TIDMDVO
RNS Number : 7052T
Devro PLC
26 March 2021
For Immediate Release 26 March 2021
Devro plc
("Devro" or the "Company")
2020 Annual Report and Notice of AGM
Devro plc (LSE: DVO) announces that it has published today its
2020 Annual Report and its 2021 notice of Annual General Meeting
(AGM) 1 . Copies of these documents and of the Form of Proxy for
the 2021 AGM have been submitted to the National Storage Mechanism
and will be available for viewing shortly at
https://data.fca.org.uk/#/nsm/nationalstoragemechanism . The
documents are also available (with the exception of the Form of
Proxy) on the Company's website - www.devro.com . They have also
been posted today to shareholders who have elected to receive paper
communications.
The Company's 2021 AGM will take place at midday on 29 April
2021 in its London office, Devro plc, 1st Floor MidCity Place, 71
High Holborn, London, WC1V 6EA. Due to continuing Covid-19
governmental restrictions applicable in the UK, no more than two
directors will be present at our AGM (in order to satisfy minimum
quorum requirements) and the business of the meeting will be
restricted to the formal business only. We are unable to invite any
other shareholders to attend the AGM in person and anyone seeking
to attend will be refused entry . Shareholders are strongly
encouraged to exercise their rights at the AGM by voting remotely
on all the resolutions, by appointing the chair of the meeting as a
proxy. Details of how to vote by proxy are set out in the 2021 AGM
notice.
Devro announced its results for the year ended 31 December 2020
on 2 March 2021. A condensed set of financial statements was
attached to the Company's results announcement which included full
disclosure of important events that occurred during the year.
The Company today provides the following additional regulated
information as required to be made public under the Disclosure
Guidance and Transparency Rules.
A description of the principal risks and uncertainties extracted
from the 2020 Annual Report is set out in Appendix 1 below, and the
information on related party transactions contained in Note 33 to
the 2020 Consolidated Financial Statements, is set out in Appendix
2 below. Page numbers and cross-references in the extracted
information below refer to page numbers and cross-references in the
2020 Annual Report.
Statement of Directors' Responsibilities
The 2020 Annual Report contains a responsibility statement in
compliance with DTR4.1.12 signed on behalf of the Board by the
Company Secretary. This states that on 1 March 2021, the date of
approval of the 2020 Annual Report, each of the Directors (whose
names and functions are listed below) confirms that, to the best of
each person's knowledge and belief:
-- the Financial Statements, prepared in accordance with the
applicable set of accounting standards, 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; and
-- the Strategic Report and the Directors' Report include a fair
review of the development and performance of the business and the
position of the issuer and the undertakings included in the
consolidation taken as a whole, together with a description of the
principal risks and uncertainties that they face.
1 In the Company's announcement on 2 March 2021 of its results
for the year ended 31 December 2020, the Board proposed a final
dividend of 6.3p per share (the "2020 Final Dividend") to be paid
on 1 October 2021, to those shareholders on the register at 20
August 2021, subject to shareholder approval at the Annual General
Meeting in April 2021. The Board has subsequently resolved to
recommend the payment of the 2020 Final Dividend be brought forward
from 1 October 2021 to 20 July 2021, to those shareholders on the
register at 11 June 2021. This revised timetable for the payment of
the dividend appears in AGM notice of meeting (but, as the date of
the Company's 2020 Annual Report is 1 March 2021, the Company's
2020 Annual Report shows the original timetable for the 2020 Final
Dividend).
In addition, each of the directors considers the Annual Report
and Accounts, taken as a whole, is fair, balanced and
understandable and provides the information necessary for
shareholders to assess the Group's position and performance,
business model and strategy.
Directors:
Steve Good, Chairman
Rutger Helbing, Chief Executive Officer
Rohan Cummings, Chief Financial Officer
Jeremy Burks, Non-Executive Director
Chantal Cayuela, Non-Executive Director
Lesley Jackson, Non-Executive Director
Malcolm Swift, Non-Executive Director
The Company's LEI is 549300Z9YLY7LEMLJ904
Andrew Money
Company Secretary
26 March 2021
Appendix 1
Principal Risks and Uncertainties
Like any other business, Devro's operations are exposed to risks
which could potentially have an adverse impact on the Group.
The Directors have carried out a robust assessment of the
emerging and principal risks facing the Group, including those that
would threaten its business model, future performance, solvency or
liquidity. The main risks identified are set out in the following
pages and we also highlight their bearing on our response to the
impact of COVID-19 on our business. Additional risks which are not
presently known to management could also have an adverse effect on
the Company.
In addressing and overseeing risk, the Board is supported by the
Risk Committee and by the Executive Management Team through
additional integrated business planning structures. 2020 was the
first year in which risk has been managed through a refreshed risk
management framework which has generated greater visibility about
how individual risks might impact the Company's delivery of
individual elements of its 3Cs strategy and associated key areas of
focus; revised the process for identifying and bringing key risks
to the Board's attention including the standardisation of processes
and risk assessments by each functional management team. The
emergence of new risks is considered at every meeting of the Risk
Committee, supported by regular reviews by each functional
management team and long-term planning through IBP.
The Board has taken into consideration the principal risks when
considering the adoption of the going concern basis of accounting
and when assessing the prospects of the Company for the purpose of
the viability statement.
The viability and going concern statements can be found on pages
41 and 72, respectively.
COVID-19 pandemic - aspects of Principal Risks and
Uncertainties
There was considerable focus in 2020 within our business to
address risks and uncertainties in connection with the COVID-19
pandemic. The immediate impact of those risks on our business has
been and continues to be managed through our Incident Management
Plan, led by our Executive Management Team. The experiences we
gained from dealing with the impact of COVID-19 on our Chinese
business prior to the wider emergence of the pandemic have
benefited and informed our global approach.
The risks we have faced in connection with the pandemic since
that time have primarily been those which we had already identified
and were monitoring prior to the pandemic but which, in some cases,
have assumed a higher priority. They can be categorised as risks
which we are addressing in our immediate and current response to
the pandemic and those which we have considered may have an impact
on our business in the longer-term.
Risks addressed in our immediate and current response to the
pandemic
-- Operational disruption: The safety of our employees and of
our manufacturing base has been our highest priority and we have
closely monitored the risk of disruption to our operations and
consequent ability to meet customer demand, caused by higher levels
of employee absences.
Mitigation
Through our Incident Management Plan we have taken account of
staffing levels in order to optimise our global production plans.
The early implementation of comprehensive COVID-19 specific health
& safety measures, in many cases at standards which exceeded
those mandated in the countries where we operate, including strict
limits on access to our sites, has mitigated the risk to
individuals and sites alike. This has been reinforced by
pandemic-specific employee engagement and support to promote a
shared responsibility for acting safely and cautiously in the face
of the pandemic. Since the start of the pandemic, we have been able
to maintain sufficient production levels to meet all customer
demands.
-- Sales downturn due to customers' business disruption: The
pandemic has continued to generate greater volatility in demand
from individual customers as a result of their own staffing
difficulties, sourcing obstacles and restrictions imposed on parts
of their customer base, most notably food service channels.
Mitigation
There is little indication that overall consumer demand for our
customers' products has materially changed and this is reflected by
the cumulative sales we have achieved in 2020 across our wide
customer base. We have managed the volatility in demand from
individual customers through effective demand planning and IBP
processes (overseen by our Incident Management Team).
-- Disruption to supply or increase in price of key raw
materials: Some of our suppliers' businesses have experienced
disruption, most notably hide split suppliers and glycerol
producers. This, in turn, has impacted their capacity to supply us.
Though there has been a plentiful supply of cattle hide splits, one
of our most important raw materials, from which collagen is
extracted, our suppliers have experienced disruption due to the
adverse impact particularly at the outset of the pandemic on the
automotive sector, which under normal circumstances, forms a
significant part of hide suppliers' customer base.
Mitigation
Our global Procurement team continues to assess and monitor our
supply chain vulnerabilities. We address these by seeking and
maintaining multiple sources for key raw materials and cultivating
equitable long-term commercial relationships with suppliers. We
have long-standing contractual relationships with multiple hide
suppliers across the world and, in response to the pandemic, a
dedicated team has overseen the management of those relationships
to ensure continuity of supply. While it was necessary to accept a
higher level of cost during the initial stage of the pandemic in
order to achieve this, we have sought to mitigate this through
engagement with our entire supplier base (including hide suppliers)
to settle on competitive and sustainable commercial terms.
Aspects of principal risks which may impact our business in the
longer-term
If a sustained global economic downturn follows the pandemic, or
our customers continue to experience inflationary cost pressures in
dealing with COVID-19 on their businesses, they will likely seek
greater efficiencies in their own businesses and from their
suppliers. This may result in Devro facing increased competition
and a corresponding higher risk of the loss of profit margins or
sales volumes.
Mitigation
Devro is well positioned to support customers in their drive for
further efficiencies. We are able to deliver for them (particularly
those switching from gut to collagen casing applications),
manufacturing efficiencies, based on over 85 years of experience,
our global presence, a wide collagen casings product range,
customer intimacy and superior technical service.
If COVID-19 restrictions persist, temporary changes in consumer
demand may become more established. There is evidence of a
significant increase in 'at-home' consumption of sausages during
COVID-19 lockdowns while foodservice demand (dine-in or on the go)
has reduced, (with the rise in takeaway/delivery and the uplift in
retail offsetting this to a degree).
Mitigation
Overall consumer demand for protein continues to grow, this
trend being particularly pronounced in emerging markets, where
there is corresponding growth in sausage consumption. Our product
range, global presence and intimacy with a wide customer base
equips us to detect, respond to and benefit from changing customer
and market demands. We have casings and gel manufacturing
facilities across six locations (the UK, Netherlands, Czech
Republic, the US, Australia and China) and are able to leverage our
collagen expertise across regional markets as well as partner with
sausage manufacturers with global reach.
For more information about the short, medium and longer term
impact on Devro's marketplace, see Understanding our Markets on
pages 14 to 19.
KEY RISK IMPACT MITIGATION MOVEMENT
LOSS OF PROFIT MARGINS/VOLUME Any increase in effective To Win with the Winning Broadly unchanged
DUE TO INCREASED competition risks Customers is a key
COMPETITIVE PRESSURES sales loss via volume pillar of our 3Cs
The Group operates and/or price decline. strategy and in 2020
in competitive markets we have continued
throughout the world. to develop our global
commercial organisation
to gain greater insights
into customer requirements
and into responding
with value propositions
to drive customer
satisfaction.
The transition to
a global commercial
organisation in 2019
has facilitated a
more rapid transfer
of successful customer
offerings and more
agile trouble shooting.
In 2020, net cost
savings of GBP6.0
million have been
delivered in order
to keep our cost
base competitive.
We also aim to continue
expanding the total
collagen casings
market by developing
products which convert
gut applications
to collagen casing.
------------------------------ ------------------------------- ------------------
DEVELOPMENT OF NON-CASING If there were to The Group makes substantial Increased
TECHNOLOGIES be a significant investments in product
More than 80% of conversion to co-extrusion, development and manufacturing
the Group's revenue there could be an processes to sustain
is derived from the adverse effect on competitive advantage.
manufacture and sale sales of casing, It invested GBP6.3
of edible collagen revenues and profits. million in research
casing, primarily and development activities
for sausages. in 2020, to extend
For many years, several and differentiate
manufacturers of the product range.
machinery used in Where there have
the food industry been conversions
have been promoting to co-extrusion for
"co-extrusion" systems fresh sausages in
for sausages which the past, the Group
do not require casing. has often been successful
Both collagen and in obtaining the
non-collagen co-extrusion business to supply
gels can be used the collagen gel
on such systems. required for such
In 2020 we have detected applications, and,
a greater readiness following the 2015
for fresh sausage acquisition of Devro
producers to consider B.V., continues to
non-collagen co-extrusion be a world leader
solutions. in this specialist
category.
We continue to invest
in the development
of innovative gel
(non-casing) solutions.
------------------------------ ------------------------------- ------------------
IT SYSTEMS/CYBER An outage for a period We commissioned an Increased
RISK of time could have external audit in
IT systems are central an impact on our 2020 of our IT systems
to our business operations. operations. Loss to identify how we
Vulnerability to of commercial or can continue to ensure
an external attack, personal data could they are appropriately
a risk faced by companies damage the business secured. We are acting
and institutions or our reputation on the recommendations
globally, has grown and result in financial of the audit by investing
in 2020, particularly penalties. to remediate known
as reliance on online vulnerabilities and
connectivity has to implement an Information
increased in order Security corporate
to accommodate different governance structure
ways of working during that will counter
the pandemic. future cyber security
risk and vulnerability.
Employees are regularly
trained to detect,
avoid and mitigate
cyber risks and information
security risks.
------------------------------ ------------------------------- ------------------
DISRUPTION TO SUPPLY The Group's most The Group manages Broadly unchanged
OR INCREASE IN PRICE important raw material the collagen sourcing
OF KEY RAW MATERIALS is collagen, a naturally risk by, where possible,
Inflationary cost occurring animal entering into long-term
pressures that cannot protein obtained arrangements with
be mitigated by cost from cattle and sow specialised suppliers
reduction or passing hides. It represents in various parts
on price risks reduced up to 20% of the of the world.
margins and profitability. Group's total cost There continues to
of goods. be an ongoing focus
There is a risk that on cost reduction
changes may occur and manufacturing
in the supply or efficiencies, led
demand for food grade by our global Procurement
collagen, resulting function, to address
in significant cost inflationary pressures
increases for the across the entire
Group's business. business.
------------------------------ ------------------------------- ------------------
FOOD REGULATORY RISK The Group's most The Group manages Broadly unchanged
Food safety concerns important raw material the collagen sourcing
risks additional is collagen, a naturally risk by, where possible,
regulation and restrictions. occurring animal entering into long-term
protein obtained arrangements with
from cattle and sow specialised suppliers
hides. It represents in various parts
up to 20% of the of the world.
Group's total cost There continues to
of goods. be an ongoing focus
There is a risk that on cost reduction
changes may occur and manufacturing
in the supply or efficiencies, led
demand for food grade by our global Procurement
collagen, resulting function, to address
in significant cost inflationary pressures
increases for the across the entire
Group's business. business.
------------------------------ ------------------------------- ------------------
CHANGES IN CONSUMER A decline in consumer Devro's wide range Broadly unchanged
DEMAND demand for sausage of products and geographical
Consumer preferences could lead to increased presence allows flexibility
evolve over time competition in the to respond to customer
and are influenced marketplace and reduced and market demands.
by a number of issues sales revenue/profitability. Our demand planning
outside our control, It may be more difficult and IBP procedures
including economic to respond to volatility assist us to react
factors and health in demand for sausage to changes in consumer
considerations. caused by the implementation demand at speed.
Preferences may be at short-notice of We continue to invest
affected both as regulatory restrictions in our products and
a result of long-term on particular sales processes with the
trends such as calls channels which could aim of producing
advocating consumers lead to reduced sales. differentiated products
to reduce their meat while reducing our
consumption and shorter-term cost base to remain
trends such as those competitive.
triggered by restrictions
on food service channels
or social gatherings
in response to the
COVID-19 pandemic.
------------------------------ ------------------------------- ------------------
FOREIGN EXCHANGE Adverse foreign exchange The financial impact Broadly unchanged
RISK rate movements, could of exchange rate
c.90% of the Group's reduce revenues and fluctuations within
revenues are invoiced the sterling value our operating units
in currencies other of reported profits. is mitigated by a
than sterling. Sterling exchange policy of hedging
rate volatility may a substantial portion
be impacted in 2021 of transactional
by ongoing trading foreign exchange
tensions between risk for periods
leading industrial of up to 15 months
nations. using forward contracts.
------------------------------ ------------------------------- ------------------
OPERATIONAL DISRUPTION Prolonged operational The Group maintains Broadly unchanged
The Group is at risk disruption could industry-leading
of result in sustained operational processes
disruption to its loss of capacity and procedures to
manufacturing or capability and ensure effective
capability from poor could affect our operational management
operational performance, ability to deliver at each of our plants.
or major disruptive to customers. With six manufacturing
events, such as fire This, in turn, could operations in various
or flooding. adversely affect locations, the Group
the Group's financial has manufacturing
performance. flexibility and this
enables effective
contingency planning.
Our business continuity
and disaster recovery
plans are regularly
tested and continually
updated.
Appropriate insurance
policies are in place.
------------------------------ ------------------------------- ------------------
RISK IMPACT MITIGATION MOVEMENT
PEOPLE There is competition We offer a competitive Broadly unchanged
Shortage of people for highly trained pay package to our
with relevant expertise staff in certain employees and we
and any failure by areas. Devro's strategy continue to pursue
management to engage of significant investment an Employee Value
with all employees in the Company's Proposition to promote
risks obstacles to manufacturing base the benefits of employment
the delivery of the requires the recruitment with the Group. The
Company's strategy. and retention of important role of
highly skilled technical the Company in the
managers and employees. food supply chain
The Company had undergone during the COVID-19
considerable organisational pandemic has brought
change since 2016, additional focus
aimed at embedding on the benefits of
a global integrated employment within
platform, the success the Group.
of which is dependent We engage regularly
on continued engagement with employees and
with employees. undertake annually
an employee engagement
survey, from which
actions to enhance
engagement are formulated
and implemented.
See page 52 for our
employee engagement
initiatives.
------------------------------ ---------------------------- ------------------
INCREASED FUNDING Any significant deterioration The position and Broadly unchanged
REQUIREMENTS OF PENSION in the schemes' asset performance of each
SCHEMES values or unforeseen of the pension schemes
Estimates of the increases in scheme are continually monitored
amount and timing liabilities might by the Group, in
of future funding increase the Group's conjunction with
obligations for the funding obligations pension trustees
Group's defined benefit and could deflect and professional
pension schemes are investment in the advisers.
based on various business. All defined benefit
assumptions, including schemes are closed
the projected investment to new entrants,
performance of the and the Group is
pension scheme assets, actively working
future bond yields, to match assets to
changes to assumptions expected future cash
about the longevity flow.
of the schemes' members
and statutory requirements.
------------------------------ ---------------------------- ------------------
PRODUCT CONTAMINATION Contamination could All of our manufacturing Broadly unchanged
Raw materials and lead to a product sites have achieved
ingredients may contain recall, loss of reputation, FS22000 approval.
impurities, contamination or significant costs This requires a Hazard
or disease. of compensation. Analysis and Critical
Control Point programme
to be implemented
with the aim of preventing
contamination.
------------------------------ ---------------------------- ------------------
BREXIT This risk primarily Comprehensive plans Decreased
Regulatory changes impacts sales from developed to mitigate
to arrangements governing product made in Scotland the effects of the
trading between the exported to the EU UK's departure from
UK and the EU, following and Northern Ireland, the EU were successfully
the conclusion of which represents implemented prior
the trade and co-operation max. 6% of Group to the December 2020
agreement reached output. (The majority expiry of the Brexit
between the UK and of Devro Group production transition period.
the EU in December and trade is unaffected The Company's framework
2020, risks disruption by this risk.) for managing the
to some Company sales. Since the December risk of an abrupt
2020 trade and co-operation departure of the
agreement between UK from the EU without
the UK and EU came a trading deal, has
into effect, the been adapted to address
scope for operational and resolve quickly
disruption remains, individual queries
due to the introduction and obstacles which
of new regulations. have arisen on the
However, the potential implementation of
adverse impact of regulatory changes
this risk is lower introduced on the
than the risks previously expiry of the transition
associated with a period following
'no-deal' scenario. the UK's departure
from the EU.
We have substantial
manufacturing operations
in the Czech Republic
from where we continue
to be able to supply
most EU customers.
------------------------------ ---------------------------- ------------------
Appendix 2
Related party transactions
Key management are deemed to be the Executive and Non-Executive
Directors and the Executive Management Team (EMT) of the Group as
together they have the authority and responsibility for controlling
Group activities. The compensation paid or payable to key
management for employee services is shown below:
2020 2019
GBP'm GBP'm
Emoluments payable to Executive and Non-Executive
Directors
------- -------
Short-term employee benefits 1.3 1.1
------- -------
Performance Share Plan charge/(credit) 0.1 (0.2)
------- -------
Post-employment benefits 0.1 0.1
------- -------
1.5 1.0
------- -------
Emoluments payable to remainder of the EMT
------- -------
Short-term employee benefits 2.3 1.5
------- -------
Performance Share Plan charge/(credit) 0.1 (0.1)
------- -------
Post-employment benefits 0.1 0.1
------- -------
Compensation for loss of office 0.2 0.1
------- -------
2.7 1.6
------- -------
Total emoluments payable to key management 4.2 2.8
------- -------
There were no other related party transactions requiring
disclosure in these financial statements.
, the news service of the London Stock Exchange. RNS is approved by
the Financial Conduct Authority to act as a Primary Information
Provider in the United Kingdom. Terms and conditions relating to
the use and distribution of this information may apply. For further
information, please contact rns@lseg.com or visit www.rns.com.
RNS may use your IP address to confirm compliance with the terms
and conditions, to analyse how you engage with the information
contained in this communication, and to share such analysis on an
anonymised basis with others as part of our commercial services.
For further information about how RNS and the London Stock Exchange
use the personal data you provide us, please see our Privacy
Policy.
END
ACSQQLFLFXLZBBE
(END) Dow Jones Newswires
March 26, 2021 12:47 ET (16:47 GMT)
Devro (LSE:DVO)
Gráfica de Acción Histórica
De Mar 2024 a Abr 2024
Devro (LSE:DVO)
Gráfica de Acción Histórica
De Abr 2023 a Abr 2024