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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Devro Plc | LSE:DVO | London | Ordinary Share | GB0002670437 | ORD 10P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 329.00 | 329.00 | 329.50 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
From Apr 2019 to Apr 2024
TIDMDVO
RNS Number : 3926A
Devro PLC
24 March 2017
24 March 2017
Devro plc
("Devro" or the "Company")
2016 Annual Report
Devro plc (LSE: DVO) announces that it has posted its 2016 Annual Report to those shareholders who have requested this, together with the notice of Annual General Meeting and Proxy Form. Copies of these documents have been submitted to the National Storage Mechanism and will be available for viewing shortly at www.morningstar.co.uk/uk/NSM. The documents are also available (with the exception of the Form of Proxy) on the Company's website - www.devro.com.
The Company's 2017 Annual General Meeting will be held at 11am on 26 April 2017 at The Westerwood Hotel, St Andrews Drive, Cumbernauld, G68 0EW.
Devro announced its results for the year ended 31 December 2016 on 6 March 2017. 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 2016 Annual Report is set out in Appendix 1 below, and the information on related party transactions contained in Note 36 to the 2016 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 2016 Annual Report.
Statement of Directors' Responsibilities
The 2016 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 15 March 2017, the date of approval of the 2016 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 IFRSs as adopted by the European Union, give a true and fair view of the assets, liabilities, financial position and profit of the Company and of the group included in the consolidation taken as a whole; and
-- the management report required by DTR4.1.8R (set out in the Strategic Report and the Directors' Report) includes a fair review of the development and performance of the business and the position of the Company and group included in the consolidation taken as a whole, together with a description of the principal risks and uncertainties that they face.
In addition, each of the Directors considers that the Annual Report, taken as a whole, is fair, balanced and understandable and provides the information necessary for shareholders to assess the Company's position, performance, business model and strategy.
Directors:
Gerard Hoetmer, Chairman
Peter Page, Chief Executive
Rutger Helbing, Group Finance Director
Jane Lodge, Non-Executive Director
Paul Neep, Non-Executive Director
Paul Withers, Non-Executive Director
John Meredith
Company Secretary
24 March 2017
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 principal risks facing the company, including those that would threaten its business model, future performance, solvency or liquidity. The main risks identified are set out in the following pages. Additional risks which are not presently known to management could also have an adverse effect on the company.
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 going concern and viability statements can be found on page 43.
In addressing and overseeing risk, the Board is supported by the Risk Committee. The Committee submits four formal reports to the Board in the course of the year.
A report from the Committee can be found on page 42.
The Financial Reporting Council has encouraged companies to consider how Brexit might impact them, so we have separated this out from the list of other risks for a more detailed analysis in the box below:
Brexit
Hot Features
Premium
Following the UK's decision to leave the EU, the Government has now
clarified its position: the UK will leave the EU, the Single Market
and the current customs union, perhaps as early as mid-2019.
This has a number of implications for Devro. For example, while our
Scottish factories mainly manufacture for the UK, some product is currently
exported to the EU, and our Czech and Dutch plants send small amounts
of their product to the UK. Our people move freely between our European
plants.
All of the above could cease on Brexit, and while the UK Government
has stated, with confidence, its intention to negotiate replacement
trade agreements with the EU and other countries, it is not possible
at this stage to gauge how successful they will be. The risk for UK-based
exporters such as Devro Scotland, is that the proposed new international
trading arrangements may not be secured before the existing framework
is removed, or may be on disadvantageous terms compared to the current
conditions. We are therefore preparing contingency plans based on various
"worst-case" scenarios.
With six manufacturing operations around the world, Devro is well placed
to reconfigure its global routes to market in order to adapt to changing
regulatory restrictions. A review of the various potential supply permutations
is underway.
Our Regulatory Affairs Director has established strong working relationships
within government, and is working to ensure that collagen food products
do not get overlooked in future trade discussions.
It is important to keep this in perspective: the great majority of
Devro group production and trade is unaffected. The total volumes which
could conceivably be impacted amount to no more than 8% of group output.
The potential Brexit-related opportunities both here in the UK and
overseas which could offset any downside are also under review.
With our global footprint, and contingency planning underway, we are
well placed to deal with whatever emerges from the post-Brexit negotiations.
--------------------------------------------------------------------------------
KEY RISK IMPACT MITIGATION MOVEMENT
----------------------------- ----------------------------- ------------------------------- ----------
LOSS OF MARKET SHARE/PROFIT Expansion by competitors The group invested Unchanged
MARGINS DUE TO INCREASED could lead to overcapacity GBP8.0m in research
COMPETITIVE PRESSURES in the industry and and development activities
The group operates the consequent risk in 2016, to extend
in competitive markets of loss of volume and differentiate
throughout the world. or price pressure. the product range
and improve the quality
of our products.
Our capital investment
programme has started
to reduce our unit
costs with further
actions planned for
2017 and 2018.
We also aim to expand
the total collagen
casings market by
developing products
which convert animal
intestine applications
to collagen casing.
----------------------------- ----------------------------- ------------------------------- ----------
FINANCIAL RISKS Failure to operate All term debt is Unchanged
The main financial within the agreed arranged and managed
risks relate to the financial framework centrally and appropriate
availability of short could lead to inability covenant headroom
and long-term funding. to support long-term is maintained.
investment or to
raise capital for
funding growth. Interest
rate increases could
impact earnings.
----------------------------- ----------------------------- ------------------------------- ----------
FOREIGN EXCHANGE Adverse foreign exchange The financial impact Increased
RISK rate movements could of exchange rate
Almost 90% of the reduce revenues and fluctuations within
group's revenues the sterling value our operating units
are invoiced in currencies of reported profits. is mitigated by a
other than sterling. policy of hedging
a substantial portion
of transactional
foreign exchange
risk for periods
of up to 15 months
using forward contracts.
----------------------------- ----------------------------- ------------------------------- ----------
DOWNTURN IN CONSUMER A decline in consumer Devro's wide range Unchanged
DEMAND demand could lead of products allows
Consumer preferences to increased competition flexibility to respond
evolve over time, in the marketplace to customer and market
and are influenced and reduced sales demands. We continue
by a number of issues revenue/profitability. to invest heavily
outside our control, in our products and
including economic processes with the
factors and health aim of increasing
considerations. quality while reducing
our cost base to
remain competitive.
----------------------------- ----------------------------- ------------------------------- ----------
OPERATIONAL DISRUPTION Prolonged operational The group maintains Unchanged
The group is at risk disruption could industry-leading
of disruption to result in sustained operational processes
its manufacturing loss of capacity and procedures to
capability from poor or capability, and ensure effective
operational performance, could affect our operational management
or major disruptive ability to deliver at each of our plants.
events, such as fire to customers. With six manufacturing
or flooding. This, in turn, could operations in various
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.
----------------------------- ----------------------------- ------------------------------- ----------
DISRUPTION TO SUPPLY Raw collagen represents The group manages Unchanged
OR INCREASE IN PRICE approximately 15% the collagen sourcing
OF KEY RAW MATERIALS of the group's total risk by, where possible,
The group's most operating costs. entering into long-term
important raw material Increase in price arrangements with
is collagen, a naturally would adversely impact specialised suppliers
occurring animal the group's operating in various parts
protein obtained costs. of the world.
from cattle and sow Disruption to supply
hides. could adversely affect
There is a risk that manufacturing performance.
changes may occur
in the supply or
demand for food grade
collagen, resulting
in significant cost
increases for the
group's business.
----------------------------- ----------------------------- ------------------------------- ----------
DEVELOPMENT OF NON-CASING If there were to The group makes substantial Unchanged
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, Where there have
of edible collagen revenues and profits. been conversions
casing, primarily to co-extrusion in
for sausages. the past, the group
For many years, several has often been successful
manufacturers of in obtaining the
machinery used in business to supply
the food industry the collagen gel
have been promoting required for such
"co-extrusion" systems applications, and,
for sausages which following the 2015
do not require casing. acquisition of Devro
B.V., continues to
be a world leader
in this specialist
category.
----------------------------- ----------------------------- ------------------------------- ----------
POLITICAL AND REGULATORY As a global trading The Global Quality Increased
RISK company, political and Regulatory Affairs
As a supplier to change (including, Director actively
the food industry, but not limited, monitors planned
the group complies to Brexit) could and actual changes
with all relevant impact our ability to regulations in
food safety regulations. to operate internationally. all relevant jurisdictions
Regulatory authorities Changes to food safety in order to minimise
routinely enact changes regulations could disruption to our
to food safety legislation. result in restrictions business.
Political uncertainty on the movement of The group is a founder
leaves international the group's products, member of the Collagen
trading companies or its raw materials, Casings Trade Association,
exposed to the risk between territories, which represents
of restrictions on or necessitate changes the industry and
cross-border sales. to the production promotes its excellent
processes at one record in regulatory
or more of the group's and health issues.
manufacturing operations. Supplier approval
and traceability
are under constant
review.
See Brexit analysis
on page 24.
----------------------------- ----------------------------- ------------------------------- ----------
RISK IMPACT MITIGATION MOVEMENT
----------------------------- -------------------------------- ---------------------------- ----------
PEOPLE There is considerable A number of internal Unchanged
Shortage of people competition for highly-trained programmes have been
with relevant expertise. staff in certain areas. introduced to train
Devro's strategy of and develop key employees.
significant investment
in the company's manufacturing
base requires the
recruitment and retention
of highly-skilled
technical managers
and employees.
----------------------------- -------------------------------- ---------------------------- ----------
INCREASED FUNDING Any significant deterioration The position and Unchanged
REQUIREMENTS OF PENSION in the schemes' asset performance of each
SCHEMES values or unforeseen of the pension schemes
Estimates of the amount increases in scheme are continually monitored
and timing of future liabilities might by the group, in
funding obligations increase the group's conjunction with
for the group's defined funding obligations pension trustees
benefit pension schemes and could adversely and professional
are based on various affect the group's advisers
assumptions, including profits and financial All defined benefit
the projected investment strength. schemes are closed
performance of the to new entrants,
pension scheme assets, and the group is
future bond yields, actively working
changes to assumptions to match assets to
about the longevity expected future cashflow.
of the schemes' members
and statutory requirements.
----------------------------- -------------------------------- ---------------------------- ----------
IT SYSTEMS/CYBER RISK An outage for a period We ensure that our Increased
IT systems are central of time could have systems are appropriately
to our business operations. an impact on our operations. secured and employ
Vulnerability to an Loss of commercial firewalls and other
external attack is or personal data could security features.
a growing worldwide damage the business Regular penetration
issue. or our reputation, testing is conducted.
and result in increased
financial penalties.
----------------------------- -------------------------------- ---------------------------- ----------
PRODUCT CONTAMINATION Contamination could All of our manufacturing 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.
----------------------------- -------------------------------- ---------------------------- ----------
Appendix 2
Related party transactions
Key management are deemed to be the Executive and Non-Executive Directors and the Executive Management Team 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:
2016 2015
GBP'm GBP'm
------------------------------------------------------------- ------- -------
Emoluments payable to Executive and Non-Executive
Directors
------------------------------------------------------------- ------- -------
Short-term employee benefits 1.2 1.5
------------------------------------------------------------- ------- -------
Performance Share Plan charge 0.2 0.2
------------------------------------------------------------- ------- -------
Post-employment benefits 0.1 0.1
------------------------------------------------------------- ------- -------
1.5 1.8
------------------------------------------------------------- ------- -------
Emoluments payable to remainder of the Executive Management
Team
------------------------------------------------------------- ------- -------
Short-term employee benefits 1.5 1.4
------------------------------------------------------------- ------- -------
Performance Share Plan charge 0.1 0.1
------------------------------------------------------------- ------- -------
Post-employment benefits 0.2 -
------------------------------------------------------------- ------- -------
Compensation for loss of office 0.7 -
------------------------------------------------------------- ------- -------
2.5 1.5
------------------------------------------------------------- ------- -------
Total emoluments payable to key management 4.0 3.3
------------------------------------------------------------- ------- -------
Transactions with the group's pension schemes are disclosed in note 25. Amounts due to the pension schemes at 31 December 2016 are GBP0.4m (2015: GBP0.4m).
The group had no further related party transactions.
Related party transactions carried out by the company during the year ended 31 December 2016 were as follows:
2016 2015
GBP'm GBP'm
------------------------------------------------------ ------- -------
Sale of services to subsidiary undertakings 8.2 4.4
------------------------------------------------------ ------- -------
Purchase of services from subsidiary undertakings 0.2 0.2
------------------------------------------------------ ------- -------
Royalty income received from subsidiary undertakings - 0.6
------------------------------------------------------ ------- -------
Interest received from subsidiary undertakings 4.7 2.9
------------------------------------------------------ ------- -------
Interest paid to subsidiary undertakings 0.1 0.1
------------------------------------------------------ ------- -------
Balances at 31 December arising from transactions with subsidiary undertakings:
2016 2015
GBP'm GBP'm
---------------------------------- ------- -------
Derivative financial assets 1.9 1.0
---------------------------------- ------- -------
Derivative financial liabilities 0.9 0.3
---------------------------------- ------- -------
Receivables
---------------------------------- ------- -------
- current 13.8 10.9
---------------------------------- ------- -------
- non-current 113.3 78.1
---------------------------------- ------- -------
Payables
---------------------------------- ------- -------
- non-current 22.1 23.1
---------------------------------- ------- -------
Current receivables from subsidiaries arise mainly on the sale of services and tax losses surrendered. The receivables are unsecured and do not bear interest. No provisions are held against receivables from subsidiaries, and all sales are made on an arm's length basis.
Non-current receivables and payables principally relate to loans to and from subsidiaries and interest is charged on them at commercial rates.
This information is provided by RNS
The company news service from the London Stock Exchange
END
ACSGMGZFNFZGNZM
(END) Dow Jones Newswires
March 24, 2017 12:00 ET (16:00 GMT)
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