under our subsidiary Gentoo Homes. “The Group remains financially strong and our financial viability grading remains unchanged. “I’d like to stress that this is a governance matter and for our customers in Sunderland, our day-to-day service delivery remains unchanged. “For our staff and customers it is very much business as usual. “We fully anticipate a speedy recovery from this setback and are working hard with the HCA to ensure a return to an improved governance grading as soon as possible. “I have every confidence in our ability to deliver positive and effective, lasting change.”