TIDMINDV
RNS Number : 1689U
Indivior PLC
31 March 2021
March 31, 2021
Indivior PLC (the 'Company')
Annual Report and Notice of Annual General Meeting
The Company has today posted or made available to shareholders
the following documents:
- Annual Report and Accounts for the year ended December 31, 2020 (the '2020 Annual Report');
- Notice of 2021 Annual General Meeting ('AGM'); and
- Form of Proxy for the AGM.
In accordance with LR 9.6.1, a copy of each of these documents
has been submitted to the FCA and will shortly be available for
inspection at
https://data.fca.org.uk/#/nsm/nationalstoragemechanism .
The 2020 Annual Report and Notice of AGM can also be viewed on
the Company's website at www.indivior.com/annual-reports/ and
www.indivior.com/shareholders/shareholder-communications/ .
The Appendix to this announcement contains information which has
been extracted from the 2020 Annual Report for purposes of
compliance with the FCA's Disclosure Guidance and Transparency
Rules and should be read together with the Company's Final Results
announcement released on February 18, 2021. Together these
constitute the material required by Disclosure Guidance and
Transparency Rule 6.3.5 which is required to be communicated to the
media in full unedited text through a Regulatory Information
Service. This announcement is not a substitute for reading the full
Annual Report and Accounts. Page numbers and cross references in
the extracted information refer to page numbers and cross
references in the 2020 Annual Report.
AGM meeting arrangements
The 2021 AGM will be held on Thursday 6 May 2021 at 3.00pm. Due
to the current COVID-19 restrictions, the AGM will be held at the
Company's offices with a limited number of Company representatives
attending to ensure that a valid meeting is held. Other
shareholders will not be permitted to attend the AGM in person and
shareholders are therefore asked to appoint the Chair of the
meeting as their proxy. Arrangements have been made to allow
shareholders to join the meeting online, further details can be
found in the Notice of Meeting. The Board understands that the AGM
is an important event in the corporate calendar and is committed to
returning to an open AGM format in future years when COVID-19
restrictions are eased.
Jason Thompson
Vice President, Investor Relations
Indivior PLC
Tel: +1 (804) 402 7123
jason.thompson@indivior.com
Forward-Looking Statements
The purpose of the Annual Report and Accounts is to provide
information to members of the Company. The Annual Report and
Accounts have been prepared for, and only for, the members of the
Company, as a body, and no other persons. The Company, its
Directors and employees, agents or advisors do not accept or assume
responsibility to any other person to whom this document is shown
or into whose hands it may come and any such responsibility or
liability is expressly disclaimed.
The Annual Report and Accounts contains certain forward-looking
statements with respect to the operations, performance and
financial condition of the Group. By their nature, these statements
involve uncertainty, since future events and circumstances can
cause results and developments to differ materially from those
anticipated. The forward-looking statements reflect knowledge and
information available at the date of preparation of the Annual
Report and Accounts and the Company undertakes no obligation to
update these forward-looking statements. Nothing in this Annual
Report and Accounts should be construed as a profit forecast.
APPIX - additional information required by DTR 6.3.5
The principal risks and uncertainties set out below are
extracted from pages 38 to 45 of the 2020 Annual Report.
i. Principal risks and risk management
Effective management of existing and emerging risks is critical
to the success of our Group and the achievement of our strategic
objectives. Risk must be accepted to a reasonable degree for our
Group to execute on our strategic objectives and pursue our
business opportunities in alignment with our mission. Risk
management is therefore an integral component of our culture and
governance.
The Board of Directors (Board) has carried out a robust
assessment to ensure that the principal risks, including those that
would threaten the Group's business model, future performance,
solvency or liquidity, are effectively managed and/or mitigated to
help ensure the Group remains viable. While the Group aims to
identify and manage such risks, no risk management strategy can
provide absolute assurance against loss.
The tables on pages 39 to 45 provide insight into the Group's
principal risks, outlining why effective management of these risks
is important, how we manage them, how the risks relate to the
Group's strategic priorities, and which risks are increasing,
decreasing or have remained static during the past twelve months.
Additional risks, not listed here, that the Group cannot presently
predict or does not believe to be equally significant, may also
materially and adversely affect the Group's business, results of
operations and financial condition. The principal risks and
uncertainties are not listed in order of significance.
Managing risks
Our Enterprise Risk Management (ERM) process is designed to
identify, assess, manage, report and monitor risks and
opportunities that may impact the achievement of the Group's
strategy and objectives. This includes adjusting the risk profile
in line with the Group's risk tolerances to respond to new threats
and opportunities. An effective ERM process is fundamental to our
ability to meet and align to our operational and strategic
objectives. The competitive market in which we operate has
industry-specific risks, particularly those relating to new product
development and commercialization, intellectual property
enforcement and legal proceedings, and compliance with laws and
regulations. This requires that existing and emerging business
risks are effectively assessed, appropriately measured, regularly
monitored, and addressed through mitigation plans. Our ERM process
fosters and embeds a Group-wide culture of risk management that is
responsive, forward-looking, consistent, and accountable.
Governance and responsibilities
The Board has overall responsibility for the Group's risk
management. The Audit Committee assists the Board in overseeing the
Group's risk management activities, including reviewing the Group's
principal risks and emerging risks with a focus on key risk areas.
In addition, the Board's Committees regularly review risks relevant
to their area of focus; this includes, but is not limited to, risks
relating to legal, financial, commercial, regulatory, and
compliance matters.
The Executive Committee is required by the Board to oversee and
monitor the effectiveness of the Group's risk management
activities. Quarterly, the Executive Committee reviews enterprise
risks as part of its regular quarterly business reviews, and
assesses any changes impacting the Group, including emerging risks
and impacts to Indivior's principal risks, as well as the
underlying mitigating plans.
Business Unit and Functional Leadership executes day-to-day risk
management activities, including risk identification, and manages
risk mitigation actions within their respective areas in alignment
with the ERM framework.
The Risk Management Team facilitates the ERM program, including
the implementation of processes and tools to identify, assess,
measure, monitor and report risks.
Any one or a combination of the risks listed below could impact
the Group's viability (refer to our Viability Statement on page
46).
The emergence of the Coronavirus (COVID-19) pandemic and related
government measures to address the pandemic have resulted in
business pressures and disruptions across industries worldwide, and
corresponding risks to the Group's business and operations. The
COVID-19 pandemic has specifically heightened risks for four of our
principal risks: business operations (refer to page 39); product
pipeline, regulatory, and safety (refer to page 40);
commercialization (refer to page 41); and supply (refer to page
42). Excluding the impact of the COVID-19 pandemic, risks for these
four principal risks would have remained mostly unchanged compared
to the prior year.
1. Business Operations Change from 2019
The Group's operations rely on complex processes Ý
and systems, strategic partnerships, as well
as specially qualified and high performing Increased
personnel to develop, manufacture and sell complexity
our products. Failure to continuously maintain and
operational and compliance processes and operational
systems as well as to retain and/or recruit challenges
qualified personnel could adversely impact due to
product availability and patient health, the
and ultimately the Group's performance and COVID-19
financials. Additionally, an ever evolving pandemic,
regulatory, political, and technological significant
landscape requires that we have the right network
priorities, capabilities, and structures of
in place to successfully execute on our business third-party
strategy and adapt to this changing environment. partners,
COVID-19 pandemic - The persistence of the impact on
COVID-19 pandemic and the ongoing government our
measures to address the pandemic continue operations
to create a very challenging business environment of the
for companies across industries worldwide Trade &
and therefore related risks to the Group's Cooperation
business and operations. In response to COVID-19, Agreement
the Group has established an agile cross-functional between
response structure; and implemented a number UK and EU
of mitigation and contingency actions to
help maintain the functioning of operations
across the organization, supply of all products
to our patients, and help ensure the welfare
of our employees. The Group continuously
monitors the potential impact on the health
and well being of our employees as well as
the workforce of our key third parties, which
ultimately may impact our operations. Furthermore,
given the remote working environment, the
Group continues to closely monitor cybersecurity
threats and the overall operating effectiveness
of the monitoring and control activities.
Given the evolving and dynamic nature of
the COVID-19 pandemic, and uncertainty surrounding
the duration of measures designed to mitigate
its spread, including the vaccination of
the population or attainment of herd immunity,
the impact on the Group's operations and
financial position is highly uncertain and
cannot be predicted with confidence. COVID-19
related developments are under constant review
to ensure our mitigation and contingency
actions are appropriate, proportionate, and
as effective as possible. However, despite
the measures the Group has taken, if the
pandemic adversely affects Indivior's operations
and/or performance, it will have a heightened
effect on many of the risks impacting the
Group, including its business operations
(refer to the other principal risks: product
pipeline and regulatory on page 40, commercialization
on page 41, and supply on page 42).
The manufacturing of our SUBOXONE and SUBUTEX
tablets for all of our European markets is
performed by a third-party contract manufacturer
located in the UK. The Group has been proactive
in taking appropriate actions since the Brexit
referendum, including changes to logistics,
shipping, and quality testing and release
processes, as well as transfer of regulatory
licenses and additional inventory builds.
While the UK and the European Union (EU)
signed the Trade and Cooperation Agreement
on December 24, 2020; certain operational
risks remain which may impact various areas
of the Group, including Operations, Regulatory,
Supply Chain, and Quality. The Group is closely
monitoring it.
-------------------------------------------------------------------------------------------------------------------------- -----------------------
Examples of risks Management actions Link to strategic
priorities
Grow SUBLOCADE to
* Failure or significant performance issues experienced * An agile cross-functional response structure led by $1bn+ net revenue,
with our key processes, Information Technology (IT) Executive Management is in place diversify revenue,
systems, and/or at our critical third-party partners build our pipeline
including due to the COVID-19 pandemic for future growth,
* Business operating standards, monitoring processes, and optimize our
and contingency plans are in place operating model
* Loss of intellectual property, confidential data, and
personally identifiable information or significant
impact on operations from cybersecurity breaches * IT policies, processes, systems, and disaster
recovery plans supporting overall business continuity
are in place
* Failure to retain and recruit qualified workforce and
key talent
* Strategy, processes, and tools to secure systems and
protect data are deployed
* Disruptions in our operations due to Brexit
* Talent management programs are in place, including
talent review and retention programs with focus on
identifying key roles and successors
* Operational and regulatory process changes were
implemented, and a Brexit steering committee
regularly monitors the impact of Brexit on our
operations and facilitates appropriate business
planning
------------------------------------------------------------ ------------------------------------------------------------ -----------------------
2. Product pipeline, regulatory and safety Change from 2019
The development and approval of the Group's Ý
products is an inherently risky and lengthy
process requiring significant financial, Increased
research and development resources, and strategic challenges
partnerships. Complex regulations with strict in
and high safety standards govern the development, conducting
manufacturing, and distribution of our products. clinical
In addition, strong competition exists for trials
strategic collaboration, licensing arrangements, and/or CMC
and acquisition targets. Patient safety depends activities
on our ability to perform robust safety assessment due to
and interpretation to ensure that appropriate COVID-19
decisions are made regarding the benefit/risk pandemic
profiles of our products. Deviations from
these quality and safety practices could
impact patient safety and market access,
which can have a material effect on the Group's
performance and prospects.
COVID-19 pandemic - The COVID-19 pandemic
has negatively impacted our R&D operations,
specifically trial patient enrollments and
limited chemistry, manufacturing & controls
(CMC) operations, and therefore caused certain
delays in conducting clinical and/or CMC
studies internally and/or at our third-party
partners.
--------------------------------------------------------------------------------------------------------------------- ----------------------
Examples of risks Management actions Link to strategic
priorities
Grow SUBLOCADE to
* Failure to advance the development and/or obtain * Product development, business development and $1bn+ net revenue,
regulatory approval of pipeline products, as well international growth strategies are in place diversify revenue,
as and build our
failure to execute on business development pipeline
opportunities * Due diligence, market valuation, and economic and for future growth
financial modeling are in place
* Potential liability and/or additional expenses
associated with ongoing regulatory obligations and * Ongoing Quality and Safety monitoring and auditing
oversight programs are in place
* Unexpected changes to the benefit/risk profiles of * Strategies to defend against and pursue appropriate
our products resolution of product liability claims are in place
* Rigorous pharmacovigilance processes for ongoing
evaluation of data collected from multiple sources
related to patient safety are in place, including
Risk Evaluation & Mitigation Strategy ("REMS")
programs in the US and Risk Management Plans (RMP)
outside the US
--------------------------------------------------------- ---------------------------------------------------------- ----------------------
3. Commercialization Change from 2019
Successful commercialization of our products Ý
is a critical factor for the Group's sustained
growth and robust financial position. Launch Increased
of a new product involves substantial investment commercial
in marketing, market access and sales activities, challenges due
product stocks, and other investments. Certain to
factors, if different than anticipated, can COVID-19
significantly impact the Group's performance pandemic
and position. These factors include: HCP/Patient for SUBLOCADE
adoption and adherence; generic and brand and
competition; pricing pressures; private and some government
government reimbursement schemes and systems; pricing
negotiations with payors; erosion and/or pressure.
infringement of intellectual property (IP) (Refer to Chief
rights; and political and socioeconomic factors. Executive
COVID-19 pandemic - The pandemic has resulted Officer's
in overall fewer patient visits to healthcare review on pages
provider offices for non-COVID-19 reasons 5 to 11 or the
or essential treatments, as patients become Financial
unable or unwilling to make visits due to Review section
overburdened healthcare systems or elect on
to have remote consultations (telehealth) pages 29 to 32.
with their providers. As a result, in Q2
2020, the Group observed a rapid decline
in new US patient enrollments followed by
a modest improvement in Q3 compared to Q2,
and continued growth in Q4 compared to Q3.
The pandemic has also resulted in safety
concerns, quarantines, or other travel restrictions
for patients. Furthermore, even though the
Group has developed remote (digital) meeting
capability with healthcare providers, the
Group's commercial organization is still
only able to engage in-person with a limited
number of healthcare professionals (HCPs)
and Organized Health Systems (OHS). Although
COVID-19 has not significantly impacted the
Group's overall operating results and financial
position to date, a potential enduring and/or
significant decline in patient enrollments
and on the patient journey, and the inability
to effectively engage with HCPs and OHS would
have a negative impact on the Group's financial
results in future periods.
Governments across the world are considering
and taking actions to lower drug prices.
In the US, there is bi-partisan support for
drug pricing reforms at both federal and
state levels, which include potential legislative
and regulatory actions to encourage the import
of drugs, to price drugs according to a defined
international pricing reference, to encourage
more competition, and to undertake other
initiatives. These, together with federal
and state government fiscal constraints resulting
from the COVID-19 pandemic, which constrain
public benefit health programs, pose direct
and indirect downward pressure risk on drug
prices. The Group continues to monitor potential
legislative and regulatory changes and their
impacts, advocating for the Group's products
based on scientific studies and patient-centered
outcomes. However, certain potential legislative
and regulatory drug pricing changes could
have an adverse impact on the Group's financial
performance and results in the future.
-------------------------------------------------------------------------------------------------------------------------- ---------------------------
Examples of risks Management actions Link to strategic
priorities
Grow SUBLOCADE to
* Lower HCP adoption and patient enrollments of * Enhanced investments in OHS access, interactions with $1bn+ net revenue,
SUBLOCADE, including the decrease linked to HCPs, including remote (digital) meeting capability, and diversify revenue
limited/restricted patient visits and HCP as well as facilitation of patients' access and
interactions due to the COVID-19 pandemic reimbursement working with key stakeholders
* Unexpected changes to government and/or commercial * Emphasizing value of products and health economics
reimbursement levels and government pricing pressures tailored to commercial and government payors through
market access activities
* Launch of competing branded and/or generic products
* Patient platforms supporting provider location,
reimbursement support, and co-pay assistance for
* Competition and challenges in the product/geographic eligible patients are in place
expansion outside the U.S.
* Ongoing training and development for field-based
employees are in place
* Monitoring of government and commercial pricing and
reimbursement related trends/measures and development
of mitigation strategies
* International growth, pipeline development, marketing
,
and business development strategies are in place
------------------------------------------------------------ ------------------------------------------------------------ ---------------------------
4. Economic and financial Change from 2019
The pharmaceutical business includes inherent Û
risks and uncertainties, requiring the Group
to make significant financial investments No
to develop and support the success of our change
product portfolio. Generating cash flow from
our approved products, together with external
financing, sustains our financial position,
allows development of new products, and funds
business growth. Realizing value on those
investments is dependent upon regulatory
approvals, market acceptance (including pricing
reimbursement levels), strategic partnerships,
competition, and legal developments. Unfavorable
outcome from resolutions of legal proceedings,
impacts from the COVID-19 pandemic, and/or
changes in government pricing regulations
could negatively impact our operating results
and financial position. Together with potential
pressure on our level of net working capital,
our ability to comply with our debt covenants
could be negatively impacted. As a global
business, we are also subject to political,
economic, and capital markets changes.
----------------------------------------------------------------------------------------------------------------------- ------------------
Examples of risks Management actions Link to strategic
priorities
Grow SUBLOCADE to
* Inability to raise capital, or execute on business * Realignment of cost and finance structures, and $1bn+ net
development and alliance opportunities active expense management are in place revenue,
diversify
revenue,
* Failure to meet financial obligations and performance * Ongoing monitoring of financial performance and build our
compliance with financial covenants pipeline
for future
growth,
* Strategies supporting expansion opportunities and and optimize our
diversification are in place operating model
* Regular appraisals of debt and capital market
conditions with advisors and counterparties are in
place
------------------------------------------------------------ --------------------------------------------------------- ------------------
5. Supply Change from 2019
The manufacturing and supply of our products Ý
are highly complex and rely on a combination
of internal manufacturing capabilities and Increased
third parties for the timely supply of our challenges
finished drug and combination drug products. throughout
The Group uses third parties, including contract the "supply
manufacturing organizations (CMOs), to manufacture, to patient"
package and distribute our products. The process
manufacturing of oral solid dose, film products due to the
and aseptically filled injectables is subject COVID-19
to stringent global regulatory, quality and pandemic,
safety standards, including Good Manufacturing including
Practice (GMP). Delays or interruptions in potential
our supply chain and/or product quality failures related
could significantly disrupt patient access, operational
adversely impact the Group's financial performance disruptions
and lead to product recalls and/or potential at our
regulatory actions against the Group along CMOs.
with potential reputational damages.
COVID-19 pandemic - The pandemic could adversely
impact our broad supply chain (i.e., "supply
to patient delivery" process) if we experience
a significant absence of our employees and/or
employees at our CMOs and vendors due to
infection and/or government containment measures.
Through on-going management and risk mitigation,
internally and with CMOs, the Group has not
experienced any significant COVID-19 related
disruptions to its supply to patient delivery
process through this date.
------------------------------------------------------------------------------------------------------------------------- -----------------------
Examples of risks Management actions Link to strategic
priorities
Grow SUBLOCADE to
* Reliance on critical CMOs and supply chain partners * Business continuity, disaster recovery, emergency $1bn+ net revenue,
response plans, and enhanced communication protocols and diversify revenue
across the supply chain network are in place
* Inability to supply compliant finished products in a
continuous and timely manner due from operational
disruptions due to the COVID-19 pandemic * Contingency plans and management of safety stocks are
in place
* Comprehensive product quality and control processes
and manufacturing performance monitoring across the
supply chain network are in place
* Ongoing monitoring of stock levels and business
contingency planning
----------------------------------------------------------- ------------------------------------------------------------ -----------------------
6. Legal and intellectual property Change from 2019
Our pharmaceutical operations, which include ß
controlled substances, are subject to a wide
range of laws and regulations. Perceived Decreased
or actual noncompliance with these applicable given
laws and regulations by a pharmaceutical the agreements
company can result in investigations or proceedings reached
leading to civil or criminal sanctions, fines with DOJ, OIG
and/or damages, as well as reputational damages. and
Intellectual Property (IP) rights protecting FTC resolved
our products may be challenged by external the
parties, including generic manufacturers. risk of
Although we have developed robust patent exclusion
protection for our products, we are exposed or other
to the risk that courts may decide that our potential
IP rights are invalid and/or that third parties federal civil
do not infringe our asserted IP rights. and
In connection with the agreements to resolve criminal
criminal charges and civil complaints related penalties
to SUBOXONE Film (see Legal proceedings section associated
on page 33), the Group has specific requirements with
that are in addition to the Group's preexisting the matters
obligations to comply with applicable laws alleged
and regulations associated with its US pharmaceutical in the
operations. The Group is subject to penalties superseding
if it fails to fulfill the requirements within indictment,
the agreements. and
The Group is also a party to several civil being able to
lawsuits, including ongoing litigation in continue
the Federal FCA qui tam suits, and civil to participate
antitrust and state claims filed by various in
plaintiffs. Many of the civil claims concern US federal
the same conduct at issue in the Superseding healthcare
Indictment filed by the DOJ. programs.
The Group is also a defendant in fewer than However,
400 civil lawsuits brought by various plaintiffs material
as part of the opioid class action litigation. business
These cases are at an early stage and are impact from
currently stayed. remaining
Unfavorable outcomes from resolutions of legal
these legal proceedings, could have a material proceedings
adverse impact on the Group's business, financial exist (refer
condition and/or operating results. to
Legal
proceedings
section on
pages
33 to 36 and
Chair
and Chief
Executive
Officer
statements
on pages 5 and
11
respectively).
------------------------------------------------------------------------------------------------------------------------ --------------------------
Examples of risks Management actions Link to strategic
priorities
Grow SUBLOCADE to
* Legal proceedings related to antitrust, state, * Quality, patient safety, monitoring and compliance $1bn+ net revenue,
shareholders, product liability claims, government are embedded in the Group's processes and culture diversify revenue,
enforcement and/or private litigation associated with and build our pipeline
the manufacturing, marketing, and distribution of our for future growth
products * Cooperation with the Government authorities in
connection with ongoing litigations, utilizing
internal and external counsel
* Inability to obtain, maintain, and protect patents
and other proprietary rights
* Insurance coverage and monitoring activities are in
place
* Ongoing active review, management and enforcement o
f
our product patents, marketing exclusivity and othe
r
IP rights are in place
* Geographic expansion and product diversification
strategies are in place
------------------------------------------------------------ ---------------------------------------------------------- --------------------------
7. Compliance Change from 2019
Our Group operates on a global basis and Û
the pharmaceutical industry is both highly
competitive and regulated. Complying with In connection
all applicable laws and regulations, including with
engaging in activities that are consistent the agreements
with legal and industry standards, and our to
Group's Code of Conduct are core to the Group's resolve
mission, culture, and practices. Failure criminal
to comply with applicable laws and regulations and civil
may subject the Group to civil, criminal complaints
and administrative liability, including the related to
imposition of substantial monetary penalties, SUBOXONE
fines, damages and restructuring the Group's Film, the group
operations through the imposition of compliance is subject to
or integrity obligations and have a potential heightened
adverse impact on the Group's prospects, compliance
reputation, results of operations and financial requirements
condition. and commitments
As part of the Group's resolution of federal (refer to Legal
criminal and civil charges related to its proceedings
legacy products (see Legal proceedings section section
on page 33), the Group has also entered into on page 33).
a Corporate Integrity Agreement (CIA) with However,
HHS-OIG. The five-year CIA requires, among to prepare and
other things, that the Group implement measures support
designed to ensure compliance with the statutes, the
regulations, and written directives of U.S. implementation
Medicare, U.S. Medicaid, and all other U.S. of these
Federal health care programs, as well as agreements,
with the statutes, regulations, and written the Group has
directives of the U.S. Food and Drug Administration. retained
Furthermore, the Group is subject to additional experienced
periodic reporting and monitoring requirements personnel.
related to the Agreements. In addition, the Further, as
CIA requires reviews by an independent review ongoing
organization, compliance-related certifications evolution of
from the Group's executives and certain Board the
members, and the implementation of a risk Group's
assessment and mitigation process. The CIA compliance
sets forth specified monetary penalties that journey and in
may be imposed on a per day basis for failure anticipation
to comply with the obligations specified of these
in the CIA. The CIA also includes specific agreements,
procedures under which the Group must notify a robust
HHS-OIG if it fails to meet the requirements strategic
under the CIA. In the event that HHS-OIG plan, advanced
determines the Group to be in material breach preparedness
of certain requirements of the CIA (including: efforts, and
repeated violations or any flagrant obligations external
under the CIA, a failure by the Group to and internal
report a reportable event and/or take corrective resources
action, a failure to engage and use an independent have been
review organization, a failure to respond deployed
to certain requests from HHS-OIG), the Group to develop and
may be subject to exclusion from participation operationalize
in the U.S. Federal health care programs, an effective
which would have a severe impact on the Group's compliance
ability to comply with the financial covenants program,
in the Group's debt facility, maintain sufficient including:
liquidity to fund its operations, pay off enhanced
its debt in 2022, generate future revenue written
and ultimately impact the Group's viability. standards;
The Resolution Agreement with the United training,
States Attorney's Office for the Western best practice
District of Virginia and Consumer Protection standards
Branch contains certain requirements, such for concerns
as reporting obligations and that the Group's "speak
CEO (a) certify on an annual basis that, up" reporting
to the best of the CEO's knowledge, after and
a reasonable inquiry, the Group was in compliance internal
with the Federal Food, Drug and Cosmetic investigations;
Act and has not committed health care fraud, crossfuntional
or (b) provide a list of all non-compliant oversight
activities and steps taken to remedy the with
activity. The FTC Stipulated Order contains certification;
specific notice and reporting requirements and monitoring
over a ten-year period related to certain activities.
activities (e.g., product switching conduct,
filing of a Citizen Petition). The Group
is subject to contempt prosecution if it
fails to comply with any terms of the resolution
agreement.
----------------------------------------------------------------------------------------------------------------------- ---------------------------
Examples of risks Management actions Link to strategic
priorities
Grow SUBLOCADE to
* Failure to meet the requirements of the government * Oversight, monitoring and reporting of compliance $1bn+ net revenue,
agreements (i.e., CIA, DOJ, and FTC) requirements with government agreements have been diversify revenue,
implemented, including a management certification, and build our pipeline
and defined sub-certification process for future growth
* Non-compliance with our Code of Conduct,
anti-corruption, healthcare, data privacy, or loca
l * Ongoing evolution of our compliance program and
laws and regulations development of compliance capabilities, guided by
defined strategic plan and learnings from program
operations, are in place
* Inability to adequately respond to changes in laws
and regulations, including data privacy
* Compliance policies and processes, including Code of
Conduct and risk assessment, and related mandatory
* Failure to comply with payment and reporting employee training programs are in place
obligations under the U.S. and foreign
* Confidential independent reporting process for
employees to report concerns is in place
* Oversight and monitoring of controls and procedures
in emerging markets are in place
* Data governance and management framework are in place
* Continuous review and assessment of developments in
the law, applicable industry standards, and business
practices are in place
* Ongoing monitoring of controls over government
pricing and reporting is in place
--------------------------------------------------------- ------------------------------------------------------------ ---------------------------
The statement of directors' responsibilities in respect of the
financial statements is extracted from pages 113 to 114 of the 2020
Annual Report.
ii. Statement of directors' responsibilities in respect of the financial statements
The Directors are responsible for preparing the annual report
and the financial statements in accordance with applicable law and
regulation.
Company law requires the Directors to prepare financial
statements for each financial year. Under that law, the Directors
have prepared the Group financial statements in accordance with
international accounting standards in conformity with the
requirements of the Companies Act 2006. Additionally, the Financial
Conduct Authority's Disclosure Guidance and Transparency Rules
require the Directors to prepare the Group financial statements in
accordance with international financial reporting standards adopted
pursuant to Regulation (EC) No 1606/2002 as it applies in the
European Union and the Parent Company financial statements in
accordance with United Kingdom Generally Accepted Accounting
Practice (United Kingdom Accounting Standards, comprising FRS 101
Reduced Disclosure Framework, and applicable law, together "UK
Accounting Standards"). Under company law, the Directors must not
approve the financial statements unless they are satisfied that
they give a true and fair view of the state of affairs of the Group
and Parent Company and of the profit or loss of the Group and
Parent Company for that period. In preparing the financial
statements, the Directors are required to:
> select suitable accounting policies and then apply them
consistently;
> state whether international accounting standards in
conformity with the requirements of the Companies Act 2006 and
international financial reporting standards adopted pursuant to
Regulation (EC) No 1606/2002 as it applies in the European Union
have been followed for the Group financial statements and United
Kingdom Accounting Standards, comprising FRS 101 have been followed
for the Parent Company financial statements, subject to any
material departures disclosed and explained in the financial
statements;
> make judgments and accounting estimates that are reasonable
and prudent; and
> prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the Group and Parent
Company will continue in business.
The Directors are also responsible for safeguarding the assets
of the Group and Parent Company and hence for taking reasonable
steps for the prevention and detection of fraud and other
irregularities.
The Directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the Group's and
Parent Company's transactions and disclose with reasonable accuracy
at any time the financial position of the Group and Parent Company
and enable them to ensure that the financial statements and the
Directors' Remuneration Report comply with the Companies Act
2006.
The Directors are responsible for the maintenance and integrity
of the Parent Company's website. Legislation in the United Kingdom
governing the preparation and dissemination of financial statements
may differ from legislation in other jurisdictions.
Directors' confirmations
The Directors consider that the Annual Report, taken as a whole,
is fair, balanced and understandable and provides the information
necessary for shareholders to assess the Group and Parent Company's
position and performance, business model and strategy.
Each of the Directors, whose names and functions are listed in
the Annual Report, confirm that, to the best of their
knowledge:
> the Group financial statements, which have been prepared in
accordance with international accounting standards in conformity
with the requirements of Companies Act 2006 and international
financial reporting standards adopted pursuant to Regulation (EC)
No 1606/2002 as it applies in the European Union, give a true and
fair view of the assets, liabilities, financial position and loss
of the Group;
> the Parent Company financial statements, which have been
prepared in accordance with United Kingdom Accounting Standards,
comprising FRS 101, give a true and fair view of the assets,
liabilities, financial position and loss of the Parent Company;
and
> the Directors' Report includes a fair review of the
development and performance of the business and the position of the
Group and Parent Company, together with a description of the
principal risks and uncertainties that it faces.
Disclosure of information to auditors
A Directors' statement in relation to disclosure of relevant
audit information can be found in the Directors' Report on pages
109 to 112.
Going concern
The Group's business model, strategy, and viability assessment
are set out in the Strategic Report on pages 2 to 47, along with
the Group's risk management strategy and the principal risks that
could threaten the Group's business model, future performance and
solvency or liquidity. The Group's and Parent Company's financial
position, cash flows, and liquidity position are discussed in the
notes to the Group and Parent Company financial statements, along
with the Group's and Parent Company's objectives, policies and
processes for managing its financial risks, and the Group's and
Parent Company's exposure to liquidity risk and capital risk.
The Directors have considered the Group's and Parent Company's
financial plan, in particular with reference to the period through
June 2022.
As disclosed in Notes 4, 21, 22 and 23 to the Group Financial
Statements, the Group reached a resolution with the U.S. Department
of Justice (DOJ), Federal Trade Commission (FTC) and the Department
of Health and Human Services (HHS), which was approved in November
2020. The agreement reached with HHS (as described in Note 23) has
eliminated the risk of potential exclusion from participating in US
government health programs. Additionally, subsequent to the
year-end, the Group resolved a claim raised by Reckitt Benckiser
(RB) in November 2020. These settlements have resulted in
liabilities totaling $536m as at December 31, 2020. While the
uncertainty relating to these matters has been resolved, various
other legal proceedings as discussed in Note 23 carry their own
specific ongoing risk and uncertainty.
The Directors have assessed the Group's and Parent Company's
ability to comply with the financial covenants in the Group's debt
facility, maintain sufficient liquidity to fund its operations,
fulfil obligations under the DOJ and RB agreements, and address the
reasonably possible financial implications of the ongoing legal
proceedings. The Directors have modeled the failure of SUBLOCADE to
meet revenue growth expectations due to the continued impact from
the COVID-19 pandemic (considering a 15% decline on forecasts) as
part of the Group's and Parent Company's going concern assessment
and downside scenario. The risk of a worse than expected outcome
relating to the remaining ongoing legal matters has been considered
for purposes of the viability period only as these cases are not
expected to be concluded during the going concern period. Should
the maximum reasonably possible risk occur (as disclosed in Note
23) in the going concern period, the Group and therefore also the
Parent Company would still maintain adequate liquidity to comply
with its financial covenants and obligations.
These risks were balanced against the Group's current and
forecast working capital position, impact of the cost saving
actions taken to date, and timing of the final balloon payment on
the term loan in Q4 2022 which is outside the going concern
assessment period and would also impact the Parent Company. As a
result of the factors set out above, the Directors of the Group and
Parent Company have a reasonable expectation that the Group and
Parent Company have adequate resources to continue in operational
existence for at least one year from the approval of these
financial statements. Based on the above assessment, the previous
material uncertainty relating to the Group's and Parent Company's
ability to continue as a going concern has been removed.
The Directors have given the going concern assessment due
consideration and have concluded that it is appropriate to adopt
the going concern basis for accounting and preparing these
financial statements. The viability statement is on pages 46 and
47.
Related party transactions are extracted from page 163 of the
2020 Annual Report.
iii. Related party transactions
Key management compensation is disclosed in Note 7.
The subsidiaries included in the consolidated financial
statements at December 31, 2020 are disclosed in Note 2 to the
Parent Company financial statements.
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END
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