Dechra Pharmaceuticals PLC

Dechra Pharmaceuticals PLC

Annual Report and Accounts for the year ended 30 June 2012

Corporate Governance

Michael Redmond
Non-Executive Chairman

Dear Shareholder

On behalf of the Board I am pleased to present Dechra's Corporate Governance Report for the year ended 30 June 2012.

As you will no doubt realise, the 2011/2012 financial year has been a busy period as we completed the acquisition of Eurovet, our biggest acquisition to date. As a result of this acquisition we have moved from being a constituent member of the FTSE Small Cap to the FTSE 250. This transaction has re-emphasised the importance of governance within our strategy and decision making.

This year, for the first time, all of the Board will stand down and seek re-election at the forthcoming Annual General Meeting in line with the UK Corporate Governance Code. Further detail in relation to this is provided later in this report. However, we have chosen to continue with our internal board evaluation process rather than seek an externally facilitated review. As we reported last year, the internal evaluation process has been substantially enhanced. All board members embraced the process, resulting in open and honest discussions which gave rise to a number of action points being agreed and then taken forward by the Executive Directors; the action points arising from the 2010/2011 board evaluation are explained later in this report. The 2012 board evaluation process has commenced in a similar vein and I look forward to reporting the action points to you in next year's report. The Board will give consideration to a potential external evaluation next year.

Board diversity, not only in terms of gender but in its wider context, has also been discussed by the Board and we are in the process of formulating our diversity policy. A recruitment process has commenced for two additional Non-Executive Directors and if possible at least one of these will be a female appointment. I recognise that my leadership of the Board over the forthcoming year is critical to ensuring that the new Directors settle into their roles quickly and effectively. I will work alongside the Company Secretary to ensure that they receive a detailed and tailored induction to the Group upon their appointments.

In July 2012 we received Bryan Morton's resignation following an increase in his professional commitments outside Dechra. During his tenure the Group completed a number of material acquisitions and I would like to take this opportunity to thank him for his input and valued contribution to the Group and wish him well in the future.

Finally, I look forward to working with the Board over the coming year in order to continue to deliver growth and progress our strategy. Should you have any questions in relation to this report, please feel free to contact myself or the Company Secretary.

Michael Redmond
Non-Executive Chairman

Directors' Report: Corporate Governance

The Financial Reporting Council's UK Corporate Governance Code (the "Code") establishes the principles of good governance for companies; the following report describes how the Company has applied these principles to its activities. The Board remains committed to maintaining high standards of corporate governance and continually strives to do so. In the opinion of the Directors, the Company has complied with the Code throughout the period under review.

The Company became a constituent member of the FTSE 250 in June 2012; however, in line with the Code, it is classed as a small company for this reporting period.

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