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Section 172 Statement

Close Brewery Rentals Limited: Section 172 Statement

Section 172(1) statement and statement of engagement with other stakeholders

The directors provide the following statement pursuant to the Companies Act 2006 (as amended by Companies (Miscellaneous Reporting) Regulations 2018) (the “Act”) to describe how they have acted in accordance with their duty under Section 172 of the Act (“Section 172”) to promote the success of the Company for the benefit of its member(s) as a whole, and in so doing, how they have had regard to those factors set out in Section 172, (1) (a) to (f) during the financial year.

Furthermore, in compliance with the Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008 (as amended by the Companies (Miscellaneous Reporting) Regulations 2018), the directors provide the statement which follows to describe how they have engaged with employees, and how they have had regard to employee interests and the need to foster the Company’s business relationships with suppliers, customers and others, and in each case, the effect of that regard, including on the principal decisions taken by the Company during the financial year.

Section 172 requires a director to have regard to the following matters, among others, when discharging their duty:

  • the likely consequences of any decision in the long term;
  • the interests of the Company’s employees;
  • the need to foster the Company’s business relationships with suppliers, customers and others;
  • the impact of the Company’s operations on the community and the environment;
  • the desirability of the Company maintaining a reputation for high standards of business conduct; and
  • the need to act fairly as between members of the Company.

The board directors of the Company (“the Board”) is collectively responsible for managing the affairs of the Company to achieve its long-term prosperity by making important decisions, monitoring the underlying performance of the Company, as well as being a means for establishing ethical standards.  Understanding the interests of key stakeholders is an important part of the Company’s strategy and helps inform the directors’ decision making throughout the year.

Board meetings are held as required where the directors will consider the Company’s principal activities and make decisions. Meetings are scheduled to provide adequate time for consideration and discussion by the directors of the interests of stakeholders, and for the directors to seek further information from management, as required.  As a part of those meetings, the directors receive information in a range of different formats to assist them in discharging their responsibilities under Section 172 when making relevant decisions.  This information may include, among other things, reports and presentations on financial and operational performance, business updates, budget planning and forecasts, HR matters, as well as specific areas of engagement, such as employee opinion surveys. When making decisions, the Board seeks to understand the impact on each of its stakeholders, including the likely consequences of a decision in the long term, whilst acknowledging that a decision will not necessarily be favourable for all stakeholders, as there may be competing interests between them. 

The Company is part of CBG, and as such it follows a range of group-wide policies in place to protect employees and provide a safe working environment, to ensure compliance with all regulatory requirements and adherence to the highest professional and ethical standards in dealing with customers, suppliers and colleagues, as well as ensuring that it continues to be cognisant of its social and environmental responsibilities. In doing so, and by balancing the interests of the Company’s stakeholders when making decisions, the Board seeks to maintain a reputation for high standards of business conduct. Further information on these group-wide policies can be found in the annual report and accounts of CBG.

The directors seek to engage directly with stakeholders wherever possible on certain issues, though the size of CBG means that stakeholder engagement often takes place at an operational or CBG level. This approach creates greater efficiency and facilitates a greater positive impact on environmental, social and other issues than may be possible at an individual Company level, as well as ensuring consistency of approach across the group. Where engagement has taken place at operational level, the outcome of that engagement has been brought to the Board for its consideration where relevant throughout the year. During the financial year, engagement with stakeholders has been modified in response to the Covid-19 regulations and government guidance, and has taken place virtually where appropriate. Additional details on engagement at CBG level with stakeholders, including employees, suppliers, customers, the community and environment can be found in the Strategic Report section of the annual report and accounts of CBG.

The following table and case studies set out further examples of the ways in which the board of the Company and CBG have engaged directly and indirectly with stakeholders during the financial year, as well as detailing how the directors have had regard to employee interests and the need to foster the Company’s business relationships with suppliers, customers and others, and the effect of that regard, including on principal decisions taken throughout the year, as well as matters set out in Section 172 (1)(a)-(f) when discharging their duties under Section 172.

Our Stakeholders

Colleagues

Our stakeholders and why we focus on them:

The Board recognises the importance of the contribution made by our employees, who deliver the highest levels of service for our customers and clients

Engagement with employees helps to attract, build and retain a high calibre talent pool and ensure that our employees remain enthusiastic about their work and their organisation. Regularly listening to employees’ feedback ensures they feel valued with their views recognised and acted upon.

Stakeholders' key priorities:

  • A safe working environment
  • A fair, supportive, diverse and inclusive culture where employee feedback is valued
  • A commitment to invest in training and development
  • Ensuring appropriate rewards for their contributions

How we engage with them:

Engagement with our colleagues takes place daily through line managers, with senior management regularly speaking at Town Halls and other business-wide forums. Regular employee opinion surveys are undertaken and closely monitored and management frequently hold employment engagement activities to provide updates on business performance and gather real time feedback, which is listened to and acted upon. Training and mentoring programmes are in place to support the development of all employees.

Key engagement during the year:

As lockdown restrictions have changed and government guidance on returning to workplaces has evolved, communication with employees has been key. Throughout the year, our focus has been on employee wellbeing and morale, ensuring our employees feel supported and engaged, both at a team and business level, as well as understanding our position in relation to returning to work.

    Customers, Clients and Partners

    Our stakeholders and why we focus on them:

    The needs of our customers, clients and partners are at the heart of our business and are core to our purpose of helping the people and businesses of Britain thrive over the long term.

    Putting the interests of our customers, clients and partners at the heart of our business is critical to our success, and the Group’s purpose to help the people and businesses of Britain thrive over the long-term underlines the Board’s commitment in this area

    Our long-term success depends on the strength of our relationships with customers, clients and partners. As such, central to all decision-making is understanding how our actions can help them and their businesses thrive.

    Stakeholders' key priorities:

    • A customer-led proposition
    • A focus on treating customers fairly
    • Strong personal relationships and specialist expertise
    • Consistent and supportive customer service whatever the market conditions

    A responsive service with solutions that are flexible and executed with speed

    How we engage with them:

    Consistent delivery of high quality service for customers, clients and partners by our specialist, expert teams is core to our business model. We ensure this is built around the needs of our customers, clients and partners and is aligned to our customer principles by conducting extensive research and analysis of feedback, captured through our “Voice of the Customer and Partner” programme. This enables us to improve experiences in the moment as well as plan for changes to our service and proposition into the future.

    Key engagement during the year:

    Maintaining close contact with our customers, clients and partners throughout the year has been paramount as we continued to support those who have found themselves in difficulty through forbearance and other Covid-19 concessions. We regularly discussed our customers’ positions with them to ensure we were best supporting their needs as they evolved.

    Regular reporting and discussion of matters and updates relating to customers, clients and partners

    Ongoing measuring and monitoring of customer experience against key customer principles and conduct risk framework

    Analysis of feedback via customer forums and Voice of the Customer programme.

    Suppliers

    Our stakeholders and why we focus on them:

    Our business is supported by a large number of suppliers, enabling us to provide high standards of service to our customers, clients and partners.

    Engagement with our suppliers enables the business to develop and maintain long-term and sustainable relationships. This engagement also helps enable our suppliers to better understand and align to our key policies and procedures and operate responsibly.

    Stakeholders' key priorities:

    • Appropriate and clear payment procedures
    • Strong and sustainable relationships with Close Brothers
    • Fair and equitable conduct of business

    How we engage with them:

    Our key supplier relationships are managed centrally through our dedicated third party management (“TPM”) function, which includes regular meetings, as well as an annual survey to seek feedback on Close Brothers as a client.

    Key engagement during the year:

    Engagement with key suppliers during the Covid-19 pandemic

    Review and consideration of material contracts with suppliers and ongoing supplier relationship management through TPM.

    Established processes for the management of supply chain risks and issues, with escalation to the Board and management as appropriate

    Regulators and Government

    Our stakeholders and why we focus on them:

    Whilst the Company is not individually regulated, it is part of CBG which in turn values an open and transparent relationship with all our regulators, particularly the Prudential Regulation Authority (“PRA”) and the Financial Conduct Authority (“FCA”), as well as government authorities and trade associations.

    It is important we maintain a culture that is focused on retaining and encouraging high standards of business conduct and regulatory compliance and openness. Engaging with the relevant regulators and associations helps to ensure the business is aligned to the evolving regulatory framework.

    Stakeholders' key priorities:

    • Fair treatment of customers and clients
    • Compliance with applicable regulation
    • Recognition of the importance of resilience and risk management
    • Provision of high quality information and regulatory reporting
    • Active consideration of risks relating to sustainability and other climate matters

    How we engage with them:

    We regularly interact with the trade bodies and business associations we are affiliated with to ensure we are engaged with issues impacting our industry.

    Regulatory risk and compliance reporting to local Risk and Compliance Committee.

    Consideration of the regulatory horizon including via risk and compliance reports.

    Consideration of relevant policies and standards that support compliance with regulatory and compliance requirements.

    Key engagement during the year:

    Participation in broader Group regulatory initiatives and programmes, including activity to support the ICAAP, RRP and ILAAP processes.

    Oversight of training for all employees on applicable regulatory requirements.

    Consideration of relevant policies and standards that support compliance with regulatory and compliance requirements.

    Communities and Environment

    Our stakeholders and why we focus on them:

    As part of the broader

    Group, the Board is committed to contributing long-term value and making a lasting, positive impact on the society in which we operate and the environment more broadly.

    Engaging with local communities helps the board and our employees develop our understanding of our clients, customers and partners so that we can support them and help them to achieve their ambition, whilst also building employee engagement.

    Stakeholders' key priorities:

    • A suitable strategy for approaching sustainability issues
    • Support for community initiatives
    • Job creation and social mobility

    A long-term focus on addressing the impacts of climate change

    How we engage with them:

    Throughout the year, we undertake various community, social and environmental initiatives, which are coordinated through our sustainability working group. Many of our employees participate in group-wide committees established to drive forward a range of initiatives around diversity and inclusion, helping the environment and charitable and community activities, with our employee volunteers the driving force behind our successful community and charitable events.

    Key engagement during the year:

    We continued to run our established social mobility programmes, supporting up-and-coming talent in local communities and providing access and opportunities for those from less-advantaged backgrounds.

    Investors

    Our stakeholders and why we focus on them:

    The Company is a wholly owned member of the CBG, forming part of the Banking division; as such it operates as part of the broader Group in delivering its purpose and strategic objectives, in line with Group-wide processes, governance and culture.

    Engagement supports the Company’s understanding of, and contribution to, broader Group activities and strategic aims, and ensures delivery of long-term sustainable value for our shareholder in line with Group policies and standards.

    Stakeholders' key priorities:

    • Focus on broader Group purpose and strategic aims.
    • Alignment with Group-wide risk, governance, compliance and financial priorities.
    • Consistent approach to stakeholder considerations and outcomes

    How we engage with them:

    Engagement with senior management at Group level, including representation on the Board and other governance forums to ensure the Board has a clear understanding of its role and contribution as part of the wider Group.

    Updates to Group level committees, including the CBG Board on the operation and performance of the Company.

    Key engagement during the year:

    We supported CBG during the year in their engagements with our investors through virtual meetings at CBG level. CBG hosted an Investor Event in June 2021, with presentations covering the group and its businesses and providing investors an opportunity to ask questions of the management team and the Company.  CBG also engaged potential and existing fixed income investors during roadshows throughout the year, as well as communicating regularly with credit rating agencies. CBG maintained its regular programme of communication organised by its investor relations team including investor roadshows, analyst presentations and keeping the market up to date in line with regulation.

    Furthermore, set out below are some additional detailed examples of the ways in which the board of the Company has engaged directly with key stakeholders during the financial year, how stakeholder interests have been considered in the decision-making of the directors, and how the Directors have had regard to the matters set out in Section 172 (1)(a)-(f) when discharging their duties under Section 172.  The Company is a wholly owned subsidiary of CBL and, as such, the duty of directors to have regard to the need to act fairly as between members of the Company is limited.

    Digital innovation

    During the year as the pandemic developed further with additional lockdowns which had a direct impact on the Company, the Board supported the continued development of improved back office systems, with the focus on improved customer experiences and improved administrative efficiency.

    The Board supported the refocusing of the digital resource into the more accurate reporting of asset locations and management, which in turn allowed the Company to use this data to support its customers through the challenging Covid-19 period.

    The digital innovation team were able to harness new data sources and produce a complimentary set of high quality key performance indicators, which were then developed into a series of reporting formats. This data has then become the foundation for both the ongoing management reporting of the business to the Board, but also to enable the Company to share some customer specific data with customers as part of the fleet management element of the services the Company provides.

    Covid-19 support to customers and our staff

    During the year the Board provided an ongoing support program for our customers including the Coronavirus Business Interruption Loans (CBILS). The use of CBILS allowed the Company to actively support its existing customer base and help new customers. The board regularly reviewed its support approach to Covid-19, and actively supported the day to day bespoke support given to customers.

    The levels and the nature of support given varied significantly driven by local market government restrictions and individual customer financial performance.

    As part of it’s decision making, the board had regard to the different interests of stakeholders but with an overarching focus as required by section 172(1), on acting in a  way that would be most likely to promote the success of the Company. Key decisions taken during the pandemic were: 

    • Support the short term liquidity of its customers and grant forbearance to assist customers in temporary financial distress.
    • Continue to lend and support new funding applications as required.
    • Provide operational solutions for those customers that did not have the capabilities of resources available to respond themselves.
    • Ensure containers were available to customers throughout as a backup to potential supply chain restrictions, (particularly in periods of reopening then followed by closure).
    • Protecting our staff through ongoing implementation of the UK Government Covid-19 protection guidelines, making all sites as Covid-19 secure as possible, with regular health and safety audits and briefings.
    • Throughout the Covid-19 pandemic continuous staff engagement and communication has sought to keep all staff as well informed and supported as possible.
    • The board has also actively sought to closely manage liquidity and costs to enable continued operation throughout the Covid-19 impacted period.

    The safety and wellbeing of our colleagues is of the utmost importance to us, and we have supported them through flexible working arrangements, seeking regular feedback and making adjustments so that they can conduct their roles safely. A number of our staff have now returned to work on-site or begun to meet customers in person where it is safe to do so. We have not made use of the Coronavirus Job Retention Scheme as none of our employees were furloughed during this period.