Section 172 (1) statement
Year ended 31 March 2020
Section 172 of the Companies Act 2006 requires a director of a company to act in the 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. In doing this, section 172 requires a director to have regard, amongst other matters, to the:
(a) likely consequences of any decisions in the long-term;
(b) interests of the company’s employees;
(c) need to foster the company’s business relationships with suppliers, customers and others;
(d) impact of the company’s operations on the community and environment;
(e) desirability of the company maintaining a reputation for high standards of business conduct;
(f) need to act fairly between members of the Company.
We set out below 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 duties in their decision making.
The directors have taken a coordinated approach in response to the COVID-19 crisis to ensure the safety of staff and security of operations at all subsidiaries. This has included staff consultation, involvement and awareness training. At the same time, we have ensured that our deliveries to customers were not disrupted but, whilst demand was temporarily suppressed, we have closed our factories for short periods. The decision was taken to maintain all staff at full salaries at all locations across the group, irrespective of the level of government support in each country. Likewise, we have maintained normal relationships with suppliers. Supplier payments have been made as normal and we have not sought any changes to supplier payment terms. The directors believe these actions are the right thing to do and in the long-term interest of the Group.
The directors oversee the compliance systems in each subsidiary and consider strong compliance with laws, regulations and other codes of conduct as being in the best interests of employees, their relationships with customers and suppliers and for the reputation of the Group as whole. The decision was taken during the year to create a new compliance and legal role in the Company as part of the continued development of our compliance activities across the Group.
Acquisitions in Turkey
Transformational acquisitions in Turkey were completed on 1 August 2019. This major step was taken with careful consultation between the directors and with the shareholders, all of whom gave their full support. The decision was driven by several key, long-term strategic priorities. One is to reinforce our relationships with global customers across their locations in each region of the world. The Group achieves this via its own plants in the UK, France, India and now, significantly, in Turkey, as well as more broadly in other parts of the world through other group companies of SCC, our ultimate parent company. Being in Turkey helps to secure and enhance the business at all of our locations, for the benefit of all our business partners as well as the Group. Another driver is environmental, as these acquisitions bring significant recycling operations and expertise into our Group, which will boost our efforts to directly make a difference to the environment, as well as increasing our exposure to fast growing markets for recycled product. Finally, Turkey is an important growth market for our business with opportunities to gain new business in the territory by leveraging the Group’s core expertise. The directors have been monitoring the integration of the acquisitions to ensure that they maintain a high reputation for quality and integrity.
No dividends had been paid for many years but after much stronger group performance for several successive years, dividends commenced in December 2018 at an amount of £889,000. A dividend policy was being developed in consultation with our shareholders, taking account of free cash after investment requirements in the businesses each year, and a further modest dividend of £200,000 was paid in December 2019. More recently, the directors took the decision to temporarily pause dividends as a precautionary measure due to the less favourable trading results and the COVID-19 crisis. However, the directors anticipate recommencing regular dividends as soon as it is prudent to do so.
Sumika Polymer Compounds (Europe) Ltd
Approved by the board on 4 November 2020