Section 172 (1) Statement
In fulfilling their duties to promote the success of the company, the Directors must have regard to
the matters set out in section 172(1)(a) to (f) of the Companies Act 2006, including regard 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.
HOW WE PROMOTE THE SUCCESS OF THE COMPANY
The following forms the Directors’ statement required under section 414CZA of the Companies Act
2006.
(a) Regard to the likely consequences of any decision in the long-term
All companies within the Group are required to submit three and five-year business plans including
a five-year Income Statement, Balance Sheet plan, Cash flow plan, headcount plan and capital
expenditure plan. The three and five-year Income Statements include allowances approved by
ultimate parent company (UPC) for research activities, investment in sales and marketing roles
and investment activities that will improve the benefits to clients, suppliers and shareholders. Once
approved, Group companies provide progress reports and reforecasts to the UPC to have
accountability and allow oversight of plan implementation.
In developing these plans, directors formally have to balance the use of maintenance, contractual
and long-term investment, with regard to the short term, medium term and the long-term (two to
five years) impact of decisions. Contracts with clients cover periods ranging from less than a year
to ten years. On a contract-by-contract basis, the directors have to devise transformational and
signature programmes covering these periods in order to meet key stakeholder expectations.
Maintaining the right balance during this investment programme for all key stakeholders including
end users (where services are provided to the general public on behalf of clients), clients, the
owners, suppliers and relevant third parties such as suppliers and trade unions has been a
particular focus for directors in 2024.
(b) Regard to the interests of the Group’s employees
As a parent company, Outsourcing UK Limited directly employs very few employees, whereas
subsidiaries of Outsourcing UK Limited have larger numbers of employees across a wide
geography. The Group earns revenue and retains its clients through the efforts of employees and
automated processes built by unlocking the knowledge, skills and creativity of employees. To
ensure employees work under safe conditions, are equipped to fulfil their duties and are effectively
motivated, the ultimate parent company OUTSOURCING Inc. issues business control objectives to
all holding companies and trading companies of Outsourcing UK Limited.
All Group companies are required to have and communicate management’s philosophy, a business
code of conduct and the ultimate parent company’s code of ethics. In some cases, these are
communicated through a series of meetings, online videos, by accessible onsite leadership, and
policies, which are readily accessible on the intranet of each company.
Companies controlled by OSUK are required to have effective financial controls and good
stewardship by the directors so that all employees are paid on time for their services. On a
monthly basis, all companies identify risks to achieving control objectives as well as opportunities
to mitigate those risks.
To give employees effective channels of communications, Group companies’ senior management
communicate important goals, results, policies and processes. All Group companies are required to
communicate and retain evidence of the clear allocation of roles, clear schemes of delegated
authority, clear performance objectives and incentive schemes. Employers within the Group
maintain employee engagement through various means, including employee forums and
consultation with unions.
(c) Regard to the need to foster the company’s business relationships with the four key
stakeholders of the Group: clients, customers, our owners and suppliers
Our clients are those (mainly public sector) organisations that retain us to deliver services on their
behalf. These relationships are maintained through formal contract mechanisms with regular and
ongoing management dialogue with an obligation on us to meet service levels. Directors of
Outsourcing UK’s trading businesses pay close attention to how clients are feeling about our
services through formal Board Reporting mechanisms and check that clients are receiving what
they need from those Group companies and more. The directors are also able to have direct
relationships with senior officers of a large number of clients due to the size of the trading
businesses, and this provides another layer of contact and feedback.
Our end customers are citizens and businesses with whom we interact on behalf of our clients.
Listening directly to our customers and finding better ways to interact and deliver services to them
is one of the main tasks of the company.
The shareholders of OSUK invested over £243m in the UK between 2015 and 2024. The board of
directors include OSI representatives, to monitor the interests of the owners.
Outsourcing UK’s parent company, OUTSOURCING Inc. continues to take a medium-term approach
and engages annually with its portfolio businesses to generate 3 years plans and understand the
investment required to grow the business responsibly into the future.
The supplier base of Outsourcing UK’s trading businesses ranges from large blue chip companies to
local SMEs. We are dedicated to ensuring that suppliers are paid within the minimum 30 days and
where possible look to local supply chains to support our business centres around the country. We
assign dedicated supplier managers to ensure we have regular feedback and dialogue with our
supplier base in combination with the formal monitoring of the contract mechanisms in place.
(d) Regard to the impact of the Group’s operations on the community and the environment
The Group is involved in revenue collection on behalf of public bodies, benefits administration and
providing consultancy services. Without tax and revenue collection, government expenditure could
not happen. The services performed by trading businesses of the Group therefore have a direct
impact on the ability of government and public bodies to carry out judicial work, central
government, local authority functions, and other duties of public bodies. Benefits administration
enables pensioners and the unemployed to maintain their welfare and participate in society as
consumers.
In providing employment, learning and development opportunities, safety training and safe
working environments, the trading businesses of Outsourcing UK Limited contribute to the
community stock of knowledge, skills, experience, health, and wellbeing. The business
relationships between clients, the owners, suppliers, employees and unions create social capital
since some of these relationships will continue after employees move on, suppliers change or after
contracts with customers end.
As a customer, the Group recycles revenue into the community, through the procurement of
services from local suppliers and as employees spend their disposable income in the community.
As a taxpayer, the Group contributes to the public finances, through taxes paid on profits, salaries,
sales (through value added tax), property and transactions in shares (through business rates and
stamp duties).
The geographic spread of operations and the involvement of some businesses in dealing with
members of the public on behalf of clients provide a natural set of incentives to invest in activities
that benefit the local communities in which we work. This includes for example:
* Committing to ‘Social Value’ endeavours through our contracts with new and existing
clients and through understanding what will make the biggest difference for those clients
and their communities.
* Job creation in the East Lancashire, South Wales and Cumbria regions.
* Engaging in and sponsoring community residential and business building developments
through our architectural services business.
* Matching charitable donations by employees on a discretionary basis.
The Group focussed on reducing its carbon footprint through actively reducing the volume of paper
that is required to support its business, which has knock on benefits for the use of peripheral
hardware and environmental burden of transporting and distributing paper.
(e) Regard to desirability of the Company and its reputation for maintaining high standards
We only undertake and compete in service sectors we really understand and where we can deliver
inspiring outcomes to our clients and customers. A high proportion of our new name business is
generated by referrals from our government clients (or those that have worked for our clients and
taken the relationship to their new companies); so, reputation and dependability is key. This is
backed by our rigorous approach to Risk Management where we have a number of roles dedicated
to leading internal efforts to manage and adapt to the evolving data protection legislation and the
increasing client requirements in this area.
Finally at Board level we positively review and affirm our commitment and compliance with
legislation such as the Bribery Act every month to ensure we hold all our directors to a visible high
standard.
(f) Regard to need to act fairly as between members of the company
Where alphabet shares exist or two or more shareholders have an interest in a company within the
Group, share purchase agreements, shareholder agreements and the articles of association
provide a terms of reference for acting fairly between members of the company or resolving any
disputes. Alphabet shares refer to when there are two or more classes of shares each with
dissimilar rights to ownership, voting, and dividends. Example terms for alphabet shares may be A
shares, B shares or C shares in either share purchase agreements, shareholder agreements or the
articles of association.
