The revised UK Corporate Governance code ('2018 Code') was published in July 2018 and applies to accounting periods beginning on or after 1 January 2019. The Companies (Miscellaneous Reporting) Regulations 2018 ('2018 MRR') require directors to explain how they considered the interests of key stakeholders and the broader matters set out in section 172(1) (a) to (f) of the Companies Act 2006 ('s172') when performing their duty to promote the success of the company under s172.
The s172 statement focuses on matters of strategic importance to the company, and the level of information disclosed is consistent with the size and the complexity of the business.
When making decisions, each director ensures that they act in a way they consider, in good faith, would most likely promote the company's success for the benefit of its members as a whole, and, in doing so have regard (among other matters) to:
(a) 'The likely consequences of any decision in the long term'
The directors have regard to the long term implications of the decisions they make, and have a policy of sustaining a diverse and comprehensive product range to enable it to take advantage of swings in the market.
When making decisions on capital commitments the directors have due regard for the financial implications to the company including affordability and returns on the investment and will ensure the overall benefits of such commitments outweigh the costs.
The directors will also ensure any adverse impact on their employees by any decisions made are minimal to the best of their ability.
(b) 'The interests of the company's employees'
The directors recognise the importance of staff to the success of the business. The company regularly updates employees and also posts information on notice boards across the company to keep employees informed.
Employee feedback is encouraged and welcomed by the directors, especially when undertaking major decisions, in this regard, being largely on one site is of great advantage.
(c) 'The need to foster the company's business relationships with suppliers, customers and others'
The directors understand that the success of the business also relies on strong mutually beneficial relationships with suppliers, customers and other partners. The company ensures its relationships with its suppliers, customers and other partners are amicable, and any potential disputes are resolved in a timely and fair manner.
The company is a member of a buying group with other companies, who pool their resources together to achieve a fair deal from suppliers, in addition the company has several longstanding suppliers who they have a strong relationship with and whom the company is in regular contact with at senior levels to ensure the relationship remains strong and mutually beneficial.
The company closely monitors its bad debt risk and will speak to the customer in the first instance to agree a mutual way forward, only taking further action if such an agreement can't be found. This has enabled the company to continue to maintain its reputation as a good, fair company for others to do business with.
(d) 'The impact of the company's operations on the community and the environment'
The company considers the impact its operations make on the community and the environment. The company sources all timber from sustainable sources and has waste management procedures in place to increase recycling and protect the environment.
The company has due regard for neighbouring businesses and residences when making changes, including the effect of goods traffic on the area.
(e) 'The desirability of the company maintaining a reputation for high standards of business conduct'
The company considers that its policies of staff incentivisation, reward and engagement, fair pricing, and an aversion to unnecessary risks ensure the company remains on a sustainable footing while growing the company and maintaining its reputation.
The company always endeavours to ensure equal opportunity for employees, to ensure a safe and healthy working environment and to ensure the business is run ethically.
(f) 'The need to act fairly as between members of the company'
The directors consider which courses of action best enable delivery of its strategy and aims, after weighing up all relevant factors and taking into consideration the impact on stakeholders.
In doing so, the directors act fairly as between the company's members, ensuring all members have the chance to express their views before a decision is made that impacts them.