Corporate Governance

The Board of Directors is committed to the principles of good corporate governance, integrity and standard-setting business ethics across all of its activities. Under the rules of the Alternative Investment Market (‘AIM’), the Group is not required to comply with the UK Corporate Governance Code (the ‘Code’). Nevertheless, the Group has taken steps to comply in so far as it can be applied practically and appropriately given the size of the Group and the nature of its operations. The Board is continuing to consider other aspects of the Code for appropriateness and these may be introduced when it becomes relevant for the Group to do so.

Responsibilities of the Board

The Board is responsible for formulating, reviewing and approving the Company’s strategy, financial activities and operating performance.  The Board delegates the day-to-day management of the business to the Executive Directors who consult with the Board on all significant financial and operational matters.

The Board structure provides demonstrable separation of responsibility for the running of the business and the responsibility of running the Board. This structure ensures there is appropriate accountability to the Board and helps to safeguard the independence and objectivity of the Board.

The roles of Chairman and Chief Executive Officer are fulfilled by separate individuals, each with clear division of accountability and responsibility. The Chairman is resposible for running the Board and the Chief Executive Officer has executive responsibilities for the Company’s strategic development, operations and results.

Board composition

The Board of Directors represent a wide range of skills and expertise that are relevant to the successful operation and development of the business. The Directors bring an extensive set of skills and deep experience in the mining industry, complemented by appropriate financial, corporate and strategic expertise.

The balance between Executive and Non-Executive Directors has been reviewed by the Nominations Committee and by the Board. Changes to the structure, size and composition of the Board are approved by the Board, following recommendations from the Nomination Committee.  The Board and Nomination Committee will continue to evaluate the skills, experience and diversity of the Board.

The Board currently comprises

Graham Mascall – Chairman
Ian Harebottle – Executive Director and Chief Executive Officer
Janet Boyce – Chief Financial Officer
Sean Gilbertson – Executive Director
Clive Newall – Independent Non-Executive Director
Finn Behnken – Independent Non-Executive Director

The Board has considered the independence of each Director, including assessment of their character, judgement and business or other relationships which could materially interfere with the exercise of their judgement.

In line with the Code, the independence of the Non-Executive Directors who have served on the Board for over nine years were reviewed. The Board has confirmed that Mr Newall and Mr Mascall, continue to demonstrate the characteristics of independence, such as challenging management and providing valuable contribution to the Board. The Board considers all the other Non-Executive Directors to be independent in line with the guidelines of the Code.

It is the Company’s policy (and a condition of the Relationship Agreement with the largest shareholder, The Pallinghurst Resources Fund L.P.) that the number of Independent Directors (meaning non-Pallinghurst directors) shall at all times comprise at least 50% of the Board.

Board and Board Committee meeting attendance

The Board of Directors meets regularly and no fewer than four times per year.

Board committees

The Board has established the following committees, each with its own terms of reference.  All committees of the Board to which significant powers, authorities and discretions are delegated, are at all times be made up of at least two Non-Executive Directors. In carrying out its responsibilities, the Committees have the right to:

  • obtain independent professional advice (at the Company’s cost, subject to a Board approved process being followed) to assist with the execution of their duties; and
  • access the Company’s records, facilities, employees and any other resources, within the scope of their responsibilities, as set out in the terms of reference.

Audit and Risk Committee

The members of the audit committee are:

  • Finn Behnken (Chairman)
  • Graham Mascall
  • Clive Newall

The Audit and Risk Committee is responsible for assuring accountability and effective corporate governance within the Company. It provides recommendations to the Board on matters concerning the Company’s accounting policies, financial, risk and compliance control, recordkeeping and reporting.

The Audit and Risk Committee’s main responsibilities include the following:

  • monitor the integrity of the financial statements of the Company including the annual and interim financial statements;
  • review and challenge, where necessary, the accounting principles, policies and practices adopted in the preparation of the financial statements;
  • review the scope and the results of the audit with the external auditors;
  • review the independence and effectiveness of the external auditors and make recommendations to the Board on the appointment/dismissal of the external auditors and terms of reference and remuneration;
  • oversee the compliance of applicable laws and regulations; and
  • review and recommend to the Board for approval appropriate risk management policies and procedures.

Remuneration Committee

The members of the remuneration committee are:

  • Clive Newall (Chairman)  
  • Graham Mascall
  • Finn Behnken

Its principal responsibility is to determine and review the ongoing appropriateness and relevance of the framework and broad policy for the remuneration of the executive management.  Within the terms of the agreed remuneration policy, it determines the individual remuneration package of executive management including incentive payments and long-term performance incentive arrangements. It also arranges performance evaluations for the Chief Executive Officer, Chief Operating Officer and Chief Financial Officer and reports the results of these evaluations to the Board.  The remuneration of the Non-Executive Directors is a matter for Board or, where required by the Articles of Association, the shareholders.

Nominations Committee

The members of the nomination committee are:

  • Graham Mascall (Chairman)
  • Clive Newall
  • Finn Behnken

The Chairman of the Board does not chair the Nomination Committee when it is dealing with the succession of the chairmanship of the Board.  The Nominations Committee is responsible for regularly reviewing the structure, size and composition (including skills, knowledge and experience) required of the Board and for making recommendations to the Board with regard to any changes.  The Nominations Committee is responsible for identifying and nominating for candidates to fill Board vacancies as and when they arise and for making recommendations to the Board concerning succession planning for both Executive and Non-Executive Directors.  In addition, the Committee keeps under regular review any authorisations granted by the Board in connection with any Director’s conflict of interest.

Health, Safety, Environmental and Community Committee (HSEC)

The members of the HSEC Committee are:

  • Clive Newall (Chairman)
  • Finn Behnken
  • Graham Mascall

The HSEC Committee is responsible for guiding and evaluating the Group’s sustainability strategy which covers key operational issues; health, safety, environmental, societal and security risks and opportunities both at existing operations and any new operations. The committee is responsible for assessment of the Group’s performance and incorporating the impact of strategic decisions and actions on the reputation of the Group particularly through the reporting of sustainability performance, setting out of future plans and engagement with key international stakeholders such as NGOs, investors and media. It is the Group’s intention to create similar HSEC committees at operational level.

Relationship with shareholders

The Directors consider the clear and timely communication of information to shareholders an important part of their duties. The Company has procedures in place to ensure that all price sensitive information is identified, reviewed by management and disclosed to the AIM market in a timely manner. Significant developments are disseminated through stock exchange announcements and by regular updates on the Company’s website.  The Executive Directors meet with institutional investors and analysts after the announcement of the interim and year end results.  Additional meetings are arranged during the year by the Company’s brokers and financial advisors on an ad-hoc basis, when required.  Feedback arising from these meetings is communicated to the Board. 

Notwithstanding Pallinghurst being a major shareholder in the Company, the Company ensures that it operates and makes decisions for the benefit of the shareholders as a whole, independently of Pallinghurst.  The Company and Pallinghurst entered into a relationship agreement in January 2013 and this agreement governs the relationship between the Company and Pallinghurst.

Annual General Meeting

Shareholders have an opportunity at the Annual General Meeting to meet the Chairman and other Directors, to receive an update on the development of the business and to ask questions of the Board. The Group proposes a separate resolution for each substantially different item of business, giving shareholders the opportunity to vote on each issue.

Performance evaluation

The Board undertakes a regular evaluation of its own performance. The review involves detailed interviews with each Director and covers the functioning of the Board as a whole, and the operation of each of the Committees. The review considers the level of commitment and professionalism exercised by the Board in the strategic and commercial leadership of the Group. It also reviews whether the Board and its individual members continue to perform effectively and operate within a framework of sound governance and practices, wherever it is reasonably practical, are consistent with the principles set out in the Code.

Risk management and internal control

The Board is responsible for maintaining a sound system of internal controls and risk management to safeguard shareholders’ investment and the Group’s assets and for reviewing the effectiveness of the system. Any internal control system can only be designed to manage, rather than eliminate, the risk of failure to achieve in part or in whole business objectives and can only provide reasonable, but not absolute, assurance against material misstatement or loss.

Due to the nature of the Group’s operations, the Executive Directors and Senior Management are very closely involved in the day to day running of the business. The Directors have reviewed the effectiveness of the internal control system presently in place and consider that they are still appropriate to the nature and scale of the operations of the Group. This review involved considering the present needs of the business, the risks it faces and appropriate control measures.

There is currently no internal audit function.  As the Group continues to grow, Management will consider setting up an intenral audit function.

Key controls and procedures

The Board maintains full control and direction over appropriate strategic, financial, organisational and compliance issues, and has put in place an organisational structure with defined lines of responsibility and delegation of authority.  The Board is committed to employing suitably qualified staff so that appropriate levels of authority can be delegated with due regard for accountability and levels of risks.

The annual budget and forecasts are reviewed by the Board prior to approval being given. This includes the identification and assessment of the business risks inherent in the Group along with associated financial risks.   Monthly and other periodic reports of actual results (financial and non-financial) are produced and reviewed by the Directors and Senior Management.

Management control is exercised at all levels of the Group and is regulated by appropriate limits of authority.

Future plans to develop governance arrangements

A formal “whistle blowing” procedure will be put in place whereby employees may, in confidence, raise concerns about possible improprieties in financial, reporting or other matters. In addition corporate governance arrangements will be reviewed periodically and their appropriateness and effectiveness evaluated and new policies developed and introduced accordingly.

The UK Bribery Act

The Board of Directors and Senior Management at Gemfields are committed to ensuring that Gemfields, its subsidiaries (“Gemfields”) and all of its employees conduct their business in an ethical and honest manner. Gemfields is committed to upholding both the letter and the spirit of national and international laws and regulations, wherever we operate, and implementing and enforcing effective training and systems to counter bribery and corruption.

Gemfields counters bribery through the enforcement of the Gemfields anti-corruption policy and code of ethics (the “Policy”). The Policy requires adherence to relevant anti-bribery and corruption legislation (including without limitation the UK Bribery Act 2010) and encourages every employee and associated third party to practice and promote ethical and honest business practices at all times.

Gemfields continues to communicate the Policy across the Group to ensure understanding of, and commitment to, the Policy. Gemfields attaches the utmost importance to the Policy and applies and enforces a strict zero tolerance approach to acts of bribery and corruption by any of our employees, contractors or business partners working on our behalf.

Modern Slavery Act 2015

This Statement is made pursuant to section 54 of the Modern Slavery Act 2015 (the “Act”) and covers the financial year ending 30th June 2016. It provides an explanation of the steps that Gemfields plc and its subsidiaries (“Gemfields” or “we”) take to combat the potential for modern slavery and human trafficking to take place in its business and supply chains.

Statement of commitment
Gemfields has a zero tolerance policy with regards to slavery, human trafficking and any similar abuses across our operations and supply chains. We are committed to a range of procedures we have introduced to mitigate the likelihood of such abuses from occurring and will continue to make improvements to these processes aimed at encouraging all of the participants within our sector to ensure that modern slavery and human trafficking does not occur and is wholly unacceptable.

Meaning of slavery and human trafficking
Gemfields takes its understanding of modern slavery and human trafficking from the offences set out in the Act and we refer to the UN Universal Declaration of Human Rights in our Human Rights & Security Policy (available on our website). We understand that forced, bonded or indentured labour are forms of slavery and include debt bondage and the restriction of a person’s freedom of movement whether that be physical, non-physical or, for example, by the withholding of personal documents such as passports or identity cards.

Our business model
Our core business is the mining, marketing and sale by auction of rough coloured gemstones. The gemstones are mined from our amethyst and emerald deposits in Zambia and ruby deposits in Mozambique. We are also committed to further expanding our operating footprint by way of exploration and the acquisition of new projects in diverse locations. Gemfields, in addition owns the Fabergé jewellery brand which has retail boutiques in a variety of countries including the UK, US, Switzerland, Australia, Kiev and Malta.

Gemfields’ corporate headquarters is situated in London, United Kingdom and we currently also have sales and support offices in South Africa, USA, India and Thailand. In total we directly employ in excess of 1000 people globally and this is further supplemented by a labour-force of mainly mining and security contractors as well as outsourced, seasonal manual labour, as and when demand requires it. All our employment and related corporate policies both globally and locally, apply to full time employees and contractors alike, but specific terms and conditions are determined by the prevailing local country laws.

The majority of our revenue is derived from the sale of rough coloured gemstones sourced from our own mines. After mining, our gemstones are either further processed (sorted, graded and sometimes treated) and then sold via our auction process, or on the odd occasion, a small percentage of production is sold out of auction. Our preferred selling platform is an auction process where specially invited jewellery manufacturers, gemstone processors and traders are presented with a range of rough gemstones which they inspect and bid upon. We have also established a ‘cut & polished sales’ division where cut & polished (finished) gemstones are sourced from the market for some of our jewellery customers. These gemstones are sourced from the open market but, where possible, we prefer to buy back cut & polished gemstones that were first sold to our suppliers by us via our rough auction platform.

Fabergé is a luxury retail brand that manufactures, via specialist jewellers and work-masters, high-end hard luxury goods and sells these products through e-commerce and physical boutiques.

Our supply chains
There are three components of our supply chain.
1. We sell rough rubies, emeralds and amethyst at auctions to authorised auction partners. These partners sign up to our terms of business in order to participate in the auction process, and as part of that agreement, our partners will be subject to physical inspection of their facilities. For the purposes of this statement we restrict our response to our direct rough gemstone customers.
2. We purchase cut & polished amethyst, emerald and rubies from the wholesale market for jewellery customers who place varying sizes of orders with us. These gemstones come from a variety of sources and we have sourcing and sales teams based in the USA, UK, South Africa, Thailand and India to service the needs of our customers. Fabergé either sources the gemstones and precious metals directly or lets its work-masters source the gemstones and precious metals themselves. Gemfields’ policies also apply to Fabergé and Fabergé’s procurement documentation also features the same warranties. For the purposes of this statement we restrict our response to meaning those suppliers of cut & polished stones to Gemfields or Fabergé with whom there is a direct commercial relationship.
3. We procure operational mining goods and services from local and international businesses. These suppliers provide us with consumable products that enable us to run our business. Goods and services include but are not limited to the purchase of electricity, diesel, food, capital mining equipment, building construction services, medical, security services, logistics partners and a variety of technical consultants.
4. We procure a small amount of rough emeralds and sapphires from the open market in Zambia and Sri Lanka. These are bought through licensed trading offices and are procured to help us understand the local market dynamics and support smaller-scale producers.

Relevant policies and employment process
Integrity is a central part of our corporate commitment as a publicly listed business. We have a variety of existing policies that are relevant. These include:
• Anti-corruption Policy & Code of Ethics
• Fairness at Work Policy
• Employment Policy and employee handbook
• Product Integrity & Stewardship Policy
• Human Rights & Security Policy
• Health & Safety Policy
• Whistleblowing Procedure
• Cut & Polished Supplier Code of Conduct
We recognise that we operate in a number of countries where historically, human rights abuses has been an issue of particular concern to international businesses. Gemfields has embedded a risk management process which provides oversight for enterprise risk across the business, ensuring it is assessed regularly, and effectively mitigated. We regularly review our mining-related operational procedures in relation to topics such as direct and indirect employment, procurement, security practices, community engagement, grievances, stakeholder engagement and government relations. We publish our group policies at each mining operation and, where necessary, do this in other languages such as Spanish or Portuguese.
Gemfields is committed to the benefits brought about by diversity and equal opportunity and therefore supports collective bargaining for our employees. We are active in supporting employee engagement, representation, dialogue and provide mechanisms for employees to raise concerns and grievances. We work with international and local recruitment agents to identify hiring needs and apply our employment practices in line with, and in certain aspects exceeding the requirements of, local legislation. In countries where established recruitment practices are not possible (for instance in very remote areas), we rely on local agencies to recommend individuals that are suitable to be hired and we carry out the same recruitment practices as with more established operations.
We recognise there is a risk under the broader definition of slavery and human trafficking in the hiring of temporary or seasonal workforces at our mining operations. Our local HR teams, working with local and international recruitment agents, are responsible for implementing local, legally compliant and applicable processes involving background checks to ensure that the relevant workers have all the necessary identification and documentation to prove, as far as possible, their eligibility and legitimacy to work. We do not, under any circumstances, withhold the documentation of any person either directly employed by the Company or our temporary/seasonal workers.

Relevant policies and employment process
Integrity is a central part of our corporate commitment as a publicly listed business. We have a variety of existing policies that are relevant. These include:
• Anti-corruption Policy & Code of Ethics
• Fairness at Work Policy
• Employment Policy and employee handbook
• Product Integrity & Stewardship Policy
• Human Rights & Security Policy
• Health & Safety Policy
• Whistleblowing Procedure
• Cut & Polished Supplier Code of Conduct

We recognise that we operate in a number of countries where historically, human rights abuses has been an issue of particular concern to international businesses. Gemfields has embedded a risk management process which provides oversight for enterprise risk across the business, ensuring it is assessed regularly, and effectively mitigated. We regularly review our mining-related operational procedures in relation to topics such as direct and indirect employment, procurement, security practices, community engagement, grievances, stakeholder engagement and government relations. We publish our group policies at each mining operation and, where necessary, do this in other languages such as Spanish or Portuguese.

Gemfields is committed to the benefits brought about by diversity and equal opportunity and therefore supports collective bargaining for our employees. We are active in supporting employee engagement, representation, dialogue and provide mechanisms for employees to raise concerns and grievances. We work with international and local recruitment agents to identify hiring needs and apply our employment practices in line with, and in certain aspects exceeding the requirements of, local legislation. In countries where established recruitment practices are not possible (for instance in very remote areas), we rely on local agencies to recommend individuals that are suitable to be hired and we carry out the same recruitment practices as with more established operations.

We recognise there is a risk under the broader definition of slavery and human trafficking in the hiring of temporary or seasonal workforces at our mining operations. Our local HR teams, working with local and international recruitment agents, are responsible for implementing local, legally compliant and applicable processes involving background checks to ensure that the relevant workers have all the necessary identification and documentation to prove, as far as possible, their eligibility and legitimacy to work. We do not, under any circumstances, withhold the documentation of any person either directly employed by the Company or our temporary/seasonal workers.

Training and awareness
We provide training to our operational and security teams at our mining operations in accordance with the Voluntary Principles for Security & Human Rights. We also provide training for all of our management, sales and support office staff on anti-money laundering and business ethics. We do not currently provide specific slavery and human trafficking training within the organisation although we do intend to implement a programme which covers this in the coming financial year.

Reviewing compliance and performance
Gemfields outsources internal audit services to recognised and accredited service providers. We work closely with these providers to ensure that the stated controls exist within our company and that we have the ability to provide evidence supporting the claims we have made about such controls.
While Gemfields places a significant degree of importance on the fundamentals of Health, Safety and Sustainability, it does not have any Key Performance Indicators that relate directly to slavery or human trafficking. Any incident involving our employees or recruitment agents in such practices would constitute grounds for breach of employment contract and/or invoke the relevant policies and, as such, it is likely to trigger immediate disciplinary action. We do, however, monitor the broader data and practices that relate to the mitigation of slavery or human trafficking and these include:
• Number of employees who have completed human rights training
• Number of employees who have completed anti-money laundering and code of ethics training
• Investigating locally reported internally and externally grievances
• Investigating whistleblowing
• Investigating security incidences
• Analysis of customer audit results