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Corporate Governance Statement

The Board of H&T Group PLC (“H&T” or the “Company” or the “Group”) is responsible for the Group’s corporate governance policies and recognises the importance of high standards of integrity. H&T has adopted the Quoted Companies Alliance Code for Small & Mid-sized Quoted Companies 2018 (the “QCA Code”). This statement sets out how the Company complies with the 10 principles of the QCA Code now.

We will provide annual updates on our compliance with the QCA Code. 

Annual Report and Accounts Disclosures

The Board recognises that QCA Code compliance will require additional disclosures to be incorporated into the company’s 2018 annual report and accounts which will be published in 2019. Historic copies of the Group’s Annual Report and Accounts are available here https://handt.co.uk/about/investor-relations/reports/annual-reports.

 

  1. STRATEGY & BUSINESS MODEL

    The Board is responsible for the delivery of the Group’s long-term strategic objectives. Our high-level strategy is that “H&T will be the premier provider of alternative credit in the UK through a range of services that help our customers.”

    We are developing our capabilities to address a changing market and customer needs We are focussed on maximising the potential from our core services while investing in the development of new products and channels.

    Our network of stores supports this development. This real-world presence supported by an effective online and mobile proposition creates an important distinction between H&T and a purely online business.

         

  1. UNDERSTANDING AND MEETING SHAREHOLDER NEEDS AND EXPECTATIONS 

    The Board is responsible to the shareholders for the proper management of the Group. A Directors’ responsibilities statement in respect of the financial statements is published in the Annual Report and Accounts.

    The Board meets regularly during the year. To enable the Board to discharge its duties, all directors receive appropriate and timely information. Briefing papers are distributed to all directors in advance of the Board meetings. There is a formal schedule of matters reserved to the Board which include the determination of strategy, approval of new stores and acquisitions, approval of budget and major capital expenditure.

    Feedback from investors is obtained through direct interaction between the CEO and Finance Director at meetings following its full year and half year results, and certain other ad-hoc meetings that take place throughout the year. The voting record at the Company’s general meetings is monitored and we are pleased that all resolutions have been passed by shareholders. There is also regular investor dialogue through the medium of the Company’s corporate broker, Numis Securities, and the Company seeks to stay abreast of shareholder expectations and reactions through its regular investor roadshows and update meetings.

    More information on those responsible for shareholder liaison and contact information can be found at https://handt.co.uk/about/investor-relations.

 

  1. TAKING INTO ACCOUNT WIDER STAKEHOLDER & SOCIAL RESPONSIBILITIES AND THEIR IMPLICATIONS FOR LONG-TERM SUCCESS 

    At H&T we believe that engaging with our stakeholders strengthens our relationships and helps us deliver our strategic goals whilst maintaining our values and delivering returns for all our stakeholders.

    The fair treatment of our customers, who’s interests are at the centre of all decisions and actions we carry out, is core to our long-term success.  We have developed a diverse range of products to meet as best we can the unique needs of each customer.  We offer a transparent, efficient and professional service and constantly review our service to identify areas for improvement. 

    Aside from our shareholders, suppliers and customers we believe that our employees are our single greatest asset, and accordingly we endeavour to ensure our workforce are highly trained, motivated and feel valued.

    Your Voice is a council-style meeting with employees from a variety of positions within the Group, and geographically from around the country. These provide a forum to discuss suggestions and ideas with senior management. The meetings are very productive as they allow direct feedback on any issues that arise in our stores or the wider organisation.

    The Group has an innovations committee which reviews ideas and suggestions for changes to products, policies and procedures from its employees.

    We strive to develop and retain our staff. An important part of this is to provide opportunities within the Group where possible. We advertise positions weekly to every employee in order to help them to apply for these positions; where appropriate we use the management and star development programmes to help individuals progress. 

    Responsible lending

    The Group recognises that most people will require financial help at some point in their lives and we believe that everyone should have a choice in how to meet that need. As a responsible lender, we will do our utmost to try to help, whilst at the same time ensuring our customers do not become unduly burdened.

    It is our priority to carry out a number of stringent checks on all customers prior to loan approval.

    For Pawnbroking Loans, this includes identity confirmation and valuation of the asset that you are using to secure the loan. For Personal Loans this will include identity confirmation, credit checks, Income confirmation and affordability assessments. More information can be found at https://handt.co.uk/about/responsible-lending

    Modern slavery 

    The Group is opposed to slavery and human trafficking. The Group will not knowingly support or do business with any organisation involved in slavery or human trafficking. We have established policies to ensure that we are conducting business in an ethical manner and address the risk of Slavery and Human Trafficking in our supply chain. These include; Recruitment Policy, Purchasing Policy and internal Whistle-Blowing Policy. Our full statement can be found at  https://handt.co.uk/about/anti-slavery-and-human-trafficking-statement-for-financial-year-2017.

    In the community

    We encourage community engagement and support a variety of local and national charities through events, fun days and fundraising. We have raised thousands of pounds and collected thousands of gifts for a number of organisations, including:
  • Cancer Research UK
  • Beatson Cancer Charity
  • The Children’s Trust
  • Macmillan Cancer Support

For more details of our Corporate and Social Responsibility see https://handt.co.uk/about/investor-relations/corporate-social-responsibility.

 

  1. EMBEDDING EFFECTIVE RISK MANAGEMENT

    The Board has established Audit and Risk Committees which have the responsibility of managing the Company’s internal control environment and risk framework. The Risk Committee comprises four independent non-executive directors and is responsible for reviewing and reporting to the Board on:
  • the Group’s risk appetite and framework (the extent and categories of risk which the Board regards as acceptable for the Company to bear);
  • the Group’s risk management and internal controls framework (it’s principles, policies, methodologies, systems, processes, procedures and people); and
  • in respect of the processes and procedures, the arrangements for the identification, assessment, monitoring management and oversight of risk.


The Board owns the Group’s Risk Appetite Statement which sets out the Group’s attitude to risk and the ranges and limits of acceptable risk taking. The Risk Committee establishes the high-level qualitative Risk Appetite Statement for the Group, the quantitative Risk Appetite Statement and the Key Risk Indicators used to measure risk exposure. The statement is subject to annual review by the Risk Committee and the Board. The Risk Committee is responsible for the Risk Framework in place for identification of enterprise level risks (top down approach) and identifying risks that occur in the day to day processes and operations of the business (bottom up approach).

  1. MAINTAINING A BALANCED AND WELL-FUNCTIONING BOARD 

    The Board comprises the Non-Executive Chairman, two Executive Directors and three Non-Executive Directors. During the year Malcolm Berryman retired from the board and stepped down as the Chair of the Risk Committee (14th August 2018) with Elaine Draper taking over the chair. Mark Smith and Elaine Draper were appointed as a Non-Executive Directors (1st May 2018).

    The Board considers, after careful review, that the Non-Executive Directors bring sufficient independent judgement to bear. The Board has satisfied itself that it has a suitable balance between independent and executive directors, to enable it to discharge its duties and responsibilities effectively. All Directors use their independent judgement and to challenge all matters, whether strategic or operational. The Chairman holds regular update meetings with each Director to ensure they are performing as they are required. The Board has a Senior Independent Director.

    The Company reports the directors’ attendance at board and committee meetings during each financial year in its annual reports.

    The directors’ attendance at board and committee meetings during the financial year 2017:

Name

Position

Board

Audit

Remuneration

Risk

Nominations

Considered independent

Peter McNamara

Chair

10/10

3/3

4/4

3/3

2/2

Yes

 

Malcolm Berryman

NED

10/10

3/3

4/4

3/3

2/2

Yes

 

James Thornton

NED

10/10

3/3

4/4

3/3

2/2

Yes

 

John Nichols

CEO

10/10

3/3

3/3

3/3

N/A

N/A

Stephen Fenerty

Finance Director

10/10

3/3

3/3

3/3

N/A

N/A

 

  1. HAVING APPROPRIATE EXPERIENCE, SKILLS AND CAPABILITIES ON THE BOARD 

    John G Nichols
    Chief Executive, 68
    Appointed: 08/09/2004
    Committee Membership: None

    Profile: After an early career in the RAF, John entered the leisure industry with the Rank Organisation where he held several senior executive positions. John joined H&T as managing director in 1997 and subsequently became chief executive. He has been instrumental in developing and implementing the business strategy and delivering growth in stores, revenues and profitability.

    Current External appointments: Director, The National Pawnbrokers Association

    Stephen A Fenerty
    Finance Director, 46
    Appointed: 28/02/2005
    Committees: None

    Profile: Stephen trained with KPMG’s banking and finance team and since then he has pursued a variety of management roles in the alternative credit sector. Stephen joined H&T in March 2005 as commercial director before taking on the role as finance director in December 2013. Stephen has direct responsibility for finance, IT, unsecured lending, acquisitions, compliance and credit risk. He is a member of the Institute of Chartered Accountants in England and Wales.

    External appointments: None

    Peter D McNamara
    Non-Executive Chairman, 67
    Appointed: 25/04/2006
    Committees: Audit Committee, Nominations Committee (Chair), Risk Committee, Remuneration Committee

    Profile: Peter spent the majority of his career with Lloyds Bank plc, as chief manager for strategic planning, mergers and acquisitions, and then as the managing director of personal banking. He subsequently served as Group managing director of the Alliance & Leicester plc and chief executive of Wesleyan Assurance Society, a mutual life insurance business. In 2002 he left to become chairman and subsequently executive chairman of Moneybox plc, the leading ATM deployer operating in the UK, Germany and the Netherlands, which he led to flotation on AIM. In 2006 he set up a new ATM business, Notemachine Ltd and is the CEO.

    External appointments: Director and shareholder of the Corsair Mint Limited Group of companies, Partner of KRF Farms LLP.

    James F Thornton
    Non-Executive Director, 61
    Appointed: 30/11/2012
    Committees: Senior Independent Director, Audit Committee (Chair), Nominations Committee, Risk Committee, Remuneration Committee

    Profile: James has lengthy experience in UK financial services organisations, initially at Morgan Stanley and most recently as a director at Hannam & Partners, from 2009-2015. He was head of finance for financial services at BAT Industries, Group deputy finance director and UK finance and corporate governance director at Old Mutual plc and head of foreign exchange at IFX plc. He was also finance director of AIM listed Global Health Partner plc. James is a fellow of the Institute of Chartered Accountants in England and Wales and an MBA.

    External appointments: Director at Dunster 22 Limited

    Elaine F Draper
    Non-Executive Director, 55
    Appointed: 01/05/2018
    Committees: Audit Committee, Nominations Committee, Risk Committee (Chair), Remuneration Committee

    Profile: Elaine sat on the National Executive Committee of LINK between 2008 and 2011, Bank of England’s Strategic Cash Group between 2009 and 2011, and an Advisory Board Member 2016/17 for Centre for Ageing Better – Inequalities in later life review.  From 2015 to August 2017, Elaine was a NED of the £35m UK Government funded Credit Union Expansion programme, looking at the ways in which Credit Unions could expand their services. Through her work at Barclays latterly leading the vulnerable customer agenda and her NED role with Cornerstone Mutual, Elaine has a particular interest in supporting under-served/marginalised customers.

    External appointments: None.

    Mark J Smith
    Non-Executive Director, 60
    Appointed: 01/05/2018
    Committees: Audit Committee, Nominations Committee, Risk Committee, Remuneration Committee (Chair)

    Profile: Mark is an experienced business leader who has operated at Board and Executive Committee level for over 25 years in major UK banks. He is currently an Associate at KPMG LLP and since May 2017 has been acting in an advisory/NED capacity and chairing the risk committee for challenger bank GKBK Ltd. Mark is a fellow of the Chartered Institute of Bankers, has a degree in Business Studies and also an MBA.

    External appointments: Director at GKBK Limited.

    Independent advice

    All Directors are able to take independent professional advice in the furtherance of their duties, if necessary, at the Company’s expense. In addition, the Directors have direct access to the advice and services of the Company Secretary and Finance Director.  It is the intention of the Board to separate the role of Company secretary from Executive Director.

 

  1. EVALUATING BOARD PERFORMANCE

    The Board recognises that performance evaluation is crucial for effective governance and the long-term success of the company. Following internal reviews and succession planning discussions the Board added two new Non-Executive Directors in May 2018. These appointments strengthen the Board and support the strategic aims of the Group. A formal external review has not yet been undertaken, as part of its adoption of the QCA governance framework and the Board has agreed to establish a framework for completion of external effectiveness reviews to commence in 2019.

 

  1. ETHICAL VALUES & BEHAVIOURS

    Our corporate culture and ethical values are key to delivering the Company’s objectives and strategic goals. The Board and management team work to ensure this culture is pervasive within the Company and all of our employees share our collective values. Ensuring compliance with our processes, procedures and values is core to the company’s operation, our area managers are in our stores on a weekly basis promoting the culture and values we all stand for, our internal audit team visit our stores at least twice a year and we have a comprehensive schedule of mystery shopping. All of these together allow the Board to monitor that our ethical values and behaviours are recognised and respected.

 

  1. MAINTAINING GOVERNANCE STRUCTURES AND PROCESSES

    The Board is responsible to the shareholders for the proper management of the Group. A Directors’ responsibilities statement in respect of the financial statements is published in the Annual Report and Accounts.

    The Board meets regularly during the year. To enable the Board to discharge its duties, all Directors receive appropriate and timely information. Briefing papers are distributed to all Directors in advance of the Board meetings. There is a formal schedule of matters reserved to the Board which include the determination of strategy, approval of new stores and acquisitions, approval of budget and major capital expenditure.

    Remuneration Committee

    The Remuneration Committee comprises independent Non-Executive Directors of the Company. The members of the Committee are:

    Peter D McNamara
    James F Thornton
    Elaine F Draper
    Mark J Smith (Chair)

    The Committee meets at least twice in each year and at such other times as the Chairman of the Committee sees fit. The Chairman of the Committee is appointed by the Board on the recommendation of the Nomination Committee. The quorum for the Committee is two. The duties of the Committee are to:
  • determine and agree with the Board the framework or broad policy for the remuneration of the Chairman, Executive Directors and any employees that the Board delegates to it;
  • within the terms of the agreed policy, determine individual remuneration packages including bonuses, incentive payments, share options, pension arrangements and any other benefits;
  • determine the contractual terms on termination and individual termination payments, ensuring that the duty of the individual to mitigate loss is fully recognised;
  • in determining individual packages and arrangements, give due regard to the comments and recommendations of the Code;
  • be told of and be given the chance to advise on any major changes in employee benefit structures in the Company;
  • recommend and monitor the level and structure of remuneration for senior managers below Board level as determined;
  • agree the policy for authorising claims for expenses from the Chief Executive and from the Chairman of the Board; and
  • recommend an annual report for the Board to put to Shareholders on executive remuneration compliant with relevant legal and regulatory provisions.


The Committee is authorised by the Board to:

  • seek any information it requires from any employee of the Group in order to perform its duties;
  • be responsible for establishing the selection criteria and then for selecting, appointing and setting the terms of reference for any remuneration consultants providing advice to the Committee, at the Group’s expense; and
  • obtain, at the Group’s expense, outside legal or other professional advice where necessary in the course of its activities.



Audit Committee
The Audit Committee comprises independent Non-Executive Directors of the Company. The members of the Committee are:

James F Thornton (Chair)
Peter D McNamara
Elaine F Draper
Mark J Smith

The Audit Committee reviews each year the arrangements for safeguarding auditor objectivity and independence. The Audit Committee reviews the scope, results and cost-effectiveness of internal and external audit, and has delegated power from the Board to exercise the power from shareholders to agree fees for external auditors. The Audit Committee is responsible for satisfying itself on the independence and objectivity of external auditors and the independence of internal auditors.

As directed by the Audit Committee, the principal function of the Group’s internal audit team is to verify the physical presence and control procedures surrounding the cash, pledge and inventory balances within stores and the Group’s Jewellery Centre. The internal audit team report to the Audit, Security and Compliance executive meetings and the Audit Committee reviews those minutes.

The Committee reviews the operation of internal controls and reports to the Board on the annual review of the internal control and risk management.

Nomination Committee

The Nomination Committee comprises independent Non-Executive Directors of the Company.

The members of the Committee are:

Peter D McNamara (Chair)
James F Thornton
Elaine F Draper
Mark J Smith

The function of the Nomination Committee is to provide a formal, rigorous and transparent procedure for the appointment of new Directors to the Board. In carrying out its duties, the Nomination Committee is primarily responsible for:

  • identifying and nominating candidates to fill Board vacancies;
  • evaluating the structure and composition of the Board with regard to the balance of skills, knowledge and experience and making recommendations accordingly;
  • reviewing the time requirements of Non-Executive Directors;
  • giving full consideration to succession planning; and
  • reviewing the leadership of the Group.

Risk Committee

The Risk Committee comprises independent Non-Executive Directors of the Company. The members of the Committee are:

Peter D McNamara
James F Thornton
Elaine F Draper (Chair)
Mark J Smith

The Risk Committee is responsible for reviewing and reporting to the Board on:

  • the Group’s risk appetite (the extent and categories of risk which the Board regards as acceptable for the Company to bear);
  • the Group’s risk management and internal controls framework (it’s principles, policies, methodologies, systems, processes, procedures and people); and
  • in respect of the processes and procedures, the arrangements for the identification, assessment, monitoring management and oversight of risk.
  • The Risk Committee reviews the regular reports of the Head of Audit & Compliance to oversee the operational management of the compliance framework.
  • The Committee should make recommendations to the Board in respect of all risks faced by the Company outside of its declared risk appetite.
  1. COMMUNICATING WITH SHAREHOLDERS AND OTHER RELEVANT STAKEHOLDERS

    The Board recognises the importance of effective communication with its shareholders. Feedback from investors is obtained through direct interaction between the CEO and Finance Director at meetings following its full year and half year results, and certain other ad-hoc meetings that take place throughout the year. There is regular dialogue through the medium of the Company’s corporate broker, Numis Securities, and the Company seeks to stay abreast of shareholder expectations and reactions through its regular investor roadshows and update meetings.

    More information on those responsible for shareholder liaison and contact information can be found at https://handt.co.uk/about/investor-relations.

September 2018