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Statement by the Directors in performance of their statutory duties in accordance with s172 (1) Companies Act 2006

The Directors of French Connection Group PLC consider that they have behaved in the way that would be most likely to promote the success of the Company for the benefit of its members as a whole (with regards to the stakeholders and matters set out in s172 (1) (a to f) of the Companies Act) in the decisions taken during the year ended 31 January 2021.

French Connection’s governance framework is conducive to Board-level decisions being made with stakeholder interests and the longer-term, in mind.

Specific matters and how the Board of Directors have promoted the success of the business for the benefit of its members in accordance with s172 are summarised below:

 

 

Matters Matters for discussion How the Board considered S172 Actions Key Stakeholders
Interests of the Group’s employees Employee reviews and appraisals, Gender Pay Gap reporting Our employees are fundamental to the success of the business. We aim to be a responsible employer in our approach to the pay and benefits that our employees receive and ensure that we adhere to all statutory employee health and safety standards. We have worked hard to keep all of our colleagues informed, engaged and supported while we have been working remotely and while our stores were temporarily closed. We also recognise the importance of diversity and inclusion and listening and reacting to the input of our employees. The business also provides Gender Pay Gap reporting. Employees
Operational changes due to COVID-19 pandemic The pandemic caused unprecedented disruption to our business impacting trading operations and cash flows The decisions made by the Board were key to the Group’s approach in response to COVID-19. The Board actively engaged with senior management to create a working plan to best navigate the business through this period and at all times focussed on the best interests of key stakeholder groups including employees, customers, suppliers and our shareholders. Our stores were closed in line with government advice and store and head office staff were appropriately furloughed. Senior management were consulted and actively engaged in key decision making. Board and Committee meetings continued virtually throughout the lockdown period. COVID-19 risk mitigation strategy can be found on page 8. Employees Shareholders Suppliers Partners Customers
Brexit Mitigation strategies with regards to Brexit The Board identified and effectively responded to the challenges of a post-Brexit environment including logistic and supply chain issues, volatility in currency and labour market and additional regulatory responsibilities. A Brexit steering committee was established with weekly meetings including the Directors and senior management from finance, logistics and IT. A detailed plan of action was created and implemented. Key shareholders were informed of Brexit impact under effective supplier and customer engagement. Employees Shareholders Suppliers Partners Customers
Reducing costs and driving efficiencies Likely consequences of any decision in the long term The Board focussed on the longterm sustainability of the business, including the prioritisation of cash preservation, in particular, from the impact of COVID-19 New working capital credit facilities were secured during the current year ensuring the future of the Group. Annually, the Board undertakes a review of the Company’s strategy, including the budget for the forthcoming year and the long range plan for the next five years. Once approved, the plan and strategy form the basis for financial budgets and resource and investment decisions. Both input to the budgets and output in terms of decision making involves both the Board and senior management. In making decisions concerning the business plan and future strategy, the Board has regard to the interests of various stakeholders and the consequences of its decisions in the long-term. During the last year and as a result of the impact of the pandemic, the business reduced variable costs where possible and reduced both store and head office headcount following an employee restructure review. Employees Shareholders
Sustainability More focus on implementing new policies and supporting a sustainable approach The Board took into consideration the increasing demand on sustainability from our customers and shareholders including focus on issues such as waste regulation membership, recycling and carbon emissions. Key focus was on establishing new policies and communicating these to our suppliers and employees in compliance with relevant regulations. Environmental issues are an important focus of the business. The Directors regularly review the raw materials sourced to manufacture the products and the related transportation and packaging. Recycling and reducing carbon footprint is widely encouraged throughout the supply chain and amongst employees. Employees Shareholders Suppliers Partners Customers Communities
Effective employment engagement Continuous focus on effective engagement with our employees through new policies and systems Our design-led culture continues to evolve and our employees are key to our business. French Connection continues to find ways to engage with our employees and the Board plays a key role in implementing and maintaining the culture of the business. We ensure that all employees, customers and suppliers are treated consistently and do not suffer discrimination, harassment, bullying or victimisation in any form. We have implemented a new policy management system which was approved by the Board which ensures that all employees remain updated and well informed about our latest policies. The Board also approved the implementation of a new whistleblowing hotline system that can enable our employees to feel supported and listened to by the business. Employees
Effective supplier and customer engagement Need to foster the Company’s business relationships with suppliers, customers and others The Board considered the engagement with customers and suppliers. They have been a key focus during the past year, so that they can continue to deliver, work and shop safely. The Board has ensured that all investors are informed of the impact the virus and Brexit had on our business. We are committed to securing strong working relationships with both our suppliers and customers to accentuate the performance of the Group. We have published an internal ‘Supplier Guide’ which focuses on working with suppliers who adhere to acceptable employment, industry and environmental practices. Harbouring good retail and ecommerce customer relations is a key area of focus which is supported by regular retail employee training workshops and customer feedback surveys. Suppliers Customer Partners
Relationship with the Members of the Company Need to act fairly between members of the Company The Board is committed to openly engaging with our shareholders, whether with institutional investors or private shareholders. It is important that shareholders understand our strategy and objectives The Board of Directors have regular meetings with shareholders. Reference: relations with shareholders (page 28), controlling shareholder relationship agreement (page 25). Shareholders
Business Conduct Desirability of the Group maintaining a reputation for high standards of business conduct Our Board’s intention is to behave responsibly and ensure that management operate the business in a responsible manner and within high standards of business conduct and good governance. The Group has processes in place to monitor new regulations and compliance requirements that might impact the business. Corporate governance compliance. Audit and remuneration committees. Non-executive Director Board appointments. FTSE market regulation compliance. Reference: Corporate Governance Board statements (page 27). Employees Suppliers