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 considered the likely consequences of any decision in the long term. Each company within the ConvaTec Group Plc 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 also have regard to other factors which they consider relevant to the decision being made, acknowledging that every decision made will not necessarily result in a positive outcome for all stakeholders. However by considering our vision and values, together with our strategic priorities, and having a process in place for decision making, the Board aims to make sure that all decisions are consistent and well-considered.

The directors continued to follow a structured reporting process through scheduled and adhoc board meetings as and when required, the majority of which took place virtually. The directors received information on 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). Updates were provided to the directors outlining the Group’s response to Brexit and mitigating actions being taken to manage the impact to stakeholders and customers. The developments of the COVID-19 pandemic were monitored to ensure measures were in place to safeguard employees and business continuity.

The directors reviewed and considered customer and employee recognition feedback, with stakeholder engagement activities predominantly taking place at a Group level. Further details of the group’s stakeholders and how their interests are considered as well as the group Organisational Health Index survey can be found on pages 40 to 41 and 50 of ConvaTec Group Plc’s Annual Report 2020 respectively, its ultimate sole member. The directors are mindful of fostering good relationships with suppliers, customers and others; continue to work proactively and prioritise each of these groups as the needs arise, such as during the change of management structure during the year. This has enabled our patients to be served, suppliers to be paid in a timely manner, which we hope will lead to positive ongoing relationships with various stakeholders into the future.

The directors reviewed and approved data concerning the company’s payment practices and policies with regard to the payment of the company’s suppliers, this allowed the directors to monitor and review the payment of suppliers against the Company’s standard terms and ensure any concerns were addressed. The directors received and considered reports in relation to health & safety and environmental matters as part of the Group’s environmental, social and governance initiatives.