Corporate Responsibility, Social, Ethical and Environmental Responsibilities

A responsible approach to our stakeholders and the wider community is considered by the Board to be fundamental to the business. The conduct of the business towards social, environmental, ethical and health and safety issues is recognised to have an impact on our reputation and therefore the implementation and improvement of policies and systems is ongoing.

The Board takes ultimate responsibility for Corporate Social Responsibility ("CSR") and continues to be committed to developing and implementing appropriate policies that create and maintain long term value for all stakeholders. Sound business ethics help to minimise risk, ensure legal compliance and enhance Company efficiency.

The Sustainability Committee (the "Committee") was set up in October 2009. It has terms of reference which were approved by the Board in July 2010, copies of which can be obtained from the Company Secretary or via the Company's website at www.dechra.com. The Committee is chaired by Ed Torr, the nominated Director responsible for environmental policy. The Company Secretary is secretary to the Committee. The Committee is responsible for establishing and maintaining the Group's social, ethical and environmental policy. The following report details how we have applied the main principles of this policy, a full copy of which can be obtained from the Company Secretary or via the Company website.

Social Responsibilities

The Board recognises that the Group has a responsibility to its stakeholders and therefore encourages the business units to contribute to the social and economic welfare of the local communities in which they operate. It recognises that by taking voluntary action in this area it is helping to protect and develop its own business.

As reported in the 2011 Annual Report the Committee established a Group Donations Policy, which became effective 1 July 2011. From this date, the Group will donate up to £10,000 a year to be split between an animal welfare charity, an environmental charity and an employee nominated charity. All employees within the Group are entitled to nominate a charity or a non-commercial organisation. During 2012 the chosen charities were:

Environmental Charity

  • Staffordshire Wildlife Trust: As in previous years Dechra has maintained its investment in the Corporate Membership Scheme for the Staffordshire Wildlife Trust (the "Trust"). The continued support provided by the Company has assisted the Trust to continue with their education, conservation and community projects throughout Staffordshire.

Employee Charity

  • An employee at DVP EU took part in the Vatternrundan, an organised cycle race in Sweden which has been held over the last 48 years. This year there were over 23,000 cyclists who started the 300km circuit around Lake Vattern. The employee raised £2,500 which was matched by the Company, and the funds donated to Cancer Research UK.

In addition to the annual Group donation each business unit has discretion to allocate funds to local community groups, employee nominated charities and/or animal welfare charities. Below is a selection of what has taken place during the 2012/2013 financial year.

Animal Welfare

  • As in previous years, many of our businesses have donated obsolete and/or short dated stock, damaged products and consumables to various charities, ensuring that such stock is not provided to charities where the donation-in-kind could be sold to third parties. DVP UK continued to provide assistance to a charity called Help the Street Cats of Morocco which it has been involved with since 2006 providing supplies of Atipam, Canaural, Cleanaural, Fucithalmic and Sedator. NVS donated dog food to City Dogs Home.

Environment

  • DVP EU has continued to donate DKK0.02 for every kilowatt per hour used for the period 2011 to 2015 to Energreen ApS for the construction of new green energy production facilities within Denmark.

Other

  • Each year DVP EU nominates a Danish charity. This year they donated DKK2,000 to the Danish Cancer Foundation. Furthermore as reported in the previous Annual Report, DVP EU has continued its sponsorship of three children through SOS Children's Villages.
  • Dechra Laboratory Services has maintained its links with local schools by offering a number of work experience placements to six children from local schools and four veterinary students.

Business Ethics

The Board expects all of the Group's business activities to be conducted in accordance with the highest standards of ethical conduct and in full compliance with all applicable national and international legislation; in doing so we aim to maintain a reputation for acting responsibly and with integrity.

The Board has formalised its expectations in respect of business conduct into a policy known as The Code of Business Conduct (the "Code"). The Code aims to set a standard of conduct which applies throughout the Group and ensures, amongst other things, that:

  • all third parties are treated fairly, openly and honestly;
  • our employees do not accept or offer bribes, facilitation payments or other inducements; and
  • employees must avoid direct and indirect conflicts of interest (and where this is not possible, the employee must follow the procedure set out in the Code in order to ensure that the employee is removed from the position of conflict as soon as possible).

A whistle-blowing policy is also in place whereby employees report, in confidence, any suspected wrongdoings within the business which they feel unable to discuss directly with local management. Details of the whistle-bowing policy are detailed on the Company website at www.dechra.com.

The Dechra Values were launched in June 2011 across the business. Further information can be found in Dechra Values and via the Company's website at www.dechra.com. The Board fully endorses these Values and believes that they encapsulate Dechra's business ethics and set standards that all employees should strive to achieve and ultimately exceed.

Environmental Policy

The Group recognises the importance of good environmental controls. It is the Group's policy to comply with environmental legislation currently in place, adopt responsible environmental practices and give consideration to minimising the impact of its operations on the environment. Dechra has commenced collating the data to comply with the forthcoming Companies Act 2006 (Strategic Report and Directors' Report) Regulations 2013, which requires all UK quoted companies to report on their greenhouse gas emissions as part of their annual Directors' Report. This will be included in the 2014 Annual Report and Accounts.

In terms of fuel, travel and waste we can report for the 2012/2013 financial year the following changes:

Fuel

With respect to the 2012/2013 financial year, Dechra, as reported in the 2012 Report, has undertaken a review of the Company Car provision with the view of standardising the offering and reducing CO2 emission. The two lower car bands, which account for over 55% of the Company Car fleet, have been amalgamated and the choice of car has been reduced to two models from the same manufacturer which are generating between 108 and 116 CO2g per km. In addition band three has been capped at 160 CO2/km, which account for a further 22% of the car fleet. The light commercial fleet of over 130 delivery vans now integrate an alternative range of vehicles including small VW Caddy vans returning over 46 mpg, as opposed to the previously standard vehicle that delivered only 32 mpg. The HGV fleet has been limited to 53mph and the Gloucester and Tiverton trunking routes have been amalgamated allowing the release of one HGV tractor unit and trailer which has resulted in a saving of least 200 miles per day.

The average miles per gallon as at the end of June 2013 and June 2012 were as follows:

20132012
HGV Fleet10.719.92
Transit32.3432.64

The HGV fleet complies with the Euro 5 standard, a European regulation which sets emission limits for each category of pollutant emissions, such as carbon monoxide, nitrogen oxides and combined emissions of hydrocarbons and nitrogen oxides.

Following the disposal of the Services Segment in August 2013, Dechra will have a reduced car fleet and no commercial vehicles in the UK.

Travel

In respect of travel, use of the video conference facilities is recommended as priority over travel. Video conference facilities are installed at PLC, DVP UK, DVP US, Skipton, Bladel, Netherlands and Uldum, Denmark. Whilst the Company appreciates that face to face meetings are beneficial the use of video conference facilities substantially reduces the amount of travel by car and aeroplanes.

Waste

In respect of waste, the Group is a registered member of the Waste Packaging Obligations Regulations compliance scheme. The general waste is then sorted for collection by third party waste management companies. Dechra Manufacturing Skipton also actively monitors its recycling rates. This facility continues to comply with, and exceed, effluent discharge standards into local water supplies, which is subject to random monitoring by Yorkshire Water Authority. Standard operating procedures are in place to ensure that all contaminated waste is disposed of under strict controls. Furthermore, all exhaust air is fully filtered from the manufacturing unit before discharge into the environment. DVP EU is legally obliged to submit an environmental impact report to the Danish Ministry of Environment on an annual basis.

The Group continues to review its environmental controls and encourage its own staff, suppliers and customers to achieve similar standards.

Health and Safety Policy

The Group attaches great importance to the health and safety of its employees and the public. The management are responsible and committed to the maintenance, monitoring and promotion of a policy of health and safety at work to ensure the care and well-being of its employees and on-site visitors.

Each unit within the Group has an active Health and Safety Committee comprising representatives from both management and employees. The workforce nominates employee representatives. These committees meet on a regular basis to carry out a review of risk assessments and standard operating procedures as well as investigating any concerns raised by individual employees. Each site has the requisite number of employees trained in health and safety legislation.

For a number of years the Group has reported Lost Time Accident Frequency Rates ("LTAFR") as a non-financial key performance indicator (see Key Performance Indicators ("KPIs")). The LTAFR is a calculation of all injuries that would be statutorily reportable under the Reporting of Injuries, Diseases and Dangerous Occurrences Regulations ("RIDDOR"), normalised per 100,000 hours worked. This measure provides information to help monitor and control accidents and injuries to the workforce and is widely used as a key performance indicator throughout industry. The Company reports LTAFR on the same basis as in previous years, that is over-three day incidents. Over the course of the last 12 months the number of accidents has decreased from 10 to 5, none of which resulted in a work-related fatality or disability. It is hoped to reduce this further during the 2013/2014 financial year.

Any material health and safety issues or incidents which occur are discussed in detail at both the monthly business unit board meetings and the PLC Board meetings. The discussions include details of the incident that took place and also details of any remedial action which has been taken in order to mitigate or prevent a recurrence of the incident. Twice a year a comprehensive health and safety report is presented at each of the business unit board meetings and subsequently reported to the PLC Board meeting the following month for discussion and review by the Directors.

The Transport Risk Committee assesses risks relating to the Group fleet and establishes control procedures, including regular licence checks of all individuals who are able to drive company vehicles, investigations into all accidents and a disciplinary procedure for speeding offences. During the year an online driver risk assessment was undertaken by all new Company car and commercial vehicle drivers as part of their induction. The results of the assessment enables the Company to identify any drivers at risk and to provide further training to those drivers. It is intended that all drivers will be reassessed every three years. The investment so far in respect of the online driver assessments has had a positive impact on the number of insurance claims with both the frequency and severity of accidents having been reduced. Due to the disposal of the Services Segment this committee has met once during the year and its terms of reference will be reassessed in light of this disposal. All issues raised by this committee are reviewed by the Board as part of the bi-annual health and safety review.

Employees

We recognise that the success of the Group is dependent on our ability to attract, develop, motivate and retain skilled employees. For a number of years the Group has reported labour turnover as a non-financial KPI using a standard formula as follows:

Total number of leavers over a periodx 100
Average total number employed over period

The Group has established a target of no more than 15% Moving Annual Turnover; during the 2012/2013 financial year we achieved 14.84% (2012: 16.10%).

Dechra Pharmaceuticals Manufacturing Skipton is registered with 'Investors in People' and has continued in its commitment to people development through a number of apprentices embarking on the Modern Apprenticeship Scheme. Such employees are assisted in achieving National Vocational Qualifications ("NVQ") as part of their apprenticeship, usually work-based but also involving literacy and numeracy modules.

It is the Company's policy to provide equal recruitment and other opportunities for all employees, regardless of age, sex, sexual orientation, religion, race or disability. The Group gives full consideration to applications from disabled people, where they adequately fulfil the requirements of the role. Where existing employees become disabled, it is the Group's policy whenever practicable to provide continuing employment under the Company's terms and conditions and to provide training and career development whenever appropriate.

The Group continues to encourage employees to share in the growth of the Company through eligibility to participate in the SAYE Scheme. The SAYE Scheme is currently offered to UK employees only; the take-up for the December 2012 grant was 21.59% (December 2011: 15.34%). The graph below shows the percentage of employees who have taken up the SAYE Scheme over the last five years.

Percentage Take-up