Convatec Group PLC

Convatec Group PLC 213800LS272L4FIDOH92 2023-01-01 2023-12-31 213800LS272L4FIDOH92 2024-01-01 2024-12-31 213800LS272L4FIDOH92 2023-12-31 213800LS272L4FIDOH92 2024-12-31 213800LS272L4FIDOH92 2022-12-31 213800LS272L4FIDOH92 2024-01-01 2024-12-31 ifrs-full:IssuedCapitalMember 213800LS272L4FIDOH92 2024-01-01 2024-12-31 ifrs-full:SharePremiumMember 213800LS272L4FIDOH92 2024-01-01 2024-12-31 ifrs-full:OtherReservesMember 213800LS272L4FIDOH92 2024-01-01 2024-12-31 ifrs-full:ReserveOfExchangeDifferencesOnTranslationMember 213800LS272L4FIDOH92 2024-01-01 2024-12-31 ifrs-full:MergerReserveMember 213800LS272L4FIDOH92 2024-01-01 2024-12-31 ifrs-full:RetainedEarningsMember 213800LS272L4FIDOH92 2024-01-01 2024-12-31 ifrs-full:TreasurySharesMember 213800LS272L4FIDOH92 2023-01-01 2023-12-31 ifrs-full:OtherReservesMember 213800LS272L4FIDOH92 2023-01-01 2023-12-31 ifrs-full:ReserveOfExchangeDifferencesOnTranslationMember 213800LS272L4FIDOH92 2023-01-01 2023-12-31 ifrs-full:MergerReserveMember 213800LS272L4FIDOH92 2023-01-01 2023-12-31 ifrs-full:RetainedEarningsMember 213800LS272L4FIDOH92 2023-01-01 2023-12-31 ifrs-full:TreasurySharesMember 213800LS272L4FIDOH92 2023-01-01 2023-12-31 ifrs-full:SharePremiumMember 213800LS272L4FIDOH92 2023-01-01 2023-12-31 ifrs-full:IssuedCapitalMember 213800LS272L4FIDOH92 2024-12-31 ifrs-full:IssuedCapitalMember 213800LS272L4FIDOH92 2024-12-31 ifrs-full:SharePremiumMember 213800LS272L4FIDOH92 2024-12-31 ifrs-full:TreasurySharesMember 213800LS272L4FIDOH92 2024-12-31 ifrs-full:RetainedEarningsMember 213800LS272L4FIDOH92 2024-12-31 ifrs-full:MergerReserveMember 213800LS272L4FIDOH92 2024-12-31 ifrs-full:ReserveOfExchangeDifferencesOnTranslationMember 213800LS272L4FIDOH92 2024-12-31 ifrs-full:OtherReservesMember 213800LS272L4FIDOH92 2022-12-31 ifrs-full:OtherReservesMember 213800LS272L4FIDOH92 2022-12-31 ifrs-full:ReserveOfExchangeDifferencesOnTranslationMember 213800LS272L4FIDOH92 2022-12-31 ifrs-full:MergerReserveMember 213800LS272L4FIDOH92 2022-12-31 ifrs-full:RetainedEarningsMember 213800LS272L4FIDOH92 2022-12-31 ifrs-full:TreasurySharesMember 213800LS272L4FIDOH92 2022-12-31 ifrs-full:SharePremiumMember 213800LS272L4FIDOH92 2022-12-31 ifrs-full:IssuedCapitalMember 213800LS272L4FIDOH92 2023-12-31 ifrs-full:IssuedCapitalMember 213800LS272L4FIDOH92 2023-12-31 ifrs-full:SharePremiumMember 213800LS272L4FIDOH92 2023-12-31 ifrs-full:TreasurySharesMember 213800LS272L4FIDOH92 2023-12-31 ifrs-full:RetainedEarningsMember 213800LS272L4FIDOH92 2023-12-31 ifrs-full:MergerReserveMember 213800LS272L4FIDOH92 2023-12-31 ifrs-full:ReserveOfExchangeDifferencesOnTranslationMember 213800LS272L4FIDOH92 2023-12-31 ifrs-full:OtherReservesMember iso4217:USD iso4217:USD xbrli:shares Pioneering trusted medical solutions to improve the lives we touch Convatec Group Plc Annual Report and Accounts 2024 Welcome Help us to reduce our environmental impact by opting out of receiving printed copies. Convatec Annual Reports are available to view online at convatecgroup.com/investors. We are Convatec Our strongest-ever innovation pipeline Read more about our innovation on pages 39 to 43. A strategy that continues to deliver Read more about our FISBE strategy on pages 7, 10 and 11. Strongly positioned to continue to create value for all our stakeholders Pioneering trusted medical solutions to improve the lives we touch Convatec is an innovative global medical products and technologies company, focused on solutions for the management of chronic conditions. We have leading positions in Advanced Wound Care, Ostomy Care, Continence Care and Infusion Care. With more than 10,000 colleagues, we provide our products and services in around 90 countries, united by our promise to be forever caring. Our solutions provide a range of clinical and economic benefits, including infection prevention, protection of at-risk skin, improved patient outcomes and reduced total costs of care. FINANCIAL HIGHLIGHTS Group revenue $2,289m (2023: $2,142m) Adjusted 1 operating profit $485m (2023: $432m) Reported operating profit $325m (2023: $263m) Adjusted 1 diluted earnings per share 15.2¢ (2023: 13.4¢) Reported diluted earnings per share 9.3¢ (2023: 6.3¢) Adjusted 1 operating profit margin 21.2% (2023: 20.2%) Pioneering trusted medical solutions to improve the lives we touch Convatec Group Plc Annual Report and Accounts 2024 1. Certain ﬁnancial measures in this document, including adjusted results above, are not prepared in accordance with International Financial Reporting Standards (IFRS). See the Non-IFRS ﬁnancial information section on pages 28 to 31. We have pivoted to sustainable and profitable growth Read more about our record performance and double- digit adjusted EPS and free cash ﬂow to equity growth in our CEO’s review on pages 9 to 11. 1 Convatec Group Plc Annual Report and Accounts 2024 Overview 2 About us Strategic report 5 Megatrends 6 Chair’s statement 7 How we realise our vision 8 Business model 9 Chief Executive Oﬃcer’s review 10 Investment case 12 Key performance indicators 14 Operational review 22 Financial review 28 Non-IFRS ﬁnancial information 32 Responsible business review 60 Task Force on Climate-related Financial Disclosures 72 Risk management 76 Principal risks 81 Non-ﬁnancial and sustainability information statement 82 Viability statement Governance 85 Governance at a glance 86 Chair’s governance letter 88 Board statements 89 How we have applied the Code's core principles 92 Board of Directors 94 Convatec Executive Leadership Team 96 Board activity and actions 99 Board performance evaluation 101 Nomination Committee report 104 Audit and Risk Committee report 114 Directors’ Remuneration report 145 Directors’ report 148 Directors’ responsibilities statement Financial statements 150 Independent auditor’s report 157 Consolidated ﬁnancial statements 201 Company ﬁnancial statements Additional information 210 Shareholder information 211 Glossary 213 Important information for readers of this Annual Report WHAT'S INSIDE THIS REPORT INNOVATION IS A CORNERSTONE OF OUR STRATEGY Stories throughout this report highlight our deep commitment to innovation and delivering solutions to improve people’s lives Strategic report Governance Financial statements Additional information Overview Convatec at a glance About us OUR CATEGORIES Convatec at a glance About us Advanced dressings for the management of acute and chronic wounds resulting from ongoing conditions, such as diabetes, and acute conditions resulting from traumatic injury and burns. Read more on page 14 Devices, accessories and services for people with a stoma (a surgically created opening where bodily waste is discharged), commonly resulting from causes such as colorectal cancer, bladder cancer, inﬂammatory bowel disease and trauma. Read more on page 16 Products and services for people with urinary continence issues related to spinal cord injury, neurological disease, prostate enlargement or other causes. Read more on page 18 Disposable infusion sets used with insulin pumps for diabetes or with continuous infusion treatments for conditions such as Parkinson’s disease. Read more on page 20 Convatec is deeply committed to the people we serve – patients living with chronic conditions, their families and caregivers, and the healthcare professionals who support them #3 globally 1 #1 in the US 1 #1 globally 1 #3 globally 1 Advanced Wound Care (AWC) Ostomy Care (OC) Continence Care (CC) Infusion Care (IC) 1. Market dynamics, segment size, growth rates and positions based on internal analysis and publicly available sources. 2 Convatec Group Plc Annual Report and Accounts 2024 Overview OUR BUSINESS Group-reported revenue by category Group-reported revenue by geography Organic revenue growth¹ Adjusted operating profit margin² 2019 2020 2021 2022 2023 2024 19.4% 21.2% 20.2% 19.5% 17.7% 18.5% 2019 2020 2021 2022 2023 2024 2.3% 7.7% 7.2% 5.6% 5.3% 4.2% Since 1978, we have supported people living with long-term chronic conditions. Convatec has leading market positions in Advanced Wound Care, Ostomy Care, Continence Care and Infusion Care $2,289 1 m $2,289 1 m Europe 29% $661m North America 57% $1,296m Rest of world 14% $332m Advanced 32% $743m Wound Care Ostomy Care 28% $634m Continence Care 22% $501m Infusion Care 18% $411m 1. Includes $0.2m of hospital care and related industrial sales. ~900m finished products in 2024 ~10,000 colleagues in 2024 12 key markets 7 manufacturing locations KEY FACTS OUR PERFORMANCE 1. Revenue growth at constant currency, adjusted for acquisitions, divestments and discontinuations. 2. Deﬁnitions of adjusted measures are shown in the reconciliation tables on pages 29 to 31. 3 Convatec Group Plc Annual Report and Accounts 2024 Strategic report Governance Financial statements Additional information Overview Convatec Group Plc Annual Report and Accounts 2024 What’s inside Strategic report 5 Megatrends 6 Chair’s statement 7 How we realise our vision 8 Business model 9 Chief Executive Officer’s review 10 Investment case 12 Key performance indicators 14 Operational review 22 Financial review 28 Non-IFRS financial information 32 Responsible business review 60 Task Force on Climate-related Financial Disclosures 72 Risk management 76 Principal risks 81 Non-financial and sustainability information statement 82 Viability statement Convatec Group Plc Annual Report and Accounts 2024 4 Strategic report Megatrends Chronic care markets are driven by global healthcare megatrends Ageing populations, rising per-capita gross domestic product (GDP) and urbanisation will drive healthcare demand in emerging markets. This demand is set to outpace overall GDP growth in emerging economies and healthcare spending growth in developed countries. Global population aged 65+ 2060 2020 1.6bn 0.8bn Average life expectancy globally (years) 2022 1950 72 47 Source: United Nations, World Population Prospects. Source: United Nations, Population Divisions estimates. INCREASED LIFE EXPECTANCY AND AGEING POPULATIONS CHRONIC CONDITIONS ARE INCREASING IMPROVING ACCESS TO HEALTHCARE IN EMERGING MARKETS 1 in 3 Adults affected by chronic conditions globally (Cardiovascular, cancer, diabetes) Source: The global burden of multiple chronic conditions, Cother Hajat and Emma Stein. As people live longer, the prevalence and cost of chronic disease continues to grow. 2019 healthcare spending (% of GDP) Emerging markets 5.2% OECD 12.5% US 16.8% Source: World Bank, UBS, March 2023. More than 90% of our revenues arise from serving chronic care patients, and these revenues are often recurring in nature Three global healthcare megatrends drive structural growth and demand for our solutions 1 3 2 5 Convatec Group Plc Annual Report and Accounts 2024 Governance Financial statements Additional information Overview Strategic report The payout ratio of 42% of adjusted net proﬁt remains modestly ahead of the target range of 35-45%. This progressive dividend recommendation is consistent with the approach over the last three years. We have also set out proposals for a revised Remuneration Policy within our Directors’ Remuneration Report on pages 114 to 134. Our plans have been developed following signiﬁcant shareholder engagement and the Board is conﬁdent that they will support the next phase of Convatec’s growth. Culture and values During the year, we have continued to make progress on senior management diversity, sustaining strong performance on gender targets set by the FTSE Women Leaders Review. We are also committed to a race and ethnicity target, encouraged by the Parker Review, including meeting the diversity targets in the FCA Listing Rules. We continue to recruit on merit and ensure that we appoint the best candidate for the role. Further information on this, including our targets for gender and ethnic diversity within senior management, can be found on pages 44 to 48. Our values guide our everyday behaviours. The Board is determined to foster a culture that is shaped by these values as we strive to deliver our vision of pioneering trusted medical solutions to improve the lives we touch. We are delivering our forever caring promise, and this Annual Report sets out our progress in nurturing a responsible, engaging, inclusive and high- performing culture. Dear Shareholder I am pleased to report that Convatec delivered strong results in 2024, and has continued to enhance our trusted medical solutions with a rich stream of innovation and successful new product launches. As we have continued to transform Convatec, driven by strong execution of our Focus, Innovate, Simplify, Build, Execute (FISBE) strategy, we have pivoted to sustainable and proﬁtable growth. Our target is to consistently produce double-digit adjusted earnings per share (EPS) and free cash ﬂow to equity growth. Strong execution of our strategy During 2024, we continued to strengthen our product portfolio, led by research and development, innovation and the successful launch of new products. We launched or signiﬁcantly expanded the regional presence of four new products including ConvaFoam™ in Europe and GentleCath Air™ for Women in the US. Looking ahead, ConvaNiox™, our new advanced wound dressing technology powered by nitric oxide, is on track to launch in 2026, following EU regulatory approval in 2025. This game-changing solution is highly complementary to our Advanced Wound Care portfolio. We continued to drive operational and commercial improvements as part of our focus on driving simpliﬁcation and productivity. During the year, we closed manufacturing operations at our smaller Danish facility as planned. We also launched new centres of excellence (CoEs) for Global Marketing & Sales and Market Access & Reimbursement, supplementing our existing CoEs which are helping to achieve better pricing and salesforce productivity, particularly following the roll out of a new single customer relationship management platform in our FISBE markets. We also continued to increase our operational resilience with further investments in infrastructure, automation and capacity across our manufacturing network. We are ready to respond to growth opportunities. 2024 trading and dividend Convatec reported revenue was $2,289 million, up 6.9% YoY (7.7% higher on a constant currency basis). Operating proﬁt was $324.9 million on a reported basis (2023: $262.7 million) and $485.3 million on an adjusted basis (2023: $431.8 million). Our adjusted operating proﬁt margin increased by 100 basis points to 21.2% (2023: 20.2%), despite signiﬁcant inﬂationary headwinds in H1 2024, although as we expected, these eased substantially in H2 2024. Higher proﬁts and strong cash generation led to net debt decreasing, with net debt to EBITDA leverage at 31 December 2024 of 1.8x, 0.3x below FY23. In November 2024, Medicare Administrative Contractors in the US published Local Coverage Determinations (LCDs) for Skin Substitute Grafts. Convatec’s InnovaMatrix ® was not covered by Medicare for treatments in the LCDs. The situation remains changeable, with implementation of the LCDs subsequently postponed until April 2025. On the basis that the LCDs are implemented, we expect a hiatus in Medicare InnovaMatrix ® revenues in FY25, discussed further on page 11. Given our strong ﬁnancial performance, robust balance sheet and the Board’s continuing conﬁdence in future growth prospects and cash generation, the Board recommends a ﬁnal dividend of 4.594 cents per share, resulting in a full-year dividend of 6.416 cents per share, an increase of 3%. If approved at our Annual General Meeting on 22 May 2025, the ﬁnal dividend will be paid on 29 May 2025 to shareholders on the register at the close of business on 22 April 2025. Delivering our forever caring promise Chair’s statement 6 Convatec Group Plc Annual Report and Accounts 2024 Strategic report Convatec Cares Convatec Cares, our approach to environmental, social and governance (ESG), sets out the commitments and actions which enable us to integrate ESG practices throughout the organisation. Convatec Cares is integrated within our FISBE strategy and supports our ability to deliver sustainable and proﬁtable growth and underpins our long-term success. The framework is built around four pillars: – Delivering for our customers – Enabling our people to thrive – Behaving ethically and transparently – Protecting the planet and supporting communities The Responsible business review (pages 32 to 59) provides commentary on ESG governance pillars, metrics and targets, together with information on our stakeholders and why it is important for Convatec to actively engage with them. Convatec remains committed to the highest standards of corporate governance. The Governance report on pages 84 to 148 provides detail on our wider governance framework, plus the Board’s stakeholder engagement activities. Thank you to all our stakeholders Convatec’s turnaround since 2019 would not have been possible without the hard work, drive and unwavering commitment of our colleagues and leadership team, and I would like to thank them on behalf of the Board. I would also like to thank shareholders for their support, many of whom met with me or other members of the Board over the last year. The Board remains focused on the continued execution of our FISBE strategy. Despite ongoing macroeconomic uncertainties, Convatec is very well placed to continue to deliver sustainable double- digit compound growth in adjusted EPS and free cash ﬂow to equity. Dr John McAdam CBE Chair 25 February 2025 Read more on page 45 OUR PROMISE Forever caring OUR VALUES OUR ESG FRAMEWORK: CONVATEC CARES Customers Delivering for our customers Colleagues Enabling our people to thrive Commerce Behaving ethically and transparently Communities Protecting the planet and supporting communities OUR STRATEGY: FISBE Focus on strengthening customer loyalty in key markets Innovate to increase vitality of trusted medical solutions Simplify to improve productivity across our organisation Read more on pages 10 and 11 Read more on pages 32 to 59 HOW WE REALISE OUR VISION Build and embed mission-critical capabilities and winning culture Execute with excellence, while integrating environmental, social & governance Pioneering trusted medical solutions to improve the lives we touch Improve care Deliver results Grow together Own it Do what’s right 7 Convatec Group Plc Annual Report and Accounts 2024 Governance Financial statements Additional information Overview Strategic report Our business model Delivering our forever caring promise Convatec is a global medical products and technologies company focused on solutions for the management of chronic conditions Every year, we sell over 900 million products, helping millions of customers, including patients, consumers and healthcare professionals OUR EXPERTISE Deep sector knowledge Talented workforce Innovation mindset Strong quality brands Manufacturing capability & robust supply chain Relationships with customers OUR BUSINESS MODEL Benefit chronic care patients and society Deliver double- digit EPS & free cash flow to equity 2 CAGR Reinvest for future growth Distribute to shareholders RESEARCH & DEVELOPMENT QUALITY & OPERATIONS SALES, MARKETING & SERVICE Identify unmet needs Manufacture with quality and at scale Commercialise globally Usability and human factor design Drive productivity and increase gross margin Measure loyalty and learn Customer support across the continuum of care Process and solution development Clinical development Regulatory submission $102m inveﬆment in 2024 ~5,000 manufauring colleagues across seven locations cNPS in 20 countries Enhance eﬃciency across our supply chain 8 Convatec Group Plc Annual Report and Accounts 2024 Strategic report Footnotes within the CEO review are deﬁned as follows 1. Consistent with prior years, management present adjustments to the reported ﬁgures, to produce more meaningful measures in monitoring the underlying performance of the business. These are set out in the tables on pages 29 to 31. 2. Certain ﬁnancial measures in this document, including adjusted results, are not prepared in accordance with International Financial Reporting Standards (IFRS). All adjusted measures are reconciled to the most directly comparable measure prepared in accordance with IFRS in the Non-IFRS Financial Information (see pages 28 to 31). Delivering sustainable and profitable growth Chief Executive Officer’s review 2024 represented another year of strong operational and strategic delivery for Convatec, evidenced by accelerating organic revenue growth, improving operating margin, 14% adjusted EPS¹ growth and strong cash conversion. We announced our FISBE strategy in 2020, having just reported 2019 organic revenue growth of 2.3%. Our annual R&D spend was c.$50m, and our innovation pipeline was very limited. Our adjusted operating margin¹ was 19.4%, and we had no mid-term targets. In 2024, organic revenue growth accelerated to 7.7%, the sixth consecutive year of accelerating growth and exceeding the top end of our target range for the second year running. We invested over $100m in R&D, our product portfolio is systematically broadening to enhance our oﬀering, and we have our strongest-ever innovative, new product pipeline. Adjusted operating margin¹ was 21.2%, and we are on track to deliver our mid-20s% target by 2026 or 2027. Given these strong results and consistent delivery of our strategy, we can now say that we have successfully pivoted to sustainable and proﬁtable growth. Looking ahead, we have leading positions in structurally growing, recurring revenue, chronic care markets. We are targeting the fastest growing segments by developing innovative and diﬀerentiated new products. Our resilient business model is highly scalable and is well-positioned to deliver sustainable double-digit compound annual growth in adjusted EPS¹ and free cash ﬂow to equity². Out performing our structurally growing markets Convatec operates in four chronic care categories. These have a combined market size of c.$15.5 billion p.a. and market growth rates varying between 4-8% p.a. We are among a small number of leaders in the categories in which we operate and expect to consistently grow revenue faster than each market. We sell over 900 million high-quality consumable products for a diverse range of chronic conditions annually. There are notable synergies across the Convatec categories in areas such as polymer and biomaterial sciences, adhesive technologies, product and clinical development, automated manufacturing, supply chain capabilities and sales & marketing. In recent years we have been rationalising our production network while automating and expanding capacity in the most appropriate locations and increasing our business resilience and eﬃciency. Increasing margins, driven by simplification and productivity improvements We delivered another strong year of adjusted operating margin¹ improvement, up 100 bps to 21.2% (21.8% on a constant FX basis). Operating margin¹ has now increased by 350 bps since 2021 (+390 bps in constant currency. Our strong cash generation is supporting continued organic and inorganic investment for growth, consistent with our capital allocation priorities and broader strategy. “Our FY24 results demonstrate that Convatec has successfully pivoted to broad-based, sustainable and profitable growth. Our FISBE strategy is delivering strongly, evidenced by our sixth year of accelerating revenue growth, further operating profit margin expansion, double-digit growth in adjusted EPS and strong cash conversion.” Read more about our FISBE strategy on pages 10 and 11 9 Convatec Group Plc Annual Report and Accounts 2024 Governance Financial statements Additional information Strategic report Overview Strategic report In FY24 we remained focused on delivering for our customers and patients. New product innovation accelerated, including four key new products launches or major geographic expansions in 2024. In addition to the R&D spend noted above, we invested $122m in capex and increased our emphasis on clinical and regulatory engagement. Additionally, we invested c.$90m in earn-outs and one small acquisition in France in our Home Services Group. Our simpliﬁcation and productivity initiatives continued to progress well. In Global Quality & Operations (GQO), we increased automation in our facilities and continued to optimise our plant network for scale and eﬃciency by completing the closure of our EuroTec facility in the Netherlands and closing our small Herlev site in Denmark. In commercial areas, we created an integrated Global Marketing & Sales (GMS) Centre of Excellence (CoE), further developed our Market Access & Reimbursement CoE, and rationalised our use of marketing agencies globally. We are encouraged by the potential for AI to drive productivity improvements in areas such as customer service, marketing content generation and translation. In addition, we delivered further general and administrative (G&A) savings by expanding the scope of our Global Business Services centres across Finance, IT and HR activities. Adjusted G&A¹ declined by 4.7% to $165m (2023: $173m), representing 7.2% of revenue (2023: 8.1%). FISBE strategy: FY24 progress Our FISBE (Focus, Innovate, Simplify, Build, Execute) strategy again delivered strongly in 2024. Focus We continued to drive focus in our four chronic care categories and 12 focus markets. Over 90% of our revenues arise from supporting patients with chronic illnesses, resulting in high recurring revenues. The US was our largest market and grew strongly, supported by the contribution from recent launches (InnovaMatrix ® , ConvaFoam™, Esteem Body™ and GentleCath Air™ for Women). In 2024, we continued to strengthen our focus on customer centricity and advanced the use of customer Net Promoter Score (cNPS) as the key measure of customer satisfaction and loyalty within Convatec, rolling out the programme across 20 countries, including all our FISBE markets. We are working towards capturing cNPS for all our main customer groups, initially starting with Healthcare Professionals (HCPs) and expanding to users and our key B2B customers. Acting on customer feedback is critical to the success of our business, as we look to deliver a frictionless experience from our front-line clinical colleagues to customer support functions. Innovate Innovation is a key part of our strategy and is helping to drive growth in the fastest growing segments of our markets. We continued to strengthen our Technology & Innovation capabilities; adjusted R&D expenditure of $102m (2023: $104m) was equivalent to c.5% of revenue. New product innovation accelerated with a broadening pipeline across our chronic care markets, including eight new products launched between 2022-24. Our vitality index, which measures the percentage of Group revenues generated from new or signiﬁcantly upgraded products launched in the last ﬁve-years, reached our target of 30%, a year ahead of target. Products launched since 2022 are: – InnovaMatrix ® in the US and starting to launch in Latin America – Esteem Body™ in the US and key European markets – ConvaFoam™ in the US and key European markets – GentleCath Air™ for Women in the US and key European markets – Infusion set with Beta Bionics new iLet Bionic Pancreas system – Extended Wear Infusion Set in US with Medtronic 780G – Infusion set for new Tandem Mobi pump – Neria™ Guard Infusion set for AbbVie Parkinson’s therapy We expect continued momentum from future launches including: – In Advanced Wound Care (AWC), ConvaVac™, a single use negative pressure treatment on track to launch in 2026; ConvaNiox™, which is expected to obtain EU regulatory approval in H1 2025, and to launch in Europe in 2026; and ConvaFiber™, our new enhanced hydroﬁbre dressing, launching in Europe in 2026 – In Ostomy Care (OC), Natura Body™, our two-piece convex product launching in 2026, and FlexiSeal™ Air, a new market-leading fecal management product in the US in H2 2025 – In Continence Care (CC), GentleCath Air™ for Men Pocket & Set in 2026; and – In Infusion Care (IC), infusion technology innovations including a potential new Parkinson’s therapy for Mitsubishi Tanabe Simplify We continued to make progress simplifying the organisation and improving productivity. Chief Executive Officer’s review continued Our resilient business is designed to sustainably deliver double-digit CAGR in adjusted EPS & free cash ﬂow to equity: OUR INVESTMENT CASE 2 We have delivered six years of accelerating organic revenue growth, and our target is to grow sales by 5-7% every year. This will be driven by our investment in innovation which is broadening our product portfolio Refer to operational reviews on pages 14 to 21 for further detail. GROWING FASTER THAN OUR CATEGORIES 2 Adjusted operating margin has increased by 350bps to 21.2% since 2021 and we remain on-track to deliver a mid-20s% margin¹ by 2026 or 2027. This will be driven by further operational and commercial productivity, an increasing mix of Convatec-manufactured products and positive operating leverage arising from the delivery of 5-7% per annum organic revenue growth Refer to operational reviews on pages 14 to 21 for further detail. 3 INCREASING PROFITABILITY VIA INNOVATION, SIMPLIFICATION AND SCALE 3 We target high cash conversion while consistently investing in capex and R&D to grow our sales and sustainably increase operating margin, plus selective bolt-on M&A. We are committed to paying a progressive dividend STRONG CASH FLOW 4 Convatec has leading positions in four chronic care categories, with market growth rates varying between 4% and 8% p.a. and high levels of recurring revenue Refer to operational reviews on pages 14 to 21 for further detail. FOCUSED ON LARGE AND GROWING CHRONIC CARE CATEGORIES 1 10 Strategic report In operations, as part of our Plant Network Optimisation programme, for scale and eﬃciency, we completed the closure of our EuroTec facility in the Netherlands and closed our small Herlev site in Denmark in December 2024. Our GQO function continued to introduce smart factory tools and automation to the manufacturing footprint to drive enhanced productivity. In commercial, the newly created GMS CoE drove supplier consolidation across research, advertising and media agencies, delivering cost eﬃciencies and simpliﬁed ways of working. In G&A, costs reduced to 7.2% of revenue (2023: 8.1%), declining by $8m to $165m (2023: $173m). We continued to improve, standardise and automate processes, build internal expertise and reduce external third-party spend. We also continued to transition activities to our GBS centres, which has helped enable a reduction in G&A costs from 13% of revenue to 7% in three years. In Finance, our initiative in procure-to-pay has enhanced process, reduced cost, improved cash generation and improved employee experience, with transactional NPS (tNPS) up signiﬁcantly. In IT, we insourced our service desk capability, at a lower cost and resulting in higher colleague satisfaction scores. In HR, we made signiﬁcant progress with our transformation, refreshing our operating model and transitioning certain activities (e.g. payroll) to our GBS centres to align to standardised processes and ways of working. Build During the year we established our Market Access & Reimbursement CoE. This team supports access and reimbursement for our existing brands and new product pipeline. Our GMS CoE brings together separate legacy Marketing and Salesforce teams to nurture and drive customer engagement, provide sales leadership training and further improve commercial productivity. Our focus remains on strengthening employee engagement and building high-performing teams. We launched a new employee engagement platform to support ongoing dialogue and feedback. We achieved a top decile employee engagement score during the year, with 95% of colleagues sharing feedback. Execution Our Strategic Pricing CoE, in collaboration with our business units, supported the delivery of 60 bps of pricing improvement, included in our gross margin. Our GMS CoE continued to leverage the single CRM platform to drive enhanced salesforce productivity. We increased call rates and improved targeting, with c.70% of calls made to priority (A,B,X) accounts (2023: c.60%). We continued to focus on execution excellence within our GQO function. This was through continuous improvement initiatives such as our further automation of production lines at Deeside, UK, and our global packaging project to improve terms and pricing. We also made further progress embedding ‘Convatec Cares’, which underpins our commitment to generating value responsibly and embedding ESG practices. In line with our goal to achieve net zero by 2045, we reduced Scope 1 and Scope 2 greenhouse gas emissions by 14% in 2024 and continued to make progress towards our near-term targets. We also received a B-rating from the Carbon Disclosure Project (CDP) and a Silver award from EcoVadis in their 2024 ratings, recognising our continued progress. More than 230,000 HCPs and patients participated in Convatec’s educational programmes in 2024, across categories and geographies. This has been a key execution pillar helping the success of new product launches such as Esteem Body™. We also supported more than 2,300 HCPs with medical education grants. Consistent with our commitment to building an inclusive business, we ﬁnished 2024 with 45% of the senior management team being women. Update on InnovaMatrix ® InnovaMatrix ® performed well in FY24, with revenue up 34% YoY to $99m. In November 2024, US Medicare Administrative Contractors published Local Coverage Determinations (LCDs) for Skin Substitute and Tissue-Based Products for the Treatment of Diabetic Foot Ulcers (DFU) and Venous Leg Ulcers (VLU) removing coverage under Medicare for the majority of products, including InnovaMatrix ® . Implementation of the LCDs was subsequently postponed from 12 February until 13 April 2025. Medicare DFU/VLU sales represented c.75% of overall InnovaMatrix ® sales in 2024. If the LCDs are implemented, InnovaMatrix ® would no longer be covered for these indications. InnovaMatrix ® is an excellent product with strong real-world evidence and signiﬁcant clinical beneﬁts. It has 510k clearance from the US Food & Drug Administration based on an established predicate product and oﬀers a popular and eﬀective choice to patients and HCPs. We believe the LCDs, if implemented, would reduce patient and HCP choice, and availability of eﬀective medical solutions in the near-term. We published real-world evidence of the eﬀectiveness of InnovaMatrix ® for DFU and VLU treatment in December 2024 and we are making good progress in our two InnovaMatrix ® randomised controlled trials, which we expect to report in 2026. Convatec remains conﬁdent of securing DFU/VLU coverage in the future and is committed to working collaboratively with the new US Administration, including at the Centers for Medicare & Medicaid Services, and their contractors, in the best interests of patients. The outlook for InnovaMatrix ® revenue in FY25 is therefore uncertain: – In DFU/VLU indications, the implementation of LCDs in April 2025 would lead to Medicare sales being removed. This would create a revenue hiatus while we complete our clinical data generation and re-apply for coverage – Non-DFU/VLU indications are outside the scope of the LCDs. Revenue in these indications grew strongly in FY24, up 70% to c.$25m. Non-DFU/VLU comprise c.55% of the US wound biologics segment and we expect further strong growth in our non DFU/VLU sales in 2025 – Overall, based on implementation of the LCDs in April 2025, we expect a reduction in revenue of approximately $50m, approximately 2% of Group revenue Confidence in FY25 outlook We continue to expect 5-7% organic growth in non-InnovaMatrix ® sales 1 (FY24: 96% Group sales) based on our broadening product portfolio, strongest ever innovation pipeline and focused commercial execution. Adjusted operating proﬁt margin¹ of 22.0%-22.5%, underpinned by detailed productivity improvement programmes across operations, commercial and G&A. Another year of double-digit growth in adjusted EPS¹, underpinned by strong cash conversion. On-track to deliver our medium- term guidance We are positioned to deliver sustainable 5-7% p.a. organic revenue growth, underpinned by innovation, our broadening pipeline and enhanced commercial execution. We are also on-track to reach mid-20s% adjusted operating proﬁt margin¹ by 2026 or 2027, supported by productivity improvements and positive operating leverage. Karim Bitar Chief Executive Officer 25 February 2025 11 Convatec Group Plc Annual Report and Accounts 2024 Governance Financial statements Additional information Overview Strategic report Tracking our progress Key performance indicators FINANCIAL METRICS Organic revenue growth (%) Adjusted operating profit margin (%) Adjusted diluted EPS growth (%) Free cash flow to equity growth (%) Metric Year-on-year (YoY) revenue growth at constant currency, adjusted for acquisitions, divestments and discontinuations. Relevance Sustainable top-line growth is a key strategy pillar and a metric by which investors judge our progress. Our medium-term revenue growth target is 5-7% every year. Remuneration linkage Organic revenue growth has a weighting of 25% of the annual bonus for Executive Directors and is used as a metric for all colleagues in our annual bonus plan. Organic revenue growth has 25% weighting within the 2024 LTIP plan. 2024 performance We delivered broad-based organic growth of 7.7%, ahead of our target. This was driven by improved performance across all our categories: high single-digit organic growth in Advanced Wound Care, Continence Care and Infusion Care and mid single-digit organic growth in Ostomy Care. Metric Adjusted operating proﬁt as a % of Group revenue.¹ Relevance Adjusted operating proﬁt margin reﬂects how eﬀective we are at running our business. Increasing proﬁtability is a key metric by which investors judge our strategic progress. Our target is to deliver a sustainable mid-20s% adjusted operating margin by 2026 or 2027. Remuneration linkage Adjusted operating proﬁt ($m) has a weighting of 40% of the annual bonus for Executive Directors and is a metric used for all colleagues in our annual bonus plan. 2024 performance Our adjusted operating proﬁt margin increased by 100bps to 21.2% (21.8% in constant currency). This was driven by sales growth, productivity initiatives and reduction in G&A. Metric YoY growth of adjusted diluted EPS.¹ Relevance Growth in adjusted diluted EPS illustrates our ability to deliver sustainable and proﬁtable growth overall, including the impact of any M&A undertaken to further strengthen the business. It is a key metric by which investors judge our strategic progress. In 2023, we indicated a target of growing adjusted diluted EPS by a double-digit compound annual growth rate each year. Remuneration linkage Adjusted PBT growth has a weighting of 50% within the 2024 LTIP awarded to Executive Directors and senior leaders across the business. For LTIP awards from March 2025 onwards we will move to use adjusted EPS within LTIP assessment. 2024 performance Adjusted diluted EPS rose strongly in 2024, up 13.7%. Growth in adjusted operating proﬁt of 12.4%, and was supported by a slightly lower tax rate. Metric YoY growth of Free cash ﬂow to equity.¹ Relevance Free cash ﬂow to equity reﬂects how eﬀectively we convert the proﬁt we generate into cash (after accounting for working capital, capital investments, adjusting items, tax and interest). This cash is then available for reinvestment (i.e. through M&A) to distribute to shareholders or to pay down debt. It is a key metric by which investors judge our strategic progress. We expect to grow our free cash ﬂow to equity by a double-digit compounded annual growth rate over the medium term. Remuneration linkage Free cash ﬂow to equity has a 15% weighting within the annual bonus for Executive Directors and all colleagues who participate in our annual bonus plan. 2024 performance Free cash ﬂow to equity increased 32.2% YoY, primarily driven by the increase in EBITDA, strong working capital management and lower capital expenditure. 1. Deﬁnitions of adjusted measures are shown in the reconciliation tables on pages 29 to 31. 2020 7.7% 2021 7.2% 2022 5.6% 2023 5.3% 2024 4.2% 2020 21.2% 2021 20.2% 2022 19.5% 2023 17.7% 2024 18.5% 2020 13.7% 2021 6.1% 2022 (3.1)% 2023 8.3% 2024 2.6% 32.2% 2024 116.8% 2020 (49.4)% 2021 (14.2)% 2022 (18.4)% 2023 12 Convatec Group Plc Annual Report and Accounts 2024 Strategic report NON-FINANCIAL METRICS 1 Quality – Complaints per million 2,3 Product innovation – Vitality index Environmental progress – In Scope 1 and 2 greenhouse gas (GHG) emissions 2 Diversity, Equity & Inclusion (DE&I) – proportion of female representation at leadership level 2,4 Metric YoY reduction in the number of complaints received per million (CPM) products sold. In 2024, in collaboration with our major partners, we commenced a process to re-evaluate CPM in our business-to-business (B2B) category. As a result, CPM has been restated from 2021 onwards to remove our B2B data. Relevance CPM is a strong indication of manufacturing quality. It is a reﬂection of our core capabilities and our ability to execute eﬀectively. Connected to both safety and eﬃcacy of our solutions, CPM features as an ESG metric. We targeted to reduce CPM by 8% during 2024. Remuneration linkage Executive Directors, plus certain members of CELT and the Quality leadership team, are incentivised to deliver improvement as part of their objectives. 2024 performance YoY reduction of 17% in our direct-to-consumer categories, as our Quality function continues to have a positive impact, delivering for our customers. The CPM numbers have been restated to represent our direct-to-consumer categories, excluding our B2B products. See page 40 for further details on our approach to quality. Metric YoY reduction in our combined Scope 1 and 2 GHG emissions. Relevance Convatec has set an ambition to reach net zero carbon emissions by 2045. Reduction in our Scope 1 and 2 emissions are an ESG metric, with a target to reduce them by 70% by 2030. Remuneration linkage Executive Directors, plus certain members of CELT and the Global Operations leadership team, are incentivised to deliver improvement as part of their objectives. 2024 performance We reduced emissions by installing additional on-site renewable energy generation, and implementation of energy eﬃciency projects to reduce fossil fuel use. We restated our Scope 3 emissions using material speciﬁc emission factors and updated spend-based factors to support prioritisation of key initiatives. See pages 53 and 54 for more detail about carbon emissions across all categories. Metric Proportion of females in combined CELT and senior management. Relevance We recognise that by building a diverse and inclusive company we can deliver more for our customers. This features as an ESG metric. In 2024, we set a target to achieve 50% females in senior management by Q4 2027. Remuneration linkage Executive Directors, plus members of CELT and members of the HR leadership team, are incentivised to deliver improvement as part of their objectives. 2024 performance We achieved 45% women in senior management positions, progressing towards our 2027 target. Baseline population numbers are subject to YoY variation.⁴ Metric The percentage of total revenues that are generated from new or signiﬁcantly upgraded products and services launched by Convatec in the preceding ﬁve-year period. Relevance The vitality index is a measure of how eﬀective our innovation eﬀorts are at meeting patients’ needs and delivering for customers, and features as an ESG metric. In 2022, we set a target to reach a vitality index of 30% by Q4 2025. Remuneration linkage Executive Directors, plus certain members of CELT and the Global Operations leadership team, are incentivised to deliver improvement as part of their objectives. 2024 performance Our vitality index reached our target of 30%, a year ahead of plan. 1. As our ESG journey continues and our metrics and measurement mature, it is possible we may modify our non-ﬁnancial KPIs. 2. A set of non-ﬁnancial metrics received limited assurance, as described on page 59. These included CPM absolute value for 2024 only, on the revised basis, see footnote 3; Scope 1 and 2 absolute emissions, intensity and % reduction; and proportion of female representation at leadership level. 3. Percentage movements are calculated on actual unrounded numbers. Restated to represent direct-to- consumer categories. 4. Deﬁned as Convatec Executive Leadership Team (CELT) and their direct reports, excluding executive assistants. Total population in 2024 was 78 (2023: 79). (9.3)% 2022 2023 (23)% 2024 30.2 27.4 (16.8)% 22.8 2021 39.2 2021 30% 2022 26% 2024 25% 2023 27% 2020 4% 2021 20% 2022 (32)% 2023 (35)% 2024 (14)% 2020 45% 2021 44% 2022 38% 2023 32% 2024 30% 13 Convatec Group Plc Annual Report and Accounts 2024 Governance Financial statements Additional information Overview Strategic report Operational review Advanced Wound Care 1. Based on Convatec estimates and external study: Human Wound and Its Burden: Updated 2020 Compendium of Estimates. 2. Based on Convatec estimates and external study: Cohort study evaluating the burden of wounds to the UK’s National Health Service in 2017/2018. 3. Guest et al. Cohort study evaluating the Burden of wounds to the UK’s NHS in 2017/2018. BMJ, 2020. SOURCES: 4. Wound biologics includes: skin substitutes, collagen dressings and topical delivery drugs; uncertainty related to LCD impacts size and growth rate of wound biologics segment (Convatec estimates based on SmartTRAK). 5. Other segment includes: Alignates & ﬁbre, superabsorbers, hydrocolloids, Hydrogels, Contact Layers, Composite/ Island Dressings, Films. 6. Segment size based on SmartTRAK projections for Q3 2024 Last Twelve Months (LTM); including all sub-segments, total advanced wound care market size is c.$8.5bn. 7. Segment growth as projected by SmartTRAK and Convatec estimates for 5 yr CAGR ‘24-’29. 8. Segment positions based on SmartTrak YTD Q3 2024 reported revenues across companies. David Shepherd President & Chief Operating Officer, Advanced Wound Care 2024 performance Revenue of $743m increased by 6.8% on a reported basis, and 7.4% on both a constant currency and organic basis. This included $99m of InnovaMatrix ® revenue, up 34% YoY, demonstrating the clinical eﬃcacy and popularity with HCPs and patients of our product. Excluding InnovaMatrix ® , AWC growth was 4.2% on an organic basis. Geographically, growth was supported by good performance in North America and Global Emerging Markets (GEM). By product type, in antimicrobials, Aquacel™ Ag+ Extra continued to perform strongly. In foam, recently launched ConvaFoam™ started to take market share in the US and our European launch progressed well, including Germany and the UK. AWC key focus areas are: – Building on our strong positions and rolling out recent launches to new markets: • Continuing to grow Aquacel™ Ag+ Extra globally • Ongoing launch of ConvaFoam™ in the US, Europe and GEM • Progressing InnovaMatrix ® randomised controlled trials and starting to launch outside the US – Continuing to develop new products and develop the AWC pipeline with: • ConvaNiox™, our break-through nitric oxide dressing, launching in Europe in 2026 • ConvaFiber™, our new enhanced hydroﬁbre dressing, launching in Europe in 2026; and • ConvaVac™, our single-use negative pressure wound therapy product, launching in 2026 2021 2023 2024 2022 2020 2019 Total Sales $m Organic growth % 0.5 570 592 621 695 743 9.2 547 -2.7 9.5 7.4 6.8 Performance A large growing market Convatec has leading market positions and strong brands in fast-growing segments 100m patients¹ every year globally ~50% unhealed despite therapy² Now 2-4% of healthcare budgets³ Prevalence of hard-to-heal wounds is increasing Wound healing rates need to improve Wound-care related costs are increasing Wound biologics⁴ Foam Anti-microbials Single-use Negative pressure wound therapy (NPWT) Other⁵ Segment size⁶ Segment growth⁷ Convatec brands Our segment position⁸ $3.0bn ~6% #7 #5 #1 #3 #1 ~6% ~6% ~10% ~4% $2.1bn $1.1bn $0.4bn $1.9bn Extra Aquacel ® Ag+ 14 Convatec Group Plc Annual Report and Accounts 2024 Strategic report Exudate management Superior absorption, retention and handling of ﬂuid⁶ Strong, skin- friendly adhesion Superior adhesive strength balanced with gentle, atraumatic removal Skin protection Vertical wicking reduces peri-wound skin maceration³ Patient comfort Designed to minimise pain on removal⁴ Lasting wear time Seven-day wear time means fewer dressing changes – saving time and resources¹ Eﬃciency Can be cut to size and repositioned on application, helping to reduce wastage² , ³ Versatility Suitability across an extensive range of wound types, from minor to more complex wounds⁵ 1. WHRI9478 MS186_DHF1093 ConvaFoam™ Superiority Report Testing between May 2021 and June 2022. 2. WHRI8050 MS172 Adhesion Characteristics of ConvaFoam™. 3. WHRI8051 MS173 In-vitro Performance Characteristics of ConvaFoam™. 4. Soft Silicone Dressings Made Easy, Meuleneire F, Rucknagel H, Wounds International, May 2013 5. ConvaFoam™ IFU. 6. Versus selected dressings tested in vitro for absorption, retention, ﬂuid handling and adhesion. Redefining The only foam dressing that combines our three technologies – Aquacel © Hydroﬁber™, Superabsorber Fibers and ConvaTac™ silicone – to deliver superior exudate management¹ with skin friendly adhesion for longer lasting wear times which optimises healthcare eﬃciency. REDEFINING SUPERIOR PERFORMANCE ¹ REDEFINING MY CARE “As a tissue viability nurse caring for people with complex oncology wounds, I cannot overstate the value of a dressing that not only promotes comfort but also adheres gently to challenging areas while eﬀectively managing exudate. ConvaFoam has brought hope to both me and my patients by addressing our needs, reducing the frequency of dressing changes, and providing reassurance that the dressings stay securely in place.” Susy Pramod Tissue Viability Matron The Christie NHS Foundation Trust 15 Convatec Group Plc Annual Report and Accounts 2024 Governance Financial statements Additional information Overview Strategic report Operational review Ostomy Care Bruno Pinheiro President & Chief Operating Officer, Ostomy Care Source: Market dynamics, segment size, growth rates and positions based on internal analysis and publicly available sources. 1. llsop M, et al. Quality of life proﬁles and their association with clinical and demographic characteristics and physical activity in people with a stoma: a latent proﬁle analysis. Qual Life Res. 2022;31(8):2435-2444. doi:10.1007/s11136-022-03102-5. Performance 2024 performance Revenue of $634m grew by 4.2% on a reported basis, by 5.6% in constant currency and 5.3% on an organic basis. Esteem Body™, our ﬁrst new ostomy product launch in over a decade, proved to be very successful with patients and clinicians and took Convatec into the one-piece soft convex segment in the US and Europe. Growth was also strong in our existing Plus™ product range, and in accessories. In North America, we grew sales, supported by our Home Services Group (HSG) with continued increased new patient starts. We delivered double-digit growth in GEM, outpacing market growth. Key focus areas are: – Continuing to progress our innovation pipeline: • Broadening the launch of new Esteem Body™ globally • Developing Natura ® Body, our two-piece soft convex product launching in 2027 • Launching Flexi-Seal™ Air, a refresh of our market-leading fecal management product, in the US in H2 25 – Further improving commercial execution across the continuum of care (acute, post-acute and community): • Improving US new patient starts, with continued close collaboration with HSG and strategic partners • Enhancing digital engagement with patients, through our me+ Companion™ service, and increased interactions with healthcare professionals (HCPs) in our education and training programmes ~2.8m patients¹ ~50% lifelong conditions Growing ~2x faster than developed markets Ageing population and increase in life expectancy Rise in underlying conditions (e.g. cancer) Improved access in emerging markets Global trends driving growth 2021 2023 2024 2022 2020 2019 1.0 569 615 583 608 634 2.0 590 4.5 4.2 5.3 1.7 Total Sales $m Organic growth % Large and growing segment with attractive recurring revenue Global market by region Europe US GEM c. $3.2bn segment c. 4-5% growth p.a. Supporting patients across the continuum of care is critical to achieving growth Services Products 16 Convatec Group Plc Annual Report and Accounts 2024 Strategic report A GAME CHANGER FOR MY PATIENTS “As a nurse, I love that I can use a more scientiﬁc approach when choosing from a standardised system of soft convexity. It’s very ﬂexible and compressible (or “squishable” as I like to call it), tension location and depth/slope to make it a truly custom ﬁt for my patients, that can be used immediately post-op or years after their surgery. This appliance is truly versatile – from retracted stomas in a crease to a well budded stoma and everything in between, it has been a game changer for my outpatient ostomy clinic.” Stacy Thomlison Certified Ostomy Care Nurse Leakage problem? Problem solved Leak Defense™ combines gold-standard adhesives with a comprehensive soft-convexity range that adapts to the body for a secure, longer-lasting seal. Strategic report Additional information Financial statements Governance Overview 17 Convatec Group Plc Annual Report and Accounts 2024 Operational review Continence Care Mark Jassey President & Chief Operating Officer, Continence Care & Home Services Group Source: Market dynamics, segment size, growth rates and positions based on internal analysis & publicly available sources including Medicare/CMS. Large and growing segment with recurring revenues Delivering products and service 2024 performance Revenue of $501m increased by 9.7% on a reported basis and 9.8% on a constant currency basis. Organic revenue growth was 8.3%. Performance was led by growing volume and market share in the US. This was further supported by a modest increase in reimbursed pricing and increasing patient adoption of Convatec-manufactured products (including Cure Medical and GentleCath™), which now represent over 50% of our 180 Medical sales. Hydrophilic catheters represented 60% of our sales, having increased by c.5% percentage points in our mix since 2020. Our GentleCath Air™ for Women 2.0 has been very well-received by HCPs and customers, launching in key markets in Europe and the US. We also made further progress starting to build our international presence, resulting in accelerating growth in GEM and Europe. Key focus areas are: – Rolling out launches to new markets: • Extending the launch of GentleCath Air™ for Women internationally • Introducing Cure™ products in Europe and GEM • Developing GentleCath Air™ for Men Pocket and Set in 2026/27 – Further improving commercial execution globally: • Continuing to build out and strengthen commercial teams in Europe and GEM Performance 2021 2023 2024 2022 2020 2019 5.4 342 405 426 457 501 3.4 363 5.4 6.5 8.3 5.1 Total Sales $m Organic growth % c. $2.3bn segment c. 4% growth p.a. 3-6x per day Customers require manual intervention to void their bladders daily >95% at home In-home usage, typically without any assistance Average 3-5 year relationship with end-user Enduring relationships via chronic conditions and distinctive services Catheter usage is largely at home Global market by region Expansive and growing portfolio Forward integrated solutions for high retention Europe US GEM 18 Convatec Group Plc Annual Report and Accounts 2024 Strategic report GentleCath Air™ for Women are hydrophilic catheters with FeelClean Technology™, which integrates hydrophilic, lubricating properties within the catheter material to remove the risk of sticking that occurs with the chemicals used to coat other catheters. Designed to minimise damage to the urethral mucosa and protect the ﬁrst line of defence against urinary tract infections (UTI). MY JOURNEY TO CONFIDENT CATHETERISATION Kiera thought she’d found the best possible option for her, but clicking on a link online one day led her to a new possibility: GentleCath Air™ for Women. She was understandably hesitant to try something new. “I’d gone through that diﬃcult process at the beginning; I didn’t want to disrupt things.” Kiera almost didn’t try it, but the chance to free herself from the stickiness and discomfort she felt was worth another roll of the dice. “That immediately made sense to me. There was not that sticky solution you have on some catheters. It has never been uncomfortable, which is unbelievable because before, I thought it was a normal part of using catheters. There was no irritation.” “That doesn’t sound like much, but it was the biggest thing for me. I haven’t had a UTI for a year and a half or longer. I don’t like saying that out loud,” she laughs, crossing her ﬁngers. “Normal”, she says, can be a loaded word for people who use catheters – she doesn’t like the idea that there is anything ‘abnormal’ about her. “For me, it’s just about ﬁnding the new normal that works for me. And I’m happy with my new normal.” Kiera McGarrity an intermittent catheter user and Psychological Wellbeing Practitioner Gentle protection. Confident living Strategic report Additional information Financial statements Governance Overview 19 Convatec Group Plc Annual Report and Accounts 2024 Operational review Infusion Care Diabetes Other therapies Parkinson’s disease Pain management Immunoglobulin deﬁciency – 10m patients and 8% market growth² – AbbVie or Mitsubishi Tanabe targeting advanced patients – 7.5m patients³ and 8% market growth⁴ – Morphine and combinations- pallative care – 6m patients⁵ and 10% market growth⁶ – IgG antibodies for e.g. autoimmune and cancer 1. Seagrove (December 2024). 2. WHO 2022 fact sheet and Convatec estimates based on latest market research. 3. WHO 2020 – Palliative Care fact sheet. 4. Center to Advance Palliative Care facts and stats. 5. Bousﬁha et al. Primary Immunodeﬁciency Diseases Worldwide: More Common than Generally Thought. JClin Immunol. 2013; 33:1-7. 6. MEGAN A. COOPER et al. Primary Immunodeﬁciencies Am Fam Physician. 2003;68(10):2001-2009. Kjersti Grimsrud President & Chief Operating Officer, Infusion Care Increasing penetration as pumps displace users currently on multiple daily injections¹ Subcutaneous drug delivery is relevant to multiple therapeutic areas 2024 performance Revenue of $411m increased 10.8% on a reported basis, and by 11.2% on both a constant currency and organic basis. Growth was driven by strong demand for Convatec infusion sets in both diabetes and non-diabetes treatments. In diabetes, durable insulin pump penetration accelerated led by increasing adoption of automated insulin delivery and continuing innovation. This included Medtronic’s 780G, Beta Bionics iLet, Tandem Mobi and YpsoMed’s YpsoPump. Diversiﬁcation of our products and customers progressed very well, both within and outside diabetes. For non-insulin therapies, our Neria™ brand infusion sets achieved excellent double-digit growth and included the launch of AbbVie’s new Parkinson’s medicine therapy, which is approved in 35 countries, including the US where approval was received in October 2024. Key focus areas are: – Supporting customer expansion in diabetes: • Medtronic’s 780G extended wear infusion set, Tandem Mobi, Beta Bionics iLet – Continuing to diversify patient base outside diabetes • Supporting AbbVie’s Parkinson’s launch globally; preparing for the Mitsubishi Tanabe launch • Increasing penetration of infusion sets for other therapies such as pain management – Enhancing operations: • Increasing production capacity to meet accelerating demand Performance 2021 2023 2024 2022 2020 2019 2.2 238 316 341 371 411 11.5 283 18.5 8.7 11.2 9.2 Total Sales $m Organic growth % 2020 3.8% Durable pump Patch pump 0.9% 4.0% 1.0% 4.1% 1.2% 4.2% 1.4% 4.7% 1.7% 2021 2022 2024 2023 20 Convatec Group Plc Annual Report and Accounts 2024 Strategic report Making everyday life easier Neria™ Guard is an all-in-one infusion set with fully automatic insertion at the touch of a button that can make it easier to use especially for those with dexterity issues. The set connects to a pump on one end and the user’s infusion site on the other end. The retractable needle can provide increased comfort (compared to a steel needle) during insertion of the soft cannula. Neria™ Guard’s easy and intuitive insertion technique protects against insertion technique errors and can encourage independence in patients’ everyday lives. LIFE-CHANGING EFFECT Damian Gath, aged 52, lives in the East Midlands in the UK and has advanced Parkinson’s disease. Before his treatment, Damian had to consume four diﬀerent drugs orally six times a day in order to gain control of involuntary movements. Damian experienced pain during the night and ﬂuctuations of his condition due to reduced eﬀects of the drugs at nighttime. Shortly after his ﬁrst Produodopa ® treatment in July, Damian experienced extraordinary and life-changing improvements to his Parkinson’s symptoms. His quality of life has been transformed through increased independence, absence of ﬂuctuations and better sleep, making everyday activities like making a cup of coﬀee much easier. “Using the infusion therapy through Neria™ Guard has been life- changing for managing Parkinson’s disease. Just shortly after having the ﬁrst treatment, I was able to do everyday tasks much more easily, such as make a cup of coﬀee or go to the supermarket. The fact that Neria™ Guard enables the infusion therapy to be delivered 24 hours a day has meant a huge improvement in my sleep which has dramatically enhanced my quality of life.” Damian Gath Convatec Group Plc Annual Report and Accounts 2024 21 Financial statements Additional information Strategic report Governance Overview “Our strong financial performance clearly demonstrates the success of our FISBE strategy. We have delivered six consecutive years of accelerating organic revenue growth, three years of adjusted operating margin expansion and our first year of double- digit growth in adjusted EPS.” $2,289.2m $2,142.4m 2023 2024 +7.7% +7.2% 2023 2024 Net cash generated from operations +17.3% $575.5m $490.6m 2023 2024 Equity cash conversion² , ³ 96.6% $301.8m $228.3m 2023 2024 15.2¢ 13.4¢ 2023 2024 9.3¢ 6.3¢ 2023 2024 Revenue grew by 6.9% on a reported basis, 7.6% on a constant currency basis and 7.7% on an organic¹ basis. Adjusted operating proﬁt margin was 21.2%, representing an increase of 100bps over the previous year. On a constant currency basis, adjusted operating proﬁt margin expanded by 160bps to 21.8%, with improved productivity, cost control, pricing and mix beneﬁts more than oﬀsetting inﬂation and continued investment in commercial and R&D capabilities. Adjusted operating proﬁt margin has increased by 350bps over the past three years. Adjusted diluted EPS increased by 13.7% year-on-year to 15.2 cents per share (2023: 13.4 cents per share). Reported diluted EPS increased by 45.9% to 9.3 cents per share (2023: 6.3 cents per share). Net cash generated from operations improved by 17.3% to $575.5 million (2023: $490.6 million), with free cash ﬂow to equity increasing by 32.2% to $301.8 million (2023: $228.3 million), primarily driven by higher EBITDA. Equity cash conversion improved to 96.6% (2023: 83.3%). For 2025, we expect further expansion of Group adjusted operating margin to 22.0-22.5% and to deliver another year of double-digit growth in adjusted EPS. This will be driven by 5-7% organic growth in non-InnovaMatrix ® sales based on our broadening product portfolio, strongest ever pipeline and focused commercial execution. 1. Organic revenue growth is calculated by applying the applicable prior period average exchange rates to the Group’s actual performance in the respective period and excluding acquired and disposed/discontinued businesses. Acquisitions and disposals which impact this measure are shown in the Glossary on page 212. 2. These non-IFRS ﬁnancial measures are explained and reconciled to the most directly comparable ﬁnancial measures prepared in accordance with IFRS on pages 28 to 31. 3. Equity cash conversion is calculated as free cash ﬂow to equity divided by adjusted net proﬁt. Free cash ﬂow to equity² Reported and Adjusted results The Group’s ﬁnancial performance, measured in accordance with IFRS, is set out in the Consolidated Financial Statements and Notes thereto on pages 157 to 200 and referred to in this Annual Report as “reported” measures. The commentary in this Financial review includes discussion of the Group’s reported results and alternative performance measures (or adjusted measures) (APMs). Management and the Board use APMs as meaningful measures in monitoring the underlying performance of the business. These measures are disclosed in accordance with the ESMA guidelines and are explained and reconciled to the most directly comparable reported measures prepared in accordance with IFRS on pages 28 to 31. Revenue and revenue growth on constant currency and organic bases are non-IFRS ﬁnancial measures and should not be viewed as replacements of IFRS reported revenue and revenue growth. Constant currency and organic growth are deﬁned in the Glossary to the Annual Report and Accounts. Percentage movements throughout this report are calculated on actual unrounded numbers. Financial review Reported operating profit margin growth +190bps 14.2% 12.3% 2023 2024 Adjusted operating profit margin growth² +100bps * 21.2% 20.2% 2023 2024 * +160bps on a constant currency basis Adjusted diluted earnings per share² +13.7% Reported diluted earnings per share +45.9% Reported revenue growth +6.9% Organic revenue growth¹ , ² +7.7% 22 Convatec Group Plc Annual Report and Accounts 2024 Strategic report Group financial performance Reported 2024 $m Reported 2023 $m Adjusted¹ 2024 $m Adjusted¹ 2023 $m Adjusted @ CC² 2024 $m Change % Revenue 2,289.2 2,142.4 2,289.2 2,142.4 2,304.6 7.6% Gross proﬁt 1,283.6 1,200.6 1,396.4 1,320.7 Operating proﬁt 324.9 262.7 485.3 431.8 502.4 16.4% Proﬁt before income taxes 245.9 167.4 410.9 357.2 Net proﬁt 190.5 130.3 312.4 274.1 Basic earnings per share (cents per share) 9.3¢ 6.4¢ 15.3¢ 13.4¢ Diluted earnings per share (cents per share) 9.3¢ 6.3¢ 15.2¢ 13.4¢ 15.8¢ 18.5% Dividend per share (cents) 6.416¢ 6.229¢ 1. These non-IFRS ﬁnancial measures are explained and reconciled to the most directly comparable ﬁnancial measures prepared in accordance with IFRS on pages 28 to 31. 2. Adjusted 2024 at constant currency is calculated on 2024 adjusted results translated at 2023 actual FX rates. Revenue 2024 $m 2023 $m Reported growth % Foreign exchange impact % Constant currency growth % Organic growth % Advanced Wound Care (AWC) 742.7 695.3 6.8% (0.6)% 7.4% 7.4% Ostomy Care (OC) 634.0 608.3 4.2% (1.4)% 5.6% 5.3% Continence Care (CC) 501.4 457.2 9.7% (0.1)% 9.8% 8.3% Infusion Care (IC) 410.9 370.9 10.8% (0.4)% 11.2% 11.2% Revenue excluding hospital care exit 2,289.0 2,131.7 7.4% (0.7)% 8.1% 7.7% Exit of hospital care and related industrial sales 0.2 10.7 (98.1)% n/a n/a n/a Total 2,289.2 2,142.4 6.9% (0.7)% 7.6% 7.7% Group reported revenue for 2024 of $2,289.2 million (2023: $2,142.4 million) increased 6.9% year-on-year on a reported basis and 7.6% on a constant currency basis. Adjusting for foreign exchange and acquisition and divestiture-related activities³, Group revenue grew by 7.7% on an organic basis. This was driven by broad-based growth across Advanced Wound Care, Ostomy Care, Continence Care and Infusion Care. For more details about category revenue performance, refer to the Operational reviews on pages 14 to 21. Net profit Adjusted gross proﬁt increased by 5.7% to $1,396.4 million (2023: $1,320.7 million) and adjusted gross proﬁt margin decreased by 60bps to 61.0% (2023: 61.6%). The Group delivered pricing and mix beneﬁts of 100bps and productivity improvements of 50bps. However, these were more than oﬀset by inﬂationary pressures of 160bps and foreign exchange headwinds of 50bps. On a reported basis, gross proﬁt increased by 6.9% to $1,283.6 million (2023: $1,200.6 million). Adjusted operating expenses saw a net increase of $22.2 million to $911.1 million (2023: $888.9 million), with increases in adjusted selling and distribution (S&D) expenses partially oﬀset by reductions in adjusted general and administrative (G&A) expenses. Increases in adjusted S&D of $31.8 million to $643.7 million (2023: $611.9 million), were primarily driven by higher investment in the sales force associated with growing the business. Reported S&D increased by $32.7 million to $645.2 million (2023: $612.5 million). Adjusted R&D of $102.4 million (2023: $103.9 million) remained consistent year-on-year and, combined with an increase in R&D capital expenditure, reﬂected the ongoing investment in our future pipeline of new products and new R&D talent joining the business through recent acquisitions. On a reported basis, R&D increased by 1.5% to $111.7 million (2023: $110.0 million). Adjusted G&A decreased by $8.1 million year-on-year to $165.0 million (2023: $173.1 million), reﬂecting the Group’s focus on simpliﬁcation and productivity, notably as we continued to standardise technology and processes, build internal expertise and reduce external third party spend and expand the scope of our Global Business Services (GBS). Adjusted G&A as a percentage of revenue fell to 7.2% (2023: 8.1%) – over the past three years, adjusted G&A as a percentage of revenue has fallen by 450bps. Reported G&A decreased by 8.4% to $195.0 million (2023: $212.9 million). A reconciliation between reported and adjusted operating expenses is provided in the Non-IFRS ﬁnancial information section on pages 28 to 31. The Group delivered adjusted operating proﬁt of $485.3 million (2023: $431.8 million), representing an adjusted operating margin of 21.2% (2023: 20.2%). This was equivalent to 21.8% on a constant currency basis, an increase of 160bps versus 2023. Reported operating proﬁt increased by 23.7% to $324.9 million (2023: $262.7 million). Adjusted net proﬁt increased by 14.0% to $312.4 million (2023: $274.1 million), with the increase in adjusted income tax expense (explained on page 24) more than oﬀset by the increase in adjusted operating proﬁt as explained above. On a reported basis, net proﬁt increased by 46.2% to $190.5 million (2023: $130.3 million). Adjusting items are explained on page 24. 3. Acquisitions in 2024 related to Livramedom whilst in 2023, acquisitions related to Starlight Science, A Better Choice Medical Supply and All American Medical Supply. Divestitures related to the 2022 discontinuation of hospital care, related industrial sales and associated Russia operations. The Group discontinued operations (including all sales and marketing activities) in Russia in 2022. We are in the process of managing our exit from the Group’s dormant entity, and from 1 March 2025, will have no remaining employees in the country. We have no plans to recommence operations. 23 Convatec Group Plc Annual Report and Accounts 2024 Governance Financial statements Additional information Overview Strategic report Financial review continued Earnings per share (EPS) Adjusted basic EPS for 2024 was 15.3 cents (2023: 13.4 cents) and adjusted diluted EPS was 15.2 cents (2023: 13.4 cents), representing increases of 13.5% and 13.7% respectively. Reported basic EPS rose 45.6% to 9.3 cents (2023: 6.4 cents), reﬂecting the reported net proﬁt divided by the basic weighted average number of ordinary shares of 2,047,643,498 (2023: 2,038,653,228). Taxation Year ended 31 December 2024 $m Eﬀective tax rate 2023 $m Eﬀective tax rate Reported income tax expense (55.4) 22.5% (37.1) 22.2% Tax eﬀect of adjustments (40.2) (38.5) Other discrete tax items (2.9) (7.5) Adjusted income tax expense (98.5) 24.0% (83.1) 23.3% The Group’s reported income tax expense was $55.4 million (2023: $37.1 million). The increase in the reported eﬀective tax rate was due to the variance of proﬁt mix between jurisdictions, an increase in uncertain tax positions and the impact of the 2023 beneﬁt from a successful resolution of an uncertain tax position. The increase was net of a reduction due to the release of a $2.9 million tax liability relating to business restructuring and a beneﬁt from prior year tax ﬁlings in the UK. The adjusted eﬀective tax rate of 24.0% for the year ended 31 December 2024 (2023: 23.3%) was after reﬂecting the tax impact of items treated as adjusting items (further details can be found in the reconciliation of reported earnings to adjusted earnings table in the Non-IFRS ﬁnancial information section on page 29). The increase in the adjusted eﬀective tax rate was due to the variance of proﬁt mix between jurisdictions in which the Group had a taxable presence and an increase in uncertain tax positions. This increase was net of a beneﬁt from prior year tax ﬁlings in the UK. Alternative Performance Measures (APMs) Management and the Board will make adjustments to the reported ﬁgures, where appropriate, to produce more meaningful measures to monitor the underlying performance of the business – Alternative Performance Measures (APMs). The Group’s APM policy can be found in the Non-IFRS ﬁnancial information section on page 28 and the following adjustments were made to derive adjusted operating proﬁt and adjusted net proﬁt. Operating proﬁt $m Fair value movement of contingent consideration $m Non-operating income/(expense) $m Income tax $m 2024 2023 2024 2023 2024 2023 2024 2023 Reported 324.9 262.7 (4.6) (24.6) 3.7 4.8 (55.4) (37.1) Amortisation of acquired intangibles 136.3 136.2 – – – – (33.6) (32.6) Acquisitions and divestitures 1.8 10.1 4.6 24.6 – (3.9) (1.3) (0.7) Termination beneﬁts and related costs 6.3 9.5 – – – – (1.5) (2.0) Other adjusting items 16.0 13.3 – – – – (3.8) (3.2) Other discrete tax items – – – – – – (2.9) (7.5) Adjusted 485.3 431.8 – – 3.7 0.9 (98.5) (83.1) Adjustments made to derive adjusted operating proﬁt in 2024 included the amortisation of acquired intangibles of $136.3 million (2023: $136.2 million), of which $94.1 million (2023: $93.2 million) resulted from intangible assets arising from the spin-out from Bristol-Myers Squibb in 2008 and will be fully amortised by December 2026. Acquisition and divestiture-related costs of $1.8 million consisted of costs in respect of the Livramedom acquisition and certain prior acquisitions partially oﬀset by the release of previously recognised provisions in respect of the hospital care exit. Termination costs of $6.3 million were in respect of one-oﬀ, fundamental transformation projects in line with our simpliﬁcation and productivity initiatives. Other adjusting items of $16.0 million largely consisted of the impairment of right-of-use assets and property, plant and equipment, inventory write oﬀs and charges wholly related to the oﬃce footprint optimisation programme and closure of certain manufacturing sites as previously announced. Of the total $160.4 million of adjusting items recognised within operating proﬁt (excluding tax impact), only $10.8 million was cash-impacting in 2024 (2023: $16.1 million). There was also a cash outﬂow of $11.7 million (2023: $7.5 million) during the year in respect of adjusting items recorded as accruals in the prior year. In 2025, the total cash impact of adjusting items to be recognised within operating proﬁt (including amounts accrued in previous years), is currently expected to be similar to 2024. For further information on Non-IFRS ﬁnancial information, see pages 28 to 31. In 2024, other discrete tax items related to a tax beneﬁt of $2.9 million resulting from the release of a tax liability relating to restructuring activities in Switzerland. In 2023, other discrete tax items related to a tax beneﬁt of $15.1 million resulting from a provision release following the successful resolution of an uncertain tax position, partially oﬀset by tax expenses of $7.6 million in respect of a restructuring of activities in Switzerland. For further details on deferred taxation, see Note 6 – Income taxes in the Consolidated Financial Statements. The Board, through the Audit and Risk Committee, annually reviews the Group’s APM policy to ensure that it remains appropriate, aligns with regulatory guidance and reﬂects the way in which the performance of the Group is managed. 24 Convatec Group Plc Annual Report and Accounts 2024 Strategic report Acquisitions In 2024, the Group completed the acquisition of Livramedom – a homecare service provider, based in France, for a net cash outﬂow of $13.6 million to further strengthen our Home Services Group. There was no contingent consideration associated with this acquisition. During the year, the Group paid $70.9 million in respect of ﬁnal earn out amounts associated with the acquisitions of Cure Medical in 2021 and Triad Life Science in 2022 (of which $69.7 million had been provided at 31 December 2023). As at 31 December 2024, the discounted fair value of contingent consideration arising on acquisitions was $70.3 million (2023: $138.0 million). Refer to Note 26 – Acquisitions in the Consolidated Financial Statements for further details. Dividends Dividends are distributed based on the realised distributable reserves of the Company, which are primarily derived from the dividends received from subsidiary companies and are not based directly on the Group’s consolidated retained earnings. The realised distributable reserves of the Company at 31 December 2024 were $1,474.7 million (2023: $1,539.4 million). The Board declared an interim dividend of 1.822 cents per share in July 2024 and has recommended a ﬁnal 2024 dividend of 4.594 cents per share, which would bring the full-year dividend to 6.416 cents per share (2023: 6.229 cents per share), an increase of 3% and a pay-out ratio when compared to adjusted net proﬁt of 42% (2023: 46%). Our stated policy is a pay-out ratio of 35% to 45% of adjusted net proﬁt but this is interpreted ﬂexibly over time to reﬂect the underlying performance of the business and the Board’s conﬁdence in its future growth prospects. Further information about the Group’s dividend policy and dividends paid can be found on page 145 and information on capital maintenance and the available realised distributable reserves position can be found on page 185. Cash Flow and Net Debt Adjusted 2024 $m Adjusted 2023 $m Adjusted EBITDA¹ , ⁶ 590.5 527.1 Working capital inﬂow/(outﬂow)¹ , ⁶ 7.5 (12.9) Adjusting items² , ⁶ (22.5) (23.6) Capital expenditure (122.1) (129.2) Operating cash ﬂow¹ 453.4 361.4 Tax paid (52.1) (35.9) Free cash ﬂow to capital¹ 401.3 325.5 Net interest paid (79.1) (65.6) Lease payments (24.7) (22.7) Other³ 4.3 (8.9) Free cash ﬂow to equity¹ 301.8 228.3 Dividends⁴ (130.2) (110.7) Acquisitions and other⁵ (89.5) (178.8) Purchase of own shares (10.9) – Movement in net debt 71.2 (61.2) Net debt¹ at 1 January (excluding lease liabilities) (1,129.3) (1,068.1) Net debt¹ at 31 December (excluding lease liabilities) (1,058.1) (1,129.3) 1. These non-IFRS ﬁnancial measures are explained and reconciled to the most directly comparable ﬁnancial measure prepared in accordance with IFRS in the Non-IFRS ﬁnancial information section on page 30. 2. Details of adjusting items are provided in the adjusting items cash movement table in the Non-IFRS ﬁnancial information section on page 31. Of the total cash outﬂow of $22.5 million during the year, $11.7 million related to accruals recorded in the prior year. 3. Other consisted of ﬁnancing fees amortisation $3.0 million (2023: $2.8 million) oﬀset by a net FX gain on cash and borrowings of $4.6 million (2023: $6.7 million FX loss) and proceeds from PP&E sales of $2.7 million (2023: $0.6 million). 4. Dividend cash payments of $130.2 million (2023: $110.7 million) were made to shareholders during the year. 5. Acquisition and other payments of $89.5 million consisted of the consideration payment of $13.6 million in respect of the acquisition of Livramedom, a $5.0 million SAFE note investment in BlueWind Medical and $70.9 million in respect of the ﬁnal earn out payments associated with the acquisitions of Cure Medical in 2021 and Triad Life Sciences in 2022. 6. Excluding the impact of adjusting items of $22.5 million (2023: $23.6 million) on adjusted EBITDA and adjusted working capital movements, EBITDA was $573.2 million (2023: $496.7 million) and the reported working capital movement was a $6.5 million outﬂow (2023: $0.6 million inﬂow). Adjusted EBITDA Adjusted EBITDA increased by $63.4 million to $590.5 million (2023: $527.1 million), with the increase in adjusted gross proﬁt of $75.7 million more than oﬀsetting the increase in adjusted operating expenses of $22.2 million. These are explained in the adjusted net proﬁt commentary section. A reconciliation of adjusted EBITDA to the closest IFRS measure is provided in the Non-IFRS ﬁnancial information section on pages 28 to 31. Free cash flow to capital Free cash ﬂow to capital increased by $75.8 million to $401.3 million (2023: $325.5 million), largely driven by the increase in adjusted EBITDA of $63.4 million and improved year-on-year working capital movements of $20.4 million. These were partly oﬀset by an increase in cash tax paid of $16.2 million. The Group invested $122.1 million in capital expenditure (2023: $129.2 million) to increase manufacturing capacity and automation, develop new products and improve information technology and digital tools. 25 Convatec Group Plc Annual Report and Accounts 2024 Governance Financial statements Additional information Overview Strategic report The adjusted working capital inﬂow of $7.5 million (2023: $12.9 million outﬂow) improved year-on-year, with reduced inventory levels of $25.7 million on an adjusted basis and a realised gain on the settlement of FX derivatives held to manage foreign exchange risk in our working capital of $8.8 million (2023: $6.7 million loss) partially oﬀset by a $26.9 million increase in trade and other receivables based on higher sales. Free cash ﬂow to capital is reconciled to its nearest IFRS measure in the Non-IFRS ﬁnancial information section – see page 30. The nearest IFRS measure is net cash generated from operations, which has increased by $84.9 million to $575.5 million (2023: $490.6 million) and is derived from reported net proﬁt of $190.5 million (2023: $130.3 million). Operating cash conversion was 93.4% (2023: 83.7%). The improvement in the ratio primarily reﬂected the improvement in working capital and net FX gains on derivatives. Refer to page 31 in the Non-IFRS ﬁnancial information section. Free cash flow to equity Free cash ﬂow to equity increased by $73.5 million or 32.2% to $301.8 million (2023: $228.3 million). This was driven by an increase in free cash ﬂow to capital of $75.8 million as explained above and net foreign exchange gains of $11.3 million on borrowings and cash, partly oﬀset by higher ﬁnance expense payments of $13.5 million primarily due to the timing of interest payments associated with the revolving credit facility. Free cash ﬂow to equity is reconciled to its nearest IFRS measure in the Non-IFRS ﬁnancial information section – see page 30. Equity cash conversion was 96.6% (2023: 83.3%) – refer to page 31 in the Non-IFRS ﬁnancial information section. Borrowings and net debt 2023 2024 2023 2024 2023 2024 2023 2024 Net debt 2 excluding leases $1,058.1m (2023: $1,129.3m) 500 250 0 -1,000 -750 -250 -500 Net debt 2 / adjusted EBITDA 2 At 31 December 2023 2.1x Net debt 2 / adjusted EBITDA 2 At 31 December 2024 1.8x ($627.7m) $97.6m ($732.8m) ($85.5m) ($494.1m) $64.7m ($78.8m) ($495.1m) Cash and cash equivalents Lease liabilities Senior notes¹ Credit facilities drawn¹ 1. Senior notes and credit facilities are stated net of unamortised ﬁnancing fees of $4.9 million and $5.8 million respectively (2023: $5.9 million and $7.8 million). 2. These non-IFRS measures are explained and reconciled to the most directly comparable ﬁnancial measures prepared in accordance with IFRS on pages 28 to 31. As at 31 December 2024, the Group’s cash and cash equivalents were $64.7 million (2023: $97.6 million) and total borrowings (net of deferred ﬁnancing fees) were $1,122.8 million (2023: $1,226.9 million). The Group’s banking facilities comprise of a multicurrency revolving credit facility of $950.0 million and a term loan of $250.0 million, maturing in 2028 and 2027 respectively. The Group’s $500.0 million senior unsecured notes, issued in October 2021, remain in place with maturity in October 2029. As at 31 December 2024, $566.5 million of the multicurrency revolving credit facility remained undrawn. The Group ended the period with total borrowings, including IFRS 16 lease liabilities, of $1,201.6 million (2023: $1,312.4 million). Oﬀsetting cash of $64.7 million (2023: $97.6 million) and excluding lease liabilities, net debt was $1,058.1 million (2023: $1,129.3 million), equivalent to 1.8x adjusted EBITDA (2023: 2.1x adjusted EBITDA). We continue to target leverage of 2x over time but are comfortable to temporarily go above or below this, dependent on M&A and other investment opportunities. For further information on borrowings see Note 21 – Borrowings in the Consolidated Financial Statements. Covenants At 31 December 2024, the Group was in compliance with all ﬁnancial and non-ﬁnancial covenants associated with the Group’s outstanding debt. The Group has two ﬁnancial covenants, being net leverage and interest cover, each of which is deﬁned, where applicable, within the borrowing documentation. The table below summarises the Group’s most restrictive covenant thresholds and position as at 31 December 2024 and 2023. Maximum covenant net leverage Actual covenant net leverage Minimum covenant interest cover 3 Actual covenant interest cover 3 31 December 2024 3.50x 1.9x 3.5x 7.6x 31 December 2023 3.50x 2.3x 3.5x 7.0x 3. Interest cover is adjusted EBITDA/interest expense (net) and net leverage is net debt/adjusted EBITDA in accordance with the deﬁnitions contained in underlying borrowing documentation and are not the same as the deﬁnitions of these measures presented in the Non-IFRS ﬁnancial information section on pages 28 to 31 and applied in the commentary in this Financial review. Financial review continued 26 Convatec Group Plc Annual Report and Accounts 2024 Strategic report Group financial position At 31 December 2024 $m 2023 $m Change $m Intangible assets and goodwill 2,096.1 2,234.1 (138.0) Other non-current assets 625.6 609.6 16.0 Cash and cash equivalents 64.7 97.6 (32.9) Other current assets 728.6 772.4 (43.8) Total assets 3,515.0 3,713.7 (198.7) Current liabilities (512.3) (536.4) 24.1 Non-current liabilities (1,313.8) (1,484.6) 170.8 Equity (1,688.9) (1,692.7) 3.8 Total equity and liabilities (3,515.0) (3,713.7) 198.7 Intangible assets and goodwill Intangible assets and goodwill decreased by $138.0 million to $2,096.1 million (2023: $2,234.1 million) and was primarily driven by the in-year amortisation of intangible assets of $157.0 million partially oﬀset by intangible asset additions of $31.4 million. Further detail is provided in Note 9 – Intangible assets and goodwill in the Consolidated Financial Statements. Following the Local Coverage Determinations (LCDs) announcement in November 2024, management considered whether there was an indication of impairment in respect of the InnovaMatrix ® product-related intangible asset held on the balance sheet. Using latest approved forecasts, the recoverable amount was calculated, and this demonstrated signiﬁcant headroom over the carrying amount. A similar exercise was carried out on the goodwill balance associated with the Advanced Wound Care CGU and there was signiﬁcant headroom remaining. Management therefore concluded that the intangible asset and goodwill balance were not impaired at 31 December 2024. No other triggers of impairments were identiﬁed during 2024. Other non-current assets Other non-current assets, including property, plant and equipment (PP&E), right-of-use assets, investment in ﬁnancial assets, deferred tax assets, restricted cash and other assets increased by $16.0 million to $625.6 million (2023: $609.6 million), with the increase largely due to an increase in PP&E reﬂecting the continued investment in our manufacturing facilities. Current assets excluding cash and cash equivalents Current assets, excluding cash and cash equivalents, decreased by $43.8 million to $728.6 million (2023: $772.4 million), primarily driven by a reduction in inventories of $46.5 million. As a result of the LCDs announcement, consideration was also given to the recoverability of related debtors and inventory valuation. No issues were noted and management concluded that there were no risks of material misstatement in respect of these balances as at 31 December 2024. Current liabilities Current liabilities decreased by $24.1 million to $512.3 million (2023: $536.4 million), with decreases in trade and other payables of $6.0 million, provisions of $9.7 million and contingent consideration of $16.4 million partially oﬀset by an increase in current tax payable of $5.3 million. Non-current liabilities Non-current liabilities decreased by $170.8 million to $1,313.8 million (2023: $1,484.6 million). This was primarily due to reductions in non-current borrowings of $104.1 million, contingent consideration of $51.3 million (following the ﬁnal earn out payments made for the Cure Medical and Triad acquisitions), deferred tax liabilities of $5.5 million and lease liabilities of $8.0 million. Going concern In assessing going concern, the Directors considered available cash resources, access to committed undrawn funding, ﬁnancial performance and forecast performance, including continued implementation of the FISBE 2.0 strategy, together with the Group’s ﬁnancial covenant compliance requirements and principal risks and uncertainties. The same severe but plausible downside scenarios utilised in the preparation of the Viability statement were also applied in assessing going concern. Under each scenario, the Group retained signiﬁcant liquidity and covenant headroom throughout the going concern period, i.e. 12 months from the date of this report. For further information on the Viability statement see pages 82 and 83 and for Going Concern, see Note 1.2 to the Consolidated Financial Statements. A reverse stress test, before corporate level mitigations, was also considered to demonstrate what reduction in revenue would be required in the next 12 months to create conditions which may lead to a potential covenant breach. The outcome of this test was considered implausible given the Group’s strong global market position, diversiﬁed portfolio of products and the corporate mitigations available to the Board and management. Accordingly, the Directors continue to adopt the going concern basis in preparing the Consolidated Financial Statements. Jonny Mason Chief Financial Officer 25 February 2025 27 Convatec Group Plc Annual Report and Accounts 2024 Governance Financial statements Additional information Overview Strategic report KPI Please see page 12 KEY Non-IFRS financial information Non-IFRS financial information Non-IFRS ﬁnancial information or alternative performance measures (APMs) are those measures used by the Board and management on a day-to-day basis in their assessment of proﬁt and performance and comparison between periods. The adjustments applied to IFRS measures reﬂect the eﬀect of certain cash and non-cash items that the Board believes distort the understanding of the quality of earnings and cashﬂows as, by their size or nature, they are not considered part of the core operations of the business. Adjusted measures also form the basis of performance measures for remuneration, e.g. adjusted operating proﬁt. It should be noted that the Group’s APMs may not be comparable to other similarly titled measures used by other companies and should not be considered in isolation or as a substitute for the equivalent measures calculated and presented in accordance with IFRS (our reported measures). In determining whether an item should be presented as an allowable adjustment to IFRS measures, the Group considers items which are signiﬁcant either because of their size or their nature and arise from events that are not considered part of the core operations of the business. These tend to be one-oﬀ events but may still cross more than one accounting period. Recurring items may be considered, particularly in respect of the amortisation of acquisition-related intangible assets. If an item meets at least one of these criteria, the Board, through the Audit and Risk Committee, then exercises judgement as to whether the item should be classiﬁed as an allowable adjustment to IFRS performance measures. The tax eﬀect of the adjustments is reﬂected in the adjusted tax expense to remove the tax impact from adjusted net proﬁt and adjusted earnings per share. Amortisation of acquisition- related intangible assets The Group’s strategy is to grow both organically and through acquisition, with acquisitions being targeted to strengthen our position in key geographies and/or business categories or which provide access to new technology. The nature of the businesses acquired includes the acquisition of signiﬁcant intangible assets, which are required to be amortised. The Board and management regard the amortisation as a distortion to the quality of earnings and it has no cash implications in the year. The amortisation also distorts comparability with peer groups where such assets may have been internally generated and, therefore, not reﬂected on their balance sheet. Amortisation of acquisition-related intangible assets is, by its nature, a recurring adjustment. Acquisition-related activities Costs directly related to potential and actual strategic transactions which have been executed, aborted or are in-ﬂight are deemed adjusting items. Acquisition-related costs relate to deal costs, integration costs and earn-out adjustments, including the discounting impact which are incurred directly as a result of the Group undertaking or pursuing an acquisition. Deal costs are wholly attributable to the deal, including legal fees, due diligence fees, bankers’ fees/commissions and other direct costs incurred as a result of the actual or potential transaction. Integration costs are wholly attributable to the integration of the target and based on integration plans presented at the point of acquisition, including the cost of retention of key people where this is in excess of normal compensation, redundancy of target staﬀ and early lease termination payments. Adjusted measures in relation to acquisitions also include aborted deal costs. Divestiture-related activities Divestiture-related activities comprise the gains or losses resulting from disposal or divestment of a business as a result of a sale, major business change or restructuring programme. These include write-down of non-current assets, provisions to recognise inventories at realisable value, provisions for costs of exiting contracts and associated legal fees, and any other directly attributable costs. Any income from the ultimate disposal of a business or subsidiary is included in the gain or loss. Adjusted measures in relation to divestitures also include aborted deal costs. Impairment of assets Impairments, write-oﬀs and gains and losses from deﬁned programmes and where the Group considers the circumstances of such event are not reﬂective of normal business trading performance or when transactions relate to acquisition-related intangible assets where the amortisation is already excluded from the calculation of adjusted measures. Termination benefits and related costs Termination beneﬁts and other related costs arise from material, one-time Group-wide initiatives to reduce the ongoing cost base and improve eﬃciency in the business, including divestitures from non-strategic activities. The Board considers each project individually to determine whether its size and nature warrants separate disclosure. Qualifying items are limited to termination beneﬁts (including retention) without condition of continuing employment in respect of major Group-wide change programmes. Where discrete qualifying items are identiﬁed these costs are highlighted and excluded from the calculation of adjusted measures. Due to their nature, these adjusted costs may span more than one year. Other adjusting items Other adjusting items relate to material, one-time initiatives which are part of the Group’s strategy to improve productivity in the business and optimise cash ﬂows. The Board considers each project individually to determine whether its size and nature warrants separate disclosure. Qualifying costs are limited to directly attributable costs of the initiatives and any realignment costs. Due to the nature of the initiatives, these adjusted costs may span more than one year. Revenue measures Revenue growth on a constant currency basis represents reported revenue, as determined under IFRS, and applying the applicable prior period average exchange rates to the Group’s actual performance in the respective period. Organic revenue growth is calculated by adjusting this to exclude the impact of acquisitions and divestitures (see details in the Glossary on page 212). KPI Cash flow measures Operating cash ﬂow is the net cash generated from operations, as determined under IFRS, less capital expenditure. Free cash ﬂow to capital is deﬁned as operating cash ﬂow less tax paid. Free cash ﬂow to equity reﬂects how eﬀectively we are converting the proﬁt we generate into cash (after accounting for working capital, capital investments, adjusting items, tax and interest). Refer to page 30 for details on how these measures are calculated. Net debt and leverage ratio are two other measures used and these are explained on page 31. 28 Convatec Group Plc Annual Report and Accounts 2024 Strategic report Reconciliation of reported earnings to adjusted earnings for the years ended 31 December 2024 and 2023 Year ended 31 December 2024 Revenue $m Gross proﬁt $m Operating costs $m Operating proﬁt $m Finance expense, net $m Fair value movement of contingent consideration $m Non- operating income, net $m PBT $m Income tax $m Net proﬁt $m As reported 2,289.2 1,283.6 (958.7) 324.9 (78.1) (4.6) 3.7 245.9 (55.4) 190.5 Amortisation of acquired intangibles – 109.0 27.3 136.3 – – – 136.3 (33.6) 102.7 Acquisition-related costs – – 3.5 3.5 – 4.6 – 8.1 (1.7) 6.4 Divestiture-related costs/ (income) – (1.1) (0.6) (1.7) – – – (1.7) 0.4 (1.3) Termination beneﬁts and related costs – 0.9 5.4 6.3 – – – 6.3 (1.5) 4.8 Other adjusting items – 4.0 12.0 16.0 – – – 16.0 (3.8) 12.2 Other discrete tax items – – – – – – – (2.9) (2.9) Adjusted 2,289.2 1,396.4 (911.1) 485.3 (78.1) – 3.7 410.9 (98.5) 312.4 Amortisation 20.7 Depreciation 63.8 Impairment of assets 0.9 Share-based payments 19.8 Adjusted EBITDA 590.5 Year ended 31 December 2023 Revenue $m Gross proﬁt $m Operating costs $m Operating proﬁt $m Finance expense, net $m Fair value movement of contingent consideration $m Non- operating income, net $m PBT $m Income tax $m Net proﬁt $m As reported 2,142.4 1,200.6 (937.9) 262.7 (75.5) (24.6) 4.8 167.4 (37.1) 130.3 Amortisation of acquired intangibles – 110.4 25.8 136.2 – – – 136.2 (32.6) 103.6 Acquisition-related costs – 1.5 6.8 8.3 – 24.6 – 32.9 (1.4) 31.5 Divestiture-related costs/ (income) – 3.6 (1.8) 1.8 – – (3.9) (2.1) 0.7 (1.4) Termination beneﬁts and related costs – 2.1 7.4 9.5 – – – 9.5 (2.0) 7.5 Other adjusting items – 2.5 10.8 13.3 – – – 13.3 (3.2) 10.1 Other discrete tax items – – – – – – – (7.5) (7.5) Adjusted 2,142.4 1,320.7 (888.9) 431.8 (75.5) – 0.9 357.2 (83.1) 274.1 Amortisation 18.4 Depreciation 60.2 Impairment of assets 2.1 Share-based payments 14.6 Adjusted EBITDA 527.1 Refer to the Financial Review on page 24 for commentary on the Group’s adjusting items. Adjusted operating proﬁt margin of 21.2% (2023: 20.2%) is calculated as adjusted operating proﬁt of $485.3 million (2023: $431.8 million) divided by revenue of $2,289.2 million (2023: $2,142.4 million). A reconciliation of adjusted operating proﬁt to its closest IFRS measure is shown in the table above. KPI Adjusted operating proﬁt at constant currency, determined by applying the applicable prior period average exchange rates to the adjusted operated proﬁt, was $502.4 million, with adjusted operating proﬁt margin growth of 16.4% on a constant currency basis. The adjusted operating proﬁt margin was 21.8% on a constant currency basis, calculated as the adjusted operating proﬁt of $502.4 million on a constant currency basis divided by revenue of $2,304.6 million on a constant currency basis. Reconciliation of reported operating costs to adjusted operating costs for the years ended 31 December 2024 and 2023 2024 2023 S&D $m G&A $m R&D $m Other $m Operating costs $m S&D $m G&A $m R&D $m Other $m Operating costs $m As reported (645.2) (195.0) (111.7) (6.8) (958.7) (612.5) (212.9) (110.0) (2.5) (937.9) Amortisation of acquired intangibles 0.6 19.0 7.7 – 27.3 – 19.8 6.0 – 25.8 Acquisition-related costs – 2.8 – 0.7 3.5 – 6.8 – – 6.8 Divestiture-related income (0.6) – – – (0.6) (1.0) (0.4) – (0.4) (1.8) Termination beneﬁts and related costs 1.2 2.6 1.6 – 5.4 1.6 5.7 0.1 – 7.4 Other adjusting items 0.3 5.6 – 6.1 12.0 – 7.9 – 2.9 10.8 Adjusted (643.7) (165.0) (102.4) – (911.1) (611.9) (173.1) (103.9) – (888.9) 29 Convatec Group Plc Annual Report and Accounts 2024 Governance Financial statements Additional information Overview Strategic report Reconciliation of reported basic and diluted earnings per share to adjusted earnings per share for the years ended 31 December 2024 and 2023 2024 $m Adjusted 2024 $m 2023 $m Adjusted 2023 $m Net proﬁt attributable to the shareholders of the Group 190.5 312.4 130.3 274.1 Number Number Basic weighted average ordinary shares in issue¹ 2,047,643,498 2,038,653,228 Diluted weighted average ordinary shares in issue¹ 2,056,797,417 2,052,589,260 Cents per share Cents per share Cents per share Cents per share Basic earnings per share 9.3 15.3 6.4 13.4 Diluted earnings per share 9.3 15.2 6.3 13.4 1. See Note 7 – Earnings per share to the Consolidated Financial Statements. Adjusted diluted EPS has increased by 13.7% and is calculated as adjusted diluted EPS for the current period less adjusted diluted EPS for the prior year, divided by the prior year adjusted diluted EPS. This is calculated on actual unrounded numbers. KPI Reconciliation of Operating cash flow, Free cash flow to capital, Free cash flow to equity Year ended 31 December 2024 $m 2023 $m Net cash generated from operations 575.5 490.6 Less: acquisition of PP&E and intangible assets (122.1) (129.2) Operating cash ﬂow 453.4 361.4 Tax paid (52.1) (35.9) Free cash ﬂow to capital 401.3 325.5 Net interest paid (79.1) (65.6) Payment of lease liabilities (24.7) (22.7) Financing fee amortisation (3.0) (2.8) Foreign exchange gain/(loss) on cash and borrowings 4.6 (6.7) Proceeds from sale of PP&E 2.7 0.6 Free cash ﬂow to equity 301.8 228.3 Free cash ﬂow to equity has increased by 32.2% to $301.8 million (2023: $228.3 million) and is calculated as the movement in free cash ﬂow to equity year-on-year divided by the free cash ﬂow to equity in the prior year. A reconciliation of free cash ﬂow to equity to its closest IFRS measure is shown in the table above. KPI Reconciliation of reported and adjusted working capital movement Year ended 31 December 2024 $m 2023 $m Reported working capital movement ² (6.5) 0.6 Increase in respect of acquisitions and divestitures 3.1 3.1 Increase/(decrease) in termination beneﬁts 4.2 (6.1) (Decrease) in respect of other adjusting items (2.1) (3.8) Realised gain/(loss) on settlement of FX derivatives held to manage foreign exchange risk in working capital³ 8.8 (6.7) Adjusted working capital movement 7.5 (12.9) 2. The comparatives have been re-presented as outlined in Note 1.6 to the Consolidated Financial Statements. 3. Realised gains and losses arising from the settlement of FX derivatives held to manage foreign exchange risk in our working capital have been included in this reconciliation as management believe this provides a more accurate view of the underlying movement in working capital. Non-IFRS financial information continued 30 Convatec Group Plc Annual Report and Accounts 2024 Strategic report Cash flow conversion Year ended 31 December 2024 2023 Operating cash conversion¹ 93.4% 83.7% Equity cash conversion¹ 96.6% 83.3% 1. Operating cash conversion is calculated as Operating cash ﬂow / Adjusted operating proﬁt. Equity cash conversion is calculated as Free cash ﬂow to equity/ Adjusted net proﬁt. Cash outflows from adjusting items Year ended 31 December 2024 $m 2023 $m Acquisition and divestitures adjustments (4.2) (13.6) Termination beneﬁts and related costs adjustments (10.7) (3.4) Other adjusting items (7.6) (6.6) Cash outﬂows from adjusting items (22.5) (23.6) Net debt Monitoring net debt is important to the Group as it is an indicator of the Group’s ﬁnancial health and its available liquidity. It is an important decision-making tool for investment decisions and strategic planning. Net debt is calculated as borrowings less cash and excluding lease liabilities. 2024 $m 2023 $m Senior notes² 495.1 494.1 Credit facilities² 627.7 732.8 Lease liabilities³ 78.8 85.5 Total borrowings including lease liabilities 1,201.6 1,312.4 Less: cash and cash equivalents⁴ (64.7) (97.6) Less: lease liabilities³ (78.8) (85.5) Net debt excluding leases 1,058.1 1,129.3 2 . See Note 21 – Borrowings of the Consolidated Financial Statements. 3. See Note 24 – Leases of the Consolidated Financial Statements. 4. See Note 22 – Cash, cash equivalents and restricted cash of the Consolidated Financial Statements. Leverage Leverage is an important performance measurement metric for the Group as it is an indicator of ﬁnancial risk, credit worthiness and operational ﬂexibility. It is also an important consideration in strategic decision-making. The leverage ratio is calculated as net debt excluding leases divided by adjusted EBITDA. 2024 $m 2023 $m Net debt excluding leases⁵ 1,058.1 1,129.3 Adjusted EBITDA⁶ 590.5 527.1 Leverage 1.8x 2.1x 5. Net debt excluding leases is deﬁned and reconciled to the closest IFRS measure in the Net debt table above. 6. Adjusted EBITDA is reconciled to the closest IFRS measure in the Reconciliation of reported earnings to adjusted earnings table on page 29 of this section. 31 Convatec Group Plc Annual Report and Accounts 2024 Governance Financial statements Additional information Overview Strategic report Responsible business review Sustainable growth Generating value, responsibly. Doing what’s right for all stakeholders. Convatec Cares “As we deliver results for customers and patients, we are committed to undertaking our business responsibly. By focusing on the most important issues for us and our stakeholders, and integrating sustainable business practices into our core processes, we will continue to generate value for the long term.” → To ﬁnd out more about Convatec Cares, watch our short video www.convatecgroup.com/ sustainability/our-frameworks-and-targets/ Our dedicated colleagues around the world strive to ensure that customers can trust us to deliver products, services and solutions that improve lives. Our FISBE strategy continues to deliver, underpinned by responsible business practices that are core to who Convatec is today, and who we aspire to be in the future. Our product pipeline is the healthiest and most innovative in the company’s history, with safety, eﬃcacy and quality at its core. We have expanded our customer loyalty programme, in order to become an increasingly customer-centric company. We have also enhanced our employee engagement eﬀorts to strengthen our culture of listening and learning. We are engaging with our supply chain partners on their environmental and social commitments more meaningfully than ever before; we continue to reduce our environmental footprint year-on-year. As we have transformed Convatec, we have carefully considered important topics for our stakeholders and assessed our impacts. Responsible, sustainable practices have been integrated into the way we do business, and this allows us to stay the course as we navigate change against the backdrop of a dynamic external landscape. We are well positioned to capitalise on sustainability-related opportunities – in all pillars of Convatec Cares – and continue to prioritise long-term thinking and actions. Karim Bitar, CEO Chair, ESG Steering Committee OUR ESG TARGETS → For a short summary of our ESG journey click here www.marketingworld.convatec.com/ MarketingZone/MZDirect/Source/5a8cfc1f-be5e- 4c97-82fc-015a019fae7c Within each of our ESG pillars, we set and regularly review targets to guide our commitments. We track our progress throughout the year and report to management and the Board. These targets are listed within each pillar on pages 39, 44, 49, and 52 and can be found at www.convatecgroup.com/ sustainability/our-frameworks-and- targets/. Progress made in 2024, against a select set of target metrics has been reviewed as part of the external assurance process. For further details see the assurance statement on page 59 and basis of reporting at www. convatecgroup.com/sustainability/ esg-reports-and-data. 32 Convatec Group Plc Annual Report and Accounts 2024 Strategic report CONVATEC CARES: OUR ESG FRAMEWORK ESG PILLARS Delivering for our customers Innovative patient-centric products, services and solutions that improve lives (see page 39) Enabling our people to thrive Ensuring the health, safety and wellbeing of our people and using their talent for good (see page 44) Behaving ethically and transparently Protecting and enhancing our reputation with all our stakeholders (see page 49) Protecting the planet and supporting communities How we operate and our contribution to the world around us (see page 52) Integrated within our FISBE strategy and informed by a materiality assessment (page 38), Convatec Cares sets out our commitments and activities that support sustainable and proﬁtable growth. It focuses on the topics that are material for Convatec and our stakeholders and considers a dynamic range of societal and planetary needs. ESG mission Underpinned by our values (page 45), our ESG mission is to drive progress towards our vision of Pioneering trusted medical solutions to improve the lives we touch by aligning and enabling ESG-related initiatives for the beneﬁt of our customers, colleagues, communities and shareholders. V A L U E S F I S B E S T R A T E G Y C U S T O M E R S C O L L E A G UE S C O M M UN I T I E S C O M M E R C E F O R E V E R C A R I N G Pioneering trusted medical solutions to improve the lives we touch 33 Convatec Group Plc Annual Report and Accounts 2024 Governance Financial statements Additional information Overview Strategic report Responsible business review continued ESG GOVERNANCE: BOARD AND MANAGEMENT ESG Steering Committee Human Rights Committee DE&I and Wellbeing Council TCFD working group Product sustainability working group CSRD taskforce Audit and Risk Committee Board Strategic planning and investment cycle Stakeholders drive progress, performance, compliance and metrics Responsibilities – Custodian of ESG strategy and commitments, including our approach to key sustainability topics such as: – Environment and communities – Workforce engagement, DE&I and Wellbeing and human rights – Sustainable supply chain – Key stakeholder engagement – Oversees sub-groups to drive focus and execution Members 1 CEO (Chair) 5 EVP, Chief Technology Oﬃcer and Head of R&D 2 CFO 6 EVP, Chief People Oﬃcer 3 EVP, Chief Quality & Operations Oﬃcer 7 EVP, General Counsel & Company Secretary 4 EVP, Chief Strategy & Business Development Oﬃcer 8 VP, Head of Global Corporate Aﬀairs * Not CELT member. See CELT member skills and experience on pages 94 and 95. The VP, Financial Controller & Transformation; VP, Internal Audit, Enterprise Risk & Insurance; and VP, Head of Investor Relations support the work of the Committee. Sub-groups are comprised of leaders from across the business. 34 Convatec Group Plc Annual Report and Accounts 2024 Strategic report ROLE OF THE BOARD ROLE OF MANAGEMENT INTEGRATION INTO OUR FISBE STRATEGY Role of the Board Our Board has ultimate oversight of ESG, including climate-related risks and opportunities, at Convatec. The Executive Director responsible for these issues is our CEO, Karim Bitar. As a Board member, he brings together continuity and responsibility for our ESG strategy. The Board reviews progress of ESG strategy execution, including at least two formal updates annually. See page 97 for information about the Board’s activities in this area during 2024. Role of the Audit and Risk Committee The Board’s Audit and Risk Committee (ARC) met ﬁve times during the year and is responsible for reviewing and approving our ESG assurance approach and compliance with the requirements of the Task Force on Climate-related Financial Disclosures (TCFD), in terms of data integrity and compliance with regulatory requirements. See page 110 for more information on the ARC’s activities in this area. Our ESG Steering Committee is chaired by the CEO and includes six other members of our Convatec Executive Leadership Team (CELT). Committee members provide ESG stewardship across a range of areas. The Committee oversees the formulation and delivery of the ESG strategy and meets three times a year. It drives progress and actions to manage our ESG-related risks, impacts and opportunities. This is reported to CELT for discussion, review and challenge. The Committee updates the Board at least twice a year. Together, these measures ensure that all those charged with governance understand our business response to ESG topics and are committed to delivering against our commitments to become a more sustainable business. The Committee oversees a series of sub-groups, comprised of leaders from across the business. The Scope 3 and Product Sustainability working group met three times in 2024 to progress workstreams around Scope 3 emissions reduction levers. The TCFD working group meets regularly to advance the work needed to meet TCFD requirements. The Human Rights Committee monitors progress on protecting labour and human rights in our operations and supply chain and met twice in 2024. The Diversity, Equity & Inclusion (DE&I) and Wellbeing Council meets annually, alongside regular engagement with CELT and the Board’s Nomination Committee on relevant DE&I and wellbeing topics. In 2025, the ESG Steering Committee will continue to facilitate our ESG agenda, ensure preparedness for forthcoming regulatory compliance considerations, including the EU Corporate Sustainability Reporting Directive, and further integrate ESG practices across our direct operations and value chain. Our Global Corporate Aﬀairs team brings together ESG stakeholder activities, initiatives and priorities across Convatec, and supports the work of the Committee. We also have a dedicated Environment, Health and Safety (EHS) team within our Global Quality & Operations function. They work across our manufacturing and Research & Development (R&D) facilities to deliver environmental management systems in line with our corporate requirements, aligned with ISO 14001. Group Financial Controls work across ESG activities to strengthen and evolve our control environment for ESG data and processes. ESG is a focus area during the company-wide strategic planning process. With emphasis on ‘execution’ of the FISBE strategy, leaders from each business unit and functional area scoped ESG-related activities, initiatives and resources within their remit that will support our progress. Given the importance, complexity and dynamic nature of ESG considerations, the strategic planning process also clariﬁes various roles and responsibilities for positioning Convatec to meet our targets, particularly related to our net zero transition plan, see pages 53 to 54. In 2025, informed by an external benchmarking exercise completed last year, we will work with partners across the business to evolve our approach further. 35 Convatec Group Plc Annual Report and Accounts 2024 Governance Financial statements Additional information Overview Strategic report Understanding stakeholder perspectives and building positive relationships to inform our strategy and decision-making Engaging stakeholders Stakeholder group Stakeholder needs How Convatec and our Board engage Outcomes The people who use our products and rely on our services Customers/ patients Our products and services are designed for and delivered to our customers and patients. They need: – Safe, eﬀective, accessible and innovative products – Support and information Convatec: – Direct-to-consumer channels – Home delivery companies – Specialist nurses and call centres – Targeted consumer research – Responding to speciﬁc consumer questions, feedback and complaints – Training and online support Board: – The Board met a patient living with Type 1 diabetes, and discussed their current infusion sets, beneﬁts and potential enhancements. – The Chair, Board workforce liaison, and the Executive Directors met patients from each of Convatec’s business categories at the Global Leaders Meeting in April 2024 (see page 45) Convatec : – Incorporation of relevant consumer feedback in our research and development processes – Service provision reviews based on customer feedback, and implementation of enhancements as required – Tracking and management of customer issues Board: – Insight into patient needs and broader perspectives on the market segment, opportunities for innovation and new therapy areas, informs our strategy, decision-making and investment in research and development, manufacturing capacity and quality Direct enablers who help us deliver Healthcare professionals Healthcare professionals provide valuable insight into our product development and help to ensure that our products reach a wide range of patients. They need: – Products and services that meet patients’ needs and beneﬁt the healthcare delivery system – Fair pricing Convatec: – Ongoing clinical and commercial dialogue – Targeted research – Specialist training programmes – Advisory boards – Key opinion leader meetings Board: – The annual Board agenda includes in-depth discussions with leading healthcare professionals. – In 2024, the Board met with a Professor of Neurology at Lund University specialising in Parkinson’s disease Convatec: – Product and service insights inform our development processes and our day-to-day operations Board: – Insights gained from discussions with patients, researchers and healthcare professionals are considered in Convatec’s strategy and decision-making Our people Our employees bring our vision, values and FISBE strategy to life, fostering an inclusive and supportive culture that enables them to deliver for customers and patients. They need: – Safe, healthy, ethical and fair working environment – DE&I and wellbeing – Ability to make a diﬀerence to the people who rely on our products and services – Training and development – Career growth opportunities – Attractive reward and recognition Convatec: – Group-wide interaction via our intranet, app and regular town halls – Employee recognition activities – DE&I and wellbeing initiatives – Customer stories – Employee surveys – Union representation and works councils (where relevant) – Performance reviews – Compliance helpline and website (Speak up) Board: – Regular town halls led by the Executive Directors, and employee focus groups and other forums attended by the Board Workforce Liaison Champion – Board and Committee site visits (2024: Lisbon, Portugal (Global Business Services), and Osted, Denmark (Infusion Care) Convatec: – Incorporation of insights to shape our people strategy, talent processes and development/training programmes – Ensure a cadence of communications and engagement that encompasses employee feedback – Read more about how we enable our people to thrive on pages 45 and 46 Board: – Provides ﬁrst-hand insight into culture and sentiment within the business – Helps the Board make broader strategic decisions Suppliers and other supply chain partners Our suppliers and partners are critical to Convatec’s ability to deliver our products and services to our customers and patients. They need: – Long-term relationships – Fair pricing and commercial terms – Predictable business – Transparency on suppliers’ expected ESG standards Convatec: – Commercial dialogue – Supplier due diligence, assessments and audits Board: – The Board is briefed on suppliers and supply chain partners periodically through updates from the Executive Directors and CELT Convatec: – Development of valuable partnerships to address consumers’ needs – Value chain emissions reporting – Supplier awards – Read more on behaving ethically and transparently on pages 49 to 51 Board: – Provides assurance that Convatec is operating responsibly and behaving ethically and transparently. – Ongoing monitoring enables the Board to weigh the beneﬁts of plans appropriately against any adverse impacts on suppliers and ensure that any potential environmental impact is also considered Responsible business review continued 36 Convatec Group Plc Annual Report and Accounts 2024 Strategic report 1. Including distributors, large buying organisations, integrated delivery networks, hospitals and national and regional payors. Stakeholder considerations in decision-making As we continue our journey of sustainable and proﬁtable growth, we are mindful of the importance of staying aware and responsive to stakeholder needs. Our Section 172 statement and speciﬁc examples of how our Directors have discharged their duties pursuant to Section 172 of the Companies Act 2006, by considering stakeholders in decision making can be found on pages 36 and 37. Stakeholder group Stakeholder needs How Convatec and our Board engage Outcomes Channel partners 1 Our channel partners are critical to ensure that Convatec’s products and services are available to those with chronic conditions. They need: – Eﬀective, competitively priced products – Fair pricing and commercial terms – Continuity of supply Convatec: – Commercial dialogue – Marketing activities – Tender processes – Distributor due diligence and compliance training – Quarterly reviews with partners Board: – The Board is briefed on channel partners and B2B customers periodically through updates from the Executive Directors and CELT Convatec: – Continued inclusion in tender processes – Development of valuable relationships to address consumer needs Board: – This enables the Board to consider the views and needs of these stakeholders given their importance to the Group’s commercial strategy and its global manufacturing and quality operations B2B customers Our B2B customers are critical to ensuring that Convatec’s innovative products can be used with other companies’ own products to address patient needs. They need: – Innovative products for use with their own products – Long-term relationships – Fair pricing and commercial terms Convatec and the Board: – Commercial dialogue and partnerships Convatec: – Development of long-term partnerships focused on addressing patient needs Investors and debt providers Our investors and debt providers are critical to supporting and maintaining Convatec’s ability to operate and deliver. They need: – A clear corporate strategy and delivery on that strategy – Sustainable returns – Responsible business practices – Cash ﬂow to pay dividends and service debt obligations Convatec: – Annual General Meeting – Active investor relations programme: in 2024, we hosted more than 290 investor meetings, including nine roadshows and participation in 14 conferences – Post-roadshow investor surveys plus feedback from corporate brokers – Relationship-led engagement with debt providers Board: – The Chair held two meetings with institutional shareholders on governance, covering matters such as risk, employee engagement, remuneration, board composition and oversight, cyber and AI – The Board receives analysts’ notes published about the Group and the sector and receives regular updates on investor relations matters (IR) – The Board was provided with a presentation from the brokers which considered investor sentiment – The Executive Directors participate in an active IR programme, including investor roadshows – The Remuneration Committee Chair held meetings with investors to discuss the proposed changes to the Remuneration Policy Convatec: – Quality materials to ensure the capital markets appreciate the health of the business and its future prospects – Strategy, Board composition and succession planning and remuneration policy considers investor feedback – Read more about our capital allocation policy on page 10 Board: – Enables the Board to communicate its strategy and ﬁnancial performance as well as how Convatec operates responsibly – Investors’ feedback and insights are taken into account by the Board in our communications to shareholders – The 2025 Remuneration Policy can be found on pages 128 to 134 and shareholders will be asked to approve this at the 2025 AGM Evaluators who hold us to account for our performance Regulators Regulatory bodies are critical to our licence to operate and ability to deliver for customers. They need: – Adherence to legislation and regulation – Proactive engagement when challenges arise Convatec and the Board: – Regular and ad hoc dialogue in relation to product approvals and other matters. We are committed to working collaboratively with the new US Administration, including at the Centers for Medicare & Medicaid Services (CMS), and their contractors, in the best interests of patients Convatec and the Board: – Implementation of responsible and diligent business practices – Compliance with legislation and regulation – Input into relevant industry consultations Governments National and multi-national governments set out requirements. They need: – Adherence to legislation – Responsible business practices – Employment – Income generation via taxes Convatec and the Board: – Ad hoc dialogue in relation to speciﬁc matters, including ﬁscal (e.g. taxation), employment (e.g. apprenticeships) and corporate governance Convatec and the Board: – Making a socio-economic contribution to a range of stakeholders, including through paying taxes as described on page 57 Communities Communities are core to our people and planet commitments. They need: – Employment opportunities – Medical education – Active management of environmental impact Convatec and the Board: – Ad hoc dialogue in relation to speciﬁc matters – Support for a range of medical education initiatives – Charitable partnerships Convatec and the Board: – Investing to enhance the communities where we operate – Building our reputation in our communities and across broader society – Decarbonisation/net zero plans Industry bodies Industry bodies help us to ensure that our interests are understood and eﬀectively communicated. They need: – High-quality input into industry policies and standards development – Proactive engagement in relation to relevant issues Convatec and the Board: – Membership of industry bodies – Participation in discussions in relation to industry issues, including best practice Convatec and the Board: – Contributing to improved understanding of key industry issues – Helping to shape relevant agendas and standards 37 Convatec Group Plc Annual Report and Accounts 2024 Governance Financial statements Additional information Overview Strategic report Our ESG focus is on the operational, people-led and environmental issues that are most material to us and our stakeholders. We regularly engage with stakeholders (see pages 36 and 37) including through a periodic formal ESG materiality assessment. This helps us to identify the most important issues for Convatec as they relate to business success and our impact on our value chain, people and the planet (see right for priority list). The process is guided by third-party expert support and aligned to a range of good practice and standards. Our most recent materiality assessment involved document research (policies, industry trends, regulatory horizon), engagement with more than 100 stakeholders and an assessment of priority topics for Convatec, our customers, colleagues, communities and shareholders. The matrix was reviewed and approved by our Board. Insights are aligned with corporate governance and our approach to enterprise risk management. Next year, we will publish the output of our refreshed materiality assessment, consistent with the requirements of the EU Corporate Sustainability Reporting Directive (CSRD). IDENTIFYING KEY ISSUES FOR STAKEHOLDERS 1 Product quality and patient safety 10 Climate change 2 Responsible business 11 Corporate governance 3 Sustainable product and packaging design (circular economy) 12 Workers elsewhere in the value chain (inc. health and safety) 4 Developing user-centric solutions 13 Waste (operational) 5 Customer access and aﬀordability 14 Water (operational) 6 Talent attraction and development 15 Geopolitical risks and value chain resilience 7 Human rights and labour rights in own workforce 16 Local community engagement 8 Diversity, equity & inclusion and wellbeing 17 Natural capital and biodiversity/ecosystems 9 Data privacy and cybersecurity SUPPORTING THE UNITED NATIONS SUSTAINABLE DEVELOPMENT GOALS We support the United Nations Sustainable Development Goals (SDGs) which aim to align governments, businesses and the civil society sector in their eﬀorts to end poverty, ﬁght inequality and address climate change. As a supporter since 2018, Convatec joins over 15,000 companies as a participant in the UN Global Compact (UNGC) in which we pledge to follow the UNGC’s ten principles on human rights, labour, environment and anti-corruption. Though all 17 goals are interlinked and important to stakeholders, we have prioritised six goals where we can contribute to a more sustainable future: these are SDG 3 (Good health and well-being), 5 (Gender equality), 8 (Decent work and economic growth), 10 (Reduced inequalities), 12 (Responsible consumption and production) and 13 (Climate action). A description of how our activity contributes to SDG targets can be found on our website at www.convatecgroup.com/sustainability/our-frameworks- and-targets/. Responsible business review continued 38 Convatec Group Plc Annual Report and Accounts 2024 Strategic report Responsible business review – customers DELIVERING FOR OUR CUSTOMERS Innovation journey To fulﬁl our vision and drive growth, we continue to strengthen our research and development (R&D) capabilities, alongside bringing new products to market. In 2024, we invested $102 million in adjusted R&D (2023: $104 million) and reached our 2025 target of 30% vitality index, a year ahead of plan. Our approach to innovation continues to build momentum in the following ways: – Increased investment: We have more than doubled spend on R&D investment since 2019, enabling our new operating model which integrates R&D teams across functions to leverage shared capabilities with cross-functional reviews, new product development process gate reviews and semi-annual portfolio reviews. – Innovation mindset: We recognise that the users of our solutions are people, not just patients, and we must focus on the social, emotional and functional needs in our solutions. Our solutions therefore involve digital and service oﬀerings as well as our products. We also understand that many of our products are produced and used in high volume and must be of the highest quality. – Simpliﬁed processes: We use a single business and product development process across all product categories, from ideation through to launch, that we refer to as IDEAL. This process goes beyond R&D and involves commercial, technical and operations teams. – Leadership and competencies: We have attracted global talent for R&D, medical, regulatory, intellectual property, digital health and portfolio management. We have ﬁve technology centres: one in the US (Boston), and the others close to our manufacturing facilities in the UK (Flintshire and Oxfordshire), Denmark (Osted) and Slovakia (Michalovce). – Portfolio management: Our investment is properly managed in order to maximise value for all our stakeholders. It starts with detailed regular reviews as described above. We prioritised projects where resources are best deployed. In between reviews, we have our budget and strategic planning processes and regular engagement with the Board. Dr Divakar Ramakrishnan EVP, Chief Technology Officer and Head of Research & Development “Convatec has the most exciting innovation pipeline in our history. Signiﬁcant investment in research, development and clinical evidence is core to our vision. To ensure we’re creating trusted medical solutions, consistent with our forever caring promise, we are committed to the highest standards for product quality, safety, and eﬃcacy. People are counting on us to live their lives, and we take that seriously.” Innovative and patient-centric products, services and solutions that improve lives Targets: Delivering for our customers Target Progress in 2024 Status Read more 1 Quality: Reduce complaints per million (CPM) by 8% for 2024 against a 2023 baseline 17% 1 (2023: 10% 1 ) Page 40 Reduce our B2C CPM by 5% for 2025 against a 2024 baseline See above 2 Product vitality: Vitality index of 30% by Q4 2025 30% (2023: 27%) Page 40 3 Product development: Ensure we have complete and actionable carbon intensity data recorded in our digital product sustainability tool for all Convatec manufactured products’ raw materials by Q4 2024. Ensure data is incorporated into our new product design process for carbon footprinting by Q4 2024 Searchable digital carbon- intensity database developed Replacement target can be found on page 52 Page 54 4 Customer centricity: By Q4 2025, roll out cNPS surveys to each of our main customer groups (healthcare professionals, end users, and key B2B customers) across FISBE markets Survey rolled out to HCPs in 17 markets, including all of our FISBE markets Page 40 1. Stated to represent direct-to-consumer categories 2024 highlights 2025 priorities – Four key new product launches or signiﬁcant geographical expansion plus Convatec’s ﬁrst digital health solution – Rolled out new customer loyalty programme – Enhanced quality system – Improved carbon data capture for raw materials and components – Support roll out of new products and continue to develop our product pipeline – Continue to focus on product quality, eﬃcacy and safety – Enhance customer loyalty programme – Strengthen clinical and new product research capabilities PROGRESS KEY Achieved New In progress 39 Convatec Group Plc Annual Report and Accounts 2024 Governance Financial statements Additional information Overview Strategic report – Continuous improvement: While we are building momentum and are now developing and launching multiple medical technology platforms each year, we are also identifying learnings to sustain our existing products and continuously improve our overall new product scale-up process. We continue to incorporate these learnings into our IDEAL process, as well as our overall new product operating system spanning capabilities, metrics, governance, tools and infrastructure. This is enabling us to rapidly and eﬀectively drive continuous improvement in terms of quality, speed and value across our portfolio. Additionally, we have launched an initiative to reduce cycle time for developing, scaling up, and launching our innovation portfolio while prioritising safety and quality. New products and solutions In 2024, we continued to launch new products with a particular focus on our FISBE markets, including four key new product launches or signiﬁcant geographic expansions. We also launched Convatec’s ﬁrst digital health solution, oﬀering signiﬁcant beneﬁts for users. Following its introduction in the US in 2023, we launched ConvaFoam™ in Europe in 2024. ConvaFoam™ oﬀers customers a broad portfolio of dressings providing longer wear times due to better absorption and adhesive technology. In Ostomy Care, we launched Esteem Body™, our new one-piece soft convex ostomy system, in Europe and the US – this launch marks a new chapter in ostomy care management, and Convatec’s return to leading with data-driven solutions to address evolving trends. We continued to scale GentleCath Air™ for Women 2.0 in Europe and launched our improved female compact catheter oﬀering in the US. Convatec’s Neria™ Guard launched in Europe in January 2024 with our partner, AbbVie, to support the launch of Produodopa ® , a medicine for advanced Parkinson’s disease. Convatec’s Neria™ Guard infusion set supports continuous subcutaneous infusion of this medicine. We also launched Convatec’s me+ Companion™ app, our ﬁrst digital health solution in Continence Care to support new intermittent catheter users and healthcare professionals, enabling users to log and record drink intake and urine output, set hydration goals, log leaks, and create customised summary reports that can be shared with their healthcare professionals to help manage their condition. The app also oﬀers direct access to Convatec’s me+™ support programme’s suite of educational tools, resources, and support. During 2024, a total of 38 patent ﬁlings were made (2023: 82). The higher number of patent ﬁlings in 2022 to 2023 was due to the signiﬁcant changes we made to R&D investment and closing gaps in the historic patent portfolio. In recent years, there has also been an increase in the number of new platforms developed for ﬁrst generation products, while in 2024, the number of new ﬁlings is representative of our heightened focus on ﬁling product upgrades instead of new platforms and adjusting our patent ﬁling strategy to encompass ﬁling applications that combine related inventive concepts. Strategic investments In September 2024, consistent with our FISBE strategy, we completed our acquisition of Livramedom, a homecare service provider based in France. The acquisition will allow us to expand our presence in Europe in the direct-to- consumer market, while enabling us to meet a wider range of needs for both patients and healthcare professionals. Product quality We recognise the need for continued progress, and the importance of quality for our customers. We have established ISO 13485 quality certiﬁcations in place across the business, and since 2021, our complaints per million (CPM) reduction target has been leveraged as an ESG target. In 2024, we set a target to reduce CPM by 8% against a 2023 baseline. We also commenced a process, working with our major partners, to reevaluate CPM in our business-to-business category. As a result, we calculated CPM with data from our three direct-to-consumer categories and have restated previous calculations for comparison (see page 13). We met this target with a 17% reduction and are working to develop a new methodology for integration of business-to-business data for CPM in future years. See page 59 for the scope of our ESG assurance, basis of reporting and ESG deﬁnitions. Furthermore, in 2025, we continued to build on our commitment to improve quality by: – Digitising more of our core quality system processes, to enable ease of execution and increase availability of data for proactive analytics – Implementing automated inspections systems to increase reaction speed in our manufacturing processes – Embedding problem-solving capabilities – Enhancing the quality culture via increased connections with our end customers and regular training, including mandatory complaint handling awareness training for all employees In 2025, we aim to reduce CPM by at least 5% and will also further expand our data segmentation capability to support prioritisation and focus on targeted improvements to maximise impact on the experience of our customers. Product safety is a priority for Convatec and our customers. In 2024, we successfully maintained the certiﬁcation of our quality system following a series of external audits and inspections, which required extensive preparation. Regulators consider most of the products and solutions we develop to be of low risk to users. Nevertheless, we have a rigorous supplier audit mechanism and quality management system. We conducted a total of 107 audits on suppliers during 2024 (2023: 98). Additional information on our supplier engagement can be found on page 50. From time to time, it may be necessary to conduct a product recall, following a detailed internal quality investigation led by our Quality, Regulatory and Medical and Clinical Aﬀairs teams. In 2024, we executed eight product recalls (2023: three), none of which have been FDA Class 1. Each of the recalls in 2024 occurred where the distributed products did not meet the requirements of our quality system and we took all necessary steps to voluntarily ensure customers and patients were informed and supported. Customer centricity In 2024, we continued to strengthen our focus on customer centricity and advance the use of customer Net Promoter Score (cNPS) as the measure of customer satisfaction and loyalty within Convatec. We are working towards capturing cNPS insights for all our main customer groups, initially starting with healthcare professionals and expanding to users and our key B2B customers. Acting on customer feedback is critical to the success of our business. We have processes in place to ensure that action is taken to improve the customer experience based on feedback. We call this our Data > Insights > Action approach. As a responsible business, our approach to marketing includes: – Governance: All externally facing content follows a consistent approval and regulatory review process, and colleagues are regularly reminded of this process. – Socially conscious principles: We are committed to ensuring our marketing is accessible, diverse and respectful. We provide materials to remind our marketers of the need to consider accessibility, reﬂect all Convatec customers and consider how we sensitively show the lives of people living with chronic conditions. Responsible business review – customers continued 40 Convatec Group Plc Annual Report and Accounts 2024 Strategic report Access to healthcare Access to healthcare is a basic human right that should be available to all who need it. This fundamental principle is integrated in our vision and we run our business to ensure the following: 1 Availability: We continue to evolve our sales channels to best meet our customers’ needs. In Continence Care, the Convatec me+ Companion™ app provides digital support, allowing users to track catheterisation and share progress with healthcare professionals. Our me+ Wellbeing programme further enhances access to psychological support through a ten-module online platform. Our me+ nurses are able to enhance the support they provide through triaging challenging cases for telehealth intervention. In Global Emerging Markets (GEM), our HCP medical educational training programmes continue to expand access to products through a standardised protocol-of-care, such as our Wound Hygiene Academy. 2 Adaptability: Based on feedback from users and healthcare professionals, our products address a broad range of patient needs reﬂecting the diﬀerent challenges that individual users experience. Getting the range of products right relies on research and stakeholder engagement. In Continence Care, our Expert Consensus Clinical Practice Principles and tools provide evidence-based, product-agnostic protocols for intermittent catheterisation. These principles, endorsed by multiple professional bodies, enable HCPs to adapt care approaches based on individual patient needs. 3 Usability: Products may ’do a job’ medically but given the social and emotional context of the people we serve, we need to provide solutions which go beyond the provision of a functional device. To lower access barriers, we help patients identify the device which best suits their needs, provide easy-to-follow resources and support. In Continence Care, we provide comprehensive product selection guides and educational resources to help users master catheterisation techniques. Our evidence-based approach facilitates patients to conﬁdently use their chosen catheter products in various daily situations. 4 Aﬀordability: Aﬀordability is a key issue which we strive to address through geography-based pricing, patient segmentation, and volume- based pricing. For example, the US, Western Europe, and Japan usually have higher pricing compared to countries in Latin America (LATAM), Eastern Europe, Asia, and Africa. Segmentation pricing can be divided into four segments: private insurance, public insurance, the underinsured, and low-income patients. In China, we delivered an Ostomy Patient Access Programme that beneﬁtted over 1,000 patients from low-income backgrounds. Convatec invests in developing new solutions that will be available globally, providing cost-eﬀective treatment options, while complying with local pricing regulations. Sustainable product design Our IDEAL processes include a review of the proposed materials against certain externally compiled lists of ’substances of concern’, including the requirements of California Proposition 65 and REACH25. This approach is consolidated within our ethical issues and new product design policy: www.convatec.com/marketingzone/ mediadownload/?id=f82fbf09-66c4- 4301-805f-fad37047cc0f&lid=en-GB. We are focusing on key product development priorities, while integrating sustainability in line with our net zero carbon transition plan (see page 53). Where possible, we aim to lower the carbon intensity of our products, guided by data obtained through our digital product sustainability database. Primary packaging is an essential component of our products, forming a sterile barrier. We continually review our primary packaging roadmap and the role of primary, secondary and tertiary packaging in reducing our Scope 3 emissions (see page 54). Due to signiﬁcant regulatory restrictions on our industry and our priority focus on safety, quality and eﬃcacy in our solutions, manufacturing environmentally sustainable products is a challenge we face along with our industry peers. Given the regulatory framework for MedTech products, it is not straightforward to change device form and components. Extensive requaliﬁcation and reapproval of products are necessary after any change before modiﬁed products can be launched to ensure patient safety. It can also be problematic to include recycled content in device materials due to regulatory constraints regarding quality and traceability. We are engaging with industry alliances and partners in our value chain to develop solutions that support our net zero ambition. Clinical studies We have continued to make signiﬁcant progress in 2024 in clinical evidence generation, with 26 active clinical studies (2023: nine) including four global randomised controlled trials (RCTs) (2023: one). In 2024, we shared our evidence generation work through 12 peer-reviewed publications and 69 scientiﬁc posters and presentations. To increase diversity of our clinical data, patients from our ConvaClinics across LATAM are also included in our clinical studies. Hydrofiber™ PRODUCT SUSTAINABILITY Hydroﬁber™ was ﬁrst launched as Aquacel ® almost three decades ago in 1996. Hydroﬁber™ is developed from cellulose ﬁbres, a natural material which is compostable, biodegradable and sourced from sustainable forests across Europe and South America. Hydroﬁber™ is certiﬁed to world class sustainability standards; FSC and PEFC. When producing Hydroﬁber™ for our dressings, for every tree cut down in a plantation forest (usually a eucalyptus), one tree is replanted. In a semi-natural forest, approximately ﬁve to ten trees are replanted to protect the forest and its biodiversity. A video overview of the process can be viewed here: www.vimeo.com/922485 570/788f5af410?share=copy. 1:1 Tree harvesting to tree planting >100 million Aquacel ® dressings manufactured in the UK in 2024 Protecting forests and biodiversity 41 Convatec Group Plc Annual Report and Accounts 2024 Governance Financial statements Additional information Overview Strategic report Use of animals in research At Convatec, we seek to minimise the use of animals in research. Consistent with other leading organisations and established practice, we have adopted the 3Rs – replacement, reﬁnement and reduction of use of animals in research, and continue to identify innovative solutions to gain knowledge and support regulatory submissions without the use of live animal models. Every eﬀort is made to conduct as much of our research with benchwork, cell cultures, and where appropriate, ex-vivo tissue models. When live animal models are required, our research is highly regulated to ensure responsible, ethical and humane treatment by following local ethical approval boards, laws and regulations. Animal welfare is a priority and we conduct our research at reputable facilities and organisations that are Assessment and Accreditation of Laboratory Animal Care (AAALAC) accredited (or equivalent) with fully trained veterinarians and dedicated welfare teams. All medical devices are required to show biocompatibility prior to approval and use, per ISO 10993-1:2018. This requirement is enforced by government authorities and is part of the registration process for medical devices. As part of this requirement, certain biological risks are required to be evaluated and mitigated through the use of testing. In some cases, some biological risks are only able to be evaluated through the use of deﬁned and prescribed animal tests. As such, when mandated we will execute the critical biocompatible veriﬁcation tests required by the ISO standards to ensure patient safety and registration requirements. We do not willingly perform any animal testing in the development or functional veriﬁcation of our devices, as described in our Ethical Issues and New Product Development Policy, which we refreshed in 2023, and can be found at www. convatecgroup.com/investors/ governance/our-policies-and-statements. To avoid the use of living animal studies, in 2024 we used porcine (pig) ex-vivo tissue models to assess urethral tissue damaged by novel urinary catheters. All ex-vivo models were collected from animals that were being slaughtered for meat production. Our ex-vivo tissue suppliers are either AAALAC accredited or are UK registered to supply animal by-products (EU Article 23, No. 1069/2009). In 2024, as part of our biological risk assessment to determine compatibility of our devices within a biological system, we conducted biocompatibility tests using 13 swine, 120 guinea pigs, 38 rabbits and 209 rodents (2023: 9 rabbits and 100 rodents). All studies were approved by local animal welfare committees and/or responsible government authorities. Convatec Advanced Tissue Technologies (ATT) solutions are derived from porcine placentas. These are derived naturally through the birthing process and provided in partnership with a farm. The placentas are subsequently stored at ultra-low temperatures until required. No swine are destroyed or aﬀected in the process. Reliability of supply Exceeding our customer expectations continues to be a top priority. Throughout 2024, we continued to make progress in ensuring product availability and reliable delivery. Close collaboration across all relevant teams enables us to plan for short-, medium- and long-term requirements, anticipating demand scenarios and to ensure production, inventory and logistics readiness. This is supported by a rigorous performance framework overseeing end-to-end reliability. 2024 saw the post-pandemic supply chain marketplace recovery continue, notwithstanding present challenges to shipping lanes in the Middle East and the ongoing conﬂict in the region. We have continued to focus on strengthening resilience throughout our supply chain, in the areas of manufacturing capacity and strategic inventory. In 2024, Convatec was the ﬁrst MedTech company globally to achieve the British Standards Institution (BSI) Customer Service Hard-to-heal wounds RANDOMISED CONTROLLED TRIALS Venous ulcers currently aﬀect a global population of over 143 million patients and pose a signiﬁcant burden on healthcare systems worldwide, often requiring prolonged treatment and causing substantial morbidity. In 2024, Convatec announced signiﬁcant clinical study results from a multinational randomised controlled trial (RCT) showcasing remarkable advancements in the healing of venous leg ulcers with AQUACEL ® Ag+ Extra™ compared to standard of care dressing.¹ The multicentre RCT was conducted across 20 sites in Germany, UK and Colombia and investigated the eﬀectiveness of AQUACEL ® Ag+ Extra™ compared to standard of care dressing in the management of patients with venous leg ulcers. The study found that venous leg ulcers managed with AQUACEL ® Ag+ Extra™ were 35% more likely to heal completely at 12 weeks and 19% more likely to have satisfactory clinical progress ( ≥ 40% reduction in wound area) at four weeks, compared to the standard of care dressing. At 12 weeks, 74.8% of venous leg ulcers managed with AQUACEL ® Ag+ Extra™ had completely healed, compared to 55.6% of those managed with the standard of care dressing. The compelling ﬁndings from this RCT suggest that AQUACEL ® Ag+ Extra™ may provide an eﬀective means of managing these hard-to- heal wounds. In 2024, Convatec also advanced clinical evidence for InnovaMatrix ® AC through two adaptive design RCTs that will evaluate the eﬃcacy of InnovaMatrix ® AC in the treatment of patients with venous leg ulcers as well as diabetic foot ulcers. RCTs enable Convatec to accelerate the execution process, ensuring that these advancements can beneﬁt patients more quickly and eﬃciently. We expect to publish further information in 2025. 1. S Beraldo et al. J Wound Care 2025; 34(3):170–178 Responsible business review – customers continued 42 Convatec Group Plc Annual Report and Accounts 2024 Strategic report Kitemark for a number of geographies, and we aim to expand this coverage to all markets in the coming year. Our delivery on-time, in-full service levels have seen strong improvements across all geographies. Our manufacturing network has seen additional capacity come online to support service and sales growth. We are continuing our eﬀorts to establish dual sourcing for our strategic raw materials. We continue to strengthen our logistics capabilities in the way of network design and the availability of options to move our products globally as such, supporting our agility to avoid delays, satisfy our customer expectations and balance cost. Data privacy The Audit and Risk Committee (ARC) has oversight of our privacy governance framework and continued programme of improvements. Executive leadership, accountability and sponsorship is in place for critical personal data classes, with four CELT members accountable for ensuring that the use of personal data across the organisation is properly governed. In 2024, we continued our focus on the development of Convatec’s data privacy function and maturing our data privacy framework and controls under the oversight of the ARC. We invested in strengthening our data privacy team by elevating the role of the VP, Chief Data Privacy Oﬃcer, reporting to the EVP, General Counsel & Company Secretary, together with appointing regional privacy oﬃcers and managers. Our privacy team is supported by a network of trained privacy champions and provides local support to our people and our business. Our privacy governance framework includes policies, procedures, controls and records that are implemented globally, and aligned to data protection principles and requirements enshrined in applicable privacy regulations, including the European Union General Data Protection Regulation (GDPR), the California Consumer Privacy Act (CCPA) and the Chinese Personal Information Protection Law (PIPL). This framework and its eﬀectiveness is regularly assessed by our internal audit team and reviewed by our central privacy team to keep it up to date with changes in our business, our risk appetite and the laws and regulations in the countries in which we operate. Employees are informed of their privacy obligations through a training and awareness programme, including mandatory induction training and annual updates for existing employees. We made signiﬁcant progress during the year in our four target areas of Governance and Operating Model; Process, Procedure and Technology; Inventory and Data Mapping; and Third-Party Management. In 2024, there were no signiﬁcant incidents or issues reported to data protection authorities. No signiﬁcant volume of data subject access requests were received. For further information on our legal, compliance and privacy risk, see page 79. Artificial intelligence Convatec’s artiﬁcial intelligence (AI) strategy aims to leverage the power of AI to enable patient and customer solutions, as well as to support our teams to be at their best. We are focused on responsibly integrating AI into our day-to-day operations and processes. An executive AI steering committee considers AI initiatives, ensuring its application enhances current capabilities, in alignment with our strategic objectives and core values and appropriate safeguards are implemented consistently. The ARC oversees governance and risk related to AI. We are embracing opportunities of well-managed AI technologies, in areas like language translations, workplace productivity tools and marketing eﬀorts. Key elements of Convatec’s AI strategy include: Innovation AI presents signiﬁcant opportunities to drive innovation and we plan to explore the potential of AI as a medical device to treat, diagnose, inform and drive clinical management. Productivity and efficiency Leveraging available AI technology that enhances productivity, without distracting the organisation. Governance and compliance Integrating AI into our operations in a sustainable and compliant way, implementing appropriate governance measures to safeguard Convatec and our patients and customers from potential risks. Harnessing AI has the potential to reshape the way Convatec operates and delivers value; by embracing AI in the right way, we have the power to increase eﬃciency whilst driving signiﬁcant innovation. 43 Convatec Group Plc Annual Report and Accounts 2024 Governance Financial statements Additional information Overview Strategic report ENABLING OUR PEOPLE TO THRIVE 2. Includes seven Non-Executive Directors. For full breakdown, see page 47. 3. This includes voluntary and involuntary turnover. At the end of 2024 we employed 10,489 2 people (2023: 10,136). Employee turnover in 2024 was 19.5% 3 (2023: 18.8%). Voluntary turnover in 2024 was 9.8% (2023: 10%). Information on our employee proﬁle is illustrated in the graphs on the following pages, while our deﬁnitions for employee count and gender diversity are detailed on page 47. While our employees are based in 45 countries, 57% of our workforce is employed in countries where we have manufacturing sites (2023: 55%). In addition to our facilities in the Dominican Republic, Mexico and Slovakia, we have manufacturing operations in the UK (two locations), Denmark and the US. Consistent with our corporate theme of simpliﬁcation and productivity, in 2024, we closed our manufacturing site in Herlev, Denmark, and outsourced operations. Of countries with no direct manufacturing operations, Colombia has the largest concentration of employees. Our people strategy We have started to refresh our people strategy to better meet the needs of the business, as we continue to deliver sustainable and proﬁtable growth. Our people mission is: Creating a winning organisation where our people can learn, grow, thrive and make a real diﬀerence. In 2024, our focus was on three core areas: – Build key capabilities: Anticipate and embed core capabilities to support sustainable and proﬁtable growth through high-performing leadership, talent and teams. – Shape our winning culture: Bring our vision, promise, strategy, values and team principles to life so we can attract, engage and retain the diverse talent we need to win. – Unlock potential to enable change: Strengthen our HR team, digital capabilities and foundation that drives simpliﬁcation and productivity and improves employee experience. Ensuring the health, safety and wellbeing of our people and using their talent for good Responsible business review – colleagues Targets: Enabling our people to thrive Target Progress in 2024 Status Read more 5 Health and safety: 5.1 Maintain an annual Operations Hazard Observation Rate above 200 per 200,000 hours worked 291 per 200,000 hours worked (2023: 265) Page 48 5.2 Sustain Operations Lost Time Injury Rate below 0.22 by Q4 2025 0.16 per 200,000 hours worked (2023: 0.22) Page 48 6 Diversity, equity & inclusion and wellbeing: 6.1 50% of senior management¹ positions are held by females by Q4 2027 45% (2023: 44%) Page 47 6.2 At least 20% of senior management is ethnically or racially diverse by Q4 2027 Continued to advance self-ID in markets we can where lawfully able to do so Page 46 6.3 Reduce voluntary turnover to 10% by Q4 2027 9.8% (2023: 10%) Page 44 1. CELT and direct reports, excluding executive assistants. “We’ve made important progress this year to strengthen employee engagement, support our leaders to facilitate change, and continued to embed a refreshed HR operating model to ensure we’re building a business that enables our colleagues to bring to life our forever caring promise.” Emma Rose EVP, Chief People Officer 2024 highlights 2025 priorities – Refreshed our HR operating model as a foundation for our people strategy – Centralised and strengthened people solutions and services – Launched a new employee engagement platform to support ongoing dialogue and feedback – Sustained momentum across key health and safety, people and culture initiatives – Refresh our people strategy – Integrate and embed our HR operating model – Support colleague leadership and development – Advance talent development practices PROGRESS KEY Achieved New In progress 44 Convatec Group Plc Annual Report and Accounts 2024 Strategic report Our values Our values ensure we all work and act in ways that deliver our forever caring promise, every day. These were shaped by thousands of colleagues in 2020 and we continue to embed them across Convatec. Improve care We are passionate about serving and supporting people with deeply personal and challenging medical conditions Deliver results We consistently deliver excellent work, say what we do and do what we say Grow together We celebrate diversity and respect one another. We help our colleagues around us grow, develop and thrive, so they can fulﬁl their potential Own it We take personal ownership of all our work: taking the initiative, innovating and never settling for second best Do what’s right We behave ethically, are honest and trustworthy, operate with the highest standards of integrity, uphold policies and make a positive diﬀerence Build key capabilities Aligned with our FISBE strategy, we are focused on building key capabilities and integrated talent practices. We continue to promote learning for all employees, invest in leadership development, and enhance manager capabilities. In 2024, over 4,000 colleagues accessed our on-demand learning platform, engaging with over 150,000 pieces of microlearning content. We launched instructor-led virtual onboarding, customised for new hires in diﬀerent parts of the business, to ensure their success. Our mentoring programme has engaged over 250 colleagues. We also continued to embed high- performing team principles through workshops for leaders and their teams. Shape our winning culture Our people mission aims to foster an engaging, inclusive and high-performing culture centred on colleague feedback, which enables colleagues to contribute meaningfully and achieve their potential. Our values guide our behaviours and how we run our business. They are embedded in our policies and processes, including our performance reviews, which assess both the ‘what’ and ‘how’ of each employee’s contribution. In 2024, we enhanced employee engagement by scaling up our new digital platform, Peakon Employee Voice by Workday. We piloted the platform, which uses employee Net Promoter Score (eNPS) methodology, in 2023, and throughout 2024 rolled out the tool across the company achieving a 95% aggregated participation rate. We secured a top decile engagement score, according to Peakon’s True Benchmark™ for Healthcare, Pharmaceutical, Biotechnology & Life Sciences. We have deployed comprehensive training and support to people managers to engage with the tool and to act on insights, sparking thousands of conversations via the platform. Feedback on the four themes of engagement, transformation and change, health and wellbeing, and diversity and inclusion, is helping shape our refreshed people strategy in 2025. We continued our global town hall series, engaging colleagues worldwide with our progress, plans, and patient stories. Our CELT Live virtual ‘coﬀee and conversation’ series enabled smaller group interactions with our CEO and CFO. Our annual Big Conversation initiative brought teams together for leader-led discussions around our vision, promise, strategy, values and team principles – helping colleagues see their role in the context of the ‘big picture’. Recognising colleagues and their contribution is an important part of our core value to ‘grow together’. In 2024, Convatec Champions, our way of celebrating colleague eﬀorts, surpassed 20,000 awards since its launch in September 2022. Through a digital platform, any colleague can make a nomination for an award for good work and behaviours aligned to our promise and values. We also continued to celebrate our annual Convatec Day in 2024, aligned to World Mental Health Day. Convatec Day gives colleagues (whose roles allow) an extra day oﬀ to focus on their wellbeing. Reports are regularly provided to the Board to help assess and monitor workplace practices and culture, including progress on our people strategy, employee engagement, and on talent development and succession planning. “At a recent Ostomy Care event I met a new patient who was overwhelmed aﬅer surgery and unsure about life with a stoma. I recommended the me+ programme for support. She later sent a kind email thanking me for my help and noting how wonderful the customer care team was in setting her up with new products to try. This part of my work is very rewarding.” Feedback submitted through our employee listening platform Spotlight on leadership development In 2024, we hosted our Global Leaders Meeting (GLM) at the Science Museum, London, bringing together our top 100 leaders from around the world. The last meeting of its kind was held in 2022 in Boston. Speakers included our Chair, Dr John McAdam CBE, Dave Ricks, Chair & CEO of Eli Lilly and Company and Baroness Manningham-Buller LG, DCB, former head of the UK Security Service (MI5) and Chair of the Wellcome Trust. GLM included immersion learning with visits to patients and customers, including NHS Trusts and leading UK NGOs, and sessions focused on catalysing our high-performing team principles. 45 Convatec Group Plc Annual Report and Accounts 2024 Governance Financial statements Additional information Overview Strategic report → For more on our DE&I and Wellbeing journey visit www.convatecgroup.com/sustainability/ enabling-our-people/dei-spotlight-page/ Unlock potential to enable change Throughout 2024, we made signiﬁcant progress with our HR transformation, and continued to strengthen our employee experience by focusing on simpliﬁcation and standardisation of key processes, including leveraging AI and machine learning capabilities. Over the last year, we have transitioned almost all HR activity to align to global processes and ways of working. This has brought greater consistency to how HR supports the business and has improved colleague experience through: – Processes: Standardised ways of working and leveraging digital tools, underpinned by data driven insights – Improving career pathways: Bringing to life a consistent career framework, helping colleagues around the world understand where their role ﬁts and future career development – Simplifying global payroll oﬀering: Strengthened payroll compliance, eﬃciency and consistency, governance and insight through improved automation – Refreshing our HR operating model: Bringing together our HR people partners, Centres of Excellence, HR Service Delivery, as well as our Global Business Services (GBS) capability to support day-to-day HR solutions that beneﬁt colleagues We continued to navigate a dynamic talent and labour market, including the impact of ﬂexible and hybrid working, automation and digitalisation, cost of living and employee wellbeing and mental health. Next generation talent Part of building core capabilities is engaging with and training the next generation. In 2024, Convatec’s programmes included apprenticeships, internships, and graduate training across several countries, as described at https:// marketingworld.convatec.com/ MarketingZone/MZDirect/ Source/85334ca0-5f45-4cf3-a281- 6c1522523a8f. In addition to hosting placements, Convatec also partnered with universities in Denmark, Slovakia, Dominican Republic and the UK, oﬀering workshops and development opportunities around topics from ﬁnance to manufacturing. In 2024, we welcomed 14 student interns from the UK, Denmark, Slovakia, Mexico, Dominican Republic and the US to assist with the implementation of Convatec Cares through actionable projects. To facilitate their professional development and continuity of the work, each intern presented their project to leaders at the end of their placement. Diverse and inclusive teams We have continued to integrate DE&I and Wellbeing practices across the business and recognise the multiple beneﬁts of ensuring our business reﬂects the diversity of customers and patients we serve, while ensuring that colleagues feel included and able to be themselves. As a part of our overall ESG governance, our DE&I and Wellbeing Council brings together a range of leaders involved in our commitments. The Council is led by our Chief People Oﬃcer, and includes thematic sponsors from across CELT, leaders of our Employee Resource Groups (ERGs) and subject matter experts. Our employee networks, or ERGs – Women’s Network, Pride Network (LGBTQIA+), Black Employee Network (BEN), Latinx, and Ability Network – continue to evolve. In 2025, we will expand ERG activity around disability and neurodiversity and ethnic and racial diversity. ERGs help us learn as a company. We mark key dates on the calendar including Black History Month, International Women’s Day, Pride Month, Hispanic Heritage Month, and UN International Day of Persons with Disabilities. We continued our self-ID campaign, in countries where lawfully permitted, to enable employees to self-identify on a voluntary basis and provide their demographic data for race and ethnicity. This helps us measure progress so that we can respond to a range of stakeholder requirements. We monitor employee diversity through our HR systems, and the Board reviews our diversity proﬁle on an annual basis. Colleagues are able to update their personal information if they wish. We have four pillars to our DE&I and Wellbeing approach, with the following key activities in 2024: 1 Cultivate an inclusive culture for our colleagues – Strengthened our global DE&I and Wellbeing Council – Expanded ERG membership to support communities of interest. – Launched our Convatec mentoring programme, engaging more than 250 colleagues – Delivered diversity-focused training, aligned to our high performing team principles 2 Build a diverse workforce with greater gender and ethnic diversity across our leadership – Progressed towards our ESG target of 50% female representation in senior management by 2027 – Continued a campaign to enable colleagues to self-identify on our HR systems – Advanced talent acquisition practices to better recruit and retain diverse talent 3 Support wellbeing as a priority for colleagues – Continued to embed ﬂexible and hybrid working as part of Our Work Life – Celebrated our ﬁfth annual Convatec Day (page 45) – Strengthened our culture of recognition with Convatec Champions (page 45) – Made available over 150 colleagues as Mental Health First Aiders to support colleagues, focused in our manufacturing sites 4 Enhance our reputation through leveraging our scale, partnerships and programmes – Consistent pay structure, beneﬁts and ﬂexibility for employees aligned to their role – Rolled out equalised parental leave in regions covering over 70% of colleagues – Reviewed and updated our mobility policy Responsible business review – colleagues continued 46 Convatec Group Plc Annual Report and Accounts 2024 Strategic report Increasing diversity At 31 December 2024, women represented 44% of our Board membership (2023: 44%) and 45% of our CELT and senior management team (2023: 44%). Our gender diversity proﬁle at 31 December 2024 is found below. Gender diversity demographic data Male Female Total Number % Number % Board 1,2 9 5 56% 4 44% CELT 2 12 8 67% 4 33% Senior management 3 66 35 53% 31 47% Other employees 10,404 3,941 38% 6,463 62% Total 1, 2, 4 10,489 3,987 38% 6,502 62% 1. Includes seven Non-Executive Directors. 2. The CEO and the CFO are included as members of the Board and CELT. Stated total numbers in ﬁnal row are adjusted to remove duplication. 3. Includes direct reports of CELT, excluding administrative staﬀ. The percentage of women in CELT and senior management combined in 2024 is 45% (2023: 44%). Total population in 2024 is 78 (2023: 79). 4. Excludes freelancers, independent contractors or other outsourced and non-permanent workers who are hired on a project or temporary basis. OUR PEOPLE: AT A GLANCE Employees Agency staﬀ and independent contractors < 30 30-50 > 50 Geographical areas 2020-2021 Americas APAC EMEA Geographical areas 2022-2024 Europe North America Rest of World Employees and contractors Employees by geography Employees by age 2024 2023 2022 2021 2020 10,489 233 10,036 350 10,142 319 9,914 341 10,136 301 2024 2023 2022 2021 2020 51% 14% 35% 49% 15% 36% 48% 42% 41% 14% 8% 7% 38% 50% 52% 2024 2023 2022 2021 2020 20% 58% 22% 20% 59% 21% 21% 20% 17% 58% 60% 61% 21% 20% 22% Hires and leavers by age 1 Hires and leavers by gender 1 < 30 30-50 > 50 Hires 2024 2023 2022 2021 2020 206 1,134 1,108 283 283 153 1,219 1,147 1,169 1,219 796 808 252 1,059 864 < 30 30-50 > 50 Leavers 365 1,013 706 569 319 221 1,514 989 750 862 683 436 2024 2023 2022 2021 2020 360 973 653 Male Female Hires 1,356 1,091 1,545 1,216 1,293 1,176 1,010 837 2024 2023 2022 2021 2020 1,287 888 Male Female Leavers 1,149 933 1,688 1,129 828 1,257 862 579 2024 2023 2022 2021 2020 1,163 823 1. Includes voluntary and non-voluntary turnover. 47 Convatec Group Plc Annual Report and Accounts 2024 Governance Financial statements Additional information Overview Strategic report Our gender pay gap The median hourly pay diﬀerence between our UK-based male and female employees as of 5 April 2024 was 1.93% (2023: 3.8%), signiﬁcantly below the UK median pay gap of 13.1% (Source: Oﬃce for National Statistics). This reduction reﬂects our ongoing commitment to gender pay equity. We made progress improving gender balance, strengthening senior female representation in the upper and upper middle quartiles through strategic promotions and inclusive hiring. This shift was balanced by increased male representation in the lower quartiles, creating a more equitable distribution overall. Our eﬀorts to narrow the gender pay gap include implementing our job architecture to ensure consistent role classiﬁcation, adjusting salaries to market levels, and focusing on fair compensation and promotion practices to support career growth, particularly within senior roles. Our Gender Pay Gap statement encompasses all UK-based entities, beyond statutory requirements. We also report gender pay gap in other markets where there is a regulatory requirement, and we are actively working on routes to provide enhanced levels of future pay transparency to enhance visibility and equity across our organisation. We are pleased with our progress and remain dedicated to further reducing the gap. Further information about our pay data is included in our Gender Pay Gap Report, which can be found at www. convatecgroup.com/sustainability/ esg-reports-and-data. Paying a living wage For the eighth consecutive year, we have been accredited as a ’real living wage’ employer in the UK. Every two years we conduct a global living wage assessment, which considers the local total cost of living, as we work towards all locations paying at or above the national or local living wage. In 2024, our regular assessment found that 92% of our employee population were paid at or above the prevailing living wage. The residual gap was due to a sharp increase in the local legal minimum wage in a small number of our markets, which, in turn had driven up the living wage level. We are committed to increasing the salaries of these identiﬁed employees to at or above the living wage in 2025. For employees globally we continue with our annual salary review increases and are committed to providing fair pay for our employees. We require all our contractors to comply with local laws on employment rights and continue to work with our contractors to ensure they pay their employees at the same rates. Employee assistance programme We actively look at ways to support our colleagues in line with our core values and our forever caring promise. In 2024, as well as maintaining annual pay awards, we continued to raise awareness of wellbeing support available as part of our global employee assistance programme (EAP), which includes a range of resources such as educational sessions and personalised support on topics such as mental health and ﬁnancial planning. Health and safety Our global Environment, Health and Safety (EHS) team support the development of strategy, policies and standards, audit performance and support company-wide teams improve working practices, aligned to both regulatory and company requirements. The team report to the VP, Global Manufacturing, who in turn reports to the Chief Quality & Operations Oﬃcer, who is a member of CELT and the ESG Steering Committee. Performance is reported to senior management including CELT and the Board on a regular basis. Manufacturing and R&D sites have a dedicated EHS team at their location. During 2024, we completed the planned activities associated with the electrical safety programme and continued to target further improvement across our key initiatives: machinery and equipment safety, developing safety-speciﬁc standard work instructions, and enhancing our safety culture programme, tailoring delivery to site speciﬁc requirements. Site reviews and targeted development activities have supported improved engagement, enhanced working practices and improved performance. Our Deeside, UK and Michalovce, Slovakia sites maintained their ISO 45001 (Occupational Health & Safety Management) certiﬁcation, with plans in place to expand to all primary operations locations, reinforcing our commitment and the added value of aligning our practices to international standards. There were no fatalities on our estate in 2024, maintaining our record of zero events. The target of keeping our Operations Lost Time Injury Rate (LTIR) per 200,000 hours worked below 0.22 by 2025 remains on track. The continued focus on our proactive approach to engagement and hazard elimination has sustained our Operations Hazard Observation Rate above the target of 200 per 200,000 hours worked for 2024, enabling the identiﬁcation and elimination of a signiﬁcant number of hazards across our sites, with in excess of 16,000 potential hazards addressed during 2024. In addition, continued focus on engagement, visible safety leadership and behaviours has also contributed to a reduction in the total number of lost time injuries incurred, resulting in a reduction of approximately 17% across Convatec, compared to 2023. This year, we also marked World Health and Safety at Work Day, aligned to the theme of the impact of climate change on occupational safety and health. Responsible business review – colleagues continued Our Health and Safety performance¹ 2024 2023 2022 2021 2020 Fatalities 0 0 0 0 0 Convatec Lost Time Injury Rate 2 0.14 0.17 0.18 0.26 0.21 Convatec Hazard Observation Rate 2 230 227 196 148 138 Operations Lost Time Injury Rate 0.16 0.22 0.20 0.30 0.23 Operations Hazard Observation Rate 291 265 234 190 173 Lost Time Injuries 10 12 13 18 15 1 The data is based on OSHA deﬁnitions and rates are calculated based on 200,000 hours worked, as described in our Basis of reporting (page 59). 2 Lower rates are desirable for Lost Time Injury Rates; higher rates are desirable for Hazard Observation Rates. 48 Convatec Group Plc Annual Report and Accounts 2024 Strategic report Responsible business review – commerce BEHAVING ETHICALLY AND TRANSPARENTLY Ethics and compliance governance The Convatec Executive Leadership Team (CELT) meets with our Chief Compliance Oﬃcer on a quarterly basis to review the ethics and compliance programme, including its risk assessment and mitigation eﬀorts; investigative and monitoring oversight; and policy development and educational delivery. The Audit and Risk Committee (ARC) also meets with the Chief Compliance Oﬃcer quarterly. This helps assure that ethics and compliance concerns are discussed and actioned at the highest levels of the business. Regular company-wide and localised communications and education assure that all of our people are aware of the ethical standards expected of them. Our extensive ethics and compliance programme incorporates several policies and procedures including: – Maintaining a Code of Ethics and Business Conduct (Code of Conduct) that is updated regularly and mandating annual training for al employees either online, with electronic acknowledgement of completion, or through participation in town hall meetings – Making available an independent and conﬁdential Compliance Helpline (Speak up) and web link for employees and third parties (www.convatec. ethicspoint.com), to seek guidance and to anonymously report suspected deviations or policy breaches – Making it easy for issues to be reported by colleagues, reviewed by our Ethics & Compliance team and where appropriate, ensuring that any resulting investigation and outcome of any signiﬁcant issues are overseen by the ARC (see page 109) – Regular onsite or computer-based monitoring of business activities to assure that they are consistent with policy, including the Code of Conduct – Providing an additional line of defence through our risk assessment process, which involves direct engagement with global market or functional leaders, and our commitment, when areas of concern are identiﬁed, to work with those leaders on an ongoing basis to improve business practices Protecting and enhancing our reputation with all our stakeholders Targets: Behaving ethically and transparently Target Progress in 2024 Status Read more 7 Human rights: 7.1 Ensure at least 95% of employees complete mandatory annual Human Rights training by Q4 2025 and in subsequent years 84% trained in ﬁrst year of launch Page 50 7.2 Procurement and supply chain: Ensure that supplier sites covering 80% of spend across direct, external manufacturing and logistics are registered with our risk assessment platform by end Q4 2025 Target update: Ensure 100% of high risk suppliers are assessed on Sedex by end of 2026 Suppliers representing 39% of spend have been assessed on Sedex. Key suppliers representing 83% of spend have been registered and assessed with EcoVadis. See page 54 for new targets on procurement and Scope 3 emissions reduction. Page 50 8 Code of conduct: 8.1 Ensure at least 95% of employees complete mandatory annual training by Q4 2023 and in subsequent years 99% trained in 2024 (2023: 90%) Page 50 “Doing business responsibly is key for all our stakeholders. From ensuring labour standards and environmental stewardship to ethical marketing and data privacy, our core value ‘Do what’s right’ applies to everything we do. We hold ourselves accountable for the commitments we make, and expect the same level of transparency from partners.” James Kerton EVP, General Counsel & Company Secretary 2024 highlights 2025 priorities – Increased the number of suppliers assessed and audited – Enhanced and streamlined supply chain risk management process practices – Expanded mandatory human rights training for employees – Standardise corrective action engagement with high risk suppliers – Drive improvement of sustainability practices of key suppliers – Increase engagement around human rights training for colleagues PROGRESS KEY Achieved New In progress 49 Convatec Group Plc Annual Report and Accounts 2024 Governance Financial statements Additional information Overview Strategic report 84% of colleagues trained on human rights 94% of our key suppliers completed EcoVadis assessments We have a target to ensure at least 95% of employees are trained on our Code of Conduct annually, which we met in 2024 with a completion rate of 99%. Each year, we enhance our conﬂict of interest measures by expanding the number of team members that participate in a web-based survey mechanism that invites managers to identify actual or potential conﬂicts of interest, with plans to expand the scope of survey participants to include all management and senior commercial roles by 2027. Supplier due diligence and contracting Our suppliers are central to our success. We work together to ensure we have access to the products, materials, components, and services we need to meet the needs of our customers. Our commitment to responsible, ethical, and compliant business practices extends to everyone in our global supply chain. We believe our suppliers are an extension of Convatec and expect no less from them than we do from ourselves. To help protect against the risk of a third party acting unethically, our teams conduct a range of due diligence and related activities. To ensure best in class human rights and labour practices throughout the supply chain, all of our suppliers are initially screened by a third-party platform, EcoVadis IQ. Suppliers identiﬁed as high risk of modern slavery are required to complete a Sedex self-assessment questionnaire (SAQ) at locations that manufacture Convatec products, provide raw materials or store our goods. Through the SAQ, suppliers with risks identiﬁed that have potential to conﬂict with our Code of Conduct are expected to complete a Sedex Members Ethical Trade Audit (SMETA). We operate processes that are designed to facilitate corrective actions after SMETAs, to ensure vendors are engaged promptly when a risk event occurs and that these events are tracked through to satisfactory closure of the potential risk. We will continue to build on this progress in 2025. Our key suppliers are audited by a Sedex inherent risk assessment, with some also completing a voluntary audit. To drive sustainability improvements through our supply chain, we also require our key suppliers to complete an EcoVadis assessment with the expectation that they score above our minimum accepted threshold. Key suppliers are deﬁned through our supplier relationship management programme, these suppliers are our most important with high spend, strong levels of collaboration and are involved in driving innovation projects with Convatec. 94% of our key suppliers completed their EcoVadis assessment, with the average score across our key suppliers being 60. We aim to grow the average EcoVadis score of our key suppliers with the ambition for our key suppliers to match our own silver rating. Any key supplier scoring below ‘Committed’ on their EcoVadis assessment by the end of 2025 will be required to complete a Sedex SMETA in 2026. Our process of reviewing scorecards and driving corrective actions through EcoVadis enables suppliers to improve their own sustainability performance. We require that new suppliers agree to adhere to our third-party compliance manual, or demonstrate adherence to the principles stated therein, which may derive from their own codes of conduct. Our manual covers a range of topics including commitments to the International Labour Organisation conventions and the Principles of the UN Global Compact (UNGC) and environmental protections. It extends our Code of Ethics and Business Conduct and our Human Rights and Labour Standards Policy to the supply chain. The manual is introduced to all existing supplier contracts as these are renewed. A copy of the manual is available at www. convatecgroup.com/investors/ governance/our-policies-and- statements/. Working responsibly with partners We aim to build long-term, mutually beneﬁcial relationships with third parties along the value chain, including suppliers of materials and services, contract manufacturers, and transport and logistics companies. Led by our Global Procurement and Supply Chain teams, we are clear that relationships with third Responsible business review – commerce continued We are committed to creating a working environment where everyone is treated fairly with respect, dignity and consideration and where there are opportunities for all. We regularly review our Human Rights and Labour Standards Policy, which incorporates principles and guidelines set out in the United Nations Universal Declaration of Human Rights, Modern Slavery Act and the UN Guiding Principles on Business and Human Rights, and addresses a range of issues, including equal opportunities, anti-harassment and dignity at work. The policy underpins the way we work with each other, partners and suppliers. In 2024, our cross-functional Human Rights Committee, a sub-group of our ESG Steering Committee, continued driving forward this important agenda. Chaired by our Chief People Oﬃcer, and including our General Counsel & Company Secretary, as well as colleagues from HR, legal, compliance, supply chain and global corporate aﬀairs, the Committee reviewed and updated our human rights-related policies and practices and identiﬁed strategies to strengthen supplier due diligence. Consistent with our core values, we are passionate about embedding a culture of respect within Convatec, with this in mind a Global Human Rights e-learning module was developed and launched in 2023. Grounded on the principal areas of focus in our Human Rights and Labour Standards Policy, this interactive module guides all Convatec colleagues through important subjects such as human traﬃcking prevention, compulsory labour, supply chain concerns, speaking up and environmental issues. The training will be expanded each year with additional topics, and apply to our global workforce. Our Code of Conduct, Human Rights and Labour Standards Policy, and Modern Slavery Act Statement can be found here: www.convatecgroup.com/investors/ governance/our-policies-and-statements/. HUMAN RIGHTS 50 Convatec Group Plc Annual Report and Accounts 2024 Strategic report parties must be consistent with our vision and values, and the regulatory framework which underpins our ethical business practices. We believe that developing a more sustainable supply chain will beneﬁt our business over the long term through increased eﬃciency, product improvements, reduced risk and deeper, more collaborative relationships. Building partnerships through engagement with our key vendors is key to driving sustainable best practice across our value chain. In 2024, Convatec hosted two webinars, engaging over 100 attendees representing over 50 companies. The webinars encouraged ongoing dialogue around our commitments to responsible, ethical and compliant business practices, covering our expectations of suppliers and emissions reduction pathways (see page 54). Our suppliers are an extension of Convatec’s business and operations, and we are committed to two-way dialogue and engagement. Like many MedTech companies, our products are often sold by third parties, such as distributors. We have communicated our ambitions to our partners, including setting out our monitoring arrangements for sustainability performance, expectations around minimum standards and requirements for annual disclosure of greenhouse gas emissions (GHGs), commitment to setting science-based targets and the publishing of carbon reduction plans. We will continue to embed these standards in 2025 across Convatec, including our commitment to monitor and ensure a risk-based audit programme and monitoring of corrective actions are in place. Expectations vary based on their industry and magnitude of the supply relationship, taking a proportionate approach so that we focus on the suppliers and supply categories that have the largest impact and inﬂuence on our sustainability performance. In Q4 2024, we requested emissions information from suppliers that make up over 60% of our Scope 3, category 1 emissions and our key logistic providers. We are committed to working with our suppliers to support them through brieﬁngs, training, and other initiatives. See page 56 for our Scope 3 emissions reduction levers. Convatec’s sustainability requirements are now part of our standard request for proposal and contract documentation so that all new suppliers understand and accept these at the start of our trading relationship. We also engage with stakeholders on ethical topics within our sector. During 2024, we continued to participate in a number of industry meetings and discussions regarding key legal, ethical, compliance topics, including HCP interactions, as well as other areas. Ratings and disclosures The landscape of ESG ratings and disclosures continues to evolve, including the forthcoming implementation of the EU Corporate Sustainability Reporting Directive (CSRD). We continue to disclose against various reporting schemes that we believe oﬀer value to our stakeholders and align with our material ESG topics. In 2024, we disclosed against Carbon Disclosure Project (CDP), Sustainability Accounting Standards Board (SASB) and Global Reporting Initiative (GRI) (see www.convatecgroup.com/sustainability/ esg-reports-and-data/), FTSE Women Leaders Review, Workforce Disclosure Initiative (WDI) and maintained UK Living Wage Foundation accreditation. Our TCFD disclosure is found on pages 60 to 71. Memberships We are pleased to have maintained our participation in the UNGC since 2018, reporting annually against the ten principles of the UNGC. We are proud members of FTSE4Good, a global sustainable investment index series, designed to identify companies that demonstrate strong ESG practices measured against international standards. In the past year, we have engaged on sustainability topics with the Advanced Medical Technology Association (AdvaMed), MedTech Europe, Asia Paciﬁc Medical Technology Association (APACMed) and the Association of British HealthTech Industries (ABHI). We are also members of the All-Party Parliamentary Corporate Responsibility Group. Ratings Rating organisation 2024 2023 2022 2021 2020 ISS B- B B B B- Sustainalytics Risk Rating 1 14.1 16.6 14.5 14.6 15.2 MSCI² AAA AAA AAA AA AA CDP B B C B B EcoVadis Silver Committed – – – WDI³ 90% 73% 43% 54% 60% 1. As at December 2024, Convatec rated low risk. Lower scores are desirable for Risk Rating. 2. Disclaimer: The use by Convatec of any MSCI ESG Research LLC or its aﬃliates (MSCI) data, and the use of MSCI logos, trademarks, service marks or index names herein, do not constitute a sponsorship, endorsement, recommendation or promotion of Convatec by MSCI. MSCI services and data are the property of MSCI or its information providers, and are provided ’as-is’ and without warranty. MSCI names and logos are trademarks or service marks of MSCI. 3. Completion rate. Higher scores are desirable. 51 Convatec Group Plc Annual Report and Accounts 2024 Governance Financial statements Additional information Overview Strategic report Responsible business review – planet and communities PROTECTING THE PLANET AND SUPPORTING COMMUNITIES How we operate and our contribution to the world around us Targets: Protecting the planet and supporting communities Target Progress in 2024 Status Read more 9 Emission reduction: 9.1 Achieve net zero carbon (in line with our SBTi target) by 2045 Scope 1, 2 and 3 reductions (see below) Page 54 9.2 Reduce our combined Scope 1 and 2 emissions by 70% against a 2021 baseline, in line with our SBTs, by 2030 62% (2023: 55%) Page 55 9.3 Reduce our Scope 3 emissions by 52% per sold product against a 2021 baseline, in line with our SBTs, by 2030 2.5% in-year reduction of our SBT Scope 3 emissions per product Page 56 10 Product sustainability and Scope 3 targets: 10.1 Procurement and supply chain: Achieve 100% of key suppliers attaining an EcoVadis score of at least 45 by 2026 84% of our key suppliers have scored at least 45 on EcoVadis Page 54 10.2 Procurement and supply chain: Ensure that suppliers covering 60% of our Scope 3 category 1 emissions have committed to set science- based targets by end of 2026 Commenced new engagement programme with suppliers and held ﬁrst workshop Suppliers covering 27% of our category 1 emissions have committed to set near-term science-based targets at end of 2024 Page 53 10.3: Product development: Establish a Product Stewardship team to maintain our carbon intensity database and green design tools by 2026 The carbon intensity for Convatec manufactured product raw materials has been collected into a searchable database. Data informs the green design assessment required at each development stage of our new product development process Page 54 11 Community impact: 11.1 Contribute $2 million to our community partners to improve lives by end of 2025 Completed the second year of our three-year partnership with Partners In Health (PIH), with $1.25m donated Page 58 11.2 By 2027, touch one million lives in our communities through medical education programming and support of strategic community partners Since 2023, touched over 80,000 lives through Community Health Workers with PIH and over 475,000 HCPs trained through medical education Page 58 12 Medical education: 12.1 Reach more than 500,000 healthcare professionals (HCPs) with medical education programmes per year by 2027 Over 237,000 HCPs and patients participated in educational programming led by Convatec Page 58 12.2 Expand HCP education programmes through the development of a global medical education digital platform and review of activity to enhance impact by end of 2024 Ongoing development of Medical & Clinical Aﬀairs capabilities Page 58 “We recognise the importance many stakeholders place on environmental stewardship and remain committed to managing our impact and reducing emissions, working closely with partners and our supply chain, and balancing the various regulatory considerations. Consistent with our core values, we also continue to make a positive social impact, through our programmes in medical education, volunteering, disaster relief and charitable partnerships.” John Haller EVP, Chief Quality & Operations Officer 2024 highlights 2025 priorities – 95% renewable electricity procured globally across all Convatec sites – Advanced our carbon transition plan through a dedicated manufacturing site energy audit programme – Held supplier webinars to advance our engagement programme – Restated our Scope 3 emissions footprint using materials speciﬁc data for raw materials and semi- ﬁnished product – 100% of strategic buyers and category managers trained on the topic of sustainable procurement – Over 237,000 HCPs engaged in medical education programme – Supported the training of 700 Community Health Workers with Partners In Health – Advance our transition plan to net zero – Progress ISO 14001 (Environmental Standard) Certiﬁcation across all manufacturing sites, with Group certiﬁcation by 2027 – Enhance our water and waste stewardship eﬀorts – Continue expansion of medical education programmes PROGRESS KEY Achieved New In progress 52 Convatec Group Plc Annual Report and Accounts 2024 Strategic report Convatec is committed to transitioning to a 1.5°C aligned net zero economy, and achieving net zero by 2045. The global pressures on industries to contribute meaningfully to the low-carbon transition and align with the critical objective of limiting global temperature rise to 1.5°C. For the Targets and levers Our Greenhouse Gases (GHG) emissions reduction pathway is guided by our science-based targets that include our Scope 1, 2 and 3 emissions. This is supported by a set of speciﬁc sub-targets across our key impact areas that help drive investment into achieving our climate strategic ambition. MedTech sector, this transition presents not only signiﬁcant risks and challenges, but is also coupled with transformative opportunities to innovate, adapt, and mitigate our impact. Over the past year, we have continued to focus on mitigation and adaptation activities. To guide this journey, we have grouped our eﬀorts under six key themes, designed to evolve as new risks and opportunities emerge. By working across our value chain and engaging with stakeholders, we aim to maximise our inﬂuence and impact, leveraging key levers to accelerate meaningful progress toward a net zero future. WORKING TOGETHER OUR CLIMATE AMBITION We will work together with our stakeholders to meet our ambition and overcome sector challenges: Our customers and patients Understanding their needs to ensure we can meet climate ambitions without compromise on the availability, eﬃcacy and safety of products. Our colleagues Driving sustainable behaviours and investment in climate-related digital tools that allow teams to make informed decisions that drive our ambition. Our communities Fostering responsible commerce, minimising operational impacts and championing local stewardship to ensure our activities contribute positively to our communities. Our industry Participate in opportunities for industry collaboration, seeking ways to address key sector challenges such as the need to balance material and design alternatives with product eﬃcacy. Our net zero and climate resilience objectives requires activating decarbonisation and adaptation measures across our value chain, from product innovation to distribution. Products Delivering products and solutions that meet the needs of our patients and customers, ensuring eﬃcacy, quality and safety, whilst exploring design and material alternatives to continually reduce climate impact. Packaging and waste Reducing the amount of production waste and aligning to waste hierarchy to focus on prevention and recycling for primary, secondary and tertiary packaging. Supply chain Working closely with suppliers to achieve shared goals and raise ambition by encouraging suppliers to set science- based targets. Logistics Driving eﬃciency in logistics through better data, consolidating transportation and switching to lower-carbon modes of transport. Operating process Optimising lower carbon or renewable energy use to enhance eﬃciency, lower emissions and drive sustainable production in our direct operations. Adaptation Responsibly managing natural resources and investing in solutions to strengthen resilience to physical climate impacts. Implemented decarbonisation HVAC replacements Heat pumps Steam & heat decarbonisation Vehicle electriﬁcation Renewable electricity increase – Total spend FY21–FY24: $5–10m – Spend in FY24: $2–5m – Committed spend FY25–FY30: $20–35m P l a n n e d a c t i o n s 2 0 2 5 – 2 0 3 0 A c h i e v e d r e d u c t i o n s 2 0 2 1 – 2 0 2 4 INVESTING IN DECARBONISATION Key targets 2025 2030 2035 2040 2045 SC: Supply chain P+W: Packaging and waste DO: Direct operations A: Adaptation Scope 1 and 2 emissions from 2021 70% Scope 3 emissions per product sold from 2021 52% Scope 1, 2 and 3 emissions, plus 100% neutralisation at 2045 90% 60% of Category 1 suppliers to set SBTs SC 100% renewable energy 80% DO Deliver sustainable water withdrawal at high water-stressed locations and develop our water management practices at all locations A Certify 100% our waste diversion from landﬁll practices P+W We have identiﬁed and begun to activate key decarbonisation levers to reduce our Scope 1 and 2 emissions, including investing in renewable energy, enhancing energy eﬃciency through technology upgrades, and transitioning to lower- carbon fuels where feasible. For further information on our decarbonisation activities see page 54. 53 Convatec Group Plc Annual Report and Accounts 2024 Governance Financial statements Additional information Overview Strategic report Responsible business review – planet and communities continued Our plans to achieve a net zero transition will require broad stakeholder collaboration on a range challenges that aﬀect our ability to implement change, that must be considered within the context of industry-speciﬁc medical safeguards. Engaging suppliers & procurement processes Engagement across the whole value chain is essential for business to decarbonise and meet the net zero challenge. In 2024, we held multiple supplier webinars to explain our Scope 3 challenge, targets and requirements, led by our Chief Quality & Operations Oﬃcer. The webinars established the importance of our emissions reduction programme and explained how sustainability is now part of our regular Supplier Review Meetings (SRMs). We are encouraged by the eﬀorts of our suppliers, including opportunities for shared learning. We continue to support our procurement colleagues with resources to facilitate ongoing partnership. Digital tools & baselining We have refreshed our digital product sustainability database to improve the accuracy of our emissions proﬁle through enhanced carbon intensity data and analytics. This includes the identiﬁcation of carbon hot spots across our product raw materials to focus assessment of alternative design options and monitor the impact of product changes. Our focus in 2025 is to expand our Green Design Guidelines which help us to consider the full lifecycle impact of our products. This will include standard operating procedures and expectations of product designers, which will help to drive down the emission intensity of products to meet our Scope 3 target. Material challenges Product safety and adherence to medical safeguards is a top priority. This limits changes that can be made to product and packaging material and design. Due to lengthy regulatory processes and long lifetime of our products, there is a time lag to realise product-related emission reductions. Our digital tools and resources enable more accurate lifecycle assessments, helping us pinpoint opportunities to reduce environmental impact. OUR VALUE CHAIN RESPONDING TO CHALLENGES IN THE LOW-CARBON TRANSITION Supply chain Products Packaging Direct operations Logistics End of life Data informed material and design changes Primary packaging: We continued focus in this area, including our eﬀorts to remove PVC and reduce packaging weight by almost 80% on all baseplates in our Ostomy Care portfolio. We intend to continue rolling out ﬂow wrap in additional geographies in 2025 and 2026. Secondary and tertiary packaging: 100% of our cartons and shipping boxes continue to be paper-based and recyclable. Our Esteem Body product line successfully launched with lightweight, size-optimised cartons, setting a new standard for our packaging design which we are we are actively extending to other product lines. Carbon calculations: We are working with our packaging vendors to improve carbon emission evaluations through more granular calculations of packaging weights and their associated carbon footprint, allowing us to make informed decisions that consider both functionality with environmental impact. Site specific decarbonisation planning In 2024, energy audits at our manufacturing sites identiﬁed 10–20% potential energy savings per site through initiatives like building management system controls optimisation, compressed air system improvements, heat recovery, and motor upgrades using advanced technologies. Longer-term decarbonisation opportunities, including heat pumps, hydrogen fuel, and onsite renewables, were also assessed. By evaluating energy savings, capex, and ROI, site teams prioritised projects and integrated them into environmental roadmaps, driving utility reductions and progress toward low-carbon goals. End of product life management challenges There are some key challenges in reducing emissions, including navigating a range of regulatory requirements, ensuring safe disposal of hazardous materials, and addressing contamination risks that limit recyclability. These challenges highlight the importance of design for end of life (EOL) strategies, fostering innovative recycling solutions, and collaborating with stakeholders to develop scalable and sustainable EOL strategies. Although EOL emissions are not a signiﬁcant part of our emission proﬁle (over which Convatec has limited control), we will continue to drive and monitor progress in these areas. Logistic planning and efficiency Reduced air freight: Through eﬀective planning and targeted emissions reduction activities, we have successfully reduced Scope 3 Category 4 emissions by 608 tCO 2 e in 2024. Transport space utilisation: We implemented a pilot project with our third-party supply chain partner to develop a new consolidation tool and increase transport space utilisation. The project delivered a total savings of 32 Transatlantic containers in 2024. An automated transport optimisation tool is now in development to scale up the project during 2025, with forecasted emissions reduction from eliminating 52 transatlantic containers shipped per year. Data challenges Accurate data is essential to eﬀectively baseline our emissions, identify impactful reduction opportunities, and measure progress. Otherwise we risk mis-prioritising investments into climate mitigation and adaptation. To address this, we have ongoing initiatives across the business to improve the collection of primary data, reduce dependence on estimates, and ensure robust data management practices. By investing in digital tools we can ensure climate is appropriately considered in decision making frameworks, to ensure strategic and ﬁnancial planning dedicates suitable resource which is necessary to meet our targets. Please see page 61 for ways in which we are adapting and strengthening physical climate resilience. 54 Convatec Group Plc Annual Report and Accounts 2024 Strategic report Environment Our manufacturing site in Reynosa, Mexico achieved ISO14001 certiﬁcation in 2024, with our sites in Rhymney and Deeside, UK and Michalovce, Slovakia maintaining their ISO14001 certiﬁed status. We are making progress on our plans to expand the certiﬁcation across all of our manufacturing sites by 2027. See also our Environmental Policy at www.convatecgroup.com/sustainability/ esg-reports-and-data and our TCFD disclosure on pages 60 to 71. Scope 1 and 2 GHG emissions Our 2024 Greenhouse Gas (GHG) emissions under the market-based method totalled 13,823 tonnes CO 2 e (2023: 16,142), equating to an in-year reduction of 14.4% (2023: 34.5%). This reduction was achieved through improved energy eﬃciency and sourcing of renewable electricity at all our global manufacturing sites. Our ﬂeet of 1,179 vehicles (2023: 1,312) generated a total emissions of 5,832 tonnes CO 2 e (2023: 6,837), and our refrigerant gas emissions amounted to 136 tonnes CO 2 e (2023: 776). Energy consumption In 2024, total global energy consumption was 127,114,380 kWh (2023: 133,712,897 kWh), of which UK speciﬁc energy consumption was 25,340,649 kWh (2023: 25,922,351). Energy efficiency In 2024, our overall energy intensity ratio reduced by 10% (2023: 6%) through implementation of our global energy eﬃciency programme. We are prioritising the reduction of our absolute energy consumption as the key means for reducing emissions. We continue to identify and implement projects to improve our energy eﬃciency by leveraging sources such as mandatory Energy Savings Opportunity Scheme (ESOS) audits, voluntary internal energy audits and best practice sharing across our sites. In addition, we are committed to obtaining ISO 50001 certiﬁcation at our manufacturing sites by 2030. Energy eﬃciency projects to reduce our Scope 1 and 2 emissions in 2024 included; energy eﬃcient chiller installation, chiller eﬃciency improvements, smart metering, air handling unit retroﬁts, onsite renewables and LED lighting. GHG (market-based method) (tonnes CO 2 e) 1,2 2024 2023 2022 2021 2020 Scope 1 (Global) 12,360 14,632 14,395 14,931 5,608 Scope 1 (UK) 2,702 2,867 3,202 3,107 2,012 Scope 2 (Global) 1,463 1,510 10,258 21,255 24,650 Scope 2 (UK) 26 72 70 29 - Total GHG emissions 13,823 16,142 24,653 36,186 30,258 Total UK 2,728 2,939 3,272 3,136 2,012 GHG (location-based method) (tonnes CO 2 e) 1,2 2024 2023 2022 2021 2020 Scope 1 (Global) 12,360 14,632 14,395 14,931 5,608 Scope 1 (UK) 2,702 2,867 3,202 3,107 2,012 Scope 2 (Global) 23,324 23,430 23,210 25,872 27,169 Scope 2 (UK) 2,155 2,403 2,200 2,348 2,433 Total (Global) GHG emissions 35,684 38,062 37,605 40,803 32,777 Total UK 4,857 5,270 5,402 5,455 4,445 Scope 1 and 2 GHG emission intensity (tonnes/$m revenue) 1,2 2024 2023 2022 2021 2020 GHG emission intensity (location basis) 15.6 17.8 18.1 20.0 17.3 GHG emission intensity (location basis, UK) 2.1 2.5 2.6 2.7 2.3 GHG emission intensity (market basis) 6.0 7.5 11.9 17.8 16.0 GHG emission intensity (market basis, UK) 1.2 1.4 1.6 1.5 1.1 1. Please refer to our Basis of reporting for accounting methodologies (page 59). 2. In 2024, 3.5% of total Scope 1 and 2 emissions is estimated (2023: 3.0%). Total energy consumption (by function) (MWh) 1,2 2024 2023 2022 2021 2020 Manufacturing locations 93,004 95,374 103,131 103,207 95,523 Non-manufacturing locations 8,647 9,969 9,770 10,736 6,205 Company vehicles 25,463 28,370 24,713 28,017 – Total energy consumption 127,114 133,713 137,615 141,961 101,728 Total UK energy consumption 25,341 25,922 25,856 25,339 10,381 Total energy consumption (by fuel source) (MWh) 1,2 2024 2023 2022 2021 2020 Non-renewable electricity 3,391 3,451 22,748 43,252 66,047 Renewable electricity 63,610 64,464 50,999 31,869 10,607 Natural gas 33,452 35,218 38,609 38,130 24,766 Propane 3 1 – – – District heating 834 1,538 464 642 254 Diesel 361 671 82 51 53 Company vehicles 25,463 28,370 24,713 28,017 – Total energy consumption 127,114 133,713 137,615 141,961 101,728 Energy intensity (GWh/$m revenue) 1,2 2024 2023 2022 2021 2020 Energy intensity 0.056 0.062 0.066 0.070 0.054 1. 2.1% is estimated for 2024 data (2023: 2.5%). 2. See our Basis of reporting (page 59) for reporting methodology. 55 Convatec Group Plc Annual Report and Accounts 2024 Governance Financial statements Additional information Overview Strategic report Renewable energy As part of our Scope 1 and 2 science- based targets, we have met and exceeded our target to procure 80% of our electricity from renewable sources by 2025, reaching 100% by 2030. As of 2024, renewable electricity accounts for 95% of total electricity consumed (2023: 95%) with 100% renewable electricity procured at all of our manufacturing sites. During 2024, we generated 2,313 MWh (2023: 1,448 MWh) from on-site renewable energy sources. We continue to develop project feasibilities within our eﬃciency project pipeline. Information about the methodology we use for disclosing renewable energy in relation to our Scope 1 and 2 emissions can be found in our Basis of reporting document (page 59). Scope 3 emissions The provision of material speciﬁc carbon emissions data, compiled in our digital product sustainability tool has improved the accuracy of our Scope 3 emissions data. As such, replacing spend-based emission factors in our footprint data triggered the requirement for a rebaseline and restatement of our emissions, in line with our policy. Updated Scope 3 data is provided in the adjacent table. During 2024, we continued to progress engagement with our suppliers and partners to collect primary data to ensure accuracy of emissions data and allow us to track our suppliers decarbonisation eﬀorts. During 2024, we collected 10% of Scope 3 data from primary sources (2023: 8%). These numbers were collected through direct engagement or use of third- party platforms such as EcoVadis, which we encourage our suppliers to use to improve transparency and encourage continuous improvement. Our supplier webinars promoted engagement by actively sharing our requirements whilst promoting collaboration on emissions reduction throughout the value chain. In 2024, our Scope 3 GHG emissions totalled 239,255 tonnes CO 2 e (2023: 246,771 tonnes), a 10% absolute reduction from 2021. See our Basis of reporting (page 59) for exclusions and details of our re-baselining and restatement. Our GHG reporting follows the methodologies set out in ’The GHG Protocol: A Corporate Accounting and Reporting Standard (Revised Edition)’, developed by the World Business Council for Sustainable Development and the World Resources Institute. Water During 2024, we have continued our high-level review of all our manufacturing facilities using the WRI Aqueduct and Ecolab Smart Water Navigator, based on our 2023 operational data. This allows us to track progress and maintain understanding of the risk to our operations. Our manufacturing site in Reynosa, Mexico, remains the only site with high baseline water stress and consequently a medium water withdrawal risk and we are continuing our progression towards becoming water stewards. Our Reynosa facility has prepared a water stewardship plan, setting out SMART targets to implement and identify water eﬃciency projects, to ensure delivery and review success. Whilst our water use within Haina, Dominican Republic, is indicated in the high level review to be within a sustainable water use, the Aqueduct analysis indicated that it could be impacted by water risks. We have undertaken data gathering on speciﬁc water risks and opportunities at this site. A facility level assessment was completed to identify opportunities to reduce our clean water demands and improve water eﬃciency, including considering rainwater harvest. In addition, a survey identiﬁed key water opportunities and challenges within the local catchment (both surface water and groundwater), and key water stakeholders have been identiﬁed and mapped. In 2024, we withdrew approximately 163 megalitres of water (2023: 153 megalitres), all of which was provided by municipal water suppliers or other public or private water utilities. The increase in water withdrawal is related to the installation of sprinkler systems for business continuity purposes. No water is abstracted directly from lakes, rivers or other bodies of water. Data is compiled from invoiced amounts and meter readings. In 2024, our focus will remain on achieving our sustainability water targets and becoming positive water stewards at all of our plants. We will continue to monitor water risks at our facilities and we are committed to achieve Alliance for water stewardship certiﬁcation at our priority sites by 2027. 5,781 tonnes of water (2023: 6,015 tonnes) are tankered oﬀsite as hazardous waste, the vast majority relating to our Rhymney site in the UK, where as part of the production process water becomes contaminated with Industrial Denatured Alcohol (IDA) and is segregated for further processing. After processing, a signiﬁcant proportion of the IDA is recovered and reused at the site. The remaining treated water is returned to the environment via a sewer as part of a permitted discharge. Other uncontaminated wastewater is discharged via a sewer. Scope 3 emissions (tCO 2 e) 1 2024 2023 2022 2021 Category 1: Purchased goods and services 113,190 119,537 119,473 142,591 Category 2: Capital goods 22,912 24,929 25,067 16,748 Category 3: Fuel and energy related activities 7,479 7,670 8,214 8,732 Category 4: Upstream transport and distribution 32,502 33,110 48,130 40,279 Category 5: Waste generated in operations 2,468 3,524 3,055 5,200 Category 6: Business travel 12,829 9,440 6,315 6,147 Category 7: Employee commuting 6,555 6,703 7,315 7,284 Category 12: End of life treatment of sold products 41,320 41,858 40,020 39,670 Total Scope 3 emissions 239,255 246,771 257,589 266,651 Total emissions (Scope 1, 2 and 3) 253,077 262,913 282,242 302,837 1. All Scope 3 data for 2021 to 2024 has been restated using updated emission factors and material- speciﬁc data where available. Responsible business review – planet and communities continued Water use 2021 2022 2023 2024 163 153 169 176 (megalitres purchased) 56 Convatec Group Plc Annual Report and Accounts 2024 Strategic report Waste Throughout 2024, we have advanced our waste data analysis processes across all global sites, leveraging our bespoke data collection tool to assess site-speciﬁc waste generation and disposal practices at a greater level of granularity. This provides us the opportunity to better understand our waste and what we can do to reduce its impact. This year’s eﬀorts included a comprehensive cross-analysis against production workﬂows, allowing us to establish normalised baselines for our key waste-related metrics. These metrics will be used to support all sites on their journey towards Waste Diverted from Landﬁll certiﬁcation. Alongside this, we have now appointed our certiﬁer and have begun pre-audits at key strategic sites. The remaining sites are scheduled over the next few years with an overall ambition of achieving certiﬁcation globally by 2030. Recycling continues to be the predominant disposal route across our sites, driven signiﬁcantly by liquid waste recycling at our manufacturing site in Rhymney, which constitutes our largest waste stream at 39% of total waste generated (2023: 34%). However, landﬁll ranks as the second-largest disposal route at 31% of total waste generated (2023: 37%). This has highlighted our manufacturing sites in Haina, Dominican Republic, and Reynosa, Mexico, as key targets for improvement. General waste is one of our largest waste streams and its treatment is country-speciﬁc, with 2% recycled, 30% sent for energy recovery and 68% either incinerated without energy recovery or sent to landﬁll. We have active projects currently underway to optimise source-segregation, maximise recyclability and ﬁnd the most sustainable disposal routes for all remaining residual waste. In 2024, hazardous waste made up 40% of total waste generated (2023: 35%). 99% of this hazardous waste was recycled. We are piloting reuse initiatives and actively sharing best practices across our manufacturing sites to facilitate implementation and further minimise our global environmental impact. Waste generated (tonnes) 2024 2023 2022 2021 2020 Non-hazardous waste Disposed of 6,962 8,499 9,655 13,599 11,806 Recycled 1,750 2,779 3,425 2,990 2,120 Generated 8,712 11,278 13,080 16,589 13,926 Hazardous waste Disposed of 73 98 69 82 72 Recycled 5,855 6,073 5,789 5,606 5,337 Generated 5,928 6,171 5,858 5,688 5,409 Total generated 14,640 17,449 18,938 22,277 19,335 Fate of non-hazardous waste generated (%) 2024 2023 2022 2021 2020 Recycled 20% 25% 26% 18% 15% Incineration (with energy recovery) 27% 18% 27% 16% 10% Incineration (without energy recovery) 1% 1% 0% 0% 0% Landﬁll 52% 56% 47% 66% 75% Socio-economic contribution to society Through running our business, we aim to make a socio-economic contribution to society. This contribution, which is important to a range of stakeholders, is summarised in the table below. We also recognise that there are a range of beneﬁts to communities and society as a result of our products, services and jobs directly and indirectly created. 2024 $m 2023 $m 2022 $m 2021 $m 2020 $m Direct economic value generated 2,289.2 2,142.4 2,072.5 2,038.3 1,910.8 Economic value distributed Operating costs 1 947.6 937.1 990.4 962.3 891.7 Employee wages and beneﬁts 767.2 701.3 648.5 650.1 579.7 Payments to providers of capital 2 349.2 223.2 312.8 262.7 254.0 Payments to governments 3 82.3 61.2 45.7 47.6 56.3 Community investment 4 1.8 1.3 0.7 1.5 0.7 Economic value retained 141.1 218.3 74.4 114.1 128.4 1. Operating costs exclude depreciation, amortisation, impairment charges, asset write-oﬀs and operating taxes. Employee wages and beneﬁts, payments to governments and community investments are normally part of operating costs, but have been excluded as they appear on separate lines in the table. 2. Payments to providers of capital have been included on an accruals basis and include interest paid on long-term debt, capital and interest payments on right-of-use assets, net debt repayment, dividends and own share reserve purchase paid to Convatec shareholders. 3. Payments to governments include corporate income taxes, sales taxes, real estate taxes and other taxes, but exclude employer portion of payroll taxes, as they are included in employee wages and beneﬁts. 4. Calculated as costs associated with charitable community donations. See page 59 for calculation of value to communities. Contribution to governments We are fully committed to meeting our legal tax obligations in each of the countries in which we operate. We fully support and embrace greater transparency with tax authorities and the initiatives being introduced by the Organisation for Economic Cooperation and Development (OECD) and governments to ensure clarity and adherence to the tax laws of each jurisdiction in which we operate. Our Tax Strategy is available at www.convatecgroup.com/investors/governance/our-policies-and- statements/. 57 Convatec Group Plc Annual Report and Accounts 2024 Governance Financial statements Additional information Overview Strategic report SUPPORTING COMMUNITIES Our forever caring promise guides how we engage with our communities. Globally, our approach is to support community partnerships on issues that closely align with our vision and values, and where the majority of our people are based and their impact is made. In recognising that the way in which we operate enhances the contribution we make to local communities, we maintain partnerships with select non-governmental organisations (NGOs) to achieve maximum impact. These partnerships focus on issues of healthcare access/ equity, education and disaster relief. Partnerships Disaster relief We continued our disaster relief programmes throughout 2024. In May, we worked with humanitarian partners in response to catastrophic ﬂooding in South Brazil which displaced more than 160,000 people. We also helped support those aﬀected by the 7.6 magnitude earthquake that hit the Noto peninsula in Japan, contributing to a safety net system to support ostomates in the areas who may have diﬃculty accessing products and supplies. We continued our support for the Disasters Emergency Committee, through a $150k donation to their Middle East Appeal. Health equity and education In 2024, Convatec entered the second year of a three-year collaboration with the international NGO Partners In Health (PIH). Focused on key geographies of Mexico, Peru and the United States, the partnership aims to advance innovative methods for recruiting, training and deploying Community Health Workers (CHWs) and enhance treatment of chronic conditions. The combination of ﬁnancial support, product donations, and medical education has so far trained 700 CHWs in underserved communities, by extension touching over 80,000 lives. To see more about the partnership, its objectives, and impact numbers, see www. convatecgroup.com/sustainability/ protecting-the-planet-and-supporting- communities/supporting-communities/. Engagement and volunteering Throughout the year, Convatec colleagues spent hundreds of hours in their communities, participating in volunteering activities on issues that matter to them. For the third year, we hosted ‘Forever caring month’ to encourage colleagues to get involved in their communities and utilise company supported volunteering time. Stories are shared and celebrated as a way to witness our forever caring promise for communities. Our two-day volunteering policy makes it easy for colleagues to engage in community service. Business units, functions and our ERGs contribute to local market activities as well. → For a summary of Forever caring month, watch this short video: www. vimeo.com/1047416089/0fa70334a2?sha re=copy Medical education In line with our forever caring promise, we support HCPs through our medical educational programme. We provide grants to support HCPs and third parties (such as scientiﬁc congresses, regional bodies, medical associations, educational and hospitals) supporting their engagement with educational and scientiﬁc meetings, programmes, workshops, events, activities, and public education, non-contingent on the use of Convatec products. We progressed on our target to reach more HCPs with medical education programming and patient education programmes – supporting over 2,300 HCPs with medical education grants and engaging over 237,000 HCPs in educational programmes. FOREVER CARING IN ACTION Wound care training As part of our partnership with PIH, last year we kicked oﬀ a medical education training programme in Liberia. The session, held at the J.J. Dossen Hospital in Liberia, centred around the fundamentals of wound healing and was designed to build on the current knowledge of healthcare providers at the hospital. Managed by our Medical and Clinical Aﬀairs team, the virtual sessions addressed a series of topics around AWC for PIH HCPs in Haiti, Liberia and Sierra Leone. The sessions were recorded and compiled in a training library for the sites. For more information on PIH, visit their website at www.pih.org. Responsible business review – planet and communities continued Developing meaningful relationships with community partners is especially important for colleagues at our manufacturing sites, where we have signiﬁcant footprints in the area. For years, colleagues near our sites have cleaned up beaches and roadsides, fundraised through football, and spent time with children with cancer and elderly residents at local care homes. 58 Convatec Group Plc Annual Report and Accounts 2024 Strategic report 2024 VALUE TO COMMUNITIES In line with our forever caring promise and values, we supported our communities through: $1 million + to community partners through programming and disaster relief $2.5 million Product value donated to charity partners 1 237,000+ HCPs and patients participated in educational programmes ~$457,000 in medical education grants supporting over 2,300 HCPs 1. Product value calculated using regional average sale price. Includes discounted contribution from products with shortened shelf lives. STATEMENTS Independent assurance In line with our commitment to transparency, we commissioned Deloitte LLP for the third year to perform limited assurance procedures on selected key performance indicators as detailed in our Responsible business review 2024. The assurance was completed in accordance with the International Standard on Assurance Engagements 3000 (revised) (ISAE 3000) and 3410 (ISAE 3410). Details of the procedures performed are outlined in Deloitte’s independent assurance opinion, which can be located at www.convatecgroup.com/investors/governance/our-policies-and-statements/. Performance data The scope of Deloitte’s work covered the following 2024 disclosures (performance data) from the review: – Greenhouse gas emissions: Scope 1 (12,360 tonnes CO 2 e); Scope 2 (market based) (1,463 tonnes CO 2 e); Scope 2 (location based) (23,324 tonnes CO 2 e ) (page 55) – Emission intensity (location based: 15.6 tonnes CO 2 e/$million revenue and market based: 6.0 tonnes CO 2 e/$million revenue) (page 55) – Energy consumption (127,114 MWh) (page 55) – Energy intensity (0.056 GWh/$million revenue) (page 55) – Health and safety: operations lost time injuries rate (0.16) and hazard observation rate (291) (page 48) – DE&I and Wellbeing: percentage of females in senior management and CELT (45%) (page 47) – Quality: Complaints per million (22.8) (page 13) Deloitte’s full Assurance Statement, including opinion and basis of opinion is available at www.convatecgroup.com/sustainability/esg-reports-and-data/. Completeness of information The information contained in the Responsible business review section of our 2024 Annual Report and Accounts covers all operations over which we had ﬁnancial control for the 2024 ﬁnancial and calendar year. It also covers all of the issues identiﬁed in our ESG framework and places emphasis on the most material issues. Where a reported KPI does not relate to the entire organisation for the whole year, the scope of its boundaries is indicated. Businesses acquired or disposed of during the year are not included in our reporting for that year except where disclosed otherwise. Basis of reporting and ESG definitions We regularly assess the scope of our ESG assurance and covered metrics. Convatec’s basis of reporting for the above metrics and all other ESG target deﬁnitions can be found at www.convatecgroup.com/sustainability/esg-reports-and-data/. 59 Convatec Group Plc Annual Report and Accounts 2024 Governance Financial statements Additional information Overview Strategic report TCFD disclosure Task Force on Climate-related Financial Disclosures Statement of Compliance Convatec is committed to the continued adoption and alignment with the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD) as a means to eﬀectively integrate climate considerations into our business. Our disclosure is compliant with the UK Government’s Companies (Strategic Report) (Climate-related Financial Disclosure) Regulations 2022 and the FCA Listing Rule UKLR 6.6.6(8) on climate-related ﬁnancial disclosure. The table below summarises how we comply with the TCFD recommendations. Further supporting information can be viewed in our ESG section of the annual report under the ‘Protecting the planet and supporting communities’ pillar on pages 52 to 59. Recommendations Relevant information Status Page ref GOVERNANCE a) Board oversight – Responsibility for the identiﬁcation and management of climate-related matters – Frequency of engagements on climate-related matters Comply Page 61 b) Management’s role – How climate is integrated across business processes and frameworks Comply Page 61 STRATEGY a) Climate-related risks and opportunities – Description of time horizons used in the analysis – Climate risks and opportunities identiﬁed Comply Page 62 b) The impact of climate-related risks and opportunities – Climate scenario analysis, including qualitative and quantitative impact assessment results and the management response measures – Climate integration in ﬁnancial planning processes and climate transition plan on alignment to net zero Comply Page 63 c) The resilience of the organisation’s strategy – Description of climate scenarios used – Conclusion on climate resilience under diﬀerent scenarios Comply Page 64 RISK MANAGEMENT a) Describe the organisation’s processes for identifying and assessing climate-related risks – Process and methodology to identify and assess climate risks and opportunities Comply Page 70 b) Managing climate-related risks – Process to identify and select risk controls Comply Page 70 c) Integration into overall risk management – Overview of climate integration in Convatec enterprise risk management framework Comply Page 70 METRICS AND TARGETS a) Climate metrics – Overview of climate metrics and targets used to monitor performance – Climate metrics used to monitor risk and opportunity exposure Comply Page 71 b) GHG emissions – Scope 1, 2 and 3 GHG emissions reported in responsible business section Comply Page 71 c) Climate targets – Climate commitments to align with the low-carbon transition and to reduce our exposure Comply Page 71 60 Convatec Group Plc Annual Report and Accounts 2024 Strategic report GOVERNANCE The responsibilities of the Board and management on climate-related issues are described on pages 34 and 35. The CEO has overall responsibility for climate matters, whilst the Board has strategic oversight of Convatec’s climate ambition and transition plan (see page 54). The Board is supported by the following governance bodies with climate-speciﬁc roles relating to the identiﬁcation, assessment, management and disclosure of climate risks and opportunities (R&Os): – ESG Steering Committee: The Committee is chaired by the CEO and discusses the progress of Convatec’s Climate Transition Plan including its Climate Strategic Ambition, as well as supporting the overall implementation of the Group’s vision and ESG strategy through the strategic planning process. – Audit and Risk Committee (ARC): The ARC is responsible for ensuring compliance with all relevant regulations and laws, including TCFD, and monitoring programmes to achieve compliance. In addition, the ARC is also responsible for reviewing and approving Convatec’s management of all risks, including any material climate-related risks. Risk controls are identiﬁed by aﬀected business units, with the support of the TCFD working group and risk team. In a bottom-up approach, risk owners are identiﬁed in each business unit and responsible for identifying appropriate controls, monitoring risk exposure, and providing two of four quarterly updates. In addition, some controls are deﬁned as top-down as climate change is managed under the Principal Risk ‘Environment and Communities’. Convatec Executive Leadership Team (CELT): The CELT has delegated responsibility from the Board to set the direction of Convatec’s strategy, ensure climate-related issues have appropriate management in place, and cascade this through the organisation. – Remuneration Committee: Responsible for setting and monitoring variable compensation performance metrics for CELT members, which include performance against ESG objectives. The Remuneration Committee has a close relationship with the ESG Steering Committee for the preparation and sign-oﬀ of public disclosures, which include TCFD-related information. Frequency of engagements on climate-related matters: ESG, including climate-related matters, is a regular agenda item across most Board and management committees. In FY2024, there were two formal updates on climate-related matters in 2024 Board meetings. For further details on the frequency of meetings please see page 35. CLIMATE AND BUSINESS PROCESSES Strategy management Our strategy includes the environment as an ESG priority aspect. In our annual strategic planning cycle, each business unit considers actions and resources required to meet our ESG objectives, which includes climate. This helps to inform the development of the annual business plan and budget. Risk management Our in-depth climate scenario analysis informs the Environment and Communities Principal risk and ensures suitable resources are allocated to risk controls. For example, we are committed to implementing decarbonisation initiatives to minimise our environmental impact and reduce exposure to transition risks. Additionally, we maintain comprehensive insurance coverage across our sites and have established dependency ﬂows to support business continuity in the event of disruptions. Goals and targets We are committed to the net zero transition, and reducing our environmental impact across emissions, waste, water and product life cycles. We have updated our climate strategic ambition, and will use this to inform actions required to deliver on our climate- related targets. Performance monitoring We have KPIs associated with our environmental ambition and report our annual performance alongside multiple years of historical data. We are working on ways to improve data collection and reporting processes by assessing data sources and internal and external reporting requirements. As part of this process, we will also establish additional metrics as relevant. Decision-making frameworks Climate considerations are included in M&A due diligence as well as capital allocation. We have also developed tools and resources like the Green Design Guidelines which foster sustainability behaviours in day-to-day activities. Our approach to climate resilience Climate-related risks and opportunities have been assessed and managed as a Principal Risk since 2021. Since then, Convatec has continued to embed climate change into its business practices and operations to strengthen climate resilience and help drive actions to reduce our value chain GHG emissions. 61 Convatec Group Plc Annual Report and Accounts 2024 Governance Financial statements Additional information Overview Strategic report TCFD disclosure continued STRATEGY Our climate scenario analysis approach This is the third year we are reporting against the TCFD recommendations, and we have taken the opportunity to further develop our climate scenario analysis (CSA) approach with each iteration. In this reporting period, we are compliant across all TCFD recommendations, and our climate scenario analysis combines both qualitative and quantitative assessment of potential physical and transition impacts, the outputs of which help to inform our management response and better integrate climate considerations into our business. Summary of our climate scenario analysis development: – FY2022: Established process for our ﬁrst qualitative CSA of transition and physical impacts (for material manufacturing sites). – FY2023: Supplemented our assessment with quantitative CSA including ﬁnancial impacts from a selection of transition and physical value drivers. – FY2024: Updated our CSA with the latest climate models and expanded our physical climate assessment to include all owned manufacturing sites. Our analysis approach is reviewed annually, and formally refreshed at least every three years as part of our continual monitoring and integration of climate considerations within business processes and operations. It will be fully refreshed next in FY2026. Our climate scenario analysis approach Risk identiﬁcation: By using the TCFD guidance, climate scenarios and our own industry perspective, we can identify relevant climate impacts which we then interpret and align to the speciﬁcs of our business value chain. Information sources include a review of regulatory requirements related to climate change, climate policy and climate scenario research, a review of peer disclosures and internal engagement with business function leads. Time horizons: Climate impacts can vary over time. For the assessment of climate impacts, short-term time horizon (zero to one year) aligns with that of our risk management and business planning near term period, medium term (two to ﬁve years) aligns with the strategic planning cycle in which climate matters are integrated, and long-term (six years to 2050) aligns with Convatec’s goal of achieving net zero and the longer term nature in which climate issues may manifest. Qualitative assessment methodology: Identiﬁed climate-related risks have been assessed qualitatively against the likelihood of occurrence, magnitude of impact and vulnerability, where vulnerability is a function of exposure, sensitivity and adaptive capacity. Sensitivity reﬂects the predisposition of organisations, assets, societies, processes, or systems to be adversely aﬀected by risk. Adaptive capacity refers to characteristics or actions that may reduce the risk posed by a hazard and alleviate vulnerability. Climate opportunities have been scored based on the potential size of opportunity through avoided costs, increased revenue, and the ability to realise the opportunity. Scoring: Semi-qualitative scoring allows for the prioritisation of possible impacts on which the business agrees to focus control measures and investment. Each term is scored on a ﬁve-point scale, and scoring thresholds are deﬁned for each indicator to ensure a consistent and comparable approach is applied across all impacts, climate scenarios and time horizons. Our materiality threshold is determined by qualitative scoring of 1-5 across diﬀerent criteria, informed by stakeholder engagement and desk-based research. Risks that are deemed to be most signiﬁcant to the business will typically involve a critical asset, cause disruption to multiple assets, or aﬀect a large portion of our supply chain or customers. Signiﬁcant opportunities are those where we consider the business to be in a good position to realise the opportunity, either due to alignment of business strategy or low market competition. Where methodologies allow, we have sought to better understand the business impact from a selection of priority physical and transition impacts through the quantiﬁcation of potential ﬁnancial impact across diﬀerent climate scenarios. Risks and opportunities based on our business operations and market landscape to better understand the cause and consequence. Research on potential ﬁnancial impact pathways to select risks and opportunities that are feasible for quantiﬁcation. Potential ﬁnancial impact of transition risks and opportunities unmitigated and considering decarbonisation actions. Results of physical risk analysis into impairment testing, as well as in business continuity and risk management plans. Risk and opportunities identiﬁcation and qualitative assessment Quantiﬁcation of ﬁnancial impact Integration of climate scenario analysis in business processes Continued monitoring and refresh of assessments Identify risks and opportunities through cross-function engagement and climate scenario desk-based research on sector trends, policy and climate analytics. A qualitative climate scenario analysis to systematically assess all risks and opportunities across timeframes and climate scenarios. Potential ﬁnancial impact of physical risks unmitigated across climate scenarios out to the long term. Priority transition risks and opportunities into the strategic planning process. A robust and integrated approach to identify and assess climate risks and opportunities under the Environment and Communities Principal Risk. Perform climate scenario analysis periodically. Eﬀorts to identify longer-term actions required to meet net zero commitments and iterate Transition Plan accordingly. Develop our transition plan considering the key risks and opportunities and ensuring actions are taken to respond to these and contribute to a low-carbon and climate resilient economy. 62 Convatec Group Plc Annual Report and Accounts 2024 Strategic report Financial assessment methodology Physical risk This year, Convatec has refreshed its ﬁnancial assessment of potential losses associated with physical climate risk to include all manufacturing sites and apply the latest climate data projections. The forward-looking assessment modelled the potential impact of productivity loss and asset damage driven by various climate indicators which are categorised into the following hazards: ﬂood, wildﬁre, heat stress, storms, and water stress. The climate analytics are sourced from Climate Insights, a tool owned and developed by ClimSystems (part of SLR). The data from the Climate Insights tool shows the potential future change in climate variables based on global climate models (GCMs), using the scenarios described on page 64. The climate data provided is correlated to our business data, including building value and revenue generation, to provide an annual assessment of the potential value at risk (VaR) experienced from repair costs for asset damage, and revenue loss due to decreased productivity driven by the likes of employee eﬃciency and site closures. As such, it is not a forecast of potential annual costs or revenue losses but is a helpful indication of the potential impacts of physical climate change events which are likely to increase over time. The analysis does not consider any mitigation actions that the business has or would implement. We have considered the potential increase in losses over time, compared to exposure in 2024 as a baseline. We have presented this as the net present value of the cumulative cash ﬂow impact for the period 2024 to 2050, discounted at the Convatec WACC. The results are presented for the 50th percentile, indicating the ‘best guess’ on the potential impact under each scenario. To provide a ‘worst-case’ view for the purpose of ensuring appropriate risk controls we have not accounted for physical risk mitigation or adaptation measures that reduce our exposure. The updated climate variable data has resulted in an overall increase in the unmitigated potential ﬁnancial risk, which is due to enhancements to data models and methodologies used. Whilst the ﬁnancial values have increased, these ﬁgures are only indicative and our overall assessment outcomes in terms of site exposure to climate variables and the extent of this has not changed. Transition risk Our ﬁnancial assessment of transition risks has focused on the potential increases in costs of direct operations at our manufacturing sites – associated with energy prices and carbon taxes, as well as increases in costs from raw material suppliers – using carbon tax as a proxy. The potential impacts are determined for two business cases. A reference case where no further decarbonisation action beyond what is known and planned is taken, and a mitigation case where Convatec achieves its near- and long-term emission reduction targets. The climate-related information is sourced from the IEA’s World Energy Outlook which outlines current trajectories as well as the required level of policy action to limit global warming to 1.5⁰C b y the end of the century. This information is overlayed with our business data on projected energy consumption and emissions proﬁle to 2050. The projections on our energy and emissions correspond with the same data used for our net zero and transition plan modelling to ensure consistency and alignment in the level of investment required to mitigate risks, achieve targets, seize opportunities, and align with the low-carbon transition. As such, our long-term emissions projections have been updated. This reﬂects our decarbonisation pathway modelling, which highlights opportunities for greater reductions due to technological advancements and areas where we have signiﬁcant inﬂuence and control. The outcome provides a climate-adjusted view of cashﬂows. These are hypothetical absolute costs which could aﬀect the cost base of our operations in the future. To understand the potential downside, we have assumed a ‘worst-case’ and less likely scenario where our major operations (all manufacturing assets and material suppliers) are subjected to carbon pricing as a proxy to transition costs. Across the diﬀerent scenarios analysed, we used the price projections to inform the range in ambition level but assumed a start date of carbon tax impact in 2030 for our raw materials as there is uncertainty in the applicability and likelihood of suppliers being subject to additional transition costs that will be wholly passed on to us. 63 Convatec Group Plc Annual Report and Accounts 2024 Governance Financial statements Additional information Overview Strategic report TCFD disclosure continued Climate scenario modelling We assess identiﬁed climate-related risks and opportunities across a range of forward-looking climate scenarios to account for future uncertainty in regional mitigation and physical climate change. Our analysis draws upon multiple scenario sources that align with three broad scenario pathways, including Ambitious Policy, Middle of the Road and High Warming. By using multiple climate scenario sources, we can draw on a broader range of scenario indicators that help describe how future climate-related outcomes could impact the business. The selected climate scenarios and the underlying scenario data sources are described in the table below. In the risk and opportunity matrices (pages 65 to 67), we present the most signiﬁcant risks and opportunities identiﬁed and show the relative signiﬁcance of the potential impact over the short to long term and across three climate scenarios. Our climate scenario selection Ambitious Policy Scenario Middle of the Road Scenario High Warming Scenario Scenario storyline 1.5°C aligned scenario, where global CO 2 emissions are cut severely, with ambitious and gradual eﬀorts to limit temperature rise. Slow, less ambitious policy action or a time lag before sudden ambitious action. Emissions remain stagnant in the near term with notable shifts occurring between 2030 and 2050. Limited to no action, with society continuing along past trends and emissions increasing signiﬁcantly, resulting in extreme warming. Rationale for selection Analysis of a 1.5°C scenario is key to understanding our business’s compatibility with the commitments of the Paris Agreement. In addition, it allows us to consider how growing regulatory pressure on energy systems, directly on our operations and on our supply chains, may generate or exacerbate transition risks and opportunities. Analysis of a ‘middle-of-the-road’ scenario is useful for having a view that is consistent with the pace of current climate regulation but that anticipates that this may accelerate as we reach a point of inevitable policy response which could be disordered and aggressive due to the delayed nature. As temperatures are warmer, this scenario indicates the potential blend between signiﬁcant physical and transition risks. Analysis of a high warming scenario provides us with a view on the upper range of physical risk that might be expected, should climate action deteriorate or if the climate system is more sensitive to GHG concentrations than expected by current models. Temperature range outcome by 2100 1.3°C – 2.4°C 2.1°C – 3.5°C 3.3°C – 5.7°C Sets of climate scenario sources NGFS Orderly transition REMIND-MAgPie Net Zero scenario IEA Net Zero scenario IPPC’s SSP1-2.6 NGFS Disorderly transition REMIND-MAgPie Delayed Action scenario IEA Announced Pledges scenario IPPC’s SSP2-4.5 NGFS Hot House World REMIND-MAgPie Current Policy scenario IEA Stated Policies scenario IPPC’s SSP5 8.5 Our climate-related risks and opportunities described The identiﬁed risks and opportunities are grouped into four themes that represent the value chain and impact drivers: 1. Supply chain and raw materials used includes risks and opportunities related to material availability and price 2. Direct operations and processes includes risks and opportunities related to our manufacturing and day-to-day operations 3. Stakeholder expectations includes risks and opportunities related to corporate regulation as well as shifting requirements from suppliers, customers, investors and other stakeholder groups 4. Physical damage and disruption includes risks and opportunities related to changing weather conditions over time Risk and opportunity themes Ambitious Policy potential scenario impact Middle of the Road potential scenario impact High Warming potential scenario impact Supply chain and sustainable design Convatec will have access to sustainable materials but will face high competition to procure alternatives. Investment into R&D will increase quickly to adapt existing products and design new products that align with a transitioned economy. Convatec will be investing in its R&D of new products to use lower emission materials if available. Suppliers may increase their costs to Convatec over time, as they are faced with a surge in price due to transition policies. Sustainable and low emissions technology will be limited. Convatec will focus on creating lower emission products whilst still producing its current portfolio to meet customer needs. Direct operations and processes Direct operational costs will change, predominantly driven by the energy transition which brings volatility in purchase agreements. There is also the possibility of a global carbon pricing mechanism which puts a cost on our carbon emissions. Convatec will continue to decarbonise its operations and will experience a signiﬁcant demand for renewable energy, increasing competition and cost in 2030. Convatec would continue to decarbonise against its 2045 net zero target with no surge of eﬀorts required until 2045. Stakeholder expectations To comply with new climate policies set by governments and sectors, Convatec will need to increase its resources in sustainability management to meet regulatory requirements and show progress against ESG metrics and targets. Strict climate policies and targets are implemented suddenly, which require Convatec to comply quickly. This would result in a large request of resource and allocated capital. Convatec would have to comply with its existing climate targets and stakeholder expectations. Resource increase would be minimal as Convatec would move to a performance platform to measure success against ESG metrics. Physical damage and disruption The physical climate will not signiﬁcantly divert from the climate we experience today, as such Convatec sites will have low exposure to key climate hazards. Changes in climate would aﬀect Convatec’s high-exposure sites, resulting in expensive building repairs and insurance premiums. Convatec’s insurance may not be available in speciﬁc locations, increasing the potential exposure to losses and capital costs. Disruption in production would occur in high-exposure areas. All Convatec sites will experience high-frequency and high-damage events, with large expenses dedicated to building repairs and maintenance and making up for lost time in production disruptions. Production loss would be frequent, and customers may not want to continue their relationship with Convatec, if other suppliers demonstrate better resilience. 64 Convatec Group Plc Annual Report and Accounts 2024 Strategic report Climate scenario analysis results The table below identiﬁes the risks and opportunities which sit within each of the four themes (described on page 64). Relative risk impact Relative opportunity impact Scenario Time period Low Low A = Ambitious S = Short term (0–1 years) Medium Medium M = Middle of the road M = Medium term (2–5 years) High High H = High warming L = Long term (6+ years to 2050) In the table of results (below), we include both qualitative and quantitative ﬁnancial impact assessment results. The assessment score for each risk and opportunity is our qualitative assessment of the relative potential ﬁnancial impact to Convatec, showing how the impacts may vary over time and climate scenarios. The methodology of the qualitative assessment is outlined on page 62, and the quantitative assessment on page 63. To date, the quantitative ﬁnancial impact assessment has included the impact from physical risks at all key manufacturing assets and the potential costs associated with the low carbon transition on our material procurement and site operations. Supply chain and sustainable design The largest proportion of emissions in our value chain are derived from the materials Convatec uses, the majority of which come from petrochemicals. Exploring the feasibility of sustainable design options across our product portfolios and packaging, focusing on new product development, is an essential activity required to reduce the embodied GHG emissions and manage transition risks associated with a change in material availability and price. Risk/opportunity Assessment Risk/opportunity Assessment HIGHER SUPPLIER COSTS: Increase in price for purchased goods and services as suppliers transition costs may be passed on to Convatec. A S M L M H Scenarios Time ALTERNATIVE MATERIAL AVAILABILITY: Lack of opportunity for sustainable material alternatives and possible bottlenecks in advanced materials due to expected high demand. A S M L M H Scenarios Time PETROCHEMICAL RELIANCE: Period of increased competition for petrochemical- based materials as road transport demand for oil declines. A S M L M H Scenarios Time MATERIAL REGULATION: Regulation (e.g. taxes on single-use plastics) and sudden shifts in consumer perception of materials could inhibit the use of certain materials. A S M L M H Scenarios Time PRODUCT EFFICACY: Limited options to use sustainable materials without compromising product eﬃcacy, or restricted access to solutions if competitors patent designs. A S M L M H Scenarios Time SUPPLY DIVERSIFICATION: Lower emission materials may also increase diversity and resilience of supply, e.g. by reducing reliance on petrochemicals. A S M L M H Scenarios Time Financial impact The potential cost increase from raw material suppliers passing on carbon-related costs is expected to range $40m – $55m across climate scenarios. This represents the net present value for 2025 to 2050 assuming we achieve our net zero decarbonisation plan, refer to page 54 for calculation methodology. Management and resilience response We have created a supplier engagement strategy to increase the number of suppliers with green credentials to improve our use of sustainable materials. Our suppliers are encouraged to set an emissions reduction target and provide its annual emissions to Convatec to help strengthen our Scope 3 footprint and promote positive action through our suppliers. We are continuing the integration of the Green Design Guidelines and the associated digital product sustainability tool that calculates the emissions associated with materials used in Convatec’s product library and our packaging solutions to reduce our product’s emissions and environmental impact. In addition, we are collaborating across our industry and lobbying of governments, to drive innovation and identify sustainable solutions which support the decarbonisation of the sector while meeting the needs of patients. Strategic insights Suppliers face increased costs during transition to a low-carbon economy which increases procurement costs. This could impact proﬁt margins or result in a loss of sales if products are not priced competitively. Increased competition for sustainable materials, as well as lack of these alternatives, in addition to decline of petrochemical based materials, could result in material shortages. This may disrupt production and increasing investment in R&D, as well as costs to meet regulatory compliance for any product design changes. 65 Convatec Group Plc Annual Report and Accounts 2024 Governance Financial statements Additional information Overview Strategic report TCFD disclosure continued Direct operations and processes: In transitioning to a low-carbon economy, Convatec will be aﬀected by global and national policy interventions which will increase the cost of emitting carbon. While Convatec is not currently subject to global carbon pricing mechanisms, it may face a change in the cost of energy as well as restrictions on energy-intensive processes such as sterilisation. During the energy transition, there is uncertainty about how the supply of renewable sources will meet the exponential increase in demand, and Convatec could be faced with reduced availability of renewable energy or price volatility. Risk/opportunity Assessment Risk/opportunity Assessment ENERGY COSTS: Change and volatility in energy prices, increase the operating costs of direct operations. A S M L M H Scenarios Time CLIMATE INVESTMENT: Cost to invest in climate mitigation and adaptation of operations. A S M L M H Scenarios Time RENEWABLE ENERGY: Limited availability of renewable energy. A S M L M H Scenarios Time ENERGY EFFICIENCY: Implementing energy eﬃciency projects in oﬃces and manufacturing plants. A S M L M H Scenarios Time CARBON TAX: Increased pricing of GHG emissions applied to direct operations. A S M L M H Scenarios Time SELF-GENERATION: Investment in on-site renewable generations or power purchase agreement. A S M L M H Scenarios Time MANUFACTURING REGULATION: Increase in regulations that aﬀect our manufacturing processes. A S M L M H Scenarios Time HEAT DECARBONISATION: Decarbonisation of heat to reduce reliance on fossil fuels in manufacturing operations. A S M L M H Scenarios Time Financial impact The potential cost impact from changes to energy prices, renewable energy procurement and potential introduction of carbon pricing mechanisms is not expected to cause a negative ﬁnancial impact on our operational costs. This is due to our planned decarbonisation which minimises potential costs from carbon taxation mechanisms, whilst our procurement of low-carbon and renewable energy minimises the potential risk of higher prices from fossil fuels and impacts of volatility. We are aware that our decarbonisation plan requires upfront capital expenditure as described on page 53, and that there could be some ﬁnancial impacts from energy costs due to volatility and uncertainty during the energy transition. As such, we are committed to the continual monitoring of this risk. Management and resilience response We have decarbonised a selection of our sites through improved eﬃciency and renewable electricity procurement, as well as having installed on-site renewable energy at three manufacturing sites, and are currently procuring 95% renewable energy. Switching from natural gas to lower-carbon or renewable energy sources for heating will reduce Convatec’s exposure to future increases in the cost of consumption of fossil fuels and volatility of electricity prices. We plan to introduce a bespoke carbon price to use within capital allocation to support the investment direction towards projects that avoid GHG emissions or deliver GHG reductions. Strategic insights Convatec may experience an increase in operational costs associated with renewable energy procurement, changes to energy price driven by the expansion of global carbon pricing mechanisms, as well as large upfront costs to direct capital for decarbonisation initiatives. However, Convatec is dedicated to reaching its emissions targets by reducing its emissions across its manufacturing portfolio. Implementing eﬃciency measures and avoiding transition costs will achieve operational cost savings, which will help combat initial costs associated with investments in mitigation activities. 66 Convatec Group Plc Annual Report and Accounts 2024 Strategic report Stakeholder expectations: Convatec recognises that managing climate-related risks and opportunities is essential for delivering long-term value and building climate resilience. Stakeholder expectations on transparency, ambition level and performance against ESG and climate matters are evolving rapidly. REGULATION COMPLIANCE: Additional costs to comply with evolving regulations and exposure to climate-related litigation. A S M L M H Scenarios Time SUPPLIER RESILIENCE: Increase resilience in the supply chain to be able to better absorb climate-related shocks. A S M L M H Scenarios Time INVESTOR TRANSPARENCY: Increased investor concern and scrutiny over climate credentials. A S M L M H Scenarios Time USING CLIMATE DATA: Use of data to manage climate risk and seize opportunities. A S M L M H Scenarios Time CUSTOMER REQUESTS: Customers request greater climate ambition and transparency. A S M L M H Scenarios Time INDUSTRY COLLABORATION: Collaboration in industry and lobbying of governments to address climate impacts. A S M L M H Scenarios Time Financial and strategic impacts There is an increasing volume of legislation and reporting requirements which require appropriate resources to respond to and manage increasing stakeholder scrutiny. This could result in reduced access to capital or increased cost of capital may occur if investors switch to better climate-performing stocks. Stakeholder (including investors and customers) requests for climate information are rising, with high expectations on ambition, transparency of disclosure, and management of risks and opportunities. For example, the NHS has laid out a supplier roadmap to net zero, which sets out requirements to 2030, such as reporting progress against net zero and enhancing product-speciﬁc data. There is the potential impact on tenders if Convatec does not meet the ‘rules of engagement’. Customers may switch to alternative suppliers demonstrating accelerated climate action, resulting in sales and market share loss. Management and resilience response We are undertaking frequent reviews of investor priorities through consistent engagement to ensure Convatec meets expectations. This has involved reviewing performance and reporting on progress against environmental targets using ESG rating indices to indicate evolving investor expectations on climate performance. Convatec is continuing its investment, use and roll out of data management tools and software, e.g. increasing supplier engagement through EcoVadis and TransVoyant to reduce and monitor distribution costs and increase the eﬃciency of logistics to identify any hotspots that require additional attention to continue our progress. Physical damage and disruption: In the future, gradual climate changes and the increased frequency of extreme weather events will impact global value chains. While Convatec is aware of the physical climate hazards most prevalent across our manufacturing sites and can implement adaptation and control measures to reduce the risk, Convatec has less inﬂuence over how suppliers manage climate risk. DAMAGE AND PRODUCTIVITY LOSSES: Increase in repair costs, and loss of productivity at manufacturing sites due to extreme and gradual climate changes. A S M L M H Scenarios Time TRANSPORT DISRUPTION: Disruption in transportation both upstream and downstream due to extreme weather conditions. A S M L M H Scenarios Time SUPPLIER DISRUPTION: Delays in receiving goods or unﬁlled orders from suppliers disrupted by climatic events. A S M L M H Scenarios Time WATER EFFICIENCY: Reduce water intensity of operations. A S M L M H Scenarios Time Financial impact The potential additional ﬁnancial cost for repairs, maintenance and loss revenue from decreased productivity is expected to range $80m – $180m across climate scenarios. This represents the unmitigated net present value for 2025 to 2050, refer to page 63 for calculation methodology. Management and resilience response Convatec has site-speciﬁc dependency ﬂows and business contingency plans for each manufacturing and distribution location. We also have premium insurance coverage at our high-risk sites to cover major climatic events. Infrastructure investment is being made to mitigate potential climate-related business disruption, e.g., back-up generators at our plant in Mexico to address power disruption due to extreme cold weather in the US and additional drainage measures at our plant in Deeside, UK, to address ﬂood risk. We have implemented water eﬃciency measures, including replenishment initiatives, and are exploring alternative water sources at priority sites (especially those in high-water-risk regions, Haina and Reynosa). This will mitigate the potential impact of degrading water quality and water availability due to climate change. Strategic insights Increased costs to manage damage and disruption at manufacturing sites and relocation of operations could result in reduced product production, loss of sales, and an increase in insurance premiums. Disruption in upstream and downstream transportation due to extreme weather conditions, which, for example, may prevent travel on roads (snowstorms) or unloading/loading at ports (storms), would result in Convatec being unable to meet customer orders on time. 67 Convatec Group Plc Annual Report and Accounts 2024 Governance Financial statements Additional information Overview Strategic report Using ClimSystems’ Climate Insights data, as described on page 63, we have assessed our value at risk across a range of climate perils. This provides an initial view on the potential scale of unmitigated ﬁnancial risk related to damage and repairs as well as productivity losses. This view allows us to see what climate perils our manufacturing portfolio are most ﬁnancially exposed to, as well as which sites represent the greatest contribution to the unmitigated risk. This shows that our three largest manufacturing sites represent the majority of the ﬁnancial risk (85%) and our operations are most susceptible to heat stress, ﬂooding and storms. Actual impacts Convatec’s assessment of actual impacts is based on experiences across its manufacturing sites over recent years. This includes the closure of our plant in Haina, Dominican Republic, as a result of a severe tropical storm, and power disruption to our plant in Reynosa, Mexico, as a result of extreme cold weather. In both examples, our business continuity plans were implemented to carefully manage any impact on our business and the ﬁnancial impact was negligible. SIGNIFICANCE OF CLIMATE PERILS TO OUR MANUFACTURING SITES Reynosa 25% of total financial risk Memphis 5% of total financial risk Deeside 28% of total financial risk Rhymney 1% of total financial risk Osted 4% of total financial risk Michalovce 5% of total ﬁnancial risk 20% 22% 56% 1% 1% Key: Heat stress Flood Storms Water stress Wildﬁre Haina 32% of total financial risk TCFD disclosure continued 68 Convatec Group Plc Annual Report and Accounts 2024 Strategic report Resilience assessment The climate scenario analysis outcomes inform the assessment of both unmitigated and mitigated potential climate ﬁnancial impact which collectively provides a view on our overall climate resilience now and in the future. Climate resilience Our responses TRANSITION IMPACTS Our commitment to decarbonisation and the corresponding climate action signiﬁcantly reduces our exposure to potential net zero transition ﬁnancial impacts, and contributes to the achievement of our climate strategy. However, sector speciﬁc challenges (including the need to prioritise product eﬃcacy and adhere to lengthy regulatory review periods) limit the speed at which we can implement product related carbon reductions. We have quantiﬁed the ﬁnancial impact across climate scenarios for a selection of transition drivers, including raw material supplier pass on of carbon-related costs, energy prices, renewable energy procurement and potential introduction of carbon pricing mechanisms. The results support our view that the potential residual ﬁnancial impact from these indicative transition value drivers is within acceptable limits. – NET ZERO : Our net zero targets drive carbon emission reductions in the near and long term. – SUPPLIERS : Increasing the number of suppliers with green credentials, sustainable materials and emissions reduction targets. – PRODUCT DESIGN: Our Green Design Guidelines and the associated digital product sustainability tool calculates product material emissions. – PACKAGING: Investment in packaging solutions reduces our product’s emissions and environmental impact. – DISCLOSURE & TRANSPARENCY: We review our performance and report on progress using ESG rating indices and systems monitoring across our value chain e.g. CDP, supplier engagement through EcoVadis and TransVoyant to reduce and monitor distribution costs and increase the eﬃciency of logistics. PHYSICAL HAZARDS We believe Convatec is resilient to potential impacts under a range of climate scenarios, from those limiting global warming to 1.5°C to more extreme scenarios exceeding 4°C. Convatec’s physical risk exposure reveals varying levels of vulnerability across ﬁve key climatic hazards at our sites (see page 68). Understanding the potential ﬁnancial impact of physical hazards is critical to evaluating whether adequate controls are in place at our manufacturing sites. While our qualitative and quantitative climate scenario analyses illustrate the potential unmitigated ﬁnancial impacts, in practice, our established adaptation strategies and business continuity plans across our manufacturing sites mitigate potential disruptions (see page 67). – CONTINGENCY PLANS: Convatec has site-speciﬁc dependency ﬂows and business contingency plans for each manufacturing and distribution location. – INSURANCE: We have insurance coverage at our high-risk sites covering major climatic events. – ADAPTATION MEASURES: Infrastructure investment is being made to protect against climate-related events such as power disruption and ﬂood risk (see page 53). – WATER EFFICIENCY: Replenishment initiatives and alternative water sources at priority sites in high-water-risk regions, to mitigate degrading water quality and water availability. Climate change remains a cornerstone of our strategy, embedded within our ESG framework and business objectives, ensuring that we continue to manage risks and capitalise on opportunities in the transition to a sustainable future. 69 Convatec Group Plc Annual Report and Accounts 2024 Governance Financial statements Additional information Overview Strategic report TCFD disclosure continued RISK MANAGEMENT Identifying, assessing, and managing climate risks using a climate scenario approach Convatec has conducted a scenario based assessment of identiﬁed risks and opportunities, as described on pages 65 to 67. The staged approach to assessment means we have a foundational understanding of all identiﬁed risks and opportunities to reference to. This means that where, to date, we have not been able to quantify the potential ﬁnancial impact we still have a comprehensive assessment to reference. Our climate resilience assessment and responses to both transition impacts and physical hazards are set out in the table on page 69. Risk governance Climate-related issues are embedded within the Environment and Communities Principal Risk, reﬂecting Convatec’s strategic commitment to aligning with the net zero transition and integrating a low-carbon economy into our operations. The Board conducts a bi-annual assessment of Convatec’s principal risks, supported by CELT, the risk management team, and a network of risk champions across the organisation. This network ensures the continuous identiﬁcation, assessment, and management of key risks, as well as the implementation and monitoring of control measures throughout the year. Relevant members of CELT are accountable for owning and managing risks, maintaining the eﬀectiveness of internal control processes, and implementing robust risk mitigation plans. Oversight of the Environment and Communities risk is led by the Chief Quality & Operations Oﬃcer. Integration of climate in risk management Convatec’s approach to climate risk is fully integrated into our broader risk management framework, as outlined above. Beyond company-wide assessments, we conduct climate scenario analysis to ensure a comprehensive evaluation of climate issues over long-term horizons. Risks and opportunities are identiﬁed with consideration of the speciﬁc geographies, business units, functions, and assets aﬀected. Our risk management processes combine top-down and bottom-up approaches to inform decisions on controlling, mitigating, or accepting climate-related risks. The Environment and Communities Principal Risk sets the risk appetite, guiding the allocation of resources and investments. This principal risk is further reﬁned by bottom-up scenario analysis, which highlights the scale of potential impacts across timeframes and climate scenarios. Many of the measures we use to mitigate climate risks also present opportunities to strengthen resilience, achieve cost savings, and drive revenue growth. These opportunities align with our strategic commitment to the net zero transition. Each year, our strategic planning process deﬁnes the commitments and actions of each business unit to address key risks and opportunities and contribute to net zero alignment. Details on our current and planned responses to climate risks and opportunities are set out on page 69. We refresh our quantitative climate scenario analysis annually, using the latest business data. Additionally, we commit to updating our climate analytics for both qualitative and quantitative assessments at least every three years to maintain alignment with evolving conditions. CLIMATE RISK MANAGEMENT PROCESS Identify Assess and prioritise Quantify gross/net impact Risk tolerance determined Indentify controls and actions Function and category risk register Convatec risk register CLIMATE SCENARIO ANALYSIS CLIMATE RISK RESPONSE CLIMATE RISK REGISTER Climate key risk indicators RISK MANAGEMENT GOVERNANCE Board, CELT, ARC, Function leadership, Risk champions, Risk owners, ERM team, Internal Audit 70 Convatec Group Plc Annual Report and Accounts 2024 Strategic report METRICS AND TARGETS Convatec uses a range of metrics to assess our baseline environmental impact, focusing on four key areas: emissions, energy use, waste, and water. Monitoring performance provides critical insights and having associated targets ensures accountability and drives active management of climate impacts. Our commitments to minimising environmental impacts and supporting the low-carbon transition are detailed on page 54, along with the actions we are taking to achieve these goals. Using advanced tools and software, we identify the most signiﬁcant impact areas and their underlying drivers for decarbonisation. This analysis enables us to implement targeted solutions that address root causes and deliver the greatest environmental beneﬁts. TCFD Metric Category Metrics Target Unit 2023 2024 Link to climate-related risks and opportunities GHG Emissions Scope 1, 2 and 3 emissions. Reducing absolute Scope 1 and 2 GHG emissions by 70% by 2030 from a 2021 base year and Scope 3 GHG emissions from Purchased Goods and Services, Upstream Transport and Distribution, and Waste by 52% per sold product by 2030 from a 2021 base year. See carbon and energy performance table page 55 Our value chain emissions are a helpful indicator of our exposure to transition risks in our direct operations (Scope 1 and 2) and our supply chain (Upstream Scope 3), providing an indication on the carbon intensity and potential carbon costs pass through in our cashﬂows. Energy Energy consumption, and renewable sourcing. Aim to reach 100% renewable electricity throughout the estate by 2030. See carbon and energy performance table page 55 Increasing our consumption of renewable energy, and self-generation reduces our reliance on fossil fuels and exposure to volatility in the market during the energy transition. Climate risks and opportunities Review of qualitative and quantitative climate scenario analysis results annually to inform the appropriate response for priority risks and opportunities. Capital deployment Capital expenditure on carbon decarbonisation initiatives and adaptation activities. We have an estimated capex spend of around $20-$35 million over the next ﬁve years. $m $10m $4m The allocation of ﬁnance and resources to climate mitigation and adaptation ensures that we minimise our risk exposure and limit the potential impact of risk to the business, whilst being able to beneﬁt from climate-related opportunities. Remuneration Proportion of overall CELT bonus remuneration linked to sustainability performance. Continued implementation of climate in remuneration policies. % 5 5 Linking climate KPIs as part of the ESG objectives of CELT members helps to cascade sustainable behaviours across the organisation, which means we are more likely to achieve our climate commitments and meet stakeholder expectations. 71 Convatec Group Plc Annual Report and Accounts 2024 Governance Financial statements Additional information Overview Strategic report Risk management Understanding and managing our risks maximises potential opportunities to deliver our strategy and realise our vision Risk culture The Board is responsible for risk management. The Board promotes a transparent and accountable culture, which does not inhibit sensible risk- taking, critical to growth and delivery of the Group’s vision and strategy, but also sets the boundaries for such risk-taking. The Board and its committees set the tone for CELT and other senior management to promote and cascade this culture through the Group and with external stakeholders. The Board, its committees and CELT ensure that our risk management framework and systems are robust, eﬀective and take account of appropriate exposures. The Board supports eﬀective risk management across the Group by implementing and overseeing a framework of appropriate and eﬀective controls that enable risk to be assessed and managed. The risk-related responsibilities of the Board’s committees Audit and Risk Committee (ARC) Monitors and reviews all risk management processes, including the eﬀectiveness of risk identiﬁcation, appetite, mitigation and control measures. Nomination Committee Oversight to ensure that the Group has a talented, diverse and eﬀective Board and CELT, combining extensive corporate experience with knowledge of our markets and regulatory environment, as well as a pipeline of future senior talent capable of identifying and managing risk to enable eﬀective strategy delivery. Remuneration Committee Oversees the implementation of appropriate reward arrangements to drive a high-performing culture that manages risk in line with our risk appetite. Our risk appetite The Board sets the level of risk we are prepared to accept to deliver our strategy and realise our vision. In 2024, we formally reviewed our risk appetite and the risk tolerance levels of each principal risk. Our risk appetite is deﬁned through four risk appetite statements, which are detailed on this page, and each principal risk is aligned to one of the four statements, with risk tolerance levels set in line with the current and forecast business environment. On an ongoing basis, the ARC monitors the level of risk to which the Group is exposed and how the business continues to mitigate the risk and operate within the stated risk appetite levels. In 2024, we enhanced our risk appetite model through implementing identiﬁed group-level metrics (key risk indicators) to measure actual business performance against our agreed risk tolerance. In 2025, we will continue to enhance the governance over each principal risk by developing our assurance over key material controls. These additional enhancements further support the Group to operate within our risk appetite, and as a management tool for business decision making. Board risk appetite statements Seek Risk is taken in order to choose strategic options that oﬀer potentially higher business rewards and/or there is conﬁdence in the level of robust systems of internal control to respond eﬀectively and limit the duration of potential impact. Accept Risks that arise from events that are outside realistic boundaries for Convatec’s immediate direct inﬂuence and control. A focus is required to build a reasonable level of resilience to impacts on strategic objectives. Manage Risk is accepted by Convatec in order to achieve strategic objectives, and where the risk is able to be managed to a level that would not result in material impact to strategic objectives. Cautious Risks arising from Convatec’s people, processes, and systems that are controllable and where there is no appetite for risk taking in this area. The objective is to eliminate the risk or to reduce it to an absolute minimal level of tolerance. Managing our risks Strategic enterprise level Operational exposure management Board risk appetite statements Business risks and tolerance Articulation into principal risks RISK MANAGEMENT FRAMEWORK 72 Convatec Group Plc Annual Report and Accounts 2024 Strategic report Governance and oversight The work of the Board and the ARC is underpinned by a formal structure of delegated authority and supported by Group policies covering key areas of operation, including risk management. The diagram below shows the key roles, responsibilities and overall arrangements for collecting, monitoring and reviewing risk information. Risk management framework We continue to strengthen our risk management approach through the development of a process that is based upon ISO 31000, Risk Management, and complies with the requirements of the UK Corporate Governance Code. Our process undertakes a continuous bottom-up review of risk (current and emerging), across each area of our business, to identify the main threats to delivery of our strategy. The resulting business risk proﬁle is used to inform our biannual principal risk update process, working with subject matter experts from the business and supported by CELT sponsor(s). We identify, assess and prioritise our business and principal risks in accordance with our deﬁned risk assessment criteria. Risk ratings are used to prioritise our risks and are a product of the expected impact and the likelihood of that impact to occur as a result of an event. Risk controls have been identiﬁed and certain additional risk mitigation measures implemented and monitored to further reduce our risk exposure and ensure alignment with our risk appetite. Consequently, this process results in our principal risks being managed at the residual risk level rather than inherent risk. The ARC oversees the risk management process each quarter. For further information see page 108. Board – Sets the Group’s risk appetite – Ensures appropriate risk management and internal control frameworks and systems are in place to enable the identiﬁcation and robust assessment of the principal and emerging risks – Ensures eﬀective processes exist to manage the principal risks and takes a balanced view of those risks against Convatec’s strategy and risk appetite – Assesses the Group’s prospects and resilience through the Viability statement – Sets the ‘tone from the top’ and the culture for managing risk – Sets strategic priorities in light of the Group’s risk proﬁle Audit and Risk Committee (ARC) – Considers the risk environment through reporting from management, internal audit and the external auditor and considering external developments (e.g. geopolitical events) – Reviews, and reports to the Board on the eﬀectiveness of the internal control environment and risk management framework and systems – Sets the internal audit annual plan and external audit scope to provide assurance on a materiality basis that the Group operates within the Board’s approved risk appetite through appropriate and eﬀective controls and mitigations Convatec Executive Leadership Team (CELT) – Sponsors a coordinated approach to establishing and embedding enterprise risk management – Employs a central risk team to establish and facilitate the risk management process across the Group to provide risk information for management oversight and decision – Manages the principal risks appropriately to operate within the Group’s risk appetite and monitors appropriate key risk indicators – Ensures that risk recognition and appetite are integral to determining strategy – Delivers strategy by managing risks Leadership teams – Identify new and emerging risks to the Group’s strategy – Review management of their speciﬁc risks against the Group’s risk appetite – Identify additional mitigations to reduce risk exposure on an ongoing basis – Manage business performance in accordance with the key risk indicators – Assign senior business representatives (risk champions) for each category and function to take a lead role in the identiﬁcation of risk, and updating risk information for senior management oversight Principal risks: Risks with potential material consequences at a Group level or where the risk is connected and may trigger a succession of events that, in aggregate, become material to the Group. Risks may materialise individually, simultaneously or in combination to impact the delivery of our strategic priorities and the long-term value of Convatec. Business risks: Risks identiﬁed from any aspect of the Group that are relevant to one or more categories, functions and/or Centres of Excellence, and can be owned at that level. Emerging risks: Risks with potential material consequences at a Group level as a result of changes in the business environment that may impact over a longer timeline than that of the current business objectives. Emerging risks may materialise individually, simultaneously or in combination with other risks in one or more areas of the business to impact the delivery of our strategic priorities and the long-term value of Convatec. Risk information top down Risk information bottom up Strategy and objectives Risk analysis Risk reporting Monitoring and challenge Risk response Tolerate Treat Terminate Transfer Risk identiﬁcation Risk description Risk assessment Risk categorisation 73 Convatec Group Plc Annual Report and Accounts 2024 Governance Financial statements Additional information Overview Strategic report 2024 risk landscape Our overall risk proﬁle has moved to reﬂect both the ongoing enhancement in our business resilience capability and the continuing challenges from the macroeconomic and political environment. Since 2020, the risk proﬁle has been elevated as a result of various global forces, and we continue to manage the challenges facing the wider business landscape and build further resilience into our operations. As such, we remain well placed to successfully deliver our strategy. To support our objectives and mitigate speciﬁc external events we increased our focus in certain areas as detailed below. Strategic risks In 2024, we continued to build momentum whilst managing the broader risk landscape. This included operating within changing macroeconomic and supply chain conditions, continuing global uncertainties from the wars in Ukraine and the Middle East and any continued or additional impact from geopolitics, in a year of national elections, on regulatory and healthcare reform. In our product development pipeline, we successfully delivered four key products and services to our target markets and continue to improve pipeline delivery through our deﬁned innovation framework. Our focus on ESG continues to gain momentum as we develop our transition plan to deliver our net zero commitment. Operational risks While inﬂation lowered signiﬁcantly over the year, we continue to manage sustained external supply chain cost pressure on raw materials, freight, utilities and all other aspects of the business cost base. The business continues to eﬀectively manage and respond to the issues faced, increase operational productivity, execute an eﬃciency agenda and work closely with third parties on potential areas of exposure to minimise any possible impact, including through maintaining suﬃcient levels of strategic resilience in our inventory holding. We focused work on delivering our people programmes that support the right level of key talent, roles and skills being in place to achieve our strategic objectives now and in the future. We remain focused on ensuring that our diversity goals are met sustainably, reﬂecting the customers, countries and cultures that we serve; and, that we are contemporary to social movements and issues. Over the course of 2024, we have further improved the robustness of our IT infrastructure and cybersecurity in line with the changing business environment. Financial risks During 2024, we demonstrated strong performance across the business with robust organic revenue growth and margin expansion as a result of our dynamic competitive position and portfolio mix across and within categories, delivering simpliﬁcation and productivity initiatives through improving business cost eﬃciencies and undertaking new business acquisition to strengthen market capability. Driven by our Strategic Pricing Centre of Excellence (CoE), improving Group pricing practices has continued to positively impact our strong ﬁnancial performance. We also focused on developing our Global Marketing & Sales CoE to further improve commercial, sales and marketing productivity. We received a US market determination for our Advanced Wound Care solution, InnovaMatrix ® , that withdrew its Medicare coverage for speciﬁc treatments. We continue to build clinical evidence as part of the reconsideration process and are conﬁdent of success in our reapplication. Our overall group performance for the year and outlook for 2025 is unchanged by this event. We continue to maintain a strong balance sheet, banking and credit facilities and level of tax governance to reﬂect our robust credit standing. Compliance risks Over the course of 2024, we strengthened and adapted our compliance framework sustainably as we grew in mature markets and targeted investment in emerging markets. We maintained ongoing compliance in our markets, including the continued provision of ethics training and focused global compliance resources and initiatives. We continued to improve the robustness of our data management and privacy framework in line with the changing business environment. During the period, we identiﬁed exposures and addressed risks of non-compliance through implementation of appropriate mitigation programmes. We have continued to progress improvements in our third-party risk management and contract procurement to maintain expected standards of compliance within our third-party partners. Third-party activity is monitored and managed through due diligence by our Compliance team and an external, independent expert. 2025 anticipated risks We expect certain risks to impact in 2025 and have put in place mitigation measures to reduce any adverse implications for the Group’s ﬁnancial results, operations, reputation and strategy. While these speciﬁc risks are embedded in many of our principal risks, further details are provided as follows. Geopolitical tensions Volatility in the international political climate increases pressure on our operations. We are reliant on supply chain partners predominantly in North America and Europe, but also from across the world. The integrity of our supply chain depends on access to and the reliability of raw material and energy supply and the storage, logistics, processing and manufacturing infrastructure operated by us and our third-party partners. The current international political climate presents increased possibility of commodity and energy price volatility, unpredictable populism, isolationism, interventionist economics, transactional globalisation, unstable exchange rates, implementation of additional sanctions or other trade limiting actions that could impact our ability to source commodities and raw materials, or maintain a presence in current and future markets and countries. Any break in this supply chain, for example, as a result of interstate conﬂict, regional tensions or terrorist activity, including acts and threats to shipping channels or cyber-attacks, or as a result of heightening operating costs, could jeopardise our revenues and/or manufacturing productivity and impact supply to customers and patients. Global macroeconomic pressures Our operating and ﬁnancial performance is inﬂuenced, amongst other factors, by the economic conditions of the countries and markets in which we operate, and our ability to manage exposure to volatile economic measures. Pressure from economic deterioration, the persistence of inﬂation, interest rate uncertainty, recessionary impacts and the additional challenge of transitioning to lower carbon generation can all contribute to challenging market conditions. Global economic conditions have broadly continued to improve, but we remain focused on delivering simpliﬁcation and productivity through eﬃciencies to our manufacturing and operating cost base in response to the environment and the reality of delivering, and the required investment to achieve, net zero. Whilst the management of our supply chain is a core competence, we continue to monitor the evolving situation and take appropriate steps to prepare for foreseeable challenges in the current environment over persistent inﬂation on commodities, lead times and shortages for raw materials and manufactured goods, potential tariﬀ reforms, ﬂuctuations and adverse movement in shipping costs, congestion and capacity constraints, which are all expected to have continued uncertainty into 2025. Risk management continued 74 Convatec Group Plc Annual Report and Accounts 2024 Strategic report FISBE market growth and product delivery We continue to focus on investing in and growing market share across our FISBE markets around the world. We support the business in achieving this through developing critical core capabilities in our Global Marketing & Sales, Global Market Access & Reimbursement, Medical & Clinical Aﬀairs and Strategic Pricing CoEs. The external climate continues to be challenging as a result of national healthcare systems’ ﬁnancial constraints and reforms, and regulatory pressures as seen more recently in the ongoing impact of the market-wide Anti-Bribery and Corruption campaign (ABAC) in China. The capabilities within our dedicated global CoEs allows us to focus and respond to these market and geographical movements and resultant pressure on our future pricing and reimbursement rates. We expect to launch a new product for Ostomy Care and leverage recent product launches by rolling them out in key geographies in 2025. We expect to continue launching new products across all of our categories into 2026 and beyond. Delivery of our product pipeline is supported by our product development and launch process, which acts end-to-end to govern our actions and milestones from ideation through development to scale-up and ﬁnally approval and launch in a consistent manner. We will continue to also strengthen our competitive position by evaluating potential partnerships and acquisitions. Any delays or failure to meet market expectations in our growth plans, however, may result in a lack of stakeholder conﬁdence to deliver against stated plans. Emerging risks On a biannual basis, our risk management process engages with senior management to identify any emerging risks, which represent a signiﬁcant change in the business environment that may impact over a longer timeline than that of the current business objectives. In 2024, we continued to enhance our emerging risk model to further develop our measurement of the key exposures and the resilience in place. In 2025, we will develop this model further to enhance our measurement of these key exposures, the resilience in place and identify relevant metrics to aid with detection. As at the date of this report, the following emerging risks have been identiﬁed: Medical advances Technology and innovation are essential if we are to meet customer demands. If we do not develop the right products, have access to the right technology or deploy it eﬀectively within our FISBE markets, or adjust to medical and surgical advancements and improvements in detection, cure and prevention (including in the development of smart ‘artiﬁcial device’ technology, the emergence of new drugs to treat chronic conditions and artiﬁcial intelligence), we may lose market share in multiple FISBE markets to existing and new-entrant competitors. Future material and operational restrictions Our future business is dependent on our ability to anticipate and/or adapt to future health, safety and environmental legislation, concerns, studies or the loss of stakeholder conﬁdence in the materials and processes used in the manufacture of current and future products, or where there is a proven greener alternative, for example, to single-use plastics. Long-term third-party management Our current and future products rely on regulated manufacturing processes and approved supply chains. We are dependent on our ability to eﬀectively manage the security of supply in our key raw materials and unﬁnished goods, critical services and manufacturing energy supply to avoid any future chronic sourcing issues/cessation in service by single or sole source suppliers for key product lines. Future market environment Our ambition to drive growth and further develop our business is reliant on our ability to adapt to future market and healthcare models, market competition and major unforeseen economic events. The value of customer data and the emergence of artiﬁcial intelligence has increased. Any shortfall in our ability to adapt to an increase in the management of customer data, expanding data commercialisation capability and technology and widening range of virtual capability allows for potential disintermediation and/or bundling of other products and services by emerging, non-traditional, competitors entering the market. Catastrophic loss risks After an extended period of external major global, industrial and ﬁnancial catastrophes, we had a growing need to enhance our risk management framework to meet the unpredictable and dynamic challenges that we may face moving forward. In 2024, we implemented a formal strategy to review high impact, low likelihood risks (catastrophic loss risks) and move towards a resilience model for the business to operate within. Preventing, preparing and responding to catastrophic loss events in a considered manner and ensuring that when events do occur the business emerges more resilient from the experience is a critical activity. Improved visibility should allow for greater challenge and assurance that the business is resilient and prepared for such events and will also strengthen our ability to properly consider the severe but plausible scenarios used in building our long-term Viability statement (pages 82 and 83). Risks can be assessed through careful crisis management planning as part of a wider resilience framework to maintain the support and conﬁdence of stakeholders, but the costs of risk mitigation will need to be considered to ensure any measures are proportionate to the risk faced. On a biannual basis, our risk management process engages with senior management to identify any catastrophic loss risks, which are deﬁned as low-likelihood risks (derived from our principal risk model) that lie outside the realm of regular expectations; however, carry an extreme impact, which in some cases were perhaps predictable. As at the date of this report, areas in which we have identiﬁed catastrophic loss risk scenarios are grouped as: Pan-global risks Worldwide events aﬀecting the Group indirectly and that sit largely outside of our control, such as global ﬁnancial crises or major health events. External threats External events that directly aﬀect the Group and that we have a degree of control over, such as major climate events, man-made environmental disaster, sustained public utilities failure, major loss of IT systems or a complete loss of critical national infrastructure. Internal threats Internal events that directly aﬀect the Group and that we have a degree of control over, such as a complete loss of one of our major assets, major product quality failure, key loss of part of our supply chain, or a severe market conduct incident. We support this area of risk by working with senior leadership across the business to run crisis management exercises. In 2024, we ran a signiﬁcant product recall scenario, with senior leadership and CELT, to enhance our preparedness and resilience within the business. Other factors For further information relevant to our risk proﬁle see: – Our business model – page 8 – Key performance indicators – pages 12 and 13 – Operational review – pages 14 to 21 – Responsible business review – pages 32 to 59 – The Task Force on Climate-related Financial Disclosures – pages 60 to 71 – Viability statement – pages 82 and 83 – Governance – pages 84 to 148 75 Convatec Group Plc Annual Report and Accounts 2024 Governance Financial statements Additional information Overview Strategic report Principal risks An overview of our principal risks, which could impact the delivery of our strategy and the realisation of our vision, is given below in order of priority. The Board has oversight of all principal risks that the Group faces The Board reviews and agrees our principal risks on a biannual basis, taking account of our risk appetite and key risk indicators together with our evolving strategy, current business environment and any emerging risks and catastrophic loss risks. The Board also takes account of the eﬀectiveness of our risk mitigation and controls. Our principal risks are set out over the following pages in order of priority (based on the rating of residual likelihood and impact, as described previously). They are also reﬂected in the key adverse scenarios underlying the Viability statement (see pages 82 and 83). We have removed our principal risk relating to Tax and Treasury. At the year-end review, Tax and Treasury was not assessed as having a high residual impact or likelihood but still underpins and is material to the delivery of the Group’s strategic objectives. We have successfully implemented structural changes, controls and risk mitigation to our ﬁnancial and tax frameworks and systems that have demonstrated, during a period of volatile uncertainty, a good track record of robust ﬁnancial performance, credit standing and governance over reporting obligations and disclosure. We will continue to actively assess and monitor the remaining risk exposures and drivers. We do not, however, forecast any material issues in this area over the next three years (reﬂected in the Viability statement) as we have limited tax uncertainties and a robust ﬁnancial balance sheet with no debt maturities due until 2027. Risk heatmap The graphic below summarises our assessment of the expected impact and the likelihood of that impact to happen as a result of our principal risks occurring after taking into consideration the mitigating actions and eﬀective controls in place to manage each risk, with an indication of the change in the risk proﬁle since December 2023. KEY 1. Operational Resilience and Quality 2. Customer and Markets 3. Cyber and Information Security 4. Political and Economic Environment 5. Innovation and Regulatory 6. Legal, Compliance and Privacy 7. People 8. Environment and Communities Risk category: Strategic Operational Financial Compliance Increased Unchanged Decreased Impact Likelihood 1 2 3 5 4 6 7 8 Understanding our risks 76 Convatec Group Plc Annual Report and Accounts 2024 Strategic report 1. OPERATIONAL RESILIENCE AND QUALITY Risk Supply and manufacture of products and packaging are reliant on the resilience of supply chain partners and manufacturing assets, and robust clinical and quality system processes. We invest in and develop our assets, systems and processes to provide a level of operational integrity and performance. Failure to respond to events, including geopolitical issues and any increase in extreme weather patterns from climate change, that result in production and/or supply chain delays, adverse product quality and health, safety and environmental incidents could result in underperformance, a requirement to recall a product, reputational harm or a loss of stakeholder conﬁdence in our ability to deliver our strategic ambitions. Risk details Key risk indicators Opportunity Risk profile change Category: Operational Appetite: Manage Accountability: John Haller, EVP, Chief Quality & Operations Oﬃcer – Lost time injury rate – Operations gross productivity Increase the eﬃciency and eﬀectiveness of operations to support future market and customer demands. 2024: decreased – further strengthening and investment in operational resilience and advancement of simpliﬁcation and productivity initiatives. Key drivers Risk mitigation – Supply chain resilience capabilities – Single source or sole suppliers for raw materials and services – Business continuity management – Quality standards and resolution of existing and emerging quality issues within the supply chain, manufacturing and packaging processes – Health and safety of employees and contractors. Protection of the environment – Maintaining manufacturing plant performance – Operational strategy in place to continuously enhance our operational resilience response to external factors. Business continuity plans for manufacturing facilities, inventory movement and our key supply chain processes to maintain capability to respond rapidly and appropriately to incidents – Procurement and supply chain processes to monitor, manage and provide assurance to supply-based risk across our markets, inventory, energy security, key suppliers and supply routes, ports and countries of operation – Dedicated health, safety and environment, and quality project teams, management systems and processes to prioritise and address risk to manufacturing processes, facilities and people How the principal risk links to: Strategy Key stakeholders see pages 36 and 37 ESG topics Viability statement Important to groups within: – Customers/patients – Direct enablers – Evaluators Aligns with issues within: – Products & customer – Environmental – Social – Governance Considered in scenarios: – Manufacturing incident – Business interruption – Cyber incident – Regulatory issue Read more on pages 32 to 71 2. CUSTOMER AND MARKETS Risk Growth and value in our markets rely on our product portfolio, future innovation, M&A pipeline and digital strategy delivering to expectations and meeting customer demands, in-line with our commercial policy. There is continued pressure on pricing and cost containment from global inﬂation rates and large and consolidating buying groups, as well as on reimbursement rates for products sold into the home care setting from government or commercial payers managing and reducing their costs. Competitor behaviour, attractiveness and eﬀectiveness of our portfolio to market trends or public perception, and maintaining a low-cost base, all increase competition for sales and reduce prices and margins. Failure to identify, react or plan eﬀectively to changes in market conditions, competition, customer demand, expectations and behaviours or a deterioration in counterparty exposure, cash-ﬂow and liquidity could result in suboptimal decisions, underperformance and adverse results. Risk details Key risk indicators Opportunity Risk profile change Category: Financial Appetite: Manage Accountability: Presidents and Chief Operating Oﬃcers – Customer net promoter score – In-market sales growth versus segment Grow portfolio and market share through cost-eﬃcient, innovative products that strengthen the relationship with our customer base. 2024: increased – global economic challenges continue to pressure healthcare systems’ ﬁnancial constraints with potential eﬀects on future pricing and reimbursement rates. Key drivers Risk mitigation – Local or national government healthcare budget provisions impacting reimbursement – Operational, contracting and price review process – Competitive markets and behaviours and consolidation of buying groups – Manufacturing costs in a low-margin driven pricing environment and as a result of changes in consumer and government behaviour/attitude to sustainability – Changes in customer buying patterns and service level expectations – Product portfolio rationalisation. Strategic M&A and divestures realisation – FISBE market and geographies focus supported by the Global Strategic Pricing CoE established in key regions to adapt and provide insight to changing market conditions, with regular pricing analysis and reviews undertaken. Global Market Access & Reimbursement CoE focus on reimbursement market rates – Executive operational reviews in place to drive manufacturing cost eﬃciencies and focus through dedicated R&D and technology innovation teams on new product development and launch. Digital strategy capability for patient and customer interaction and voice of customer processes in place. Clinical trial capability and programme in place – Key strategic market and geographies monitored and in-market activity and environment assessed for further growth opportunities. Supply chain team manages and mitigates market and region challenges and logistics How the principal risk links to: Strategy Key stakeholders see pages 36 and 37 ESG topics Viability statement Important to groups within: – Customers/patients – Direct enablers – Evaluators Aligns with issues within: – Products & customer Considered in scenarios: – Reimbursement reduction – Key global markets Read more on pages 14 to 21 77 Convatec Group Plc Annual Report and Accounts 2024 Governance Financial statements Additional information Overview Strategic report 3. CYBER AND INFORMATION SECURITY Risk Eﬀective operation of our global business relies on the resilience of our technology systems, network and information management processes. Failure to ensure that our systems, data management and related controls are eﬀective, available, integral and secure, and recoverable, including those of our third-party partners, could adversely aﬀect our ability to maintain continuity in our operations and the trust of our customers and other stakeholders. Any real or perceived failure to comply with standards, laws and regulations, or to adjust to a change in conditions and increase in scrutiny, could result in adverse consequences such as penalties, regulatory investigation, a decrease in corporate trust from stakeholders or additional compliance measures. Risk details Key risk indicators Opportunity Risk profile change Category: Operational Appetite: Manage Accountability: Jonny Mason, Chief Financial Oﬃcer – Security incidents – Vulnerability patching Enhance the eﬃciency and resilience of our IT and data management systems and processes to support eﬀective delivery of our operations. 2024: no material change – privacy moved to Legal, Compliance and Privacy to reﬂect CELT accountability. Key drivers Risk mitigation – Cybersecurity – IT and network resilience, business continuity and disaster recovery arrangements – Digitisation – IT network alignment to business needs – Internal IT control – Data optimisation – Cybersecurity steering committee provides risk governance and oversight. Global Information Security and Compliance function supports the business with an IT general control framework and technical benchmarks in place to protect systems and data. Independent cyber assessment and data review programme in place – Critical IT system recovery plans, overarching IT recovery plan and backup solutions have been designed. Third-party partner contracts with controls and assurance in place – Security operations team respond to threats and ensure the security of IT. Policies, technical standards, guidance documents and workforce training in place to manage the use and governance of IT systems. Cyber threat monitoring in place across IT systems How the principal risk links to: Strategy Key stakeholders see pages 36 and 37 ESG topics Viability statement Important to groups within: – Evaluators Aligns with issues within: – Governance Considered in scenarios: – Cyber incident Read more on pages 83 and 108 4. POLITICAL AND ECONOMIC ENVIRONMENT Risk Our global operations and markets are subject to political interventions and changes to corporate governance requirements, particularly in relation to global inﬂationary and supply chain pressures, ﬂuctuations in interest rate and foreign exchange movements, security of raw material and energy supply, healthcare system reform, regulatory reform, governance of industry operations, amendment to tax and disclosure regimes and ﬁscal terms, and protection of consumers and business customers. Continuing volatility in the international political climate increases the possibility of tariﬀ structure changes, sanctions or other trade limiting actions. Failing to identify and adapt to these factors could impact sourcing commodities and services, ﬁnancial performance and our ability to maintain a presence/develop in current and future markets and countries. Risk details Key risk indicators Opportunity Risk profile change Category: Strategic Appetite: Accept Accountability: Jonny Mason, Chief Financial Oﬃcer – Sales growth – G&A Eﬀective minimisation of political and macroeconomic disruption will enable us to identify areas for operational improvement, deliver further value and maintain our competitive market positions. 2024: no material change. Key drivers Risk mitigation – Financial markets, inﬂationary and supply chain pressures and macroeconomics – National healthcare reforms, political movements and trends – Geopolitics and security of the supply chain. Uncertainties eﬀected by global pandemics, interstate conﬂict and social unrest aﬀecting FISBE markets – Adverse national trading relationships, customs duties and tariﬀs – Compliance with sanction frameworks – Responsible and sustainable group performance to retain stakeholder conﬁdence and maintain perception and expectations – Strategic Pricing CoE established in key regions provides control on local and regional pricing. Compliance, IR, Legal, Regulatory and Tax teams support the business, liaise with external stakeholders and respond to changing requirements where appropriate – Global supply chain function manages our presence in markets and across regions. Third-party contracts in place to maintain the security of supply. Monitoring of supply chain through implemented systems and third-party partners – Dialogue with governments in relation to speciﬁc matters. Membership of appropriate industry bodies and participation on industry issues including development and implementation of best practice. External support via third-party logistic service providers and consultants to identify and manage supply chain risks How the principal risk links to: Strategy Key stakeholders see pages 36 and 37 ESG topics Viability statement Important to groups within: – Direct enablers – Evaluators Aligns with issues within: – Products & customer – Governance Considered in scenarios: – Reimbursement reduction – Key global markets Read more on pages 2, 3 and 5 Principal risks continued 78 Convatec Group Plc Annual Report and Accounts 2024 Strategic report 5. INNOVATION AND REGULATORY Risk Failure to invest in and develop safe, eﬀective, proﬁtable and sustainable long-life products to meet customer and market expectations, ﬁll unmet medical needs or respond to disruptive new technologies, could result in lost market share, underperformance and a lack of stakeholder conﬁdence to deliver in line with expectations. We are subject to oversight by a number of regulatory jurisdictions that continue to implement signiﬁcant obligations and scrutinise how we operate. Failure to fulﬁl emerging obligations, provide safe clinical processes, or produce products and packaging that meet stringent and transparent customer, environmental and performance criteria, or operate inadequate or environmentally inappropriate manufacturing and quality systems could impact our ability to supply or a requirement to recall product(s). This may lead to the potential for regulatory action and/or liability claims, a failure to meet stakeholder expectations or patient harm from faulty products. Risk details Key risk indicators Opportunity Risk profile change Category: Strategic Appetite: Cautious Accountability: Dr Divakar Ramakrishnan, EVP, Chief Technology Oﬃcer and Head of Research & Development – Vitality index – Customer complaints per million units Create a leading and responsive position in the regulatory environment, and through a sustainable development pipeline, improve the long-term customer experience, meet market demands and capture growth opportunities in our markets. 2024: no material change. Key drivers Risk mitigation – Product innovation transition from end-of-life technology and ageing products – Compliance with regulatory frameworks and anticipation of emerging regulatory environment – Disruptive and new technologies. Artiﬁcial intelligence. Changing customer and market needs – Maintaining legal manufacture structure, authorised representatives and assurance process for pre-market, manufacture, and post-market compliance – Managing safe clinical services for sustainable growth – Sustainable approach to responsible products, packaging and development – Central Technology & Innovation team provides strategic direction for continued R&D investment, product development, medical education, regulatory approval, M&A initiatives and new product reimbursement and launches to cultivate the product pipeline – Product portfolio reviews, with Executive oversight, provide oversight on near-, medium- and long-term innovations and the balance across product categories and market regions. Product ‘sustainability’ metrics in place – Regulatory teams and regulatory intelligence framework supports the business to meet the latest standards and expectations in all our jurisdictions and manages our relationship with regulatory bodies How the principal risk links to: Strategy Key stakeholders see pages 36 and 37 ESG topics Viability statement Important to groups within: – Customers/patients – Direct enablers – Evaluators Aligns with issues within: – Products & customer Considered in scenarios: – Regulatory issue Read more on pages 39 to 43 6. LEGAL, COMPLIANCE AND PRIVACY Risk Our business is subject to a complex environment of laws and regulations across multiple jurisdictions. Any real or perceived failure to comply with required and/or new and emerging laws, regulations and sanctions or to adjust to a change in conditions and increase in scrutiny, or exposure to litigation from contractual obligations or intellectual property could result in adverse consequences such as penalties, government investigation, a decrease in corporate trust from stakeholders, competitive disadvantage or additional compliance measures. Loss of data management and privacy integrity can lead to IP and data theft, fraud or accidental disclosure and result in non-compliance with global data protection laws. Risk details Key risk indicators Opportunity Risk profile change Category: Compliance Appetite: Cautious Accountability: James Kerton, EVP, General Counsel & Company Secretary – Whistleblower case monitoring – Compliance training (Workforce) Create an industry-leading legal and compliance approach to our obligations and stakeholder expectations. 2024: no material change – privacy moved to Legal, Compliance and Privacy to reﬂect CELT accountability. Key drivers Risk mitigation – Privacy and data management – Market conduct compliance – Legal obligations in relation to customer conduct, including sales practices and distributor activity – Product and patient liability – Commercial litigation. Complexity and transparency of IP and patent environment, including in tax and operations – Financial crime – Our Code of Conduct and policies govern how we conduct our aﬀairs through our values and culture. Executive Compliance Steering Committee and the ARC provide oversight on compliance assurance programme, training and emerging exposures. Independent whistleblower process in place. Sanction framework checks in place with shareholder register, Compliance, Treasury, Banking Partners, Supply Chain and Finance – Executive Privacy Committee and privacy team provide governance and oversight with policies, methodologies, training, accountability and control frameworks in place to manage the protection and use of personal data – In-house legal counsel team with external counsel engaged when appropriate. Contract database, contract approval process and Grant of Authority scheme in place. Third-party risk control framework for onboarding due diligence process and distributor training. Patent counsel manages patent protection and ongoing market IP monitoring processes How the principal risk links to: Strategy Key stakeholders see pages 36 and 37 ESG topics Viability statement Important to groups within: – Customers/patients – Evaluators Aligns with issues within: – Governance Considered in scenarios: – Cyber incident – Regulatory issue Read more on pages 43 and 49 to 51 79 Convatec Group Plc Annual Report and Accounts 2024 Governance Financial statements Additional information Overview Strategic report 7. PEOPLE Risk Failure to eﬀectively recruit, retain and develop a diverse and inclusive workforce with strong succession to align the right talent, particularly in our senior management and through the development of the talent pipeline, to enable key business imperatives. Global cost of living and inﬂationary pressures continue to challenge retaining and/or recruiting key talent and skills. Failing to successfully manage transformation and/or the eﬀects of high business disruption could impact employee eﬀectiveness, engagement and wellbeing and adversely aﬀect our ability to achieve our strategic objectives and deliver growth. Risk details Key risk indicators Opportunity Risk profile change Category: Operational Appetite: Manage Accountability: Emma Rose, EVP, Chief People Oﬃcer – Employee engagement – Voluntary turnover Create a sustainable level of expertise and key skills across the Group. 2024: no material change. Key drivers Risk mitigation – Attraction, recruitment and retention of key skills and capabilities, including salary and remuneration inﬂation challenges in critical areas – Eﬀective succession and knowledge management planning strategy for senior leadership and key roles – Mental and occupational health and wellbeing of the workforce – Resource planning, people capability and capacity, including the speed and volume of management change – Performance and development management, diversity, equal opportunities and labour relations – Company culture, values and workforce engagement – Executive and senior leadership focus on maintaining a diverse and eﬀective leadership team with a pipeline of senior future talent and retention and development of key skills across the organisation. Employee Resource Groups (ERG) in place and mentorship programme launched – Employee engagement surveys and initiatives in place. Appropriate remuneration and reward arrangements attract and retain top, senior talent, maintain strength in key skills and respond to key regional market challenges – Global diversity, equality, inclusion and wellbeing strategic framework with key initiatives in place. Established employee assistance programme and occupational health activities to support workforce How the principal risk links to: Strategy Key stakeholders see pages 36 and 37 ESG topics Viability statement Important to groups within: – Direct enablers Aligns with issues within: – Social No long-term viability risk events were considered severe but plausible for the People principal risk. Read more on pages 44 to 48 8. ENVIRONMENT AND COMMUNITIES Risk Long-term success relies on addressing the challenges to the sustainability of our operations (including environmental and social aspects), supply chain resilience, products and the ability to manage the impact of climate change, developing trends in the political environment and increasing pressure and scrutiny from external groups, society, customers and communities in which we operate. The level of requirements and expectation from stakeholders continues to increase, which requires a robust, transparent and equitable level of sustainable corporate culture to underpin the way in which the Group operates. Failure to implement appropriate plans across environmental, social and governance aspects, including incorporating the recommendations of the TCFD and SBTi and deliver on a net zero commitment, could hinder eﬀorts to mitigate long-term risks and bring a range of reputational and commercial impacts to the business across a range of stakeholders. Risk details Key risk indicators Opportunity Risk profile change Category: Strategic Appetite: Manage Accountability: Emma Rose, EVP, Chief People Oﬃcer. – Carbon footprint reduction (Scope 1 and 2) – Carbon footprint reduction (Scope 3) Achieve an eﬀective balance between short-term needs and delivery versus longer-term requirements and commitments, in response to anticipated exposures from changes and events in the climate, the environment and society. 2024: no material change. Key drivers Risk mitigation – Environmental and climate change strategy delivering our net zero commitment and Science-Based Targets initiative – Recommendations of the TCFD and emerging ESG reporting requirements and standards – Responsible and sustainable behaviours across the supply chain – Product impacts, sustainable product design and product stewardship – Sustainable corporate culture in DE&I and transparent ways of working – Community investment programme – Executive ESG Steering Committee, including functions from across the business, provides oversight and direction on Group strategy and execution, with regular Board engagement – ESG framework implemented, aligned to Group strategy and our Group reporting and regulatory requirements. Published policies and independent third-party expert assurance in place – Supply chain partners managed through contracts, supplier code of conduct and performance monitoring with third-party assurance process in place for key suppliers How the principal risk links to: Strategy Key stakeholders see pages 36 and 37 ESG topics Viability statement Important to groups within: – Customers/patients – Direct enablers – Evaluators Aligns with issues within: – Products & customer – Environmental – Social – Governance No long-term viability risk events were considered severe but plausible for the Environment and Communities principal risk. Read more on pages 52 to 59 Principal risks continued 80 Convatec Group Plc Annual Report and Accounts 2024 Strategic report In accordance with the requirements of Section 414CB of the Companies Act 2006, the information below is provided to help our stakeholders understand our position in relation to key non-ﬁnancial and sustainability matters including, where appropriate, the relevant policies and processes we operate. Key matter Position and policies and processes we implement Page Environmental matters Climate change and environmental strategy Pages 32 to 35 and 52 to 60 Climate-related ﬁnancial disclosures Pages 52 to 71 Employees Our vision and values Page 33 Code of Conduct Pages 49 to 51 Diversity, Equity & Inclusion and Wellbeing Pages 44 to 48 Our people strategy Pages 44 to 48 Employee induction, training and development programmes Pages 45 and 46 Employee engagement Pages 36 to 45 Diversity targets and review of metrics Pages 46 and 47 Human rights Human Rights and Labour Standards Page 50 Modern Slavery Act Statement Page 50 Social and community matters Community engagement Pages 58 and 59 Anti-corruption and anti-bribery Third-Party Compliance Manual Page 50 Compliance helpline and website Page 50 Principal risks and impact of business activity Pages 72 to 80 Non-ﬁnancial key performance indicators Page 13 Our business model Page 8 → You can ﬁnd more information, including copies of our policies, processes and statements at: www.convatecgroup.com/investors/governance/our-policies-and-statements/ www.convatecgroup.com/sustainability/esg-reports-and-data/ Non-financial and sustainability information statement 81 Convatec Group Plc Annual Report and Accounts 2024 Governance Financial statements Additional information Overview Strategic report Convatec’s future prospects and viability Viability statement An understanding of the Group’s strategy, to deliver sustainable revenue growth and expanding operating margin, and its business model (pages 8 to 11), are central to allowing the Board to assess Convatec’s prospects, liquidity, resilience and viability. The principal and emerging risks being addressed by the Company (see pages 72 to 80) are reﬂected in the determination of the Group’s strategy and its successful implementation. Assessment of future prospects The Directors are of the view that the appropriate period of assessment remains a three-year period from January 2025 to December 2027 (the Viability Period). Although the Directors have no reason to believe that the Group will not be viable over a longer period, the Board has chosen to conduct the assessment for this three-year period because: – Our R&D and production cycles tend to be of a duration of less than three years with key innovation pipeline programmes targeting launch within the Viability Period. – Signiﬁcant capital investments are being made to realise the Group’s strategy over the medium to long term. The Group’s business model means that its capital investment is discretionary, and it has the ability to respond in a timely manner to reasonably possible Group speciﬁc and market events, and therefore does not require a longer time horizon assessment. – Implicitly, it is harder to accurately forecast the latter years of a ﬁve- year plan. The Group’s performance management process consists of monthly monitoring of progress against the ﬁnancial budget and key objectives for the current year by CELT and the Board, and reforecasting throughout the year in respect of the expected outcome for the current year. It also includes the preparation of a detailed budget for the following year and updating a rolling ﬁve-year strategic plan, which forms the main basis on which to assess the longer-term prospects of the Group. In 2024, the Board approved a detailed operational plan and execution model to deliver sustainable and proﬁtable growth that underpins the Group’s ﬁve-year strategic plan. The ﬁve-year ﬁnancial plan from 2025 to 2029 forecasts the Group’s proﬁtability, cash ﬂows and funding requirements, inclusive of the Viability Period. Our strategy is consumer-centric, agile, focuses on innovation and ensures clear accountability. It has been developed from strategic plans for each of our business units and functional areas, supplemented by items managed at a Group level and assumptions such as macroeconomic activity, market sector growth forecasts, competitor activity and exchange rates. This has then been supplemented by CELT’s plans for improving the operational eﬀectiveness and execution across the Group. Key factors aﬀecting the Board’s view of the Group’s prospects over the period of the viability assessment and the longer term are: – The fundamentals of our markets, products and brands remain sound, as does our current and future strategy of leveraging our product portfolio for growth in attractive segments and geographies, developing and commercialising new technologies and services and striving to reduce complexity and increase eﬃciency. – Established positions in large, structurally growing markets; strong brands and a range of diﬀerentiated products; a well-diversiﬁed business platform across a range of market segments and geographies. – Strong cash generation capabilities and a sound ﬁnancial base, with the Group’s $250 million term loan committed until November 2027, which is towards the end of the Viability Period, $950 million revolving credit facilities committed until 2028, and the Group’s $500 million senior unsecured notes due in 2029. – The evolved ﬁve strategic pillars that support the delivery of the strategy, which are set out on pages 10 to 11. The key assumptions considered in the strategic plan, on which this viability assessment is based, include: – Our markets remain structurally sound and continue to grow at existing levels with no signiﬁcant change to reimbursement environments. – Margin improvement is driven by successful execution of our operational excellence programmes in order to deliver productivity gains in excess of inﬂation and other headwinds. – Climate impact has been considered but is not expected to have a bearing during the viability assessment period of three years. – Through the execution of our strategy, we continue to simplify our business, remove excess costs and re-invest in capacity and future innovation. – The Group will be able to reﬁnance its $250 million term loan in November 2027. – Dividends growing progressively over the Viability period. Viability assessment Throughout the year, the Board has undertaken a robust assessment of the principal risks aﬀecting the Group and also emerging risks, particularly those that could threaten the business model and the Group’s viability over an extended period, including an assessment of the likelihood of them materialising. These risks and the actions being taken to manage or mitigate these risks are explained in detail on pages 72 to 80. This analysis has then been applied to allow the Board to assess the prospects, liquidity, resilience, and viability of the Group. The viability assessment has consisted of stress testing the forecasts underlying the strategic plan by modelling severe but plausible scenarios in which a number of the Group’s principal risks and uncertainties materialise within the Viability Period. We have modelled scenarios which group together principal risks where we believe interdependencies exist between risks, in addition to scenarios where unconnected risks occur simultaneously. These scenarios focused on both external factors and internal factors, such as the impact of economic recession leading to higher interest rates and increased inﬂation headwinds, and aﬀecting reimbursement rates, or consequences of regulatory compliance issues resulting in a loss of revenues. We continue to strengthen and develop the link between the Group’s principal risks and the viability assessment and scenarios. The Group’s principal risks are updated through the lens of our risk appetite together with assessing our evolving strategy, current business environment and any emerging risks. We reviewed the severe but plausible risk events from each principal risk and prioritised those by relative impact to form revised long-term viability scenarios. As a result, six severe but plausible risk scenarios have been chosen. We have added a new scenario in addition to the ﬁve scenarios we have modelled in 2023. We included a signiﬁcant business 82 Convatec Group Plc Annual Report and Accounts 2024 Strategic report interruption, leading to loss in revenues, caused by a major climate event in Dominican Republic, which is one of our strategic manufacturing plants. This risk is linked to the operational resilience and quality principal risk, and reﬂects our consideration of longer-term climate change impacts or an extreme weather event to the business. We have maintained our other ﬁve risk scenarios from 2023, in relation to an EHS incident in Deeside, UK, signiﬁcant cyber incident, regulatory issues within product lines, signiﬁcant adverse change to reimbursement rates and ﬁnancial market distress, and macroeconomic forces and/or sanctions restricting access to a key global market due to geopolitical challenges. This reﬂects the importance of all these areas to our business as we grow new and emerging markets as well as the changing and emerging external environment that our current and future operations work within. The main severe but plausible scenarios are included in the table below. The scenarios and sensitivity testing have been based upon the current Board-approved strategic plan and forecast revenues, operating proﬁt and balance sheet and were reviewed against the current and projected liquidity and funding position. In addition, as a result of recent Medicare announcements, we have also considered the crystallisation of the reimbursement risk, aﬀecting the reimbursement of our InnovaMatrix™ product within the Viability Period ﬁnancials. The individual scenarios took no account of any corporate mitigating actions available to and within control of the Directors. For combined scenarios, where required, controllable corporate mitigations have been applied through adjustments to the Group’s strategy and other means in the normal course of business, for example, reducing expansionary capital investment. In the Board’s estimation, these events would not plausibly occur to a level of materiality that, in themselves, would endanger the Group’s viability. This assessment was informed by Management’s and the Board’s combined judgement as to the potential ﬁnancial (particularly liquidity and debt ﬁnancing ﬁnancial covenants) impact of these risks if they were to materialise, together with their likelihood of occurrence. The Board reviewed and discussed the process undertaken by Management and also reviewed the results of reverse stress testing performed against the forecast to determine the performance levels that would result in a breach of covenants or lack of liquidity. The outcome of this test was considered implausible given the Group’s strong global market position and diversiﬁed portfolio of products and mitigations available to the Board and management. In addition, the Board undertook an independent review of market information, including investors’ and analysts’ views on the future viability of the Group and market prospects. This review was undertaken to ensure that where there was an external view or information that was contradictory to the views of Management, the Board understood the rationale for the diﬀerence of opinion and agreed with Management’s view. This independent review and the scenario tests enabled the Board to conclude on the Group’s viability and resilience. Viability statement Having assessed the Group’s principal risks and uncertainties, and the consolidated ﬁnancial impact of sensitivity analysis, including any corporate mitigating actions available to the Group (that can be deployed in the unlikely event that two of the scenarios occur at the same time), plus the Group’s level of cash generation and existing ﬁnancing facilities, and the timing of the forecast peak cash outﬂows, the Board has determined that it has a reasonable expectation that the Group will be able to continue to operate within its existing bank covenants and meet its liabilities over the Viability Period to December 2027. The Group’s Going Concern statement is detailed on page 161. The Strategic Report comprising pages 4 to 83 was approved by the Board on 25 February 2025. Karim Bitar Chief Executive Officer Jonny Mason Chief Financial Officer Scenarios Linkage to risks on pages 76 to 80 Impacts from a signiﬁcant manufacturing incident modelled on a plant ﬁre – Impact on supplying customers before plant production is restored – Reduced production or extended period of shut down – Loss of sales could have a material adverse impact on the Group’s reputation – Impact of supply disruption – Operational Resilience and Quality Impacts from a signiﬁcant business interruption, linked to an extreme climate event at an important supply chain location – Impact on supplying customers before island infrastructure and plant production is restored – Impact of supply disruption from reduced production or extended period of shut down – Loss of sales could have a material adverse impact on the Group’s reputation – Operational Resilience and Quality Impacts from a signiﬁcant cyber incident producing a signiﬁcant interruption – A signiﬁcant data privacy breach, leading to a regulatory penalty and ﬁne, and subsequent costs for investigation and remediation – Cyber and Information Security – Operational Resilience and Quality – Legal, Compliance and Privacy Impacts from signiﬁcant regulatory issues in a key product line – Signiﬁcant breach of regulatory compliance in a product line – Reduced production and loss of sales due to adverse impact on the Group’s reputation – Impact of supply disruption – Legal, Compliance and Privacy – Innovation and Regulatory – Operational Resilience and Quality Reimbursement reduction and ﬁnancial market distress – Signiﬁcant reimbursement reduction in a major market resulting in adverse change to pricing – Increased costs as a result of sustained inﬂationary pressure matched by sustained high interest rates – Impact of reduced market reﬁnancing appetite and/or competitive terms – Customer and Markets – Political and Economic Environment Macroeconomic forces and/or sanctions restrict access to key global markets – Failure to deliver stated growth targets in a key global focus market – Supply chain issues to our manufacturing and distribution from the aﬀected key global focus market – Customer and Markets – Political and Economic Environment 83 Convatec Group Plc Annual Report and Accounts 2024 Governance Financial statements Additional information Overview Strategic report 85 Governance at a glance 86 Chair’s governance letter 88 Board statements 89 How we have applied the Code’s core principles 92 Board of Directors 94 Convatec Executive Leadership Team 96 Board activity and actions 99 Board performance evaluation 101 Nomination Committee report 104 Audit and Risk Committee report 114 Directors’ Remuneration report 145 Directors’ report 148 Directors’ responsibilities statement What’s inside Governance Convatec Group Plc Annual Report and Accounts 2024 84 Governance Governance at a glance Key Board activities Throughout 2024, the Board has overseen and regularly reviewed the Group’s ﬁnancial performance, risk and controls, strategic initiatives (including material capital expenditure, M&A and integration), relevant regulatory and market developments, people matters and culture. The Board seeks to engage with stakeholders and considers their interests when making decisions. ADDITIONAL AREAS OF FOCUS AND ACTIVITIES BY MONTH INCLUDE: Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2025 – Approval: New appointments to CELT, strengthening the leadership team – Announcement: Convatec’s partnership with AbbVie allowing our Neria Guard™ infusion sets to be used in AbbVie’s Parkinson’s therapy and rolled out across Japan and Europe. In October 2024, AbbVie received FDA approval in the US – Announcement: Publication of 2023 full-year results and dividend declared to shareholders – Event: Board and CELT participate in a two-day strategy session to reassess and review FISBE strategy goals and priorities, with participation from relevant business leadership teams and deep dives into key business category and functional strategic areas – Approval : Ernst & Young (EY) appointment as external auditor from FY2026 – Announcement: Publication of 2024 half-year results and dividend declared to shareholders – Approval: Acquisition of Livramedom, a homecare business in France to build our direct-to-consumer capabilities in Continence Care and Ostomy Care through a homecare channel for our French business – Announcement: Continued scale-up of GentleCath Air™ for Women with FeelClean Technology™, in the UK and Italy, following its successful launch in France – Discussion: Group internal controls environment, including cyber security, data privacy and fraud prevention opportunities and considerations – Announcement: Publication of the ten- month trading update – Approval: 2025 budget – 2024 Annual General Meeting – Event: Audit and Risk Committee (ARC) members and senior managers visit our Lisbon oﬃce to review progress of GBS transition and to learn more about its contribution to our simpliﬁcation and productivity agenda – Event: The Board participated in a two-day visit to our manufacturing site in Osted, Denmark which included: • A tour of our site and deep-dives into our Infusion Care (IC) products and pipeline • Meeting with a Professor of Neurology from Lund University and an IC patient using our product to help manage type-1 diabetes • Meetings with colleagues – Deep dive: Presentations and discussions on Global Quality & Operations, including automation and robotics, plant network optimisation and further capital expenditure investment into quality and production capacity expansion – Discussion: ESG topical update and an update by external advisers on governance and regulatory changes, including relating to audit and corporate governance reform, ESG and AI – Approval: Vitality metric calculation and governance – Approval: Capital expenditure to support operations automation, plant network optimisation and continuous improvement projects, optimising production lines improving quality and increasing production capacity for future demand – Announcement: Oversaw the launch of Esteem Body with Leak Defense™, the latest ostomy system advancement in soft convexity, in Italy, followed by the US in April 2024 85 Convatec Group Plc Annual Report and Accounts 2024 Governance Financial statements Additional information Overview Strategic report Chair’s governance letter A culture of doing what’s right Dear Shareholder I am pleased to present this Governance report for the year ended 31 December 2024. This report, together with the Nomination, Remuneration and Audit and Risk Committee (ARC) reports, show how Convatec’s leadership and governance framework support Convatec as we continue to build on our long-term, sustainable and proﬁtable growth, whilst engaging with our stakeholders, maintaining our values and culture and conducting our business in a responsible and sustainable way. Our culture We maintain strong governance principles across the Company through our culture of doing what’s right, one of Convatec’s ﬁve core values. This is reﬂected in our vision: pioneering trusted medical solutions to improve the lives we touch, and is supported by our promise to be forever caring. We continue to invest in leadership and sustain strong levels of overall employee engagement. Sharon O’Keefe and I were particularly pleased to join our CEO and his team at Convatec’s Global Leaders Meeting during the year – a three-day event that brought together Convatec’s top 100 leaders in London. The strength of the talent we have built in recent years is clear, and we can have conﬁdence in our continued success. Our people The Board has a critical role in promoting our culture and ensuring that our strategic focus is to deliver on our forever caring promise. Our people are key to this and the Board follows a programme of engagement with Convatec’s employees and is regularly briefed on people matters and employee information and surveys throughout the year. In 2024, members of the Board connected with employees during on-site visits to our Osted manufacturing site in Denmark and our GBS site in Lisbon, Portugal. Sharon O’Keefe leads for the Board on workforce engagement and hosted focus groups with employees in Osted and heard about their experiences working for Convatec. Colleagues across diﬀerent functions and levels of seniority described our engaging and collaborative culture, which enables colleagues to feel empowered and a sense of ownership in our journey. We were pleased to hear our employees talk with pride about their work and the Company as a whole. As a Board, we recognise the importance of their feedback and acknowledge that we must continue to invest in our people through training, development and workplace cultural initiatives to maintain this sense of community and pride in the business. Further details of Board-level workforce engagement and our culture can be found on page 36 and 45, respectively. Leadership Leadership continues to be a particular focus for the Board, and through the Nomination Committee, we have continued to oversee a diverse succession pipeline for the Board and wider leadership team. This year saw a number of new appointments to our executive leadership team supported by the Board, and we are pleased to have in place a team with the right skills and experience to fulﬁl the Company’s vision and support the continued successful delivery of our FISBE strategy. As a Board we review the Group’s senior management and talent pipeline to ensure we are growing tomorrow’s leaders. Further details are provided in the Nomination Committee Report on pages 101 to 103. Membership of the Board is set out on pages 92 and 93 and the members of the Board’s committees are set out in the respective committee reports on pages 101, 104 and 114. Membership of CELT is set out on pages 94 and 95. ESG The Board also continued to oversee our responsible business programme, details of which are included on pages 32 to 59. We have overseen ongoing progress in embedding Convatec Cares, our approach to ESG, including on emissions reduction and net zero transition planning. Under the remit Dr John McAdam CBE Chair “Core to bringing our vision to life is maintaining a culture that is consistent with our core values and underpins our commitment to effective corporate governance” Directors’ attendance at Board meetings held during the year is outlined below: Director Member since Attended John McAdam (Chair) September 2019 8/8 Karim Bitar September 2019 8/8 Jonny Mason March 2022 8/8 Brian May March 2020 8/8 Margaret Ewing August 2017 8/8 Constantin Coussios September 2020 8/8 Heather Mason July 2020 8/8 Kim Lody February 2022 8/8 Sharon O’Keefe March 2022 8/8 Board attendance 86 Convatec Group Plc Annual Report and Accounts 2024 Governance of our CELT-led ESG Steering Committee, we developed an internal carbon footprint database to enhance decision making in this area. We also made good progress across ESG targets, including a vitality index of 30% in 2024. From a people and culture perspective, we made progress towards our 2027 target of 50% of senior management roles held by women (45% in 2024) and saw strong levels of overall employee engagement. We have also kept compliance with regulatory requirements for sustainability in focus. Key stakeholders Our key stakeholder groups are identiﬁed and detailed on pages 36 to 37. Our stakeholders are key to the long term sustainable success of our business and we have ensured that all Directors have timely access to information about stakeholder issues and concerns. Information about how the Board has taken account of Section 172 considerations in our Board discussions and decision-making processes is set out on pages 36 to 37 and 98. Board performance evaluation In accordance with the Code requirements, a performance evaluation of the Board and Board Committees was carried out in the autumn of 2024. Details of the evaluation process, recommendations and actions can be found on pages 99 to 100. The Code We explain how we have applied the Code’s principles on pages 89 to 91. These core principles also serve as a framework for the following sections of this Annual Report which explain our governance structure and processes we operate to support the Group’s long-term success. More details can also be found on our website: www.convatecgroup. com/investors/governance/. During the year, the Board, through the ARC, has also monitored plans to address the new requirements of the EU Corporate Sustainability Reporting Directive (CSRD) and the workstreams reviewing and improving the Group’s internal controls, in preparedness for changes brought about by the UK Corporate Governance Code 2024 which will apply to ﬁnancial years beginning on or after 1 January 2025 generally and speciﬁcally for internal controls from 1 January 2026. More details of the progress made in respect of our internal controls workstream can be found within the ARC Report on page 109. AGM Our 2024 Annual General Meeting (AGM) took place as a hybrid meeting, enabling shareholders to attend either in person or remotely. Our 2025 AGM will similarly be held as a hybrid meeting, full details can be found in the Notice of Meeting. 2025 priorities The Board remains committed to eﬀective corporate governance practices. Looking at the year ahead, Non-Executive succession planning will remain a key focus for the Board, through its Nomination Committee. As a Board, we will continue to oversee delivery of our FISBE strategy. We will monitor progress on our simpliﬁcation and productivity initiatives, including the continuing transition of key central functions and activities to our Global Business Services teams in Lisbon, Bogotá and Kuala Lumpur, which has helped to reduce our general and administrative costs and improve the eﬀectiveness of our end-to-end processes, as well as the improvements in our global operations and quality team which will provide us with a best-in-class manufacturing operations and optimise quality, capacity and productivity. It is clear that our innovation pipeline is delivering with strong growth in products and applications. The Board will continue to monitor the successful development and launch of a range of new products in 2025 and oversee the continuing build of our supply chain resilience to support product delivery. After much progress over the last few years, we continue to monitor the broader regulatory landscape, evolving stakeholder expectations and Convatec’s overall response and actions. In 2025, following extensive shareholder consultation in 2024 and early 2025, we will be asking shareholders to approve a new Directors Remuneration Policy at the AGM, expected to be in place for the next three years. The proposed new Policy can be found on pages 128 to 134 and has been designed to drive retention of our senior leadership, and provide market competitive reward contingent on delivery of robust business performance. I would like to take this opportunity to thank my fellow Board members, the management team and our colleagues in the wider workforce, who served during another successful year for Convatec and look forward to building on this success during 2025. Dr John McAdam CBE Chair 25 February 2025 1. As at 31 December 2024 and at 21 February 2025. 2. As at 31 December 2024. BOARD STATISTICS Gender 1 Male: 56% Female: 44% Length of tenure 2 2-3 years: 3 4-5 years: 3 5 years or more: 3 BOARD AND COMMITTEE MEETINGS 8 Board scheduled meetings 5 Audit and Risk Committee meetings 5 Remuneration Committee meetings 3 Nomination Committee meetings 87 Convatec Group Plc Annual Report and Accounts 2024 Governance Financial statements Additional information Overview Strategic report Board statements REQUIREMENT BOARD STATEMENT MORE INFORMATION UK Corporate Governance Code 2018 compliance Throughout the ﬁnancial year ended 31 December 2024, except as explained above, the Company has complied with the Code. Pages 89 to 91 Going concern The Directors are satisﬁed that the Group has suﬃcient ﬁnancial resources to continue operating for at least 12 months from the date of signing of the 2024 Annual Report and Accounts and, therefore, have adopted the going concern basis in preparing the Group’s 2024 Financial Statements. Page 161 Viability statement The Directors have assessed the viability of the Group over a three-year period ending 31 December 2027, taking into account the principal risks identiﬁed by the Board as set out on pages 72 to 80. This assessment led the Board to the reasonable expectation that the Group will remain viable and continue in operation and meet its liabilities as they become due over the Viability Period. Pages 82 and 83 Fair, balanced, and understandable The Directors consider that the 2024 Annual Report and Accounts, taken as a whole, are fair, balanced and understandable, and provide the necessary information for all stakeholders to assess the Group’s position and performance and its business model and strategy. Page 105 Assessment of the Group’s principal and emerging risks The Directors conﬁrm that they have undertaken a robust assessment of the principal and emerging risks facing the Group. Pages 72 to 80 Annual review of risk management and internal control systems The Board undertook, throughout the year, a review of the eﬀectiveness of the Group’s risk management framework and internal controls, including those over the ﬁnancial reporting period, and concluded that these provided assurance that there were no control failures in the year which could materially impact the ﬁnancial statements or the future ﬁnancial performance of the Group. Page 91 Stakeholder engagement The Board has taken steps to understand stakeholders’ views and has considered them in its discussions and decision-making process. Pages 36, 37 and 98 Throughout 2024, Convatec was subject to the requirements of the UK Corporate Governance Code 2018. During the year, we have complied with the Code other than provisions 40 and 41, employee engagement on executive remuneration. The Remuneration Committee has not undertaken consultation with the workforce when considering executive remuneration, however the Committee has considered wider pay practices at all levels across the Group and all employees have opportunity to provide feedback on pay and other issues. The Committee is mindful of this when applying salary increases. Page 123 of the Remuneration Committee report provides further details of our engagement activities. During 2024, the Board reviewed the implications and Convatec’s preparedness for the changes brought about by the new version of the UK Corporate Governance Code, which will apply to ﬁnancial years beginning on or after 1 January 2025. In accordance with the Code, the Board is required to make a number of statements. These are set out in the table below. 88 Convatec Group Plc Annual Report and Accounts 2024 Governance BOARD LEADERSHIP AND COMPANY PURPOSE Code principles Application Where further information is available A The Board’s role The Board is collectively responsible for promoting the long term success of the Company for its shareholders and stakeholders. The Board discharges its responsibilities through a programme of activities. This includes an annual event held over two days where the Board and CELT review and approve the Group’s strategic priorities, regular progress reviews of its execution and implementation, discussion on arising key issues and monitoring of performance, to enable the Group to deliver sustainable and proﬁtable growth. Board focus and principal matters considered in 2024 Pages 96 and 97 Matters reserved for the board can be found on our website: www. convatecgroup.com/ globalassets/2024-schedule-of- matters-reserved-for-the-board--- ﬁnal-and-approved-for-web- B Purpose and culture The Board endorses the Group’s vision statement (which encapsulates our purpose and ambition), our values and our forever caring promise. During the year, the Board regularly considers the Group’s strategy, both in the two-day strategy Board meetings in June and as part of scheduled Board meetings. People and culture are a key part of Convatec’s strategy. The Board has reviewed several cultural indicators, including regular brieﬁngs from the Chief People Oﬃcer, employee surveys, interactions between the Board and employees and employee focus groups chaired by Sharon O’Keefe, our designated Non-Executive Director Workforce Liaison Champion. The Chair, Executive Directors and Workforce Liaison Champion all attended a three-day Global Leaders Meeting that brought together Convatec’s top 100 leaders (see page 45). The Executive Directors also participated in global town hall events throughout the year to provide employees with key updates, participate in live Q&As and to hear inspirational stories from patients, HCP and caregivers about how our products are transforming lives. How we realise our vision Page 7 Shaping our winning culture Page 45 Chair’s statement Pages 6 and 7 Chair’s governance letter Pages 86 to 87 Culture Page 44 to 45 Board site visit Page 97 C Resources and controls The Board regularly reviews the Group’s ﬁnancial and non-ﬁnancial resources to ensure that it has the resources available to deliver its strategy. The Board has approved and regularly reviews a series of KPIs that monitor performance and delivery of strategy. The Board has established an eﬀective governance and risk management framework. The ARC helps the Board to oversee the risks to which the Group may be exposed and provides the Board with strategic advice in relation to current and potential risk exposures. The Group’s KPIs Pages 12 and 13 The Group’s risk management framework Page 72 to 75 Audit and Risk Committee report Pages 104 to 113 D Stakeholder engagement To fulﬁl its duty to promote the Group’s long-term success and generate value for shareholders, stakeholders and wider society a number of mechanisms have been established to facilitate shareholder, workforce and wider stakeholder engagement and ensure that the Directors consider all relevant stakeholder issues and concerns when making strategic decisions. Engaging stakeholders and Section 172 statement Pages 36, 37 and 98 Board key decisions Page 98 E Workforce engagement The Board has ensured that workforce policies and practices are consistent with the Group’s values and has established mechanisms, including an independently provided whistleblowing/speaking-up facility, to allow the workforce to raise concerns anonymously. Throughout the year, the Board, through its ARC, received regular reports on the global use of the whistleblowing facility. The Executive Directors also host global town hall events and other engagement events throughout the year to provide employees with key updates and answer questions. We also rolled out additional employee engagement measures in 2024 – see page 45. During the year, Non-Executive Directors met with colleagues to discuss their experience and share insights. The Board has also designated a Non-Executive Director as Workforce Liaison Champion. Enabling our people to thrive Pages 44 to 48 Compliance Helpline and website Page 50 Audit and Risk Committee report Pages 104 to 113 How we have applied the Code’s core principles 89 Convatec Group Plc Annual Report and Accounts 2024 Governance Financial statements Additional information Overview Strategic report DIVISION OF RESPONSIBILITIES Code principles Application Where further information is available F The Chair’s role The Chair was independent on appointment in September 2019 and is responsible for the leadership of the Board and continues to demonstrate objective judgement. The Chair eﬀectively facilitates robust discussions at Board meetings and active participation from all Board members. The Board’s key roles and responsibilities can be found on our website: www.convatecgroup.com/ investors/governance/ G Composition of the Board The Board comprises seven Non-Executive Directors, including the Chair and two Executive Directors. Their responsibilities are clearly deﬁned. Key Board roles and responsibilities can be found on our website: www. convatecgroup.com/investors/ governance/. The division of responsibilities between the roles of the Chair and Chief Executive Oﬃcer; and, the responsibilities of the Senior Independent Director can be found on our website: www.convatecgroup. com/investors/governance/ H Time commitment, constructive challenge and strategic guidance All Directors have demonstrated that they have suﬃcient time to fulﬁl their duties and responsibilities, including taking into account any new signiﬁcant external appointments during the year. In their roles, the Non-Executive Directors have provided constructive challenge, strategic guidance and held management to account. The Board and Nomination Committee regularly reviews the skills and experience of its members to ensure that the Board continues to be eﬀective. Nomination Committee report Page 101 to 103 Board performance evaluation Pages 99 and 100 I Eﬀective and eﬃcient Board All Directors have access to an encrypted electronic portal system which enables them to receive accurate and timely information. The Board works with the Company Secretary to ensure eﬀective communication ﬂows between the Board and its Committees, and between senior management and the Non-Executive Directors. The Company Secretary assists the Chair in establishing the policies and processes the Board needs and periodically reviews governance processes. All Directors have access to the advice and services of the Company Secretary and, through him, have access to independent professional advice in respect of their duties, at the Group’s expense. Board key activities during 2024 Page 85 Board activity and actions Page 96 to 98 Board performance evaluation Pages 99 and 100 COMPOSITION, SUCCESSION AND EVALUATION Code principles Application Where further information is available J Board appointments and succession planning The Nomination Committee is responsible for reviewing Board composition and leads the process for Board appointments. These are based on merit against an objective criteria and with due regard for the beneﬁts of diversity in all forms on the Board. The Nomination Committee regularly considers Board and senior management succession. There is a formal, rigorous and transparent process for all appointments. The Board engages international search and selection ﬁrms to provide support, most recently using ﬁrms including Egon Zendher, Korn Ferry and Russell Reynolds. None of them have any connection with the Group, or any Director, other than they may be engaged to assist with Board and senior management appointments and ordinary course succession planning from time to time. Nomination Committee report and Board appointment procedure Pages 101 to 103 Board appointments Page 103 Talent and succession planning Page 103 Board Diversity, Equity and Inclusion Policy www.convatecgroup.com/investors/ governance K Skills, experience and knowledge of the Board Our Board is balanced and diverse and its members have proven leadership capabilities as well as relevant healthcare, operational skills, ﬁnancial expertise and experience. Board member tenure is such that there is a balance of deep knowledge of the Company and fresh perspective and challenge. None of the Non-Executive Directors have currently served more than nine years on the Board. Directors’ biographical information Page 93 Skills and experience matrix Page 92 Board member tenure Pages 86, 87 and 103 L Annual evaluation In compliance with the Code, during 2024, the Board undertook an evaluation of its performance and that of its committees. The evaluation was by way of an externally facilitated questionnaire and reporting process, the conclusions of which are contained within this report. The Non-Executive Directors meet with the Chair, without the Executive Directors present, to discuss performance against agreed objectives. Led by the Senior Independent Director, the Non-Executive Directors also meet without the Chair to appraise his performance. The Chair provides performance feedback to each Non-Executive Director throughout the year as and when the need arises. Board performance evaluation Page 99 and 100 How we have applied the Code’s core principles continued 90 Convatec Group Plc Annual Report and Accounts 2024 Governance AUDIT RISK AND INTERNAL CONTROL Code principles Application Where further information is available M Independent and eﬀective internal and external audit functions The Board has delegated a number of responsibilities to the ARC, including oversight of the Group’s ﬁnancial reporting processes, and ensuring the eﬀectiveness and independence of the external and internal auditors. The ARC Chair regularly briefs the Board on how the Committee has discharged its responsibilities. The ARC assesses throughout the year the eﬀectiveness of the internal and external audit functions, including a formal assessment, taking into consideration management’s views, once per year. Audit and Risk Committee report Pages 104 to 113 N Fair, balanced and understandable assessment The Strategic Report sets out the performance of the Company, the business model and the risks and uncertainties relating to the Company’s prospects. When taken as a whole, the Directors consider that the Annual Report is fair, balanced and understandable and provides information necessary for shareholders to assess the Company’s performance, business model and strategy. Audit and Risk Committee report Pages 104 to 113 O Risk management and internal controls The Board is ultimately responsible for overseeing how we manage both internal and external risks (current and emerging) that could impact our business model and strategic goals. The Board also determines the Group’s risk appetite and monitors adherence to it through reports received by the ARC and from the VP, Internal Audit, Enterprise Risk & Insurance. The Board regularly reviews the Group’s principal risks and, on an annual basis, reviews the eﬀectiveness of our risk management and internal control systems and undertakes horizon scanning to identify new emerging risks. The ARC reviews the eﬀectiveness of the Group’s risk management and internal control frameworks and systems regularly throughout the year. Following this review, the Board is satisﬁed that the Group’s risk management and internal control frameworks and systems provided assurance that there were no control failures in the year that could have a material impact on the Group’s ﬁnancial statements or its future ﬁnancial situation. Risk management Pages 72 to 75 Principal and emerging risks Pages 74 to 80 Audit and Risk Committee report Pages 104 to 113 REMUNERATION Code principles Application Where further information is available P Remuneration policy and practices Our Remuneration Policy is designed to support our strategy, be aligned to our vision and shareholder interests, and promote long-term sustainable success. Our current Policy was approved by shareholders in 2023. We will be tabling proposed changes to our Policy for approval by shareholders in 2025, following an extensive consultation exercise with our key shareholders. Remuneration Policy Pages 128 to 134 Directors’ Remuneration report Pages 114 to 144 Q Development of remuneration policy and packages The Remuneration Committee is responsible for setting the remuneration for Executive Directors. The Remuneration Committee reviews remuneration packages of CELT members to ensure that they support our strategy and provide an appropriate balance between motivating and challenging our senior leaders. No Director is involved in making decisions on their own remuneration. Remuneration Policy Pages 128 to 134 Directors’ Remuneration report Pages 114 to 144 R Independent judgement and discretion Following a formal procedure, the Remuneration Committee sets the remuneration for the Executive Directors and oversees the remuneration of senior management. In doing so it applies judgement and, if required, discretion to ensure a considered outcome on remuneration issues. Directors’ Remuneration report Pages 114 to 144 91 Convatec Group Plc Annual Report and Accounts 2024 Governance Financial statements Additional information Overview Strategic report Board of Directors Experienced leadership A diversely skilled Board with proven leadership capabilities and relevant healthcare, operational and financial skills and experience SKILLS AND EXPERIENCE John McAdam Karim Bitar Jonny Mason Margaret Ewing Brian May Constantin Coussios Kim Lody Heather Mason Sharon O’Keefe Board experience Corp. transactions & M&A ESG Finance Global Healthcare Leadership Operational Strategy, transformation & org design T&I Advanced. Director demonstrates signiﬁcant skill and knowledge and/or previous experience. (5-8 years) Expert. Director demonstrates extensive experience, identiﬁable by occupation, profession and career. (8+ years) Key 1 7 8 2 4 9 6 3 5 1 Jonny Mason, Chief Financial Oﬃcer 4 Heather Mason, Non-Executive Director 7 Margaret Ewing, Senior Independent Director 2 Sharon O’Keefe, Non-Executive Director 5 Karim Bitar, Chief Executive Oﬃcer 8 Kim Lody, Non-Executive Director 3 Dr John McAdam CBE, Chair 6 Brian May, Non-Executive Director 9 Prof Constantin Coussios OBE, Non-Executive Director The skills and experience matrix has been created on the basis that all members of our Board have previous operational experience or have acquired a working knowledge through their tenure at Convatec in each of the areas. Any additional capabilities with a director being either advanced or expert are indicated below. 92 Convatec Group Plc Annual Report and Accounts 2024 Governance Dr John McAdam CBE N Chair Karim Bitar Chief Executive Officer Jonny Mason Chief Financial Officer Date of appointment: September 2019 Independent: Yes (on appointment) Relevant skills and experience – Extensive chair and board leadership experience, including as former Chair of Rentokil Initial plc and United Utilities Group PLC and as a Non-Executive Director of a number of FTSE 100 and US companies. – Extensive experience of leading companies undergoing transformation including as Chief Executive of ICI PLC between 2003 and 2008. Current external appointments Adviser to BlackRock’s Long-Term Investment Group. Date of appointment: September 2019 Independent : No Relevant skills and experience – Signiﬁcant board level and leadership experience including as Non-Executive Director of Spectris PLC between 2017 and 2021 and Chief Executive Oﬃcer of Genus PLC between 2011 and 2019. – Successful business transformation track record. – Extensive and broad management experience. – Relevant sector knowledge and experience, including 15 years with Eli Lilly, where from 2008, Karim was President of Europe, Australia and Canada. Current external appointments Member of the Advisory Board of the University of Michigan, Ross School of Business. Date of appointment: March 2022 Independent: No Relevant skills and experience – Seasoned CFO with an extensive track record in listed and international businesses. – Was formerly CFO of Dixons Carphone PLC, now known as Currys Plc, from 2018 to 2021, CFO of Halfords PLC from 2015 to 2018, CFO of Scandi Standard AB, CFO at Odeon and UCI Cinemas and FD of Sainsbury’s Supermarkets. Current external appointments None. Margaret Ewing AR N Senior Independent Director Brian May AR N R Non-Executive Director Heather Mason AR N Non-Executive Director Date of appointment: August 2017 Independent: Yes Relevant skills and experience – Chartered Accountant with signiﬁcant ﬁnancial and executive experience, including as former Managing Partner of Deloitte LLP and CFO of BAA PLC. – Extensive audit and risk management experience. – Strong board experience, having served as a Non-Executive Director of Whitbread plc and Standard Chartered PLC and CFO of BAA PLC and Trinity Mirror PLC (now Reach PLC). Current external appointments Non-Executive Director, Chair of the Audit and Risk Committee and member of the Nomination Committee of ITV PLC. Non- Executive Director, member of the Audit and Compliance Committee and the Nominations Committee of International Consolidated Airlines Group, S.A. Date of appointment: March 2020 Independent: Yes Relevant skills and experience – Signiﬁcant ﬁnancial and international business experience, including as Chief Financial Oﬃcer of Bunzl plc from 2006 to 2019. Prior to that, Brian held a number of senior management ﬁnance roles with Bunzl, including divisional Finance Director, Group Treasurer and Head of Internal Audit. – Experience as a Non-Executive Director including of United Utilities Group PLC between 2012 and 2021, where he was also Chair of the Audit Committee. – Extensive experience of signiﬁcant strategic initiatives that delivered growth and sustained shareholder returns over the long term. – Chartered accountant. Current external appointments Non-Executive Director of Ferguson Enterprises Inc., where Brian is also a member of its Nominations and Governance Committee and Audit Committee. Non-Executive Director of OFI Group Limited. Date of appointment: July 2020 Independent: Yes Relevant skills and experience – Signiﬁcant international healthcare experience leading fully integrated global businesses, including 27 years with Abbott Laboratories, where Heather held a number of global senior operational and strategic leadership roles, including Senior Vice President of Abbott Diabetes Care and most recently Executive Vice President of Abbott Nutrition. – Extensive relevant international, commercial and operational experience. – Proven track record of overseeing the development of commercially viable new product pipelines and brand building. Current external appointments Chair of Assertio Therapeutics, Inc.; Chair of SCA Pharmaceuticals, LLC. Non-Executive Director of Immatics, Inc., and Non-Executive Director of Pendulum Therapeutics, Inc. Prof Constantin Coussios OBE N R Non-Executive Director Kim Lody N R Non-Executive Director Sharon O’Keefe N R Non-Executive Director Date of appointment: September 2020 Independent : Yes Relevant skills and experience – Internationally recognised key opinion leader, awarded an OBE for Services to Biomedical Engineering with a track record of translating research into commercial technologies. – Signiﬁcant experience in drug delivery devices and technologies, including previously leading the Oxford Centre for Drug Delivery Devices, a cross-disciplinary centre working with pharmaceutical and medical device companies and the NHS. – Signiﬁcant experience in antimicrobial technologies and advanced wound care, including as co-investigator of a national programme on antibacterial technologies beyond antibiotics. Current external appointments Director, Institute of Biomedical Engineering, University of Oxford. Professorial Fellow Magdalen College, Oxford, Founder and Director of OrganOx Limited, OxSonics Limited and OrthoSon Limited. Trustee of the Oxford Transplant Foundation and Trustee of Magdalen College Oxford. Date of appointment: February 2022 Independent: Yes Relevant skills and experience – Extensive healthcare, reimbursement, and MedTech experience specialising in commercial strategy, product innovation, branding, business development, and growth. – Leadership experience as President and CEO of NYSE listed Sonida Senior Living Corporation (retired); President of GN Hearing North America, President of Resound US; President of Coloplast Chronic Care US, Chief Operating Oﬃcer of Senior Home Care, and Executive Vice President and Chief Marketing Oﬃcer of Gentiva Health Services. Current external appointments Non-Executive Director and Chair of the Talent & Compensation Committee, Ball Ventures; Non-Executive Director and member of the Audit Committee of Mozarc Medical; and Non-Executive Director and Treasurer, Geauga Hunger Task Force. Date of appointment: March 2022 Independent: Yes Relevant skills and experience – Extensive healthcare and executive experience, with focus on driving quality, eﬃciency and innovation. – Previously President and Chief Operating Oﬃcer of UChicago Medicine, Non- Executive Director of Aviv REIT and of Vocera Communications. – Holds an M.S. in Nursing Administration from the Loyola University of Chicago, and a B.S. in Nursing from Northern Illinois University. Current external appointments Non-Executive Director of Adtalem Global Education Inc. N Nomination Committee AR Audit and Risk Committee R Remuneration Committee * denotes Chair of the respective Committee 93 Convatec Group Plc Annual Report and Accounts 2024 Governance Financial statements Additional information Overview Strategic report Convatec Executive Leadership Team (CELT) CELT is responsible for the management and performance of Convatec with frequent reporting to, and oversight by, the Board 1 James Kerton EVP, General Counsel & Company Secretary 5 Karim Bitar Chief Executive Oﬃcer 9 John Haller EVP, Chief Quality & Operations Oﬃcer 2 Mark Jassey President & Chief Operating Oﬃcer, Continence Care & Home Services Group 6 Jonny Mason Chief Financial Oﬃcer 10 David Shepherd President & Chief Operating Oﬃcer, Advanced Wound Care 3 Kjersti Grimsrud President & Chief Operating Oﬃcer, Infusion Care 7 Emma Rose EVP, Chief People Oﬃcer 11 Dr Divakar Ramakrishnan EVP, Chief Technology Oﬃcer and Head of Research & Development 4 Bruno Pinheiro President & Chief Operating Oﬃcer, Ostomy Care 8 Evelyn Douglas EVP, Chief Strategy & Business Development Oﬃcer 12 Anne Belcher President & Chief Operating Oﬃcer, Global Emerging Markets Biographical details for Karim Bitar, CEO, and Jonny Mason, CFO, are provided on page 93. More detailed CELT member biographical information is available at www.convatecgroup.com BOARD MEMBERSHIP 1 2 3 4 5 6 7 8 9 10 11 12 94 Convatec Group Plc Annual Report and Accounts 2024 Governance James Kerton¹ EVP, General Counsel & Company Secretary Emma Rose¹ EVP, Chief People Officer Kjersti Grimsrud President & Chief Operating Officer, Infusion Care Appointed to CELT: 2024 James rejoined Convatec in May 2024, having previously held the role of Vice-President, Deputy General Counsel in 2021 to 2022. James was previously General Counsel and Company Secretary at Redde Northgate plc and brings signiﬁcant listed company and legal practice experience, having previously held senior leadership roles at London Stock Exchange Group plc and practiced as a lawyer at Freshﬁelds Bruckhaus Deringer LLP. Appointed to CELT: 2024 Emma joined Convatec in April 2024. She was previously Chief Human Resources Oﬃcer at Travis Perkins Plc, the UK’s largest distributor of building materials, with more than 20,000 colleagues in the UK and Europe. Emma is a seasoned HR leader and has had a distinguished career spanning more than two decades across industries, from Kerry Foods and InterContinental Hotels Group, to Mondelez International, Cadbury, Coca-Cola and M&S. She has a very strong track record for delivering transformational people and culture strategies. Appointed to CELT: 2018 Kjersti joined Convatec and CELT in 2018. She was a member of the founding team at Axis-Shield and appointed President Europe and the Middle East and President International at Alere, Inc., following its acquisition. Kjersti’s 25 years of experience in the MedTech sector includes roles within diabetes care, including General Manager, Operations, Sales, Marketing and R&D positions. Mark Jassey President & Chief Operating Officer, Continence Care & Home Services Group Dr Divakar Ramakrishnan¹ EVP, Chief Technology Officer and Head of Research & Development Bruno Pinheiro President & Chief Operating Officer, Ostomy Care Appointed to CELT: 2024 Mark was promoted and joined CELT in October 2024. Mark joined 180 Medical in 2007, which became part of Convatec in 2012, and has held a variety of leadership roles, including most recently, Chief Commercial Oﬃcer, HSG and VP, Head of Global Marketing – Continence Care. Prior to joining Convatec, Mark worked for several years in retail and logistics. Appointed to CELT: 2020 Prior to joining Convatec, Divakar served as Chief Digital Oﬃcer and Vice President for Eli Lilly’s Drug Delivery, Device and Digital Health groups, where he led a global R&D team focused on developing innovative and digitally enabled devices to improve patient care. Divakar’s career in healthcare spans more than 20 years. He served as Eli Lilly’s Vice President of Manufacturing Science and Technology, a role in which he oversaw all the company’s process development across its entire product portfolio. Appointed to CELT: 2021 Bruno worked for Bristol Myers Squibb prior to its sale of Convatec in 2008. Bruno’s diverse experience spans across Sales, Business Development & Global Emerging Markets. Prior to his appointment as interim President & Chief Operating Oﬃcer, Global Emerging Markets, Bruno led a diverse team across eight countries in his role as Head of Convatec’s Latin America business. Bruno was appointed as President & Chief Operating Oﬃcer, Ostomy Care, in May 2022. Evelyn Douglas¹ EVP, Chief Strategy & Business Development Officer John Haller¹ EVP, Chief Quality & Operations Officer Anne Belcher President & Chief Operating Officer, Global Emerging Markets Appointed to CELT: 2020 Evy has in-depth expertise in the MedTech sector, having spent 20 years at Becton, Dickinson and Company (BD) prior to joining Convatec in 2020. At BD, she was Senior Vice President of Corporate Development and Strategy, where she supported the company to build its capabilities, focusing on opportunities for partnerships, acquisitions and divestitures. Prior to her role in corporate development at BD, Evy held senior positions in their legal team. Appointed to CELT: 2022 John joined Convatec in 2022 from Next Press, where he was General Manager. Previously, he spent 26 years with Stryker Corporation, a leading global MedTech business, where he played a pivotal role in helping Stryker grow from a $1 billion revenue company to a $13 billion revenue company. John has lived and worked in countries around the world. Appointed to CELT: 2022 Anne joined Convatec in 2022 after 30 years at GlaxoSmithKline (GSK), where she most recently served as Senior Vice President & General Manager, Nordics. She originally joined GSK as a sales representative in New Zealand in 1991 and went on to hold senior roles globally within GSK. Anne has experience in diverse market environments, including both mature and emerging markets across Asia Paciﬁc, EMEA and the Americas. David Shepherd President & Chief Operating Officer, Advanced Wound Care Appointed to CELT: 2018 David joined Convatec and CELT in 2018, having previously worked for Johnson & Johnson for 26 years, where he held a variety of sales, marketing, strategic and operations roles, most recently being Vice President, Southern EMEA with responsibility for 15 businesses across the region. Prior to that, he was the US President for Cardiovascular and Speciality Services. 1. Members of the ESG Steering Committee. 95 Convatec Group Plc Annual Report and Accounts 2024 Governance Financial statements Additional information Overview Strategic report Board activity and actions Areas of focus Activities Strategic priorities Strategy and delivery – Considering and approving the Group’s strategy and any changes and monitoring execution and delivery. – Considering and approving major transactions, capital projects, corporate actions or investments by the Company. – Two-day strategy meeting to review progress and evolution of the FISBE strategy – Review of corporate development opportunities and capital investments to ensure alignment with our FISBE strategy and business segment plans – Consideration and approval of capital expenditure to support manufacturing capacity expansion across all segments – Consideration and approval of the acquisition of Livramedom, a homecare services business to provide improved support to our patients and Healthcare Professionals (HCP) in France – Regular review of innovation and technology, including the new product pipeline and out clinical evidence generation as well as quality and operations enhancements to improve resilience. In particular, the Board has considered the US Medicare Administrative Contractors (MACs) Local Coverage Determinations (LCDs) for Skin Substitute Grafts/Cellular and Tissue-Based Products for the treatment of Diabetic Foot Ulcers (DFUs) and Venous Leg Ulcers (VLUs) – Reviewed progress of the GBS transition and its contribution to our simpliﬁcation and productivity agenda – Consideration of the global economy and geopolitics, and the potential impact on growth and performance – Consideration of our customers and those who use our products and services, the competitive landscape we operate in and opportunities for innovation Focus Innovate Simplify Build Execute Leadership – Recommendation of directors for re-election, following recommendations from the Nomination Committee. – Reviewing the performance of the Board and its committees, individual Directors and the Group’s overall corporate governance framework. – Reviewing wider leadership across the organisation. – Board evaluation completed and results reviewed in late 2024 (see pages 99 to 100 for details) – Consideration of the composition and skills, knowledge and experience of the Board and Board Committees – Consideration of Non-Executive Director tenure and appropriate succession planning – Consideration of the appointment of three new CELT leaders. – Review of CELT including their performance, retention and career development – Further development of succession plans for CELT including review of potential candidates from the wider leadership team Build Execute Our people – Receiving and considering the views of the Company’s employees. – Sharon O’Keefe continued her role as Non-Executive Director Workforce Liaison Champion and provided the Board with regular post-engagement brieﬁngs. The Board also considered the 2025 plan for workforce engagement. – The Chair and Sharon O’Keefe attended the Global Leadership Meeting, held in London in April 2024 – The Board met colleagues from across the organisation during site visits Innovate Build Execute Business plan and performance – Approving annual budget and business plan and regularly reviewing actual performance and latest forecasts against the budget and business plan. – Approved 2025 budget and business plan – Regular CEO and CFO reports and brieﬁngs on actual performance, horizon scanning and forecasts – Deep-dives into segment performance and plans Focus Innovate Simplify Build Execute Board focus and principal matters considered in 2024 The principal matters considered by the Board during 2024 and their linkage to the Company’s strategic priorities are set out in the table below. As part of the business of each Board meeting, the Board is briefed by Executive Management on business performance, people and culture, including relevant updates on employee engagement, turnover, DE&I, wellbeing and talent. The Board also receives a report from the CFO providing updates on the Group’s ﬁnancial performance. Members of CELT and senior management regularly brief the Board on business and strategic developments, opportunities, principal and emerging risks and their mitigation, and key operating decisions. The Board also receives regular reporting on Convatec’s responsible business agenda, including enterprise risk management, stakeholder engagement, legal and compliance and other topics relevant to the business and the environment Convatec operates in. 96 Convatec Group Plc Annual Report and Accounts 2024 Governance Areas of focus Activities Strategic priorities Financial reporting – Approving ﬁnal and interim results, trading updates, the Annual Report and the release of price-sensitive information. – Approving the dividend policy, determination of any interim dividend and the recommendation (subject to the approval of shareholders) of any ﬁnal dividend to be paid by the Company. – Approval of the Viability and Going Concern statements – Approval of half-year and full-year results – Consideration and approval of trading updates issued in May and November 2024 – Conﬁrmation and approval of the interim dividend and recommendation of the ﬁnal dividend – Approval of the 2023 Annual Report and Notice of 2024 AGM, held as a hybrid meeting Focus Execute Risk and governance – Ensuring the Group has an eﬀective framework and systems of internal control and risk management in place, including approving the Group’s risk appetite and principal and emerging risks. – Review of the eﬀectiveness of the Group’s risk management and internal control framework and systems – Review and approval of the Group’s risk appetite, ensuring that Group strategy and current performance are aligned with risk appetite – Review and approval of the Group’s principal and emerging risks – Regular Governance, Legal and Compliance brieﬁngs, including updates provided by external advisers – Brieﬁngs to the Board from the Board Committee Chairs on the activities of the Committees – Review of Board Committee terms of reference, with particular reference to the changes brought about by the 2024 UK Corporate Governance Code Focus Innovate Simplify Build Execute Stakeholder engagement – Considering the balance of interests between the Group’s stakeholders. – Receiving and considering the views of the Company’s shareholders. – The Board met with patients, HCP and thought leaders to gain deeper insights into our products and developments – Brieﬁngs provided by the Investor Relations team and the Group’s corporate brokers on investor feedback following results announcements and investor roadshows – The Chair and other members of the Board had meetings with our largest institutional shareholders during the year Innovate Build Execute Responsible business – Overseeing the Group’s responsible business programme. – Reviewing the Group’s responsible business strategy and its implementation. – Considering the Group’s people and their welfare. – Regular brieﬁngs from the ESG Steering Committee – Oversight of the Group’s ESG framework – Reviewed progress against sustainability targets and agreed priorities for 2025 and further embedding ESG into strategy – Review of plans to address the new requirements of the EU Corporate Sustainability Reporting Directive (CSRD) – Review of talent management and progress on DE&I initiatives including gender and ethnicity data – Review of employee gender pay gap data – Review and approval of the Modern Slavery Statement. – Review of results collected from and management’s responses to two employee surveys Innovate Simplify Build Execute BOARD FOCUS SESSION ON OUR INFUSION CARE PRODUCTS CASE STUDY: BOARD EDUCATION In September, the Board enjoyed an in-depth visit to our Infusion Care manufacturing site in Osted, Denmark, spending time with colleagues to learn more about Global Quality & Operations (GQO) and Infusion Care and to see the progress we are making in the execution of our FISBE strategy. During the visit, Non-Executive Director, Sharon O’Keefe – a former nurse and our W Orkforce Liaison Champion, held a series of small focus groups to listen directly to colleagues in manufacturing and commercial roles on their perspectives and suggestions, which Sharon shared with the Board as a whole. Board members also had the opportunity to hear a number of insightful brieﬁngs and practical demonstrations from Kjersti Grimsrud, President & Chief Operating Oﬃcer, Infusion Care, and members of the Infusion Care team, as well as leading Health Care Practitioner, Professor Per Odin, Head of Neurology at Lund University, who shared insights on Parkinson’s disease, and a customer with Type 1 diabetes. The Board spent time hearing from John Haller, EVP, Chief Quality & Operations Oﬃcer, and members of the GQO team on our commitment to quality and continuous improvements, and took a tour of the manufacturing facilities for a ﬁrst-hand look at products coming oﬀ the line and the highly automated lines that produce our Inset Guard portfolio of products. Sessions helped bring to life our solutions and exciting portfolio, including Neria™ Guard and the beneﬁts it oﬀers in the treatment of Parkinson’s disease (see page 21). As part of the site tour, colleagues spoke about a range of continuous improvement projects underway to increase capacity to meet the needs of our customers, ensuring the many people who use our Infusion Care solutions can continue to count on trusted solutions from Convatec. Further opportunities to meet with HCP, researchers and patients will be scheduled during 2025. Commenting on the visit, Non-Executive Director Professor Constantin Coussios OBE, said “Convatec is a global leader in subcutaneous drug delivery and infusion set design, development and manufacturing. During our visit, we were able to see how the Company is building on its three decades of experience in this area to drive innovation, quality, safety, as well as leveraging its global scale to support Convatec partners.” Convatec delivers more than 110 million products every year to serve end users in disease areas such as diabetes, Parkinson’s disease, pain management, and primary immunodeﬁciency. 97 Convatec Group Plc Annual Report and Accounts 2024 Governance Financial statements Additional information Overview Strategic report Board activity and actions continued BOARD KEY DECISIONS IN 2024 Oversight of Convatec’s product pipeline and new product launches The Board oversaw our technology and innovation driven growth strategy during the year, reviewing progress and approving capital to support R&D, improvements in quality and capacity and drive the launch and scale-up of new products. During the year, the Board oversaw the delivery of four new product launches: GentleCath Air™ for women 2.0, see pages 18 and 19; Esteem Body™ with Leak Defense™, see pages 16 and 17; our me+ Companion™ app, see page 41; partnered with Tandem on a new innovative infusion set, see page 20; and collaborated with AbbVie for new therapies to treat Parkinson’s disease through Neria™ Guard, pages 20 and 21. S.172 – How the Board considered diﬀerent stakeholders in making the decision New product launches are fully aligned with our FISBE strategy as diversiﬁcation of products and customers is vital to the long-term success of the Company. Patients and HCPs: Our innovative new products have the potential to provide improved care, greater choice and better outcomes for patients living with chronic conditions. Our people: Our colleagues beneﬁt from the increased strength of our business, creating more opportunities for career development within a larger-scale business. Suppliers and distributors: The launches provide opportunities to build partnerships with trusted suppliers and distribution networks across the globe. Investors: Our innovation pipeline supports our FISBE strategy and our sustainable and proﬁtable growth through diversifying our product portfolio, improving the solutions we provide to our customers and enabling us to serve more customers across our chronic care markets. Oversight of Global Quality Operations (GQO) transformation programmes The programmes aim to support the business by providing Convatec with a world class quality and operations team that is able to deliver high-quality, cost-eﬀective products to our customers on time and aligned with our ESG strategy, by focusing on three pillars of simpliﬁcation and productivity: – Continuous Improvement – Automation and Robotics – Plant Network Optimisation During the year, the Board oversaw initiatives to optimise our network, these included the approval of signiﬁcant capital expenditure projects to expand manufacturing capacity and increase resilience by scaling core sites; while also reducing our footprint through the ﬁnalisation of the closure of our Herlev site in Denmark and our Eurotec site in the Netherlands and the movement of our supply hub work from Switzerland to the UK. The Board also approved capital and operational investments and monitored the roll-out of programmes to increase the use of automation and robotics in our production lines. S.172 – How the Board considered diﬀerent stakeholders in making the decision The programmes are fully aligned with our FISBE strategy as their delivery will result in a more eﬃcient and eﬀective commercial organisation. Investors: The GQO transformation programmes support revenue growth through capacity expansion and cost reduction. The improvements to quality and availability will also strengthen customer loyalty, increasing demand for our products. The programmes also underpin conﬁdence in the future growth and overall success of the business. Suppliers and distributors: The ability of suppliers to meet the increased requirements in terms of quality, volume, price and standards of raw materials was considered before making decisions to invest in the expansion of our core sites. The expansion will provide opportunities to build partnerships with new and existing trusted suppliers and our distribution networks across the globe. Patients and HCPs: The programme will provide patients with better quality and improved access to our products. The eﬃciencies created in our supply chain can also be passed onto our customers and patients who will beneﬁt from lower cost products. Our people: The closure of our Herlev and Eurotec manufacturing sites and supply hub in Switzerland resulted in a number of redundancies. While the impact of any redundancy proposals on colleagues was considered, the decision was taken to ensure the success of the business in the medium to long term. The reforms within our GQO will provide our colleagues with safe, challenging, and engaging places of work where they can grow their careers while enabling us to grow our business. Convatec will also invest in developing our people with additional skills to support the new and innovative ways of working. Convatec Group Plc Section 172 statement In accordance with Section 172 of the Companies Act 2006 (Section 172), the Group and its Directors act in the way that they consider in good faith would most likely promote the success of the Company for the beneﬁt of its shareholders as a whole, having regard to other stakeholders. Throughout the Annual Report and Accounts, we provide examples of how Convatec has taken into account the likely consequences of decisions in the long term, fosters and builds relationships with stakeholders, understands the importance of engaging with our employees and gives consideration to their interests, understands the impact of our operations on the communities in the regions where we operate and the environment we depend upon and attributes important to behaving as a responsible business. The Board appreciates the importance of eﬀective stakeholder engagement and considers its stakeholders’ views in its decision making and in setting its strategy. The Board also understands the need to act fairly between Convatec’s stakeholders. Although the Board’s decisions do not always impact all of our stakeholders to the same extent, by having a process in place for decision making, the Board ensures that it has due regard for the interests of its stakeholders, including our customers and patients, HCP, our people, our suppliers and other supply chain partners, our channel partners, our B2B customers and our investors and debt providers, when taking decisions. Details of our stakeholder engagement can be found throughout the Annual Report and Accounts and in particular on pages 36 and 37. The above principal decisions and activities provide speciﬁc examples of how the Board and its Directors have complied with Section 172 and have considered, individually and collectively, stakeholder interests and impacts in making diﬀerent decisions that support the implementation of Convatec’s strategy and the delivery of our objectives now and in the longer term. Details of how our Board and Board committees operate, their responsibilities, and the matters they considered during the year are contained in the Governance Report on pages 84 to 148. 98 Convatec Group Plc Annual Report and Accounts 2024 Governance Board performance evaluation recommendations resulting from the review process, are set out below. Lintstock has no other connection with Convatec or any of the individual Convatec Directors. Individual Director performance evaluation As part of the annual evaluation process, there is a review of the eﬀectiveness and commitment of individual Directors. In respect of the Non-Executive Directors this includes a review of an individual’s commitment of time to the Company in light of their other commitments (as noted in their biographies on page 93). Except in relation to his own, the Chair leads the individual Director evaluations. All Non-Executive Directors were considered to be providing valuable input and robust challenge to management with a small degree of healthy tension, eﬀective dialogue and thoughtful and authentic interactions. Therefore, the Board is recommending all Non-Executive Directors for re- election at the 2025 AGM. 2023 Board performance evaluation progress report and 2024 Board performance evaluation review In 2023, the Board undertook an evaluation of its eﬀectiveness as required by the Code (details of which are set out in the 2023 Annual Report and Accounts). Information about the key priorities arising from this evaluation and progress to date is set out on the following page. In October 2024, the Board undertook a questionnaire-based evaluation, externally facilitated by Lintstock. The questionnaire included both quantitative and qualitative questions. Lintstock analysed the results and provided reports for the Board and Board Committees, with unattributed scoring and comments. The reports and key ﬁndings were discussed at the Board and Committee meetings, with each considering the evaluation outcomes and any appropriate actions. The key ﬁndings from the 2024 Board performance evaluation process, including the actions agreed to address Board Chair performance evaluation In line with prior years, the evaluation of the performance of the Board Chair was conducted by the Senior Independent Director (SID) in discussion with all other Board members, other than the Board Chair. The overall conclusion was that he continues to perform very well in all aspects of the role, providing considerable value and support to management, the Board and wider business. The review highlighted that the Chair leads eﬀective meetings, with a focus on clarity and pragmatism in decision making. He has a strong and constructive relationship with the Executive Directors, providing appropriate challenge, support and advice. The SID provided feedback to the Board Chair after the review of his performance. PROGRESS IN RELATION TO ACTIONS ARISING FROM THE 2023 BOARD PERFORMANCE EVALUATION Actions Progress Board education and understanding around external developments and competition Reinforce focus on key areas for the business including broad emerging trends, IT, talent and the competitive landscape. During the year, the CEO and CFO Reports provided the Board with information on the competitive landscape, including latest developments and market share. The Board also received presentations from external advisers concerning competition. In June, the Board participated in a two-day oﬀ-site meeting which focused on strategic review and priorities, each business segment provided the Board with details on the Group’s positioning within the market as well as the business’ relative strengths and weaknesses and any opportunities within the market. The Board also beneﬁtted from an external presentation on AI exploring opportunities for future use. This programme will continue in 2025. Engaging with stakeholders, particularly through site visits In order to gain better insight into stakeholder priorities and concerns and to provide opportunities to improve relationships, the Board considered that the momentum in respect of stakeholder engagement be maintained and additional opportunities for the Board and management to engage with colleagues and customers be sought. An engagement programme between Non-Executive Directors, Executive Directors, colleagues from across the business, researchers, HCP and patients was implemented during the year. As part of this programme, the Board and Committee members visited a number of Convatec sites, including our GBS centre in Lisbon, Portugal; our manufacturing site in Osted, Denmark and our Head Oﬃce in London, UK. A similar programme has been put in place for 2025. Board information, including R&D The Board considered that they would beneﬁt from more opportunities to improve their knowledge in areas such as research and development (R&D) to better inform decision making. The Board was provided with a deep-dive session on Infusion Care product landscape and innovative use developments supporting increased capacity requirements. Technology & Innovation (T&I) leadership also provided details of the T&I strategy as part of the two day strategy focused oﬀ-site event in June. 99 Convatec Group Plc Annual Report and Accounts 2024 Governance Financial statements Additional information Overview Strategic report Board performance evaluation continued 2024 BOARD PERFORMANCE EVALUATION REVIEW Overall, the Board was considered to be operating at a high standard, with positive Board member dynamics that continue to add real value to the business. The Board felt conﬁdent in its oversight, with strong alignment as to the key priorities. The priority recommendations arising from the Board performance evaluation and proposed actions are set out below. Findings Actions for 2025 Board focus on strategy The Board should continue to focus on overseeing the execution and delivery of the strategy and strong ﬁnancial performance. This should include innovation strategy, capacity and pipeline for research and development and growth through investment in organic growth opportunities or M&A, as well as longer-term strategy, opportunities and risks. The Chair and the Company Secretary to review the Board meeting forward planner, to ensure appropriate weight is given to strategic plans and opportunities in the short, medium and long term. Board membership and succession planning The Board‘s composition of high calibre individuals with a diverse range of experience is a strength, and has a focus on how the skills and experience of the Board can be leveraged in oversight of succession planning for the organisation more broadly. The Chair to ensure that the Nomination Committee is focused on addressing future succession needs broadly and considering any additional skill sets or diversity that could complement the Board. Assessment of past decisions The Board has beneﬁtted from the structured look-back at past decisions, to assess outcomes and the key learnings and intends to broaden the use of this important tool. CEO to lead structured sessions reviewing past decisions, including an assessment of outcomes versus expectations and use of key learnings as part of decision making for future strategic initiatives. 100 Convatec Group Plc Annual Report and Accounts 2024 Governance Nomination Committee report A word from the Chair “We recognise the multiple benefits for stakeholders that a diverse and inclusive business, leadership team and culture will deliver. These factors continue to make a positive contribution to Convatec’s success” Dr John McAdam CBE Chair of the Nomination Committee COMMITTEE INTRODUCTION AND OVERVIEW Activity highlights – Reviewed skills, experience and characteristics of Board members and determined that the Board was balanced, diverse and with an appropriate level of skills, knowledge and experience – Reviewed talent and succession planning for the Board, Board Committees and CELT – Recommended to the Board the appointments to CELT to further strengthen our leadership team – Reviewed progress and development of the Group’s diversity, equity & inclusion and wellbeing strategy and assessed key metrics – Reviewed performance and development for CELT and senior leaders within the organisation, helping to build and develop a sustainable, diverse and inclusive organisation – Reviewed and approved the Board Diversity, Equity and Inclusion Policy 2025 priorities – Maintain focus on development and succession plans for CELT and senior management – Continue the development of short-, medium- and long-term Board succession plans, considering the tenure of each Director – Identify any gaps in skills, background or experience which the Board may wish to consider when making new appointments Key numbers Meetings held 3 (2023: 3) Attendance 95% (2023: 100%) Key areas of responsibility – Reviews regularly the Board’s composition – Leads Board appointments process as necessary – Oversees and recommends orderly Board succession and oversees senior management succession planning – Reviews whether each Non-Executive Director is devoting enough time to his or her duties – Oversees the balance of skills and experience within the Group and on the Board – Monitors diversity within the Board, its Committees and across the Group The role and responsibilities of the Committee are set out in the terms of reference and available at www. convatecgroup.com/investors/ governance/ . These are subject to annual review and were last reviewed in December 2024. Committee membership, meetings and attendance Director Member since Attended John McAdam (Chair) September 2019 1 3/3 Margaret Ewing May 2019 3/3 Heather Mason September 2020 3/3 Brian May September 2020 3/3 Constantin Coussios January 2022 2/3 2 Kim Lody February 2022 3/3 Sharon O’Keefe March 2022 3/3 1. Dr McAdam was appointed Chair of the Committee on 30 September 2019 2. Mr Coussios was unable to attend one meeting due to a scheduling conﬂict The table above shows Committee members and the number of scheduled meetings attended out of the number of meetings members were eligible to attend during 2024. 101 Convatec Group Plc Annual Report and Accounts 2024 Governance Financial statements Additional information Overview Strategic report Diversity The Board endorses the aims of The FTSE Women Leaders Review and the Parker Review. At Board level, we have members of various nationalities, gender and ethnicity who have an excellent range of appropriate skills and expertise. The renewed Board Diversity, Equity and Inclusion Policy, which also applies to its committees was reviewed and approved by the Board in December 2024, and reﬂects the objectives of the FCA Listing Rules, The FTSE Women Leaders Review and Parker Review. As at 31 December 2024 and at the date of this report, we comply with the recommendations of all requirements in relation to gender and ethnicity at a Board and executive management level. On this page, we have provided data on Board and executive management gender and ethnicity. For the purposes of gathering this information, individuals were asked to self-declare their gender and ethnicity against the Oﬃce for National Statistics classiﬁcation. The Committee will continue to monitor Board diversity in other respects, including experience, skills, personal attributes, age and ethnicity. In all instances, individuals will continue to be appointed on merit and the Committee will remain focused on always ensuring that the Board has the relevant skills and expertise to perform eﬀectively. Dear Shareholder I am pleased to present the Nomination Committee Report, which summarises how the Committee discharged its duties during the year. Year in review The Committee’s main priorities this year included supporting the evolution of the senior leadership structure and reviewing longer-term Board composition. The Committee supported the appointments of Emma Rose, EVP, Chief People Oﬃcer and James Kerton, EVP, General Counsel & Company Secretary to CELT in April and May 2024, respectively, as well as the promotion of Mark Jassey to CELT as President & Chief Operating Oﬃcer of Continence Care & Home Services Group in October 2024. They are each strong additions to CELT and, with their leadership, we are in an even stronger position to deliver our FISBE strategy. Board and Committee composition This year there have been no Board changes, but the Nomination Committee has continued to keep Board composition under review The composition of the Nomination Committee is set out on page 101. As part of our ongoing diversity and inclusion strategy, our target is to achieve 50% of senior management roles to be held by female leaders and 20% by ethnically diverse leaders by 2027, this currently stands at 45% and 27%, respectively. During the year, the Board has considered diversity insights across a range of metrics with a focus on gender and ethnicity. In 2025, the Committee and the Board will continue to monitor the ongoing development of DE&I and Wellbeing initiatives across the Group. Relevant skills and expertise The Board beneﬁts from a wide variety of relevant skills, experience and knowledge, details of which are set out in the biographies and skills matrix on pages 92 and 93. Nomination Committee report continued Board and senior leadership gender representation Number of Board members Percentage of Board Number of senior positions on the Board (CEO, CFO, SID and Chair) Number in executive management Percentage of executive management Men 5 56% 3 6 60% Women 4 44% 1 4 40% Note: Executive Management includes CELT members but excludes the CEO and CFO. Board and senior leadership ethnicity representation Number of Board members Percentage of Board Number of senior positions on the Board (CEO, CFO, SID and Chair) Number in executive management Percentage of executive management White British or other white (including minority-white groups) 7 78% 3 9 90% Mixed/multiple ethnic groups – – – – – Asian/Asian British – – – 1 10% Black/African/Caribbean/ black British – – – – – Other ethnic group 2 22% 1 – – Note: Executive Management includes CELT members, but excludes the CEO and CFO. 102 Convatec Group Plc Annual Report and Accounts 2024 Governance Talent and succession planning An equally important role for the Committee is ensuring that we have an appropriate pipeline of future talent within the business. The Committee regularly reviews succession plans, not only for the Board, but also for CELT. In support of Convatec’s succession planning, the Committee received reports on talent management, DE&I and Wellbeing initiatives as well as progress of the Group’s eﬀorts to increase the number of Vice-President appointments from internal candidates, through a leadership development programme for mid-level leaders with emphasis on personal development goals. This programme assesses potential successors ready now, those ready in one to two years, and those anticipated to be ready in three to ﬁve years and aims to accelerate their development and enable them to play a crucial role in delivering on our strategic aims into the future. Mark Jassey was appointed to the role of President & Chief Operating Oﬃcer of Continence Care and Home Services Group, having been previously identiﬁed by the Committee as a suitable internal candidate. Given its importance, succession planning is scheduled for the Committee’s consideration twice a year. Board tenure Director tenure and independence was reviewed as part of the annual Board Review. None of the directors’ tenure exceeded the recommended nine years, and it was concluded that each Non-Executive Director remained independent. The Committee has commenced appropriate succession planning for the Board’s longest serving members. Board induction, training and development On joining the Board, all Non-Executive Directors participate in a formal induction programme. The programme is monitored by the Chair (other than in relation to his own induction, which is guided by the Senior Independent Director) and is the responsibility of the Company Secretary. Its purpose is to ensure that each newly appointed Non-Executive Director is able to contribute to Board discussions as quickly as possible. Board appointments Appointments to our Board are made solely on merit with the overarching objective of ensuring that the Board maintains the correct balance of diversity, experience, skills, length of service and knowledge of the Group to successfully establish and oversee the delivery of the Group’s strategy, whilst also providing constructive challenge as necessary. Appointments are made based on the recommendation of the Nomination Committee with due consideration given to the beneﬁts of diversity in its widest sense, including gender, social and ethnic backgrounds, as well as candidates expected ongoing commitments. Directors are required to seek Board approval prior to taking on additional signiﬁcant commitments and to ensure that existing roles and responsibilities continue to be met and conﬂicts are avoided or managed. When recruiting new Non-Executive Directors, meetings are held between potential candidates and the Chair, CEO, CFO and Non-Executive Directors. Members of the Nomination Committee review feedback and recommend candidates for appointment to the Board. Decisions relating to such appointments are made by the Board based on a number of criteria, including the candidate’s skills and experience, the contribution they can make to our business and their ability to devote suﬃcient time to properly fulﬁl their duties and responsibilities. Reappointment of Directors All Directors are subject to annual re-election and will be proposed for re-election by shareholders at the AGM to be held on 22 May 2025. Following evaluation, all Directors continue to be eﬀective and have the time available to commit to their role, and the Board has recommended that all directors are put forward for re-election. Non-Executive Directors are initially appointed for a three-year term and retiring Directors, if willing to act, will be deemed to be reappointed unless the resolution for their re-election is not approved. While each induction programme is tailored to the individual Director’s needs, based on their skills and experience, typically, each programme provides new Directors with insight into the Group’s strategy, culture and operations and informs them about the governance and compliance processes and procedures we operate. During the year, the Board has also received training and updates on governance and regulatory matters, including the new 2024 Corporate Governance Code; the listing and prospectus regime reform; sustainability, including EU sustainability disclosure requirements and UK transition plan requirements; people matters, including remuneration and diversity; the new corporate failure to prevent fraud oﬀence and AI governance. The Board also received updates and training from the Group’s senior management and external advisers covering a range of topics. We continued to advance Board knowledge through training sessions and updates provided to both the Remuneration and Audit and Risk Committees by external advisers. Training focused on matters speciﬁc to their respective committee activities, including corporate governance updates, executive remuneration, corporate reporting and audit updates. In line with the results of the Board and Committee performance evaluation, we will focus on appropriate training in 2025. Committee performance evaluation The Committee conducted an evaluation of its performance in the form of a detailed questionnaire facilitated by an external provider, Lintstock, the results of which were highly rated overall. Matters identiﬁed for attention in 2025 are set out under 2025 Priorities on page 100. Copies of all Non-Executive Directors’ appointment letters are available for inspection at the Company’s registered oﬃce. On behalf of the Nomination Committee. Dr John McAdam CBE Chair of the Nomination Committee 25 February 2025 103 Convatec Group Plc Annual Report and Accounts 2024 Governance Financial statements Additional information Overview Strategic report Audit and Risk Committee report A word from the Chair “The Committee is delighted with the progress made by Global Business Services in continuing to transform and improve core business processes and controls, creating value for the Group” Margaret Ewing Chair of the Audit and Risk Committee COMMITTEE INTRODUCTION AND OVERVIEW 2024 highlights – Reviewed key judgements and estimates, alternative performance measures (or adjusted measures) and disclosures in respect of the 2024 ﬁnancial statements – Visited the Global Business Service centre in Lisbon to review progress – Appointed a new external auditor for 2026 ﬁnancial year, following a successful tender process – Monitored the development of ESG reporting and targets including compliance with TCFD and the plans to address the new requirements of the EU Corporate Sustainability Reporting Directive (CSRD) 2025 priorities – Continue to monitor the Audit and Risk Committee’s (ARC) understanding of the rapidly evolving regulatory requirements related to ESG and CSRD and the implications for the Group – Review the material control framework developed to respond to the new requirements of the UK Corporate Governance Code (the Code) 2024 (‘the revised Code’) – Monitor the preparation to address the new failure to prevent fraud oﬀence, applicable from September 2025 Composition The current members of the Committee are listed above. The biographies of the Committee members on page 93 outline the members’ collective wide ﬁnance, audit, risk management and relevant sector and business experience, enabling the Committee to provide constructive challenge and support to management and the auditors. In accordance with the Code, the Board has determined that Margaret Ewing and Brian May possess an appropriate breadth of recent and relevant ﬁnancial experience and is satisﬁed that the Committee has competence relevant to the sector and its overall responsibilities. Key numbers Meetings held 5 (2023: 5) Attendance 93% (2023: 100%) Key areas of responsibility The Audit and Risk Committee (ARC) plays a key role in supporting the Board to ensure there is appropriate oversight of the Group’s ﬁnancial position, external reporting, controls and risks. The Committee’s principal responsibilities are to oversee and provide assurance to the Board on: – The integrity and quality of ﬁnancial and non-ﬁnancial (including ESG and TCFD) reporting and to ensure it is fair, balanced and understandable – The eﬀectiveness of audit and assurance arrangements – The robustness and eﬀectiveness of the ﬁnancial, reporting, operational and compliance controls and risk management processes throughout the year The full role and responsibilities of the Committee are set out in the terms of reference (available on our website: www. convatecgroup.com/investors/governance/) and were updated in July 2024 to comply with the requirements of the revised Code. The Chair, Chief Executive Oﬃcer, Chief Financial Oﬃcer, EVP General Counsel & Company Secretary, Deputy Company Secretary, VP Group Financial Controller & Transformation and the VP Internal Audit, Enterprise Risk & Insurance and representatives of the external auditor attend the meetings on a regular basis. Other Board members have an open invitation to attend Committee meetings. The Committee also has at least two private sessions each year with each of the external auditor and the VP Internal Audit, Enterprise Risk & Insurance. A summary of the Committee’s activities during 2024, and until the date of this report, is detailed on the following pages. Committee membership, meetings and attendance Director Member since Attended 2 Margaret Ewing 1 August 2017 5/5 Heather Mason September 2020 4/5³ Brian May March 2020 5/5 1. Ms Ewing was appointed Chair of the Committee on 28 June 2019. 2. In 2024, there were ﬁve formal scheduled Committee meetings and, in addition, the members met as part of the selection panel to the external audit tender process. 3. Ms Mason was unable to attend one meeting due to a scheduling conﬂict. 104 Convatec Group Plc Annual Report and Accounts 2024 Governance General Counsel & Company Secretary and the lead partners of our external auditor, Deloitte, allowing me to understand how existing and emerging issues were being addressed and adapting the Committee’s agendas accordingly. The meetings with the VP Internal Audit, Enterprise Risk & Insurance and Deloitte lead partners also informed the Committee’s ongoing review of the eﬀectiveness of audit (internal and external, respectively) and ensured the internal audit plan prioritised controls and processes related to the Group’s principal and emerging key risks and the external audit plan focused on the evolving key audit risks. They also provided insight on the culture across the Group. Committee performance evaluation During the year, as part of the Board performance evaluation, the Committee members and regular attendees (including the internal and external auditors) undertook an evaluation of the Committee’s performance. The ﬁndings were discussed initially by the Committee and then shared with the Board. Overall, it was concluded that the Committee continued to perform very eﬀectively and had addressed its key priorities and action plan for 2024. Fair, balanced and understandable The Board is required to provide its opinion on whether it considers that the Company’s 2024 Annual report and Accounts (ARA), taken as a whole, are fair, balanced and understandable, and provide the information necessary for shareholders and other stakeholders to assess the Company’s position and performance, business model and strategy and key risks that challenge the Group. To support the Board in providing its opinion, the Committee considered the overall cohesion and clarity of the ARA an assessment of the quality of reporting through the assurance framework, process and controls that were applied in its preparation and discussion with management and the external auditor. This included: Dear Shareholder and other stakeholders As Chair of the Audit and Risk Committee, I am pleased to present the Committee’s 2024 Report, the purpose of which is to describe how the Committee conducted its responsibilities during the year. The Committee had ﬁve formal scheduled meetings in 2024, including the May meeting held in the Lisbon Global Business Services (GBS) centre. The Committee also led a robust external audit tender process. This concluded in June, when a Selection Panel held a meeting, resulting in a recommendation to the Board to appoint Ernst & Young as external auditor for the 2026 ﬁnancial year. See page 113 for further details. Whilst in Lisbon, the Committee held knowledge sharing sessions with the key leaders from the ﬁnancial, IT and HR control process teams based in the GBS as part of the Committee’s oversight responsibilities. The Committee was keen to understand the progress in simplifying processes, improving controls and risk management and any ongoing challenges faced by the GBS management in its ongoing migration. The expansion of the GBS from the Lisbon centre to now include Bogotá and Kuala Lumpur enables support to markets in all time zones. The Committee was delighted to observe the signiﬁcant progress made by the teams since its last visit in 2022, to transform, standardise and simplify business processes and controls. The Committee will continue to review progress as the Gloabl Emerging Markets (GEM) markets and Home Services Group (HSG) are transitioned into GBS scope (whereby processes across all of the Group will be included in the GBS), and as an increasing number of previously outsourced IT services are migrated to and provided by GBS. The GBS platform provides cost-eﬀective services to a high standard and is a critical facilitator of the Group’s strong internal controls and risk management framework. In addition to the Committee’s scheduled meetings, throughout the year I met regularly with senior management, particularly the CFO, VP Group Financial Controller & Transformation, VP Internal Audit, Enterprise Risk & Insurance, EVP – A detailed veriﬁcation process dealing with the factual content – Comprehensive reviews undertaken independently by senior management and Committee members to consider messaging, adequacy of disclosures, compliance with regulatory and legal reporting requirements, and balance – Speciﬁc reviews by the Board and CELT in relation to key sections of the ARA and relevant sections of the ARA audited by Deloitte – Conﬁrmation from management that the assurance framework had been adhered to for the preparation of the 2024 ARA Committee conclusions and confirmations Taking into consideration all areas of focus of the Committee during the year and in reviewing the 2024 ARA, including reviewing the supporting detailed topic papers, presentations and reports from management and Deloitte, the Committee was satisﬁed and able to conﬁrm to the Board that: – The Financial Statements for the year ended 31 December 2024 have been prepared applying appropriate accounting policies and disclosures, and provide a true and fair view – The Group’s internal controls and risk management processes were operating eﬀectively throughout the year, with no signiﬁcant control failures identiﬁed – The 2024 ARA, overall, are fair, balanced and understandable. The Board’s statement in relation to this conﬁrmation is included on page 148 – It is reasonable for the Directors to make the viability and the going concern statements on pages 82 to 83 and page 161, respectively – The Group’s speaking up and fraud risk processes have operated eﬀectively during the year – The external and internal auditors have provided eﬀective and independent audits that have been challenging, robust and of a high quality I would like to thank my fellow Committee members and all teams involved with the Committee’s activities for their contribution during 2024 and their intense focus on quality, sound judgements, controls and risk in a challenging global environment, politically and economically. I hope that you ﬁnd this report informative and can take assurance from the work undertaken by the Committee during the year and planned for 2025. Margaret Ewing Chair of the Audit and Risk Committee 25 February 2025 ARC members, together with Jonny Mason and James Kerton, met with GBS colleagues in Lisbon. 105 Convatec Group Plc Annual Report and Accounts 2024 Governance Financial statements Additional information Overview Strategic report Audit and Risk Committee report continued 2024 KEY MATTERS The Committee reviewed the interim and full-year results statements and 2024 ARA, with supporting materials, focusing on the: – Integrity of the Group’s ﬁnancial reporting process – Clarity of disclosure – Compliance with relevant legal and ﬁnancial reporting standards and regulatory guidance – Application of accounting policies and judgements – The consistency of the non-ﬁnancial disclosures, including climate risks and opportunities, and related evolving regulatory reporting requirements – Considering the above factors, whether the Convatec Annual Report and Accounts were fair, balanced and understandable Throughout the year, the Committee received regular updates from the CFO, VP Group Financial Controller & Transformation, VP Internal Audit, Enterprise Risk & Insurance and the VP Investor Relations & Treasury, and formal and informal reports and feedback from the external auditor, covering the following scope: – Alternative performance measures, including the policy and the rationale and non-recurring nature and quantum of the proposed adjusting items – Non-Financial information reported externally, including the increasing requirements and the compliance readiness planning – Accounting judgements related to the impact of recent decisions on the reimbursement of speciﬁc advanced tissue technology products in the US – Acquisitions and related accounting treatments and judgements, including the assessment of contingent consideration – The results of the monitoring of the eﬀectiveness of internal controls, particularly ﬁnancial and IT general controls related to ﬁnancial reporting, and the fraud risk assessment and ongoing related enhancement programme to support the Committee conclusions on the integrity of the Consolidated Financial Statements and the review of the wider control environment in anticipation of the requirements of the revised Code – Appropriateness of going concern and viability assessment, including basis of preparation and management reports on all key judgements, risk scenarios and underlying assumptions, supporting analysis and evidence – Treasury matters including policy, activity, funding and ongoing compliance with debt covenants – Tax matters including the Tax Strategy Statement, tax transparency, key tax risks, ongoing and new local tax audits and investigations, estimated tax rates applied in the Financial Statements and provisions for uncertain tax positions As a result of the reviews performed and related discussions and challenges, the Committee was able to recommend the interim and full-year results statements and 2024 ARA to the Board for approval. 1. EXTERNAL REPORTING Significant reporting matters considered by the Committee The principal area of judgement considered by the committee is set out below. Issue Committee’s conclusion and response Revenue recognition in key markets The calculation of revenue includes a number of areas of estimation at the point of recognition, including rebates, discounts, allowances, product returns and consideration expected to be received. The arrangements in diﬀerent countries and with individual customers vary. As a result, the Group applies a limit on variable revenue consideration, in order to ensure that revenue is recognised at an appropriate level (see pages 163 and 164). The Committee scrutinised these judgements and estimates related to revenue, and discussed them with the external auditor, ultimately concluding that the accounting for revenue was appropriate. 106 Convatec Group Plc Annual Report and Accounts 2024 Governance The Committee considered the key risks, facts and judgements for the following areas: Matter Committee’s conclusion and response Going concern and Viability statements The Committee considered and robustly challenged management’s going concern review and viability assessment, including the supporting analysis, in accordance with the requirements of the Code. The Committee considered the Board approved Group 2025 budget, 2025 to 2029 strategic ﬁnancial plan, and updated forecasts and projections, taking into account reasonably possible changes in trading performance and the potential impact of principal and emerging risks. The stress test scenarios, including the underlying scenario assumptions and the reverse stress test, were reviewed and assessed against the Group’s ﬁnancing facilities and covenants. In addition, the Committee obtained a summary of external views from analysts and other industry commentators, to understand the wider market’s perception of the Group’s future ﬁnancial performance and viability, including the impact of the coverage of Medicare for reimbursement of InnovaMatrix ® for speciﬁc applications in the US. The Committee considered the possible implications of the rapidly evolving geopolitical and economic environment in which the Group operates. It also considered the potential ‘corporate’ mitigations that would be available to management should the environment and Group’s performance deteriorate beyond that reﬂected in the stress test scenarios, and discussed the external auditor’s ﬁndings and conclusions. Following this assessment, the Committee considered the scenarios applied were severe but plausible and the extent of the analysis made by management to be appropriate and ultimately recommended the viability and going concern statements and their respective related disclosures to the Board for approval and inclusion in the 2024 ARA. Taxation The Committee was pleased to note the improvements in the eﬃciency and eﬀectiveness of the Group’s tax operations, contributing to minimal uncertain tax positions and a reduction in risk, regarding transfer pricing. The Committee challenged management’s conclusions relating to these risk areas and related disclosures and considered them to be appropriate. Alternative Performance Measures (APM) The Committee discussed the APM policy and the alignment with guidance, and concluded the APM policy remains appropriate given the material level of adjusting items, certain of which would continue to be incurred for several years. The largest adjustments continue to be the amortisation of acquired intangible assets, of which a signiﬁcant proportion relate to the Bristol Myers Squibb spin-out in 2008 and will be fully amortised by 2026. The Committee concluded that management had correctly proposed the adjusting items as they were relevant to understanding the ongoing underlying performance of the Group. The Committee will continue to scrutinise all proposed adjusting items prior to approval. Dividends The Committee reviewed the dividends recommended by management with regard to the realised distributable reserves, cash resources, availability of liquidity and the eﬀect of sensitivities aligned to the viability statement and concluded that it was able to advise the Board that there were suﬃcient realised distributable reserves and cash resources to enable the Board to approve and recommend the 2024 interim and ﬁnal dividends, respectively. 107 Convatec Group Plc Annual Report and Accounts 2024 Governance Financial statements Additional information Overview Strategic report 2. RISK MANAGEMENT AND COMPLIANCE Throughout the year, the Committee reviewed risk management and compliance matters to be able to provide assurance to the Board that it could conclude on the eﬀectiveness of the Group’s compliance, fraud prevention, risk management and internal controls frameworks. Our role Decisions and actions taken by the Committee Enterprise Risk Management (ERM) and insurance – Ensure a robust assessment of the principal and emerging risks has been undertaken with eﬀective mitigations and controls established – Assist the Board to establish and articulate overall risk appetite, oversee speciﬁc risk exposures and mitigations and ensure the Group is operating within the Board’s risk appetite – Review eﬀectiveness of the Company’s risk management systems and processes and the progress to comply with the revised Code – Review of the annual insurance renewal strategy and programme to assess adequacy and appropriateness of coverage of insurable risks across the Group The Committee reviewed and approved the updated ERM policy, with the key updates being further clariﬁcation of roles and responsibilities to further enhance the eﬀective management of processes and assist the Committee in monitoring the eﬀectiveness of risk controls and mitigations. The principal and emerging risks identiﬁed by management were regularly reviewed and challenged by the Committee, with consideration of the eﬀectiveness of the respective risk mitigations and controls. Improvements to the risk framework with the introduction of key risk indicators were noted. The Committee will continue to monitor the development of the risk management processes and the control activities on behalf of the Board, in preparation for the Board’s material controls declaration for the 2026 ﬁnancial year (in compliance with the revised Code). The Committee reviewed the risk appetite statements, and the principal and emerging risk management statements and disclosures, including the priority order of risk as disclosed in the 2024 ARA, reﬂecting the discussions held with CELT (collectively and with individual members). After careful review and discussion, the Committee concluded that the risk appetite statements and the principal and emerging risks (including prioritisation) were appropriate and recommended them to the Board for approval. At the request of the Committee, a risk simulation exercise was undertaken in May, with risks expanded beyond the IT and cyber scope performed in 2023 to include a signiﬁcant product recall. The lessons learned from this simulation exercise were reviewed by the Committee. A further risk simulation is planned in 2025 to include an incident at a manufacturing facility, to align with the principal risks of the Group. Following the maturity assessments performed by external advisers in 2023, the ongoing improvement of data protection controls and cyber defence capabilities were monitored, with regular updates from the Chief Digital Information Oﬃcer to the Committee. The Committee will continue to closely monitor these key risks due to their nature and signiﬁcance. The Committee reviewed and approved the proposed insurance renewals programme, which has been further tailored to reﬂect the signiﬁcant growth in the business and to better align to the risks faced by the Group. Audit and Risk Committee report continued 108 Convatec Group Plc Annual Report and Accounts 2024 Governance Our role Decisions and actions taken by the Committee Internal controls – Promote and review sound risk management and internal control systems and frameworks over ﬁnancial, reporting, operational and compliance processes – Review the eﬀectiveness of internal controls – Monitor progress on the preparations for readiness towards compliance with the revised Code The Internal Controls team provided the Committee with quarterly updates of the self-attestation of compliance with the Group’s formal internal control frameworks, including details of control failures (all immaterial during 2024), their remediation and independent reviews of control evidence. A deep dive on IT controls was also conducted. The reliance approach adopted by the external auditor on GBS controls and the reviews undertaken by the internal auditors across all aspects of the Group continued to provide additional assurance to the Committee on the eﬀectiveness of the ﬁnancial, operational, IT and compliance controls. Based on the quarterly updates, and the reports from the internal and external auditors, the Committee is satisﬁed that the Group’s internal controls operated eﬀectively throughout the year, with no occurrence of material weaknesses. Controls relating to compliance are covered in the paragraph below. The Committee received updates of progress on the implementation of the framework for material controls in order to comply with the revised Code with eﬀect from 2026, and in reviewing the 2024 ARA, has had particular regard to the controls framework related to external reporting of non- ﬁnancial information. Compliance, including speaking up and fraud – Review the Group’s codes, policies, systems and controls in respect of fraud, bribery, corporate conduct, privacy and regulatory and legal compliance – Review speaking up reports The Committee continued to monitor our compliance culture across the Group with strong focus on markets that have an enhanced perceived corruption index risk score. This included the review of regular reports on the results of the global compliance programme and the speaking up process. The global business risk assessments, performed jointly by the Group’s compliance team and internal audit (as part of the global compliance programme), were extended to the remaining markets throughout 2024, building on the successful launch in 2023 focused on high-risk markets. The Committee monitored progress, together with the conclusions and actions arising out of the reviews. Key themes arising from the reviews included data privacy, the adoption of artiﬁcial intelligence, third-party risk management, regulatory change and challenges associated with rapidly evolving technologies, including emerging fraud risks tied to new standards of conduct. The Committee monitored the progress and outcomes of these assessments which have informed policy and process updates, enhanced corporate education, and the reinforcement of roles and responsibilities. Overall, the Committee was able to conclude that an ethical and compliant business culture remains ﬁrmly rooted across the organisation. Whistleblowing/speaking up incidents are reported by employees and certain third parties through a conﬁdential Compliance helpline or directly to the Oﬃce of Ethics and Compliance (OEC). Reports of a speaking up nature or of breaches of the Code of Conduct that are made directly to senior management or HR personnel are also reported to the OEC. All reports, irrespective of the channel, are collated, managed, reviewed and investigated by the OEC. A summary of the key themes, locations and disposition of whistleblower/ speaking up matters together with subsequent actions are reviewed by the Committee and reported to the Board. The Committee reviewed the status of the fraud risk assessment initiative, the associated control framework and the improved reporting on measures taken to prevent and detect fraud in accordance with the enhanced requirements of the Code and the new UK ‘Failure to prevent fraud’ oﬀence, applicable from 2025. 109 Convatec Group Plc Annual Report and Accounts 2024 Governance Financial statements Additional information Overview Strategic report Our role Decisions and actions taken by the Committee Regulatory compliance – ESG and TCFD – Approve appointment of ESG assurance partner and review their report – Approve ESG related metrics to be subject to external (limited) assurance (see page 59) – Approve TCFD disclosures – Review the Responsible Business section of the 2024 ARA for compliance with all applicable regulations (pages 32 to 59) The Committee continued to focus on ESG, including TCFD and transition plan reporting, during 2024, monitoring progress to meet increasing stakeholder expectations and reporting requirements, and our progress towards our net zero ambition. An initial transition plan was established in 2023 and the Committee has continued to monitor progress in delivering the actions required to iterate this further, ensuring a roadmap is in place to meet the commitments and targets, notwithstanding dynamic market considerations and externalities that will make the delivery of our long-term net zero ambition a reality. As the Group will be in scope for CSRD reporting on 2025 data, the Committee received updates on the requirements and reviewed progress in December to ensure that compliance was on track. An in-depth review, including the approval of key decisions regarding reporting scope and the double materiality assessment, will be performed by the Committee in May 2025. The Committee approved Deloitte to provide limited assurance over seven key ESG metrics, consistent with 2023, and the targets disclosed in the Group’s ARA and other sustainability reporting linked to senior executives’ remuneration. The scope of ESG assurance will be reviewed as part of CSRD readiness in 2025. Regulatory developments – Monitor the development of regulations relating to ESG, TCFD, CSRD, climate change, fraud, audit and corporate governance and FRC and FCA reporting requirements and any other relevant evolving regulations and management’s preparedness to adopt the changing requirements The Committee continued to keep abreast of guidance relating to new regulations, including the revised Code, issued in January 2024, and CSRD. The Committee received detailed brieﬁngs on both the revised Code and CSRD to ensure it can navigate the requirements of these new regulations, calibrate Convatec’s approach and monitor progress of related initiatives to ensure compliance in the required timeframes. The Committee also received regular brieﬁngs from the external auditor and Convatec’s ESG Steering Committee on regulatory and other developments relating to sustainability, fraud and other disclosure and reporting requirements, building the proposed timelines for implementation of related changes into the Committee’s forward agenda. Treasury, debt and insurance – Provide oversight of the treasury function – Annually review and approve the Group’s treasury policy – Review activities of the treasury function, including the status of the treasury instruments, the indebtedness of the Group and compliance with covenants within its debt instruments and the treasury policy The Committee received regular updates from the VP Investor Relations & Treasury as regard to compliance with treasury policy, covenants and other conditions of ﬁnancing arrangements. Tax – Provide oversight of the tax function – Review the key aspects of taxation, including compliance, accounting judgements, reporting, tax strategy and the external reporting requirements of regulators and tax bodies – Annually review and recommend to the Board for approval the Group’s updated Global Tax Strategy statement for publication The Committee continues to review the appropriateness of the Tax Strategy to ensure the alignment with the Group’s tax risk proﬁle and continues to be satisﬁed that the Group manages its tax aﬀairs carefully, ensuring that we operate within our tax risk appetite. The judgements underpinning the provision for uncertain tax positions were scrutinised by the Committee and considered to be prudent, appropriate and in line with the requirements of IFRIC 23, Uncertainty over Income Tax Treatments . The Committee reviewed the tax rates to be applied during the year compared to the guidance previously disclosed. Audit and Risk Committee report continued 110 Convatec Group Plc Annual Report and Accounts 2024 Governance 3. INTERNAL AUDIT The Internal Audit function provides independent, objective assurance to the Board, the Committee and senior management on the adequacy and eﬀectiveness of the Group’s risk management, governance, and internal control framework and processes. The Committee oversees the work of the Internal Audit team as follows: Focus areas Decisions and actions taken by the Committee Annual audit plan and resources Monitored progress in delivery of the approved 2024 audit plan and approved amendments to the plan to reﬂect emerging risks and changes in priorities. Reviewed and challenged the 2025 audit plan, which includes risk-based reviews of ﬁnancial, operational, strategic and governance risks, reviews of emerging risks and business change activity, together with assurance over risk management activities. The Committee also considered the adequacy and capabilities of the internal audit resource and budget to enable eﬀective delivery of the audit plan. Audit conclusions Reviewed the results of the audits conducted (including management’s response to the audit ﬁndings and recommendations) and considered emerging themes of concern. Actions arising from audits rated with more signiﬁcant weaknesses were closely monitored, with responsible management invited to present their response to the audit ﬁnding and action plans directly to the Committee where appropriate, thereby emphasising the need for considered, timely and deliverable responses. The Committee was pleased to note the increased focus by management to ensure closure of audit actions in a timely manner. Eﬀectiveness of the internal audit function A formal assessment was undertaken by the Committee, including obtaining direct feedback from CELT members and other relevant management. Both management and the Committee concluded that the internal audit function continued to be highly eﬀective and provided robust, challenging and quality audits. 4. EXTERNAL AUDIT The Committee is responsible for overseeing the relationship with the external auditor, the audit process and, most importantly, the eﬀectiveness and quality of the audit. The following table summarises the steps taken by the Committee in overseeing the eﬀectiveness of the 2024 audit and its quality. Significant matters for review Decisions and actions taken by the Committee The annual audit plan and strategy including the scope of the audit, changes in approach and methodology, emerging industry and Group speciﬁc risks. Reviewed and challenged the strategy, particularly in respect of the risk in speciﬁc markets, leading to an agreed plan (see below). The Committee noted the increased reliance on the ﬁnancial controls enabled by the further transition of ﬁnancial accounting processes to GBS for the US and GEM markets. Audit materiality level, including Group materiality and component materiality. Reviewed and agreed the methodology for calculating the materiality, which was consistent with 2023. Audit fee and terms of engagement. Approved the audit fee and terms of engagement, ensuring no impact on scope of audit or quality of resource engaged due to the agreed fee level. The Committee also approved the engagement of Deloitte to provide continued limited assurance on ESG data in 2024. 111 Convatec Group Plc Annual Report and Accounts 2024 Governance Financial statements Additional information Overview Strategic report Significant matters for review Decisions and actions taken by the Committee Audit scope and risk assessment. The Committee considered the impact of the revised auditing standard for the audit of Group ﬁnancial statements (ISA 600R), which impacted the audit scope in 2024 and focused on a risk-based approach for each signiﬁcant account, compared to the previous approach which focused on individually signiﬁcant entities, which aligned to the Group strategy. The Committee noted that this approach, combined with the increased scope of GBS in 2024, enabled Deloitte to apply its global shared service centre audit approach, resulting in an increase in the scope of audit testing performed by the Deloitte team co-located with GBS in Lisbon, rather than in-market. The Committee reviewed the risk assessment performed by Deloitte and the proposed audit scope, and considered it to be appropriate and aligned to the key developments in the Group’s business. Audit ﬁndings, signiﬁcant issues and other accounting judgements. Discussed with Deloitte and management throughout the year, and particularly during the year-end audit. Deloitte’s independence, objectivity and quality control procedures. Independence and objectivity conﬁrmed and quality control procedures reviewed (see below). judgements and estimates; reliably interpreted evidence provided by management; involved relevant specialists; and used external sources to support their conclusions where appropriate. Based on the Committee’s conclusion, the Committee recommended to the Board that Deloitte be proposed for reappointment by shareholders at the AGM to be held on 22 May 2025 in respect of the 2025 ﬁnancial year. Audit independence The Committee has responsibility for monitoring auditor independence and objectivity. The Committee enforces the Group policy on the provision of non-audit services, aligned with the FRC’s Ethical Standard, which requires non-audit engagements performed by the external auditor to be approved by the Committee. Permissible services are subject to a fee cap of 10% of average audit fees billed to the Company by the auditor in the past three ﬁnancial years. The Group was compliant with the policy in 2024, when non-audit fees (which were not signiﬁcant in quantum) principally related to the interim review of the Group’s half-year unaudited ﬁnancial statements and to the limited assurance on the ESG metrics. A summary of fees paid to the external auditor is set out in Note 3.3 to the Consolidated Financial Statements. Audit quality and effectiveness The Committee monitors the eﬀectiveness of the external audit continuously throughout the year, with a formal assessment undertaken in February and a post audit completion debrief taking place in May. A targeted group of Convatec ﬁnancial management, with regular contact with the external auditor, was asked to participate, which assisted the Committee with its own consideration of the quality of the audit team and involvement by the lead audit partner, the adequacy of audit planning, the timely and robust execution of the audit, the quality of communications with the Committee, and auditor independence and objectivity. The Committee also reviewed the FRC’s most recent Audit Quality Review conclusions relating to Deloitte as a ﬁrm and any speciﬁc ﬁndings that may relate to Convatec. The ﬁndings from the evaluation and agreed actions were reviewed and approved by the Committee in February 2025. The Committee’s review concluded that the 2024 audit was highly eﬀective, and demonstrated that the external auditor has: a good understanding of the business; continued to provide the Committee with strong opinions, views and insights; provided clear evidence of robust and objective challenge of management; exercised appropriate scepticism in relation to key audit In addition, the Committee’s review of the independence of the external auditor included: – Conﬁrmation to the Directors from Deloitte that they remained independent and objective within the context of applicable professional standards – Monitoring the tenure and rotation of the lead and engagement partners. Claire Faulkner rotated into the role of lead partner in 2021 and she will continue in this position for 2025. David Holtam assumed the role of engagement partner in 2023 and the limited assurance of ESG – Monitoring the tenure and rotation of other key personnel – Observing the relationship and tone of communication between management and the auditor – Deloitte reconsidering and reconﬁrming their audit independence under 2019 Ethical Standard for Auditors, given Margaret Ewing’s situation as both a former partner of Deloitte LLP and chair of this Committee, with Deloitte and the Committee (excluding Margaret) concluding that this relationship does not aﬀect the external auditor’s independence The Committee concluded that Deloitte remained appropriately independent in the role of external auditor. Audit and Risk Committee report continued 112 Convatec Group Plc Annual Report and Accounts 2024 Governance Committee members and key management and visiting our manufacturing site in Deeside, UK. Proposals were submitted to the Selection Panel (which consisted of all members of the Committee and two key members of ﬁnance management). These were judged against a number of key selection criteria identiﬁed in advance of the process including strength and experience of proposed team, audit quality, knowledge and understanding of the business and industry, audit approach and use of technology for ﬁnancial and non-ﬁnancial data and audit delivery and execution. A ﬁnal short list of two candidates was put forward to the ﬁnal stage, where ﬁnal presentations were made to the Committee. After a robust process, and considerable discussion, the Committee recommended to the Board that EY be appointed as the Group’s auditors, eﬀective for the 2026 ﬁnancial year audit. The Board approved the appointment at its meeting in June. A detailed transition plan will be developed by EY with Group ﬁnancial management and Deloitte and will commence implementation during the latter stages of 2025. External auditor appointment and engagement tender At the AGM on 16 May 2024, shareholders approved the reappointment of Deloitte as the Group’s external auditor. Deloitte has been the Group’s external auditor since the Company’s Listing in October 2016 and prior to this were the Company’s external auditor for the period 2008 to 2016 whilst the Company was in private equity ownership. For the purposes of complying with the requirements of The Statutory Audit Services for Large Companies Market Investigation (Mandatory Use of Competitive Tender Processes and Audit Responsibilities) Order 2014 (2014 Order), Deloitte’s ‘qualifying’ tenure as the Group’s external auditor commenced in October 2016. During 2024, the Committee undertook a formal competitive tender (not mandatory rotation), in line with the FRC’s Minimum Standard for audit committees, with the resulting appointment eﬀective for the 2026 ﬁnancial year audit. Six ﬁrms were approached during 2023, including all members of the ‘Big Four’ and two mid-tier ﬁrms, to gauge their willingness to participate in the audit tender in 2024. Three ﬁrms declined to participate, citing resourcing issues and limited engagement and knowledge of the Group. The tender commenced with the Committee meeting and approving the three participating ﬁrms’ proposed lead audit partners. The detailed process commenced in April 2024, with the participating ﬁrms being given access to information stored in a data room created by management (the content of which had been agreed with the Committee), meeting with The Group is monitoring non-audit services currently provided by EY to safeguard their independence ahead of their appointment as Group auditor in 2026. 113 Convatec Group Plc Annual Report and Accounts 2024 Governance Financial statements Additional information Overview Strategic report Directors’ Remuneration report A word from the Chair “As Convatec has successfully pivoted to sustainable growth and demonstrates continued delivery, the retention of key talent is ever more critical to ensure we continue to drive the business forward and deliver future growth.” Brian May Chair of the Remuneration Committee Committee membership, meetings and attendance³ in 2024 Director Member since Attended 2 Brian May 1 March 2020 5/5 Constantin Coussios January 2022 3/5 Kim Lody February 2022 5/5 Sharon O’Keefe March 2022 5/5 1. Mr May was appointed Chair of the Committee on 1 September 2020. 2. Mr Coussios was unable to attend meetings in January and December 2024 due to competing commitments. He provided feedback in advance to the Committee Chair on agenda items and papers. 3. The Deputy Company Secretary attends meetings as the Secretary to the Committee. The Chair, CEO, CFO, General Counsel and Company Secretary, Chief People Oﬃcer and VP Head of Global Total Rewards & Recognition attend meetings of the Committee by invitation, as does the Committee’s appointed adviser. Executives are absent when their own remuneration is under consideration. COMMITTEE INTRODUCTION AND OVERVIEW Activity highlights – Ensured remuneration arrangements for the Executive Directors and CELT members in 2024 supported Convatec’s successful pivot to sustainable and proﬁtable growth. – Reviewed competitiveness of reward for Executive Directors, to understand our ability to retain key talent and attract successors when required. – Developed proposals for changes to our Remuneration Policy and undertook extensive shareholder consultation activity to share our insight and seek input from key investors. – Ensure that the way we operate as a Committee reﬂects best practice guidelines, including review of our terms of reference and committee evaluation to support continuous improvement. 2025 priorities – Work with shareholders to ensure understanding of our proposed policy changes and the wider context to our proposals. – Ensure that targets for variable reward remain stretching in nature, and that we continue to embed a pay for performance philosophy aligning leaders with the wider shareholder experience. – Continue to actively engage key stakeholders on remuneration matters, as appropriate. Key areas of responsibility – Designs, recommends and implements Convatec’s Remuneration Policy, packages for the Executive Directors and other CELT members, and sets the fee for the Non- Executive Chair. – Ensures appropriate alignment of executive remuneration with the remuneration approach across the wider organisation. In this section you will find Letter from the Chair of the Remuneration Committee Update from the Committee Chair on the activities and decisions made in 2024 on pages 115 to 117. Our remuneration at a glance: 2024 Reward Outcomes and summary of the changes we are proposing to our Policy for approval by Shareholders at the forthcoming AGM on pages 118 and 119. Our proposed new Policy: Full details behind our Policy changes, including market insight and the outcomes from our extensive shareholder consultation exercise on pages 120 to 134. Our Annual Report on Remuneration How we implemented our Remuneration Policy during 2024 and how we intend to apply it in 2025, pages 135 to 144. This includes insight on the wider workforce including our CEO pay ratio. Meetings held 5 (2023: 4) Attendance 90% (2023: 94%) Remuneration Principles Our driving principles behind Remuneration remain unchanged: 1 Incentivise sustained strong ﬁnancial performance 2 Align rewards with the delivery of the Group’s strategy and long-term interests of shareholders 3 Help attract, motivate and retain the best talent to deliver the Group’s strategy and create long-term shareholder value 114 Convatec Group Plc Annual Report and Accounts 2024 Governance LETTER FROM THE CHAIR OF THE REMUNERATION COMMITTEE Dear Shareholder On behalf of the Board, I am pleased to present the report of the Remuneration Committee for the year ended 31 December 2024. Introduction This has been a strong year for the business, illustrating that Convatec has successfully been through a turnaround phase, and how it is well placed for future growth and delivery of long-term returns for shareholders. We have accelerated organic revenue growth and delivered double-digit adjusted EPS and free cash ﬂow to equity growth. The evolution of Convatec’s FISBE strategy has delivered material operating margin progress, particularly during H2 of 2024. We can clearly see the FISBE 2.0 strategy delivering simpliﬁcation across the business, driving productivity improvements and ﬂow through to bottom-line ﬁnancial performance. Most excitingly, we are well placed to draw on structural growth opportunities, supported by a strong innovation pipeline and investment in our future. We have also shown the ability to overcome challenges that we naturally face from day-to-day within our markets and operations. This report contains full disclosures around the way we have implemented our Remuneration Policy during 2024, including the determination of reward outcomes against the backdrop of strong business performance and strategic delivery. The Board is pleased with the continued strategic progress of the Group and ﬁnancial delivery for the year. Against our key ﬁnancial metrics we have seen strong results. Organic revenue growth was 7.7%, adjusting operating proﬁt growth was 16.4% on a constant currency basis, and free cash ﬂow to equity performance was well in excess of the stretch target set for the year. We continue to demonstrate the progress the business is making against the medium-term goals we have stated, the strength of our innovative new product pipeline and the pivot to higher levels of organic revenue growth and proﬁtability. The resultant performance means that overall formulaic outcomes under the Annual Bonus were 98.7% of maximum for the CEO and 98.7% of maximum for the CFO. Additionally, PSP awards granted in March 2022 will vest at 70.3% of maximum. The Committee was satisﬁed that the formulaic outcomes under the incentive plans were a fair reﬂection of the overall strong performance, against the context of the wider group achievement and the shareholder experience, and did not use any discretion to alter these values. A full breakdown of the stretching targets we set, and the associated ﬁnal outcomes is provided within this disclosure. As required under the UK Corporate Governance Code, we have comprehensive provisions covering clawback and malus in connection with the operation of our incentive plans. We can conﬁrm that these provisions were not utilised during 2024, and we will continue to disclose the application of any clawback or malus in line with the expectations of the Code. As a Committee, a major focus is to ensure that we can attract and retain key talent to drive the business forward and build on the momentum we now see in place. We discussed the extent to which our existing Remuneration Policy would support this and concluded that changes were required to ensure ongoing competitiveness at a key time for the organisation. Therefore, we have made the decision to revert to shareholders a year ahead of our standard cycle with a revised Policy. We have provided full details of our proposed Remuneration Policy that we will be asking shareholders to support at the forthcoming AGM, and the way we propose to implement reward for 2025. This disclosure outlines the factors and insight we considered as a Committee which drove our conclusion that a policy change was necessary, as well as sharing granular detail of what we heard through the extensive shareholder consultation that we have undertaken during the year. I would like to thank all those shareholders and proxy voting agencies who gave their time to support our consultation and provided comprehensive feedback and contribution to our thinking as a Committee. This was invaluable, and the evolution of our proposed Policy through the consultation process shows the beneﬁts of active engagement with and listening to our investors, as well as shareholder proxy agencies to fully understand their perspectives. COMMITTEE FOCUS AND ACTIVITIES DURING 2024 Policy development – Considered eﬀectiveness of existing Policy and read-across to identiﬁed talent pools – Developed revised Policy and undertook extensive consultation exercise with shareholders Remuneration packages – Approved Executive Director and CELT salaries for 2024 – Approved the 2023 bonus outcomes for Executive Directors and CELT – Approved 2024 LTIP award levels for Executive Directors and CELT Setting performance targets – Reviewed and set ﬁnancial targets for 2024 annual bonus and 2024 LTIP awards, in the context of multiple internal and external reference points for performance over the relevant period Equity incentives – Conﬁrmed outcome of PSP awards linked to three-year performance period ending 31 December 2023 – Reviewed developments in the executive remuneration landscape Workforce remuneration – Received updates on workforce remuneration policies and practices – Received updates on our gender pay gap position within the UK – Reviewed global trends in pay transparency and how this may impact Convatec Effectiveness – Undertook an annual performance review of the Committee – Worked with Willis Towers Watson to analyse AGM trends and conduct comprehensive market benchmarking to make sure we are aligned 115 Convatec Group Plc Annual Report and Accounts 2024 Governance Financial statements Additional information Overview Strategic report Directors’ Remuneration report continued Goals of proposed changes We identiﬁed three goals we wanted to achieve through our review: a) Driving retention of leadership . Our CEO, Karim Bitar, a US national based in the UK with multiple ties to the US, has been instrumental in the creation and leadership of Convatec’s FISBE strategy, designed to achieve our strategic intent of pivoting to sustainable and proﬁtable growth. Business performance demonstrates the extent of business transformation and ﬂow-through to ﬁnancial delivery. This strategy is delivering, with robust organic growth and commitment to further margin improvement in line with our medium-term stated commitments. As we continue to accelerate our growth and deliver the next stage of our strategy (FISBE 2.0) it is vital that we can retain the leadership of Karim Bitar and Jonny Mason, our CFO, to drive the delivery of the business and progress towards our medium term stated ﬁnancial goals. We are very well positioned to beneﬁt from future growth opportunities, with an established leadership team and the strongest innovation pipeline in Convatec’s history, all underpinned by our forever caring promise. We wish to incentivise and retain each Executive Director to drive the business forward. b) Enabling eﬀective succession (when needed). Convatec is a global organisation competing across the world, but with a heavy focus within North America. Many of our leaders are based there or are US nationals, it is the source of 57% of our revenue and is the leading centre for the MedTech industry. It is important that we take steps to plan for future succession whenever this may be needed. Routine CEO succession activity in 2023 (carried out independently on behalf of the Board) highlighted the extent of potential candidates who are either US citizens and/or currently working in the US, with a match of skills to the needs of Convatec. We therefore see it as imperative that we have a Remuneration Policy that is capable of attracting candidates from across the world, including those with signiﬁcant ties to the US, in the event that we need to secure future successors. c) Alignment of reward and performance. We are committed to driving a strong alignment between reward and performance, ensuring that leaders are incentivised for delivery of successful business outcomes, and that they are aligned to the wider shareholder experience through material levels of shareholding. We also wanted to consider previous changes we had made in senior level reward in the business below the Executive Directors in response to prevailing market conditions, and ensure that we had an eﬀective cascade of reward through the business. Approach to Policy Review and Findings We engaged with our top-20 shareholders, and held meetings with the vast majority, covering in excess of 50% of our issued share capital. To support conversations, Willis Towers Watson (WTW), our remuneration consultant, helped us develop an eﬀective comparator group of 20 organisations, operating within our sector and of similar revenue or market capitalisation levels with global representation. The comparator group was validated for applicability by WTW through considering a talent mapping exercise of companies where Convatec had attracted senior talent from, or lost talent to, over the past three years, and also the ﬁndings of the CEO succession activity from 2023. In total, half of these companies were based in the US, and the full breakdown of the composite companies within the Group and our associated methodology is provided in more detail on page 121. This insight showed a sizeable gap in expected reward levels between our current reward structure and the median of this global comparator group for CEO reward, placing Convatec towards the lower quartile of the comparator companies, and signiﬁcantly below the lower quartile of the US only companies within the comparator group. This was primarily reﬂected through the quantum available through long-term incentives, but also through incentive design, where many companies were using multiple forms of long-term incentive (typically Restricted Stock and Performance Shares) compared to the existing Convatec design of Performance Shares only. Our conclusion was that we needed to review our existing remuneration policy in light of our stated goals and analysis of the market insight from these comparator organisations. We discussed a straw-model for change with shareholders, designed to reﬂect the global insight we had reviewed and to seek input from our key investors. We used these conversations to discuss and gain perspectives from our shareholder base, and to use this to develop proposed changes to our Policy that we are now seeking approval for at our AGM. Later in this report we have provided full detail on the comparator group, changes we discussed with shareholders, and the range of feedback we heard in response, including how we have used this feedback to shape our revised policy proposals. Summary of Proposed Policy Changes Shareholders were appreciative and generally understanding of the insight we shared into the prevailing market reward practices within our sector, and the proposed use of Performance Shares and Restricted Shares within the long-term incentive design. We heard some speciﬁc comments around the structure of restricted stock awards and overall quantum levels that we have reﬂected into our ﬁnal proposal. In summary, our proposed changes are: – Quantum: Increase in amount of long-term incentives permissible under our Policy, to address gaps in competitiveness against a global comparator group, and to ensure future ability to attract potential candidates into Convatec from a global talent pool. – Structure: Evolution of the structure of our long-term incentive awards through a combination of Performance Shares (PSP) linked to stretching Convatec performance targets, and Restricted Stock Units (RSU) linked to continued employment with the business. This more closely aligns with market norms we have seen across the companies within our sector and our comparator group. We noted the retention impact that RSU awards can have, at a time when maintaining continuity of leadership is of key importance for us as a business. Our assessment is that a structure with delivery of long-term incentives through PSP alone would be a barrier to eﬀective talent retention or future recruitment from outside if required. – Strengthening Alignment: Increase in level of shareholding requirement under our Remuneration Policy for our CEO to 500% of salary, reﬂecting typical practice seen in the US and to drive further alignment with value creation for owners in the business. The requirement for the CFO will remain at 300% of salary, which has been identiﬁed as an already signiﬁcant requirement against market comparators. We also considered the resulting alignment that would be created with the next layers of leadership in the business, where long-term incentives are already delivered through a combination of PSP and RSU awards. This was a change we implemented in 2022 to reﬂect typical market practice within the MedTech sector and drive competitiveness. Our conclusion is that the introduction of RSU awards within our long-term incentive structure is a necessary change, reﬂective of our own experience in competing for global talent within our industry and to support our desire to drive retention of existing leaders, but also to equip us to successfully attract talent from outside the organisation when needed. 116 Convatec Group Plc Annual Report and Accounts 2024 Governance We remain committed to ensuring that the majority of executive reward continues to be linked with the achievement of stretching performance outcomes that drive shareholder value, and for our leaders to have a material shareholding in the business and alignment to the shareholder experience. How we would look to implement these changes in 2025 and beyond We will operate the annual bonus in a consistent way to 2024, both in terms of quantum and structure. This will continue to include an element linked to free cash ﬂow to equity, which many shareholders have indicated they support as a key measure of our success. The balance between each metric will be unchanged, and full disclosure of the respective targets set and associated outcomes for each measure will be provided in the disclosure next year. For our long-term awards we will continue to use PSP as our primary long term incentive vehicle. We will continue to determine vesting using a combination of absolute ﬁnancial delivery of Convatec (using annualised growth in adjusted EPS and organic revenue growth) and relative TSR performance of Convatec against a comparator group. Subject to approval from shareholders at the AGM, we will grant total long-term incentive awards for the CEO of 525%, comprising a PSP award of 425% of salary and a RSU award of 100% of salary. This compares to our existing approach of a PSP award only of 300% of salary. The PSP award for the CFO will remain unchanged (at 250% of salary) and we will introduce a RSU award of 75% of salary. These awards will vest after three years and then be subject to a further two-year holding period. Full details of the way we have determined these changes in quantum are provided within this report and has been subject to extensive shareholder consultation. We have agreed to make a change in the TSR comparator assessment so that all TSR vesting is determined by reference to a Global Healthcare Index, as opposed to the previous split between a global healthcare index and a subset of the FTSE. This change was supported by the Committee having heard a desire from a number of shareholders to reﬂect both the global nature of Convatec and the speciﬁc sector when considering TSR achievement. We have continued to set stretching targets for our PSP awards. The range for organic revenue growth is consistent with the award made in March 2024 (4% to 7%). For our earnings metric, we will move from an adjusted PBT metric to use adjusted EPS, consistent with the way we publish forward looking guidance to investors. We have maintained the same growth range as used for earnings in 2024 (6% to 14% per annum). To support implementation of these changes we will also look for shareholder approval for a revised share plan, to enable eﬀective delivery of our revised Policy. Finally, the Committee decided to increase the salary of the CEO, CFO and the fee of the Chair by 2.9% from 1 April 2025, in line with the increases provided to the general employee population in the UK. The Committee considered these increases to be appropriate in the context of the continued strong performance of the Group. The pension allowance for the CEO and CFO remains at 8.5% of salary, which is aligned with the wider UK workforce. Concluding remarks I hope that this Remuneration Report provides you with the insight into the way we have implemented our Policy during 2024, and why we feel it is important to now evolve our Policy for the future. This is a critical time for Convatec: the business has now demonstrated the actions taken to position itself for future success, and it is vital that we have stability and quality of leadership to see through the next stage of the journey and implementation of our FISBE 2.0 strategy. The business is set up to deliver sustainable and proﬁtable growth, has a very strong innovation pipeline, continues to drive productivity and simpliﬁcation improvements, and is set to deliver on medium-term operating margin commitments. We remain conﬁdent that the proposed Policy changes are necessary and align executives and shareholder interests in the context of the global growing business that Convatec now is. On behalf of the Committee, I would like to thank you for your support and constructive input to our engagement activity, and I hope that you will support our proposals at the forthcoming AGM. Brian May Chair of the Remuneration Committee 25 February 2025 Convatec Group Plc Annual Report and Accounts 2024 117 Governance Financial statements Additional information Overview Strategic report Directors’ Remuneration report continued 2024 annual bonus outcomes The charts below show how actual performance contributed to the bonus payouts for the Executive Directors for 2024: Annual bonus: 197.3% of salary (£1,936,657); 98.7% of maximum bonus opportunity. LTIP: Vesting of 70.3% of maximum (£1,991,124). Annual bonus: 197.3% of salary (£1,051,609); 98.7% of maximum bonus opportunity. LTIP: Vesting of 70.3% of maximum (£1,109,632). Free cash flow to equity (15% weighting) Adjusted Operating Profit¹ (40% weighting) Target Threshold Actual Maximum $457m $471m $500m $499m Target Threshold Actual Maximum $213m $237m $260m $302m Performance Outcome: 98.5% of maximum for this element. 1. Adjusted operating proﬁt is calculated on a constant currency basis using a budget rate. Target = Assumes Fixed remuneration plus target annual bonus (50% of maximum) and 60% vesting of LTIP awards Target = Assumes Fixed remuneration plus target annual bonus (50% of maximum) and 60% vesting of LTIP awards Performance Outcome: 100% of maximum for this element. Personal Strategic Objectives (inc. ESG) (20% weighting) Jonny Mason Karim Bitar 96.25% of max 96.25% of max Organic Revenue Growth¹ (25% weighting) Performance Outcome: 70.5% of maximum for this element. Three-year Compound Annualised Growth in Adjusted PBT (75% weighting) Maximum Threshold Actual 8.0% 15.0% 12.2% Target Threshold Actual Maximum 4% 5.5% growth 7% growth 7.5% growth Performance Outcome: 100% of maximum for this element. 1. Organic revenue growth is calculated on a constant currency basis using a budget rate. Relative TSR vs FTSE350 (25% weighting) Stretch (upper quartile) Threshold (median) Actual vesting (67th percentile) Maximum (upper decile) 25.0% 75.0% 90.0% 69.7% Performance Outcome: 96.25% of maximum for this element. Personal strategic objectives were set for each Executive Director in relation to the following areas of strategic focus for 2024: Customer People, Product/service improvement and Business performance. Details of the objectives set for the Executive Directors, and performance against these, are on page 136. 2022-2024 LTIP outcomes The charts below show how actual performance contributed to the LTIP awards vesting for the Executive Director for the three-year period ended 31 December 2024. Overall, the LTIP vesting outcome was 70.3% of maximum. Chief Executive Officer Karim Bitar (£’000) Chief Financial Officer Jonny Mason (£’000) Maximum Minimum On-target £5,926,240 £5,058,537 £1,130,755 £3,811,730 Single Figure 2024 Fixed Remuneration Annual bonus LTIP Single Figure 2024 Maximum Minimum On-target £3,233,559 £2,750,376 £589,135 £2,069,189 Fixed Remuneration Annual bonus LTIP REMUNERATION AT A GLANCE – 2024 This section provides a summary of the way we have implemented the Policy in 2024. 2024 remuneration: outcomes vs performance scenarios Performance Outcome: 69.7% of maximum for this element. 118 Convatec Group Plc Annual Report and Accounts 2024 Governance This section provides a summary of proposed implementation relating to 2025. We will be reverting to shareholders one year ahead of the typical three-year cycle with a proposed new Remuneration Policy, and the table below highlights changes we plan to incorporate subject to endorsement from Shareholders. Full details on these Policy changes are outlined within this disclosure, including the extensive shareholder consultation process that was undertaken. Our approach to implementing our Remuneration Policy in 2025 Rationale Link to strategy Base salary Reviewed annually Policy: Benchmarked periodically against comparable roles at international MedTech peers, as well as UK-listed companies of similar size and complexity. In deciding base salary levels, the Committee considers personal performance including the individual’s contribution to the achievement of the Group’s strategic objectives. The Committee will also consider employment conditions and salary levels across the Group, and prevailing market conditions in the geographies in which the Group competes for talent. Base salaries are reviewed annually with any increases normally aligned with those of the wider workforce, and eﬀective from 1 April. Implementation from April 2025: Karim Bitar: £1,010,000 (+2.9%); Jonny Mason: £548,500 (+2.9%). Base salaries are aligned with the broader market trends and UK workforce increase of 2.9%. Innovate Build Pension and benefits Policy: Executives may receive a contribution to a personal pension plan, a cash allowance in lieu or a combination thereof. Other beneﬁts normally include car allowance, medical insurance and life insurance, and are set at a level considered appropriate taking into account market practice and consistent with the wider workforce. Implementation in 2025: No change to the range of beneﬁts provided. Karim Bitar and Jonny Mason will continue to receive a pension beneﬁt of 8.5%, aligned to that of the wider UK workforce. Pension levels for all Executive Directors are aligned to the wider workforce rate, in line with prior commitment to investors and market expectations. Annual bonus Policy: Maximum opportunity: 200% of salary (target: 50% of maximum). Performance measures, targets and weightings are set at the start of each year. Financial performance will normally be weighted 80% of the overall opportunity, with the remainder (up to 20%) linked to the achievement of personal strategic objectives. A minimum of 5% of the bonus opportunity will be based on quantiﬁable ESG metrics. One-third of any bonus earned is deferred into shares normally for three years. Malus and clawback provisions apply. Implementation in 2025: Maximum opportunity of 200% of salary for Karim Bitar and Jonny Mason. The annual bonus will be based on: adjusted operating proﬁt (weighted 40%), organic revenue growth (excluding ATT) (25%), free cash ﬂow to equity (15%) and personal strategic objectives (20%), of which 5% relate to quantiﬁable ESG metrics. Adjusted operating proﬁt and organic revenue are calculated on a constant currency basis using a budget rate. For 2025, we have set a target for revenue growth excluding ATT, and these revenues will be removed from the base year and 2025 outcomes when assessing performance. We have done this recognising the current uncertainty around LCDs in the US. This is only being applied to the revenue metric, and full disclosure of targets and resultant performance will be made in the next Remuneration Report. Focus Innovate Simplify Build Execute Long-Term Incentive Plan Policy: Subject to shareholder approval at the 2025 AGM, the maximum opportunity permissible under the LTIP will be 525% for the CEO and 325% for the CFO. This will be delivered through a combination of Performance Shares and Restricted Shares. Implementation in 2025: Performance Shares: Award opportunity of 425% of salary for Karim Bitar and 250% for Jonny Mason. Awards will vest subject to adjusted Earnings per share (EPS) growth (weighted 50%), organic revenue growth (weighted at 25%), and TSR versus the S&P Global Healthcare Equipment & Services Index (25%) over the three ﬁnancial years to 31December 2027. Restricted Shares: Award opportunity of 100% of salary for Karim Bitar and 75% of salary for Jonny Mason, vesting in March 2028. Malus and clawback provisions will apply to all awards made under the LTIP. A two-year post vesting holding period will also apply. Full details of the performance targets set for these awards (where applicable) and the timing and basis for when awards will be made in 2025 is provided on page 127. The Long-Term Incentive plan continues to underscore sustainable growth and long-term value creation and drive retention. The performance conditions (where applicable) and reward structure are designed to attract, incentivise and retain high-calibre talent from the global healthcare sector. Focus Innovate Simplify Execute Shareholding requirement Current Policy: Executives are required to build up shareholdings of 400% of salary for the CEO and 300% of salary for the CFO. These must be retained whilst the Executive Directors remain on the Board. 50% of any net vested share awards (after sales to meet tax liabilities) must be retained until the minimum shareholding requirements are met. Subject to shareholder approval of our amended Policy at the 2025 AGM, the shareholding requirement for the CEO will increase to 500% of salary and this will be used for future calculations, with no change for the CFO (remaining at 300% of salary). Implementation: Our agreed approach includes ordinary shares held outright, shares not subject to future company performance conditions (on a net of tax basis) and vested shares under our PSP plan in a mandatory holding period post vesting. At the end of 2024, Karim Bitar held shares worth 774% of his year-end 2024 salary and Jonny Mason held shares worth 78%. See page 143 for more information. Executive Directors are required to hold 100% of their in-situ shareholding requirements for 12 months after cessation and50% for the next 12 months. Our shareholding requirement is designed to demonstrate alignment with shareholder interest and fosters a culture of ownership and long-term investment in the Company’s success. Focus OUR REMUNERATION AT A GLANCE 2025 119 Convatec Group Plc Annual Report and Accounts 2024 Governance Financial statements Additional information Overview Strategic report Directors’ Remuneration report continued OUR APPROACH TO POLICY REVIEW Driving retention of leadership at a critical time for the business Supporting retention of our existing Executive Directors to lead the next stage of our strategy: FISBE 2.0 Ensuring ability to attract future leadership talent Ensuring that a Remuneration Policy would support a global search for future leadership talent, when needed Ensuring alignment of leaders with shareholder experience Driving alignment of Executives through shareholding and enabling eﬀective cascade of reward through the organisation Karim Bitar joined Convatec in late 2019. He is an American citizen with multiple ties to the US and currently resides in the UK. He was the architect of the FISBE strategy as well as subsequently overseeing the introduction and implementation, designed to achieve our strategic intent of pivoting to sustainable and proﬁtable growth. This FISBE strategy has under-pinned business transformation and the ﬁnancial performance we have seen over the period. This transformation is being recognised and reﬂected in a signiﬁcant improvement in business performance and in the shareholder experience. We have also seen progressive dividend growth over this period. Our TSR performance has signiﬁcantly outperformed market indices, including both FTSE and Global Healthcare indices, since Karim Bitar’s appointment as CEO, with growing conﬁdence within the investor community in our Executive Directors, the sustainability of our business model and opportunities to drive continued growth. Furthermore, Karim Bitar has been instrumental in attracting and recruiting quality leadership talent at CELT. Our last full CEO succession planning review took place in autumn 2023. This involved a wide market mapping by an external leading search agency, looking at identifying potential CEO successors if one were required, considering their commercial background and acumen and assessed cultural ﬁt with our organisation. Of a shortlist of potential successors for the role identiﬁed we noted the following: – Around half were either working for US listed organisations or were currently based in the US – Two-thirds were operating as a CEO within existing organisations, most at a Group CEO level of the respective organisation. It is evident to us that this insight, coupled with the clear importance of the US to Convatec, but also the industry in which we operate, mean that we should aspire to have a Remuneration Policy capable of attracting global talent into Convatec at all levels, including Executive Director positions. We ﬁrmly believe in the importance of signiﬁcant levels of alignment of senior leaders to Company performance through material levels of shareholding in the business. We have high levels of share ownership requirements in place now and would consider increasing these further such that any executive leader is required to have signiﬁcant ﬁnancial alignment while in role, and beyond through the application of post-cessation shareholding guidelines. In 2022, we made reward changes at the levels below our Executive Directors in response to conditions prevailing in the MedTech sector to ensure that we were able to successfully attract and retain leadership talent. These changes included investment in overall opportunity levels within variable reward, coupled with the use of multiple forms of long-term incentives, including both Performance Shares (shares vesting linked to achievement against Company performance targets) and Restricted Stock (shares vesting contingent on future employment only). These changes have enabled us to evolve our leadership team, with high representation across CELT with close ties to the US. Convatec is a global organisation, actively selling goods and services in almost 90 countries. We see growth opportunities in all our markets, with North America a highly signiﬁcant region for the business, reﬂective in our customer and employee base, and as a key centre for our industry. 57% of our 2024 revenue was from the region, and it is at the centre of our sector. It is a key location for product innovation and development, and our business relationships and ability to successfully operate across the region are key levers to future success. A considerable number of comparator companies are either listed in the US or have key headquarters or leadership centres based there. Half of our CELT members have joined from US organisations in the past three years. Including the next level below, around 40% of our senior leadership are currently based in the US and the US is a key market for talent. 67% of the current CELT members (8 out of 12) are either US nationals, US based, or have extensive experience working in the US. Below the Executive Director level we have needed to make changes to the way we deliver reward to attract this talent into the organisation and drive competitiveness. This has included both quantum of variable reward and the way this is structured, introducing RSU awards in addition to PSP, which now more closely resembles market practice seen in the US. CEO succession planning activities have highlighted potential external candidates that we could consider if we needed to source new leadership. CONVATEC IS A GLOBAL ORGANISATION These facts led us to the conclusion that we need to be able to consider a global talent market when considering remuneration, which includes a reward design that can be viewed as competitive to someone with signiﬁcant ties to the US, whether through citizenship, residency or working for a US listed organisation. 120 Convatec Group Plc Annual Report and Accounts 2024 Governance Defining a suitable Comparator Group Against this backdrop we wanted to understand the competitiveness of reward within Convatec for our Executive Directors compared to other companies. We constructed a comparator group using the following principles: – Global MedTech businesses using size criteria (considering businesses of ¼ through to 3x scale of Convatec on either Revenue or Market Capitalisation) – Removal of service-related organisations (e.g. solely laboratory testing, dialysis, surgery) – Validated against companies from a talent ﬂow overlay (an identiﬁcation of organisations where Convatec has either lost or gained senior talent) – Includes overlay of potential CEO candidates identiﬁed through recent routine succession planning activity (Autumn 2023) – Excludes private organisations where market data is not readily available/disclosable This resulted in a comparator group of 20 companies, of which half were based in the US and half in Europe. From a size perspective, Convatec was around the middle of this group (depending on the respective ﬁnancial metric used). The resultant Comparator Group (sorted by descending revenue): Company Name Country Fresenius SE & Co. KGaA Germany Baxter International Inc. United States Edwards Lifesciences Corporation United States Smith & Nephew plc United Kingdom STERIS plc United States Sonova Holding AG Switzerland Coloplast A/S Denmark Demant A/S Denmark Getinge AB (publ) Sweden Teleﬂex Incorporated United States GN Store Nord A/S Denmark ICU Medical, Inc. United States Integer Holdings Corporation United States Integra LifeSciences Holdings Corp United States Haemonetics Corporation United States Merit Medical Systems inc United States CONMED Corporation United States LivaNova PLC United Kingdom Ambu A/S Denmark Medacta Group SA Switzerland Convatec United Kingdom Convatec Placement (Percentile) 41st (Revenue) 54th (Market capitalisation) 121 Convatec Group Plc Annual Report and Accounts 2024 Governance Financial statements Additional information Overview Strategic report Market insight – CEO target reward Through analysis of reward data for each of these companies (provided to us by our external adviser – WTW) we were able to establish the overall competitiveness of the reward structure within Convatec, highlighting potential diﬀerences in quantum and underlying reward structure. Quantum Global MedTech Group US global MedTech Comparator details MedTech organisations that range between ¼ and 3x Convatec’s scale based on market capitalisation or revenue. Convatec is around median of this group based on ﬁnancial metrics. Subset of the Global Group based on US only. 20 companies 10 companies Benchmark target Remuneration level (£k) Lower quartile £2,754k Lower quartile £5,878k Median £5,699k Median £6,680k Upper quartile £6,680k Upper quartile £8,564k Current Convatec CEO Existing Convatec Target Remuneration £3,730k Convatec CEO vs benchmark Between Lower Quartile and Median (closer to Lower Quartile) Signiﬁcantly below Lower Quartile Gap to benchmark median £(1,969)k £(2,950)k Market insight – Structure of long-term awards The use of multiple long-term incentives was common across the identiﬁed comparator group, with 13 of the companies oﬀering multiple forms of long-term incentives within their reward structure, including all of the US constituents. Half of the comparator group were using restricted shares within their long-term incentive design, all in combination with another form of incentive (typically performance shares and occasionally market priced share options). Market insight – Annual Bonus Our existing target award level of 100% of base was comparable with the wider comparator group. (Median target bonus across the Global comparator group = 108% of salary). Market insight – Base Pay Existing Convatec CEO base salary of £981k is competitive compared to the Global median of £846k. Market insight – Shareholding Requirements Current Convatec requirement for CEO is 400% of base salary. Market practice varies globally from nil to in excess of 6x salary. US requirements are typically higher than those seen across Europe. * Target Remuneration deﬁned as value of base salary, target bonus and expected value of long-term incentives. Notes to above table – Target remuneration is deﬁned as base salary, target annual bonus and expected value of long-term incentives. – Values shown in GBP using average exchange rates for the last three months of 2024 where applicable. – Data has been derived using a consistent methodology provided by WTW, using publicly disclosed information. This was done to enable eﬀective comparison between organisations, while recognising that the underlying reward structures in place may diﬀer between individual companies. – Performance shares (where used) are valued at 60% of the face value of grant (unless otherwise stated by the organisation) to reﬂect the associated performance conditions in place. Restricted share awards are based on the face value of awards, and stock options calculated using a binomial lattice model, adjusted for any applicable performance vesting conditions where used. – Comparator data was not available for one organisation (due to an Interim CEO appointment that was in place). Directors’ Remuneration report continued 122 Convatec Group Plc Annual Report and Accounts 2024 Governance Competitiveness of other reward elements Our CEO base pay level was conﬁrmed as competitive against the comparator group, ahead of market median but below upper quartile levels. Additionally, annual target incentives in place at Convatec (100% of base) were positioned close to the median level of 108% of base. Shareholding requirements varied considerably between the US and Europe: our current holding of 4x base for the CEO was high against European peers (some of which had no formal requirement in place) compared to typical requirements of 4x to 6x base in the US. Conclusion: Our conclusion was that while there were diﬀerent approaches being utilised across the companies analysed, our overall market position was less competitive than we would like, coupled with some structural diﬀerences that may be a barrier to eﬀective future succession. In particular, we noted the widespread use of multiple long-term incentives across the US organisations, and concluded that our existing approach may make attraction of future candidates with strong linkages to the US diﬃcult. We therefore agreed to engage with shareholders to discuss changes to our Policy designed to address our stated goals with a focus on: Addressing quantum Ensure that through changes in the quantum we would be better positioned within the comparator group, ideally with target levels of reward closer to the median level of the comparator group Reviewing structure of long-term incentives Recognise that multiple forms of long-term incentive were typical in our industry, and that the use of restricted stock was widespread, and would support our desire to retain Karim Bitar and Jonny Mason (or attract future talent if required) Driving continued alignment through shareholding Further increase shareholding requirements for our CEO to levels above the 400% of base level to ensure ongoing high levels of alignment through material share ownership Effective shareholder engagement We engaged with 13 shareholders (covering 52% of our issued share capital) and held discussions with shareholder proxy voting agencies to discuss our proposals. Feedback was largely consistent, but on some topics we heard a spectrum of views, in some cases diametrically opposite perspectives on the same point. It was evident that we would not be able to evolve our initial thinking into a single solution that would address our goals and align fully with the individual expectations of every shareholder. Instead, we have used consultation to recognise the broad themes and expectations cited by our shareholders. This engagement process has helped shape our views and evolve the Policy we are now proposing to shareholders. The table overleaf highlights key topics within the consultation, examples of shareholder feedback and the way we have looked to incorporate feedback into our proposed policy. Shareholders were highly supportive of the existing leadership team and a desire to retain this leadership through the next stages of the deployment of our strategy. They were generally understanding of the insight we shared into the prevailing market reward practices within our sector, and the proposed use of Performance Shares and Restricted Shares. 123 Convatec Group Plc Annual Report and Accounts 2024 Governance Financial statements Additional information Overview Strategic report Themes from our discussions with shareholders through effective consultation The table below illustrates some of the themes that emerged through our consultation process and the way we used shareholder feedback to inform our ﬁnal Policy proposals shown later. Area Feedback Our Response / What we have incorporated through feedback into our proposals Use of combination of PSP and RSU awards – Shareholders were largely supportive of the use of a combination of PSP and RSU awards within long-term incentive design, and wanted further insight on the proposed structure of each element and associated targets (where applicable). Structure of Restricted Share awards – Conversations highlighted the mixed practice of staged vesting of RSU’s annually (the predominant US practice) compared to a cliﬀ vesting after three years elsewhere (often accompanied by a further two-year holding period). Feedback highlighted a strong desire to align to UK market expectations around cliﬀ vesting, followed by a holding period. Our original proposal was for RSU awards to vest on a phased basis over the ﬁrst three anniversaries of grant. We will adjust the scheduled vesting proﬁle of RSU awards so that vesting happens at the end of year three, followed by a two-year holding period. While practice is mixed on this point in the US, we recognise the clear expectations from our shareholder base in this area, drawn out through the recent publication of updated Investment Association guidelines in the UK. Why not PSP only? – Would it not be easier to further increase the quantum under the PSP? We did consider this route as an alternative, although a number of shareholders were keen to highlight the positive retention-based impact that Restricted Share awards can have. We reﬂected that a PSP-only approach would result in a structure atypical within the MedTech industry. Our view was that a balance of both a PSP, with stretching performance criteria, and the RSU would show more conformity with prevailing market practice and would support future recruitment from a global talent pool (if needed). Overall quantum change – Some shareholders recognised the need to bridge a gap in quantum and a desire to narrow rather than close the gap to where the market median of our comparator group would suggest. Our ﬁnal proposal reﬂects some scaling back in quantum from the example initially shared with shareholders. This reduces the overall expected value of the resultant annual CEO package (by £0.5m) and continues to place Convatec below the median of the comparator group. Balance of PSP and RSU – We heard some requests to amend the weighting between PSP and RSU awards, so that proportionately more was linked to company performance. Our ﬁnal proposal has a higher weighting of the overall opportunity towards PSP awards and a reduction in the level of RSU. Setting of future stretch targets for implementation of Performance Share Awards – Will the change in quantum be accompanied by more stretching targets? We believe that our existing approach to target setting is rigorous. The business has an increasingly strong track record of delivery and the associated reward outcomes (particularly around long-term incentives) demonstrate the inherent stretch in targets we have set. (See later section on page 127 for more detail). Use of relative metrics within performance targets – A desire for us to use a global healthcare index (e.g. MSCI or S&P) to assess TSR performance rather than considering a combination of Global Healthcare and a FTSE-linked index. We will use a single global Healthcare global index for TSR assessment (S&P Global Healthcare and Equipment Services) beginning from March 2025 awards, with no adjustment to the basis of assessment of in-ﬂight awards. Internal alignment and cascade of approach – How are the changes proposed for Executive Directors being cascaded through the business? In 2022, we implemented some changes to reward across our senior leaders (below Executive Directors) to reﬂect market practice and drive competitiveness. This included investment in quantum under our long-term plans and a change in structure to include a combination of Performance Shares and Restricted Shares awards across the Convatec Executive Leadership Team and the management layer below. The changes we are proposing for the Executive Directors drive alignment with what is already in place, and which has been successful in ensuring we can attract and retain key leadership talent. Approach for CFO (or other Executive Director as applicable) – Would we look to follow the approach proposed for the CEO and cascade this to apply to any Executive Directors in place? Our consultation was initially focused on our CEO, as this was the area where we saw the greatest divergence between our current structure and our identiﬁed comparator group. Our proposal includes a structural change to bring Restricted Shares into the package for the CFO and deliver an overall package that is similarly placed against comparator group data. Directors’ Remuneration report continued 124 Convatec Group Plc Annual Report and Accounts 2024 Governance Evolving our policy proposals through effective consultation We consulted on a straw model for changes as a basis to engage with shareholders. This looked to drive market competitiveness (through an increase in overall LTI quantum) and an amended structure using a combination of both Performance Shares and Restricted Stock Units. As expected, while we heard support for the way we proposed to evolve our structure and our stated aims, we did see some variation in response from shareholders. We have therefore needed to consider feedback carefully and determine an approach that meets our goals and is right for the business, while reﬂecting feedback from the majority of our shareholders. The diagram below shows the structure we used as a basis to consult and the way this has evolved into the ﬁnal policy proposal. LONG-TERM INCENTIVE DESIGN – CEO Current Policy Target Total Reward £3.7m pa PSP 300% of Salary RSU 150% RSU 100% PSP 425% PSP 425% Target Total Reward £5.9m pa Target Total Reward £5.4m pa PSP – Assessment based on achievement against key metrics over three–year period Shareholding requirement – 4x salary for CEO PSP – Award level increased to 425% of salary RSU – Annual awards of 150% of base, vesting on ﬁrst three anniversaries of award date Shareholding requirement – increased to 5x salary for CEO PSP – Award increased to 425% of salary RSU – 100% of base, cliﬀ vest after three years followed by two-year holding period Shareholding requirement – increased to 5x salary for CEO Original model for consultation Final Proposal Comparator Insight (Target Reward): Global MedTech – £5.7m Median, US Subset only – £5.9m Lower Quartile Driving principles – Majority of awards linked to key ﬁnancial performance metrics – Increased alignment between executive and shareholder experience through material shareholding requirements – Eﬀective cascade and alignment of performance metrics through senior leadership teams – Recognition of the global talent market and signiﬁcance of the US to our business and industry sector – Ensure competitive framework to attract and retain world class leadership talents Our proposed policy We are proposing changes to our long-term incentive structure and quantum, to align with market practice and ensure competitiveness. No changes are proposed within our revised Policy to our approach to salary or annual bonus, both of which have been shown to be competitive with the identiﬁed comparator group. The key changes within our policy are: Proposed Policy change Proposed changes to the way we plan to implement the Policy in 2025 – Introduction of ability to make Restricted Stock awards as part of Long-Term incentive awards for Executive Directors. – These awards to vest after three years with a further two-year holding period (replicating the approach to existing Performance Share awards). – Vesting of RSU awards to occur subject to an underpin of Committee determination of alignment of overall reward outcomes with underlying Group performance and to ensure fairness to shareholders and participants. – Subject to approval from Shareholders at the 2025 AGM, ability to make restricted share awards under our Policy, with awards of 100% of salary to be made to the CEO and 75% of salary to the CFO, respectively in 2025. – We will use the share price at the time we make our core Performance Share award (in March 2025) as a basis for determining these awards, which would be made following successful approval of the Policy at the AGM. – These will vest in March 2028 and then be subject to a further two-year holding period, after allowing some to be sold to cover an estimate of any resulting tax liability. – Awards in future years would be expected to be made in March with vesting on the third anniversary of award, followed by a two-year holding period. – Increase in Performance Share Awards permissible under the Policy from 300% to 425% for CEO. No change for the CFO (250%). – A PSP award of 300% of salary will be made to the CEO in March 2025, and awards of 250% of salary to the CFO. – A further award of 125% of salary will be made in June 2025 to the CEO, subject to Policy approval at the AGM. The share price used for this additional award will reﬂect that used at the time of the main grant in March 2025. Awards will vest in March 2028 and be subject to the same performance targets as the award made in March 2025. – Shareholding Requirement. Increase of shareholding requirement for CEO to 500% of salary. – This would be eﬀective and apply following approval of the wider Policy change at the AGM. 125 Convatec Group Plc Annual Report and Accounts 2024 Governance Financial statements Additional information Overview Strategic report The graph below shows how the existing total target remuneration for the Convatec CEO compares to the comparator group. Additionally, we have shown how the proposed changes to our policy reposition Convatec against this comparator group. Our changes are focused on long-term incentives only, introducing RSU awards and investing in overall quantum. Our changes continue to place Convatec below the median of the comparator group, and mean that the vast majority of variable reward is fully performance linked, either through Annual Bonus or Performance Share awards. We are not proposing any changes to annual bonus quantum, or to base salary (other than through annual salary reviews, which will be a 2.9% increase from April 2025 in line with the wider workforce). HOW OUR PROPOSED CHANGES RE-POSITION CONVATEC CEO REWARD AGAINST THE IDENTIFIED COMPARATOR GROUP (£K) Co 1 Co 2 Co 3 Co 4 Co 5 Co 6 Co 7 Co 8 10,000 8,000 6,000 4,000 12,000 Convatec Proposed Co 09 Co 11 Co 10 Co 12 Co 13 Co 14 Co 15 Co 16 Co 17 Co 18 Co 19 Co 20 Convatec Current Upper Quartile £6.7m Median £5.7m Lower Quartile £2.8m £3.7m £5.4m 2,000 0 Total Direct Compensation is the aggregate value of salary, target annual bonus and expected value of long-term incentives. Comparator data was not available for one organisation (due to an Interim CEO appointment that was in place). Directors’ Remuneration report continued 126 Convatec Group Plc Annual Report and Accounts 2024 Governance Demonstration of stretch within performance assessment Several shareholders asked us about the level of stretch within future performance targets. We have highlighted three factors that demonstrate the rigour behind target setting, and the way we will look to set stretching performance targets so high levels of reward is dependent on robust business delivery. 1. Our Performance Curve for TSR assessment. – Our current vesting proﬁle is tougher than prevailing market practice with full vesting only at 90th percentile performance or above, compared to market practice at 75th percentile or above. – This leads to lower vesting outcomes in all cases for TSR rankings between 50th and 90th percentile. 2. Our recent history of target setting. – Our recent performance ranges for adjusted PBT growth have required either 14% or 15% per annum compound growth over the respective three-year performance period for maximum vesting. – This is well in excess of typical market levels and reﬂects the commitment to deliver robust growth through our strategy in a sustainable way. – Our ﬁnancial performance over the past few years has improved signiﬁcantly as the business has delivered a turnaround, yet Performance Share vesting has averaged around 60% of maximum, illustrating the inherent stretch within the target setting adopted by the Committee. 3. Choice of future comparator group for TSR assessment. We will use solely a Global Healthcare index for TSR assessment for the awards we make in March 2025, driving eﬀective comparative sectoral assessment of Convatec. This aligns Convatec fully to a wider global healthcare sector and is designed to enable eﬀective comparison of our performance with others within the same market sector that we operate within. History of adjusted PBT ranges and PSP vesting levels Period Growth range (PBT) Actual PBT Growth PSP Vesting (% max) 2024–26 6%–14% n/a n/a 2023–25 7%–14% n/a n/a 2022–24 8%–15% 12.3% 70.3% 2021–23 8%–15% 10% 51.6% 2020–22 4.5%–10% 8.3% 80.5% Typical Market Practice TSR Outcome vs Peers (Percentile) TSR Outcome vs Peers (Percentile) Convatec – Stretch 100% 25% 100% 90% 25% 50th 75th 100th 50th 75th 100th 90th Vesting Vesting Current Performance scale for TSR assessment Conclusion Through extensive shareholder consultation we heard clear support and endorsement for the existing leadership of Convatec and a desire to drive retention to see through delivery of our FISBE 2.0 strategy. Our review process, underpinned by market insight, indicates that changes are required at an important time for Convatec. We have used shareholder inputs to develop our approach and shape our ﬁnal proposed policy, making changes in direct response to what we heard from our shareholder base. Convatec is well placed to deliver sustainable and proﬁtable growth, has a very strong innovation pipeline and is set to deliver on medium term operating margin commitments. We believe that the changes proposed are the right ones at this time, addressing the goals of our review and taking actions now to position the business for future success. 127 Convatec Group Plc Annual Report and Accounts 2024 Governance Financial statements Additional information Overview Strategic report OUR REMUNERATION POLICY This section of the Directors’ Remuneration report has been prepared in accordance with the Remuneration Reporting Regulations, and sets out details of the 2025 Policy to be tabled for approval by shareholders at the 2025 AGM and eﬀective for a period of up to three years from that date. We also describe below how our Policy reﬂects the principles of Provision 40 of the 2018 UK Corporate Governance Code: – Clarity: we are committed to transparent disclosure of our remuneration structures and decisions, including clear rationale and context for these. – Simplicity: our Policy and approach to its implementation is simple and well-understood internally and externally. – Risk: remuneration arrangements are designed not to encourage or reward excessive risk taking, with targets set to be stretching and achievable, and retaining Committee discretion to adjust formulaic bonus and LTIP outcomes to align with underlying performance. – Predictability: there are deﬁned threshold and maximum pay scenarios, which we have disclosed on page 132. – Proportionality: there is a clear and direct link between performance and reward. – Alignment to culture: the Committee has designed the Policy to align with the Group’s culture, driving behaviours that promote the long-term and sustainable success of the Group for the beneﬁt of all stakeholders. Details of how the Company plans to implement the Policy for the year ending 31 December 2025 are provided in the Annual Report on Remuneration starting on page 135, including our intended approach to implementation of changes within our proposed Policy. Remuneration principles The Committee recognises and manages conﬂicts of interest when determining the policy and no director is responsible for setting their own remuneration. When setting remuneration for the Executive Directors, the Committee considers the following principles: – Incentivise sustained strong ﬁnancial performance. – Align rewards with the delivery of the Group’s strategy and long-term interests of shareholders. – Help attract, motivate and retain the best talent to deliver the Group’s strategy and create long-term shareholder value. – Reﬂect market best practice and consistently adhere to principles of good corporate governance and encourage good risk management. Proposed Remuneration Policy for the Executive Directors Purpose and link to strategy Operation Opportunity Performance measures Summary of changes from existing Policy Base salary To attract and retain talented Executive Directors to deliver the Group’s strategy, by ensuring base salaries and the implied total package are competitive in relevant talent markets, while not overpaying. Base salaries will be reviewed by the Committee annually and benchmarked periodically against comparable roles at international MedTech peers, as well as UK-listed companies of similar size and complexity. Any resulting changes are normally eﬀective from 1 April, in line with the eﬀective date for salary increases for the broader workforce. In deciding base salary levels, the Committee considers personal performance including the individual’s contribution to the achievement of the Group’s strategic objectives. The Committee will also consider employment conditions and salary levels across the Group, and prevailing market conditions in the geographies in which the Group competes for talent. Base salary increases for the Executive Directors will normally be no higher than those of the wider workforce, but may be made above or below this level in exceptional circumstances such as a material change in responsibilities, size or complexity of the role, or if a Director was intentionally appointed on a below-market salary. Salaries will be set on a case-by- case basis to reﬂect the role and the experience and qualiﬁcations of the individual. Base salaries for the year under review and the following year, as well as the rationale for any increases, will be disclosed in the relevant year’s Annual Report on Remuneration. There is no maximum but increases are typically in line with the wider workforce. n/a None Pension To provide an appropriate level of post-retirement beneﬁt for Executive Directors in a cost-eﬃcient manner, taking account of the provisions for the wider workforce. Executive Directors may receive a contribution to a personal pension plan, a cash allowance in lieu, or a combination thereof. Salary is the only element of remuneration that is pensionable. Karim Bitar and Jonny Mason receive a pension beneﬁt from the Group (currently 8.5% of salary), in line with the wider UK workforce. Details of the pension contributions made to Executive Directors during the year are disclosed in the Annual Report on Remuneration. n/a None Directors’ Remuneration report continued 128 Convatec Group Plc Annual Report and Accounts 2024 Governance Purpose and link to strategy Operation Opportunity Performance measures Summary of changes from existing Policy Other beneﬁts To provide non-cash beneﬁts which are competitive in the market in which the Executive Director is employed. The Group may provide beneﬁts in kind including, but not limited to, a company car or car allowance, private medical insurance (or allowance in lieu), permanent health insurance, and life insurance. Executive Directors may also be provided certain other beneﬁts to take account of individual circumstances such as, but not limited to, payment of ﬁnancial, and/ or legal adviser fees, expatriate allowance, relocation expenses, housing allowance and tax equalisation (including associated interest, penalties or fees plus, in certain circumstances or where the Committee consider it appropriate, any tax incurred on such beneﬁts). Executive Directors may also be oﬀered any other future beneﬁts made available either to all senior employees globally or in the region in which the Executive Director is employed. Beneﬁts for Executive Directors are set at a level which the Committee considers appropriate compared to wider employee beneﬁts, as well as competitive practices in relevant markets. The value of annual beneﬁts will normally not exceed 10% of salary. The Committee retains discretion to approve non-material increases in cost. In addition, the Committee retains discretion to approve a higher cost in exceptional circumstances (e.g. to facilitate recruitment, relocation, expatriation, etc.) or in circumstances where factors outside the Group’s control have changed (e.g. market increases in insurance costs). Beneﬁts in respect of the year under review are disclosed in the Annual Report on Remuneration. n/a None Annual bonus To incentivise Executive Directors to deliver strong ﬁnancial performance on an annual basis and reward the delivery of the Group’s strategic aims that will underpin the longer-term health and growth of the business. Deferral into shares enhances alignment with shareholders. Performance measures, targets and weightings are set by the Committee at the start of the year. After the end of the ﬁnancial year, the Committee determines the level of bonus to be paid, taking into account the extent to which these targets have been achieved. To the extent that the performance criteria have been met, one-third of the annual bonus earned will normally be compulsorily deferred into shares for a period of three years under the Deferred Bonus Plan. The remainder of the bonus will be paid in cash. Dividends may accrue on deferred bonus shares over the deferral period and, if so, will be paid on deferred shares at the time deferred shares are released to the Executive Director. Malus and clawback provisions apply to the annual bonus in certain circumstances (as set out in the Notes to the Policy Table). The maximum annual bonus opportunity is 200% of base salary for both Executive Directors. The payout for on-target performance is 50% of maximum; threshold performance results in a payout of no more than 25% of maximum. Bonuses are based on a combination of stretching annual ﬁnancial and non-ﬁnancial/strategic performance measures, selected to reﬂect the Group’s short-term KPIs, ﬁnancial goals and strategic drivers. The ﬁnancial element of the annual bonus will normally be weighted 80% of the overall bonus opportunity, with the balance based on personal strategic objectives, including a minimum of 5% linked to qualiﬁable ESG metrics. The Committee may adjust the formulaic annual bonus outcomes (including to zero) to avoid unintended outcomes, align pay outcomes with underlying Group performance and ensure fairness to shareholders and participants. Further details will be disclosed in the relevant Annual Report on Remuneration. Performance targets set for each year will be disclosed retrospectively, usually in the Annual Report on Remuneration in respect of the year to which such performance targets relate. None 129 Convatec Group Plc Annual Report and Accounts 2024 Governance Financial statements Additional information Overview Strategic report Purpose and link to strategy Operation Opportunity Performance measures Summary of changes from existing Policy Long-Term Incentive Plan (LTIP) To align the interests of Executive Directors and shareholders in growing the value of the Group over the long term. A minority of the award can be made as Restricted Shares designed to retain executives and recognise typical market norms within our wider sector, and global talent pool where we compete. Executive Directors are eligible to receive annual awards of Convatec Group Plc shares under the LTIP either in the form of conditional share awards or nil cost options. The majority of any award will be made as ‘Performance Shares’. These are awards that vest after a performance period (normally three years) subject to achievement against targets determined prior to grant. Targets are set to ensure that they remain appropriately stretching and aligned to the Group’s strategy. A proportion of any award (up to a maximum of 100% of salary) may be awarded as ‘Restricted Shares’. Awards granted under the LTIP to Executive Directors will normally have a performance period of three years and a minimum vesting period of three years. If no entitlement has been earned at the end of the relevant performance period, awards will not vest. Shares received as a result of an award vesting will normally be subject to an additional two-year holding period. Dividends may accrue on LTIP awards over the vesting period and, if so, will be delivered in shares that vest at the end of the vesting period. LTIP awards granted to Executive Directors will be subject to malus and clawback provisions, as set out in the Notes to the Policy Table. The maximum total annual LTIP opportunity is 525% of base salary for the CEO and 325% of base salary for the CFO (or other Executive Directors as applicable). For awards made as Performance Shares, 25% of an award will vest if performance against each performance condition is at threshold and 100% if it is at maximum, normally with straight-line vesting in between these points, unless the Committee determines otherwise. Vesting of LTIP awards is subject to continued employment during the performance period and the achievement of performance conditions (where applicable) aligned with the Group’s strategic plan and shareholder value creation. Measures and their weightings will be determined by the Committee prior to making an award. The Committee may adjust the formulaic Performance Share vesting outcomes to ensure it takes account of any major changes to the Group (e.g. as a result of M&A activity). As an underpin, for both Performance Share and Restricted Share awards the Committee may make adjustments to vesting levels (including to nil) to ensure that the awards are a fair reﬂection of the underlying ﬁnancial performance of the Group over the performance period. Further details, including the performance targets attached to the LTIP in respect of each year, will be disclosed in the relevant Annual Report on Remuneration. Introduction of ﬂexibility under the Plan to make awards of Restricted Shares. Increase in total opportunity available for CEO to 525% of salary, and to 325% for CFO. Shareholding requirements To align executives and shareholders through shareholding requirements, including periods beyond cessation of employment. See notes to Policy table covering calculation of share ownership guidelines and post-cessation shareholding requirements. 500% of salary for CEO and 300% of salary for any other Executive Director. Requirement to hold 100% of guideline in ﬁrst year following cessation, and 50% of guideline in year two. n/a Increase in shareholding requirement for CEO from 400% of salary to 500%. Save-As-You-Earn (SAYE) or equivalent scheme To align the interests of employees and shareholders by encouraging employees to buy and own Convatec Group Plc shares. Executive Directors are entitled to participate in the Group’s all- employee share plan if available in the jurisdiction in which they are based on identical terms as other eligible employees. A UK or Europe- based Executive Director may make monthly savings over a period of three or ﬁve years or other period set by any relevant tax authority linked to the grant of an option over Group shares. The option price will be set at a discount of up to 15% of the market value of the shares at grant (which align with similar all-employee arrangements in the US). Employees are limited to saving a maximum in line with the monthly savings limit imposed by the Committee (which will not exceed any limits imposed by legislation) at the time they are invited to participate. n/a None Full details behind proposed changes within the Policy and associated rationale are set out on pages 120 to 127. Notes to the policy table Malus and clawback The Committee regularly reviews the Company’s approach to malus and clawback and our Malus and Clawback Principles determines the trigger events and time periods that these provisions relate to. Both our annual bonus and LTIP awards are covered by these provisions and they apply in circumstances including: – cases of fraud, negligence or gross misconduct by the Executive Director; – material ﬁnancial misstatement in the audited ﬁnancial results of the Group; – error in calculation; or – other exceptional circumstances at the Committee’s discretion. Directors’ Remuneration report continued 130 Convatec Group Plc Annual Report and Accounts 2024 Governance The timeline over which Malus and Clawback provisions could be used is shown in the table below. These have been determined to appropriately balance the timing of determination of awards/vesting with the underlying performance metrics that are used to determine award levels and align with mandated deferral period under the Annual Bonus or holding period post vesting of long-term incentive awards. Cash bonuses will be subject to clawback, with deferred bonus shares being subject to malus, over the deferral period. LTIP awards will be subject to malus over the vesting period and clawback from the vesting date to the second anniversary of the relevant vesting date. We believe this timeframe is eﬀective and proportionate to the operational nature of the business, allowing for malus on deferred bonus shares for up to three years following the determination of company performance upon which the award was made. For LTIP awards this aligns with the mandatory holding period in place for shares post vesting, and again extends for a signiﬁcant timeframe (ﬁve years) from when the original grant of awards was made. Summary of Malus/Clawback Malus Clawback Annual Bonus – Cash Payments Up to point of cash payment Yes – aligned to share deferral period Annual Bonus – Deferred Shares Up to point of vest (three years after completion of performance period that determined the award) None post vesting Share Awards under Long-Term Incentive Plans During vesting period Up to 2nd anniversary of respective vesting date Share ownership guidelines The Committee recognises the importance of aligning Executive Directors’ and shareholders’ interests through signiﬁcant shareholdings in the Group. The Group’s policy is to require Executive Directors to build up shareholdings worth 500% (previously 400%) of base salary for the CEO, and 300% of base salary for other Executive Directors, and to retain these shares whilst an Executive remains on the Board of Directors. 50% of any net vested share awards (after sales to meet tax liabilities) must be retained until the minimum shareholding requirements are met. Shareholdings will be valued at the higher of the acquisition price of the shares and the average share price over the last three months of the ﬁnancial year. The Committee have determined that unvested shares not subject to future Company performance conditions can be included in assessing compliance with the Guideline, calculated on a net of tax basis. This includes shares that may be in a compulsory holding period after vesting. Details of the Executive Directors’ current personal shareholdings, and progress towards meeting the share ownership guidelines, are provided in the Annual Report on Remuneration. Post-exit shareholding requirement The Committee further recognises the expectation of shareholders that a requirement is placed on Executive Directors to maintain a meaningful shareholding for a period of time after they leave the Company. In keeping with prior commitments, the 2023 Policy introduced a requirement for Executive Directors to hold 100% of their in-situ guideline in the ﬁrst-year post-exit and 50% in year two. Use of discretion The Committee may apply its discretion (as set out below) when agreeing remuneration outcomes, to help ensure that the implementation of our Remuneration Policy is consistent with the guiding principles set out in this report. Payments from outstanding awards The Committee reserves the right, in certain circumstances, to make any remuneration payments and payments for loss of oﬃce (including exercising any discretions available to it in connection with such payments) where the terms of the payment were agreed: before the Policy in force at that time came into eﬀect; or at a time when the relevant individual was not a Director of the Group provided that, in the opinion of the Committee, the payment was not agreed in consideration of the individual becoming a Director of the Group. For these purposes, payments include the satisfaction of variable remuneration awards previously granted, but not vested, to an individual. Minor changes to Policy The Committee retains discretion to make minor, non-signiﬁcant changes to the Policy set out above (for reasons including, but not limited to, regulatory, exchange control, tax or administrative purposes or to take account of a change in legislation) without reverting to shareholders for approval for that amendment, where seeking such shareholder approval would be disproportionate to the discretion being exercised. LTIP awards The Committee may exercise its discretion as provided for in LTIP rules approved by shareholders. The Committee may also adjust the number of shares comprising an LTIP award (or the exercise price if the award comprises options) in the event of a variation of share capital, demerger, special dividend, distribution or any other corporate event which may aﬀect the current or future value of an award. It is intended that any adjustment will be made on a neutral basis, i.e. to not be to the beneﬁt or detriment of participants. Any use of discretion by the Committee during a ﬁnancial year will be detailed in the relevant Annual Report on Remuneration and may be the subject of consultation with the Group’s major shareholders, as appropriate. Remuneration Policy for the wider workforce The Remuneration Policy for other employees is based on principles that are broadly consistent with those applied to Executive Director remuneration, with a common objective of driving ﬁnancial performance and the achievement of strategic objectives, and contributing to the long-term success of the Group. Remuneration supports our ability to attract, motivate and retain skilled and dedicated individuals, whose contribution will be a critical factor in the Group’s success. Annual salary reviews take into account Group performance, local pay and market conditions, and salary levels for similar roles in comparable companies. Pension entitlements and other beneﬁts vary according to jurisdiction, to ensure these remain appropriately competitive for the local market. 131 Convatec Group Plc Annual Report and Accounts 2024 Governance Financial statements Additional information Overview Strategic report Many employees below executive level are eligible to participate in annual bonus schemes or similar variable incentive arrangements. Opportunities and performance measures vary by organisational level, geographical location and an individual’s role. Employee ownership of Convatec Group Plc shares is promoted across the Group. Senior executives are eligible for LTIP awards on similar terms as the Executive Directors, although award opportunities are lower and vary by organisational level. At senior levels a combination of Performance Shares and Restricted Share awards are used, as is common within our sector. Other executives are eligible for restricted share awards on a discretionary basis. Convatec also oﬀers an opportunity for broader-based participation in share purchase plans, such as Save As You Earn (SAYE) or Employee Share Purchase Plan (ESPP) arrangements. The Committee does not directly consult with employees as part of determining our Remuneration Policy for Executives, but receives regular oversight and updates on workforce policies and practices on reward. Approach to target setting and performance measure selection The Committee considers carefully the selection of performance measures at the start of each performance cycle, taking into consideration the Group’s strategic objectives and the macroeconomic environment. Annual bonus measures are selected to align with the Group’s KPIs (see pages 12 and 13). Measures may change from year-to-year (subject to the Remuneration Policy), and the rationale for any changes to the bonus measures selected will therefore be disclosed in the relevant Annual Report on Remuneration. LTIP performance measures (used for awards of Performance Shares) are selected to ensure they align with the Group’s strategy and long-term shareholder value creation. They are designed to align executive and shareholder interests through an eﬀective balance between external and internal measures of performance, and between growth and returns in the context of the Group’s strategy. Targets are set to be stretching but achievable over the performance period, taking account of multiple relevant reference points, for example, internal forecasts, external expectations for future performance at both the Group and its closest sector peers, and typical performance ranges of companies of comparable size and complexity. The Committee also retains discretion, in exceptional circumstances, to vary, substitute or waive the performance conditions attaching to incentive awards (within the relevant limits set out in the Policy table) if there is a signiﬁcant and material event which causes the Committee to believe the original conditions are no longer appropriate, and the new performance conditions are deemed reasonable and not materially less diﬃcult to satisfy than the original conditions. Pay-for-performance: scenario analysis The charts below provide an estimate of the potential future reward opportunities for Karim Bitar and Jonny Mason, and the potential split between the diﬀerent elements of remuneration under four diﬀerent performance scenarios: “Maximum + 50% share price growth”, “Maximum”, “On target” and “Minimum”. Potential reward opportunities are based on the forward-looking policy, applied to 2024 base salaries and incentive opportunities. LTIP awards granted in a year will not normally vest until the third anniversary of the date of grant, and the projected value of the “Maximum”, “On target” and “Minimum” scenarios excludes the impact of share price movement. The above charts are based on the following assumptions: “ Maximum + 50% SPA”: ﬁxed remuneration (salary, pension, other beneﬁts), plus maximum bonus (200% of salary) and full vesting of the 2024 LTIP awards (Performance Share Awards of 425% of salary for the CEO/250% of salary for the CFO, and Restricted Share awards of 100% for CEO and 75% for CF0), and reﬂecting 50% share price growth over the vesting period). “Maximum”: ﬁxed remuneration (as above), plus maximum bonus (200% of salary) and full vesting of the 2024 LTIP awards assuming no share price growth. “On-target”: ﬁxed remuneration (as above), plus target bonus (50% of maximum or 100% of salary) and 60% of maximum vesting of Performance Share Awards under the LTIP and full vesting of Restricted Share awards, assuming no share price growth. “Minimum”: ﬁxed remuneration only, being the only element of Executive Directors’ remuneration not linked to performance. Executive Director service contracts In accordance with general market practice, each of the Executive Directors has a rolling service contract. Karim Bitar and Jonny Mason have service contracts with the Company (copies of which are available to view at the Company’s registered oﬃce) that are terminable on 12 months’ notice from the Group and six months’ notice from the Executive Director. This practice will also apply for any new Executive Directors. The following table shows the date of the service contract for each Executive Director that served during the year: Executive Director Position Date of appointment Date of service agreement Karim Bitar CEO 30 September 2019 24 March 2019 Jonny Mason CFO 12 March 2022 8 December 2021 Directors’ Remuneration report continued Pay scenarios CEO – Karim Bitar Maximum + 50% SPA Minimum Target £11,145,280 11% 18% 71% 14% 24% 62% 20% 100% 18% 62% £ 8,494,030 £ 1,171,530 £ 5,767,030 Maximum Fixed Remuneration Annual bonus LTIP (PSP + RSU) CFO – Jonny Mason Maximum + 50% SPA Minimum Target £4,382,519 £3,491,207 £611,582 £2,394,207 Maximum Fixed Remuneration Annual bonus LTIP (PSP + RSU) 14% 25% 61% 18% 31% 51% 25% 100% 23% 52% 132 Convatec Group Plc Annual Report and Accounts 2024 Governance Exit payments policy The Group’s policy on termination payments is to consider the circumstances on a case-by-case basis, taking into account the relevant contractual terms in the executive’s service contract and the circumstances of termination. Executive Directors’ contracts provide for the payment of a pre-determined sum in the event of termination of employment in certain circumstances (but excluding circumstances where the Group is entitled to dismiss without compensation), comprising base salary, pension beneﬁt and beneﬁts in respect of the unexpired portion of the notice period. Termination payments may take the form of payments in lieu of notice. Payments would normally be made on a phased basis and subject to mitigation. If the employment is terminated by the Group, the Committee retains the discretion to settle any other amount the Committee considers reasonable to the Executive Director including in settlement of claims, in respect of legal fees incurred in connection with the termination and fees for outplacement services and relocation costs. In addition to contractual provisions, the following table summarises how awards under each discretionary incentive plan are typically treated in speciﬁc circumstances, with the ﬁnal treatment remaining subject to the Committee’s discretion as provided under the rules of the plan. In the event of termination, any outstanding options granted under the SAYE, or equivalent, scheme will be treated in accordance with the rules of the scheme, which do not include discretion. Disclosure in relation to any departing Executive Director, including details of any remuneration payment made to them after they cease to be a Director, will be made on the Company’s website in accordance with Section 430(2B) of the Companies Act 2006. Treatment of awards on cessation of employment Reason for cessation Calculation of vesting/payment Timing of vesting/payment Annual bonus Injury, disability, death, redundancy, retirement, or other such event as the Committee determines The Committee may determine that a bonus is payable on cessation of employment (normally pro-rated for the proportion of the performance year worked) and the Committee retains discretion to determine that the bonus should be paid wholly in cash. The bonus payable will be determined based on the performance of the Group and of the individual over the relevant period, and the circumstances of the Director’s loss of oﬃce. At the normal payment date, taking into account actual Company performance for the performance period. All other reasons (including voluntary resignation) No bonus will be paid for the ﬁnancial year. Not applicable. Deferred bonus shares Resignation or dismissal for cause Awards normally lapse. Not applicable. All other reasons (e.g. injury, disability, death, redundancy, retirement, or other such event as the Committee determines) Awards will normally vest in full (i.e. not pro- rated for time) unless the Committee determines that time pro-rating should apply. At the normal vesting date, unless the Committee decides that awards should vest earlier (e.g. in the event of death). Change of control Awards will normally vest in full (i.e. not pro- rated for time). Awards may alternatively be exchanged for equivalent replacement awards, where appropriate. On change of control. LTIP awards Resignation or dismissal for cause Awards normally lapse. Not applicable. All other reasons (e.g. injury, disability, death, redundancy, retirement, or other such event as the Committee determines) Awards will normally be pro-rated for time (unless the Committee chooses to disapply time pro-rating) and will vest based on performance over the original performance period (where awards are subject to performance conditions) unless the Committee decides to measure performance to the date of cessation. At the normal vesting date, unless the Committee decides that awards should vest earlier (e.g. in the event of death). Change of control LTIP awards will normally be pro-rated for time (unless the Committee chooses to disapply time pro-rating) and will vest subject to performance (where applicable) over the performance period to the change of control. LTIP awards may alternatively be exchanged for equivalent replacement awards, where appropriate. On change of control. Approach to remuneration on recruitment External appointments In cases of hiring or appointing a new Executive Director from outside the Group, the Committee may make use of all existing components of remuneration set out in the Policy table, up to the disclosed maximum opportunities (where applicable). When determining the remuneration package for a new Executive Director, the Committee will take into account all relevant factors based on the circumstances at that time to ensure that arrangements are in the best interests of the Group and its shareholders. This may include factors such as the experience and skills of the individual, internal comparisons and relevant market data. The Committee may also make an award in respect of a new appointment to “buy-out” incentive arrangements forfeited on leaving a previous employer, i.e. over and above the maximum limits on incentive opportunities set out in the Policy table. In doing so, the Committee will consider relevant factors, including any performance conditions attached to these awards, the likelihood of those conditions being met, and the time over which they would have vested. The intention is that the expected value of any “buy-out” award would be no higher than the expected value of the forfeited arrangements, and that the structure will replicate (as far as reasonably possible) that of the awards being forfeited. The Committee may consider it appropriate to structure “buy-out” awards 133 Convatec Group Plc Annual Report and Accounts 2024 Governance Financial statements Additional information Overview Strategic report diﬀerently from the structure described in the Policy table, exercising its discretion under the LTIP rules to structure awards in other forms (including market value options, restricted shares, forfeitable shares or phantom awards) and may use the exemption permitted within the Listing Rules where necessary to make a one-oﬀ award to an Executive Director in this context. Internal promotion Where a new Executive Director is appointed by way of internal promotion, the Policy will be consistent with that for external appointees, as detailed above (other than in relation to ‘buy-out’ awards). Any commitments made prior to an individual’s promotion will continue to be honoured even if they would not otherwise be consistent with the Policy prevailing when the commitment is fulﬁlled, although the Group may, where appropriate, seek to revise an individual’s existing service contract on promotion to ensure it aligns with other Executive Directors and good practice. Disclosure on the remuneration structure of any new Executive Director, including details of any ‘buy-out’ awards, will be disclosed in the RNS notiﬁcation made at the time of appointment and in the Annual Report on Remuneration for the year in which recruitment occurred. External appointments held by Executive Directors Executive Directors may accept one external appointment subject to approval by the Board, there being no conﬂicts of interest and the appointment not leading to deterioration in the individual’s performance. Executive Directors may retain the fees paid for such roles. Details of external appointments and the associated fees received will be included in the Annual Report on Remuneration. Consideration of conditions elsewhere in the Group The Committee seeks to promote and maintain good relations with employees as part of its broader employee engagement strategy, considers pay practices across the Group and is mindful of the salary increases applying across the rest of the business in relevant markets when considering any increases to salaries for Executive Directors. Consideration of shareholder views The Committee will take into consideration all shareholder views received during the year and at the Annual General Meeting each year, as well as guidance from shareholder representative bodies more broadly, in shaping the Group’s implementation of its Remuneration Policy. The Committee has undertaken extensive engagement with Shareholders in determining the Policy proposals, which reﬂect investor feedback received. Remuneration Policy for the Non-Executive Directors Details of the Policy on fees paid to our Non-Executive Directors are set out in the table below: Purpose and link to strategy Operation Opportunity Performance measures Summary of changes from existing Policy Non-Executive Director fees To attract and retain Non- Executive Directors of the highest calibre with broad commercial and other experience relevant to the Group The fees of the Chair are determined by the Committee. The fees paid to Non-Executive Directors are determined by the Chair and Executive Directors. Additional fees are payable for acting as Senior Independent Director and for chairing the Audit and Risk Committee or the Remuneration Committee. An additional fee is also payable for acting as a Board Level Representative for the workforce. Flexibility to introduce Committee membership fees is also retained if deemed to be necessary. The maximum aggregate annual fee for all Non- Executive Directors (including the Chair) as provided in the Group’s Articles of Association is £1,500,000. n/a None Fee levels are reviewed annually (with any increases normally eﬀective 1 April), taking into account external advice on best practice and competitive levels, in particular at other FTSE companies of comparable size and complexity. Time commitment and responsibility are also taken into account when reviewing fees. Chair and Non-Executive Director fees are paid in cash. The Committee reimburses the Chair and Non-Executive Directors for reasonable expenses and may settle any tax incurred in relation to these expenses. The fees paid to the Chair and Non-Executive Directors are disclosed in the Annual Report on Remuneration. Fee increases will be applied taking into account the outcome of the annual review. None Non-Executive Directors are not eligible to join the Group’s pension, incentives or share schemes or to participate in any of the Group’s other beneﬁt arrangements. In recruiting a new Non-Executive Director, the Committee will use the Policy set out above. To see details of current appointments of the Chair and Non-Executive Directors for the year ending 31 December 2024, please see page 143. Directors’ Remuneration report continued 134 Convatec Group Plc Annual Report and Accounts 2024 Governance OUR ANNUAL REPORT ON REMUNERATION Introduction This section of the Remuneration report provides details of how our Remuneration Policy was implemented during the ﬁnancial year ended 31 December 2024, and how it will be implemented during the year ending 31 December 2025. It has been prepared in accordance with the provisions of the Companies Act 2006 and Schedule 8 of the Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008 (as amended). It also meets the requirements of the FCA’s Listing Rules. In accordance with the Regulations, the following sections of the Remuneration report are subject to audit: the single total ﬁgure of remuneration for Executive Directors and Non-Executive Directors, and accompanying notes (pages 135 and 138), scheme interests awarded during the ﬁnancial year (page 137), payments to past Directors (page 139) and the statement of Directors’ shareholdings (page 143). The remaining sections of the report are not subject to audit. Committee membership in 2024 Details of the membership of the Committee, the number of times it met during 2024 and attendance at its meetings are set out on page 114. Committee responsibilities The Committee’s key areas of responsibility are also set out on page 114. Committee performance evaluation A performance evaluation of the Remuneration Committee was carried out in 2024, facilitated by an external consultant, Lintstock, by way of a detailed questionnaire. The evaluation conﬁrmed that the Committee was functioning eﬀectively and addressing all areas of its remit in a systematic manner. Recommendations included ensuring that Committee members continue to have full access to appropriate training and support, to include UK Governance trends, recognising that a number of Committee members were based in the US. Advisers During the year, Willis Towers Watson (WTW) reported to the Chair of the Committee and provided reward survey benchmark data to the Company. WTW is considered to be independent by the Committee. Fees paid to WTW are determined on a time and materials basis, and totalled £133,350 (excluding expenses and VAT) for the 2024 ﬁnancial year in its capacity as adviser to the Committee. WTW is a member of the Remuneration Consultants Group and, as such, voluntarily operates under the Code of Conduct in relation to executive remuneration consulting in the UK (www.remunerationconsultantsgroup.com). Summary of shareholder voting The following table shows the results at the 2024 AGM of the advisory vote on the 2023 Annual Report on Remuneration and the binding vote on the 2023 Remuneration Policy (at the 2023 AGM). Resolution Votes ‘for’ Votes ‘against’ Votes ‘withheld‘ 1 2023 AGM: To approve the Directors’ Remuneration Policy (Binding) 95.95% 4.05% 8,682,610 2024 AGM: To approve the Directors’ Remuneration report (Advisory) 98.24% 1.76% 8,051,515 1. Votes ‘withheld’ are not votes in law and, therefore, have not been included in the calculation oftheproportion of votes ‘for’ or ‘against’ each resolution. Single total figure of remuneration for Executive Directors (audited) The following table sets out a single ﬁgure for the total remuneration received by each Executive Director for the 2024 ﬁnancial year and compares this with the equivalent ﬁgure for the 2023 ﬁnancial year. The Committee believes that the Remuneration Policy has operated as intended in 2024 with no deviations from the approved Policy. Director Base salary ’000 Taxable beneﬁts 1 ’000 Annual bonus 2 ’000 LTIP 3 ’000 Pension beneﬁt 4 ’000 Total Fixed 5 ’000 Total Variable 6 ’000 Total ’000 Karim Bitar 2024 £972 £76 £1,937 £1,991 £83 £1,131 £3,928 £5,059 2023 £938 £76 £1,873 £1,661 £80 £1,094 £3,534 £4,628 Jonny Mason 2024 £528 £16 £1,052 £1,109 £45 £589 £2,161 £2,750 2023 £509 £17 £1,017 n/a £43 £569 £1,017 £1,586 1. For Karim Bitar and Jonny Mason, beneﬁts consist primarily of car allowance, private medical insurance, life assurance and permanent health insurance. For Karim Bitar, private medical is provided in the form of a healthcare allowance of £50,000 payable per annum. 2. Reﬂects the total bonus awarded for performance in the relevant ﬁnancial year. One-third of the bonus earned by Karim Bitar and Jonny Mason is deferred into shares for three years (the vesting of which is not subject to any further performance conditions). 3. 2024 ﬁgures represent the estimated value of LTIP awards made to Karim Bitar and Jonny Mason in March 2022. These awards shall vest on the third anniversary of grant at 70.3% of maximum based on performance over the three-year performance period ending 31 December 2024 (further details of which are set out on page 137). The estimated values shown in the table above use the three-month average share price for the period ended 31December 2024 (228.72p) and will be trued up in next year’s report to reﬂect their value (including any accrued distribution which were reinvested into shares) on the vesting date. The value of vested shares has increased by £415k for Karim Bitar since the respective award dates as a result of share price appreciation (awards were granted at 181p per share). The 2023 ﬁgure has been updated from that disclosed in our last Annual Report to reﬂect the actual value of the 2021 LTIP when it vested in March 2024, with an associated share price of 280p. 4. Karim Bitar’s and Jonny Mason’s pension beneﬁts in the year are equivalent to 8.5% of base salary, in line with the wider UK workforce. 5. Total of base salary, taxable beneﬁts and pension beneﬁt. 6. Total of annual bonus and LTIP. 135 Convatec Group Plc Annual Report and Accounts 2024 Governance Financial statements Additional information Overview Strategic report Directors’ Remuneration report continued Incentive outcomes for the year ended 31 December 2024 (audited) Annual bonus in respect of performance in the 2024 financial year For 2024, Karim Bitar and Jonny Mason had a maximum bonus opportunity of 200% of their 2024 base salary. Any payments under the annual bonus are normally payable two-thirds in cash and one-third in shares, deferred for three years. The on-target opportunity was 50% of maximum. The annual bonus for 2024 was based on a combination of adjusted operating proﬁt 1 (weighted 40%), organic revenue growth 1 (25%), free cash ﬂow to equity (15%) and personal strategic objectives (20%), of which 5% relate to quantiﬁable ESG metrics. The tables below summarise the structure of the 2024 annual bonus, the targets set, our performance over the ﬁnancial year and the resulting annual bonus payout. Performance targets Financial measure Link to corporate strategy Threshold 0% payout Target 50% payout Maximum 100% payout Actual performance Adjusted operating proﬁt 1 Focus Innovate Simplify $457m $471m $500m $499m Organic revenue growth 1 Focus Innovate Simplify 4% 5.5% 7% 7.5% Free cash ﬂow to equity Simplify Execute $213m $237m $260m $302m Objectives and actual performance Karim Bitar – Grew FISBE market sales ahead of other markets. – Customer net promoter score (cNPS) introduced across all business units: actioning insights leading to increased customer loyalty. – Roll out of eNPS globally, with Convatec in the top decile for employee engagement. – Continued the successful execution of FISBE strategy, delivering sustainable and proﬁtable growth, a strong cash ﬂow position and strengthening Convatec’s competitive position. – Eﬀective pipeline progression with strong pipeline of new products. – Continued delivery of improvements in overall quality of products, greenhouse gas emissions (61% reduction in Scope 1 and Scope 2 over 2021), increased diversity through women in senior leadership positions (45%). Jonny Mason – Guided the business to deliver on all ﬁnancial targets for the year, including: revenue growth; margin expansion; earnings increase; and cash generation. – Expanded Finance, IT and Global Business Services (GBS) scope, with reduction in cost ratio achieved ahead of target. – Delivered process improvements in core processes (such as purchase to pay), evidenced by increases in tNPS. – Continued increase in employee engagement and reduction in voluntary turnover levels. – Successful delivery of ﬁrst year of IT transformation activity. ESG targets in scope: Complaints per million (CPM), Scope 1 and 2 greenhouse gas emissions; Vitality Index and a DE&I metric linked to proportion of females in senior management roles. We successfully achieved a reduction in CPM by at least 8% and attained a Vitality Index in excess of the target set of 28%. We also reduced Scope 1 and 2 emissions by 61% relative to our 2021 baseline, and had female representation within senior management of 45% at year end, ahead of the stated target. For a comprehensive account of our performance against these targets see pages 39, 44 and 52 of the Annual Report. Annual bonus in respect of performance breakdown Weighting Maximum opportunity (% of salary) Bonus Calculation Director Measure (% of maximum) (‘000) Karim Bitar Adjusted operating proﬁt 1 40% 80% 98.5% Organic revenue growth 1 25% 50% 100% Free cash ﬂow to equity 15% 30% 100% Personal strategic objectives (inc. 5% in relation to ESG metrics) 20% 40% 96.25% Total 100% 200% 98.7% £1,937k Jonny Mason Adjusted operating proﬁt 1 40% 80% 98.5% Organic revenue growth 1 25% 50% 100% Free cash ﬂow to equity 15% 30% 100% Personal strategic objectives (inc. 5% in relation to ESG metrics) 20% 40% 96.25% Total 100% 200% 98.7% £1,052k 1. Adjusted operating proﬁt and organic revenue growth are both calculated on a constant currency basis using a budget rate. One-third of the bonus earned by the Executive Directors will be deferred into shares to be held for three years. This will be awarded in March 2025 and full details of this element of the award will be disclosed in next year’s Annual Report. 136 Convatec Group Plc Annual Report and Accounts 2024 Governance Scheme interests vesting in respect of the year ended December 2024 (audited) In March 2022, Karim Bitar and Jonny Mason were granted conditional share awards under the LTIP. These LTIP awards were subject to performance over the three-year period ended 31 December 2024, and performance conditions based on a combination of: Relative TSR and adjusted PBT growth, both over a three-year period, weighted 25% and 75%, respectively. The table below sets out details of the targets, and performance against these: Measure Weighting Performance range Payout Range Actual performance Weighted vesting outcome Three-year Relative TSR against the constituents of the FTSE 350 excluding investment trusts 25% Median to 90th percentile Median = 25% award Stretch (75th percentile) = 90% award Max (90th percentile or above) = 100% award 67th percentile 69.7% Three-year compound annualised growth in adjusted PBT 1 75% 8% to 15% p.a. Threshold (8%) = 25% award through to Stretch (15% or above) = Full award 12.2% 70.5% Total % vesting 70.3% 1. Final vesting outturns on the PBT measure have been adjusted to reﬂect the impact of M&A over the period in line with the Remuneration Policy. Accordingly, Executive Directors’ 2022 LTIP awards will vest on the third anniversary of grant as set out below: Director Date of grant Number awarded % vesting Number vesting Karim Bitar 14 March 2022 1,238,337 70.3% 870,551 Jonny Mason 14 March 2022 690,112 70.3% 485,149 Scheme interests awarded in 2024 (audited) 2024 LTIP awards During the year ended 31 December 2024, the Executive Directors were awarded conditional share awards under the LTIP, details of which are summarised in the table below. They are based on Convatec performance from 1 January 2024 to 31 December 2026. Face value Director Date of grant Number awarded Award price 1 Value % of annualised salary Vesting date Karim Bitar 11 March 2024 1,025,891 276p £2,831,459 300% 11 March 2027 Jonny Mason 11 March 2024 464,221 276p £1,281,250 250% 11 March 2027 1. The LTIP face values are determined as a percentage of each Executive Director’s annualised salary on the date of grant and converted into numbers of conditional shares using the average of the three-day closing price preceding the date of grant. The performance conditions attached to these 2024 LTIP awards are set out in the table below. Measure Weighting Threshold (25% vesting) Stretch (90% vesting) Maximum (100% vesting) Organic revenue growth 25% 4% 7% Three-year compound annualised growth in adjusted PBT 50% 6% p.a. 14% p.a. Three-year Relative TSR rank vs constituents of FTSE 50 to 150 excluding investment trusts and using three-month average opening and closing values 12.5% Median 75th percentile ≥ 90th percentile Three-year Relative TSR rank vs constituents of S&P Global Healthcare Equipment & Services index (calculated in GBP) 12.5% Median 75th percentile ≥ 90th percentile To the extent the 2024 LTIP awards vest, vested shares will be required to be held for a further two-year post-vesting holding period. Vesting will be determined on a straight-line basis between the points in the table above. Deferred Bonus Award (audited) One-third of the 2023 bonus earned by Karim Bitar and Jonny Mason was deferred into shares to be held for three years under the Deferred Bonus Plan DBP), details of which are summarised in the table below. Value Director Date of grant Number awarded Award price 1 £ % of 2023 bonus Vesting date Karim Bitar 11 March 2024 226,266 276p £624,494 One-third 11 March 2027 Jonny Mason 11 March 2024 122,863 276p £339,102 One-third 11 March 2027 1. The award values are determined as one-third of each Executive Director’s 2023 bonus and converted into numbers of conditional shares using the average of the three-day share price preceding the date of grant. 137 Convatec Group Plc Annual Report and Accounts 2024 Governance Financial statements Additional information Overview Strategic report Directors’ Remuneration report continued Fees retained for external non-executive directorships Executive Directors may hold one external appointment and retain the fees paid for such a role. Neither of the Executive Directors held an external non-executive director appointment during the year. Single total figure of remuneration for Non-Executive Directors (audited) The table below sets out a single ﬁgure for the total remuneration received by each Non-Executive Director for the 2024 and 2023 ﬁnancial years. Fee 1 Beneﬁts 2 Total Non-Executive Director 2024 ’000 2023 ’000 2024 ’000 2023 ’000 2024 ’000 2023 ’000 John McAdam £346 £334 £30³ £1 £376 £335 Margaret Ewing £123 £120 £0 £1 £123 £121 Brian May £100 £97 £0 £1 £100 £98 Heather Mason £81 £79 £2 £2 £83 £81 Constantin Coussios £79 £77 £2 £1 £81 £78 Kim Lody £81 £80 £3 £2 £84 £82 Sharon O’Keefe £92 £90 £3 £2 £95 £92 1. Eﬀective 1 April 2023, US dollar and Euro fee levels were introduced alongside the Sterling fee rates. Where a Non-Executive Director receives fees in US dollar or Euro, the fees have been converted to Sterling using the average exchange rate at the time of payment. 2. In addition to the fees payable to each of the Directors, the Group reimburses reasonable expenses. 3. Includes travel related beneﬁts provided to the Chair during the year. Percentage change in Director remuneration The table below shows the percentage change in Director remuneration (from 2019 to 2024) compared to the average percentage change in remuneration for other employees over the same period. Convatec Group Plc does not have any other employees other than Executive Directors. For the comparator group, we have used the population of UK-based employees whose remuneration is based on overall Group business performance rather than that of a particular Business Unit. In determining the annual change in average employee remuneration, we have looked at average annual pay increase (excluding promotions) and actual bonus payments. We have only included employees who were in the Group in both years of the comparison to ensure consistency. Annualised percentage change from 2023 to 2024 Annualised percentage change from 2022 to 2023 Annualised percentage change from 2021 to 2022 Annualised percentage change from 2020 to 2021 Annualised change from 2019 to 2020 Salary or fees¹ Beneﬁts² Bonus Salary or fees¹ Beneﬁts² Bonus Salary or fees¹ Beneﬁts² Bonus Salary or fees¹ Beneﬁts² Bonus Salary or fees¹ Beneﬁts² Bonus Executive Directors Karim Bitar 3% 0% 3% 2.5% 35.9% 39.9% 2.6% 0.0% (6.5)% 1.9% 0.0% (16.9)% 0.0% 0.0% 40.0% Jonny Mason 3% 0% 3% 2.5% 1.3% 41.9% n/a n/a n/a n/a n/a n/a n/a n/a n/a Non- Executive Directors John McAdam 4% 2226% n/a 1.9% 197.1% n/a 2.5% 213.0% n/a 0.0% n/a n/a 0.0% (100)% n/a Margaret Ewing 3% (88)% n/a 2.6% 6.3% n/a 0.0% 310.1% n/a (5.4)% n/a n/a 0.9% (100)% n/a Brian May 3% (81)% n/a 2.4% 2.3% n/a 0.0% 443.5% n/a 8.4% n/a n/a n/a n/a n/a Heather Mason 2% 0% n/a 5.7% (14)% n/a 0.0% 134.2% n/a 15.4% n/a n/a n/a n/a n/a Constantin Coussios 4% 29% n/a 2.0% (1.7)% n/a 0.0% 247.4% n/a 15.4% n/a n/a n/a n/a n/a Kim Lody 2% 26% n/a 5.7% (19.5)% n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a Sharon O’Keefe 2% 27% n/a 6.1% (9.7)% n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a Average per employee 6.4% 5.7% 18.8% 7.2% 3.1% 21.2% 5.3% 10.0% 13.5% 2.7% (16.5)% 39.2% 2.7% 2.7% 16.0% Former Directors (who did not serve on the Board during the ﬁnancial year under review) have been removed from the table. Relevant prior data and commentary can be found in last year’s annual report. 1. Salary / fee ﬁgures have been annualised for this analysis to permit a meaningful comparison over time. Eﬀective 1 September 2020, the Non-Executive Director fee structure was changed: the base fee was increased and committee membership fees were discontinued. 2. The year-on-year increase in beneﬁts reﬂects the Group’s best estimate for the change in the average value of beneﬁts for other employees. Non-Executive Directors’ beneﬁts relate to taxable expenses (largely travel to attend meetings). Karim Bitar receives a healthcare allowance instead of private medical insurance which was set at £30,000 per annum in 2019. Due to the rising cost of healthcare and inﬂation, Karim’s medical beneﬁt was reviewed during the year and the Committee approved an increase to £50,000 per annum. Changes exclude the value of pension contributions. 138 Convatec Group Plc Annual Report and Accounts 2024 Governance Relative importance of spend on pay The table below shows shareholder distributions (i.e. dividends) and total employee pay expenditure for the ﬁnancial years ended 31 December 2024 and 31 December 2023, and the percentage change year-on-year. 2024 $m 2023 $m Year-on-year change Total employee pay expenditure 767 701 9% Shareholder distributions 130 127 2% Payments to past Directors and payments for loss of office (audited) There were no payments to past Directors or payments for loss of oﬃce during the year. Review of past performance The ﬁrst graph shows the Group’s TSR compared to the FTSE 100 index, an index of which the Group is a constituent. Performance, as required by legislation, is measured by TSR over the period from commencement of conditional dealing (26 October 2016) to 31 December 2024. The second graph shows TSR performance of the Group compared with the FTSE 100 index since the announcement of Karim Bitar as CEO (25 March 2019) to 31 December 2024. TSR Chart – Convatec vs the FTSE 100 Value of £100 invested on 25 October 2016 – IPO Convatec Group Plc FTSE 100 40 60 80 100 120 140 160 180 25/10/16 31/12/16 31/12/17 31/12/18 31/12/19 31/12/20 31/12/21 31/12/22 31/12/23 31/12/24 Value of £100 invested on 25 March 2019 – announcement of Karim Bitar as CEO Convatec Group Plc FTSE 100 40 60 80 100 120 140 160 180 200 220 March 19 Dec 19 Dec 20 Dec 21 Dec 22 Dec 23 Dec 24 The table below details the CEO’s single total ﬁgure of remuneration and incentive outcomes over the same period: 2016 2017 2018 2019 2020 2021 2022 2023 2024 Karim Bitar (from 30 September 2019) CEO single ﬁgure (‘000) £6,878¹ £2,786 £3,699² £4,419 £4,628³ £5,059 Annual bonus (% max.) 70.2% 98.5% 79.8% 72.7% 99.3% 98.7% LTIP vesting (% max.) n/a n/a 44.2% 80.5% 51.6% 70.3%⁴ Rick Anderson⁵ (15 October 2018 to 29 September 2019) CEO single ﬁgure (‘000) £264 £1,118 Annual bonus (% max.) n/a n/a LTIP vesting (% max.) n/a n/a Paul Moraviec (to 14 October 2018) CEO single ﬁgure (‘000) £1,413 £917 £631 Annual bonus (% max.) 40% 9% n/a LTIP vesting (% max.) n/a n/a n/a 1. 2019 remuneration includes the face value of the restricted share awards made to Karim Bitar as part of his buy-out. 2. Includes the actual vesting value of Karim Bitar’s Conditional Share award that formed part of his buy-out arrangement on appointment of £888k. 3. Updated single ﬁgure to reﬂect actual vesting of 2021 LTIP award in March 2024. 4. Represents the performance outcome of the 2022 LTIP (as a % of maximum) with a ﬁnal vesting date in March 2025. 5. Rick Anderson was a Non-Executive Director who acted as interim Executive Chair ahead of Karim Bitar joining the business. He received a ﬁxed fee for his services in comparison to the reward package design in place for Paul Moraviec and Karim Bitar. 139 Convatec Group Plc Annual Report and Accounts 2024 Governance Financial statements Additional information Overview Strategic report Directors’ Remuneration report continued CEO pay ratio The table below discloses the ratio of CEO pay for 2023, comparing the single total ﬁgure of remuneration for Karim Bitar to the full-time equivalent total reward of those colleagues whose pay is ranked at the 25th, 50th and 75th percentiles in our total UK workforce. Methodology Option A (as deﬁned by the Regulations) has been chosen to calculate the ratio, as it provides a fair comparison of colleague pay with that of our CEO by using a consistent methodology to value remuneration and identify our colleagues ranked at the 25th, 50th and 75th percentiles. We believe that the median ratio for 2024 is consistent with the pay and reward policies for the company’s UK employees. Colleague pay was calculated based on actual pay and beneﬁts for the 12 monthly payrolls in respect of the full ﬁnancial year to 31 December 2024. We can conﬁrm that no adjustments were made to the calculation of the total remuneration for these employees from the methodology set out for the CEO’s single total ﬁgure remuneration. Our pay ratios are set out below: Year Method 25th percentile 50th percentile 75th percentile 2024 Option A 117:1 87:1 58:1 2023 Option A 106:1 80:1 51:1 2022 Option A 125:1 98:1 59:1 2021 Option A 115:1 89:1 52:1 2020 Option A 83:1 65:1 40:1 2019 Option A 163:1 123:1 76:1 The table below provides information on the salary and total pay and beneﬁts paid to our colleagues ranked at the 25th, 50th and 75th percentiles. Year Method 25th percentile 50th percentile 75th percentile 2024 Salary £33,345 £43,735 £64,191 Total pay and beneﬁts £43,296 £58,123 £87,627 2023 Salary £31,639 £41,076 £60,000 Total pay and beneﬁts £40,145 £53,121 £82,799 2022 Salary £29,892 £38,000 £55,017 Total pay and beneﬁts £34,757 £44,418 £73,336 2021 Salary £27,638 £34,521 £58,739 Total pay and beneﬁts £32,663 £41,964 £71,619 2020 Salary £26,660 £34,487 £52,415 Total pay and beneﬁts £33,425 £42,641 £69,668 2019 Salary £23,500 £32,798 £39,542 Total pay and beneﬁts £30,652 £40,601 £65,922 Our CEO Pay Ratio has increased since 2023 to 87:1 from 80:1. Pay and beneﬁts for the median employee increased by 9.4% between the two years. This compared to an increase in the CEO single ﬁgure of 9.3%. The breakdown of the variance for the CEO is provided below with commentary behind the change. History of CEO pay ratio: CEO pay to median employee 2020 CEO Pay Ratio (Median) 2022 2021 2023 2024 65:1 150 100 50 0 89:1 98:1 80:1 87:1 Change in CEO Single Figure 2023 to 2024 (£K) Single Figure 2023 Single Figure 2024 Change in Salary Change in Beneﬁts Increase in Annual Increase in PSP 4,628 34 3 64 330 5, 059 140 Convatec Group Plc Annual Report and Accounts 2024 Governance Change in CEO Reward (Single Figure 2023 to 2024) Reward Change Commentary Salary (+£34k) This is the impact of the change in annual base pay to £981,580 eﬀective April 2024 (previously £943,820) Beneﬁts (including pension) (+£3k) There was no change in structure of beneﬁts provided to the CEO between 2023 and 2024. The value relates to the pension allowance paid by the Company, driven oﬀ a higher base salary ﬁgure. The allowance level has remained consistent year-on-year, at 8.5% of base pay, consistent with the wider UK workforce. Annual Bonus (+£64k) Awards under our annual plan were at similar levels to 2023, with awards of 197.3% out of a maximum of 200% (2023: 198.5%). This represents a further year of strong business delivery for the organisation. Long-Term Incentives – Performance Shares (+£330k) The PSP award vested at 70.3% of maximum compared to a vesting level of 51.6% for the previous three-year performance period. The estimated value on vesting (based on the average share price for the last three months of 2024) is £1,991k. This compares to the value of the PSP award that vested in March 2024 of £1,661k. Overall (+£431k) The variance in the CEO pay ratio reﬂects the overall proportion of pay linked to variable reward for the CEO, and the associated strength of achievement against this over time. Implementation of Executive Director Remuneration Policy for 2025 Base salary Following a review of the Executive Directors’ salaries, the Committee decided to award a base salary increase of 2.9% in line with the increases for the general employee population in the UK. The increase will be eﬀective from 1 April 2025. Director Role From 1 April 2025 From 1 April 2024 Karim Bitar CEO £1,010,000 £981,580 Jonny Mason CFO £548,500 £533,000 Pension Karim Bitar and Jonny Mason receive a pension beneﬁt of 8.5% of base salary in line with that available to the wider UK workforce. Karim Bitar receives his pension beneﬁt as a combination of a contribution to pension and the balance as a cash allowance. Jonny Mason receives his pension beneﬁt as a cash allowance. Annual bonus For 2025, Karim Bitar and Jonny Mason will continue to have a maximum bonus opportunity of 200% of salary. The on-target bonus opportunity remains 50% of maximum. Two-thirds of any bonus earned will be paid in cash, with the remainder deferred into Convatec Group Plc shares for a further three-year period. The annual bonus for 2025 will be based on the following measures and weightings: Measure Link to corporate strategy Weighting Adjusted operating proﬁt 1 Focus Innovate Simplify 40% Organic revenue growth 1 Focus Innovate Simplify 25% Free cash ﬂow to equity Simplify Execute 15% Personal strategic objectives (including ESG) Focus Build 20% (of which 5% relates to ESG) 1. Adjusted operating proﬁt and organic revenue growth are both calculated on a constant currency basis using a budget rate. We have set revenue targets excluding ATT for 2025, removing this from the base year and 2025 performance to determine growth achieved. The Committee reaﬃrms its conﬁdence in the established balance of ﬁnancial measures for 2025, which continues to support our focus on sustainable and proﬁtable growth. The use of organic revenue growth as a key metric reinforces our commitment to long-term value creation, and complements operating proﬁt in driving our strategic objectives forward. ESG is within the personal strategic objective metric of the bonus to place importance on this and responsible business practices within our operations. The Board currently considers these targets to be commercially sensitive and intends to disclose retrospectively in next year’s Annual Report on Remuneration. In the event the Board considers these targets to remain commercially sensitive, they will be disclosed as soon as possible once they are no longer considered to be sensitive. In line with our Policy, bonuses for the 2025 ﬁnancial year will be subject to the Group’s policy on deferral, and its malus and clawback provisions (see pages 130 to 131 for further details). Long-Term Incentive Plan (LTIP) The 2025 LTIP will, subject to approval of our revised Remuneration Policy at the 2025 AGM, comprise two elements: an award of Performance Shares and a separate award of Restricted Shares. 141 Convatec Group Plc Annual Report and Accounts 2024 Governance Financial statements Additional information Overview Strategic report Directors’ Remuneration report continued Performance Shares We will make PSP awards to Karim Bitar of 425% salary, and of 250% of salary to Jonny Mason, as described on page 125. These awards will vest in March 2028, subject to the following performance targets assessed over the three years ending 31 December 2027: Measure Weighting Threshold (25% vesting) Stretch (90% vesting) Maximum (100% vesting) Organic revenue growth 25% 4% p.a. 7% p.a. Three-year compound annualised growth in adjusted Earnings per Share (EPS) 50% 6% p.a. 14% p.a. Three-year Relative TSR rank vs constituents of S&P Global Healthcare Equipment & Services index (calculated in GBP) 25% Median 75th percentile ≥ 90th percentile Vesting will be determined on a straight-line basis between the data points in the table above. To the extent an award vests, it will be subject to a further two-year holding period after allowing some of the shares to be sold to cover estimated social security/tax liabilities. Restricted Shares We will make awards of 100% of salary to Karim Bitar and 75% of salary to Jonny Mason. These will be awards of shares that vest in the future subject to continued employment with the business. They are not subject to further company performance conditions, but remain subject to our clawback and malus policies. The Committee may adjust the vesting level (including to zero) to avoid unintended outcomes, align pay outcomes with underlying Group performance and ensure fairness to shareholders and participants. To support transition to the new Policy, awards will be made in June 2025, using the share price used for the main Performance Share grant described above, and will be scheduled to vest in March 2028. In future years we expect awards to be made each March, with vesting on the third anniversary of award. As with the award of Performance Shares, to the extent an award vests, it will be subject to a further two-year holding period after allowing some of the shares to be sold to cover estimated social security/tax liabilities. Summary of Scheme Interests As at 31 December 2024, the Executive Directors had the following beneﬁcial interests in share awards and share options: PSP – Performance Share Plan – awards of shares that vest after three years subject to the achievement of performance against business targets. DBP –Deferred Bonus Plan – awards of shares that represent the compulsory deferral of part of the annual bonus into shares that vest after three years subject to continued employment with the business. SAYE – Awards of shares under our Save as You Earn plan, our HMRC approved all-employee share plan that operates in the UK. Karim Bitar Vesting Period Share Price at Grant At 31 December 2023 Granted in year Lapsed In year Exercised in Year As at 31 December 2024 10 March 2021 to 10 March 2024 – DBP £1.90 301,460 0 0 (301,460) 0 10 March 2021 to 10 March 2024 – PSP £1.90 1,147,691 0 (555,483) (592,208) 0 14 March 2022 to 14 March 2025 – DBP £1.81 263,650 0 0 0 263,650 14 March 2022 to 14 March 2025 – PSP £1.81 1,238,337 0 0 0 1,238,337 15 March 2023 to 15 March 2026 – DBP £2.21 201,937 0 0 0 201,937 15 March 2023 to 15 March 2026 – PSP £2.21 1,041,628 0 0 0 1,041,628 05 June 2023 to 05 June 2026 – PSP £2.07 222,630 0 0 0 222,630 20 July 2023 to 01 September 2026 – SAYE £1.76 10,253 0 0 0 10,253 11 March 2024 to 11 March 2027 – DBP £2.76 0 226,266 0 0 226,266 11 March 2024 to 11 March 2027 – PSP £2.76 0 1,025,891 0 0 1,025,891 TOTAL 4,427,586 1,252,157 (555,483) (893,668) 4,230,592 * A further two-year holding period applies to these awards post vesting. Jonny Mason Vesting Period Share Price at Grant At 31 December 2023 Granted in year Lapsed In year Exercised in Year As at 31 December 2024 14 March 2022 to 14 March 2025 – PSP £1.81 690,112 0 0 0 690,112 14 July 2022 to 01 September 2025 – SAYE £1.74 10,346 0 0 0 10,346 15 March 2023 to 15 March 2026 – DBP £2.21 99,826 0 0 0 99,826 15 March 2023 to 15 March 2026 – PSP £2.21 565,610 0 0 0 565,610 11 March 2024 to 11 March 2027 – DBP £2.76 0 122,863 0 0 122,863 11 March 2024 to 11 March 2027 – PSP £2.76 0 464,221 0 0 464,221 TOTAL 1,365,894 587,084 – – 1,952,978 * A further two-year holding period applies to these awards post vesting. 142 Convatec Group Plc Annual Report and Accounts 2024 Governance Implementation of Non-Executive Director Remuneration Policy for 2025 The Remuneration Committee sets the fee for the Chair and approved an increase aligned with that of the Executive Directors at 2.9%. The fees for the Non-Executive Directors, other than the Chair, are reviewed and set by the Non-Executive Director Fee Committee, comprised of the Chair, CEO and CFO. The Non-Executive Fee Committee reviewed and approved an increase to the basic fees aligned with the that of the wider UK employee workforce. The fee increases will take eﬀect on 1 April 2025. The fees payable to the Non-Executive Directors are set out below. Role Fee structure in 2025¹ Fee structure in 2024 Chair £359,800 £349,700 Non-Executive Director basic fee £82,300 or $107,800 £80,000 or $104,750 Additional fees: Senior Independent Director No change £21,000 or $28,000 Chair of the Audit and Risk Committee No change £23,000 or $30,000 Chair of the Remuneration Committee No change £21,000 or $28,000 Fee for acting as a Board Level Employee Representative No change £10,500 or $14,000 1. Eﬀective 1 April 2025. Non-Executive Director letters of appointment None of the Non-Executive Directors has a service contract with the Group. They do have letters of appointment, and will be submitted for re-election annually. Copies of letters of appointment are available to view at the Company’s registered oﬃce. The dates relating to the appointments of the Chair and Non-Executive Directors who served during the reporting period are as follows: Director Role Date of appointment Date of letter of appointment Date of election/ re-election John McAdam Non-Executive Chair 30 September 2019 18 August 2019 16 May 2024 Margaret Ewing Senior Independent Director 11 August 2017 17 August 2017 16 May 2024 Brian May Independent Non-Executive Director 2 March 2020 26 February 2020 16 May 2024 Heather Mason Independent Non-Executive Director 1 July 2020 8 May 2020 16 May 2024 Constantin Coussios Independent Non-Executive Director 1 September 2020 29 June 2020 16 May 2024 Kim Lody Independent Non-Executive Director 1 February 2022 13 December 2021 16 May 2024 Sharon O’Keefe Independent Non-Executive Director 1 March 2022 24 February 2022 16 May 2024 Directors’ shareholdings (audited) The table below sets out details of the current shareholdings of each Director (and any relevant connected persons) as at 31 December 2024. For Executive Directors, the current shareholding is compared to their shareholding guideline. Shares Options Owned outright or vested Director 31 December 2023 31 December 2024 Unvested and not subject to performance conditions Unvested and subject to performance conditions Vested but not exercised Unvested and not subject to performance conditions Current shareholding¹ (% salary) Shareholding guideline (% salary) Current directors Karim Bitar 2,456,534 2,929,020 691,853 3,528,486 – 10,253 774% 400% Jonny Mason 50,000 50,000 222,689 1,719,943 – 10,346 78% 300% John McAdam 23,181 23,181 Margaret Ewing 10,000 10,000 Brian May 25,000 25,000 Heather Mason 10,000 10,000 Constantin Coussios 23,278 23,278 Kim Lody 10,000 10,000 Sharon O’Keefe 3,200 3,200 1. Executive Director shareholdings calculated based on the number of shares that are owned outright or vested plus an estimated number of unvested shares that are not subject to performance conditions, on a net of tax basis. These shares are valued using a share price of 228.72p, being the average share price during the last three months of the 2024 ﬁnancial year, or the market value of the shares at the point of award (if higher) in line with our Shareholding Guidelines policy. There were no changes to the number of shares held by Directors between 31 December 2024 and 21 February 2025, being the latest practicable date prior to publication of this Annual Report. 143 Convatec Group Plc Annual Report and Accounts 2024 Governance Financial statements Additional information Overview Strategic report Directors’ Remuneration report continued Share scheme dilution limits The Company complies with the guidelines laid down by the Investment Association. These restrict the issue of new shares under all the Company’s share schemes in any ten-year period to 10% of the issued ordinary share capital. Our year-end position shows dilution levels at December 2024 of 3.1% across all schemes, with 2.6% over discretionary schemes. These fall well below current shareholder guidelines. The Directors’ Remuneration report has been approved by the Board and signed on its behalf by: Brian May Chair of the Remuneration Committee 25 February 2025 SPOTLIGHT ON EXECUTIVE DIRECTOR SHAREHOLDING Our existing Policy requires Executive Directors to develop and maintain a signiﬁcant shareholding in the Company, currently 400% for the CEO and 300% for the CFO. We intend to further increase the requirement for the CEO as part of our updated Policy, from 400% to 500% of base. This is expected to be developed through holdings of shares that vest under company share plans. 0 100 200 300 400 500 600 700 800 900 2020 2021 2022 2023 2024 774 664 547 405 365 0 200 150 100 50 250 2022 2023 2024 March 2025 (projection) 199 * 78 44 22 CEO Shareholding Our disclosures show the way that Karim Bitar’s stated shareholding has developed over time, comfortably exceeding the required shareholding expectations under our Policy. CFO Shareholding Progression The level of holding for Jonny Mason has increased steadily each year since joining in 2022. This is now accelerating more quickly as the ﬁrst sets of long-term awards begin to vest since joining the business. We operate a mandatory two-year holding period for awards vesting under the PSP (post tax) and our Policy requires that at least half of other shares that vest are retained by the individual until the point the shareholding guideline is achieved. The graph shows the stated position at year end, but also a projection of how this will change in March 2025, when the PSP award from 2022 vests, and the one-third of the annual bonus award for 2024 is awarded as deferred shares. Disclosed CEO Shareholding at year end (% Salary) CFO Shareholding at year end (% Salary) * Projection as at March 2025 following PSP vesting 144 Convatec Group Plc Annual Report and Accounts 2024 Governance Directors’ report The Directors present their Annual Report on the affairs of the Group, together with the financial statements and auditor’s report, for the year ended 31 December 2024. The Directors’ Report comprises the Governance Report (on pages 84 to 144), the Directors’ Report (on pages 145 to 148) and the Shareholder information section (on page 210). The following information is provided in other appropriate sections of the Annual Report and is incorporated by reference in this table. To comply with the Disclosure and Transparency Rules (DTR) 4.1.5R(2) and DTR 4.1.8R, the required content of the Management Report can be found in the Strategic Report or this Directors’ Report, including the material incorporated by reference. Information Section where provided Page Likely future developments and research and development activities Strategic report 39 to 43 Stakeholder engagement 36 to 38 Employee engagement 36, 45 and 96 Employment of disabled persons 147 Greenhouse gas emissions 55 to 56 Task Force on Climate-related Financial Disclosures (TCFD) report 60 to 71 Viability statement 82 to 83 Compliance with the 2018 UK Corporate Governance Code (the Code) 88 to 91 Directors Governance Report – Our Board 92 to 93 Directors’ Remuneration report 114 to 144 Directors’ Remuneration report – directors’ beneﬁcial interests and shareholding requirements 142 to 144 Details of Long-Term Incentive Plan 130 to 131 Dividend 25 and 145 Statement of Directors’ responsibilities 148 Going concern 161 Accounting policies, ﬁnancial instruments and ﬁnancial risk management 161 to 200 Disclosure of information to the auditor Each of the Directors, as at the date of this Annual Report, conﬁrms that: – the Director has taken all steps that he/ she ought to have taken as a Director in order to make him/herself aware of any relevant audit information and to establish that the Company’s auditor is aware of that information; and – so far as the Director is aware, there is no relevant audit information of which the Company’s auditor is unaware. This conﬁrmation is given and should be interpreted in accordance with the provision of Section 418 of the Companies Act 2006 (the Act). Deloitte LLP has expressed its willingness to continue in oﬃce as auditor and a resolution to reappoint them will be proposed at the 2025 AGM. Branches of the Company The Group, through various subsidiary and related undertakings, has branches in a number of diﬀerent jurisdictions in which the business operates. Further details are included in subsidiary undertakings on pages 207 to 209. Dividends Our stated policy is to target a payout ratio of between 35% and 45% of adjusted net proﬁt. This is interpreted ﬂexibly over time to reﬂect the development of the business. The Board is recommending a 3% increase in the full-year dividend to reﬂect the underlying improvement in business performance. We annually assess the application of the policy when proposing the dividend, taking into account, among other things, our growth prospects, capital eﬃciency, investment plans and the proﬁtability of the Group, whilst also maintaining appropriate levels of dividend cover. Any decision to declare and pay dividends will be made at the discretion of the Directors and will depend on, among other things, applicable law, regulation, restrictions, strategic objectives, capital management, the Group’s various stakeholders (for further information see the Section 172 statement on page 98), review of our comparator peer group, available and forecast realised distributable reserves of the Company and the forecast cashﬂows and liquidity of the Group, and other factors the Directors deem signiﬁcant. The Directors recommend a ﬁnal dividend for the year of 4.594 cents per share (2023: 4.460 cents) which, together with the interim dividend of 1.822 cents per share (2023: 1.769 cents), makes a total for the year of 6.416 cents per share (2023: 6.229 cents), a 3% increase over the prior year. The ﬁnal dividend, if approved by the shareholders, will be paid on 29 May 2025 to shareholders on the register at the close of business on 22 April 2025. Capital structure Share capital As at 31 December 2024, the Company’s issued share capital consisted of 2,049,789,559 ordinary shares of 10p each. Further details of the authorised and issued share capital, together with details of the movements in the Company’s issued share capital during the year, are shown in Note 17 to the Consolidated Financial Statements. As at 31 December 2024, the Company had only one class of share consisting of ordinary shares of 10p each. 145 Convatec Group Plc Annual Report and Accounts 2024 Governance Financial statements Additional information Overview Strategic report Directors’ report continued Acquisition of Company’s own shares At the Company’s AGM on 16 May 2024, the Directors’ authority was renewed under shareholders’ resolution to purchase through the market up to 10% of the Company’s ordinary shares at a maximum price per share of the higher of: (i) an amount equal to 105% of middle market quotations of the price of shares for the ﬁve business days prior to the date of purchase; and (ii) an amount equal to the higher of the last independent trade and the highest current independent bid at the time of purchase. This authority will expire at the end of Company’s 2025 AGM and the Company will seek its renewal at the AGM. It is conﬁrmed that no acquisition of the Company’s own shares has been made under such authority. Shareholders’ rights The rights attaching to the ordinary shares are governed by the Company’s Articles of Association (the Articles) and prevailing legislation. There are no speciﬁc restrictions on the size of a holding. Subject to applicable law and the Articles, holders of ordinary shares are entitled to receive all shareholder documents, including notice of any general meeting, attend, speak and exercise voting rights at general meetings, either in person or by proxy, and participate in any distribution of income or capital. Restrictions on voting There are no speciﬁc restrictions on voting rights, save in situations where the Company is legally entitled to impose such restrictions (usually where amounts remain unpaid on shares after request, or the shareholder is otherwise in default of an obligation to the Company). Currently, all issued ordinary shares are fully paid. There are no agreements between holders of securities in the Company that are known to the Company and may result in restrictions on transfer or on voting rights. Restrictions on the transfer of ordinary shares The transfer of ordinary shares is governed by the general provisions of the Company’s Articles and applicable legislation. There are no restrictions on the transfer of ordinary shares other than: (i) as set out in the Articles; and (ii) certain restrictions which may from time to time be imposed by laws and regulations and pursuant to the Listing Rules whereby Directors and certain oﬃcers and employees of the Company require approval to deal in the ordinary shares in accordance with the Company’s share dealing policies and the Market Abuse Regulation. Directors’ appointment, replacement and powers The appointment and replacement of Directors of the Company is governed by its Articles, the Code, the Act and related legislation. The Articles themselves may be amended by special resolution. Details of the powers of the Board and its Committees are described in the Governance Framework on our website. The powers of the Board are set out in the Articles and the Terms of Reference of each of the Board’s committees set out their respective duties and responsibilities. The aforementioned documents can be found at www.convatecgroup.com/investors/ governance. Significant agreements There are a number of agreements that take eﬀect, alter or terminate upon a change of control of the Company, such as commercial contracts, bank loan agreements, property lease arrangements and employees’ share plans. Other than the Group’s main funding agreements referenced in the following paragraph, none of these are considered to be signiﬁcant in terms of their likely impact on the business of the Group as a whole. Furthermore, the Directors are not aware of any agreements between the Group and its Directors or employees that provide for compensation for loss of oﬃce or employment that occurs because of a change of control resulting from a takeover bid. In the event of a change of control of the Company, the Group’s main funding agreements allow the lenders to give notice of repayment for all outstanding amounts under the relevant facilities. Directors’ indemnities The Group has made qualifying third- party indemnity provisions for the beneﬁt of its Directors, which remain in force at the date of this report. Company Secretary The Company Secretary provides ongoing support to the Board in relation to corporate governance issues and compliance with the Listing Rules. He is responsible for establishing, implementing and monitoring the corporate governance framework, attending (directly or through a designate) all Board and Committee meetings, advising on eﬀective Board processes, advising on Directors’ statutory duties, disclosure obligations and requirements under the Listing Rules, and working in conjunction with the investor relations team regarding dialogue with investors. Political donations No political donations, including to non-UK political parties, were made during the period. Substantial shareholdings At 31 December 2024, the Company had been notiﬁed in accordance with Chapter 5 of the Disclosure Guidance and Transparency Rules, of the following voting rights as a shareholder of the Company. At 21 February 2025, being the latest practicable date prior to the publication of this Annual Report, the Company had not received any further notiﬁcations pursuant to Chapter 5 of the Disclosure Guidance and Transparency Rules. Shareholder No. of ordinary shares Percentage of voting rights Nature of holding Novo Holdings A/S 395,318,793 20.25%¹ Direct holding Fil Limited 104,437,607 5.10%² Direct holding/Indirect holding Black Creek Investment Management, Inc. 98,997,466 4.83%³ Direct holding/Indirect holding BlackRock, Inc. Below 5% Below 5%⁴ Indirect holding/Financial instruments Pelham Capital Ltd. 93,526,729 4.71%⁵ Direct holding Artisan Partners Limited Partnership 97,980,658 4.98%⁶ Indirect holding The Capital Group Companies Inc. 97,418,767 4.99%⁷ Indirect holding It should be noted that the percentages are shown as notiﬁed and that these holdings may have changed since the Company was notiﬁed, however, notiﬁcation of any change is not required until the next notiﬁable threshold is crossed. 1. Disclosure made in 2018. 2. Disclosure made in 2024. 3. Disclosure made in 2023. 4. Disclosure made in 2023. 5. Since the disclosure made in 2019, Pelham Capital Ltd has sold its shares and is no longer a shareholder of the Company. 6. Disclosure made in 2018. 7. Since the disclosure made in 2017, The Capital Group Companies Inc. has sold its shares and is no longer a shareholder of the Company. 146 Convatec Group Plc Annual Report and Accounts 2024 Governance Diversity and inclusion We are committed to creating a values- led, performance-driven culture which starts with our employees, and we aim to bring together a rich diversity of backgrounds, experiences, preferences and capabilities which unite together to improve people’s lives through their work at Convatec. The Board considers a diverse workforce as critical to the Company’s success. Information about the Group’s initiatives to achieve diversity across the business, including speciﬁc objectives, are contained on pages 46 and 47. Employment of disabled people Applications for employment by disabled people are always fully considered, bearing in mind the aptitudes of the applicant concerned. In the event of members of staﬀ becoming disabled every eﬀort is made to ensure that their employment with the Group continues and that appropriate training is arranged. It is the policy of the Group that the training, career development and promotion of anyone with a disability should, as far as possible, be equitable with that of other employees. Employee share schemes In addition to the discretionary share schemes operated as part of the Group’s long-term incentives, detailed in the Remuneration Policy on page 130, the Group operates an all-employee share scheme in selected jurisdictions. The Directors believe that these schemes align the interests of employees and shareholders by encouraging employees to buy and own shares in the Company, thus enabling them to beneﬁt directly from the anticipated growth and success of the Group in the future. Executive Directors may also participate in the UK all-employee share scheme, which is an HMRC-approved savings- related share option plan, on the same basis as other eligible employees. All participants may invest up to the limits set in line with HMRC guidance and as operated by the Group. Shares acquired through the Group’s share plans rank pari passu with existing ordinary shares in issue and have no special rights with regards to voting, rights to dividend, control of the Company or otherwise. All of the Group’s employee share plans contain provisions relating to a change of control. On a change of control, options and awards granted to employees under the Group’s share plans may vest and become exercisable, subject to the satisfaction of any applicable performance conditions at that time. Listing Rules – compliance with UKLR 6.6.1 The information in the table below is required to be disclosed by UK Listing Rules (UKLR) 6.6.1 and can be found in the following locations. There are no other disclosures required under this UKLR. Section Applicable sub-paragraph within UKLR 6.6.1 Location 1 Interest capitalised Group Financial Statements, Note 25, page 197 4 Details of long-term incentive schemes Directors’ Remuneration report, page 119 Annual General Meeting The Annual General Meeting will be held on Thursday 22 May 2025 at 2pm and will take place at the oﬃces of FGS Global, The Adelphi, 1-11 John Adam Street, London, WC2N 6HT, United Kingdom, in the form of a hybrid meeting. Notice of the meeting, containing details of the resolutions to be put to the meeting, will be available at www.convatecgroup.com/investors/shareholder- centre/agm-information/. By order of the Board: James Kerton Company Secretary 25 February 2025 Convatec Group Plc is registered in England No. 10361298 147 Convatec Group Plc Annual Report and Accounts 2024 Governance Financial statements Additional information Overview Strategic report Directors’ responsibilities statement The Directors are responsible for preparing the Annual Report and the Financial Statements in accordance with applicable law and regulations. Company law requires the Directors to prepare ﬁnancial statements for each ﬁnancial year. Under that law the Directors are required to prepare the Group Financial Statements in accordance with United Kingdom adopted International Accounting Standards and have elected to prepare the parent company ﬁnancial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law), including FRS 101 “Reduced Disclosure Framework”. Under company law the Directors must not approve the accounts unless they are satisﬁed that they give a true and fair view of the state of aﬀairs of the Group and Company and of the proﬁt or loss of the Group and Company for that period. In preparing the parent company’s ﬁnancial statements, the Directors are required to: – select suitable accounting policies and then apply them consistently; – make judgements and accounting estimates that are reasonable and prudent; – state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the Financial Statements; and – prepare the Financial Statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business. In preparing the Group Financial Statements, International Accounting Standard 1 requires that Directors: – properly select and apply accounting policies; present information, including accounting policies, in a manner that provides relevant, reliable, comparable and understandable information; – provide additional disclosures when compliance with the speciﬁc requirements in IFRSs are insuﬃcient to enable users to understand the impact of particular transactions, other events and conditions on the Group’s ﬁnancial position and ﬁnancial performance; and – make an assessment of the Group’s ability to continue as a going concern. The Directors are responsible for keeping adequate accounting records that are suﬃcient to show and explain the Group and Company’s transactions and disclose with reasonable accuracy at any time the ﬁnancial position of the Group and Company and enable them to ensure that the Financial Statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Group and Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. The Directors are responsible for the maintenance and integrity of the corporate and ﬁnancial information included on the Group’s website. Legislation in the United Kingdom governing the preparation and dissemination of ﬁnancial statements may diﬀer from legislation in other jurisdictions. Responsibility statement We conﬁrm that to the best of our knowledge: – the Financial Statements, prepared in accordance with the relevant ﬁnancial reporting framework, give a true and fair view of the assets, liabilities, ﬁnancial position and proﬁt or loss of the Company and the undertakings included in the consolidation taken as a whole; – the Strategic report includes a fair review of the development and performance of the business and the position of the Company and the undertakings included in the consolidation taken as a whole, together with a description of the principal risks and uncertainties that they face; and – the Annual Report and Financial Statements, taken as a whole, are fair, balanced and understandable and provide the information necessary for shareholders to assess the Group and Company’s performance and position, business model and strategy. This responsibility statement was approved by the Board of Directors on 25 February 2025 and is signed on its behalf by: Karim Bitar Chief Executive Officer Jonny Mason Chief Financial Officer 148 Convatec Group Plc Annual Report and Accounts 2024 Governance What’s inside Financial Statements 150 Independent auditor’s report 157 Consolidated financial statements 201 Company financial statements Convatec Group Plc Annual Report and Accounts 2024 149 Governance Financial statements Additional information Strategic report Overview Independent auditor’s report INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF CONVATEC GROUP PLC Report on the audit of the Financial Statements 1. Opinion In our opinion: – the Financial Statements of Convatec Group Plc (the Company) and its subsidiaries (the Group) give a true and fair view of the state of the Group’s and of the Company’s aﬀairs as at 31 December 2024 and of the Group’s proﬁt for the year then ended; – the Group Financial Statements have been properly prepared in accordance with United Kingdom adopted international accounting standards and IFRS Accounting Standards as issued by the International Accounting Standards Board (IASB); – the Company Financial Statements have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice, including Financial Reporting Standard 101 “Reduced Disclosure Framework”; and – the Financial Statements have been prepared in accordance with the requirements of the Companies Act 2006. We have audited the Financial Statements which comprise: – the Consolidated Income Statement; – the Consolidated Statement of Comprehensive Income; – the Consolidated and Company Statements of Financial Position; – the Consolidated and Company Statements of Changes in Equity; – the Consolidated Statement of Cash Flows; and – the related Notes 1 to 29 of the Consolidated Financial Statements and Notes 1 to 10 of the Company Financial Statements. The ﬁnancial reporting framework that has been applied in the preparation of the Group Financial Statements is applicable law and United Kingdom adopted international accounting standards and IFRS Accounting Standards as issued by the IASB. The ﬁnancial reporting framework that has been applied in the preparation of the Company Financial Statements is applicable law and United Kingdom Accounting Standards, including FRS 101 “Reduced Disclosure Framework” (United Kingdom Generally Accepted Accounting Practice). 2. Basis for opinion We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the auditor’s responsibilities for the audit of the Financial Statements section of our report. We are independent of the Group and the Company in accordance with the ethical requirements that are relevant to our audit of the Financial Statements in the UK, including the Financial Reporting Council’s (the ‘FRC’s’) Ethical Standard as applied to listed public interest entities, and we have fulﬁlled our other ethical responsibilities in accordance with these requirements. The non-audit services provided to the Group and the Company for the year are disclosed in Note 3.3 to the Financial Statements. We conﬁrm that we have not provided any non-audit services prohibited by the FRC’s Ethical Standard to the Group or the Company. We believe that the audit evidence we have obtained is suﬃcient and appropriate to provide a basis for our opinion. 150 Convatec Group Plc Annual Report and Accounts 2024 Financial statements 3. Summary of our audit approach Key audit matters The key audit matter that we identiﬁed in the current year was: – Revenue recognition in key markets Within this report, key audit matters are identiﬁed as follows: Similar level of risk Materiality The materiality that we used for the Group Financial Statements was $11.8m which was determined on the basis of proﬁt before tax adjusted for certain items. Scoping Combined, we performed audit procedures across 23 components in 13 countries accounting for 78% of revenue, 81% of proﬁt before tax and 90% of net assets. Significant changes in our approach We have concluded that the valuation of contingent consideration is no longer a key audit matter following payments agreed and made in the year and revisions to contractual terms. We have also determined that the acquisition of Starlight Science is no longer a key audit matter given that the acquisition took place in the prior ﬁnancial year. Finally, our audit approach for 2024 changed to execute a signiﬁcantly higher proportion of audit work through the Group’s Global Business Services (GBS) centre. 4. Conclusions relating to going concern In auditing the Financial Statements, we have concluded that the Directors’ use of the going concern basis of accounting in the preparation of the Financial Statements is appropriate. Our evaluation of the Directors’ assessment of the Group’s and Company’s ability to continue to adopt the going concern basis of accounting included: – Obtaining an understanding of the Directors’ process for determining the appropriateness of the use of the going concern basis; – Assessing the availability of ﬁnancing facilities, including nature of facilities, repayment terms and covenants; – Testing the accuracy of management’s models, including agreement to the most recent Board-approved budgets and forecasts; – Challenging the key assumptions used in these forecasts by determining whether there was adequate support for the assumptions, including consideration of ongoing global macroeconomic uncertainty; – Assessing the historical accuracy of forecasts prepared by management; – Evaluating sensitivity analysis and its impact on available ﬁnancial headroom; and – Assessing the appropriateness of the disclosures within the Financial Statements. Based on the work we have performed, we have not identiﬁed any material uncertainties relating to events or conditions that, individually or collectively, may cast signiﬁcant doubt on the Group’s and Company’s ability to continue as a going concern for a period of at least 12 months from when the Financial Statements are authorised for issue. In relation to the reporting on how the Group has applied the UK Corporate Governance Code, we have nothing material to add or draw attention to in relation to the Directors’ Statement in the Financial Statements about whether the Directors considered it appropriate to adopt the going concern basis of accounting. Our responsibilities and the responsibilities of the Directors with respect to going concern are described in the relevant sections of this report. 151 Convatec Group Plc Annual Report and Accounts 2024 Governance Financial statements Additional information Overview Strategic report 5. Key audit matters Key audit matters are those matters that, in our professional judgement, were of most signiﬁcance in our audit of the Financial Statements of the current period and include the most signiﬁcant assessed risks of material misstatement (whether or not due to fraud) that we identiﬁed. These matters included those which had the greatest eﬀect on: the overall audit strategy; the allocation of resources in the audit; and directing the eﬀorts of the engagement team. These matters were addressed in the context of our audit of the Financial Statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. 5.1. Revenue recognition in key markets Key audit matter description The Group recorded revenue of $2,289.2m for the year ended 31 December 2024 (31 December 2023: $2,142.4m) under IFRS 15: Revenue from Contracts with Customers (IFRS 15). As disclosed in Note 2.1 to the Group Financial Statements, the Group’s policy is to recognise revenue when control over a product has transferred, generally on delivery, to a customer, distributor or wholesaler. The Group measures revenue for goods sold based on the consideration speciﬁed in a contract with a customer, net of discounts, rebates, chargeback allowances and sales related taxes. Further information is included in the geographic segment information in Note 2.2. For certain sales of new and recently launched products to individual doctors, medical centres and hospitals, there is judgement in estimating the transaction price due to: – Uncertainties over the payment and timing of the customers’ insurance reimbursements; and – The limited established market practice and customer payment history. As the audit of revenue is one of the key determinants of our overall audit strategy requiring signiﬁcant allocation of audit resources, and there is judgement in estimating the total transaction price in certain elements of revenue in key markets as described above, revenue recognition has been included as a key audit matter. The Audit and Risk Committee includes its assessment of this matter on page 106. How the scope of our audit responded to the key audit matter We performed the following procedures: – We completed walkthroughs of the revenue cycle to gain an understanding of the end-to-end revenue processes and tested relevant controls across the Group; – We tested the general IT controls and relevant automated business controls in the main ﬁnancial reporting system used by the Group; – We evaluated the accounting policy for revenue relating to sales of new and recently launched products against the requirements of IFRS 15; – We obtained Management’s latest sales forecasts, as well as scenario analyses, and details of sales and collections made subsequent to the balance sheet date to evaluate sales patterns and cycles; – We assessed the relevance and reliability of the underlying data used in determining the transaction price for certain contracts with customers for new and recently launched products; – We performed analytical procedures to assess the relationship between revenue, receivables and cash collections for new and recently launched products; – We performed analytical reviews to identify potentially unusual sales trends and obtained an explanation for any such movements; – We held direct enquiries with category and geographic market leaders, assessing changes in customer demand and new product introductions that might impact sales patterns; – We performed detailed transaction testing on a sample basis, agreeing sales through to invoice, ﬁnal sales contracts and delivery notes; – We reviewed any relevant updates to distributor contracts to assess the terms of sale and to support recalculation of rebates and chargebacks associated with the revenue; – We assessed whether the disclosures within the annual report and accounts are in compliance with the requirements of IFRS 15; and – We assessed Management’s analysis as to whether any elements of revenue recognition would constitute a key source of estimation uncertainty in the Financial Statements. Key observations We are satisﬁed that revenue recognised across key markets and the disclosures made are appropriate. Independent auditor’s report continued 152 Convatec Group Plc Annual Report and Accounts 2024 Financial statements 6. Our application of materiality 6.1. Materiality We deﬁne materiality as the magnitude of misstatement in the Financial Statements that makes it probable that the economic decisions of a reasonably knowledgeable person would be changed or inﬂuenced. We use materiality both in planning the scope of our audit work and in evaluating the results of our work. Based on our professional judgement, we determined materiality for the Financial Statements as a whole as follows: Group Financial Statements Company Financial Statements Materiality $11.8m (2023: $10.8m) $5.9m (2023: $5.5m) Basis for determining materiality 4.3% (2023: 4.8%) of proﬁt before tax adjusted for certain items totalling $28.7m, which include acquisition and divestiture-related costs. The Company materiality equates to 0.1% (2023: 0.1%) of net assets. Rationale for the benchmark applied In determining our materiality benchmark, we considered the focus of the users of the Financial Statements. Proﬁt before tax is the base from which key performance measures are calculated as well as key metrics used in providing trading updates. We have adjusted proﬁt before tax for certain items as summarised above. In determining our materiality, we considered net assets as the appropriate benchmark given the Company is primarily a holding company for the Group. Group materiality $11.8m Component performance materiality range $4.1m to $5.8m Audit and Risk Committee reporting threshold $0.6m PBT adjusted for certain items Group materiality PBT adjusted for certain items $275m 6.2. Performance materiality We set performance materiality at a level lower than materiality to reduce the probability that, in aggregate, uncorrected and undetected misstatements exceed the materiality for the Financial Statements as a whole. Group Financial Statements Company Financial Statements Performance materiality 70% (2023: 70%) of Group materiality 70% (2023: 70%) of Company materiality Basis and rationale for determining performance materiality We set performance materiality at a level that we consider normal for the audit of public companies. In determining performance materiality, we considered the following factors: a. our risk assessment, including our understanding of the entity and its overall control environment; b. the quality of the control environment and control reliance adopted over certain business processes and IT systems; c. the disaggregated nature of the Group and the likelihood of an individually material error; and d. our cumulative experience from prior year audits and low level of corrected and uncorrected misstatements identiﬁed. Component performance materiality For components other than the Company, where our work on a component included an audit of the entire ﬁnancial information or an audit on one of more classes of transactions, account balances and disclosures, this work was completed to component performance materiality levels between $4.1m and $5.8m (2023: $4.0m and $5.5m). 6.3. Error reporting threshold We agreed with the Audit and Risk Committee that we would report to the Committee all audit diﬀerences in excess of $0.6m (2023: $0.5m), as well as diﬀerences below that threshold that, in our view, warranted reporting on qualitative grounds. We also report to the Audit and Risk Committee on disclosure matters that we identiﬁed when assessing the overall presentation of the Financial Statements. 153 Convatec Group Plc Annual Report and Accounts 2024 Governance Financial statements Additional information Overview Strategic report 7. An overview of the scope of our audit 7.1. Identification and scoping of components Our Group audit was scoped by developing an appropriate audit plan for each signiﬁcant account, in line with the requirements of ISA 600 Revised: Special Considerations – Audits of Group Financial Statements (Including the Work of Competent Auditors) . We assessed the qualitative and quantitative characteristics of each Financial Statement line item and considered the relative contribution of each component to these line items in determining which components would be subject to audit procedures. In performing our assessment, we have considered the geographical spread of the Group and any risks presented within each region. We also considered the presence of individual ﬁnancial transactions of a signiﬁcant nature. Based on this assessment, we focused our work on 23 (2023: 23) components covering 13 (2023: 13) countries, 78% (2023: 80%) of revenue, 81% (2023: 84%) of proﬁt before tax and 90% (2023: (83%) of net assets. The 23 (2023: 23) components are in the US, UK, Australia, Brazil, Canada, Denmark, Dominican Republic, France, Germany, Italy, Slovakia, Spain and Switzerland, which include the principal operating units of the Group. In carrying out our work, we responded to management’s continued progress in centralising ﬁnance processes in GBS. We centrally determined the scope of the audit procedures executed by component and GBS audit teams, with a signiﬁcantly higher proportion of work performed by the GBS team in the year ended 31 December 2024. Subject to audit procedures 78% Review at group level 22% Revenue Subject to audit procedures 81% Review at group level 19% Profit before tax Subject to audit procedures 90% Review at group level 10% Net assets 7.2. Our consideration of the control environment We obtained an understanding of the relevant internal controls over the ﬁnancial reporting process for our audit risk assessment. We have continued to place greater reliance on ﬁnancial controls, as a higher proportion of the Group’s ﬁnancial controls have been transferred to the Group’s GBS, which has a standardised controls and processing environment. We have tested and placed reliance on relevant ﬁnancial controls within the revenue and expenditure business cycles processed within the Group’s GBS, including automated controls. Within other components, we have obtained an understanding of relevant controls. We identiﬁed IT systems relevant to the audit of the Group and obtained an understanding of relevant IT controls. For some operating companies, including the main ﬁnancial reporting IT environment in the GBS centre, we tested the general IT controls with the involvement of our IT specialists and placed reliance on general IT controls. 7.3. Our consideration of climate-related risks In planning our audit, we have considered the potential impact of climate change on the Group’s business and its Financial Statements. The Group has reassessed the risk and opportunities relevant to climate change and maintained the Environment & Communities risk as a principal risk across the Group. This risk grading has been maintained at the same level as the prior year and has been considered and embedded into the business as explained in the Strategic Report. As a part of our audit procedures, we have reviewed the Group’s environment related risk assessment and held discussions with the Audit and Risk Committee to understand the process of identifying climate-related risks, the determination of mitigating actions and the impact on the Group’s Financial Statements. While management has acknowledged that the transition and physical risks posed by climate change have the potential to impact the medium- to long-term success of the business, they have assessed that there is no material impact arising from climate change on the judgements and estimates made in the Group Financial Statements as at 31 December 2024 as explained in Note 1.3 on page 162. We performed our own qualitative risk assessment of the potential impact of climate change on the Group’s account balances and classes of transactions and did not identify any additional risks of material misstatement. Our procedures include reviewing disclosures included in the Strategic Report to consider whether they are materially consistent with the Financial Statements and our knowledge obtained in the audit. 7.4. Working with other auditors As part of our oversight of the component teams, planning meetings were held with all component auditors. The purpose of these planning meetings was to determine whether the component teams had suﬃcient understanding of the Group’s businesses, its core strategy and signiﬁcant risks. We issued our component teams detailed instructions, included them in our team brieﬁngs and discussed their risk assessment. We also provided direction in response to enquiries made by the component auditors. All the ﬁndings observed were discussed with the component auditors in detail and instructions to perform further procedures were issued where relevant. We visited local operations in the UK, US and GBS Portugal. Considering the importance of GBS to the Group Financial Statements, and the evolution of the audit strategy to greater testing of and reliance on ﬁnancial controls in certain global processes, we maintained frequent interactions with management and component teams during the planning and audit execution stages. Independent auditor’s report continued 154 Convatec Group Plc Annual Report and Accounts 2024 Financial statements 8. Other information The other information comprises the information included in the annual report, other than the Financial Statements and our auditor’s report thereon. The Directors are responsible for the other information contained within the annual report. Our opinion on the Financial Statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the Financial Statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the Financial Statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. 9. Responsibilities of directors As explained more fully in the Directors’ responsibilities statement, the Directors are responsible for the preparation of the Financial Statements and for being satisﬁed that they give a true and fair view, and for such internal control as the Directors determine is necessary to enable the preparation of Financial Statements that are free from material misstatement, whether due to fraud or error. In preparing the Financial Statements, the Directors are responsible for assessing the Group’s and the Company’s ability to continue as a going concern, disclosing as applicable, matters related to going concern and using the going concern basis of accounting unless the Directors either intend to liquidate the Group or the Company or to cease operations, or have no realistic alternative but to do so. 10. Auditor’s responsibilities for the audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the Financial Statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to inﬂuence the economic decisions of users taken on the basis of these Financial Statements. A further description of our responsibilities for the audit of the Financial Statements is located on the FRC’s website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report. 11. Extent to which the audit was considered capable of detecting irregularities, including fraud Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below. 11.1. Identifying and assessing potential risks related to irregularities In identifying and assessing risks of material misstatement in respect of irregularities, including fraud and non- compliance with laws and regulations, we considered the following: – the nature of the industry and sector, control environment and business performance including the design of the Group’s remuneration policies, key drivers for Directors’ remuneration, bonus levels and performance targets; – the Group’s own assessment of the risks that irregularities may occur either as a result of fraud or error that was approved by the Board; – results of our enquiries of management, internal audit, the Directors and the Audit and Risk Committee about their own identiﬁcation and assessment of the risks of irregularities, including those that are speciﬁc to the Group’s sector; – any matters we identiﬁed having obtained and reviewed the Group’s documentation of their policies and procedures relating to: • identifying, evaluating and complying with laws and regulations and whether they were aware of any instances of non-compliance; • detecting and responding to the risks of fraud and whether they have knowledge of any actual, suspected or alleged fraud; • the internal controls established to mitigate risks of fraud or non- compliance with laws and regulations; • the matters discussed among the audit engagement team, including signiﬁcant component audit teams and relevant internal specialists, including tax, valuations, IT and forensics specialists regarding how and where fraud might occur in the Financial Statements and any potential indicators of fraud. As a result of these procedures, we considered the opportunities and incentives that may exist within the organisation for fraud and identiﬁed the greatest potential for fraud in certain elements of revenue recognition. In common with all audits under ISAs (UK), we are also required to perform speciﬁc procedures to respond to the risk of management override. We also obtained an understanding of the legal and regulatory frameworks that the Group operates in, focusing on provisions of those laws and regulations that had a direct eﬀect on the determination of material amounts and disclosures in the Financial Statements. The key laws and regulations we considered in this context included the UK Companies Act, Listing Rules, pensions legislation and tax legislation. In addition, we considered provisions of other laws and regulations that do not have a direct eﬀect on the Financial Statements but compliance with which may be fundamental to the Group’s ability to operate or to avoid a material penalty. These included the Food and Drug Administration (FDA) regulations and the Medical Devices Regulations (MDR). 11.2. Audit response to risks identified As a result of performing the above, we identiﬁed revenue recognition in key markets as a key audit matter related to the potential risk of fraud. The key audit matters section of our report explains the matter in more detail and also describes the speciﬁc procedures we performed in response to those key audit matters. In addition to the above, our procedures to respond to risks identiﬁed included the following: – reviewing the Financial Statement disclosures and testing to supporting documentation to assess compliance with provisions of relevant laws and regulations described as having a direct eﬀect on the Financial Statements; – enquiring of management, the Audit and Risk Committee and both in-house and external legal counsel concerning actual and potential litigation and claims; 155 Convatec Group Plc Annual Report and Accounts 2024 Governance Financial statements Additional information Overview Strategic report – performing analytical procedures to identify any unusual or unexpected relationships that may indicate risks of material misstatement due to fraud; – reading minutes of meetings of those charged with governance, reviewing internal audit reports and reviewing correspondence with tax authorities in jurisdictions in which the Group operates; and – in addressing the risk of fraud through management override of controls, testing the appropriateness of journal entries and other adjustments; assessing whether the judgements made in making accounting estimates are indicative of a potential bias; and evaluating the business rationale of any signiﬁcant transactions that are unusual or outside the normal course of business. We also communicated relevant identiﬁed laws and regulations and potential fraud risks to all engagement team members including internal specialists and component audit teams, and remained alert to any indications of fraud or non- compliance with laws and regulations throughout the audit. Report on other legal and regulatory requirements 12. Opinions on other matters prescribed by the Companies Act 2006 In our opinion the part of the Directors’ Remuneration report to be audited has been properly prepared in accordance with the Companies Act 2006. In our opinion, based on the work undertaken in the course of the audit: – the information given in the strategic report and the Directors’ report for the ﬁnancial year for which the Financial Statements are prepared is consistent with the Financial Statements; and – the strategic report and the Directors’ report have been prepared in accordance with applicable legal requirements. In the light of the knowledge and understanding of the Group and the Company and their environment obtained in the course of the audit, we have not identiﬁed any material misstatements in the strategic report or the Directors’ report. 13. Corporate Governance Statement The UK Listing Rules require us to review the Directors’ Statement in relation to going concern, longer-term viability and that part of the Corporate Governance Statement relating to the Group’s compliance with the provisions of the UK Corporate Governance Code speciﬁed for our review. Based on the work undertaken as part of our audit, we have concluded that each of the following elements of the Corporate Governance Statement is materially consistent with the Financial Statements and our knowledge obtained during the audit: – the Directors’ statement with regards to the appropriateness of adopting the going concern basis of accounting and any material uncertainties identiﬁed set out on page 161; – the Directors’ explanation as to its assessment of the Group’s prospects, the period this assessment covers and why the period is appropriate set out on page 82; – the Directors’ statement on fair, balanced and understandable set out on page 105; – the Board’s conﬁrmation that it has carried out a robust assessment of the emerging and principal risks set out on page 72; – the section of the annual report that describes the review of eﬀectiveness of risk management and internal control systems set out on page 91; and – the section describing the work of the Audit and Risk Committee set out on pages 104 to 113. 14. Matters on which we are required to report by exception 14.1. Adequacy of explanations received and accounting records Under the Companies Act 2006 we are required to report to you if, in our opinion: – we have not received all the information and explanations we require for our audit; or – adequate accounting records have not been kept by the Company, or returns adequate for our audit have not been received from branches not visited by us; or – the Company Financial Statements are not in agreement with the accounting records and returns. We have nothing to report in respect of these matters. 14.2. Directors’ remuneration Under the Companies Act 2006 we are also required to report if in our opinion certain disclosures of Directors’ remuneration have not been made or the part of the Directors’ Remuneration report to be audited is not in agreement with the accounting records and returns. We have nothing to report in respect of these matters. 15. Auditor tenures 15.1. Auditor tenure Following the recommendation of the Audit and Risk Committee, we were appointed by the Directors on 12 December 2016 to audit the Financial Statements for the year ending 31 December 2016 and subsequent ﬁnancial periods. The period of total uninterrupted engagement including previous renewals and reappointments of the ﬁrm is nine years, covering the years ending 31 December 2016 to 31 December 2024. 15.2. Consistency of the audit report with the additional report to the Audit and Risk Committee Our audit opinion is consistent with the additional report to the Audit and Risk Committee we are required to provide in accordance with ISAs (UK). 16. Use of our report This report is made solely to the Company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the Company’s members those matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company’s members as a body, for our audit work, for this report, or for the opinions we have formed. As required by the Financial Conduct Authority (FCA) Disclosure Guidance and Transparency Rule (DTR) 4.1.15R-DTR 4.1.18R, these Financial Statements form part of the Electronic Format Annual Financial Report ﬁled on the National Storage Mechanism of the FCA in accordance with DTR 4.1.15R-DTR 4.1.18R. This auditor’s report provides no assurance over whether the Electronic Format Annual Financial Report has been prepared in compliance with DTR 4.1.15R-DTR 4.1.18R. Claire Faulkner, FCA (Senior statutory auditor) For and on behalf of Deloitte LLP Statutory Auditor London, United Kingdom 25 February 2025 Independent auditor’s report continued 156 Convatec Group Plc Annual Report and Accounts 2024 Financial statements Consolidated financial statements CONSOLIDATED INCOME STATEMENT For the year ended 31 December 2024 2024 2023 Notes $m $m Revenue 2 2,289.2 2,142.4 Cost of sales (1,005.6) (941.8) Gross profit 1,283.6 1,200.6 Selling and distribution expenses (645.2) (612.5) General and administrative expenses (195.0) (212.9) Research and development expenses (111.7) (110.0) Other operating expenses 4 (6.8) (2.5) Operating profit 3 324.9 262.7 Finance income 25 4.8 5.2 Finance expense 25 (82.9) (80.7) Fair value movement of contingent consideration 26 (4.6) (24.6) Non-operating income, net 5 3.7 4.8 Profit before income taxes 245.9 167.4 Income tax expense 6 (55.4) (37.1) Net profit 190.5 130.3 Earnings per share Basic earnings per share (cents per share) 7 9.3¢ 6.4¢ Diluted earnings per share (cents per share) 7 9.3¢ 6.3¢ The accounting policies and notes on pages 161 to 200 form an integral part of the Consolidated Financial Statements. All amounts are attributable to shareholders of the Group and wholly derived from continuing operations. CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME For the year ended 31 December 2024 2024 2023 Notes $m $m Net profit 190.5 130.3 Items that will not be reclassified subsequently to the Consolidated Income Statement Remeasurement of defined benefit pension plans, net of tax 15 (0.3) (0.2) Changes in fair value of equity investments 10 (6.0) (7.8) Items that may be reclassified subsequently to the Consolidated Income Statement Foreign currency translation (47.3) 54.9 Effective portion of changes in fair value of cash flow hedges 23 (11.1) 0.7 Changes in fair value of cash flow hedges reclassified to the Consolidated Income Statement 23 2.1 (0.8) Costs of hedging 23 0.6 (0.5) Income tax in respect of items that may be reclassified 0.1 0.1 Other comprehensive (expense)/income (61.9) 46.4 Total comprehensive income 128.6 176.7 All amounts are attributable to shareholders of the Group and wholly derived from continuing operations. 157 Convatec Group Plc Annual Report and Accounts 2024 Governance Financial statements Additional information Overview Strategic report Consolidated financial statements continued CONSOLIDATED STATEMENT OF FINANCIAL POSITION As at 31 December 2024 2024 2023 Notes $m $m Assets Non-current assets Property, plant and equipment 8 502.6 473.8 Right-o f -use assets 24 67.5 74.7 Intangible assets 9 805.9 935.3 Goodwill 9 1,290.2 1,298.8 Investment in financial assets 10 16.9 22.9 Deferred tax assets 6 22.7 21.2 Restricted cash 22 3.4 5.3 Other non-current receivables 12 12.5 11.7 2,721.7 2,843.7 Current assets Inventories 11 349.6 396.1 Trade and other receivables 12 335.0 333.7 Current tax receivable 16.8 16.5 Derivative financial assets 23 18.4 13.6 Restricted cash 22 8.8 12.5 Cash and cash equivalents 22 64.7 97.6 793.3 870.0 Total assets 3,515.0 3,713.7 Equity and liabilities Current liabilities Trade and other payables 13 382.7 388.7 Lease liabilities 24 22.0 20.7 Current tax payable 31.9 26.6 Derivative financial liabilities 23 18.1 16.7 Contingent consideration 1 26 53.3 69.7 Provisions 1 14 4.3 14.0 512.3 536.4 Non-current liabilities Borrowings 21 1,122.8 1,226.9 Lease liabilities 24 56.8 64.8 Deferred tax liabilities 6 82.7 88.2 Contingent consideration 1 26 17.0 68.3 Provisions 1 14 3.5 3.0 Derivative financial liabilities 23 0.3 0.9 Other non-current liabilities 13 30.7 32.5 1,313.8 1,484.6 Total liabilities 1,826.1 2,021.0 Net assets 1,688.9 1,692.7 Equity Share capital 17 251.5 251.5 Share premium 17 181.0 181.0 Own shares 17 (16.4) (0.6) Retained deficit (828.4) (888.7) Merger reserve 2,098.9 2,098.9 Cumulative translation reserve (169.5) (122.2) Other reserves 17 171.8 172.8 Total equity 1,688.9 1,692.7 Total equity and liabilities 3,515.0 3,713.7 1. The comparatives have been re-presented as outlined in Note 1.6 to the Consolidated Financial Statements. The Consolidated Financial Statements of Convatec Group Plc, company number 10361298, were approved by the Board of Directors and authorised for issue on 25 February 2025 and signed on its behalf by: Jonny Mason Karim Bitar Chief Financial Officer Chief Executive Officer 158 Convatec Group Plc Annual Report and Accounts 2024 Financial statements CONSOLIDATED STATEMENT OF CHANGES IN EQUITY For the year ended 31 December 2024 Share capital Share premium Own shares Retained deficit Merger reserve Cumulative translation reserve Other reserves Total Notes $m $m $m $m $m $m $m $m At 1 January 2023 250.7 165.7 (1.5) (892.2) 2,098.9 (177.1) 165.2 1,609.7 Net profit – – – 130.3 – – – 130.3 Other comprehensive income/(expense): Foreign currency translation adjustment – – – – – 54.9 – 54.9 Remeasurement of defined benefit pension plans, net of tax 15 – – – – – – (0.2) (0.2) Changes in fair value of cash flow hedges, net of tax – – – – – – (0.5) (0.5) Changes in fair value of equity investments – – – – – – (7.8) (7.8) Other comprehensive income/(expense) – – – – – 54.9 (8.5) 46.4 Total comprehensive income/(expense) – – – 130.3 – 54.9 (8.5) 176.7 Dividends paid 18 – – – (110.7) – – – (110.7) Scrip dividend 17, 18 0.8 15.3 – (16.1) – – – – Share-based payments 19 – – – – – – 14.5 14.5 Share awards vested – – 0.9 – – – 1.5 2.4 Excess deferred tax benefit from share-based payments – – – – – – 0.1 0.1 At 31 December 2023 251.5 181.0 (0.6) (888.7) 2,098.9 (122.2) 172.8 1,692.7 Net profit – – – 190.5 – – – 190.5 Other comprehensive income/(expense): Foreign currency translation adjustment – – – – – (47.3) – (47.3) Remeasurement of defined benefit pension plans, net of tax 15 – – – – – – (0.3) (0.3) Changes in fair value of cash flow hedges, net of tax 23 – – – – – – (8.3) (8.3) Changes in fair value of equity investments 10 – – – – – – (6.0) (6.0) Other comprehensive income/(expense) – – – – – (47.3) (14.6) (61.9) Total comprehensive income/(expense) – – – 190.5 – (47.3) (14.6) 128.6 Dividends paid 18 – – – (130.2) – – – (130.2) Purchase of shares by Employee Benefit Trust – – (22.8) – – – – (22.8) Share-based payments 19 – – – – – – 19.7 19.7 Share awards vested – – 7.0 – – – (5.3) 1.7 Excess deferred tax benefit from share-based payments – – – – – – (1.5) (1.5) Changes in fair value of cash flow hedges transferred to inventory 23 – – – – – – 0.7 0.7 At 31 December 2024 251.5 181.0 (16.4) (828.4) 2,098.9 (169.5) 171.8 1,688.9 159 Convatec Group Plc Annual Report and Accounts 2024 Governance Financial statements Additional information Overview Strategic report Consolidated financial statements continued CONSOLIDATED STATEMENT OF CASH FLOWS For the year ended 31 December 2024 2024 2023 Notes $m $m Cash flows from operating activities Net profit 190.5 130.3 Adjustments for: Depreciation of property, plant and equipment 8 40.6 37.5 Depreciation of right-o f -use assets 24 23.2 22.7 Amortisation of intangible assets 9 157.0 154.6 Income tax 6 55.4 37.1 Non-operating income/(expense), net 1 5 5.1 (11.5) Fair value movement of contingent consideration 26 4.6 24.6 Finance costs, net 25 78.1 75.5 Share-based payments 19 19.8 14.6 Impairment of intangible assets 9 0.9 – Impairment of property, plant and equipment 8 6.5 2.7 Impairment of right-o f -use assets 24 0.3 1.9 Change in assets and liabilities: Inventories 27.5 (49.4) Trade and other receivables (26.9) 18.7 Other non-current receivables – (1.1) Restricted cash 0.2 7.8 Trade and other payables 1.2 21.1 Provisions (9.8) 4.8 Other non-current payables 1.3 (1.3) Net cash generated from operations 575.5 490.6 Interest received 5.4 5.2 Interest paid (84.5) (70.8) Payment of contingent consideration arising from acquisitions 26 (48.1) (21.7) Income taxes paid (52.1) (35.9) Net cash generated from operating activities 396.2 367.4 Cash flows from investing activities Acquisition of property, plant and equipment and intangible assets 8, 9 (122.1) (129.2) Proceeds from sale of property, plant and equipment 8 2.7 0.6 Acquisitions, net of cash acquired 26 (13.6) (84.4) Payment of contingent consideration arising from acquisitions 26 (22.8) (73.0) Net cash inflow arising from divestitures – 0.3 Investment in other financial assets (5.0) – Net cash used in investing activities (160.8) (285.7) Cash flows from financing activities Repayment of borrowings 21 (98.0) – Proceeds from borrowings 21 – 9.4 Payment of lease liabilities 24 (24.7) (22.7) Dividends paid 18 (130.2) (110.7) Purchase of own shares (10.9) – Net cash used in financing activities (263.8) (124.0) Net change in cash and cash equivalents (28.4) (42.3) Cash and cash equivalents at beginning of the year 22 97.6 143.8 Effect of exchange rate changes on cash and cash equivalents (4.5) (3.9) Cash and cash equivalents at end of the year 22 64.7 97.6 1. The comparatives have been re-presented as outlined in Note 1.6 to the Consolidated Financial Statements. 160 Convatec Group Plc Annual Report and Accounts 2024 Financial statements Overview Strategic report Governance Financial statements Additional information Convatec Group Plc Annual Report and Accounts 2024 161 Convatec Group Plc Annual Report and Accounts 2024 161 Notes to the consolidated financial statements 1. BASIS OF PREPARATION This section describes the Group’s material accounting policies that relate to the Consolidated Financial Statements and explains critical accounting judgements and estimates that management has identified as having a potentially material impact to the Group. Specific accounting policies relating to the Notes to the Consolidated Financial Statements are described within that note. 1.1 General information Convatec Group Plc (the Company) is a public limited company incorporated in the United Kingdom under the Companies Act of 2006. The Company's registered office is 7th Floor, 20 Eastbourne Terrace, London, W2 6LG, United Kingdom. The Consolidated Financial Statements have been prepared in accordance with United Kingdom adopted international accounting standards and IFRS Accounting Standards as issued by the International Accounting Standards Board (IASB). The Consolidated Financial Statements are presented in US dollars (USD), which is also the functional currency as the revenue and operating profits of the Company and its subsidiaries (collectively, the Group) are primarily generated in US dollars and US dollar- linked currencies. All values are rounded to $0.1 million except where otherwise indicated. Pages 7 and 8 in the Strategic report provide further detail of the Group's principal activities and nature of its operations. 1.2 Material accounting policies The following material accounting policies apply to the Consolidated Financial Statements as a whole: Basis of accounting and presentation The consolidated financial information has been prepared on a historical cost basis, except for certain financial instruments where fair value has been applied. Historical cost is generally based on the value of the consideration given in exchange for goods. Basis of consolidation The Consolidated Financial Statements include the results of the Company and all of its subsidiary undertakings. Subsidiaries are entities controlled ultimately by the Company. Control exists when the Company ultimately: (i) has power over the investee; (ii) is exposed, or has rights, to variable returns from its involvement in the investee; and (iii) has the ability to use its power to affect its returns. The Company reassesses whether or not it ultimately controls an entity if facts and circumstances indicate that there are changes to one or more of the three elements of control listed above. The consolidated financial information of the Company's subsidiaries is included within the Group's Consolidated Financial Statements from the date that control commences until the date that control ceases and is prepared for the same year-end date using consistent accounting policies. Going concern As discussed in the Financial review on pages 22 to 27, the overall financial performance of the business remains very strong with a robust liquidity position. In preparing their assessment of going concern, the Directors have considered available cash resources, financial actual and forecast performance, including strategy delivery, together with the Group’s financial covenant compliance requirements and principal risks and uncertainties. The Group’s liquidity remains strong as management continues to monitor its liquidity requirements to ensure there is sufficient cash to meet operational needs and maintain adequate headroom. The Directors have used actual performance in 2024, the Board approved 2025 budget (and related cash flow forecasts) and longer- term strategic plan as foundations. The forecasts reflected the full potential funding requirements in relation to the remaining estimated contingent consideration payable in relation to the Group’s acquisitions. The Directors have considered a going concern period to 30 June 2026, which is more than 12 months from the date of approval of the Consolidated Financial Statements. In accordance with FRC guidance, management applied severe but plausible downside scenarios linked to the Group’s principal and emerging risks, including supply chain disruption, cyber security disruption, significant regulatory breaches, financial market distress and geopolitical events. Scenarios combining certain risks were also considered. Further details of the specific scenarios are provided in the Viability statement on pages 82 to 83. The Board has reviewed these scenarios as part of the going concern assessment and has concluded that these scenarios are in line with the Group’s principal and emerging risks and continue to reflect the potential financial risk of severe but plausible downside events and circumstances during the going concern period. Under each scenario, the Group is forecast to retain significant liquidity and covenant headroom throughout the going concern period. A reverse stress test, before corporate level mitigations, was also considered to demonstrate what reduction in revenue would be required in the next 12 months to create conditions which may lead to a potential covenant breach. The outcome of this was considered implausible given the Group’s strong global market position, diversified portfolio of products and the corporate mitigations available to the Board and management. Accordingly, at the time of approving these Consolidated Financial Statements, the Directors have a reasonable expectation that the Group and the Company will have adequate liquid resources to meet their respective liabilities as they become due and will be able to sustain the Group’s business model, strategy and operations and remain solvent for a period of at least 12 months from 25 February 2025. Financial statements Notes to the consolidated financial statements continued 1. BASIS OF PREPARATION (CONTINUED) Convatec Group Plc Annual Report and Accounts 2024 162 Foreign currency translation and transactions Assets and liabilities of subsidiaries whose functional currency is not US dollars are translated into US dollars at the rate of exchange at the period end. Equity is translated into US dollars at historic rate. Income and expenses are translated into US dollars at the average rates of exchange prevailing during the year. Foreign currency gains and losses resulting from the translation of subsidiaries into US dollars are recognised in the Consolidated Statement of Comprehensive Income. Exchange differences arising from the translation of the net investment in foreign operations are taken to the cumulative translation reserve within equity. They are recycled and recognised in the Consolidated Income Statement upon disposal of the operation. In preparing the financial statements of the individual companies, transactions in currencies other than the entity’s functional currency (foreign currencies) are recognised at the rates of exchange prevailing on the dates of the transactions. At each reporting date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing at that date. Non-monetary items carried at fair value that are denominated in foreign currencies are translated at the rates prevailing at the date when the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated. Any gain or loss arising from subsequent exchange rate movements is included as an exchange gain or loss in the Consolidated Income Statement. 1.3 Climate change In preparing the consolidated financial statements, the Directors recognised the risk of climate change on the business and acknowledge that the Group must take appropriate action to mitigate and, where feasible, prevent further climate change impact. Further details are provided within the ‘Responsible Business Review’ and the ‘Task Force on Climate-related Financial Disclosure’ sections of the Annual Report and Accounts on pages 52 to 71. In addition, climate related risks have been considered within the ‘Environment and Communities’ principal risk and discussed in greater detail in the ‘Principal Risks’ section within the Annual Report and Accounts. The Group does not believe that there is currently a material impact to judgements and estimates in relation to climate-related risks and, as a result, the valuation of assets and liabilities have not been significantly impacted as at 31 December 2024. Consideration was given to the financial reporting judgements and estimates in respect of the following areas: – Estimates of future cash flows used in the impairment assessment of goodwill – Valuation of the Group’s assets and liabilities (including the useful economic life of property, plant and equipment and other intangible assets) – Going concern and viability of the Group over the next three years (see Viability assessment on pages 82 to 83 of the Annual Report and Accounts) Whilst there are currently no material changes or impact, management is aware of the variable risks that arise from climate change and will regularly assess these risks against judgement and estimates made in the preparation of the Group’s consolidated financial statements, including their impacts on cash flows and the valuation of assets and liabilities. 1.4 Critical accounting judgements and key sources of estimation uncertainty The preparation of financial statements, in conformity with United Kingdom adopted international accounting standards and International Financial Reporting Standards (IFRS), requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported value of assets and liabilities, income and expense. Actual results may differ from these estimates or judgements of likely outcome. Management regularly reviews, and revises as necessary, the accounting judgements that significantly impact the amounts recognised in the Consolidated Financial Statements and the sources of estimation uncertainty that are considered to be key estimates due to their potential to give rise to material adjustments in the Group’s Consolidated Financial Statements within the next financial year. In preparing the Consolidated Financial Statements, management has determined that there are no areas of estimation uncertainty that have a significant risk of resulting in a material adjustment to the carrying amount of assets and liabilities within the next financial year or critical judgements in applying accounting policies that have a significant effect on the amounts recognised in the consolidated and company financial statements. 1.5 Accounting standards New standards, interpretations and amendments applied for the first time On 1 January 2024, the Group adopted the following amendments which are mandatorily effective for the period beginning 1 January 2024: – Liability in a Sale and Leaseback – Amendments to IFRS 16 – Classification of Liabilities as Current or Non-Current – Amendments to IAS 1 – Non-Current liabilities with Covenants – Amendments to IAS 1 – Supplier Finance Arrangements – Amendments to IAS 7 and IFRS 7 The adoption during the year of the amendments and interpretations has not had a material impact on the Consolidated Financial Statements. Apart from these changes, the accounting policies set out in the Notes have been applied consistently to both years presented in these Consolidated Financial Statements. Overview Strategic report Governance Financial statements Additional information Convatec Group Plc Annual Report and Accounts 2024 163 1. BASIS OF PREPARATION (CONTINUED) New standards, interpretations and amendments not yet effective At the date of authorisation of these financial statements, the Group has not applied the following new and revised IFRS Accounting Standards that have been issued but are not yet effective: – Lack of exchangeability – Amendment to IAS 21 (effective for the period beginning 1 January 2025) – IFRS 18 – Presentation and Disclosures in Financial Statements (effective for the period beginning 1 January 2027) – IFRS 19 – Subsidiaries without Public Accountability: Disclosures (effective for the period beginning 1 January 2027) The amendments to IAS 21 are not expected to have a material impact on the Group’s financial statements. The Group is currently working to identify all impacts that IFRS 18 will have on the primary financial statements and notes to the Group’s consolidated financial statements. As the Group’s equity instruments are publicly traded, it is not eligible to elect to apply IFRS 19 for the purposes of the consolidated financial statements of the Group. Other interpretations and amendments In addition to these issued standards, there are a number of other interpretations, amendments and annual improvement project recommendations that have been issued but not yet effective that have not been adopted by the Group because application is not yet mandatory, or they are not relevant for the Group. 1.6 Prior year re-presentations Certain lines in the primary statements have been disaggregated to provide greater clarity, and accordingly, the corresponding 2023 comparative amounts have been re-presented for consistency and comparability between periods. Within the Consolidated Statement of Financial Position, contingent consideration of $138.0 million (of which $69.7 million was current and $68.3 million was non-current) at 31 December 2023 is disclosed separately from provisions. Within the Consolidated Statement of Cash Flows, the non-operating income for the year ended 31 December 2023 has been re-presented to be disclosed net of unrealised losses on derivatives of $1.9 million. This was previously recognised separately as derivative financial assets ($11.5 million) and derivative financial liabilities ($13.4 million). There is no impact on net profit, net assets, cash flows or any subtotals presented previously. RESULTS OF OPERATIONS This section includes disclosures explaining the Group’s performance for the year, including segmental information, operating costs, other expenses, taxation and earnings per share. 2. REVENUE AND SEGMENTAL INFORMATION 2.1 Revenue recognition The Group sells a broad range of products to a wide range of customers, including healthcare providers, patients and manufacturers. This note provides further information about how the Group generates revenue and when it is recognised in the Consolidated Income Statement. Accounting policy Revenue recognition The Group measures revenue for goods sold based on the consideration specified in a contract with a customer, net of discounts, chargeback allowances and sales-related taxes. Revenue is recognised when control over a product is transferred to a customer, distributor or wholesaler, which is generally when goods have been delivered. Due to the short-term nature of the receivables from sale of goods, the Group measures them at the original transaction price without discounting. Nature of goods Advanced Wound Care, Ostomy Care, and Continence Care products are sold to pharmacies, hospitals and other acute and post- acute healthcare service providers directly or through distributors and wholesalers. Products are also sold directly to end customers (patients) through the Group's home services entities and a small number of clinical and retail outlets. Infusion Care primarily serves business-to-business customers, consisting principally of the leading manufacturers for pumps for insulin and other medications. In 2024 and 2023, no single customer generated more than 10% of the Group's revenue. Convatec Group Plc Annual Report and Accounts 2024 164 2. REVENUE AND SEGMENTAL INFORMATION (CONTINUED) Accounting policy (continued) Financial statements Notes to the consolidated financial statements continued Nature, timing of satisfaction of performance obligations Principally the Group's contracts with customers contain a single performance obligation, that is the delivery of products to customers. Revenue is typically recognised when the customer receives the product but is subject to the shipping terms in each individual contract. Where non-standard shipping arrangements exist, revenue is recognised when control of the goods has transferred. Allowances for returns, where the contract specifies these terms, are made at the point of sale. For sales to distributors, revenue is recognised when title is transferred to the distributor and the distributor has assumed control, the timing of which depends on the contractual terms with each distributor. Chargeback allowances or contractual deductions relating to end-customer agreements, which may differ from distributor contracts, are made at the point of title transfer to the distributor. In certain European countries, rebates are provided to governments and are often mandated by laws or government regulations. These rebates are estimated based on government regulations and unbudgeted spending, laws and terms of individual rebate agreements, and are recorded as a deduction from revenue at the time the related revenue is recorded. The estimates are adjusted periodically to reflect actual experience. When distributors buy products from the Group at a contract price and sell these products to end-customers at a price agreed with the Group that is lower than the distributors’ list price, a chargeback may arise and a claim may be submitted to the Group by the distributor. The provision for chargebacks is based on expected sell-through levels by the Group’s distributors to contracted customers, as well as estimated distributor inventory levels. Retrospective claims are reviewed against estimations to ensure provisions are regularly updated. Volume discounts The Group offers certain prospective volume discounts to customers who achieve a specified volume amount or value of purchases in any given year. Volume discounts that meet the definition of a material right are recognised as a separate performance obligation. Material rights are the option to purchase additional products at a discount which would not have been given had the contract not been entered into and are incremental to the range of discounts typically given for those goods to that class of customer. The stand-alone selling price of these volume discounts is based on the discount that the customer would obtain when exercising the option, adjusted for any discount the customer could receive without exercising the option and the likelihood that the option will be exercised. The revenue allocated to volume discounts is short-term in nature and recognised proportionally to the pattern of options exercised by the customer or when the option expires. Variable consideration The transaction price for revenue recognised is the amount the Group expects to receive at the date of revenue recognition. In certain Group businesses, the transaction price is estimated based on the levels of rebates, discounts, allowances, product returns and consideration expected to be received. In estimating the amounts to be recognised, the Group assesses historical performance and collection patterns. The arrangements in different countries and with individual customers vary, but broadly they are all dependent upon interactions with the customer, including the submission of claims that can extend to up to 24 months after the initial point of revenue recognition. This can include factors outside the direct trading relationship with the customer such as reimbursement, retrospective rebate or other claims by an insurer, healthcare provider or governmental agency which are not the Group’s direct customers and may also be impacted by the timing of when a product is used by a customer. Where there is variability in relation to the consideration that will ultimately be received from a customer, the Group estimates the amount of consideration to be recognised as revenue during the period using the expected value method, taking into account the nature of the customer, the contractual arrangements, and other circumstances where known and relevant. Revenue is not recognised in full until it is highly probable that a significant reversal in the amount of cumulative revenue recognised will not occur. Accruals and allocations against gross accounts receivables balances are recorded at the time of sales for the estimated rebates, chargebacks, retrospective discounts, other allowances and returns based on contractual obligations, historical experience and other information available at that point in time. Given the large number of variables involved in calculating these accruals it is not practicable to provide meaningful sensitivity analysis for the resultant accruals. The nature of the estimations means that there is considerable variability in the ultimate outcomes when considered on an individual customer basis. As a result, the Group applies a limit on variable revenue consideration, in order to ensure that revenue is recognised at an appropriate level. The objective of the limit is to ensure that there is a low probability of a significant reversal of revenue when the uncertainties behind the estimations are resolved for the transactions of individual customers. The limit is applied by making prudent estimates of the inputs and assumptions used in estimating the variable consideration. These estimates are driven by historical information, but also take into account the nature of customer and the specific contractual arrangements we have with them. The limit means that the risk of a material downward adjustment to revenue in future years as a result of the estimates made in the current year is very low. 2. REVENUE AND SEGMENTAL INFORMATION (CONTINUED) Overview Strategic report Governance Financial statements Additional information Convatec Group Plc Annual Report and Accounts 2024 165 2.2 Segment information The Board considers the Group’s business to be a single segment entity engaged in the development, manufacture and sale of medical products and technologies. R&D, manufacturing and central support functions are managed globally for the Group, supporting all categories of sales. Revenues are managed both on a category and regional basis. This note presents the performance and activities of the Group as a single segment. Pages 14 to 21 of the Strategic report provide further detail of category revenue. Convatec’s Executive Leadership Team (CELT) is the Group's Chief Operating Decision Maker (CODM). The CODM is the function that allocates resources and evaluates the Group's global product portfolios on a revenue basis and evaluates profitability and associated investment on an enterprise-wide basis due to shared infrastructures and support functions between the categories. Group financial information is provided to CELT for decision-making purposes with revenue included by category as disclosed below. Resources are allocated on a Group-wide basis, with a focus on both category and the key markets but primarily based on the merits of individual proposals. Revenue by category The Group generates revenue across four major product categories. The following table sets out the Group's revenue for the year ended 31 December by category: 2024 2023 $m $m Advanced Wound Care 742.7 695.3 Ostomy Care 634.0 608.3 Continence Care 501.4 457.2 Infusion Care 410.9 370.9 Revenue excluding hospital care exit 2,289.0 2,131.7 Revenue from hospital care exit 0.2 10.7 Total 2,289.2 2,142.4 Geographic information Geographic markets The following chart sets out the Group's revenue by geographic market in which third-party customers are located: 2024 2023 $m $m Europe 661.1 647.8 North America 1,295.6 1,186.0 Rest of World (RoW) 1 332.5 308.6 Total 2,289.2 2,142.4 1. Rest of World (RoW) comprises all countries in Asia Pacific, Latin America (including Mexico and the Caribbean), the Middle East (including Turkey) and Africa. Geographic regions The following table sets out the Group's revenue on the basis of where the legal entity generating the revenue resides, including countries representing over 10% of Group revenue and the UK, where the Group is domiciled: 2024 2023 $m $m Geographic regions US 896.0 821.5 Denmark 400.2 375.5 UK 128.7 116.7 Other 2 864.3 828.7 Total 2,289.2 2,142.4 2. Other consists primarily of other countries in Europe, Asia-Pacific, Latin America and Canada. The following table sets out the Group's long-lived assets by country in which the legal entity resides: 2024 2023 $m $m Long-lived assets 3 US 1,189.8 1,285.9 UK 838.4 866.6 Denmark 280.5 274.4 Other 357.5 355.7 Total long-lived assets 2,666.2 2,782.6 3. Long-lived assets consist of property, plant and equipment, right-of-use assets, intangible assets and goodwill. Financial statements Notes to the consolidated financial statements continued 166 Convatec Group Plc Annual Report and Accounts 2024 3. OPERATING COSTS The Group incurs operating costs associated with the day-to-day operation of the business. These operating costs are deducted from revenue to calculate operating profit. 3.1 Operating profit Operating profit is stated after deducting from revenue: 2024 2023 Notes $m $m Depreciation: Property, plant and equipment 8 40.6 37.5 Right-o f -use assets 24 23.2 22.7 Amortisation of intangible assets 9 157.0 154.6 Impairment of intangible assets 9 0.9 – Impairment of property, plant and equipment 8 6.5 2.7 Impairment of right-o f -use assets 24 0.3 1.9 Amounts in respect of inventories included in cost of sales 856.1 794.4 Write-down of inventories 15.6 21.8 Lease expenses 1 24 1.5 2.4 Staff costs: Wages and salaries 618.0 578.4 Share-based payment expense 19 19.8 14.6 Social security costs 94.9 77.3 Defined contribution plans post-employment costs 27.7 23.7 Defined benefit plans pension costs 15 1.2 1.4 Recruitment and other employment-related fees 5.6 5.9 Total staff costs 767.2 701.3 1. Lease expense comprises the costs in respect of low-value leases and short-term leases. Refer to accounting policy in Note 24 – Leases. The remuneration of the Executive Directors, which is set out on pages 114 to 144, has been audited and is included within staff costs and forms part of these Consolidated Financial Statements. 3.2 Employee numbers The average number of the Group's employees by function: The average number of the Group's employees by location 2 : 2023 3,311 5,704 Operations Sales and marketing General and administrative R&D Operations Sales and marketing General and administrative R&D 857 538 2024 10,410 3,241 5,559 791 517 10,108 3,655 Europe North America RoW 1,479 5,276 2024 10,410 2023 1,468 3,600 5,040 10,108 Europe North America RoW 2. North America comprises the United States and Canada, and Rest of World (RoW) comprises all countries in Asia Pacific, Latin America (including Mexico and the Caribbean), the Middle East (including Turkey) and Africa. The total number of employees as at 31 December 2024 was 10,483 (2023: 10,129). 167 Convatec Group Plc Annual Report and Accounts 2024 Overview Strategic report Governance Financial statements Additional information 3. OPERATING COSTS (CONTINUED) 3.3 Auditor's remuneration The total remuneration of the Group's auditor, Deloitte LLP, for services provided to the Group during the year ended 31 December is analysed below: 2024 2023 $m $m Fees for audit services The audit of the Company and Group financial statements 1.8 1.6 The audit of the accounts of the Company’s subsidiaries 1 3.1 3.3 Total fees for audit services 4.9 4.9 Fees for non-audit services Audit-related assurance services 0.2 0.2 Other non-audit services 0.1 0.1 Total fees for non-audit services 0.3 0.3 Total auditor remuneration 5.2 5.2 1. Included in the $3.1 million for the audit of the Company’s subsidiaries in 2024 is $0.3 million in respect of additional fees charged for the 2023 statutory audits. A description of the work performed by the Audit and Risk Committee to safeguard auditor independence when non-audit services are provided is set out in the Audit and Risk Committee report on page 112. 4. OTHER OPERATING EXPENSES Other operating expenses were as follows: 2024 2023 $m $m Impairment of intangible assets 0.7 – Impairment of property, plant and equipment and right-o f -use assets 6.1 2.5 Other operating expenses 6.8 2.5 Other operating expenses in the year of $6.8 million consisted of $6.1 million of impairments in respect of property, plant and equipment and right-of-use assets and a $0.7 million impairment of intangible assets as a result of the Group’s transformation projects (2023: $2.9 million). The prior year also included a $0.4 million reversal of impairment of property, plant and equipment. 5. NON-OPERATING INCOME, NET Non-operating income, net was as follows: 2024 2023 Notes $m $m Net foreign exchange (loss)/gain 2 (18.1) 3.7 Gain/(loss) on foreign exchange forward contracts 23 25.8 (4.3) (Loss)/gain on foreign exchange cash flow hedges 23 (4.3) 0.8 Gain on divestiture – 3.9 Other non-operating income 0.3 0.7 Non-operating income, net 3 3.7 4.8 2. The foreign exchange loss in 2024 primarily relates to the foreign exchange impact on intercompany transactions, including loans transacted in non-functional currencies. The Group uses foreign exchange forward contracts to manage these exposures in accordance with the Group’s foreign exchange risk management policy. 3. Of the total non-operating income of $3.7 million (2023: $4.8 million), $8.8 million relates to the realised gain arising from the settlement of FX derivatives (2023: $6.7 million realised loss), which has not been reflected in the adjustments to derive net cash generated from operations on the Consolidated Statement of Cash Flows. Financial statements Notes to the consolidated financial statements continued Convatec Group Plc Annual Report and Accounts 2024 168 6. INCOME TAXES The note below sets out the current and deferred tax charges, which together comprise the total tax expense in the Consolidated Income Statement. The deferred tax section of the note also provides information on expected future tax charges or benefits and sets out the deferred tax assets and liabilities held across the Group. Accounting policy The tax expense represents the sum of current and deferred tax. Current tax Current tax is the expected tax payable or receivable on the taxable profit or loss for the year, using tax rates enacted or substantively enacted at the reporting date, and any adjustment to tax payable in respect of prior years. Taxable profit differs from profit before income taxes because taxable profit excludes items that are either never taxable or tax deductible or items that are taxable or tax deductible in a different period. Deferred tax Deferred tax is recognised using the balance sheet liability method for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is not recognised for temporary differences: – On the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit or loss; – Arising on the initial recognition of goodwill; and – On investments in subsidiaries and jointly controlled entities to the extent that it is probable that they will not reverse in the foreseeable future. Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to temporary differences when the asset is realised or the liability is settled, based on the laws that have been enacted or substantively enacted by the reporting date. Deferred tax assets are recognised for unused tax losses, tax credits and deductible temporary differences, to the extent that it is probable that future taxable profits will be available against which the asset can be utilised. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realised. Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets, and they relate to income taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but they intend to settle current tax liabilities and assets on a net basis or their tax assets and liabilities will be realised simultaneously. Current tax and deferred tax for the year Current tax and deferred tax are recognised in the Consolidated Income Statement, except when they relate to items that are recognised in other comprehensive income or directly in equity, in which case, the current tax and deferred tax are also recognised in other comprehensive income or directly in equity, respectively. Where current tax or deferred tax arises from the initial accounting for a business combination, the tax effect is included in the accounting for the business combination. Tax provisions The Group is subject to income taxes in numerous tax jurisdictions. Judgement is sometimes required in determining the worldwide provision for income taxes. There may be transactions for which the ultimate tax determination is uncertain and may be challenged by the tax authorities. The Group recognises liabilities for anticipated or actual tax audit issues based on estimates of whether additional taxes will be due. Where an outflow of funds to a tax authority is considered probable and the Group can make a reliable estimate of the outcome of the issue, management calculates the provision for the best estimate of the liability. In assessing its uncertain tax provisions, management takes into account the specific facts of each issue, the likelihood of settlement and the input of professional advice where required. The Group assumes that where a tax authority has a right to examine amounts reported to it, they will do so and will have full knowledge of all relevant information. Where the ultimate liability as a result of an issue varies from the amounts provided, such differences could impact the current and deferred tax assets and liabilities in the period in which the matter is concluded. Overview Strategic report Governance Financial statements Additional information Convatec Group Plc Annual Report and Accounts 2024 169 6. INCOME TAXES (CONTINUED) 6.1 Taxation The Group's income tax expense is the sum of the total current and deferred tax expense. 2024 2023 $m $m Current tax UK corporation tax 2.1 – Overseas taxation 66.0 46.1 Adjustment to prior years (4.2) (5.5) Total current tax expense 63.9 40.6 Deferred tax Origination and reversal of temporary differences (4.6) 2.0 Change in tax rates 3.6 1.6 Adjustment to prior years (7.2) (4.5) Benefit from previously unrecognised tax losses (0.3) (2.6) Total deferred tax benefit (8.5) (3.5) Income tax expense 55.4 37.1 In 2023, the deferred tax movement included a net tax benefit of $15.1 million following the successful resolution of an uncertain tax position. 6.2 Reconciliation of effective tax rate The effective tax rate for the year ended 31 December 2024 was 22.5% (2023: 22.2%). Tax reconciliation to UK statutory rate The table below reconciles the Group’s profit before income taxes at the UK statutory rate to the Group's total income tax expense: 2024 2023 $m $m Profit before income taxes 245.9 167.4 Profit before income taxes multiplied by rate of corporation tax in the UK of 25.0% (2023: 23.52%) 61.5 39.4 Difference between UK and overseas tax rates 1 (0.3) 1.6 Non-deductible/non-taxable items 5.2 7.2 Change in recognition of deferred tax assets – 2.6 Recognition of previously unrecognised US deferred tax assets – (2.6) Movement in provision for uncertain tax positions 3.7 (17.5) Other 2 (14.7) 6.4 Income tax expense and effective tax rate 55.4 22.5% 37.1 22.2% 1. This includes changes in tax rates based on substantively enacted legislation across various tax jurisdictions as of 31 December. 2. Includes the release of a $2.9 million tax liability relating to restructuring activities in Switzerland and the $11.4 million impact of prior year corporate income tax filings. The Group has worldwide operations and therefore is subject to several factors that may affect future tax charges, principally the levels and mix of profitability in different tax jurisdictions, transfer pricing regulations, tax rates imposed and tax regime reforms. The calculation of the Group’s tax expense involves a degree of estimation and judgements in respect of certain items for which the tax treatment cannot be finally determined until resolution has been reached with the relevant tax authority, specifically in relation to open tax and transfer pricing matters. Due to the high volume of intercompany transactions, the Group’s evolving business model and the increasing complexity in interaction between multiple tax laws and regulations, transfer pricing requires judgement in determining the appropriate allocation of profits between jurisdictions. The Group assessed the impact of ongoing changes to the Group’s operating model, the supporting documentation for the tax and transfer pricing positions, existing tax authority challenges, and the likelihood of new challenges by tax authorities. The Group continues to believe it has made adequate provision for uncertain tax positions on open issues in accordance with IFRIC 23 Uncertainty over Income Tax Treatments. The ultimate liability for such matters may vary from the amounts provided and is dependent upon the outcome of discussions with relevant tax authorities or, where applicable, appeal proceedings. The movement includes resolutions of uncertain tax positions in the year. The Group has applied the temporary exception as detailed in the IASB announcement “International Tax Reform – Pillar Two Model Rules”, which amended IAS 12 Income Taxes , and therefore has not recognised nor disclosed information about deferred tax assets and liabilities related to Pillar Two income taxes. Financial statements Notes to the consolidated financial statements continued 6. INCOME TAXES (CONTINUED) 170 Convatec Group Plc Annual Report and Accounts 2024 6.3 Deferred tax The components of deferred tax assets and liabilities at 31 December were as follows: 2024 2023 $m $m Deferred tax assets 22.7 21.2 Deferred tax liabilities (82.7) (88.2) (60.0) (67.0) 6.4 Movement in deferred tax assets and liabilities Deferred tax is measured on the basis of the tax rates enacted or substantively enacted at the reporting date. The movements in the deferred tax assets and liabilities were as follows: Inventor y Tax losses PP&E Intangibles Interest Other Total $m $m $m $m $m $m $m At 1 January 2023 3.3 90.1 (3.5) (217.6) 28.4 42.7 (56.6) Recognised in income statement 6.4 (13.0) (1.7) 11.0 7.6 (6.8) 3.5 Recognised in other comprehensive income – – – – – 0.7 0.7 Acquisitions – – – (13.1) – – (13.1) Foreign exchange (0.1) 0.4 (0.2) (3.1) 0.5 1.0 (1.5) At 31 December 2023 9.6 77.5 (5.4) (222.8) 36.5 37.6 (67.0) Recognised in income statement 3.6 (34.4) 0.6 31.1 1.4 6.2 8.5 Recognised in other comprehensive income – – – – – (1.6) (1.6) Acquisitions – – – (0.3) – – (0.3) Foreign exchange – (0.6) 0.8 1.2 (0.8) (0.2) 0.4 At 31 December 2024 13.2 42.5 (4.0) (190.8) 37.1 42.0 (60.0) Net deferred tax liabilities provided in relation to intangible assets are predominantly in respect of temporary differences arising on assets and liabilities acquired as part of business combinations. An amount relating to deductible tax amortisation of intangible assets of $135.3 million that is not expected to reverse due to anticipated restructuring of the Group’s activities (2023: $145.9 million) is not recognised. Net deferred tax assets recognised in relation to tax losses are predominantly in respect of the US. Deferred tax assets on foreign tax credits of $0.4 million remain unrecognised in the US based on forecasts of suitable future taxable profit and they are due to expire within five years (2023: $2.4 million). Deferred tax on inventory predominantly relates to a deferred tax asset recognised on intra-Group profits arising on intercompany inventory that are eliminated in the Consolidated Financial Statements. As intra-Group profits are not eliminated from the individual entities’ tax returns, a temporary difference arises and will reverse when the inventory is sold externally. Other net temporary differences include accrued expenses, employee costs and pensions, for which a tax deduction is only available on a paid basis, research and development expenses, unremitted earnings and share-based payments. To the extent that dividends remitted from overseas subsidiaries and branches are expected to result in additional taxes, appropriate amounts have been provided for. Deferred tax is not provided on temporary differences of $417.1 million in the year to 31 December 2024 (2023: $381.2 million) arising on unremitted earnings as management has the ability to control any future reversal and does not consider such a reversal in the foreseeable future to be probable. 6.5 Unrecognised tax losses carried forward Deferred tax assets are only recognised where it is probable that future taxable profits will be available to utilise the tax losses. The following table shows the unrecognised tax losses carried forward, including anticipated period of expiration: 2024 2023 Losses Losses Trading and capital losses expiring: $m $m Within five years 1.3 2.2 Between five to ten years – 0.5 Unlimited 925.4 961.6 Total 926.7 964.3 The Group has Luxembourg tax losses of $911.3 million (2023: $944.5 million) which are not recognised and will not expire. The movement in Luxembourg tax losses not recognised is mainly attributable to foreign exchange differences. Overview Strategic report Governance Financial statements Additional information Convatec Group Plc Annual Report and Accounts 2024 171 7. EARNINGS PER SHARE Basic earnings per share is calculated based on the Group’s net profit for the year attributable to shareholders divided by the weighted average number of ordinary shares in issue during the year. The weighted average number of shares is net of shares purchased by the Group and held as own shares. Diluted earnings per share take into account the dilutive effect of all outstanding share options priced below the market price in arriving at the number of shares used in its calculation. 2024 2023 Net profit attributable to the shareholders of the Group ($m) 190.5 130.3 Basic weighted average ordinary shares in issue (number) 2,047,643,498 2,038,653,228 Dilutive impact of share awards (number) 9,153,919 13,936,032 Diluted weighted average ordinary shares in issue (number) 2,056,797,417 2,052,589,260 Basic earnings per share (cents per share) 9.3¢ per share 6.4¢ per share Diluted earnings per share (cents per share) 9.3¢ per share 6.3¢ per share The calculation of diluted earnings per share does not contain any share options that were non-dilutive for the year, because the average market price of the Group’s ordinary shares exceeded the exercise price (2023: average market price of the Group’s ordinary shares exceeded the exercise price). OPERATING ASSETS AND LIABILITIES This section set outs the assets and liabilities that the Group holds in order to operate the business on a day-to-day basis, including long-term assets which generate future revenues and profits for the Group. Liabilities relating to the Group’s financing activities are addressed in "Capital structure and financial costs". 8. PROPERTY, PLANT AND EQUIPMENT The Group invests in buildings, equipment and manufacturing machinery to operate the business and to generate revenue and profits. Assets are depreciated over their estimated useful economic life reflecting the reduction in value of the asset due, in particular, to wear and tear. Accounting policy Property, plant and equipment (PP&E) are stated at cost less accumulated depreciation and impairment losses. Cost includes expenditures that are directly attributable to the acquisition of an asset including subsequent additions and improvements when it is probable that future economic benefit associated with the item will flow to the Group and the cost can be reliably measured. Depreciation is provided using a straight-line method from the point an asset becomes available for use. Depreciation is calculated to reduce the asset’s cost to its residual value over the asset’s estimated useful economic life. Assets are depreciated as follows: Asset category Useful life Land not depreciated Land improvements 15 to 40 years Leasehold improvements shorter of useful life or lease tenure Buildings 15 to 50 years Machinery, equipment and fixtures 3 to 20 years The gain or loss arising on the disposal or retirement of an asset is determined as the difference between the sale proceeds, less any selling expenses, and the carrying amount of the asset. This difference is recognised in the Consolidated Income Statement. Assets under construction reflects the cost of construction or improvement of items of PP&E that are not yet available for use. Assets under construction are not depreciated whilst under construction and depreciation commences once the asset is completed and ready for use. Finance costs incurred in the construction of assets that take more than one year to complete are capitalised using the Group’s weighted average borrowing cost during the period in which the asset is under construction. Capitalisation of finance costs ceases when the asset becomes available for use. Consideration of useful economic lives The assets’ residual values, depreciation methods and useful economic lives are reviewed annually and adjusted if appropriate. Impairment of assets The carrying values of PP&E are reviewed for indicators of impairment annually or when events or changes in circumstances indicate the carrying value may be impaired. If any such indication exists, the recoverable amount of the asset is estimated, being the higher of an asset’s fair value less costs to sell and the net present value of its expected pre-tax future cash flows (value in use). When an asset’s recoverable amount falls below its carrying value, an impairment is charged to the Consolidated Income Statement. Financial statements Notes to the consolidated financial statements continued 8. PROPERTY, PLANT AND EQUIPMENT (CONTINUED) 172 Convatec Group Plc Annual Report and Accounts 2024 The movement in the carrying value of each major category of PP&E is as follows: Building, building equipment and Machinery, Land & land leasehold equipment and Assets under improvements improvements fixtures construction Total $m $m $m $m $m Cost 1 January 2023 14.2 135.2 481.2 143.7 774.3 Additions – 2.1 34.5 60.7 97.3 Arising from acquisitions – – 1.1 – 1.1 Disposals 1 – (3.3) (24.4) – (27.7) Transfers 1.7 31.9 31.4 (65.0) – Foreign exchange 0.5 7.9 13.7 5.6 27.7 31 December 2023 16.4 173.8 537.5 145.0 872.7 Additions – 2.3 2.7 97.3 102.3 Disposals 1 (1.1) (5.4) (9.6) (0.2) (16.3) Transfers – 17.5 48.5 (66.0) – Foreign exchange (0.4) (10.7) (21.5) (7.2) (39.8) 31 December 2024 14.9 177.5 557.6 168.9 918.9 Accumulated depreciation 1 January 2023 1.0 55.3 317.6 – 373.9 Depreciation 0.1 7.6 29.8 – 37.5 Arising from acquisitions – – 0.7 – 0.7 Disposals 1 – (3.1) (24.0) – (27.1) Impairment – 1.2 1.5 – 2.7 Foreign exchange – 2.5 8.7 – 11.2 31 December 2023 1.1 63.5 334.3 – 398.9 Depreciation 0.1 8.9 31.6 – 40.6 Disposals 1 – (4.0) (9.6) – (13.6) Impairment – 1.6 4.9 – 6.5 Foreign exchange – (3.1) (13.0) – (16.1) 31 December 2024 1.2 66.9 348.2 – 416.3 Net carrying amount 31 December 2023 15.3 110.3 203.2 145.0 473.8 31 December 2024 13.7 110.6 209.4 168.9 502.6 1. Assets with a net book value of $2.7 million (2023: $0.6 million) were sold during the year, with sale proceeds of $2.7 million (2023: $0.6 million). Overview Strategic report Governance Financial statements Additional information Convatec Group Plc Annual Report and Accounts 2024 173 9. INTANGIBLE ASSETS AND GOODWILL 9.1 Intangible assets The Group’s intangible assets are those that have been recognised at fair value as part of business combinations, investment in product development and software purchased to support business operations. These are assets that are not physical in nature but can be sold separately or arise from legal rights. Accounting policy Recognition Measurement on initial recognition of intangible assets is determined at cost for assets acquired by the Group and at fair value at the date of acquisition if acquired in business combinations. Following initial recognition of the intangible asset, the asset is carried at cost less any subsequent accumulated amortisation and accumulated impairment losses. Purchased computer software and certain costs of information technology are capitalised as intangible assets. Software that is integral to purchased computer hardware is capitalised as PP&E. The Group accounts for its software-as-a-service (SaaS) arrangements by applying the guidance in the 2021 IFRIC agenda decision to determine whether the configuration and customisation expenditure gives rise to an asset, including whether the Group has control of the software that is being configured or customised or whether the configuration or customisation activities create a resource controlled by the Group that is separate from the software and can be transferred to another provider. Where the recognition criteria of IAS 38 Intangible Assets are satisfied, including configuration and customisation costs which are distinct and within the control of the Group, these are capitalised and carried at cost less any accumulated amortisation and impairment, and amortised on a straight-line basis over the period which the developed software is expected to be used. Where these recognition criteria are not met, the Group recognises configuration and customisation costs, along with the ongoing fees to obtain access to the SaaS provider’s application software, as operating expenses as the services are received. R&D R&D expenses are comprised of all activities involving investigative, technical and regulatory processes related to obtaining appropriate approvals to market our products. It also includes new product development aimed at developing more sustainable product portfolios for the longer term, as mentioned within the Responsible Business review section (refer to page 41). Costs include payroll, clinical manufacturing and pre-launch clinical trial costs, manufacturing development and scale-up costs, product development, regulatory costs including costs incurred to comply with legislative changes, contract services and other external contractors costs, research licence fees, depreciation and amortisation of laboratory facilities, and laboratory supplies. Research costs are expensed as incurred. Development costs are capitalised only if the expenditure can be measured reliably, the product or process is technically and commercially feasible, future economic benefits are probable and the Group intends to and has sufficient resources to complete development and use or sell the asset. Subsequent to initial recognition, development costs are measured at cost less accumulated amortisation and any accumulated impairment losses. Upgrades and enhancements are capitalised to the extent they will result in added functionality and probable future economic benefits. Amortisation Intangible assets with an indefinite life are not amortised. Amortisation of intangible assets with a finite life is calculated using the straight-line method based on the following estimated useful lives: Asset category Useful life Product-related 3 to 20 years Capitalised software 3 to 10 years Customer relationships and non-compete agreements 2 to 20 years Trade names – finite 2 to 10 years Trade names – indefinite Indefinite Development costs 5 years Assets under construction reflects the cost of development or improvement of intangible assets that are not yet available for use. Impairment of assets Intangible assets with finite life are reviewed for indicators of impairment at each reporting period or when events or changes in circumstances indicate the carrying value may be impaired. If any such indication exists, the recoverable amount of the asset is estimated, being the higher of an asset’s fair value less costs to sell and the net present value of its expected pre-tax future cash flows (value in use). When an asset’s recoverable amount falls below its carrying value, an impairment is charged to the Consolidated Income Statement. Refer to Note 9.3 – Cash Generating Unit (CGU) impairment review for consideration of impairment of indefinite-lived intangible assets. 174 Convatec Group Plc Annual Report and Accounts 2024 Financial statements Notes to the consolidated financial statements continued 9. INTANGIBLE ASSETS AND GOODWILL (CONTINUED) The movement in the carrying value of each major category of intangible assets is as follows: Customer relationships and non- Capitalised compete Development Assets under Product-related software 1 agreements Trade names cost construction Total $m $m $m $m $m $m $m Cost 1 January 2023 2,120.5 130.4 324.4 262.8 11.0 35.5 2,884.6 Additions – 2.0 – – – 35.6 37.6 Arising from acquisitions 112.5 – 4.3 – – – 116.8 Write-offs – (1.1) – – – – (1.1) Transfers 1.5 39.8 – – – (41.3) – Foreign exchange 35.6 2.5 3.0 0.4 0.3 1.0 42.8 31 December 2023 2,270.1 173.6 331.7 263.2 11.3 30.8 3,080.7 Additions 1.0 3.6 – – – 26.8 31.4 Arising from acquisitions 2 – – 1.0 0.3 – – 1.3 Write-offs (12.8) – – – – – (12.8) Transfers 11.3 24.7 – – – (36.0) – Foreign exchange (13.3) (1.2) (5.8) (1.0) (0.7) (0.6) (22.6) 31 December 2024 2,256.3 200.7 326.9 262.5 10.6 21.0 3,078.0 Accumulated amortisation 1 January 2023 1,622.0 92.8 223.5 11.1 10.3 – 1,959.7 Amortisation 114.5 16.3 22.3 1.1 0.4 – 154.6 Write-offs – (1.1) – – – – (1.1) Foreign exchange 28.2 0.7 3.0 – 0.3 – 32.2 31 December 2023 1,764.7 108.7 248.8 12.2 11.0 – 2,145.4 Amortisation 117.3 20.1 18.9 0.4 0.3 – 157.0 Write-offs (12.8) – – – – – (12.8) Impairment – 0.2 0.7 – – – 0.9 Foreign exchange (11.4) (0.4) (5.9) – (0.7) – (18.4) 31 December 2024 1,857.8 128.6 262.5 12.6 10.6 – 2,272.1 Net carrying amount 31 December 2023 505.4 64.9 82.9 251.0 0.3 30.8 935.3 31 December 2024 398.5 72.1 64.4 249.9 – 21.0 805.9 1. Capitalised software is in respect of purchased and internally generated software. 2. Acquisitions comprise assets in relation to the acquisition of Livramedom. See Note 26 – Acquisitions. Amortisation expenses in respect of finite-lived intangible assets for the year ended 31 December were as follows: 2024 2023 $m $m Cost of sales 111.4 112.4 Selling and distribution expenses 5.0 3.6 General and administrative expenses 32.4 31.0 Research and development expenses 8.2 7.6 Total amortisation expense 157.0 154.6 The carrying amount of trade names with indefinite life at 31 December 2024 was $248.4 million (2023: $249.4 million). Each of these trade names is considered to have an indefinite life, given the strength and durability of the current trade name and the level of marketing support. The trade names are in relatively similar stable and profitable market sectors, with similar risk profiles, and their size, diversification and market shares of the products to which the trade names relate mean that the risk of market-related factors causing a reduction in the lives of the trade names is considered to be relatively low. The Group is not aware of any material legal, regulatory, contractual, competitive, economic or other factor which could limit their useful lives. Individual intangible assets with a carrying amount in excess of 10% of the total intangible asset carrying amount were as follows: 2024 2023 $m $m Remaining life Trade names Convatec trade name 234.6 234.6 Indefinite Product-related InnovaMatrix TM 123.5 134.5 11.3 years NextGen Antimicrobial platform 98.7 107.0 13.3 years 9. INTANGIBLE ASSETS AND GOODWILL (CONTINUED) 175 Convatec Group Plc Annual Report and Accounts 2024 Overview Strategic report Governance Financial statements Additional information 9.2 Goodwill The Group recognises goodwill resulting from business combinations where there are future economic benefits from assets which cannot be individually separated and recognised. Goodwill represents the amount paid in excess of the fair value of the net assets of the acquired business. Accounting policy Refer to Note 1 – Basis of preparation for the Group accounting policy in relation to the initial valuation and recognition of goodwill arising from acquisitions. Goodwill is not subject to amortisation but is tested for impairment annually or when events or changes in circumstances indicate the carrying value may be impaired. Impairment losses recognised in respect of goodwill cannot be reversed. Refer to Note 9.3 – Cash Generating Unit (CGU) impairment review for consideration of impairment of goodwill. Goodwill is denominated in the functional currency of the acquired entity and revalued to the closing exchange rate at each reporting period date. The changes in the carrying value of goodwill as at 31 December were as follows: Total $m 1 January 2023 1,224.6 Arising from acquisitions 45.9 Foreign exchange 28.3 31 December 2023 1,298.8 Arising from acquisitions (Note 26) 11.5 Foreign exchange (20.1) 31 December 2024 1,290.2 9.3 Cash generating unit (CGU) impairment review An impairment assessment is required to be performed annually for goodwill and indefinite-lived intangibles or when events or changes in circumstances indicate the carrying value may be impaired. An impairment is a reduction in the recoverable amount of an asset compared to the carrying value of the asset. Recoverable amount is the higher of value in use and fair value less costs to sell. This note provides details of the annual impairment assessment that has been performed. Accounting policy For impairment testing, assets are grouped together into the smallest group of assets that generate cash inflows from continuing use that are largely independent of the cash inflows of other assets or CGUs. Additionally, goodwill arising from a business combination is allocated to a CGU or groups of CGUs that are expected to benefit from the synergies of the combination. An impairment loss is recognised if the carrying amount of an asset or CGU exceeds its recoverable amount. The recoverable amounts of the CGUs are determined based on value in use calculations, which reflect the estimated future cash flows of each CGU discounted by an estimated weighted average cost of capital that represents the rate of return an outside investor would expect to earn. This discount rate is based on the weighted average cost of capital for comparable public companies and is adjusted for risks specific to the CGU including differences in risk due to its size, geographic concentration and trading history. Future cash flows are determined using the latest available Board-approved forecasts and strategic plans. These forecasts and strategic plans are based on specific assumptions for each CGU during the five-year planning period with respect to revenue, results of operations, working capital, capital investments and other general assumptions for the projected period. The forecast assumptions that derive the future cash flows are based on the historical results of each CGU combined with external market information and defined strategic initiatives. If identified, impairment losses are recognised in the Consolidated Income Statement. They are allocated first to reduce the carrying amount of any goodwill allocated to the CGU, and then to reduce the carrying amounts of the remaining assets in the CGU, on a pro-rated basis. An impairment loss in respect of goodwill is not reversed. For other assets, an impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised. The Group has not recognised any reversal of previous impairments in either 2024 or 2023. The CGUs identified by management are consistent with the four categories within the Group that generate cash inflows which are largely independent of each other. These are Advanced Wound Care, Ostomy Care, Continence Care and Infusion Care. The Group continues to operate under the same operating model as prior year and determined that there has not been any triggers for a change in CGU groups. Profitability continues to be assessed on a consolidated basis, and management’s focus is predominantly category revenue and key market focus. Goodwill is allocated to these CGUs, which represent the lowest level within the Group at which the goodwill is monitored for internal management purposes. Financial statements Notes to the consolidated financial statements continued 9. INTANGIBLE ASSETS AND GOODWILL (CONTINUED) Convatec Group Plc Annual Report and Accounts 2024 176 Goodwill and intangible assets with an indefinite life (trade names) are allocated to the Group's CGU groups as at 31 December as follows: Goodwill Indefinite-lived intangible assets 2024 2023 2024 2023 $m $m $m $m CGU groups Advanced Wound Care 518.3 523.7 104.8 104.8 Ostomy Care 152.7 154.3 91.2 91.2 Continence Care 540.8 535.0 41.2 41.2 Infusion Care 78.4 85.8 11.2 12.2 Total 1,290.2 1,298.8 248.4 249.4 Determining the estimated recoverable amount of a CGU group is judgemental in nature. The key input used in the estimation of value in use as at 31 December 2024 is the Group’s five-year Board approved strategic plan, with key assumptions including forecast sales growth rates, terminal value growth rate and discount rates. Forecast sales growth rates are based on past experience adjusted for macroeconomic activity, sector market growth forecasts, competitor activity and strategic decisions made in respect of each CGU group. The terminal value growth rate and discount rates used were as follows: 2024 2023 Discount rate (pre-tax) 1 % % CGU groups Advanced Wound Care 10.6 14.5 Ostomy Care 10.6 13.5 Continence Care 10.0 12.0 Infusion Care 10.2 13.5 Terminal value growth rate 2 2.0 2.0 1. The discount rate is based on the weighted average cost of capital for comparable public companies and is adjusted for risks specific to the CGU group including differences in risk due to its size, geographic concentration and trading history. 2. The estimated terminal value growth rate for the CGU groups is a prudent estimate based on expectations concerning the growth trends of the CGU groups and taking into account global gross domestic product growth, general long-term inflation and population expectations. Discount rates have seen a decrease year-on-year, primarily attributable to a reduction in risk-free rates. No impairments have been recognised in respect of the Group’s current CGU groups for the years ended 31 December 2024 and 2023. Taking into consideration the Board-approved 2025 budget and longer-term strategic plan as foundations, sensitivity analysis was performed considering changes in key assumptions including discount rates and terminal value growth rate and consideration of risk-based severe but plausible downside scenarios consistent with those identified as part of the Viability assessment (refer to page 83 for full details of scenarios). As part of the assessment, an external benchmarking assessment was also carried out on the forecast sales growth rates. Under all severe but plausible scenarios, headroom remained on all CGU groups, demonstrating that the impairment of goodwill and indefinite-lived intangible assets is not a key source of estimation uncertainty and any possible impairment would not result in a material adjustment in the next financial year. 10. INVESTMENT IN FINANCIAL ASSETS Accounting policy Investment in financial assets comprise of non-current equity investments which are initially recorded at fair value plus any directly attributable transaction costs and subsequently recognised at fair value at each balance sheet date. Unrealised gains and losses are recognised in other comprehensive income. On disposal of the equity investment any gains and losses that have been deferred in other comprehensive income are transferred directly to retained earnings. Dividends on equity investments are recognised in the income statement when the Group’s right to receive payment is established, it is probable the economic benefits will flow to the entity and the amount can be measured reliably. The investment is in relation to the Group’s investment in BlueWind Medical Limited in 2022 and the Group considers this investment to be strategic in nature and it is not held for trading. The Group made an irrevocable election on initial recognition that changes in the fair value of the investment would be recognised in other comprehensive income. It was initially recorded at fair value plus transaction costs and will be remeasured to fair value at subsequent reporting dates. The fair value of the investment at 31 December 2024 was $16.9 million (31 December 2023: $22.9 million), with the movement of $6.0 million taken to the Consolidated Statement of Other Comprehensive Income. No dividends were recognised during the period. 177 Convatec Group Plc Annual Report and Accounts 2024 Overview Strategic report Governance Financial statements Additional information 10. INVESTMENT IN FINANCIAL ASSETS (CONTINUED) In line with IFRS 13 Fair Value Measurement , this investment has been classified as Level 3 in the fair value hierarchy as its measurement is derived from significant unobservable inputs by reference to available information, including the current market value of similar instruments, recent financing rounds and discounted cash flows of the underlying net assets. The fair value of the investment has been determined by a third party, and confirmed by management, by using an average of three valuation methodologies, those being the precedent transaction method, the income approach method and the probability- weighted expected return model. The table below summarises the various methodologies used by the Group to fair value the investment, the inputs and the sensitivities applied. Sensitivity applied to input Methodology Inputs Low range High range Precedent transaction method/Price of Change in market multiples Decrease of 5% Increase of 5% recent investment (decrease of 45% to 55%) to 60% to 40% The initial transaction involving BlueWind Medical itself was the most relevant starting point and then this was calibrated by considering exogenous and idiosyncratic factors to apply a discount or uplift as applicable. Income approach method Internal cash flow projections +2.5% on -2.5% on (discounted cash flow analysis) the alpha the alpha Discounted at weighted average cost of Provides an estimation of the value of an asset capital (WACC) appropriate for the risk of based on expectations about the cash flows achieving the projected cash flows of 28.6% that an asset would generate over time, discounted at the appropriate rate of return. The final year of projections has been extrapolated using a reasonable long term growth rate (LTGR) of 2%. Probability-weighted expected return model Discounted at cost of equity of 31.5% +2% to -2% to (“PWERM”) discount rate discount rate Assesses multiple scenarios for the future proceeds to be received by the holders of the shares and weighting them according to their relative probability of occurring. The PWERM is a market approach based on comparable companies’ market multiples. Fair value measurement $13.4m $20.1m The impact of applying these sensitivities across the three methodologies would result in a fair value measurement range of $13.4 million to $20.1 million, with a mid-point range of $16.7 million, which is in line with the fair value recognised at year end. 11. INVENTORIES Inventories are the materials used in manufacturing, products manufactured or purchased to be sold by the Group in the ordinary course of business. Inventories include finished goods, goods which are in the process of being manufactured (work in progress) and raw and packaging materials awaiting use in production. Accounting policy Inventories are valued at the lower of cost or net realisable value, with the cost determined using an average cost method to calculate a standard cost. The cost of finished goods and work in progress comprises raw materials, direct labour, other direct costs and indirect production overheads. Production overheads comprises indirect material and labour costs, maintenance and depreciation of the machinery and production buildings used in the manufacturing process, as well as costs of production administration and management. Any manufacturing or purchasing variances between actual costs and standard costs are deferred over the appropriate inventory holding period, which may vary based on the specific nature of the inventory. Net realisable value is defined as anticipated selling price or anticipated revenue less cost to completion. Estimates of net realisable value are based on the average selling prices at the end of the reporting period, net of applicable direct selling expenses. Subsequent events related to the fluctuation of prices and costs are also considered, if relevant. If net realisable values are below inventory costs, a provision corresponding to this difference is recognised. Provisions are also made for obsolescence of inventories that (i) do not meet the Group's specifications, (ii) have exceeded their expiration date, or (iii) are considered slow-moving. The Group evaluates the carrying value of inventories on a regular basis, taking into account such factors as historical and anticipated future sales compared with quantities on hand, the price the Group expects to obtain for products in their respective markets compared with historical cost and the remaining shelf life of goods on hand. Financial statements Notes to the consolidated financial statements continued 11. INVENTORIES (CONTINUED) Convatec Group Plc Annual Report and Accounts 2024 178 The components of inventories at 31 December were as follows: 2024 2023 $m $m Raw and packaging materials 93.6 102.3 Work in progress 32.2 42.5 Finished goods 223.8 251.3 Inventories 349.6 396.1 Inventories are stated net of provision for obsolescence of $10.6 million (2023: $17.0 million). Adjustments to write down inventory to its net realisable value are provided in Note 3.1 – Operating profit. 12. TRADE AND OTHER RECEIVABLES Trade receivables consist of amounts billed and currently due from customers. Gross trade receivables are presented before allowances for expected credit losses, sales discounts and chargeback allowances. Credit risk with respect to trade receivables is generally diversified due to the large dispersion and type of customers across many different geographies. Other receivables include amounts due from third parties not related to revenue and prepaid expenses. Accounting policy Credit is extended to customers based on the evaluation of the customer’s financial condition. Creditworthiness of customers is evaluated on a regular basis. Exposure to credit risk is managed through credit approvals, credit limits and monitoring procedures. The Group considers a default event to be one where the customer does not have sufficient funds to make their required payments and/or is in the process of being liquidated. An allowance is maintained for expected lifetime credit losses that result from the failure or inability of customers to make required payments. It is not necessary for a credit event to have occurred before credit losses are recognised. Instead, the Group accounts for expected lifetime credit losses and changes in those expected lifetime credit losses. In determining the allowance, consideration includes the probability of recoverability based on past experience and general economic factors, incorporating forward-looking information and adjustments for customers who represent a lower risk of default, which includes public or private medical insurance customers and customers guaranteed by local government. The amount of expected credit losses, if any, is required to be updated at each reporting date. Certain trade and other receivables may be fully reserved when specific collection issues are known to exist, such as pending bankruptcy. The Group writes off uncollectable receivables at the time it is determined the receivable is no longer collectable. Trade and other receivables are not collateralised. Where the Group has entered into a receivables financing arrangement, these receivables are derecognised at the point of sale in accordance with IFRS 9 if we have substantially transferred all risks and rewards of ownership and there is no option to return the receivables to the Group. Refer to Note 2.1 – Revenue recognition for details on the accounting policy in respect of chargeback allowances. Trade and other receivables at 31 December were as follows: 2024 2023 $m $m Included within current assets: Trade receivables 310.9 337.8 Less: allowances for expected credit losses (15.6) (27.1) Less: sales discounts and chargebacks (28.3) (40.9) Other receivables 1 34.0 39.0 Prepayments 34.0 24.9 Trade and other receivables 335.0 333.7 1. The most significant component of other receivables comprises receivables for taxes other than corporate income tax of $17.4 million (2023: $13.5 million). The aged analysis of trade receivables at 31 December was as follows: 2024 2023 $m $m Current 247.5 244.2 Past due 1 to 30 days 18.5 27.7 Past due 31 to 90 days 21.5 19.2 Past due 91 to 180 days 7.4 15.1 Past due by more than 180 days 16.0 31.6 310.9 337.8 Convatec Group Plc Annual Report and Accounts 2024 179 Overview Strategic report Governance Financial statements Additional information 12. TRADE AND OTHER RECEIVABLES (CONTINUED) The unimpaired amounts at 31 December that are past due were aged as follows: 2024 2023 $m $m Past due 1 to 30 days 18.2 27.2 Past due 31 to 90 days 21.1 18.5 Past due 91 to 180 days 6.3 12.7 Past due by more than 180 days 2.2 8.1 47.8 66.5 The Group believes that the unimpaired amounts that are past due are still collectible in full, based on historic payment behaviour and extensive analysis of customer credit risk. Movements in the allowance for expected credit losses for the years ended 31 December were as follows: 2024 2023 $m $m At 1 January (27.1) (22.0) Charged to the income statement (9.7) (14.3) Released to the income statement 8.8 – Utilisation of provision 11.6 9.4 Foreign exchange 0.8 (0.2) At 31 December (15.6) (27.1) Other non-current receivables Other non-current receivables of $12.5 million (2023: $11.7 million) are principally in respect of deposits held with lessors, prepaid expenses and other receivables. Receivables financing The Group has a Limited Recourse Financing Arrangement at a beneficial financing cost with a financial institution for certain customers who have a stronger credit profile than the Group and longer than normal payment terms. It has been assessed that the Group has substantially transferred all the risks and rewards of ownership to the financial institution and accordingly, these receivables have been derecognised at the point of sale in accordance with IFRS 9. As at 31 December 2024, $43.3 million (31 December 2023: $27.4 million) remained unpaid. 13. TRADE AND OTHER PAYABLES Trade payables consist of amounts owed to third-party suppliers and represent a contractual obligation to deliver cash in the future. Other payables include taxes and social security, accruals and liabilities for other employee-related benefits. Accounting policy Trade payables are recognised at the value of the invoice received from the supplier and are not interest bearing. The carrying amount of trade and other payables is considered to approximate fair value, due to their short-term maturities. The components of trade and other payables at 31 December were as follows: 2024 2023 $m $m Included within current liabilities: Trade payables 124.9 136.9 Taxes and social security 31.8 32.2 Other employee-related liabilities 114.3 108.2 Accruals and other payables 1 111.7 111.4 Trade and other payables 382.7 388.7 1. Included within accruals and other payables are customer rebates of $17.7 million (2023: $19.8 million) and amounts held in escrow of $8.8 million (2023: $12.3 million). 2024 2023 $m $m Included within non-current liabilities: Defined benefit obligations (Note 15) 11.5 12.1 Other employee-related liabilities 4.2 5.1 Accruals and other payables 15.0 15.3 Other non-current liabilities 30.7 32.5 Convatec Group Plc Annual Report and Accounts 2024 180 Financial statements Notes to the consolidated financial statements continued 14. PROVISIONS A provision is an obligation recognised when there is uncertainty over the timing or amount that will be paid. Provisions recognised by the Group are primarily in respect of restructuring, dilapidations and legal liabilities. Accounting policy In line with IAS 37 – Provisions, Contingent Liabilities and Contingent Assets , a provision is recognised when there is a present legal or constructive obligation as a result of a past event, it is probable that the Group will be required to settle the obligation and that obligation can be measured reliably. Restructuring provisions are only recognised when a constructive obligation exists, which requires both a detailed formal plan and a valid expectation being raised in those affected by starting to implement that plan or announcing the main features. Provisions are measured at the best estimate of the expenditure required to settle the obligation and are discounted to present value if the effect is material. Provisions are reviewed on a regular basis and adjusted to reflect management’s best current estimates. Due to the judgemental nature of these items, future settlements may differ from amounts recognised. When the timing of a settlement is uncertain or expected to be more than 12 months from the reporting date, amounts are classified as non-current. The movements in provisions are as follows: Dilapidations Restructuring Legal Total $m $m $m $m 1 January 2024 2.4 14.0 0.6 17.0 Charged to income statement 0.7 6.7 0.3 7.7 Released to income statement – (2.9) (0.1) (3.0) Utilised – (13.1) (0.3) (13.4) Foreign exchange – (0.4) (0.1) (0.5) 31 December 2024 3.1 4.3 0.4 7.8 Current – 4.3 – 4.3 Non-current 3.1 – 0.4 3.5 The expected payment profile of the discounted provisions at 31 December was as follows: 2024 2023 $m $m Within 1 year 4.3 14.0 2 to 5 years 3.5 3.0 Total 7.8 17.0 Dilapidation provisions Dilapidation provisions are in respect of contractual obligations, on the expiry of a lease, to return leased properties in the condition which is specified in the individual leases. Restructuring provisions Restructuring provisions are in respect of the Group’s strategic transformation activities. All restructuring provisions are supported by detailed plans and a valid expectation has been raised in those affected as required by the Group’s accounting policy. Legal provision The legal provisions are in respect of ongoing cases. Legal issues are often subject to uncertainties over the timing and the final amounts of any settlement. Convatec Group Plc Annual Report and Accounts 2024 181 Overview Strategic report Governance Financial statements Additional information 15. POST-EMPLOYMENT BENEFITS The Group has over 10,000 employees globally and operates a number of defined benefit and defined contribution pension plans for its employees. Each individual plan is subject to the applicable laws and regulations of the country in which the plan operates. Defined contribution arrangements are where the Group pays fixed payments as they fall due into a separate fund on behalf of employees participating in the plan and has no further legal or constructive obligations. The cost of Group contributions to defined contribution arrangements during the year is provided in Note 3 – Operating costs. A defined benefit plan is a pension or other post-employment benefit plan under which the Group has an obligation to provide agreed benefits to current and former employees. The Group bears the risk that its obligation may increase or that the value of the assets in the pension fund may decline. The benefit payable in the future by the Group is discounted to the present value and the fair value of plan assets is deducted to measure the defined benefit pension position. The Group has defined benefit plans in a number of European countries. The most significant plans are: Switzerland, a state mandated plan that remains open to all Swiss employees; and Germany, with one unfunded plan, that remains open to German employees but closed to new entrants, and a funded plan put in place from April 2019. The Group's other defined benefit plans are located in Austria, France and Italy (referred to as "Other" in the tables below). For plans in Switzerland, Germany and Austria, asset funds for each country are being accumulated to meet the accruing liabilities. The assets of each of these funds are either held under trusts or managed by insurance companies and are entirely separate from the Group’s assets. Accounting policy Defined contribution pension plans Payments to defined contribution pension plans are recognised as an expense when employees have rendered service entitling them to the contributions. Payments made to state-managed retirement benefit plans are treated as payments to defined contribution pension plans where the Group’s obligations under the plans are equivalent to those arising in a defined contribution pension plan. Defined benefit pension plans The Group records an asset or liability related to its defined benefit pension plans as the difference between the fair value of the plan assets and the present value of the plan liabilities. The obligations of the plans are calculated using the Projected Unit Credit Method, with actuarial valuations being performed by an independent actuary at the end of each reporting period. The valuation requires estimates and judgements to be made to calculate the Group’s liabilities, and results in actuarial gains and losses being recorded. Actuarial gains and losses, movements in the return on plan assets (excluding interest) and the impact of the asset ceiling (if applicable) are recognised immediately in the Consolidated Statement of Financial Position with a charge or credit to the Consolidated Statement of Comprehensive Income. Remeasurements recorded in the Consolidated Statement of Comprehensive Income are not subsequently reclassified to the Consolidated Income Statement. Past service cost is recognised in the Consolidated Income Statement in the period of plan amendment, where relevant. Net interest is calculated by applying a discount rate to the net defined benefit liability or asset. The assets of the plans are held at fair value, which is equal to market value, and are held in separate trustee-administered funds or similar structures in the countries concerned. Surplus assets within the plan are only recognised to the extent that they are recoverable in accordance with IFRIC Interpretation 14, IAS 19 – The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction (IFRIC 14). Risks The defined benefit plans typically expose the Group to risks. The most significant risks impacting the Group as a result of these plans are as follows: Investment risk The present value of the defined benefit plan liability is calculated using a discount rate determined by reference to high-quality corporate bond yields; if the return on plan assets is below this rate, it will create a plan deficit. Interest risk A decrease in the interest rate will increase the plan liability, but this will be partially offset by an increase in the return on the plan’s fixed rate debt instruments. Longevity risk The present value of the defined benefit plan liability is calculated by reference to the best estimate of the mortality of plan participants both during and after their employment. An increase in the life expectancy of the plan participants will increase the plan’s liability. Salary risk The present value of the defined benefit plan liability is calculated by reference to the future salaries of plan participants. As such, an increase in the salary of the plan participants will increase the plan’s liability. Convatec Group Plc Annual Report and Accounts 2024 182 Financial statements Notes to the consolidated financial statements continued 15. POST-EMPLOYMENT BENEFITS (CONTINUED) Amounts recorded in the Consolidated Financial Statements Consolidated Income Statement The aggregate expense for all post-employment defined benefit plans recognised in the Consolidated Income Statement for the year ended 31 December was as follows: 2024 2023 $m $m Defined benefit plans: Current service cost 1.0 1.1 Past service (income) (0.1) (0.1) Interest (income) on plan assets – (0.2) Interest expense on defined benefit obligations 0.3 0.6 Total expense (Note 3) 1.2 1.4 Consolidated Statement of Comprehensive Income Aggregate actuarial gains and losses for all defined benefit plans recognised in the Consolidated Statement of Comprehensive Income for the year ended 31 December were as follows: 2024 2023 $m $m Remeasurement effect recognised in other comprehensive income: Actuarial gain on liabilities due to experience 0.1 0.1 Actuarial (loss)/gain arising from changes in financial assumptions (0.5) 0.1 Actuarial gain/(loss) on plan assets 0.1 (0.2) Remeasurement (loss)/gain recognised in other comprehensive income (0.3) – Deferred tax on remeasurement loss recognised in other comprehensive income – (0.2) Total amount recognised in other comprehensive income (0.3) (0.2) Consolidated Statement of Financial Position The amount recognised for each defined benefit arrangement in the Consolidated Statement of Financial Position at 31 December was as follows: German y 1 Switzerland Other Total 2024 2023 2024 2023 2024 2023 2024 2023 $m $m $m $m $m $m $m $m Fair value of schemes’ assets 0.7 – 12.9 11.8 0.7 0.8 14.3 12.6 Present value of funded schemes’ liabilities (8.6) – (14.7) (13.8) (0.8) (0.7) (24.1) (14.5) Deficit in the funded schemes (7.9) – (1.8) (2.0) (0.1) 0.1 (9.8) (1.9) Present value of unfunded schemes’ liabilities – (8.4) – – (1.7) (1.8) (1.7) (10.2) Net pension liability (7.9) (8.4) (1.8) (2.0) (1.8) (1.7) (11.5) (12.1) Recognised within Consolidated Statement of Financial Position: Defined benefit obligations (Note 13) (11.5) (12.1) 1. In 2024, the Group began funding the pension scheme in Germany. The weighted average duration of the Group's defined benefit obligations at the end of the year is 17.3 years (2023: 16.5 years). 15. POST-EMPLOYMENT BENEFITS (CONTINUED) 183 Convatec Group Plc Annual Report and Accounts 2024 Overview Strategic report Governance Financial statements Additional information Fair value of assets and present value of the liabilities of the plan The amount included in the Consolidated Statement of Financial Position arising from its obligations in respect of its defined benefit plans was as follows: Assets Liabilities Total $m $m $m At 1 January 2023 11.1 (22.1) (11.0) Current service cost – (1.2) (1.2) Past service income – 0.1 0.1 Interest income/(expense) 0.2 (0.6) (0.4) Remeasurement (loss)/gain (0.2) 0.1 (0.1) Contributions by employer 0.7 – 0.7 Contributions by members 0.6 (0.6) – Benefits paid (0.9) 1.0 0.1 Experience gain – 0.1 0.1 Foreign exchange 1.1 (1.5) (0.4) At 31 December 2023 12.6 (24.7) (12.1) Current service cost – (1.0) (1.0) Past service income – 0.1 0.1 Interest income/(expense) – (0.3) (0.3) Remeasurement gain/(loss) 0.7 (0.5) 0.2 Contributions by employer 1.3 – 1.3 Contributions by members 0.4 (0.4) – Benefits paid (3.3) 3.3 – Experience gain – 0.1 0.1 Transfer from multi-employer scheme 3.5 (4.1) (0.6) Foreign exchange (0.9) 1.7 0.8 At 31 December 2024 14.3 (25.8) (11.5) Plan assets The fair value of defined benefit plan assets at 31 December, which has been determined in accordance with IFRS 13, Fair Value Measurements , is analysed below. All assets have a quoted market price and are categorised as a Level 1 measurement in the fair value hierarchy. German y Switzerland Other Total 2024 2023 2024 2023 2024 2023 2024 2023 $m $m $m $m $m $m $m $m Equity instruments 0.7 – 4.3 3.9 – – 5.0 3.9 Debt instruments – – 4.5 4.6 – – 4.5 4.6 Property – – 2.6 1.8 – – 2.6 1.8 Qualifying insurance policies – – – – 0.7 0.8 0.7 0.8 Other – – 1.5 1.5 – – 1.5 1.5 Plan assets 0.7 – 12.9 11.8 0.7 0.8 14.3 12.6 Actuarial assumptions The Group makes certain key assumptions in order to value the plan obligations, and the approach to how these were set was as follows: Approach taken Discount rate Calculated by reference to the yields on high-quality corporate bonds which match expected cash flows in each territory in which a defined benefit plan is present. Inflation Calculated using the difference on yields between fixed and index-linked government bonds. Future salary increases Based on historical expectations and known future increases, including expected inflation rates. Mortality Based on mortality tables derived from assessments performed by national governments and based upon recommendations by plan actuaries. Convatec Group Plc Annual Report and Accounts 2024 184 Financial statements Notes to the consolidated financial statements continued 15. POST-EMPLOYMENT BENEFITS (CONTINUED) The principal actuarial assumptions for each defined benefit arrangement used at 31 December were as follows: German y Switzerland Other 2024 2023 2024 2023 2024 2023 Discount rate 3.32% 3.57% 1.10% 2.00% 3.18% to 3.61% 3.15% to 4.61% Rate of price inflation N/A N/A 1.00% 1.00% 2.00% to 2.20% 2.00% to 2.20% Future salary increases 2.50% 3.00% 1.75% 1.75% 0% to 2.50% 0.00% to 3.00% Discount rates have remained consistent year on year. The current mortality assumptions underlying the values of the obligations in the defined benefit plans were as follows: German y Switzerland Other 2024 2023 2024 2023 2024 2023 Life expectancy at age 65 Male 18.9 years 18.8 years 22.8 years 23.0 years 18.8 years 24.0 years Female 22.3 years 22.2 years 24.5 years 23.7 years 24.0 years 28.0 years Life expectancy at age 65 in 20 years’ time Male 21.6 years 21.5 years 24.8 years 25.2 years 18.8 years 24.9 years Female 24.5 years 24.4 years 26.4 years 25.7 years 24.0 years 28.9 years Sensitivity analysis The effect of movements in the key actuarial assumptions in respect of the Germany and Switzerland plans at 31 December 2024 would be an (increase)/decrease to the defined benefit asset/liabilities as follows: German y Switzerland Increase 0.5% Decrease 0.5% Increase 0.5% Decrease 0.5% Discount rate 0.7 (0.8) 1.4 (1.5) Inflation N/A N/A (0.5) 0.5 Future salary increases N/A N/A (0.2) 0.2 1 year increase 1 year decrease 1 year increase 1 year decrease Life expectancy (0.2) 0.2 (0.3) 0.3 Future funding Payments expected to be made by the Group to its defined benefit pension plans in the year ending 31 December 2025 are as follows: German y Switzerland Other Total $m $m $m $m Expected payments 0.2 0.5 – 0.7 CAPITAL STRUCTURE AND FINANCIAL COSTS The Group ensures that all entities within the Group have sufficient funding to deliver the Group’s strategy while maximising the return to shareholders through the debt and equity balance. The capital structure of the Group consists of net debt (which includes borrowings less cash and cash equivalents and excluding lease liabilities) and equity of the Group, comprising issued capital, reserves and earnings as disclosed in the Consolidated Statement of Changes in Equity. 16. CAPITAL STRUCTURE AND NET DEBT The capital structure of the Group at 31 December was as follows: 2024 2023 $m $m Borrowings (Note 21) 1,122.8 1,226.9 Less: Cash and cash equivalents (Note 22) (64.7) (97.6) Net debt (excluding lease liabilities) 1,058.1 1,129.3 Equity 1,688.9 1,692.7 Total capital 2,747.0 2,822.0 The Group's capital structure is managed to provide ongoing returns to shareholders and service debt obligations whilst maintaining maximum operational flexibility. 185 Convatec Group Plc Annual Report and Accounts 2024 Overview Strategic report Governance Financial statements Additional information 17. SHARE CAPITAL AND RESERVES Share capital Called up share capital is the total number of shares in issue at their par value. The rights attaching to the ordinary shares are uniform in all respects. They form a single class for all purposes, including with respect to voting and for all dividends and other distributions thereafter declared, made or paid on the ordinary share capital of the Group. Incremental costs directly attributable to the issue of new ordinary shares are shown in equity as a deduction from the proceeds, net of tax. Repurchased shares are classified as own shares and are disclosed in the own shares reserve. Share premium The share premium represents amounts received in excess of the nominal value of the ordinary shares. Own shares Own shares are ordinary shares in the Group purchased and held by an Employee Benefit Trust to satisfy obligations under the Group's employee share ownership programmes. When any Group company purchases the Company’s equity share capital (own shares), the consideration paid, including any directly attributable incremental costs (net of tax), is deducted from equity until the shares are cancelled, reissued or disposed of. Where such shares are subsequently sold or reissued, any consideration received, net of any directly attributable costs and the related tax effects, is recognised in equity and the resulting surplus or deficit on the transaction is presented within share premium. Merger reserve In 2016, the Consolidated Financial Statements were prepared under merger accounting principles. Under these principles, no acquirer was required to be identified and all entities were included at their pre-combination carrying amounts. This accounting treatment led to differences on consolidation between issued share capital and the book value of the underlying net assets. This difference is included within equity as a merger reserve. Cumulative translation reserve The foreign currency translation reserve is used to record exchange differences arising from the translation of the financial statements of foreign subsidiaries. Other reserves Other reserves comprises of the cumulative changes in the effective portion of cash flow hedges, remeasurement of defined benefit plans, remeasurement of the equity investment, and the share-based payment reserve. Share capital In 2023, the Board took the decision to terminate the scrip dividend option, effective from 2024. The movements in ordinary shares of 10 pence each were as follows: Ordinary shares Share capital Share premium Issued and fully paid or credited as fully paid number $m $m 1 January 2023 2,043,872,048 250.7 165.7 Issue of new shares for Scrip Scheme – 2022 final dividend 1,717,549 0.2 4.5 Issue of new shares for Scrip Scheme – 2023 interim dividend 4,199,962 0.6 10.8 5,917,511 0.8 15.3 31 December 2023 2,049,789,559 251.5 181.0 31 December 2024 2,049,789,559 251.5 181.0 At 31 December 2024, 5,444,666 shares (2023: 3,986,597 shares) were held in the Employee Benefit Trust. The market value of own shares at 31 December 2024 was $15.1 million (2023: $12.3 million). Other reserves include the share-based payment reserve of $184.0 million (2023: $171.1 million) and remeasurement of defined benefit obligations of $4.3 million (2023: $4.6 million) offset by the remeasurement of equity investments of $13.8 million (2023: $7.8 million) and the effective portion of cash flow hedges of $3.2 million (2023: $4.4 million). A reconciliation of movements in all reserves is provided in the Consolidated Statement of Changes in Equity. Distributable reserves At 31 December 2024, the retained surplus of the Company was $3,088.5 million (2023: $1,539.4 million) of which $1,474.7 million (2023: $1,539.4 million) was realised and distributable – refer to Note 8 – Distributable Reserves in the Company’s financial statements for further details. The capacity of the Company to make dividend payments is primarily determined by the availability of these retained and realised distributable reserves and the Group's cash resources including available borrowing facilities. 186 Convatec Group Plc Annual Report and Accounts 2024 Financial statements Notes to the consolidated financial statements continued 18. DIVIDENDS The Group ensures that adequate realised distributable reserves are available in the Company in order to meet proposed shareholder dividends and the purchase of shares for employee share scheme incentives. The Company principally derives distributable reserves from dividends received from subsidiary companies. In determining the level of dividend for the year, the Board considers the following factors and risks that may influence the proposed dividend: – Availability of realised distributable reserves; – Available cash resources and commitments; – Strategic opportunities and investments, in line with the Group’s strategic plan; and – Principal risks of the Group (as disclosed on pages 76 to 80). The Board paid the 2023 final dividend in May 2024 and the 2024 interim dividend in October 2024. The Board has taken into consideration balancing the return to shareholders and the additional investment in transformation in the period. The decision to increase the dividend for 2024 reflects the Board’s confidence in the future performance of the Group, this includes its underlying financial strength and cash generation when assessing cash flow forecasts for the next two years from the date of the dividend payment. Further details of the Group’s considerations and rationale for its policy in respect of the dividend distribution are given in the Directors’ report on page 145. Accounting policy Dividends paid are included in the Group Consolidated Financial Statements at the earlier of payment of the dividends or, in respect of the Company’s final dividend for the year, on approval by shareholders. Dividends paid and proposed were as follows: Settled in Settled via Pence Cents Total cash scrip No of scrip per share per share $m $m $m shares issued Final dividend 2022 3.657 4.330 92.4 87.7 4.7 1,717,549 Interim dividend 2023 1.380 1.769 34.4 23.0 11.4 4,199,962 Paid in 2023 5.037 6.099 126.8 110.7 16.1 5,917,511 Final dividend 2023 3.517 4.460 91.5 91.5 – – Interim dividend 2024 1.422 1.822 38.7 38.7 – – Paid in 2024 4.939 6.282 130.2 130.2 – – Final dividend 2024 proposed 3.639 4.594 94.2 The final dividend proposed for 2024 is to be distributed on 29 May 2025 to shareholders on the register at the close of business on 22 April 2025 and is subject to shareholder approval at the Annual General Meeting on 22 May 2025. The dividend will be declared in US dollars and will be paid in Sterling at the chosen exchange rate of $1.262/£1.00 determined on 25 February 2025. The interim and final dividends for 2024 give a total dividend for the year of 6.416 cents per share (2023: 6.229 cents per share). 19. SHARE-BASED PAYMENTS The Group operates a number of plans used to award shares to Executive Directors and other senior employees as part of their remuneration package. A charge is recognised over the vesting period in the Consolidated Income Statement to record the cost of these, based on the fair value of the award at the grant date. The Group’s share-based payment schemes in place are as follows: Long Term Incentive Plan (LTIP) Provides Performance Share Plan (PSP) awards subject to Group performance and market conditions and Restricted Stock Units (RSU) subject only to remaining employed up to the vesting date. Details on share-based payments in relation to Executive Directors is set out on page 137. Deferred Bonus Plan (DBP) Provides for the grant of share awards to defer a portion of the participant’s bonus as determined by the Remuneration Committee. The awards vest subject only to remaining employed up to the vesting date. Share Plan / Matching Share Plan (SP/MSP) Provides for the grant of discretionary share awards. Awards granted in 2024 will vest to employees still employed on the vesting date. Employee Plans The Group also operates Employee Plans which provide eligible employees the opportunity to save up to £500 per month (or local currency equivalent) with an option to acquire shares using these savings at a 15% discount to the market price at date of grant. The Employee Plans are available to employees under the following schemes: – Save-As-You-Earn (SAYE) – Available to all employees in the UK employed by participating Group companies. – Employee Stock Purchase Plan (ESPP) – Available to all employees in the US. – International Share Save Plan – Available to all employees in the rest of the world. 187 Convatec Group Plc Annual Report and Accounts 2024 Overview Strategic report Governance Financial statements Additional information 19. SHARE-BASED PAYMENTS (CONTINUED) Accounting policy Equity-settled share-based payment awards are measured at the fair value of the award on the grant date, excluding the effect of non-market-based vesting conditions. The fair value of the awards at the date of the grant is expensed to general and administrative expenses in the Consolidated Income Statement over the vesting period on a straight-line basis. Appropriate adjustments are made to reflect expected and actual forfeitures during the vesting period due to uncertainties in satisfying service conditions or non-market performance conditions. The corresponding credit is to other reserves in the Consolidated Statement of Financial Position. Share-based payment expenses recognised in the Consolidated Income Statement as follows: 2024 2023 $m $m LTIP 11.9 7.3 SP/MSP 6.0 5.5 DBP 1.2 1.0 Employee Plans 0.7 0.8 19.8 14.6 During the year to 31 December 2024, $19.7 million (2023: $14.5 million) of share-based payments were equity-settled, with $0.1 million (2023: $0.1 million) cash-settled. All amounts that were equity-settled were recognised in other reserves, with the amounts that were cash-settled recognised through other non-current liabilities. Awards outstanding The movements in the number of share and share option awards and the weighted average exercise price of share options are detailed below: 2024 2023 Weighted Weighted Number of average Number of average shares/ exercise price shares/ exercise price options of options options of options 000’s £ per share 000’s £ per share Outstanding at 1 January 31,439 0.29 30,800 0.33 Granted 10,667 0.27 10,987 0.22 Forfeited (5,207) 0.25 (4,081) 0.47 Exercised (6,009) 0.24 (6,267) 0.25 Outstanding at 31 December 30,890 0.28 31,439 0.29 Exercisable at 31 December 670 1.74 840 1.51 Weighted average fair value of awards granted (£ per share) – 1.97 – 1.53 The average share price during 2024 was £2.45 (2023: £2.21). The share price of the Company at 31 December 2024 was £2.21 (2023: £2.44). The range of exercise prices and the weighted average remaining contractual life of options outstanding at 31 December were as follows: 2024 2023 Number of Number of shares/options shares/options Range of prices 000’s 000’s Nil 26,240 26,414 1.21 – 73 1.74 1,546 2,002 1.76 1,101 1,821 1.84 – 18 1.96 1,444 – 2.08 559 1,111 30,890 31,439 Weighted average remaining contractual life of options outstanding 1.9 years 1.9 years Convatec Group Plc Annual Report and Accounts 2024 188 Financial statements Notes to the consolidated financial statements continued 19. SHARE-BASED PAYMENTS (CONTINUED) Valuation assumptions All share awards granted are valued directly by reference to the share price at date of grant except: – PSP shares awarded under the LTIP and MSP plans are subject to both market-based measures and non-market based measures. Values under the market-based element are based on relative Total Shareholder Return (TSR) performance conditions and are valued using a Monte Carlo simulation. – Options granted under the Employee Plans are valued using the Black-Scholes model. The principal assumptions used in these valuations were: 2024 2023 SAYE & SAYE & International International LTIP Share Save Plan ESPP LTIP Share Save Plan ESPP Share price at date of grant £2.81 £2.31 £2.31 £2.21 £2.07 £2.07 Exercise price nil £1.96 £1.96 nil £1.76 £1.76 Expected life 3 years 3.6 years 2.0 years 3 years 3.6 years 2.0 years Expected volatility 1 28.1% 28.1% 28.1% 25.1% 25.1% 25.1% Risk free rate 4.3% 4.3% 4.5% 3.3% 3.3% 3.3% Dividend yield n/a 1.9% 1.9% 2.3% 2.3% 2.3% Fair value £2.02 & £2.19 £0.48 £0.43 £1.09 & £1.41 £0.38 £0.34 1. The expected volatility was determined by calculating the observed historical volatility of share prices of peer group companies (including the Company) over the expected life of the share award. 20. FINANCIAL RISK MANAGEMENT The Group’s treasury policy seeks to minimise the Group's principal financial risks. No trading or speculative transactions in financial instruments are undertaken. This note presents information about the Group’s exposure to financial risks and the Group’s objectives, policies and processes for measuring and managing risks. Financial risk management objectives Based on the global operations of the Group, management consider the key financial risks to be liquidity, foreign exchange, interest rate and counterparty credit. The management of counterparty credit risk is discussed in Note 12 – Trade and other receivables. Liquidity risk Liquidity risk is the risk that the Group will encounter difficulty in meeting its financial obligations as they fall due. The Group manages and minimises liquidity risk by using global cash management solutions and actively monitoring both actual and projected cash outflows to ensure that it will have sufficient liquidity to meet its liabilities when due and have headroom to provide against unforeseen obligations. As at 31 December 2024, the Group held cash and cash equivalents of $64.7 million (2023: $97.6 million), of which 32.3% (2023: 57.5%) was held centrally. Medium and long-term borrowing requirements are met through committed bank facilities and capital market funding as detailed in Note 21 – Borrowings. Short-term borrowing requirements, if necessary, may be met from drawings under the multicurrency facility. Longer term, the Group has assessed its liquidity forecast as part of the viability assessment and its ability to continue trading as a going concern. For further detail on the Group's assessment of liquidity risk, refer to the Viability statement on pages 82 to 83. Foreign exchange risk As a result of the global nature of operations, the Group is exposed to market risk arising from changes in foreign currency exchange rates. Where possible, the Group manages foreign exchange risk by matching same currency revenues and expenses. It will also denominate debt in certain currencies and use foreign exchange forward contracts and swap contracts to further minimise transactional foreign exchange risk, with certain currency contracts designated as cash flow hedges; refer to Note 23 – Financial Instruments for details. As a result, the impacts of the fluctuations in the market values of assets and liabilities and the settlement of foreign currency transactions are reduced. Convatec Group Plc Annual Report and Accounts 2024 189 20. FINANCIAL RISK MANAGEMENT (CONTINUED) Overview Strategic report Governance Financial statements Additional information The following table summarises the exchange rates used for the translation of currencies into US dollars that have the most significant impact on the Group results: Average rate/ Currenc y Closing rate 2024 2023 USD/EUR Average 1.08 1.08 Closing 1.04 1.10 USD/GBP Average 1.28 1.24 Closing 1.25 1.27 USD/DKK Average 0.15 0.15 Closing 0.14 0.15 During 2024, revenue was mostly USD denominated (56%) (2023: 55%). Other significant currencies were EUR (19%) (2023: 19%) and GBP (5%) (2023: 5%). The balance comprises a basket of other currencies which, on an individual basis, were each no more than 2% of revenue. Sensitivity analysis on foreign exchange risk The sensitivity analysis below assumes a 10% strengthening of the US dollar against the principal currencies to highlight the sensitivity of profit before income taxes and total equity to translation foreign exchange risk as at 31 December, with all other variables held constant. 2024 2023 Currenc y Sensitivity $m $m I ncrease/(decrease) in profit before income taxes USD/GBP +10% 3.8 4.4 USD/EUR +10% (7.9) (10.3) USD/DKK +10% (11.6) (11.2) Decrease/(increase) in total equity USD/GBP +10% (84.7) (88.0) USD/EUR +10% 3.3 (2.5) USD/DKK +10% (31.4) (27.0) Interest rate risk The Group’s principal exposure to interest rate risk is in relation to interest expense on borrowings made under the Group's credit facilities which attract interest at floating rates plus a fixed margin as well as any cash or investments that result in interest income at floating rates. Floating rate instruments expose the Group to interest rate cash flow and expense risk. The Group manages this exposure on a net basis within Board approved policy parameters, including the use of interest rate swaps designated as cash flow hedges to maintain an appropriate mix between fixed and floating rate borrowings. As at 31 December 2024, the Group’s borrowings were principally denominated in USD and Euros. The Group’s credit facilities expose the Group to SOFR and EURIBOR. The Group’s interest rate swaps of $265.0 million, are referenced to the SOFR benchmark (see Note 23 – Financial Instruments). IBOR Reform Non-derivative financial liabilities The Group’s facilities are based on a floating rate and reflect IBOR reform. Whilst one of the Group’s facilities is multicurrency, most borrowings are expected to be denominated in USD and EUR with the reference rates of SOFR and EURIBOR respectively. Derivatives As of 31 December 2024, the Group held interest rate swaps for the purpose of risk management that are designated in cash flow hedge relationships. The floating legs of these swaps are linked to SOFR. The Group’s derivatives are governed by contracts based on the master agreement of the International Swaps and Derivatives Association (ISDA). All interest rate swaps at 31 December 2024 had a floating rate linked to SOFR, aligned with the Group’s facilities. See Note 23 – Financial Instruments. Hedge accounting Swaps with floating legs linked to SOFR had also been designated as cash flow hedges and will provide interest rate risk management beyond January 2025. Sensitivity analysis on interest rate risk Based on the composition and the terms of the Group's borrowings as at 31 December 2024, and including the 0% interest rate floor and after the effect of the interest rate swaps and cash, if interest rates were to increase or decrease by 100 basis points, the interest expense on borrowings would increase by $3.6 million (2023: $3.1 million) or decrease by $3.6 million (2023: $3.1 million) assuming that all other variables remain constant and excluding any effect of tax. 190 Convatec Group Plc Annual Report and Accounts 2024 Financial statements Notes to the consolidated financial statements continued 21. BORROWINGS The Group’s sources of borrowing for funding and liquidity purposes derive from senior notes and credit facilities including a committed revolving credit facility. Accounting policy Borrowings are recognised at fair value less directly attributable costs on the date that they are entered into and subsequently measured at amortised cost using the effective interest rate method. Borrowing costs directly attributable to the facility are capitalised and amortised over the period of the loan. The effective interest rate method is a method of calculating the amortised cost of a financial liability and allocating the interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments through the expected life of the financial liability, or, where appropriate, a shorter period, to the net carrying amount on initial recognition. Borrowings are classified as non-current when the repayment date is more than 12 months from the period-end date or where they are drawn on a facility with more than 12 months to expiry. The Group derecognises borrowings when its contractual obligations are discharged, terminated or expired. Fair value measurement Borrowings are classified as Level 1 or Level 2 in the fair value hierarchy in accordance with IFRS 13, Fair Value Measurements , based upon the degree to which the fair value movements are observable. The Group's borrowings as at 31 December were as follows: 2024 2023 Year of Face value Face value Currenc y maturit y $m $m Revolving Credit Facility 1 USD/Euro 2028 383.5 490.6 Term Loan USD 2027 250.0 250.0 Senior Notes USD 2029 500.0 500.0 Interest-bearing borrowings 1,133.5 1,240.6 Financing fees 2 (10.7) (13.7) Total carrying value of borrowings 1,122.8 1,226.9 Current portion of borrowings – – Non-current portion of borrowings 1,122.8 1,226.9 1. Included within the Revolving Credit Facility was €106.0 million ($109.8 million) and £7.0 million ($8.8 million) at 31 December 2024 (2023: €100.0 million ($110.4 million) and £8.0 million ($8.2 million)), representing 28.6% of RCF debt denominated in Euros, 2.3% of RCF debt denominated in GBP and 69.1% denominated in US dollars. 2. Financing fees of $10.7 million (2023: $13.7 million) related to the remaining unamortised fees incurred on the credit facilities of $5.8 million (2023: $7.8 million) and on the senior notes of $4.9 million (2023: $5.9 million). Credit facilities The credit facilities held by the Group are committed and available for the refinancing of certain existing financial indebtedness and general corporate purposes. The Group’s bank credit facility of $1.2 billion comprises of a $250.0 million term loan and a $950.0 million multicurrency revolving credit facility. As at 31 December 2024, the term loan was fully drawn and $383.5 million (2023: $490.6 million) of the revolving credit facility was drawn, with $566.5 million undrawn (2023: $459.4 million). Financial covenants The principal financial covenants are based on a permitted net debt to covenant-adjusted EBITDA 3 ratio and interest cover test as defined in the credit facilities agreement. Testing is required on a semi-annual basis, at June and December, based on the last 12 months’ financial performance. At 31 December 2024, the permitted net debt to covenant-adjusted EBITDA 3 ratio was a maximum of 3.50 times and the interest cover a minimum of 3.50 times, terms as defined by the credit facilities agreement. In accordance with the credit facilities agreement, the net debt to covenant-adjusted EBITDA 3 ratio can increase to a maximum 4.00 times for permitted acquisitions or investments. The Group was in compliance with all financial and non-financial covenants at 31 December 2024, with significant available headroom on the financial covenants (in excess of $887.5 million debt headroom on net debt to covenant-adjusted EBITDA 3 ). Excluding the impact of interest rate swaps, the weighted average interest rate on borrowings for the year ended 31 December 2024 was 6.0% (2023: 5.7%). 3. Covenant-adjusted EBITDA is calculated based on terms as defined in the credit facilities agreement. This is different to adjusted EBITDA, which is an alternative performance measure (“APM”) as disclosed on pages 28 to 31. 21. BORROWINGS (CONTINUED) 191 Convatec Group Plc Annual Report and Accounts 2024 Overview Strategic report Governance Financial statements Additional information Senior notes Unsecured senior notes of $500.0 million are subject to an interest cover financial covenant as defined in the indentures which is a minimum of 2.0 times, with testing required annually at 31 December on the last 12 calendar months’ financial performance. Borrowings measured at fair value The senior notes are listed and their fair value at 31 December 2024 of $456.9 million (2023: $450.1 million) has been obtained from quoted market data and therefore categorised as a Level 1 measurement in the fair value hierarchy under IFRS 13, Fair Value Measurements . For the Group’s other borrowings, the fair value is based on discounted cash flows using a current borrowing rate and is categorised as a Level 2 measurement. At 31 December 2024, the estimated fair value of the Group's other borrowings was $678.9 million (2023: $774.9 million). Maturity of financial liabilities The contractual undiscounted future cash flows, including contractual interest payments, related to the Group's financial liabilities were as follows: Contractual cash flows Within 1 year or 1 to 2 2 to 3 3 to 4 4 to 5 More than Carrying on demand years years years years 5 years Total amount $m $m $m $m $m $m $m $m At 31 December 2023 Borrowings 58.6 49.8 47.7 298.0 532.8 519.4 1,506.3 1,226.9 Lease liabilities (Note 24) 25.6 19.5 14.6 10.1 8.2 18.5 96.5 85.5 Trade and other payables (Note 13) 388.7 – – – – – 388.7 388.7 Derivative financial instruments (Note 23) Derivative financial instruments payable 1,486.9 6.8 – – – – 1,493.7 17.6 Derivative financial instruments receivable 1,483.1 5.4 – – – – 1,488.5 13.6 At 31 December 2024 Borrowings 54.1 53.3 303.6 417.4 519.4 – 1,347.8 1,122.8 Lease liabilities (Note 24) 25.9 20.2 15.0 11.3 8.3 16.0 96.7 78.8 Trade and other payables1 (Note 13) 350.9 – – – – – 350.9 350.9 Derivative financial instruments (Note 23) Derivative financial instruments payable 1,539.3 1.7 – – – – 1,541.0 18.4 Derivative financial instruments receivable 1,538.2 1.5 – – – – 1,539.7 18.4 1. Trade and other payables excludes taxes and social security of $31.8 million as per Note 13 – Trade and other payables, as these are statutory rather than contractual requirements and therefore are not classified as financial liabilities in the above table. Reconciliation of movement in borrowings 2024 2023 $m $m Borrowings at 1 January 1,226.9 1,211.9 Repayment of borrowings (98.0) – Proceeds of new borrowings, net of financing fees – 9.4 Foreign exchange (9.1) 2.8 Non-cash movements 2 3.0 2.8 Borrowings at 31 December 1,122.8 1,226.9 2. Non-cash movements were in respect of the amortisation of deferred financing fees associated with the borrowings. 192 Convatec Group Plc Annual Report and Accounts 2024 Financial statements Notes to the consolidated financial statements continued 22. CASH, CASH EQUIVALENTS AND RESTRICTED CASH Cash held at bank is used for the Group's day-to-day operations. The Group utilises bank deposits or money market funds which have a maturity of three months or less as liquid investments that enable short-term liquidity requirements to be met. Accounting policy Cash and cash equivalents comprise cash in hand and current balances with banks and similar institutions. All liquid investments, including term deposits and money market funds, have original maturities of three months or less, are subject to insignificant risk of changes in value and are repayable within one business day with no significant loss of interest, resulting in classification as cash equivalents. Cash at bank earns interest at rates based on daily bank deposit rates. Term deposits and money market funds earn interest at the respective short-term deposit rate. Cash and cash equivalents at 31 December 2024 included $19.0 million (2023: $21.1 million) of cash held in territories where there are restrictions related to timely repatriation. The amounts meet the definition of cash and cash equivalents but are not deemed to be readily available for general use by the wider Group. Consolidated Statement of Cash Flows Under certain circumstances, the Group utilises bank overdrafts to manage temporary fluctuations in cash positions. The bank overdrafts are repayable on demand, used as part of the Group’s overall cash management strategy and form part of cash and cash equivalents for the purpose of the Consolidated Statement of Cash Flows. The Group had no bank overdrafts as at 31 December 2024 or 31 December 2023. The Group reports cash flows from operating activities using the indirect method in accordance with IAS 7, Statement of Cash Flows . The Group has elected to classify net interest paid (including interest on lease liabilities) as cash flows from operating activities. Short-term lease payments and payments for leases of low-value assets are included in cash flows from operating activities. Changes in working capital assets and liabilities as reported in cash flows from operating activities reflect the changes in the Consolidated Statement of Financial Position between the current and previous financial year end, including adjustments for amounts relating to acquisitions and disposals (when necessary), as well as currency translation adjustments. Cash payments for the principal portion of lease liabilities is included within cash flows from financing activities. Acquisition of property, plant and equipment, and intangible assets reflects additions to the related assets, including adjustments for changes in capital accruals. Acquisition of intangible assets relates to capitalised software, development and product-related licences. Refer to Note 9 – Intangible assets and goodwill for further details. The adjustment for non-operating expense, net in the Consolidated Statement of Cash Flows excludes the gains and losses realised on cash-settled derivative financial instruments. Refer to Note 5 – Non-operating income, net. Restricted cash In certain instances, there are requirements to set aside cash to support payment guarantees and obligations, including the payment of value-added taxes, custom duties on imports, tender programmes and lease arrangements. Such amounts are classified by the Group as restricted cash, which do not form part of cash and cash equivalents. Cash paid into escrow, arising from a business combination, is also classified as restricted cash. 2024 2023 $m $m Cash at bank and in hand 56.8 57.7 Money market funds 7.9 39.9 Cash and cash equivalents 64.7 97.6 2024 2023 $m $m Restricted cash – current 8.8 12.5 Restricted cash – non-current 3.4 5.3 Total restricted cash 12.2 17.8 Current restricted cash of $8.8 million (2023: $12.5 million) relates to cash held in escrow in respect of the Group’s acquisitions. Non-current restricted cash of $3.4 million (2023: $5.3 million) relates primarily to amounts held in respect of guarantees and the Group’s Share Save scheme for employees. Included in the 2023 balance was $1.6 million relating to cash held in escrow in respect of the Group’s acquisitions. None of these amounts are accessible on demand. 193 Convatec Group Plc Annual Report and Accounts 2024 Overview Strategic report Governance Financial statements Additional information 23. FINANCIAL INSTRUMENTS A derivative financial instrument is a contract that derives its value from the performance of an underlying variable, such as foreign exchange rates or interest rates. The Group uses derivative financial instruments to manage foreign exchange and interest rate risk arising from its operations and financing. Derivative financial instruments used by the Group are foreign exchange forwards and interest rate swaps. The Group utilises interest rate swap agreements, designated as cash flow hedges, to manage its exposure to variability in expected future cash outflows attributable to the changes in interest rates on the Group’s committed borrowing facilities. Accounting policy Derivative financial instruments are initially recognised at fair value on the derivative contract date and are remeasured at their fair value at subsequent reporting dates. Derivative financial instruments are classified at fair value through profit or loss (FVTPL) unless they are designated and qualify as an effective cash flow hedge. The fair value of forward foreign exchange contracts is determined by using the difference between the contract exchange rate and the quoted forward exchange rate from third parties at the reporting date. Hedge accounting The Group has elected to apply the IFRS 9, Financial Instruments hedge accounting requirements. Changes in the fair values of derivatives designated as cash flow hedges are recognised in other comprehensive income to the extent the hedges are effective. The fair value is the estimated amount that the Group would receive or pay to terminate the forward or swap at the reporting date, taking into account current market rates, the Group’s current creditworthiness, as well as that of the financial instrument counterparties. The cumulative gain or loss is then reclassified to the Consolidated Income Statement in the same period when the relevant hedged transaction is realised. Any ineffectiveness on hedging instruments is recognised in the Consolidated Income Statement as they arise. Hedge accounting is discontinued when the hedging instrument expires or is sold, terminated or exercised, or no longer qualifies for hedge accounting. The discontinuation is accounted for prospectively. Any gain or loss recognised in other comprehensive income and accumulated in the cash flow hedge reserve at that time remains in equity and is reclassified to profit or loss when the forecast transaction occurs. When a forecast transaction is no longer expected to occur, the gain or loss accumulated in the cash flow hedge reserve is immediately reclassified to profit or loss. The Group held interest rate swaps of $265.0 million at 31 December 2024 (2023: $425.2 million), with exposure to SOFR as a reference rate and maturing at various points in the next two years. These have been designated as cash flow hedges through other comprehensive income. Right to offset Financial assets and liabilities are offset and the net amount presented in the Consolidated Statement of Financial Position when, and only when, the Group has a legal right to offset the amounts and intends either to settle them on a net basis or to realise the asset and settle the liability simultaneously. Fair value measurement Financial instruments are classified as Level 1, Level 2 or Level 3 in the fair value hierarchy in accordance with IFRS 13, Fair Value Measurements , based upon the degree to which the fair value movements are observable. Level 1 fair value measures are defined as those with quoted (unadjusted) market prices in active markets for identical assets or liabilities. Level 2 fair value measurements are defined as those derived from inputs other than quoted prices that are observable for the asset or liability, either directly (prices from third parties) or indirectly (derived from third-party prices). Level 3 fair value measurements are defined as those derived from significant unobservable inputs. The only instrument classified as Level 1 are the senior notes, given the availability of quoted market price (Note 21 – Borrowings). The Group’s derivative financial instruments, discussed below, are classified as Level 2. The Group’s equity investment in preference shares (Note 10 – Investment in financial assets) and contingent consideration arising on business combinations are classified within Level 3 of the fair value hierarchy. The Group holds interest rate swap agreements to fix a proportion of variable interest on the Group’s US dollar debt, in accordance with the Group's risk management policy. The interest rate swaps are designated as hedging instruments in a cash flow hedging relationship. In accordance with Group policy, the Group uses forward foreign exchange contracts, designated as cash flow hedges, to hedge certain forecast third-party foreign currency transactions. When a commitment is entered into a layered approach is taken when hedging the currency exposure, ensuring that no more than 100% of the transaction exposure is covered. The currencies hedged by forward foreign exchange contracts are US dollars, Swiss francs, Pound sterling, Danish krone and Japanese yen. The Group further utilises foreign exchange contracts and swaps classified as FVTPL to manage short-term foreign exchange exposure. Convatec Group Plc Annual Report and Accounts 2024 194 Financial statements Notes to the consolidated financial statements continued 23. FINANCIAL INSTRUMENTS (CONTINUED) Cash flow hedges The fair values are based on market values of equivalent instruments at 31 December. The following table presents the Group's outstanding interest rate swaps, which were designated as cash flow hedges at 31 December: 2024 2023 Fair value 1 Fair value 1 Notional assets/ Notional assets/ amount (liabilities) amount (liabilities) Currenc y Effective date Maturity date $m $m $m $m 6 Month term SOFR Float to Fixed Interest Rate Swap USD 23 Jan 2023 23 Jan 2024 – – 90.0 0.4 6 Month term SOFR Float to Fixed Interest Rate Swap USD 23 Jan 2023 23 Jul 2024 – – 40.0 0.1 6 Month term SOFR Float to Fixed Interest Rate Swap USD 23 Jan 2023 23 Jan 2025 50.0 0.1 50.0 0.2 6 Month term SOFR Float to Fixed Interest Rate Swap USD 3 Aug 2023 3 Aug 2024 – – 50.0 – 6 Month term SOFR Float to Fixed Interest Rate Swap USD 3 Aug 2023 3 Feb 2025 50.0 0.1 50.0 – 6 Month term SOFR Float to Fixed Interest Rate Swap USD 3 Aug 2023 4 Aug 2025 50.0 – 50.0 – 6 Month term EURIBOR Float to Fixed Interest Rate Swap EUR 29 Sep 2023 29 Sep 2024 – – 55.2 (0.2) 6 Month term SOFR Float to Fixed Interest Rate Swap USD 29 Sep 2023 29 Sep 2025 40.0 (0.3) 40.0 (0.5) 6 Month term SOFR Float to Fixed Interest Rate Swap USD 23 Jan 2024 23 Jan 2026 25.0 0.1 – – 6 Month term SOFR Float to Fixed Interest Rate Swap USD 23 Jan 2024 23 Jan 2026 25.0 0.1 – – 6 Month term SOFR Float to Fixed Interest Rate Swap USD 28 May 2024 28 May 2026 25.0 (0.3) – – 1. The fair values of the interest rate swaps were disclosed in non-current derivative financial liabilities, current derivative financial liabilities and current derivative assets in the Consolidated Statement of Financial Position. There was no ineffectiveness recognised in the Consolidated Income Statement. Foreign exchange forward contracts The following table presents the Group's outstanding foreign exchange forward contracts valued at FVTPL and foreign currency forward contracts designated as cash flow hedges, disclosed in current derivative financial assets and liabilities, at 31 December: 2024 2023 Fair value Fair value Notional assets/ Notional assets/ amount (liabilities) amount (liabilities) Term $m $m $m $m Foreign exchange contracts ≤ 3 months 783.5 16.8 453.0 8.0 Foreign currency forward exchange contracts designated as cash flow hedges ≤ 12 months 36.2 1.2 195.9 4.4 Derivative financial assets 819.7 18.0 648.9 12.4 Foreign exchange contracts ≤ 3 months 514.5 (8.4) 760.7 (15.2) Foreign currency forward exchange contracts designated as cash flow hedges ≤ 12 months 193.5 (9.4) 53.3 (1.3) Derivative financial liabilities 708.0 (17.8) 814.0 (16.5) During the year ended 31 December 2024, the Group realised a net gain of $25.8 million (2023: $4.3 million loss) on foreign exchange forward contracts designated as FVTPL in Note 5 – Non-operating income, net in the Consolidated Income Statement. Impact of hedging on other comprehensive income The following table presents the impact of hedging on other comprehensive income: 2024 2023 $m $m Recognised in other comprehensive income: Effective portion of changes in fair value of cash flow hedges: Interest rate swaps 0.5 (1.3) Foreign currency forward exchange contracts designated as cash flow hedges (11.6) 2.0 Changes in fair value of cash flow hedges reclassified to the Consolidated Income Statement 2.1 (0.8) Cost of hedging 0.6 (0.5) Total (8.4) (0.6) 195 Convatec Group Plc Annual Report and Accounts 2024 Overview Strategic report Governance Financial statements Additional information 23. FINANCIAL INSTRUMENTS (CONTINUED) Offsetting financial assets and liabilities Financial assets and liabilities are offset and the net amount reported in the balance sheet where there is a legally enforceable right to offset the recognised amounts, and there is an intention to settle on a net basis or realise the asset and settle the liability simultaneously. Amounts which do not meet all of the criteria for offsetting on the balance sheet but could be settled net in certain circumstances primarily relate to derivative transactions entered under International Swaps and Derivatives Association (ISDA) master netting arrangements or other similar agreements. In general, under such agreements, each party has the option to settle on a net basis in the event of default of the other party. As there is presently not a legally enforceable right of offset, these amounts have not been offset in the balance sheet and have been presented separately in the table below. The financial assets and financial liabilities presented below are subject to offsetting, enforceable master netting or similar agreements. The column 'Net amount' shows the impact on the Group's balance sheet if all set-off rights were exercised. Financial liabilities offset against trade and other receivables mainly relate to accrued customer rebates/discounts and chargebacks, as the offsetting criteria for these are met under IAS 32. Gross financial Net financial assets/ Related amounts Gross financial assets/ (liabilities)/ (liabilities) per balance not set off in the Net (liabilities) assets set off sheet balance sheet amount $m $m $m $m $m As at 31 December 2024 Financial assets Trade and other receivables 363.3 (28.3) 335.0 – 335.0 Derivative financial assets 18.4 – 18.4 (10.1) 8.3 Financial liabilities Trade and other payables 1 (379.2) 28.3 (350.9) – (350.9) Derivative financial liabilities (18.4) – (18.4) 10.1 (8.3) Gross financial Net financial assets/ Related amounts not Gross financial assets/ (liabilities)/ (liabilities) per balance set off in the balance (liabilities) assets set off sheet sheet Net amount $m $m $m $m $m As at 31 December 2023 Financial assets Trade and other receivables 374.6 (40.9) 333.7 – 333.7 Derivative financial ass ets 13.6 – 13.6 (11.3) 2.3 Financial liabilities Trade and other payables (429.6) 40.9 (388.7) – (388.7) Derivative financial liabilities (17.6) – (17.6) 11.3 (6.3) 1. Trade and other payables excludes taxes and social security of $31.8 million as per Note 13 – Trade and other payables, as these are statutory rather than contractual requirements and therefore are not classified as financial liabilities in the above table. 24. LEASES The Group principally leases real estate and vehicles. Leases are recognised as a right-of-use asset with a corresponding liability recorded at the date at which the leased asset is available for use by the Group. Accounting policy The lease liability is measured at the present value of future lease payments discounted using the rate implicit in the lease. If this rate is not readily determinable, the Group uses its incremental borrowing rate. Generally, the Group uses its incremental borrowing rate as the discount rate. Options such as lease extensions or terminations on lease contracts are considered on a case-by-case basis by regular management assessment. Each lease payment is allocated between amounts paid for principal and interest. The interest cost is charged to the Consolidated Income Statement over the lease term to produce a constant periodic rate of interest on the remaining balance of the liability for each period. The right-of-use asset is depreciated on a straight-line basis over the lease term. Payments associated with short-term leases and low-value leases are recognised on a straight-line basis as an expense in the Consolidated Income Statement. Short-term leases are leases with a lease term of 12 months or less and low-value leases comprise of leases with an underlying asset value of less than $5,000. Expenses recognised for these short-term and low-value leases for the year ended 31 December 2024 were $1.5 million (2023: $2.4 million). 196 Convatec Group Plc Annual Report and Accounts 2024 Financial statements Notes to the consolidated financial statements continued 24. LEASES (CONTINUED) The movements in right-of-use assets were as follows: Real estate and other Vehicles Total $m $m $m As at 1 January 2023 65.6 13.8 79.4 Lease additions 14.2 10.9 25.1 Arising from acquisitions 1.6 – 1.6 Leases terminated (7.4) (0.9) (8.3) Depreciation of right-o f -use assets (14.7) (8.0) (22.7) Impairment of right-o f -use assets (1.9) – (1.9) Foreign exchange 0.9 0.6 1.5 As at 31 December 2023 58.3 16.4 74.7 Lease additions 9.8 12.4 22.2 Arising from acquisitions (Note 26) 0.4 0.5 0.9 Leases terminated (0.7) (1.0) (1.7) Depreciation of right-o f -use assets (14.8) (8.4) (23.2) Impairment of right-o f -use assets (0.3) – (0.3) Sublease of right-o f -use assets (2.1) – (2.1) Foreign exchange (1.9) (1.1) (3.0) As at 31 December 2024 48.7 18.8 67.5 Movements in lease liabilities were as follows: 2024 2023 $m $m Lease liabilities as at 1 January 85.5 88.3 Lease additions 22.2 25.1 Arising from acquisitions (Note 26) 0.9 1.6 Payment of lease liabilities (24.7) (22.7) Leases terminated (1.7) (8.3) Interest expense on lease liabilities (Note 25) 3.6 3.5 Interest paid on lease liabilities (3.6) (3.5) Foreign exchange (3.4) 1.5 Lease liabilities as at 31 December 78.8 85.5 The total cash outflow of lease liabilities including interest for the year ended 31 December 2024 was $28.3 million (2023: $26.2 million). Interest paid during the year was $3.6 million (2023: $3.5 million). Lease liabilities by category at 31 December were as follows: 2024 2023 Real estate Real estate and other Vehicles Total and other Vehicles Total $m $m $m $m $m $m Current 14.6 7.4 22.0 13.9 6.8 20.7 Non-current 45.4 11.4 56.8 55.3 9.5 64.8 Total 60.0 18.8 78.8 69.2 16.3 85.5 The maturity of lease liabilities at 31 December was as follows: 2024 2023 Real estate Real estate and other Vehicles Total and other Vehicles Total $m $m $m $m $m $m Within 1 year 14.6 7.4 22.0 13.9 6.8 20.7 1 to 2 years 11.0 6.1 17.1 14.0 5.0 19.0 2 to 3 years 8.9 3.7 12.6 9.7 3.2 12.9 3 to 4 years 8.0 1.5 9.5 7.6 1.1 8.7 4 to 5 years 6.7 0.1 6.8 7.0 0.1 7.1 More than 5 years 10.8 – 10.8 17.0 0.1 17.1 Total 60.0 18.8 78.8 69.2 16.3 85.5 The undiscounted contractual cash flows in relation to the maturity of leases liabilities have been disclosed in Note 21 – Borrowings. Convatec Group Plc Annual Report and Accounts 2024 197 Overview Strategic report Governance Financial statements Additional information 25. FINANCE INCOME AND EXPENSE Finance expenses arise from interest on the Group’s borrowings and lease liabilities. Finance income arises from interest earned on investment of surplus cash. Accounting policy Finance expenses, including the transaction costs for borrowings and any discount or premium on issue, are recognised in the Consolidated Income Statement using the effective interest rate method. When existing debt is derecognised in the financial statements any transaction costs not amortised are recognised immediately in the Consolidated Income Statement. Upon derecognition of financial liabilities, any unamortised financing fees are recognised immediately in the Consolidated Income Statement. Interest related to qualifying assets under construction included within PP&E is capitalised (refer to Note 8 – Property, plant and equipment). Refer to Note 24 – Leases for accounting policy on interest expense on lease liabilities. Interest arising from interest rate swaps is recorded as either interest income or expense over the term of the agreement. Hedge accounting is discontinued when the hedging instrument expires or is sold, terminated or exercised, or no longer qualifies for hedge accounting. The discontinuation is accounted for prospectively. Any gain or loss recognised in other comprehensive income and accumulated in the cash flow hedge reserve at that time remains in equity and is reclassified to profit or loss when the forecast transaction occurs. When a forecast transaction is no longer expected to occur, the gain or loss accumulated in the cash flow hedge reserve is reclassified immediately to profit or loss. Finance costs, net for the year ended 31 December were as follows: 2024 2023 $m $m Finance income Interest income on cash and cash equivalents 4.8 5.2 Total finance income 4.8 5.2 Finance expense Interest expense on borrowings (76.1) (75.2) Other financing-related fees 1 (8.9) (7.2) Interest expense on interest rate derivatives (0.2) – Interest expense on lease liabilities (3.6) (3.5) Capitalised interest 2 6.4 5.4 Other finance costs (0.5) (0.2) Total finance expense (82.9) (80.7) Finance costs, net (78.1) (75.5) 1. Other financing-related fees include the amortisation of deferred financing fees associated with the multicurrency revolving credit facilities, term loan facilities and senior notes. 2. Capitalised interest was calculated using the Group's weighted average interest rate over the year of 6.0% (2023: 5.7%) and will be treated as tax deductible. 26. ACQUISITIONS During the year to 31 December 2024, the Group completed the acquisition of Livramedom. The Group used acquisition accounting to reflect the fair value of the assets acquired and liabilities assumed as well as the intangible assets and goodwill recognised upon acquisitions. These valuations are considered provisional as at 31 December 2024. The contingent consideration liabilities recognised by the Group is in respect of acquisitions and includes amounts contingent on future events such as development milestones and sales performance. Accounting policy Acquisitions of subsidiaries and businesses are accounted for using the acquisition method of accounting. Consideration transferred in respect of an acquisition is measured at the fair value of the assets acquired, equity instruments issued and liabilities incurred or assumed on the date of the acquisition. Identified assets acquired and liabilities assumed are measured at their respective acquisition-date fair values. The excess of the fair value of the consideration given over the fair value of the identifiable net assets acquired is recorded as goodwill. If the fair value of the identifiable net assets acquired is greater than the fair value of the consideration given, the excess is recognised immediately in the Consolidated Income Statement as a bargain purchase gain. Acquisition-related costs are expensed as incurred. The operating results of the acquired business are reflected in the Group’s Consolidated Financial Statements from the date of acquisition. 198 Convatec Group Plc Annual Report and Accounts 2024 Financial statements Notes to the consolidated financial statements continued 26. ACQUISITIONS (CONTINUED) Accounting policy (continued) Contingent consideration arising from a business combination is recognised at fair value on acquisition. Contingent consideration classified as a liability is a financial instrument and within the scope of IFRS 9 – Financial Instruments and is subsequently measured at fair value, with the changes in fair value recognised in the Consolidated Income Statement, in accordance with IFRS 9. This is classified within Level 3 of the fair value hierarchy (Note 23 – Financial Instruments). The classification of cash payments associated with contingent consideration within the Consolidated Statement of Cash Flows is dependent on the nature of the arrangement. The settlement of the amount initially recognised upon acquisition is reflected in cash flows from investing activities, with the element of the payment relating to any subsequent remeasurement included within cash flows from operating activities. Livramedom On 17 September 2024, the Group completed its acquisition of 100% of the share capital of Livramedom, a France-based retailer of equipment for the treatment of continence, wound healing, and stoma therapy disorders, which will strengthen our direct-to- consumer capabilities in Continence Care and Ostomy Care. The company was founded in 2006, and is based in Marseille, France. The total consideration for the acquisition was $12.8 million (€11.5 million). There is no contingent consideration associated with this acquisition. Assets acquired and liabilities assumed The transaction meets the definition of a business combination and has been accounted for under the acquisition method of accounting. The following table summarises the provisional fair values of the assets acquired and liabilities assumed as at the acquisition date: Livramedom Provisiona l $m Non-current assets Right-o f -use assets 1.0 Intangible assets 1.3 Other non-current receivables 0.1 Current assets Inventories 0.9 Trade and other receivables 1.5 Cash and cash equivalents 0.9 Total assets acquired 5.7 Current liabilities Trade and other payables (3.0) Lease liabilities (0.3) Deferred tax liabilities (0.2) Non-current liabilities Lease liabilities (0.7) Deferred tax liabilities (0.2) Total liabilities assumed (4.4) Net assets acquired 1.3 Goodwill (Note 9.2) 11.5 Total 12.8 Initial cash consideration 14.5 Working capital adjustment 1 (1.5) Gross indebtedness adjustment 1 (0.2) Total consideration 12.8 1. These are the Group’s calculations of the working capital and gross indebtedness adjustments in accordance with the terms of the Merger Agreement. These were not finalised or paid by the reporting date. Analysis of cash outflow in the Consolidated Statement of Cash Flows Livramedom Provisiona l $m Initial cash consideration 14.5 Cash and cash equivalents acquired (0.9) Net cash outflow from acquisitions, net of cash acquired 13.6 199 Convatec Group Plc Annual Report and Accounts 2024 26. ACQUISITIONS (CONTINUED) Overview Strategic report Governance Financial statements Additional information The fair values of the assets acquired and liabilities assumed are provisional at 31 December 2024. The Group will finalise these amounts as it obtains the information necessary to complete the measurement process. Any changes resulting from facts and circumstances that existed as of the acquisition dates may result in retrospective adjustments to the provisional amounts recognised at the acquisition date. The Group will finalise these amounts no later than one year from the acquisition date. The provisional fair value of trade and other receivables amounted to $1.5 million, with a gross contractual amount of $1.6 million. At the acquisition date, the Group's best estimate of the contractual cash flows expected not be collected amounted to $0.1 million. Goodwill amounting to $11.5 million was recognised on acquisition and is underpinned by a number of elements, which individually could not be quantified. Most significant amongst these is the premium attributable to a pre-existing, well-positioned business in the important Direct to Consumer market in France that will now allow Convatec to be more competitive. Additionally, Livramedom has a highly skilled workforce and established reputation. The Group expects cost savings, operational synergies and future growth opportunities to arise from combining the operations of the business to those of the Group. The Livramedom acquisition is included in the Continence Care CGU. Acquisition-related costs The Group incurred $3.5 million of acquisition-related costs in the year, primarily relating to legal and professional fees in respect of completed or aborted acquisitions in both the current year and previous years. The acquisition-related costs have been recognised in general and administrative expenses in the Consolidated Income Statement. Revenue and profit The revenue of Livramedom for the period from the acquisition date to 31 December 2024 was $4.8 million and net loss for the period was $0.6 million. If the acquisition had been completed on 1 January 2024, reported Group revenue would have been $11.4 million higher and Group profit for the year would have been $0.1 million higher. Contingent consideration As at 31 December 2024, the discounted fair value of the contingent consideration payable in respect of the Group’s acquisitions was $70.3 million. During the year, final earn out payments totalling $70.9 million were made in respect of the Cure Medical and Triad Life Sciences acquisitions ($22.8 million recognised within cash flows from investing activities and $48.1 million recognised within cash flows from operating activities in the Consolidated Statement of Cash Flows). The net charge to the income statement in respect of changes in the fair value of contingent consideration (based on the best estimates of the amounts payable as at 31 December 2024) was $4.6 million. In addition, there was a foreign exchange movement of $1.4 million from the re-translation of non-USD denominated balances. The movement in contingent consideration to 31 December was as follows: 2024 2023 $m $m 1 January 138.0 140.0 Contingent consideration from acquisitions – 66.7 Fair value movement of contingent consideration 4.6 24.6 Utilised (70.9) (94.7) Foreign exchange (1.4) 1.4 31 December 70.3 138.0 Current 53.3 69.7 Non-current 17.0 68.3 The expected payment profile of the contingent consideration at 31 December was as follows: 2024 2023 $m $m Within 1 year 53.3 69.7 2 to 5 years 0.4 55.8 More than 5 years 16.6 12.5 Total 70.3 138.0 Convatec Group Plc Annual Report and Accounts 2024 200 Financial statements Notes to the consolidated financial statements continued 26. ACQUISITIONS (CONTINUED) Fair value of contingent consideration at reporting date Contingent consideration arising on business combinations is classified as a recurring fair value measurement within Level 3 of the fair value hierarchy, in line with IFRS 13 Fair Value Measurements. Key unobservable inputs in respect of the Group’s acquisitions include actual results, management forecasts and an appropriate discount rate. As at 31 December 2024, the discounted fair value of the contingent consideration payable in respect of the Group’s acquisitions was $70.3 million (2023: $138.0 million). Management has determined that the potential range of undiscounted outcomes at 31 December 2024 is between $58.8 million and $163.9 million, from a maximum undiscounted amount of $163.9 million. The table below shows an indicative basis of the sensitivity to the income statement and balance sheet at 31 December 2024. Sales forecast Discount rate 5% 10% -5% -10% 1% 2% -1% -2% Increase/(decrease) in financial liability and loss/(gain) in income statement 0.5 1.0 (0.5) (1.1) (1.8) (3.3) 2.0 4.0 27. COMMITMENTS AND CONTINGENCIES Commitments represent the Group’s future capital expenditure which is not recognised as a liability in the Consolidated Financial Statements but represents a non-cancellable commitment. A contingent liability is a possible liability that is not sufficiently certain to qualify for recognition as a provision because the amount cannot be measured reliably or because settlement is not considered probable. Capital commitments At 31 December 2024, the Group had non-cancellable commitments for the purchase of property, plant and equipment, capitalised software and development of $42.6 million (2023: $22.3 million). Contingent liabilities The Company and its subsidiaries are party to various legal claims and disputes which arise in the normal course of business. Provisions are recognised for outcomes that are deemed probable and can be reliably estimated. Management believe that any material liability in respect of legal actions and claims not already provided for, is remote. 28. RELATED PARTY TRANSACTIONS The Directors have not identified any related parties to the Group, other than the key management personnel. The Group considers key management personnel as defined in IAS 24, Related Party Disclosures to be the members of the CELT as set out on pages 94 to 95 and the Non-Executive Directors as set out on pages 92 to 93. Key management personnel compensation Key management personnel compensation for the year ended 31 December was as follows: 2024 2023 $m $m Short-term employee benefits 18.6 15.5 Share-based payment expense 9.2 7.1 Post-employment benefits 0.6 0.5 Termination benefits 0.3 – Total 28.7 23.1 Further details of short-term employee benefits, share-based payment expense and post-employment benefits for the two Executive Directors are shown on page 135. Details of the Non-Executive Directors' fees, included in the table above, are provided on page 143. The Group has not been a party to any other material transaction, or proposed transactions, in which any member of the key management personnel had or was to have a direct or indirect material interest. 29. SUBSEQUENT EVENTS The Group has evaluated subsequent events through to 25 February 2025, the date the Consolidated Financial Statements were approved by the Board of Directors. On 25 February 2025, the Board proposed the final dividend in respect of 2024 subject to shareholder approval at the Annual General Meeting on 22 May 2025, to be distributed on 29 May 2025. See Note 18 – Dividends to the Consolidated Financial Statements for further details. Company financial statements COMPANY STATEMENT OF FINANCIAL POSITION As at 31 December 2024 2024 2023 Notes $m $m Assets Non-current assets Investment in subsidiaries 3 5,529.6 4,019.4 Deferred tax assets 4 2.2 3.0 5,531.8 4,022.4 Current assets Other receivables 5 31.4 33.4 Total assets 5,563.2 4,055.8 Equity and liabilities Current liabilities Trade and other payables 6 59.3 4.6 59.3 4.6 Non-current liabilities Other payables 0.1 0.1 Total liabilities 59.4 4.7 Net assets 5,503.8 4,051.1 Equity Share capital 7 251.5 251.5 Share premium 7 181.0 181.0 Own shares 7 (16.4) (0.6) Retained surplus 3,088.5 1,539.4 Merger reserve 1,765.6 1,765.6 Cumulative translation reserve 112.4 206.6 Other reserves 121.2 107.6 Total equity 5,503.8 4,051.1 Total equity and liabilities 5,563.2 4,055.8 The Company reported a net profit for the year ended 31 December 2024 of $1,679.3 million (2023: $103.3 million). The Financial Statements of Convatec Group Plc (registered number 10361298) were approved by the Board of Directors and authorised for issue on 25 February 2025. They were signed on its behalf by: Jonny Mason Karim Bitar Chief Financial Officer Chief Executive Officer 201 Convatec Group Plc Annual Report and Accounts 2024 Governance Financial statements Additional information Overview Strategic report Company financial statements continued COMPANY STATEMENT OF CHANGES IN EQUITY For the year ended 31 December 2024 Share capital Share premium Own shares Retained surplus Merger reserve Cumulative translation reserve Other reserves Total equity $m $m $m $m $m $m $m $m At 1 January 2023 250.7 165.7 (1.5) 1,562.9 1,765.6 3.7 91.3 3,838.4 Net profit – – – 103.3 – – – 103.3 Foreign currency translation adjustment – – – – – 202.9 – 202.9 Total comprehensive income – – – 103.3 – 202.9 – 306.2 Dividends paid – – – (110.7) – – – (110.7) Scrip dividend 0.8 15.3 – (16.1) – – – – Share-based payments – – – – – – 14.5 14.5 Share awards vested – – 0.9 – – – 1.5 2.4 Excess deferred tax benefit from share-based payments – – – – – – 0.3 0.3 At 31 December 2023 251.5 181.0 (0.6) 1,539.4 1,765.6 206.6 107.6 4,051.1 Net profit – – – 1,679.3 – – – 1,679.3 Foreign currency translation adjustment – – – – – (94.2) – (94.2) Total comprehensive income – – – 1,679.3 – (94.2) – 1,585.1 Dividends paid – – – (130.2) – – – (130.2) Share-based payments – – – – – – 19.7 19.7 Share awards vested – – 7.0 – – – (5.3) 1.7 Excess deferred tax benefit from share-based payments – – – – – – (0.8) (0.8) Purchase of shares by Employee Benefit Trust – – (22.8) – – – – (22.8) At 31 December 2024 251.5 181.0 (16.4) 3,088.5 1,765.6 112.4 121.2 5,503.8 For further information on share-based payments, refer to Note 19 – Share-based payments, and for dividends refer to Note 18 – Dividends to the Consolidated Financial Statements. 202 Convatec Group Plc Annual Report and Accounts 2024 Financial statements 1. BASIS OF PREPARATION This section describes the Company’s material accounting policies in respect of the Company Financial Statements and explains critical accounting judgements and estimates that management has identified as having a potentially material impact to the Company. Specific accounting policies relating to the Notes to the Company Financial Statements are described within that note. 1.1 General information The separate Financial Statements of the Company are presented as required by the Companies Act 2006. The Company meets the definition of a qualifying entity under Financial Reporting Standard 100 (FRS 100) issued by the Financial Reporting Council (FRC). Accordingly, the Financial Statements have been prepared in accordance with Financial Reporting Standard 101 (FRS 101) Reduced Disclosure Framework as issued by the FRC. As permitted by FRS 101, the Company has taken advantage of the disclosure exemptions available under that standard in respect of share-based payments, financial instruments, capital management, comparative information, presentation of a cash flow statement, new but not yet effective IFRSs and certain related party transactions. As permitted by s408 of the Companies Act 2006 the Company has elected not to present its own Income Statement for the current or prior year. The profit attributable to the Company is disclosed in the footnote to the Company’s Statement of Financial Position. Where required, equivalent disclosures are given in the Consolidated Financial Statements. The auditor’s remuneration for audit and other services is disclosed in Note 3.3 – Auditor’s remuneration to the Consolidated Financial Statements. 1.2 Material accounting policies Basis of accounting The Financial Statements have been prepared on the historical cost basis. The principal accounting policies adopted are the same as those set out in the Consolidated Financial Statements except as noted below. Foreign currencies The functional currency of the Company is Sterling, being the currency of the primary economic environment in which it operates. The Company has adopted US dollars as the presentation currency for its Financial Statements, in line with the presentation currency for the Consolidated Financial Statements. For the purpose of presenting individual company financial statements, assets and liabilities of the Company are translated into US dollars at exchange rates prevailing on the balance sheet date. Equity is translated into US dollars at the historic rate. Income and expense items are translated at the average exchange rates for the period, unless exchange rates fluctuate significantly during that period, in which case the exchange rates at the date of transactions are used. Exchange differences arising, if any, are recognised in other comprehensive income and accumulated in a separate component of equity, the cumulative translation reserve, in accordance with IAS 21, The Effects of Changes in Foreign Exchange Rates . Share-based payments The Company has implemented the generally accepted accounting principle for accounting for share-based payments with subsidiary undertakings under FRS 101, whereby the Company has granted rights to issue its shares to employees of its subsidiary undertakings under an equity-settled arrangement and the subsidiaries have not reimbursed the Company for these rights. Under this arrangement, the Company treats the share-based payment recognised in the subsidiary's financial statements as an increase in the cost of investment in the subsidiary and credits equity with an equal amount. Investments Investments in Group undertakings are stated at cost less any provision for impairment. The Company assesses investments for impairment whenever events or changes in circumstances indicate that the carrying value of an investment may not be recoverable. If any such indication of impairment exists, the Company makes an estimate of the recoverable amount. If the recoverable amount of the investment is less than the carrying amount of the investment, the investment is considered to be impaired and is written down to its recoverable amount. Any impairment charge is initially taken to retained earnings and subsequently offset against any merger reserve by way of a reserves transfer. At the end of each reporting period, the Company assesses whether there is any indication that previously recognised impairment losses may no longer exist or may have decreased. If such an indication exists, the Company should estimate the recoverable amount to determine if all or part of the previously recognised impairment loss should be reversed. 1.3 Critical accounting judgements and key sources of estimation uncertainty The preparation of the Company's Financial Statements in accordance with FRS 101 requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported value of assets and liabilities, income and expense. Actual results may differ from these estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. There were no critical accounting judgements that would have a significant effect on the amounts recognised in the parent company financial statements or key sources of estimation uncertainty at the balance sheet date that would have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year 203 Convatec Group Plc Annual Report and Accounts 2024 Governance Financial statements Additional information Overview Strategic report Company financial statements continued 2. STAFF COSTS The Executive Directors of Convatec Group Plc are the only employees of the Company. The remuneration of the Executive Directors is set out on pages 114 to 144 within the Remuneration Committee report. Their aggregate remuneration comprised: 2024 2023 $m $m Wages and salaries 4.2 3.8 Share-based payment expense 5.2 3.7 Social security costs 1.1 1.1 Pension-related costs 0.1 0.2 Total 10.6 8.8 Average monthly number of employees (including Executive Directors) was 2 (2023: 2). 3. INVESTMENTS IN SUBSIDIARIES Investments in subsidiaries represent the cost of the Company’s investment in its subsidiary undertakings, net of any impairment charges. Refer to pages 207 to 209 for details of all the Company’s direct and indirect holdings. Cost Impairment Net book value $m $m $m At 1 January 2023 5,350.1 (1,531.2) 3,818.9 Capital contributions in respect of share-based payments to employees of subsidiaries 12.1 – 12.1 Reduction due to reimbursement upon exercised awards (16.4) – (16.4) Foreign exchange 286.9 (82.1) 204.8 At 31 December 2023 5,632.7 (1,613.3) 4,019.4 Capital contributions in respect of share-based payments to employees of subsidiaries 14.5 – 14.5 Reduction due to reimbursement upon exercised awards (22.6) – (22.6) Reversal of impairment loss – 1,613.8 1,613.8 Foreign exchange (95.0) (0.5) (95.5) At 31 December 2024 5,529.6 – 5,529.6 The Company performed an assessment of the recoverable amount of the investments in subsidiaries at 31 December 2024. The recoverable amount was determined with reference to IAS 36 by assessing the value in use of the investments based on the discounted cash flows. This resulted in a complete reversal of the previous impairment from 2018 of $1,613.8 million, which has been taken to the retained surplus account. Refer to Note 8 for further details. In undertaking this assessment, the company has considered both external and internal sources of information, as well as any observable indications that may suggest that the impairment had reversed. The future cash flows are determined using the latest available Board-approved forecasts and strategic plans. These forecasts and strategic plans are based on specific assumptions during the five-year planning period with respect to revenue, results of operations, working capital, capital investments and other general assumptions for the projected period. The forecast assumptions, that derive the future cash flows, are based on the historical results of the Group combined with external market information and defined strategic initiatives. The recoverable amount has been estimated by the application of an appropriate discount rate to these future cash flows. The share price of Convatec Group Plc at 31 December 2024 was £2.21 (2023: £2.44), resulting in a market valuation of £4,534.1 million ($5,674.9 million) (2023: £5,006 million ($6,373 million)). The following UK subsidiaries are exempt from the requirement to file audited accounts by virtue of Section 479A of the Companies Act 2006: Company registration number Convatec Group Holdings Limited 12698069 Starlight Science Limited 14419310 Convatec International U.K. Limited 06622355 204 Convatec Group Plc Annual Report and Accounts 2024 Financial statements 4. DEFERRED TAX ASSETS Deferred tax assets mainly arise in relation to timing differences on the exercise of share-based awards. $m At 1 January 2023 2.6 Movement in income statement 0.1 Movement in other comprehensive income 0.3 Foreign exchange – At 31 December 2023 3.0 Movement in income statement 0.1 Movement in other comprehensive income (0.8) Foreign exchange (0.1) At 31 December 2024 2.2 The deferred tax asset consists of deferred tax on the following items: 2024 2023 $m $m Share-based payments 2.2 3.0 At 31 December 2.2 3.0 Deferred tax assets are only recognised where it is probably that future profit will be available to utilise the tax losses. 5. OTHER RECEIVABLES Other receivables consist of amounts due from Group undertakings, other receivables and prepaid insurance. 2024 2023 $m $m Amounts falling due within one year: Amounts owed by Group undertakings 31.0 23.0 Other receivables 0.2 10.3 Prepayments 0.2 0.1 31.4 33.4 Included in the amounts owed by Group undertakings at 31 December 2023 were intercompany loans of $6.3 million with a variable interest rate set at a margin 35bps below SONIA. In 2024, this was in a payable position and is discussed in Note 6 – Trade and other payables below. All amounts owed by Group undertakings are unsecured and are expected to be realised within 12 months of the reporting date. 6. TRADE AND OTHER PAYABLES Trade payables consist of amounts payable to third parties related predominantly to the Company’s corporate responsibilities. Other payables represent amounts owed to Group undertakings, accruals and other taxation and social security. 2024 2023 $m $m Amounts falling due within one year: Trade payables 0.3 1.1 Amounts owed to Group undertakings 54.6 – Other taxation and social security 1.3 0.8 Accruals 3.1 2.7 59.3 4.6 Included in the amounts owed to Group undertakings at 31 December 2024 are intercompany loans of $53.9 million (2023: nil) with a variable interest rate set at a margin 200bps above SONIA. All amounts owed to Group undertakings are unsecured and are repayable on demand. 7. RESERVES All reserve balances included in this note are components of equity and are non-distributable. Share capital, share premium and own shares Details of the Company's share capital, share premium and own shares are detailed in Note 17 – Share capital and reserves to the Consolidated Financial Statements. 205 Convatec Group Plc Annual Report and Accounts 2024 Governance Financial statements Additional information Overview Strategic report Company financial statements continued 7. RESERVES (CONTINUED) Merger reserve The merger reserve represents the fair value in excess of the par value of shares issued as part of a share exchange upon incorporation of the Company. Currency translation reserve The currency translation reserve comprise the exchange differences arising on the translation of the assets and liabilities of the Company into US dollars at the prevailing balance sheet rate and income and expense items being translated at the average exchange rates for the period. Other reserves Other reserves are in respect of movements on equity-settled share-based payments. 8. DISTRIBUTABLE RESERVES As the Company is a holding company with no direct operations the capacity of the Company to make dividend payments is primarily derived from dividends received from subsidiary companies. As disclosed in Note 3, a previous impairment of $1,613.8 million in respect of investments in subsidiaries was reversed during the year and taken to the retained surplus account. This amount is treated as non-distributable. At 31 December 2024, the retained surplus of the Company was $3,088.5 million (2023: $1,539.4 million) of which $1,474.7 million (2023: $1,539.4 million) was realised and distributable. Details of the considerations and rationale for the distribution of dividends are given in the Directors’ report on page 145. 9. FINANCIAL GUARANTEES The Company has guaranteed certain external borrowings of subsidiaries which at 31 December 2024 amounted to $1,133.5 million (2023: $1,240.6 million). The likelihood of these guarantees being called upon is considered to be remote and therefore the estimated fair value of these guarantees is considered to be nil at 31 December 2024 (2023: nil). 10. SUBSEQUENT EVENTS On 25 February 2025, the Board proposed the final dividend in respect of 2024 subject to shareholder approval at the Annual General Meeting on 22 May 2025, to be distributed on 29 May 2025. See Note 18 – Dividends to the Consolidated Financial Statements for further details. 206 Convatec Group Plc Annual Report and Accounts 2024 Financial statements Details of the Company’s subsidiaries and associated undertakings at 31 December 2024 are as follows: Name Place of business and registered oﬃce Portion of ownership interest % Portion of voting power held % Akers & Dickinson Limited 1 United Kingdom 100% 100% Allied Medical (UK) Services Limited 1 United Kingdom 100% 100% Alpha-Med (Medical & Surgical) Limited 1 United Kingdom 100% 100% Amcare Limited 1 United Kingdom 100% 100% Arthur Wood Limited 1 United Kingdom 100% 100% B.C.A. Direct Limited 1 United Kingdom 100% 100% Bradgate-Unitech Limited 1 United Kingdom 100% 100% Convatec Accessories Limited 1 United Kingdom 100% 100% Convatec Holdings U.K. Limited 2 United Kingdom 100% 100% Convatec NAP Limited 1 United Kingdom 100% 100% Convatec Speciality Fibres Limited 1 United Kingdom 100% 100% Convatec International U.K. Limited 2 United Kingdom 100% 100% Convatec Limited 1 United Kingdom 100% 100% Farnhurst Medical Limited 1 United Kingdom 100% 100% Lance Blades Limited 1 United Kingdom 100% 100% M.S.B. Limited 1 United Kingdom 100% 100% Needle Industries (Sheﬃeld) Limited 1 United Kingdom 100% 100% Nottingham Medical Equipment Limited 1 United Kingdom 100% 100% Novacare UK Limited 1 United Kingdom 100% 100% Pharma-Plast Limited 1 United Kingdom 100% 100% Project Dragon SPV Limited 2 United Kingdom 100% 100% Resus Positive Limited 1 United Kingdom 100% 100% Rotax Razor Company Limited 1 United Kingdom 100% 100% Shrimpton & Fletcher Limited 1 United Kingdom 100% 100% Starlight Science Limited 1 United Kingdom 100% 100% Steriseal Limited 1 United Kingdom 100% 100% SureCalm Healthcare Holdings Limited 1 United Kingdom 100% 100% SureCalm Healthcare Ltd 1 United Kingdom 100% 100% SureCalm Pharmacy Limited 1 United Kingdom 100% 100% Unomedical Developments Limited 1 United Kingdom 100% 100% Unomedical Holdings Limited 1 United Kingdom 100% 100% Unomedical Limited 1 United Kingdom 100% 100% Unoplast (U.K.) Limited 1 United Kingdom 100% 100% Convatec Finance Holdings Limited 2 United Kingdom 100% 100% Convatec Management Holdings Limited 1 United Kingdom 100% 100% Convatec Group Holdings Limited 2 United Kingdom 100% 100% Cidron Healthcare Limited 3 Jersey 100% 100% Convatec Healthcare Ireland Limited 4 Ireland 100% 100% Convatec France Holdings SAS 5 France 100% 100% Laboratoires ConvaTec SAS 5 France 100% 100% Livramedom SAS 11 France 100% 100% Convatec Healthcare D S.à.r.l. 6 Luxembourg 100% 100% Convatec Spain Holdings, S.L. 7 Spain 100% 100% Convatec Spain S.L. 7 Spain 100% 100% CVT Business Services, Unipessoal Lda. 8 Portugal 100% 100% KVTech Portugal – Produtos Medicos Unipessoal Ltda 8 Portugal 100% 100% Convatec OY 9 Finland 100% 100% Convatec (Switzerland) GmbH 10 Switzerland 100% 100% Convatec International Services GmbH 10 Switzerland 100% 100% Convatec (Austria) GmbH 12 Austria 100% 100% Convatec Italia S.r.l. 13 Italy 100% 100% Convatec Hellas Medical Products S.A. 14 Greece 100% 100% Convatec Polska Sp. Z.o.o 15 Poland 100% 100% Convatec Ceska Republika s.r.o. 16 Czech Republic 100% 100% Convatec (Australia) PTY Limited 17 Australia 100% 100% Subsidiary and related undertakings 207 Convatec Group Plc Annual Report and Accounts 2024 Governance Financial statements Additional information Overview Strategic report Name Place of business and registered oﬃce Portion of ownership interest % Portion of voting power held % Convatec (New Zealand) Limited 18 New Zealand 100% 100% Convatec Sağlik Ürünleri Limited Şirketi 19 Turkey 100% 100% Convatec (Sweden) AB 20 Sweden 100% 100% Convatec Norway AS 21 Norway 100% 100% Convatec (Germany) GmbH 22 Germany 100% 100% EuroTec GmbH 23 Germany 100% 100% Unomedical s.r.o. 24 Slovakia 100% 100% EuroTec B.V. 25 Netherlands 100% 100% EuroTec Beheer B.V. 25 Netherlands 100% 100% Convatec Nederland B.V. 26 Netherlands 100% 100% Convatec Belgium BVBA 27 Belgium 100% 100% EuroTec BV (Belguim Branch) 28 Belgium 100% 100% Papyro-Tex A/S 29 Denmark 100% 100% Convatec Denmark A/S 30 Denmark 100% 100% Unomedical A/S 31 Denmark 100% 100% Convatec Denmark Holdings ApS 32 Denmark 100% 100% Convatec South Africa (PTY) Limited 33 South Africa 100% 100% ConvaCare Medical South Africa (PTY) Ltd 33 South Africa 100% 100% Convatec Middle East & Africa LLC 34 Egypt 100% 100% Convatec Middle East FZ-LLC 35 United Arab Emirates 100% 100% Convatec (Singapore) PTE Limited 36 Singapore 100% 100% Convatec Malaysia Sdn Bhd 37 Malaysia 100% 100% Convatec China Limited (Beijing Branch) 38 China 100% 100% Convatec China Limited (Guang Zhou Branch) 39 China 100% 100% Convatec China Limited 40 China 100% 100% Boston Medical Device Dominicana S.R.L. 41 Dominican Republic 100% 100% Convatec Hong Kong Limited 42 Hong Kong 100% 100% Convatec Japan KK 43 Japan 100% 100% Convatec (Singapore) PTE Limited (Taiwan Branch) 44 Taiwan 100% 100% Convatec (Thailand) Co. Limited 45 Thailand 100% 100% ZAO ConvaTec 46* Russia 100% 100% Convatec Korea, Ltd 47 Korea 100% 100% Convatec Argentina SRL 48 Argentina 100% 100% Convatec Canada Limited 49 Canada 100% 100% Unomedical S.A de C.V. 50 Mexico 100% 100% Convatec Medical Care Mexico S. de R.L. de C.V. 51 Mexico 100% 100% Boston Medical Device de México, S. de R.L. de C.V. 51 Mexico 100% 100% Unomedical Devices S.A. de C.V. 52 Mexico 100% 100% Convatec Peru S.A.C. 53 Peru 100% 100% Convatec Brasil Ltda. 74 Brazil 100% 100% Convatec Medical Care Assistência a Paciente Ltda 54 Brazil 100% 100% Convatec Colombia Ltda. 55 Colombia 100% 100% Boston Medical Care S.A.S IPS 56 Colombia 100% 100% Convatec Medical Care S.P.A 57 Chile 100% 100% Convatec Chile S.A. 57 Chile 100% 100% Convatec Ecuador S.A. 58 Ecuador 100% 100% Boston Medical Device de Venezuela, C.A. 59 Venezuela 100% 100% Convatec India Private Limited 60 India 100% 100% 180 Medical Acquisition Inc. 61 US 100% 100% 180 Medical Holdings Inc. 61 US 100% 100% 180 Medical Inc. 61 US 100% 100% 180 Medical Distribution Inc. 62 US 100% 100% AbViser Medical, LLC 63 US 100% 100% Boston Medical Device, Inc. 64 US 100% 100% Boston Med Device International, LLC 64 US 100% 100% Convatec Dominican Republic Inc. 62 US 100% 100% Subsidiary and related undertakings continued 208 Convatec Group Plc Annual Report and Accounts 2024 Financial statements Name Place of business and registered oﬃce Portion of ownership interest % Portion of voting power held % Convatec Inc. 64 US 100% 100% Convatec Technologies Inc. 65 US 100% 100% Woodbury Holdings, Inc. 66 US 100% 100% WPI Acquisition Corporation 66 US 100% 100% WPI Holdings Corporation 66 US 100% 100% Wilmington Medical Supply, Inc. 67 US 100% 100% PRN Medical Services, LLC 68 US 100% 100% PRNMS Investments LLC 68 US 100% 100% Symbius Medical Inc. 68 US 100% 100% South Shore Medical Supply, Inc. 69 US 100% 100% Unomedical America, Inc. 64 US 100% 100% Unomedical, Inc. 64 US 100% 100% J&R Medical, LLC 70 US 100% 100% Cure Medical LLC 71 US 100% 100% Convatec Triad Life Sciences, LLC 62 US 100% 100% Convatec NAP Holdings, Inc. 64 US 100% 100% A Better Choice Medical Supply, L.L.C 72 US 100% 100% All American Medical Supply Corp. 73 US 100% 100% 1. GDC First Avenue, Deeside Industrial Park, Deeside, Flintshire CH5 2NU, UK 2. 20 Eastbourne Terrace, Paddington, London W2 6LG, UK 3. 44 Esplanade, St. Helier, Jersey, JE4 9WG, Channel Islands 4. 10 Earlsfort Terrace, Dublin 2, D02 T380, Ireland 5. 89, Boulevard National, 92250 La Garenne- Colombes, France 6. 12C, rue Guillaume Kroll, L-1882, Luxembourg 7. C/Constitucion, Num 1, Planta 4, Puerta 4, 08960 Sant Just Desvern, Barcelona, Spain 8. Av. Duque de Loulé, 106, 4th Floor, 1050-093, Lisboa Portugal 9. Karhumäentie 3, 01530 Vantaa, Finland 10. Herrenacker15, 8200 Schaﬀhausen, Switzerland 11. 111 Avenue de la Roque Forcade, 13420 Gemenos, France 12. Schubertring 6, 1010 Wien, Austria 13. Via della Sierra Nevada, 60-00144 Rome, Italy 14. 392A Mesogeion Avenue, Ag. Paraskevi, Athens, 15341, Greece 15. Rondo Daszyńskiego 1, 00-843Warszawa, Poland 16. Olivova 2096/4, Prague 1, 11000, Czech Republic 17. C/o Intertrust Australia Pty Ltd, Suite 2, Level 25, 100 Miller Street, North Sydney, NSW 2060, Australia 18. C/o Intertrust New Zealand, Level 1, 33 Federal Street, Auckland, 1010, New Zealand 19. Ayazağa Mah.Mimar Sinan SK. A Blok No:21A İC Kapi No:9 Sariyer, Istanbul, Turkey 20. Box 3096, 169 03 Solna, Stockholm, Sweden 21. Wergelandsveien 7, 0167 Oslo, Norway 22. Mühldorfstrasse 8, 81671 Munich, Germany 23. Solingerstrasse 93 40764 Langenfeld, Germany 24. Priemyselný Park 3, 071 01 Michalovce, Slovakia 25. Schotsbossenstraat 8, 4705AG Roosendaal, Netherlands 26. Papendorpseweg 95, 3528 BJ, Utrecht, Netherlands 27. Parc d’Alliance, Boulevard de France 9, B-1420 Braine l’Alleud, Belgium 28. Stationsstraat 35, 2950 Kapellen, Belgium 29. ConvaTec Harlev Skinderskovvej 32-36, 2730, Herlev, Denmark 30. Transformervej 14, 2860 Søborg, Denmark 31. Åholmvej 1-3, 4320 Lejre, Denmark 32. Åholmvej 1 Osted, 4320 Lejre, Denmark 33. Workshop 17, 16 Baker Street, Rosebank, Johannesburg, Gauteng 2196, South Africa 34. Oﬃce No. M017, Raya Building, 70 Street, New Cairo Banks, Cairo, Egypt 35. 604N, 6th Floor, Dubai Science Park Park (DSP) Towers North, Dubai Science Park, Dubai, United Arab Emirates 36. 456 Alexandra Road, #18-02 Fragrance Empire Building, Singapore 119962, Singapore 37. 18-12 Menara Q Sentral, 2A Jalan Stesen Sentral 2, Kuala Lumpur Wilayah Persekutuan 50470 Malaysia 38. Unit 805, 8F Jinbao Tower, No.89 Jinbao Street Dongcheng District, Beijing 100005, China. 39. Unit 808, Level 8, Fortune plaza, No.116 Ti Yu Dong Road, Tianhe District, Guangzhou City, Guangdong, 510620, China. 40. Unit 1105-1106, Crystal Plaza Oﬃce Tower 1, No.1359 Yaolong Road, China (Shanghai) Pilot Free Trade Zone, Shanghai 200124, China 41. Arzobispo Portes No. 659, Ciudad Nueva, Santo Domingo, Dominican Republic 42. Unit 1901 Yue Xiu Bldg 160–174, Lockhart Road, Wan Chai, Hong Kong 43. 1-1-7 Kouraku, Bunkyo-ku, Tokyo 112-0004, Japan 44. 5F.-4, No. 57, Fuxing N. Rd, Songshan Dist., Taipei City, 10595, Taiwan 45. 9th Floor, M. Thai Tower, All Seasons Place, 87 Wireless Road, Lumphini, Phatum Wan, Bangkok, 10330, Thailand 46. Kosmodamianskaya nab. 52, building 1, 9th ﬂoor, 115054, Moscow, Russia 47. 4F, American Standard B/D, Yeongdongdaero 112gil 66, Gangnam-Gu, Seoul, 06083, Republic of Korea 48. Calle Cerrito No.1070 Tercer Piso, Oﬁcina 71, Buenos Aires, Argentina 49. 600-1741 Lower Water Street, Halifax, Nova Scotia B3J 0J2, Canada 50. Avenida Industrial Falcón, L7, Parque Industrial del Norte, Reynosa Tamps, C.P. 88736, Mexico 51. Avenida Insurgentes Sur 619, 3° Piso, Nápoles, Ciudad de Mexico 03810, Mexico 52. Av. Fomento Industrial L9 M3, Parque Industrial del Norte, Reynosa Tamps, C.P. 88736, Mexico 53. Cal. Monte Rosa Nro 255 Int. 301 Urb. Chacarilla, Lima, Santiago DE Surco, Perú 54. Rua Alexandre Dumas, 2100,15º. Andar, Ed Corporate Plaza, Conj 151 e 152, Chácará Stº Antonio, São Paulo, 04717-913, Brazil 55. Av. Carrera 45 #108 – 27 Centro Empresarial Paralelo 108, Bogotá, DC Codigo Postal 111111, Colombia 56. Calle 82 # 18-31, Bogotá, Colombia 57. Av. Andres Bello #2325, Oﬁcina 8, Santiago, Chile 58. Francisco Robles E4-136 y Av. Amazonas, Ediﬁcio Proinco Calisto, Piso 12, Quito, EC170526, Ecuador 59. Av. Eugenio Mendoza Urb. La Castellana, Torre La Castellana Piso 7, Caracas Venezuela 60. Unit No 206, 2nd Floor Tower B, Digital Greens, Sector 61, Golf Course Road, Gurgaon 122102, Haryana, India 61. 8516 Northwest Expressway, Oklahoma City, OK 73162-601, US 62. 251 Little Falls Drive, Wilmington, DE 19808, US 63. 79 W 4500 S, Suite 18, Salt Lake City UT 84107-2647, US 64. 200 Connell Drive, Suite 1000, Berkeley Heights, NJ 07922, US 65. C/o CSC, 112 North Curry Street, Carson City, NV 89703, US 66. 725 Primera Blvd, Suite 230, Lake Mary, FL 32746-2127, US 67. 5815 Oleander Drive, Unit 310, Wilmington, NC 28403-4853, US 68. 16610 N. Black Canyon Highway, Suite 109, Phoenix, AZ 85053-7551, US 69. 58 Norfolk Avenue, Unit 2, South Easton, MA 02375-1907, US 70. 4625 Southwest Freeway, Suite 800, Houston, TX 77027-7105, US 71. 3471 Via Lido, Suite 211, Newport Beach, CA 92663, US 72. 3100 Dixie Hwy, Waterford Twp, MI 48328, US 73. 5493 Merrick Road, Massapequa, NY 11758, US 74. Floor 2, Room 21/22, Av Pres. Juscelino Kubitschek 50, New Conception Village, Sao Paulo, Brazil * Directly held investment by Convatec Group Plc ** The Group discontinued operations (including all sales and marketing activities) in Russia in 2022. We are in the process of managing our exit from the Group’s dormant entity, and from 1 March 2025, will have no remaining employees in the country. We have no plans to recommence operations. 209 Convatec Group Plc Annual Report and Accounts 2024 Governance Financial statements Additional information Overview Strategic report Internet share dealing Please note that, if you wish to purchase shares in the Company, you may do so through a bank or stockbroker. Alternatively, please go to www.computershare.com/dealing/uk for a range of dealing services made available by Computershare; this service is only available to shareholders in the UK. This service provides shareholders with a convenient way to buy or sell the Company’s ordinary shares on the London Stock Exchange. The commission is 1.4%, subject to a minimum charge of £40. In addition, stamp duty, currently 0.5%, is payable on purchases. Real-time dealing is available during market hours. In addition, there is a convenient facility to place your order outside of market hours. Up to 90-day limit orders are available for sales. Before you can trade you will need to register for the service. To access go to www.computershare.com/dealing/uk. Shareholders should have their SRN available. The SRN appears on share certiﬁcates as it will be required as part of the registration process. A bank debit card will be required for purchases. Postal share dealing Please note this service is, at present, only available to shareholders resident in the UK. The commission is 1.4% plus a charge of £40. In addition, stamp duty, currently 0.5%, is payable on purchases. The service is available from 8.00am to 4.30pm Monday to Friday, excluding bank holidays, on telephone number +44 (0) 370 703 0084. Before you trade you will need to register for this service. This can be done by going online at www.computershare.com/dealing/uk. Shareholders should have their SRN ready when making the call. The SRN appears on share certiﬁcates. A bank debit card will be required for purchases. Detailed terms and conditions are available on request by telephoning +44 (0) 370 703 0084. Please note that due to the regulations in the UK, Computershare are required to check that you have read and accepted their Terms and Conditions before being able to trade, which could delay your ﬁrst telephone trade. If you wish to trade quickly, we suggest visiting their website and registering online ﬁrst. Our corporate website: www.convatecgroup.com Information about our Stock Exchange announcements, key dates in our ﬁnancial calendar, our share price information and background information is available on our corporate website at www.convatecgroup.com/investors. – We will release our interim results for the six months ended 30 June 2025 on 29 July 2025. Shareholders may also receive information by email by signing up to the news alert service available at www.convatecgroup.com/investors/ sign-up-for-more-information. Share price information Our closing share price as at 31 December 2024 was 221.2p. Managing your shareholding You can manage your shareholding online by registering to use Investor Centre, a free and secure website. Investor Centre is available 24 hours a day, 365 days a year. To ﬁnd out more about Investor Centre visit www.investorcentre.co.uk. Registration is a straightforward process and all you will need is your shareholder reference number (SRN) and registered address details. Shareholders who prefer not to manage their shareholding online can contact our Registrars, Computershare Investor Services PLC, who manage our share register. The shareholder helpline number is +44 (0) 370 703 6219 and further information about Computershare Investor Services PLC is set out below. Share fraud We would like to warn all of our shareholders to be very wary of any unsolicited telephone calls or letters which oﬀer investment advice, oﬀer to buy your shares at a discounted price, or sell them at an inﬂated price or oﬀers free company reports. This type of call should be treated as an investment scam. Further information about investment scams and how they should be reported is available at www.convatecgroup.com/ investors/shareholder-services/. Company Secretary and registered office James Kerton 7th Floor, 20 Eastbourne Terrace Paddington London W2 6LG United Kingdom Registrar Computershare Investor Services PLC The Pavilions Bridgwater Road Bristol BS13 8AE United Kingdom Telephone: +44 (0) 370 703 6219 Contact: www.investorcentre.co.uk/ contactus Auditor Deloitte LLP Brokers UBS Limited Solicitors Freshﬁelds Bruckhaus Deringer LLP Shareholder information 210 Convatec Group Plc Annual Report and Accounts 2024 Additional information Glossary AAALAC Assessment and Accreditation of Laboratory Animal Care. Alternative performance measures (APMs) Certain ﬁnancial measures in this Annual Report and Accounts not prepared in accordance with IFRS and used as a meaningful supplement to reported measures. Also referred to as adjusting items. Advanced Wound Care (AWC) Advanced dressings for the management of acute and chronic wounds resulting from ongoing conditions, such as diabetes, and acute conditions resulting from traumatic injury and burns. AGM Annual General Meeting of the Company. AI Artiﬁcial intelligence. ARA Annual Report and Accounts. ARC Audit and Risk Committee. Articles The Articles of Association of the Company for the time being in force. ATT Advanced Tissue Technologies. Base erosion and proﬁt shifting (BEPS) initiative OECD initiative which seeks to close gaps in international taxation for companies that allegedly avoid tax or reduce tax burden in their home country by engaging in tax inversions. Basic earnings per share Net proﬁt available for Convatec shareholders divided by the weighted average number of ordinary shares in issue during the year. Basis points (bps) A unit of measurement that represents one-hundredth of one percent, or 0.01%. BMS Bristol Myers Squibb. Board The Board of Directors of Convatec Group Plc. Book tax rate The tax charge in the income statement as a percentage of proﬁt before tax. Compound annual growth rate (CAGR) CAGR shows the rate of growth over a certain period of time, expressed in annual percentage terms. Capital expenditure (capex) Purchases of property, plant and equipment and intangible assets. Cash- generating units (CGUs) The smallest identiﬁable groups of assets that generate cash inﬂows that are largely independent of the cash inﬂows from other assets or groups of assets. CE mark Certiﬁcation mark that indicates conformity with health, safety, and environmental protection standards for products sold within the European Economic Area. CELT Convatec Executive Leadership Team. CHW Community Health Worker Code UK Corporate Governance Code 2018 in eﬀect from 1 January 2019, issued by the FRC. Code of conduct Our code of conduct which covers business conduct and compliance issues, including bribery and corruption. CODM Chief Operating Decision Maker. CoE Centre of Excellence. COGS Cost of Goods Sold. Companies Act Companies Act 2006, as amended, of England and Wales. Company or parent company Convatec Group Plc. Constant currency growth Constant currency growth is calculated by applying the applicable prior period average exchange rates to the Group’s actual performance in the respective period. Continence Care (CC) Products and services for people with urinary continence issues related to spinal cord injuries, neurological disease, prostate enlargement and other causes. COSO The Committee of Sponsoring Organizations, a global organisation providing a framework for risk management, internal control, governance and fraud deterrence. CPM Complaints per million. CR Corporate responsibility. CSRD The EU Corporate Sustainability Reporting Directive. DE&I Diversity, equity and inclusion. Derivatives Financial instruments used to reduce risk, the price of which is derived from an underlying asset, index or rate. Diluted earnings per share The calculation of diluted earnings per share, includes the dilutive impact of share awards where the average market price of the Group’s ordinary shares exceeds the exercise price. Director A member of the Board of Directors of Convatec Group Plc. Disclosure guidance and transparency rules (DTRs) FCA disclosure guidance and transparency rules with which the Group must comply. EBITDA Earnings before interest, tax, depreciation and amortisation. EcoVadis Third-party platform used for supplier risk assessment and ESG engagement. Eﬀective tax rate (ETR) The tax charge in the income statement as a percentage of proﬁt before tax. EPS Earnings per share. Equity cash conversion Free cash ﬂow to equity divided by adjusted net proﬁt. EHS Environment, Health and Safety. eNPS Employee Net Promoter Score. ERG Employee Resource Group. ESG Environmental, Social and Governance. ESMA European Securities and Markets Authority. ESOS Energy Savings Opportunity Scheme. EU European Union. EURIBOR Euro Interbank Oﬀered Rate. FBU Fair, Balanced and Understandable. Statement made by the Board that considers the Annual Report and Accounts, taken as a whole, are fair, balanced and understandable. The Board is supported by the Audit and Risk Committee. FCA Financial Conduct Authority. FDA US Food and Drug Administration. FISBE Convatec’s corporate strategy: Focus, Innovate, Simplify, Build, Execute. FRC Financial Reporting Council. FX Foreign exchange. G&A General & Administrative. 211 Convatec Group Plc Annual Report and Accounts 2024 Governance Financial statements Additional information Overview Strategic report GBS Global Business Services (located in Lisbon, Bogotá and Kuala Lumpur). GDGs Green Design Guidelines. GDP Gross Domestic Product. GDPR General Data Protection Regulation. GEM Global emerging markets. GHG emissions Greenhouse gas emissions. Group The Company and its subsidiaries. GPO Group purchasing organisations. GQO Global Quality & Operations. H&S Health and safety. HCP Healthcare professional. Home Services Group (HSG) The Group’s US home services business unit for distribution catheter and ostomy products. IASB International Accounting Standards Board – the independent standard setting body of the IFRS Foundation. IBOR Interbank Oﬀered Rate. IDA Industrial Denatured Alcohol. IEA International Energy Agency, an autonomous intergovernmental organisation providing policy recommendations and analysis and data on the global energy sector. IFRS International Financial Reporting Standards as issued by the IASB. IFRIC International Financial Reporting Interpretations as issued by the IASB. Infusion Care (IC) Disposable infusion sets used with insulin pumps for diabetes or with continuous infusion treatments for conditions such as Parkinson’s diesease. IP Intellectual property. IR Investor Relations. KPI – Key Performance Indicator Financial and non-ﬁnancial measures that the Group uses to assess performance and strategic progress. LCDs Local Coverage Determinations (eligibility for local Medicare coverage in the US). Leverage Net debt (excluding leases) divided by adjusted EBITDA. LTIP Long-term incentive plan. LTIR Lost time injury rate. M&A Mergers and acquisitions. MAR Market abuse regulation. MDR Medical Device Regulations introduced in the EU with required transition by May 2021. MDR imposes rigorous requirements in relation to a number of areas including clinical data and post market surveillance. MedTech Medical technology. Net debt Borrowings less cash and cash equivalents and excluding lease liabilities. NGO Non-governmental organisation. NHS UK National Health Service. OEC Oﬃce of Ethics and Compliance. OECD Organisation for Economic Cooperation and Development. Operating cash conversion Operating cash ﬂow divided by adjusted operating proﬁt. Opex Operating expenses, being the total of selling and distribution expenses, general administrative expenses and research and development, and other operating expenses. Organic growth Period-over-period growth at constant currency, adjusted for: Livramedom (September 2024), Starlight Science Limited (April 2023), A Better Choice Medical Supply (July 2023) and All American Medical Supply (October 2023) acquisitions; and the discontinuation of hospital care, related industrial sales and associated Russia operations. Organisational Health Index (OHI) McKinsey index tracking organisational health that drives performance. Ostomy Care (OC) Devices, accessories and services for people with a stoma (a surgically created opening where bodily waste is discharged), commonly resulting from causes such as colorectal cancer, bladder cancer, inﬂammatory bowel disease and trauma. PBT Proﬁt before income taxes. Peakon Workday employee voice platform. PIH Partners in Health, an international public health organisation providing healthcare in the poorest areas of developing countries. PP&E Property, plant and equipment. Product categories The Group has four product groups, being Advanced Wound Care, Ostomy Care, Continence Care and Infusion Care. R&D Research and Development. RCT Randomised controlled trial. ROIC Return on invested capital. SBTi Science Based Target initiative. SBTs Science Based Targets. Sedex Third-party platform used for supplier risk assessment and ESG engagement. SID Senior Independent Director. SKU Stock keeping unit. SLR SLR Consulting Limited, our specialist sustainability advisers. SOFR Secured Overnight Financing Rate. SONIA Sterling Overnight Index Rate. Sterling, £, pence or p The currency of the United Kingdom. Subsidiary A company over which the Group exercises control. T&I Technology & Innovation. TCFD Task Force on Climate- related Financial Disclosures. Transformation Initiative Initiatives and associated investment focused on transforming the business to deliver sustainable and proﬁtable growth. TSL Total Safety Leadership. TSR Total shareholder return. UKLA The UK’s Listing Authority. US dollar, $, cent or ¢ The currency of the United States of America. UTI Urinary tract infection. YoY Year-on-year. Viability period The three-year period from January 2025 to December 2027 (based on the Annual Report). WACC Weighted average cost of capital. Glossary continued 212 Convatec Group Plc Annual Report and Accounts 2024 Additional information Important information for readers of this Annual Report Forward-looking statements are not guarantees of future performance and such uncertainties and contingencies, including the factors set out in the Principal Risks section of the Strategic report which begins on page 76, could cause the actual results of operations, ﬁnancial condition and liquidity, and the development of the industry in which the Group operates, to diﬀer materially from the position expressed or implied in the forward-looking statements set out in this Annual Report. Past performance of the Group cannot be relied on as a guide to future performance. Nothing in this Annual Report should be construed as a proﬁt forecast. Forward-looking statements are based only on knowledge and information available to the Group at the date of preparation of this document and speak only as at the date of this Annual Report. The Group and its Directors, oﬃcers, employees, agents, aﬃliates and advisers expressly disclaim any obligations to update any forward- looking statements (except to the extent required by applicable law or regulation). Third-party data The industry and market data contained in this Annual Report has come from third-party sources and from the Group’s own internal research and estimates based on the knowledge and experience of the Group’s management in the market in which the Group operates. Whilst the Group believes that such sources, research and estimates are reasonable and reliable, they have not been independently veriﬁed and are subject to change without notice. Accordingly, undue reliance should not be placed on any of the industry or market data in this Annual Report. Cautionary statement regarding forward-looking statements The purpose of this Annual Report is to provide information to the members of the Company. The Group and its Directors, employees, agents and advisers do not accept or assume responsibility to any other person to whom this Annual Report is shown or into whose hands it may come and any such responsibility or liability is expressly disclaimed. In order, among other things, to utilise the ‘safe harbour’ provisions of the US Private Securities Litigation Reform Act 1995 and the UK Companies Act 2006, we are providing the following cautionary statement: This Annual Report contains certain forward- looking statements with respect to the operations, performance and ﬁnancial condition of the Group, including among other things, statements about expected revenues, margins, earnings per share or other ﬁnancial or other measures. Forward-looking statements are generally identiﬁed by the use of terms such as ‘believes’, ‘estimates’, ‘aims’, ‘anticipates’, ‘expects’, ‘intends’, ‘plans’, ‘predicts’, ‘may’, ‘will’, ‘could’, ‘targets’, ‘continues’ or, in each case, their negatives or other similar expressions. These forward-looking statements include all matters that are not historical facts. Forward-looking statements are necessarily based upon a number of estimates and assumptions that, while considered reasonable by the Company, are inherently subject to signiﬁcant business, economic and competitive risks, uncertainties and contingencies that are diﬃcult to predict and many of which are outside the Group’s control. As such, no assurance can be given that such future results, including guidance provided by the Group, will be achieved. Convatec website Information on or accessible through our website www.convatecgroup.com and other websites mentioned in this Annual Report, does not form part of and is not incorporated into this Annual Report. Figures Figures in parentheses in tables and in the Financial Statements are used to represent negative numbers. Credits Designed and produced by Printed by Pureprint Group, ISO14001, FSC ® certiﬁed and CarbonNeutral ® This Annual Report is printed on Revive Silk 100 paper, manufactured from FSC ® Recycled certiﬁed ﬁbre derived from 100% pre and post-consumer waste and Carbon Balanced. Printed sustainably in the UK by Pureprint, a CarbonNeutral ® company with FSC ® chain of custody and an ISO 14001 certiﬁed environmental management system recycling 100% of all dry waste. Convatec Group Plc 7th Floor, 20 Eastbourne Terrace Paddington London W2 6LG United Kingdom www.convatecgroup.com Company No: 10361298 www.convatecgroup.com

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