Close Brewery Rentals Limited: Section 172 Statement
In accordance with the Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008 (as amended by the Companies (Miscellaneous Reporting) Regulations 2018), this statement also provides details how they have had regard to the need to foster the Company’s business relationships with suppliers, customers and others, and 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 with members of the Company. During the financial year, the terms of reference for the board of directors (the “Board”) were updated to remind the directors of their legal duties including under s.172 of the Act, and the directors also received refresher training on their s.172 duties.
The Board is collectively responsible for managing the affairs of the Company to achieve its long-term prosperity by making important decisions, monitoring performance and establishing ethical standards. Board meetings are held periodically where the directors consider the Company’s principal activities and make decisions. As a part of those meetings the directors receive information in a range of different formats on section 172 matters when making relevant decisions. 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, while acknowledging that a decision will not necessarily be favourable for all stakeholders.
The Company is part of Close Brothers Group Plc (“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, and to ensure that it continues to operate in a socially responsible and compliant manner, and manages environmental sustainability. 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 the Company’s ultimate holding Company, CBG.
The directors seek to engage directly with stakeholders wherever possible on certain issues, however the size of the group means that stakeholder engagement often takes place at an operational or group 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. 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. Further detail on engagement at group 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.
Throughout the year, both generally and in relation to specific matters, the Board has had regard to the interests of its stakeholders and has engaged with them in a range of direct and indirect ways. The table and case studies below set out more details of the ways in which the Board has engaged directly with stakeholders during the financial year, 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.
The Board believes in putting our customers, clients and partners first, and remains focused on upholding our reliable, high quality services and personal approach.
Putting the interests of our customers, clients and partners at the heart of our business is critical to our success, and CBG’s purpose to help the people and businesses of Britain thrive over the long-term underlines the Board’s commitment in this area.
Engagement with customers, clients and partners allows us to understand their needs and receive feedback and insight that is essential to maintaining strong relationships across our business.
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 build a deep and diverse talent pool, attract and retain talent and ensure that 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.
Our business is supported by a large number of suppliers who enables us to provide high standards of service to our customers, clients and partners
Engagement with suppliers enables the Company to develop and maintain long-term and sustainable relationships and helps ensure that the Company purchases products and services from suppliers who operate responsibly and in line with our policies and standards
Engagement with regulators and applicable regulatory requirements helps the Company develop and maintain open and transparent relationships with our regulators, maintain a reputation for high standards of business conduct and also helps the Board ensure that the business is aligned to the evolving regulatory framework
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.
Participating in local communities helps the Board and our employees develop our understanding of the clients, customers and partners so that we can support them and help them to achieve their ambition
The Company is a wholly owned member of 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 CBG policies and standards.
Below are some examples of the ways in which the Board has engaged directly with stakeholders during the financial year, how stakeholder interests have been considered in the Board’s decision-making and wider role, 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 has a sole member, Close Brothers Limited, and as such the duty of directors to have regard to the need to act fairly as between members of the Company is limited.
During the year the business took the decision to rapidly refocus its innovation resource and expedite the delivery of specific elements of its strategic improvement roadmap for back office platforms, ultimately with the aim of better utilisation of technology to improve the end to end customer journey.
The decision-making context reflected challenges faced by the business from the impact of Covid-19 and an expectation of an accelerating shift to a digital world as a legacy of Covid-19. The board consequently acknowledged a requirement to consider more broadly the design of products and interrelationships between service delivery, flexibility and engagement with our customer base.
The board has ensured it is well placed to expedite its strategic objectives by designing and implementing internal structures for clear line of sight to, and positive timely engagement with, stakeholder groups. Customer forums, innovation clusters and senior manager working groups collectively have a remit to ensure the business remains agile and customer focused as it innovates and develops.
As a result of the decision to refocus, the business has accelerated the delivery of more flexible billing platforms and greater levels of automation for customer onboarding, which ultimately allows the customer to take more control in a much more decentralised operating model.
The impact of the Covid-19 pandemic has been unprecedented and felt across all areas of the UK economy. A number of customers contacted the Company to ask for financial support during the pandemic. The board decided to support these customers as much as we could.
As part of its 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 the way that would be most likely to promote the success of the Company. The key decisions made during the pandemic were:
The board recognises the uncertainty around Covid-19 and continues to monitor the impact of its decision on the Company and its stakeholders.
While Covid-19 has had a significant impact upon consumers, businesses and the economy, our strong operational resilience has allowed the Company to continue to operate effectively during this time.
Our purpose is to help the people and businesses of Britain thrive over the long term, and in this challenging period our colleagues have continued to focus on helping our customers and clients with dedicated service and expertise.
Our prudent and resilient business model has served us well in challenging times over many years, and we have successfully adapted to the unique circumstances we face in this environment while continuing to operate effectively. Our loan book is predominantly secured and conservatively underwritten, with a deep expertise and relationship driven approach present throughout our businesses. We have a strong capital, funding and liquidity position and are well placed, both operationally and financially, to navigate this rapidly evolving environment.
The support we offer to all our stakeholders has been at the forefront of the board of directors’ minds during this time, and the board has held several additional ad-hoc meetings since the beginning of UK lockdown in March to focus on the impact of Covid-19 on our key stakeholder groups. The frequency of meetings increased to a weekly basis at the peak of the lockdown, and the directors received regular updates on developments relating to individual stakeholder groups.
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, but the majority remain successfully working from home, where our robust systems and technology have enabled them to perform their roles with minimal disruption and to serve our customers and clients effectively. We have not made use of the Coronavirus Job Retention Scheme as none of our employees were furloughed during this period.
Throughout this period, we have maintained regular contact with our customers and increased their choice of channels for engagement with us, while our technology has ensured speed and simplicity in responding to their needs. Rapid improvements to our sales tooling have enabled our businesses to adopt a remote sales and servicing model, allowing them to continue to reach consumers and small businesses when face-to-face contact has not been possible.
We have a long history of supporting individuals and SMEs across the UK and have introduced a range of forbearance and other measures to support customers and clients who find themselves in difficulty. We remain in close contact with customers who have been granted forbearance to discuss their position and identify the most appropriate financing solution for them. While it is too early to know the full impact of Covid-19, the majority of those customers that we have contacted to date have indicated a willingness and ability to recommence payments once their forbearance period comes to an end.
Throughout this period, we have continued to closely monitor and adhere to regulatory guidance in response to Covid-19 and the support for our employees, customers and shareholders during this time. Our risk management processes remain robust, and our strong internal controls ensure that we remain confident in our management of the impact upon our business activities.
While it remains too early to know the full impact that Covid-19 will have on the UK economy, we are confident that our tried and tested business model and the deep experience of our people leave us well prepared to respond to the challenges and opportunities ahead, protect our colleagues, and continue supporting our customers and clients.