Governance

Dear Shareholder

On behalf of the Board, I am pleased to present Dechra’s Governance report for the year ended 30 June 2021.

Board Appointments

We welcomed Denise Goode as a Non-Executive Director in April 2021. Denise brings a wealth of financial, commercial and life science industry experience, both from her extensive career as a senior executive and from board roles held since 2008. It is intended that Denise will be appointed as Chairman of the Audit Committee upon the retirement of Julian Heslop as Audit Committee Chairman following the 2021 Annual General Meeting. Julian will remain on the Board as a Non-Executive Director. Denise has been appointed as a member of the Audit, Nomination and Remuneration Committees.

You will have seen the notification in the preliminary results announcement of my intention to step down as Chairman once we can appoint a successor. It has been my privilege and pleasure to work with Ian, his management team and the Board these past five years as Dechra has continued to evolve and grow and deliver great products and service to our customers and strong returns to our shareholders. This is a suitable time for me to leave to devote more time to my family and my other business and charitable activities.

Purpose and Culture

Our Purpose is clearly defined and underpinned by our Culture and Values.Our Values, entrepreneurial attitude and agile approach to the way we do things are the backbone of our Culture. We expect our people to make a difference by working together and support them by providing clear guidance on expectations.

During the year, the OneDechra training module has been developed to facilitate a deep dive into our Culture and Values, providing a platform for employees to explore how the Values underpin everything that we do and drive decision making.

Our Values are supported by our Code of Conduct, which has been updated to include a set of simple one page policy documents. A Code of Conduct e-learning course has been developed and is ready to be rolled out globally on an annual basis.

Stakeholders and Section 172 Companies Act

The impact of our decisions on our key stakeholders has always been prevalent in our decision making. Details of how we consider stakeholders in the Board’s decisions and approvals of material transactions, our engagement with stakeholders and our approach to section 172 of the Companies Act 2006 can be found in here and here.

COVID-19

The measures that were put in place to enable front line employees to operate safely in our 2020 financial year have remained; this has allowed all manufacturing sites, logistic sites and laboratories to remain open and continue to function effectively. All employees who can work from home have done so successfully. Our employees are now slowly returning, where it is safe to do so, to our offices initially on a cohort basis and to meeting our customers in their practices.

The continuity of product supply and support for our customers has remained a key priority for Dechra during the pandemic. We invested significant resources to maintain an adequate supply of raw materials and finished goods to meet the needs of our customers. In addition, we expanded our webinar programme in our Academy and provided CPD events and conferences virtually.

Board Activities

The current financial year has been busy for Dechra operationally and we have approved important investments in both manufacturing and logistics. We have secured the rights to market Tri-Solfen^® in Australia and New Zealand and we have acquired a further 1.5% of the issued share capital of Medical Ethics Pty Ltd. As a result, Dechra now has the rights to sell Tri-Solfen^®, an important pain management product, in all markets globally as the product becomes approved.

Compliance with the Code

The UK Corporate Governance Code 2018 (the Code) establishes the principles of good governance for companies; this Governance section of the 2021 Annual Report describes how the Company has applied these principles and complied with the provisions, as well as how it meets other relevant requirements, such as the provisions of the Listing Rules and Disclosure and Transparency Rules (DTR) of the Financial Conduct Authority.

In the opinion of the Directors, the Company has complied with the Code throughout the period, with the exception of provision 38 of the Code. In respect of this provision, the steps intended to be taken to ensure more effective alignment of Executive Director’s pension contributions to those available to the workforce are set out on here. From 1 July 2021, two of our Executive Directors’ pension contributions will be at 8%, and the Chief Financial Officer’s pension contribution will be at 6% matching the minimum offered to our UK workforce. The Chief Financial Officer and UK workforce pension contributions will increase to 8% on 1 July 2022.

The Board remains committed to maintaining high standards of corporate governance. The Code can be found at www.frc.org.uk.

Relations with Shareholders

The Annual General Meeting will be held in Northwich on 21 October 2021. All members of the Board are scheduled to attend the Annual General Meeting (the Meeting) and the Chairmen of the Audit, Remuneration and Nomination Committees will be available to answer shareholders’ questions at the Meeting.

Looking Forward

Finally, should you have any questions in relation to this report, please feel free to contact me or the Company Secretary.