Collection House : CLH - Corporate Governance Statement

Collection House Group

Corporate Governance

Statement

Approved By	CLH Board
Approval Date
Version	12
Review Period	2018

Corporate Governance Statement

Corporate

Governance Statement

Collection House Limited's Board (the Board) and its Senior Executives are committed to achieving and demonstrating the highest standard of good corporate governance practices. We also foster a culture that values ethical behaviour and integrity.

The Board keeps the governance system under regular review to ensure it reflects changes in law and keeps pace with best practice developments in corporate governance.

The Company's listing on the Australian Securities Exchange (ASX) means it must comply with the Corporations Act 2001, the ASX Listing Rules and other Australian laws. As a part of this compliance, Collection House Limited (the Group) is required to disclose how it has applied the Recommendations contained in the ASX Corporate Governance Council's Principles and Recommendations - 3rd Edition (the Principles and Recommendations) during the financial year ending 30 June 2018 (reporting period), explaining any departures from them. The Group has, unless otherwise stated, followed the Principles and Recommendations throughout the year.

More information

The Group's key policies, Board and Committee Charters and a checklist detailing its compliance with the Principles and Recommendations (Appendix 4G) are available from its website atwww.collectionhouse.com.au/investors-corporate-governance.

A summary of the Group's corporate governance policies and procedures, organised in the same order as the Principles and Recommendations, is set out below.

This statement refers to the position of Managing Director and/or Chief Executive Officer (MD and/or CEO). The Company confirms that on and from 1 July 2017 until 23 November 2017, Anthony Rivas held the position as Chief Executive Officer, and commencing on and from 24 November 2017, Anthony Rivas holds the position of MD and CEO. However, for ease of reading, this Statement only refer to the position of MD and/or CEO.

Principle 1

Lay solid foundations for management and oversight

Role and Responsibility of Board and Senior Executives

The relationship between the Board and its Senior Executives is critical to the Group's long-term success.

The Board is responsible for guiding and monitoring the Group on behalf of its Shareholders, to account for performance and deliver long-term Shareholder value. The Board is responsible for the Group's strategic direction, for monitoring and guiding management, for overseeing effective governance and ensuring the Group's long-term financial soundness.

In addition, the Board (in conjunction with the Senior Executives) is responsible for identifying areas of significant business risk and ensuring arrangements are in place to adequately manage those risks.

During the reporting period, the Board had delegated responsibility to the MD and/or CEO and the Senior Executives, for matters that are not specifically reserved for the Board - such as the day-to-day management of the Group's affairs and the implementation of its corporate strategy. These delegations are reviewed on an annual basis.

The Board Charter sets out the principles for how the Board operates and describes the Board's functions and responsibilities and those functions delegated to the MD and/or CEO, and the Senior Executives.

To assist the Board in carrying out its responsibilities, it has established the following Committees:

• • Audit and Risk Management Committee1

•  PDL Investment Committee (established 1 November 2016) 1

1 The Audit and Risk Management Committee together with the PDL Investment Committee was disbanded on 28 November 2017, due to scarce Director resources, with the functions, powers and delegations of the Committee absorbed by the Board.

Each Committee has a formal Charter that outlines its duties and responsibilities. In circumstances where a Committee is disbanded, the functions, powers and delegations of that Committee are absorbed by the Board and the Board will continue to exercise those functions, powers and delegations in accordance with the Charter for that (now disbanded) Committee.

More information

A full list of specific functions that are reserved for the Board together with a list of functions delegated to the MD and/or CEO, and the Senior Executives is set out in the Board Charter. The Board Charter together with the Committee Charters are available atwww.collectionhouse.com.au/investors-corporate-governance.

Selection and Appointment of New Directors

When considering the selection and appointment of a new Director, the Board will carry out this function in conjunction with the Remuneration and Nomination Committee or where the Committee has been disbanded, the functions, powers and delegations of that Committee are absorbed by the Board and the Board will continue to exercise those functions, powers and delegations in accordance with the Charter for that (now disbanded) Committee. The Remuneration and Nomination Charter sets out the procedure for the selection and appointment of new Directors, which includes, but is not limited to, consideration of the following:

• • The qualifications, experience and skills appropriate for an appointee, having regard to those of the existing Board members and likely changes to the Board in the foreseeable future

• • Upon identifying a potential appointee, specific consideration is given to that candidate's:

  • - competencies and qualifications

  • - independence

  • - other directorships and time availability

  • - the effect of their appointment on the overall balance and composition of the Board

• • Undertaking the appropriate checks of a potential appointee to ensure they are a fit and proper person before appointing that person as a Director

The above information, together with biographical detail, will also be made available for the Group's Shareholders when the Director stands for election as a Director in accordance with the Collection House Limited Constitution (the Constitution).

Re-appointment of Directors

The re-appointment procedures for incumbent Directors are outlined in the Constitution. In summary, subject to the specific matters described in the Constitution, an election of Directors must take place each year at which one third (excluding the Managing Director) of Directors must retire. Any Director who has been in office for three or more years and for three or more Annual General Meetings must also retire. Directors who retire are generally eligible for re-election.

Information pertaining to tenure and independence, together with any other material information held on a Director standing for re-appointment will be made available for the Group's Shareholder when that Director stands for re-election.

The Explanatory Memorandum attached to the Notice of Annual General Meeting will contain the above information including a statement as to whether the Board supports the election or re-election of the candidate.

More information

The Charter of the Remuneration and Nomination Committee, which details its duties, objectives and responsibilities, is available atwww.collectionhouse.com.au/investors-corporate-governance.

Formal Appointments

All Board and Senior Executive appointments are pursuant to formal terms of appointment.

The formal terms of appointment will generally set out expectations (position description, duties, accountability and responsibility), commitment, remuneration, requirements to comply with key corporate policies including conflict of interest and securities trading policy, indemnity and insurance arrangements, access to corporate information, and circumstances under which the appointment may be terminated.

Company Secretary

Each Director of the Board has full and unfettered support from, and access to the Company Secretary. The Company Secretary is directly accountable to the Board, through the Board Chairman, for all governance matters that relate to the Board's proper functioning.

Policy Concerning Diversity

The Group has established a policy concerning diversity and has disclosed the policy on its website.

The Diversity Policy recognises that diversity can take many forms: cultural background, race, ethnicity, experience, gender, age, impairment or disability, sexual preference, religion, political beliefs or any other area of potential difference.

The Group values diversity and recognises the important benefits and contributions that people of diverse backgrounds make to the Group. Our diverse workforce is central to our continued growth and improved operational performance as employees of diverse backgrounds and experience are able to provide exceptional customer service to our equally diverse customer base.

The Group reviews annually the proportion of female employees in the Group, women in other Management positions, women in Senior Manager Positions, women in Senior Executive positions, and women on the Board. Set out below is the report for the year ending 30 June 2018.

Position

Number of women employees in the whole organisation

Number of women in other Management positions (Team Leaders, Operations Managers, Supervisors)

467 43

62.5

62

Number of women in Senior Managers positions**

Number of women in Senior Executive positions*

Number of women on the Board

22 3 0

61 43 0

* Senior Executive include members of the Executive Management Team (EMT). ** Senior Managers' positions include 1 and 2 steps down from the CEO.

The Diversity Policy includes requirements for the Board to establish measurable objectives for achieving gender diversity and for the Board to assess annually both the objectives and progress in achieving them.

Women account for 62.5 percent of the Group's Non-Managerial positions and 60 percent of overall Managers in the Group. In 2015, the Board established the 2015-2016 and 2016-2017 measurable objectives in the context of a longer-term strategy, which will enable better opportunities for women to move into more senior managerial roles in the future.

In 2015-2016 the Board, through the Remuneration and Nomination Committee, assessed that the measurable objectives were substantially achieved.

In 2016-2017 in accordance with the Diversity Policy, the Board, following the Remuneration and Nomination Committee Charter assessed that the measurable objectives for 2016-2017 were achieved. The exception were those objectives with a time frame that exceeds an individual reporting year.

The Committee made the following assessment of progress towards achieving the gender diversity objectives for 2017-2018:

• • At least one female had been considered for each Board position

• • At least one female had been considered for each Senior Executive position

• • The number of females in Management positions is now at 60 percent

Maintaining a workplace free from discrimination and harassment, and continuing to ensure we maintain a workplace that supports staff with family, carer and cultural responsibilities is embedded into our culture of diversity. The Group will continue to strive to maintain its best practice standards in this area.

To ensure the focus is maintained on the longer-term strategy for gender diversity the Board has set out the following diversity objectives moving forward:

• • continue to focus on ensuring at least one female candidate is shortlisted for all Board, Senior Executive and Senior Management positions

• • work towards maintaining and increasing the number of female Managers with a 50 percent benchmark

•  Commitment to ongoing training through The Leadership Academy and increasing participation of females into