Section 172(1) Statement

Section 172(1) of the Companies Act 2006 requires a director of a company to act in a way he or she considers in good faith, would most likely promote the success of the company for the benefit of its members as a whole, and in doing so, have regard, amongst other matters, to:

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

Set out below are some examples of how the directors have had regard to the matters set out in section 172(1)(a)-(f) when discharging their section 172 duty, and the effect on certain decisions made by the directors.

The directors have taken steps to implement a more structured reporting process, increasing the scope of information received and considered by the directors at the formally scheduled board meetings. The directors received information on a range of matters concerning the business activities of the Company and its employees, to support the directors in exercising their discretion when considering the matters set out in section 172(1). To support the conduct of normal business in an expeditious manner, the board delegates certain authority to management, pursuant to the Company’s Delegation of Authority which is regularly reviewed.

The directors consider the likely consequences of any decision in the long term. Each company within the ConvaTec Group is bound by Group policies consistent with the Group’s culture in all key areas including supplier management and outsourcing, customer interactions, human resources, legal and compliance, quality and regulatory, and health and safety.

The directors received and considered reports outlining stakeholder engagement activities which had taken place at a group level, whereby much of this activity takes place, due to the diversity and breadth of the group’s stakeholders. Further details of the group’s stakeholders and how their interests are considered can be found on pages 10 to 13 of ConvaTec Group Plc’s Annual Report 2019. The Company considers its employees to be a key stakeholder and attaches significant importance to employee welfare and development. The directors considered some of the key themes which had been communicated as part of the employee engagement at a company level.

During the year, the directors considered certain transactions to be entered into by the Company, as part of the group’s debt refinancing programme (“Refinancing Programme”). When considering the proposed transactions undertaken by the Company, the directors had regard to the Company’s assets, liabilities, and the benefit to the Company and its sole member, of the successful completion of the Refinancing Programme. Further details of the Refinancing Programme may be found on page 54 of ConvaTec Group Plc’s Annual Report 2019.

The directors considered proposals, as part of the group’s Transformation Initiative which identified efficiencies within the Company’s operating model, through the consolidation and relocation of certain functions. Whilst the directors supported the proposals, consideration was given as to the impact to employees as well as to the longer-term operational performance of the Company.

The directors reviewed and approved data concerning the Company’s payment practices and policies with regard to the payment of the Company’s suppliers and received and considered reports on: environmental; health & safety matters; and projects and initiatives to promote energy efficiency at various locations, including office and manufacturing sites.


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