Corporate Governance

The Board has well-established Audit and Risk Committees, which have the responsibility of managing the Group’s internal control environment and risk framework.

The internal control environment is constructed on the three lines model, which is widely used to describe how large corporate entities manage the risks and uncertainties that they encounter. Development and adoption of a principles-based approach to corporate governance and risk management assists in achieving corporate objectives.

The first line comprises the revenue-generating and client-facing areas, along with all associated support functions, including Operations, Finance, Human Resources, and Information Technology. The first line identifies the risks, sets the controls, and escalates risk events to the second line of defence. Colleagues in the first line have primary responsibility for their risks and their activities are subject to oversight from the relevant parts of the second and third lines.

The second line is made up of Risk and Compliance and oversees the first line by setting limits, rules, and constraints on their operations, consistent with the risk appetite. The second line provides assurance to the Board Risk Committee on a combination of financial and non-financial risks through the completion of the annual compliance monitoring plan and regular risk reviews and reports.

The third line is Group Internal Audit, providing independent assurance to the Board Audit Committee on the effectiveness of the internal control procedures through completion of a risk-based annual internal audit plan, which considers the current risks faced by the Group.

The governing body, the Board, ensures that the appropriate governance structures and processes are in place. The Board delegates responsibility and provides resources to management to achieve the objectives of the Company, while nurturing a culture that promotes ethical behaviour, diversity, inclusion, and accountability.

See principle 9 for further details.

In addition to reviewing materials for Board and Committee meetings prior to attendance, the Non-Executive Directors are required to commit such time to the Group’s affairs that allows them to discharge their oversight responsibilities. The Non-Executive Directors also provide their skills and experience in assisting the Group with areas that complement their industry skills and experiences including strategy, acquisitions, risk management and regulation.

The Directors of the Group and their biographies are set out on pages 51-53. The Board has satisfied itself that between them, the Directors have the necessary up-to-date experience, skills and capabilities. Each Director undertakes learning and development throughout the year to ensure their skillset remains up to date. Directors also complete the Group’s annual mandatory training delivered through the e-learning platform, and can receive ad hoc additional training as required.

Independent Advice

All Directors can 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.

Board Meetings

The Board is responsible to the shareholders for the effective and suitable management of the Group. A Directors’ responsibilities statement in respect of the financial statements is set out in this Annual Report on pages 75-76. The Board meets formally at least nine times 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 includes the determination of strategy, approval of acquisitions, approval of budget and major capital expenditure.

At Board meetings, the standing agenda normally comprises a review of the financial results and update of operations, a CEO report and an update on the progress of the Group’s other strategic objectives, which includes Consumer Duty. During the year, the Board hears from departmental managers and asks questions on their progress, issues and prospects, and receives a quarterly ESG update.

The Board meetings in August and March covered the approval of the interim and preliminary financial results respectively and the November meeting dealt with the approval of the annual budget.

Remuneration Committee

The Remuneration Committee comprises independent Non‑Executive Directors of the Company.
Lawrence Guthrie (Chair)
Catherine Nunn
Robert van Breda
Toni Wood
Board Observer: Simon Walker

Member attendance at Board and Committee meetings:

The Committee meets at least twice each year and at such other times as the Chair of the Committee sees fit. The Chair 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 Chair, Chief Executive, all other Executive Directors, and such other members of the Executive Management as it is designated to consider, including levels of base pay, potential bonus and long-term incentives;
• 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 recognise;
• In determining individual packages and arrangements, give due regard to the comments and recommendations of the QCA Code;
• Be told of, and be given the chance to, advise on any major changes to employee benefit structures in the Company;
• Recommend and monitor levels and structure of remuneration for senior managers below Board-level as determined; and
• Agree the policy for authorising claims for expenses from the Chief Executive and the Chair of the Board.

The Committee is authorised by the Board to:

• Seek any information it requires from any colleagues or officers to perform its duties; and
• 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.

During 2024, the Remuneration Committee reviewed and approved as part of the standard agenda schedule, the outcome of the 2023 Bonus Scheme and setting of the 2024 Bonus Scheme financial and non-financial targets, the Performance Share Plan for 2024, the Gender Pay Report, the Remuneration Policy, the Terms of Reference for the Remuneration Committee, and the 2024 salary review proposals.
The Committee has considered the following priorities for 2024.

• Ensuring the entry pay-level for H&T colleagues is ahead of the National Living Wage.
• Aligning the store pay structure, in line with a balanced scorecard approach, to provide motivation and retention, and to acknowledge completion of training modules.

Audit Committee

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

The members of the Committee are:
Robert van Breda (Chair Audit Committee)
Lawrence Guthrie
Sally Veitch
Simon Walker
Observer: Toni Wood

The Committee meets at least three times a year. The quorum for the Committee is three members.

The Audit Committee reviews the prudence, accuracy and consistency of the financial results, and within the remit the key judgements made and the effectiveness and robustness of the financial control system that supports the financial results. It reviews the scope, the outcomes from, and the performance and cost-effectiveness of, internal and external audit. It 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 as to the independence and objectivity of external and internal auditors.

As directed by the Audit Committee, the principal function of the Group’s Internal Audit team is to verify the design and operational effectiveness of all controls across the business. Internal audits reviews are undertaken covering all aspects of the Group’s key risks and financial controls. The Head of Internal Audit reports directly to the Audit Committee Chair. The Audit Committee has access to all Internal Audit reports. The Committee reviews the operation of internal controls and reports to the Board on the annual review of internal control and risk management.

To ensure appropriate independence, the Audit Committee, on behalf of the Board, reviews and agrees the Internal Audit plan for the year, and the Head of Internal Audit reports separately to, and meets regularly with, the Chair of the Audit Committee, who reviews all corporate audit reports as they arise.

The Board Audit Committee chair report is on pages 65-67.

Nomination Committee

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

The members of the Committee are:
Simon Walker (Chair)
Lawrence Guthrie
Toni Wood

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.

In respect of Chair succession, the Chair and any Director directly affected are excluded from discussions, and the SID assumes the role of Chair.

Risk Committee

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

The members of the Committee are:
Sally Veitch (Chair)
Catherine Nunn
Robert van Breda
Lawrence Guthrie

The Risk Committee meets at least three times in each year.

The Risk Committee 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 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 statements are subject to annual review by the Risk Committee and the Group Board.

The Risk Committee is responsible for the Risk Framework in place for the 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). The risks identified are recorded in the Corporate Risk Register and reviewed by the Committee on a biannual basis.

The Risk Committee reviews the regular reports of the Director of Risk and Compliance to oversee the operational effectiveness of the risk management framework and the current risk exposure measured through the Key Risk Indicators.

The Committee makes recommendations to the Board in respect of all risks faced by the Company outside of its declared risk appetite.

The Risk Committee oversees the arrangements for whistleblowing and receives detail of any reports made under the Whistleblowing Policy.

The Board Risk Committee Chair report is on 68-69.

The Board regularly completes reviews of its operations and effectiveness; in previous years this has been conducted by means of a robust internally facilitated review of Board and Committee effectiveness.

We are committed to continuous improvement, along with our obligation for developing our Board capabilities, effectiveness and succession planning.

The Board brings a range of experience and expertise sufficient to provide independent judgement on issues of strategy, performance, resources, and standards of conduct, which are vital to the success of the Group. The Non-Executive Directors hold shares as disclosed on page 74. There is no entitlement to share options for Non-Executive Directors, and there are no cross-Directorships between Executive and Non-Executive Directors. The Non-Executive Directors are considered to be independent; full details of the assessment of Directors’ independence is included on page 56. The Chair, who is a regulated person, leads the Board and is principally responsible for considering regulatory and strategic matters on behalf of the shareholders, in support of the CEO.

The Senior Independent Director (SID) supports the functioning of the Board and acts as a conduit between the Executive and Non‑Executive Directors. The SID leads the Board effectiveness review and Chair succession process, and assists with the preparation and approval of the Annual Report and Accounts.

The Company Secretary acts as a trusted adviser to the Board facilitating meetings and providing advice on legal and regulatory matters.

The Group communicates to its shareholders and other relevant stakeholders through a combination of dialogue, the publication of the Annual Report and Financial Statements and investor presentations, supported by additional information available on its website. The Audit Committee is a principal Committee within the Group’s governance framework and provides the role of monitoring the integrity of the Group’s financial results as outlined on page 65.

Significant Issues and Areas of Judgement considered by the Audit Committee the significant issues and areas of judgement considered by the Audit Committee in relation to the Annual Report and financial statements 2024 are outlined below. We discussed these with the external auditor during the year and, where appropriate, these have been addressed as areas of audit focus as outlined in the independent auditor’s report on pages 77-80.

Significant Issues and Areas of Judgement Considered by the Audit Committee