FY2022 Preliminary Results Announcement

RNS Number : 1880Y

Dechra Pharmaceuticals PLC

05 September 2022

 

Monday, 5 September 2022

Dechra Pharmaceuticals PLC

(Dechra, Company or the Group)

Preliminary Results Announcement

Global veterinary pharmaceutical business, Dechra, issues audited preliminary results for the year ended 30 June 2022

"We have continued to progress on all aspects of our strategy; the product development pipeline was strengthened, material acquisitions were completed post year-end and a new subsidiary was established in South Korea as we continue our geographical expansion." Ian Page, Chief Executive Officer

Highlights

Strategic progress: · Strong organic growth in all key markets and across all therapeutic segments · Pipeline strengthened through own innovation and acquisition · International portfolio strengthened through numerous product approvals · Successfully completed two material company acquisitions post year-end: Piedmont and Med-Pharmex · Executed numerous bolt-on product acquisitions to complement existing equine and CAP portfolios.

Financial performance: · Revenue growth of 13.8% to £681.8 million · Underlying operating profit increased by 9.4% to £174.3 million · Reported operating profit increased by 16.2% to £95.5 million · Strong cash generation of £163.3 million representing cash conversion of 93.7% · Underlying diluted EPS increase of 14.0% to 120.84 pence · Full year dividend increased by 10.8% to 44.89 pence.

All of the above measures are at constant exchange rate (CER).

Financial Summary

	2022 £m	2021 £m	Growth at AER	Growth at CER
Revenue	681.8	608.0	12.1%	13.8%
Underlying
Underlying operating profit	174.3	162.2	7.5%	9.4%
Underlying EBIT %	25.6%	26.7%	(110 bps)	(110 bps)
Underlying EBITDA	190.6	177.7	7.3%	9.2%
Underlying diluted EPS (p)	120.84	108.14	11.7%	14.0%
Reported
Operating profit	95.5	84.0	13.7%	16.2%
Diluted EPS (p)	53.40p	51.03p	4.6%	7.5%
Cash generated from operations before interest/taxation	163.3	141.2	15.7%
Dividend per Share	44.89p	40.50p	10.8%

Underlying results exclude items associated with amortisation and impairment of acquired intangibles and notional intangibles in respect of Medical Ethics, acquisition and integration costs including release of acquisition tax provisions, transformational cloud computing arrangements, loss on extinguishment of debt, foreign exchange and discount unwind relating to contingent consideration, the tax impact of these items and the deferred tax impact of changes in tax rates. Further details are provided in notes 5 and 21.

AER is defined as Actual Exchange Rate.

Results Briefing today: A presentation of the Annual Results will be held today at 10.00 am (UK time) via https://stream.brrmedia.co.uk/broadcast/62dac1dc878cf86b3409dea5 This will also be available on the Dechra website later today. Dial in ref: Dechra - Preliminary Announcement of Results United Kingdom: Participant Local: [phone] Confirmation Code: 3730022 For assistance please contact Fiona Tooley on [phone].

Enquiries:
Dechra Pharmaceuticals PLC	Office:  [phone]
Ian Page, Chief Executive Officer
Paul Sandland, Chief Financial Officer
Jonny Armstrong, Head of Investor Relations
e-mail: [e-mail]
TooleyStreet Communications Ltd
Fiona Tooley, Director e-mail: [e-mail]	Office:  [phone] Mobile: [phone]

Notes: Foreign Exchange Rates: FY2022 Average: EUR 1.1807: GBP 1.0; USD 1.3316: GBP 1.0 FY2022 Closing:  EUR 1.1652: GBP 1.0; USD 1.2103: GBP 1.0

FY2021 Average: EUR 1.1287: GBP 1.0; USD 1.3466: GBP 1.0 FY2021 Closing:  EUR 1.1654: GBP 1.0; USD 1.3850: GBP 1.0

About Dechra Dechra is a global specialist veterinary pharmaceuticals and related products business. Its expertise is in the development, manufacture, marketing and sales of high quality products for veterinarians worldwide. For more information, please visit: www.dechra.com Stock Code: Full Listing (Pharmaceuticals): DPH LEI: 213800J4UVB5OWG8VX82 Trademarks Trademarks appear throughout this document in italics. Dechra and the Dechra 'D' logo are registered trademarks of Dechra Pharmaceuticals PLC. StrixNB® and DispersinB® are trademarks licensed from Kane Biotech Inc. Forward Looking Statement This document contains certain forward-looking statements.  The forward-looking statements reflect the knowledge and information available to the Company during the preparation and up to the publication of this document.  By their very nature, these statements depend upon circumstances and relate to events that may occur in the future thereby involve a degree of uncertainty.  Therefore, nothing in this document should be construed as a profit forecast by the Company. Market Abuse Regulation (MAR) The information contained within this announcement may contain inside information stipulated under the Market Abuse (Amendment) (EU Exit) Regulations 2018.  Upon the publication of this announcement via the Regulatory Information Service, this inside information is now considered to be in the public domain.

Dechra Pharmaceuticals PLC

Preliminary Results for the year ended 30 June 2022

Chief Executive Officer's Statement

Introduction

I am pleased to report that the Group has delivered strong growth throughout our financial year as we continue to outperform the major international markets in which we operate. After a very strong start to the year, revenue in the second half started to return to more normalised historical levels of growth as the benefit of increased spending on pets seen during the COVID-19 restrictions slowed down. This growth was delivered across all product categories, all major therapeutic areas and in all the international markets in which we trade. We have continued to progress on all aspects of our strategy; the product development pipeline was strengthened, material acquisitions were completed post year-end and a new subsidiary was established in South Korea as we continue our geographical expansion. Excellent progress has been made on systems and quality in our supply chain, which remained robust throughout the year. Information technology implementations strengthened the infrastructure of the Group and provided better management information. ESG is integrated into the way we work and our people remain highly engaged, motivated and dedicated in achieving our strategic goals.

Operational Review

EU Pharmaceuticals Segment

In the period our total European (EU) Pharmaceuticals Segment revenue increased by 8.2% at CER (4.7% at AER). This includes a 12 month contribution from the acquisition of Tri-Solfen^® ANZ acquired in February 2021 and an additional month's contribution from Osurnia^® acquired on 27 July 2020. Existing net revenues increased by 6.4% at CER (3.0% at AER). This Segment includes our International business, which is detailed below. It also includes non-core business, such as the Agricultural Chemical business, which was originally acquired as part of the Genera acquisition in 2015 and was divested in January 2022; annual sales from this business were approximately £6.0 million.

The EU growth was delivered across all product segments and all countries with Iberia, Poland, Italy and Austria all achieving double digit growth. The main driver of growth was CAP; however, it is pleasing that FAP remains in growth in a challenging market and that Equine and Nutrition continue to perform well.

Education continues to be the main tool to engage our veterinary customers. Throughout the year we provided technical support for 6,000 clinical cases in the UK alone and have provided over 85,000 hours of continuing professional development (CPD) training across Europe to veterinarians through our Lunch and Learn programmes and educational seminars. Digital communication has also been an area of focus with 13,500 veterinarians and veterinary nurses in Europe and 17,600 globally, utilising our online Dechra Academy, which now has 596 educational modules in our key therapeutic areas.

International Pharmaceuticals

It is five years since we established a team to focus purely on international expansion. During this time, we have established Dechra Australia as the second largest company in CAP pharmaceuticals, have significantly strengthened our New Zealand operation through two small acquisitions and have established a strong foothold in South America through our Brazilian subsidiary. Our ANZ and Brazilian businesses delivered good growth in the year.

We have extended our international footprint by establishing a new subsidiary in South Korea. We terminated the agreement with our previous distributor following their change of ownership. We have appointed a senior management team, whom we have known for many years, to manage this new entity which will commence trading in the second quarter of the new financial year. Having our own operation will give us greater transparency on the opportunities in this fast growing market and will also allow us to better assess our future options for expansion in this region.

NA Pharmaceuticals Segment

Our total North America (NA) Pharmaceuticals Segment revenues increased by 23.8% at CER (25.3% at AER). This revenue includes a contribution from various products we acquired in the year, the majority of which were launched in the second half, and one month of additional Osurnia sales on a like-for-like basis over the previous year. Existing net revenues increased strongly by 21.3% at CER (22.7% at AER). This exceptional performance was delivered despite increased competition to three of our branded generics. We did manage to retain market share, albeit at a lower price point, due to our strong relationship with our customers and through a Dechra Rewards Scheme, managed by Vetcove, that now has 9,000 veterinary practice members. We continue to review and assess our relationship with the veterinary distributors (wholesalers) who proactively promote their own generic products that compete with ours.

In the USA we increased the marketing team with four specialists in digital and product management to support the launch of the newly developed and acquired products. We continue to increase the scale of our sales team with the appointment of 18 new representatives in the year, a number of which joined us as part of the Laverdia® acquisition.

The majority of growth is delivered from the US; however, we also delivered strong performances in Mexico and Canada. In Mexico, we transitioned completely out of our old manufacturing site and relocated to new sales offices. In Canada, we initiated a FAP business unit with the launch of two products and added three internal sales representatives to our sales team.

As with DVP EU, education and technical support are important tools in our relationship with our customers. In the year, our veterinary technical services team dealt with 8,500 technical queries, which involved over 15,000 telephone calls; we also held 413 certified educational presentations to 15,794 attending veterinarians. Furthermore, we continued to invest in our University engagement programme to educate veterinary graduates on our key therapeutic areas.

Product Category Performance

CAP

Companion Animal Products (CAP), which represent 74.6% of Group turnover, grew by 16.0% at CER in the year. Our key therapeutic sectors, endocrinology, dermatology, anaesthesia and analgesia were the main drivers of this growth. At the end of the year, we launched Zenalpha^® in the USA, a new novel canine sedative, approved by the FDA, which contributed revenue of $1.3 million.

FAP

The strong performance in Food producing Animal Products (FAP) during recent years, which represents 11.6% of Group turnover, slowed to 6.0% at CER. This remains a solid performance as the European market, a key area for our FAP sales, has been challenging due to avian influenza, African swine fever and inflationary costs.

Equine

Equine, which represents 7.2% of Group turnover, grew by 12.1%. This growth was driven by locomotion, a therapeutic sector, which includes Osphos, Equipalazone^® and HY-50^® and by internal medicine, including Equibactin^® and Prednidale Horse. In the second half of the year we also launched three acquired products in the USA, which are detailed later in this report.

Nutrition

Nutrition, which represents 5.1% of Group turnover, continues to perform well and grew by 15.1%. The majority of our Specific branded diet sales are in the EU where we have continued to increase market penetration, especially with our newly launched products, such as the organic range.

Product Development and Regulatory Affairs (PDRA)

Pipeline Progress

We have delivered another year of consistent progress on the pipeline. We have generated positive dose range finding data in both the dog and cat for the diabetes drugs being developed in partnership with Akston Biosciences. Using its recently commissioned GMP biologics production facility, Akston Biosciences is currently on track to deliver active ingredient for our planned pivotal efficacy studies. Lifecycle innovation of our key brands, such as Vetoryl^® and Osurnia, are ongoing and showing good progress. New opportunities are constantly being identified and new candidates have been added to the pipeline. With the addition of the Piedmont projects (outlined later in this report), our pipeline is stronger than ever and positioned to deliver material products to support future growth.

Product Approvals

Numerous marketing authorisations have been achieved throughout the year. Although only Zenalpha^® is material in its own right, they all add depth and breadth to the current product range and strengthen our international portfolio. Major approvals in Dechra territories are:

• in Europe, Metomotyl 10mg chewable tablet for dogs (Metoclopramide hydrochloride), Bupredine^® Multidose 0.3mg/ml solution for injection for dogs, cats and horses (Buprenorphine), Canergy 100mg coated tablets for dogs (Propentofylline), Cefabam 1000mg, 250mg and 50mg tablets for dogs (Cephalexin monohydrate), Clindacutin 10mg ointment for dogs (Clindamycin hydrochloride), Lodisure^® 1mg tablets for cats (Amlodipine besilate), Octacillin^® 800mg/g powder for use in water for pigs (Amoxicillin trihydrate), Sedadex 0.1mg/ml solution for injection for dogs and cats (Dexmedetomidine hydrochloride), Vomend^® vet 10mg chewable tablets for dogs (Metoclopramide hydrochloride);

• in Great Britain and Northern Ireland, Tri-Solfen^® Solution for Pigs (Adrenaline tartrate, Lidocaine hydrochloride, Bupivacaine hydrochloride, Cetrimide) was approved. An exemption from the need for a maximum residue limit (MRL) for an equine product at an advanced stage of development was also approved;

• a novel canine sedative injection Zenalpha (Medetomidine hydrochloride, Vatinoxan hydrochloride), a generic antibiotic Amoxicillin Trihydrate and Clavulanate Potassium Drops and generic Carprofen Caplets have been approved in the USA;

• two sedative products, Dexmedesed 0.5mg/ml (Dexmedetomidine hydrochloride) and Dormazolam^® (Midazolam) as well as the antimicrobial Rexxolide^® (Tulathromycin) were registered in Canada;

• in Mexico, five new products were registered;

• in Australia, four new products and in New Zealand three new products were registered;

• in Brazil, three new products were registered including two vaccines; and

• additionally, in other international territories, we have received 52 approvals in countries including Egypt, Iran, Korea, Pakistan, Peru, Puerto Rico, Serbia, Sri Lanka, Switzerland, Thailand, West Africa (UEMOA), Ukraine, United Arab Emirates, Uruguay and Vietnam.

Acquisitions

We have successfully completed several product acquisitions and two material company acquisitions.

In July 2022, post the year end, we acquired Piedmont Animal Health, Inc for $210 million (£175 million), a product development company with a long, successful track record of developing major international products for multi-national animal health companies. Piedmont has eight novel products in various stages of development, all in the CAP market for cats and dogs and all within Dechra's key therapeutic areas of competence. The business significantly strengthens Dechra's pipeline of novel products with two near term opportunities, both expected to be top ten products for Dechra. The development team of 19 people who have joined Dechra, located in Greensboro, North Carolina, have added additional strength and expertise to the Company's existing product development capabilities.

Also, post the year end in August 2022 we completed the acquisition of Med-Pharmex Holdings, Inc for $260.0 million (£221.5 million). Med-Pharmex, with sales of $43.0 million and adjusted EBITDA of $15.3 million, is an established platform business located in Pomona, California with manufacturing, product development and regulatory capabilities. It has several products already approved and established in the US market. As they have no sales and marketing capabilities, these products are currently sold through third party partners. We are planning to sell many of these products under a Dechra brand through our existing sales and marketing channels, providing material margin synergies and operational leverage. In the longer term, synergies will also be realised from integration and improved utilisation of the manufacturing facilities. The facility has the capability to produce Cephalosporins, a type of antibiotic that is required to be manufactured in a dedicated suite. They currently have one product registered and one product in the development pipeline that fall into this category, which is expected to be first entrant generic in product markets of material scale in the USA.

We executed numerous bolt on product acquisitions, which complement our equine and CAP portfolios.

The equine products acquired are all for the US market and are:

• Rompun^® (xylazine injection) and Butorphanol Tartrate Injection from Elanco™ Animal Health, which complement our anaesthesia and analgesia portfolio;

• Sucromate™ Equine (deslorelin acetate) sterile suspension from Thorn Bioscience LLC, which expands our US Equine portfolio into reproduction; and

• ProVet APC™ (Autologous Platelet Concentrate) and ProVet BMC™ (Bone Marrow Concentrate) systems from Hassinger Biomedical. These two patented medical devices harness growth factors from the horse's whole blood, which when injected back into the horse positively enhance healing results in soft tissue injuries. The ProVet APC™ system is a revolutionary device and is arguably the fastest and most transportable platelet concentrator available to the veterinary industry.

The CAP products acquired are:

• LAVERDIA^® -CA1, a novel oral SINE (selective inhibitor of nuclear export) drug and the first oral tablet for canine lymphoma acquired from Anivive Lifesciences Inc. It is currently sold under a conditional approval by the FDA Center for Veterinary Medicine in the USA with full dossier submissions planned for the USA, UK, EU, Brazil, Australia, Japan and Canada;

• Isoflurane^®, USP and Sevoflurane^®, USP from Halocarbon, both inhalant anaesthetics, which expand our US veterinary surgical suite;

• Atopivet^® range of products for cats and dogs in collaboration with Bioiberica, which offer unique alternatives to multi-modal dermatology therapy; and

• Malaseb^®, a leading dermatological medicated shampoo which we already market across Europe, was acquired from Dermcare for the US market, an excellent addition to our leading topical dermatology range.

Enablers

Manufacturing and Supply Chain

The investment made in Manufacturing and Supply Chain over the last two years has resulted in higher levels of stock availability with backorders at the end of the year being at a three year low. The huge improvements in our quality systems are clearly demonstrated by successful regulatory inspections at our sites in Zagreb, Croatia, Skipton, UK and Fort Worth, USA. Investment has continued across
our Manufacturing sites:

• two new automated lines were installed at Zagreb;

• a new autoclave system for sterilisation of finished goods has been installed in Bladel, Netherlands;

• a high speed tablet press was commissioned at our Fort Worth site in the USA;

• a new water for injection facility has been commissioned in Brazil; and

• work has commenced on a new building in Skipton, which will expand the site and improve work flows.

We have extended our European logistics centre in Uldum, Denmark creating over 6,000 new pallet spaces with a subterranean store for temperature controlled drugs that materially reduces the electricity required to maintain low temperatures. We have also increased our warehousing capacity in Australia.

This ongoing investment in our Manufacturing and Supply Chain will allow us to continue our strategy to bring more production in-house; nine products were transferred into Zagreb, Melbourne (USA), Bladel and Fort Worth within the year.

Technology

Information technology remains a key area of focus for the business. We are working on numerous projects which strengthen the infrastructure, improve internal information, provide educational support and improve employee and customer engagement. We are making excellent progress on two major projects outlined in the Half Year Report, these being the new quality document management system to support Manufacturing, Product Development, Regulatory Affairs and Technical Services, and in addition we have also established a project team to upgrade the Manufacturing ERP system to one consolidated cloud-based Oracle platform. Salesforce, a customer relationship management system, is now being utilised across the majority of countries in which we operate and we have also fully rolled out a new global payroll system across the Group. We have restructured and recruited new hires to increase our digital communication capabilities as we continue to expand our on-line training capabilities to our employees and to our customers through the Dechra Academy, a platform which we are constantly upgrading in both its technical capabilities and increased content.

People

On 1 January 2022, Alison Platt was appointed Chair of the Board following the retirement of Tony Rice. On 1 June 2022, John Shipsey was appointed as Non-Executive Director with the view to being the successor to Julian Heslop as Audit Committee Chair. The Board and I would like to express our thanks and gratitude for the huge contribution both Tony and Julian have made to the Board over their tenure as Non-Executive Directors.

We have commenced the recruitment process to find a successor to Ishbel Macpherson as Remuneration Chair as Ishbel is in her tenth year as a Non-Executive Director on the Dechra Board.

Following the retirement of Dr Susan Longhofer as Chief Scientific Officer, we are pleased to announce the appointment of Patrick Meeus as her replacement. Patrick, who has joined the Senior Executive Team, is a veterinary surgeon and brings a wealth of experience gained in multi-national pharmaceutical companies in animal health.

Isabelle Gaillet has been appointed as EU Commercial Director.  Isabelle, who previously worked for the Company from 2015 to 2019 as French Country Manager will join the European Senior Management Team. She will support the EU Country Managers and lead our commercial strategy for the EU alongside Tony Griffin, European Pharmaceuticals Managing Director.

We have launched a Future Facing Leaders programme with 24 employees from across our global subsidiaries joining the scheme, which is designed to develop our management talent and will support the future growth of Dechra. Furthermore, we have launched leadership development programmes for our International, North America and Manufacturing management teams.

We have rolled out a Group wide applicant tracking system and also an automated talent review process that allows us to monitor our talent pipeline, succession plans, employee mobility and individuals' progress.

ESG

To enable our business to adapt to climate change, we have focused on mitigating our impact through the decarbonisation of the business. We remain committed to the Science Based Target initiatives, working towards a Net-Zero ambition by 2050. We have also released our inaugural separate Sustainability Report and provided enhanced Task Force on Climate-related Financial Disclosures, which are included in the 2022 Annual Report.

Dividend

The Board is proposing a final dividend of 32.89 pence per share (2021: 29.39 pence per share). Added to the interim dividend of 12.00 pence per share (2021: 11.11 pence per share), this brings the total dividend for the financial year ended 30 June 2022 to 44.89 per share (2021: 40.50 pence per share), representing 10.8% growth over the previous year.

Subject to shareholder approval at the Annual General Meeting to be held on 20 October 2022, the final dividend will be paid on 18 November 2022 to shareholders on the Register at 28 October 2022. The shares will become ex-dividend on 27 October 2022.

Outlook

As the market returns to normal levels of trading post the impact of COVID-19 and as current macroeconomic uncertainties are expected to continue, the veterinary pharmaceutical market, particularly in the CAP sector, is resilient and in growth.

The acquisition, post year end, of Med-Pharmex strategically strengthens our position in the US market. The acquisition of Piedmont adds several novel exciting products to our development pipeline and we continue to identify new opportunities as we successfully execute our strategy.

We remain confident in our ability to outperform the markets in which we operate and in the prospects for the current financial year.

Ian Page

Chief Executive Officer

5 September 2022

Financial Review

Overview of Reported Financial Results

To assist with understanding our reported financial performance, the consolidated results below are split between existing and acquired businesses; acquisition includes the incremental effect of those businesses acquired in the current and prior year, reported on a 'like-for-like' basis. Additionally, the following table shows the growth at both reported actual exchange rates (AER), and constant exchange rates (CER) to identify the impact of foreign exchange movements. The acquisition operating profit of £1.8 million includes underlying operating profit of £6.7 million and non-underlying charges of £4.9 million relating to amortisation of acquired intangibles.

Including non-underlying items, the Group's consolidated operating profit increased by 16.2% at CER (13.7% at AER) whilst consolidated profit before tax increased by 7.8% at CER (4.9% at AER), impacted by an increase in net finance costs. Diluted EPS growth was 7.5% at CER (4.6% at AER) reflecting the marginal reduction in the effective tax rate.

As Reported	2022 Existing £m	2022 Acquisition £m	2022 Consolidated £m	2021 £m	Growth at AER	Growth at CER
					Consolidated %	Consolidated %
Revenue	669.4	12.4	681.8	608.0	12.1%	13.8%
Gross profit	377.0	7.8	384.8	345.9	11.2%	12.9%
Gross profit %	56.3%	62.9%	56.4%	56.9%	(50bps)	(40bps)
Operating profit	93.7	1.8	95.5	84.0	13.7%	16.2%
EBIT %	14.0%	14.5%	14.0%	13.8%	20bps	30bps
Profit before tax	75.8	1.8	77.6	74.0	4.9%	7.8%
Diluted EPS (p)			53.40	51.03	4.6%	7.5%

Overview of Underlying Financial Results

The Group presents a number of non-GAAP Alternative Performance Measures (APMs). This allows investors to understand better the underlying performance of the Group by excluding certain non-underlying items as set out in notes 3, 4, 5, 6 and 21. As underlying results include the benefits of acquisitions but exclude significant costs such as amortisation of acquired intangibles, they should not be regarded as a complete picture of the Group's financial performance, which is presented in its total Reported results. The exclusion of non-underlying items may result in underlying earnings being materially higher or lower than total Reported earnings. In particular, when significant amortisation of acquired intangibles is excluded, underlying earnings will be higher than total Reported earnings. A reconciliation of underlying results to Reported results in the year to 30 June 2022 is provided in the table below. In the commentary which follows, all references will be to CER movement unless otherwise stated.

		Non-underlying Items
	2022 Underlying Results £m	Amortisation and related costs of acquired intangibles £m	Acquisition, impairments and cloud computing costs £m	Tax rate changes and finance expenses £m	2022 Reported Results £m
Revenue	681.8	-	-	-	681.8
Gross profit	385.3	-	(0.5)	-	384.8
Selling, general and administrative expenses	(178.6)	(69.1)	(5.5)	-	(253.2)
R&D expenses	(32.4)	(3.7)	-	-	(36.1)
Operating profit	174.3	(72.8)	(6.0)	-	95.5
Net finance costs	(3.1)	-	-	(13.5)	(16.6)
Share of associate profit	(1.2)	(0.1)	-	-	(1.3)
Profit before tax	170.0	(72.9)	(6.0)	(13.5)	77.6
Taxation	(38.3)	17.3	1.2	0.4	(19.4)
Profit after tax	131.7	(55.6)	(4.8)	(13.1)	58.2
Diluted EPS (p)	120.84				53.40

In the year, Dechra delivered consolidated revenue of £681.8 million, representing an increase of 13.8% on the prior year. This included £669.4 million from its existing business, an increase of 11.8%, and a £12.4 million contribution from acquired product rights.

Consolidated underlying operating profit of £174.3 million represents a 9.4% increase on the prior year. This included £167.6 million from Dechra's existing business, an increase of 5.2% on a like-for-like basis, and a £6.7 million contribution from acquired product rights.

Underlying EBIT margin decreased by 110 bps to 25.6%, principally due to the increase in Selling, General and Administrative expenses (SG&A) spend as a percentage of revenue with our cost base normalising following lower levels of spend during the COVID-19 pandemic.

Underlying diluted EPS grew by 14.0% to 120.84 pence reflecting the profit growth from the existing and acquired businesses and benefiting from lower net finance costs driven by realised foreign exchange gains.

A more detailed explanation of our non-underlying items is included later in this Financial Review.

Underlying	2022 Existing £m	2022 Acquisition £m	2022 Consolidated £m	2021 £m	Growth at CER
					Existing %	Consolidated %
Revenue	669.4	12.4	681.8	608.0	11.8%	13.8%
Underlying gross profit	377.5	7.8	385.3	345.9	10.8%	13.1%
Underlying gross profit %	56.4%	62.9%	56.5%	56.9%	(50bps)	(40bps)
Underlying operating profit	167.6	6.7	174.3	162.2	5.2%	9.4%
Underlying EBIT %	25.0%	54.0%	25.6%	26.7%	(170bps)	(110bps)
Underlying EBITDA	183.9	6.7	190.6	177.7	5.3%	9.2%
Underlying diluted EPS (p)			120.84	108.14		14.0%
Dividend per share (p)			44.89	40.50		10.8%

Reported Segmental Performance

Reported segmental performance is presented in note 2. The effect of acquisitions in the year was material; the reported segmental performance is analysed between existing and acquired businesses, and at AER and CER in the table below. The acquisition elements capture the additional base business coming into the Group up to the first anniversary of their acquisition, including the growth Dechra generated in them during the year, and the synergies that have already been realised by the Group since acquisition. This analysis becomes less definitive the further in time from the completion of the acquisition, as the acquired business is progressively integrated with the existing business.

Reported	2022 Existing £m	2022 Acquisition £m	2022 Consolidated £m	2021 £m	Growth at AER		Growth at CER
					Existing %	Consolidated %	Existing %	Consolidated %
Revenue by segment
EU Pharmaceuticals	400.0	6.7	406.7	388.5	3.0%	4.7%	6.4%	8.2%
NA Pharmaceuticals	269.4	5.7	275.1	219.5	22.7%	25.3%	21.3%	23.8%
Total	669.4	12.4	681.8	608.0	10.1%	12.1%	11.8%	13.8%
Underlying operating profit/(loss) by segment
EU Pharmaceuticals	127.7	3.8	131.5	127.8	(0.1%)	2.9%	3.8%	6.9%
NA Pharmaceuticals	84.8	2.9	87.7	75.9	11.7%	15.5%	9.7%	13.6%
Pharmaceuticals  Research and  Development	(32.4)	-	(32.4)	(32.4)	0.0%	0.0%	(1.5%)	(1.5%)
Underlying segment operating profit	180.1	6.7	186.8	171.3	5.1%	9.0%	6.9%	10.9%
Corporate and unallocated costs	(12.5)	-	(12.5)	(9.1)	(37.4%)	(37.4%)	(37.4%)	(37.4%)
Underlying operating profit	167.6	6.7	174.3	162.2	3.3%	7.5%	5.2%	9.4%
Non-underlying operating items	(73.9)	(4.9)	(78.8)	(78.2)
Reported operating profit	93.7	1.8	95.5	84.0	11.5%	13.7%	13.9%	16.2%

Underlying Segmental Performance

European Pharmaceuticals

Revenue in European (EU) Pharmaceuticals grew by 8.2% to £406.7 million. The existing business grew by 6.4% with this growth driven by a robust performance across all established European markets and also in the key International businesses in ANZ and Brazil. The acquisitions of Tri-Solfen^® (for the ANZ market) and Osurnia (July sales) contributed a combined £6.7 million to revenue for the period where there is no comparative.

Operating profit from existing business increased by 3.8%, with operating margin decreasing to 31.9% and consolidated operating margin decreasing to 32.3% as our cost base normalised following COVID-19.

Underlying	2022 Existing £m	2022 Acquisition £m	2022 Consolidated £m	2021 £m	Growth at CER
					Existing %	Consolidated %
Revenue	400.0	6.7	406.7	388.5	6.4%	8.2%
Operating profit	127.7	3.8	131.5	127.8	3.8%	6.9%
Operating profit %	31.9%	56.7%	32.3%	32.9%	(100bps)	(60bps)

North American Pharmaceuticals

Revenue from North American (NA) Pharmaceuticals grew by 23.8% to £275.1 million. The existing business grew by 21.3% reflecting strong demand for our CAP products in the US, Canada and Mexico. Osurnia (July sales), along with the product acquisitions made in the latter part of 2021 and early in 2022, contributed a combined £5.7 million to revenue for the period where there is no comparative.

Operating profit from existing business grew 9.7% with operating margin decreasing to 31.5% and consolidated operating margin decreasing to 31.9% as our cost base normalised following COVID-19.

Underlying	2022 Existing £m	2022 Acquisition £m	2022 Consolidated £m	2021 £m	Growth at CER
					Existing %	Consolidated %
Revenue	269.4	5.7	275.1	219.5	21.3%	23.8%
Operating profit	84.8	2.9	87.7	75.9	9.7%	13.6%
Operating profit %	31.5%	50.9%	31.9%	34.6%	(310bps)	(270bps)

Pharmaceuticals Research and Development

Pharmaceuticals Research and Development (R&D) expenses of £32.4 million represented 4.8% of existing revenue with some project spend being delayed due to the impact of COVID-19 and specifically our ability to recruit and perform clinical study work. This spend included £3.3 million in relation to Akston.

	2022 Existing £m	2022 Acquisition £m	2022 Consolidated £m	2021 £m	Growth at CER
					Existing %	Consolidated %
R&D expenses	(32.4)	-	(32.4)	(32.4)	(1.5%)	(1.5%)
% of revenue	4.8%	-	4.8%	5.3%

Revenue by Product Category

CAP revenue continues to be the largest proportion of Dechra's business at 74.6%, up from 72.8% in the prior year. CAP grew 16.0% in the year with further market penetration across all therapeutic areas. Equine revenue grew by 12.1% in the year driven by the US product rights acquisitions. FAP revenue growth was 6.0% benefiting from the launch of Tri-Solfen^® in ANZ following the acquisition of rights in July 2021, but offset by the divestment of the non-core Agricultural Chemicals business in January 2022 (revenue growth on an existing basis was 5.6%). Nutrition revenue increased by 15.1% on the prior year reflecting the continuing success of our strategy with key customers in our key markets.

Other revenue reduced by 12.6% to £10.1 million, now representing only 1.5% of the business as we continue our planned exit from third party contract manufacturing in line with our manufacturing strategy, to improve the production efficiency of Dechra's own products.

	2022 £m	2021 £m	% Change at AER	% Change at CER
CAP	508.4	442.6	14.9%	16.0%
Equine	49.5	44.8	10.5%	12.1%
FAP	78.8	77.0	2.3%	6.0%
Subtotal Pharmaceutical	636.7	564.4	12.8%	14.3%
Nutrition	35.0	31.7	10.4%	15.1%
Other	10.1	11.9	(15.1%)	(12.6%)
Total	681.8	608.0	12.1%	13.8%

Underlying Gross Profit

Underlying gross profit margin for the existing business decreased by 50 bps to 56.4% on an Existing basis and decreased by 40 bps to 56.5% on a consolidated basis reflecting the strong CAP performance offset by the increased generic competition, particularly in our NA Business.

Underlying Selling, General and Administrative Expenses (SG&A)

SG&A costs grew from £151.3 million in the prior year to £178.6 million in the current year, an increase of 19.8%. This growth principally represents the full year impact of the investment in our people costs following the review of compensation across the Group in January 2021 and the normalisation of our cost base (including sales & marketing and travel & entertainment costs) following COVID-19 lockdowns in the prior year.

Non-underlying Items

Non-underlying items incurred in the year are fully described in note 5. In summary, they relate to the following:

• Amortisation of acquired intangibles of £72.8 million has decreased from £75.2 million in 2021 principally due to new charges relating to the product acquisitions more than offset by the reducing charge from the AST Farma and Le Vet acquisition;

• Cloud computing arrangement costs of £2.8 million relating to the initial costs of the programme to implement the Manufacturing and Supply function's new ERP and Electronic Quality Management systems;

• Impairment costs of £2.9 million predominately relating to the sale of the Agricultural Chemicals business (£1.0 million) and an impairment of a small number of In-Process R&D assets recognised on the acquisition of AST Farma and Le Vet (£1.7 million);

  Finance charge of £13.5 million (2021: credit of £2.8 million) represents the charge arising on the unwind of the discount relating to the contingent consideration liability of £3.4 million and associated foreign exchange loss of £10.1 million driven by the depreciation of Sterling against the US and Australian Dollars;

• Taxation credit of £18.9 million (2021: £14.0 million) represents the tax impact of the above items (£21.1 million), offset by the revaluation of deferred tax balance sheet items (£2.2 million charge) following changes in corporate tax rates, including a further revision to the Netherlands rate (which is increasing to 25.8%);

• Expenses relating to acquisition and subsequent integration activities were £0.3 million (2021: £1.4 million) with costs relating
to the product rights acquisitions in the current year being immaterial so treated as underlying; and

• Costs relating to rationalisation of the manufacturing organisation were nil (2021: £1.6 million), as this programme was completed in the prior year.

Taxation

The reported effective tax rate (ETR) for the year is 25.0% (2021: 25.0%) and includes the one-off impact of the substantively enacted increase in corporate tax rates in the Netherlands (from 25.0% to 25.8%) on deferred tax balances. On an underlying basis the ETR is 22.5% (2021: 21.7%); the main differences to the UK corporation tax rate applicable of 19.0% (2021: 19.0%) relate to differences in overseas tax rates and non-deductible expenses offset by patent box allowances and other incentives.

The underlying ETR is expected to remain at a similar level in the year to 30 June 2023. We continue to monitor relevant tax legislation internationally as it may affect our future ETR. 

Reported Profit

Reported profit before tax increased by 4.9% at AER reflecting the reported operating profit growth of 13.7% at AER and the increase in net finance costs which include a foreign exchange loss of £10.1 million on the remeasurement of the contingent consideration liabilities driven by the depreciation of Sterling against the US and Australian Dollars.

Earnings per Share and Dividend

Underlying diluted EPS for the year was 120.84 pence, a 14.0% growth on the prior year reflecting the underlying EBIT growth of 9.4% and the benefit from a lower net finance expense principally due to foreign exchange gains realised. The weighted average number of shares for diluted earnings per share for the year was 109.0 million (2021: 108.8 million).

The reported diluted EPS for the year was 53.40 pence (2021: 51.03 pence). This represents an increase of 4.6% (at AER) in reported EPS which is lower than the reported EBIT growth of 13.7% (at AER) reflecting the increase in net finance expense due to the foreign exchange losses recognised on contingent liabilities.

The Board is proposing a final dividend of 32.89 pence per share (2021: 29.39 pence); added to the interim dividend of 12.00 pence, the total dividend per share for the year ended 30 June 2022 is 44.89 pence. This represents 10.8% growth over the prior year. Dividend cover based on underlying diluted EPS is 2.7 times (2021: 2.7 times). The Board continues to operate a progressive dividend policy, recognising investment opportunities as they arise.

Currency Exposure

The average rate for £/€ increased by 4.6%, and the £/$ rate decreased by 1.1% during the financial year. The effect in the Consolidated Income Statement and Statement of Financial Position is analysed in the above paragraphs of this review between performance at AER and CER. CER analysis compares the performance of the business on a like-for-like basis applying constant exchange rates.

	Average rates
	2022	2021	% Change
£/€	1.1807	1.1287	4.6%
£/$	1.3316	1.3466	(1.1%)

Currency Sensitivity

Euro €: a 1% variation in the £/€ exchange rate affects underlying diluted EPS by approximately +/- 0.5%.

US Dollar $: a 1% variation in the £/$ exchange rate affects underlying diluted EPS by approximately +/- 0.5%.

Current exchange rates are £/€ 1.1623 and £/$ 1.1623 as at 1 September 2022. If these rates had applied throughout the year, the underlying diluted EPS would have been approximately 8.3% higher.

Statement of Financial Position

The Statement of Financial Position is summarised in the table below.

• Non-current assets (excluding deferred tax) increased from £819.9 million to £846.6 million and include the intangible assets recognised on the product acquisitions, partly offset by amortisation of acquired intangibles.

• Working capital increased from £142.7 million to £175.7 million (£33.0 million at AER, £27.8 million cash flow impact) mainly due to the growth of the Group with an investment in inventory made to maintain service levels during this continuing period of heightened growth and uncertainty.

• Net debt increased in the year by £8.0 million from £200.2 million to £208.2 million; this includes cash generation from operations at £166.1 million, an outflow of £54.4 million relating to product acquisitions made during the year, net capital expenditure of
£20.3 million, net interest/tax outflows of £39.8 million and £44.8 million in dividends. Exchange rate variations negatively impacted the net debt position by £7.2 million.

• Current and deferred tax assets and liabilities reduced from £45.8 million to £34.7 million principally due to the realisation of deferred tax liabilities relating to the amortisation of acquired intangibles.

	2022 £m	2021 £m
Non-current assets	846.6	819.9
Working capital	175.7	142.7
Net debt	(208.2)	(200.2)
Current and deferred tax	(34.7)	(45.8)
Other liabilities	(112.6)	(83.7)
Total net assets	666.8	632.9

Cash Flow, Financing and Liquidity

The Group enjoyed good cash generation during the year, with a strong Underlying EBITDA margin of 28.0% (2021: 29.2%). However, as mentioned above, working capital has increased by £27.8 million, mainly due to the growth of the Group with an investment in inventory made to maintain service levels during this continuing period of heightened growth and uncertainty. This resulted in net cash generated from operations after non-underlying items of £163.3 million, representing cash conversion of 93.7% of underlying operating profit.

	2022 £m	2021 £m
Underlying operating profit	174.3	162.2
Depreciation and amortisation	16.3	15.5
Underlying EBITDA	190.6	177.7
Underlying EBITDA %	28.0%	29.2%
Working capital movement	(27.8)	(36.0)
Other	3.3	2.5
Cash generated from operations before interest, taxation and non-underlying items	166.1	144.2
Non-underlying items	(2.8)	(3.0)
Cash generated from operations before interest and taxation	163.3	141.2
Cash conversion (%)	93.7%	87.1%

Net Debt Bridge

Notable cash items are listed below in the net debt reconciliation table:

• Net capital expenditure on tangible assets increased to £20.3 million (2021: £19.8 million), representing 1.8 times depreciation.

• Acquisitions of intangible assets of £57.3 million includes the product acquisitions (see below) and capitalised development expenditure (£1.2 million).

• The net debt/underlying EBITDA leverage ratio per the borrowing facilities' leverage covenant, which includes the proforma adjustment to full year EBITDA for the acquisitions, was 1.0 times (2021: 1.1 times) versus a covenant of 3 times.

	£m
Net Debt 30 June 2021	(200.2)
Net cash generated from operations before non-underlying items	166.1
Non-underlying items	(2.8)
Net capital expenditure	(20.3)
Acquisition of intangible assets	(57.3)
Acquisition of subsidiary	(0.8)
New lease liabilities	(3.8)
Interest and tax	(39.8)
Dividend paid	(44.8)
Other movements	2.3
Other non-cash movements	0.4
Foreign exchange on net debt	(7.2)
Net Debt 30 June 2022	(208.2)

Borrowing Facilities

As reported in preceding Annual Reports, the Group completed a refinancing and entered into a multi-currency facilities agreement in July 2017 (the Facility Agreement), with a group of banks comprising Bank of Ireland (UK) plc, BNP Paribas, Fifth Third Bank, HSBC Bank plc, Lloyds Bank plc (replaced by Credit Industriel et Commercial, London branch (CIC) in August 2019), Raiffeisen Bank International AG and Santander UK plc (the Banks). The Facility Agreement has a revolving credit facility (the RCF) of £340.0 million, which is committed until July 2024.

In January 2020 the Group undertook a Private Placement raising €50.0 million and USD100.0 million (under seven and ten year new senior secured notes respectively), the proceeds of which were used to repay existing debt. The placement achieved the Group's aims of diversifying the sources of debt financing and extending the debt maturity profile.

On 14 July 2022, the Group undertook a further Private Placement raising €50.0 million and €100.0 million (under seven and ten year new senior secured notes respectively), the proceeds of which were used to repay existing debt.

Capital Management

On 21 July 2022, the Group successfully completed a share placing of 5,364,683 new ordinary shares, representing 4.95% of the existing issued share capital of the Company, at a price of 3430 pence per placing share, raising gross proceeds of £184.0 million which were largely deployed to fund the Piedmont Animal Health, Inc acquisition upon its completion on 20 July 2022.

Covenants

There are two covenants governing the RCF and the Private Placements:

• Leverage: Net Debt to underlying EBITDA not greater than 3.0:1 for the RCF and 3.5:1 for the Private Placements (30 June 2022: 1.0:1); and

• Interest Cover: underlying EBITDA to Net Finance Charges not less than 4.0:1 (30 June 2022: 24.6:1).

The above ratios are calculated excluding the impact of IFRS 16 and having adjusted for the pro-forma impact of acquisitions in accordance with the terms of the RCF and Private Placements arrangements.

On 22 December 2021, the Group entered into an Amendment and Restatement Agreement in relation to the £340.0 million Revolving Credit Facility (RCF) maturing 25 July 2024. With effect from 1 January 2022, any new Borrowings drawn on the RCF will now use Risk Free Reference (RFR) rates instead of LIBOR rates. The relevant RFR rates for the principal Borrowings of the Group will be SONIA (for Borrowings in GBP), SOFR (for Borrowings in USD) and EURIBOR (for Borrowings in EUR). The interest rate charged on any new Borrowings drawn under the RCF will be the relevant RFR rate plus the Margin plus a Credit Adjustment Spread (CAS). The CAS charged on the RCF will be a minimum of 0.0326% and a maximum of 0.42826%, dependent upon the term and currency of the new Borrowings. The CAS will not be charged on any new Borrowings that are drawn in EUR currency. The margin over LIBOR (or equivalent) remains in the range from 1.3% for leverage below 1.0 times, up to 2.2% for leverage above 2.5 times.

The weighted average coupon of the Private Placements fixed rate notes equates to 3.2%.

Underlying Return on Capital Employed (ROCE)

Underlying ROCE increased to 19.5% in the year (2021: 18.8%) reflecting the increased contribution from the Group's existing businesses.

Acquisitions

The Group has made several acquisitions in recent years. The incremental performance during the first year of ownership of the acquisitions made during the 2021 and 2022 financial years is separately summarised compared to the existing business in the sections above.

During the year the Group completed the following product rights acquisitions:

• In July 2021, the rights to Isoflurane^® and Sevoflurane^® were acquired from Halocarbon Life Sciences LLC for USD12.0 million (£8.7 million).

• In September 2021, the rights to ProVet APC™ and ProVet BMC systems were acquired from Hassinger Biomedical and DSM Medical for USD4.0 million (£3.0 million). A payment of £0.1 million was also made for inventory.

• In October 2021, the rights to Rompun^® (xylazine injection) and Butorphanol Tartrate injection were acquired from Elanco™ Animal Health for USD4.0 million (£3.0 million). A payment of £0.2 million was also made for inventory.

• In October 2021, the rights to Sucromate™ Equine sterile suspension were acquired from Thorn Bioscience LLC for USD9.0 million (£6.5 million). A minor payment was also made for inventory.

• In January 2022, the global product rights to Verdinexor, a novel treatment for all forms and stages of canine lymphoma in dogs, including a first right of refusal for other species along with the trademark (Laverdia) were acquired from Anivive Lifesciences Inc. Following the initial payment of USD19.0 million (£14.0 million) there are subsequent milestone payments totalling USD45.5 million (£33.5 million) due on the achievement of various approval and sales milestones for the product in the USA, UK, EU, Brazil, Australia, Japan and Canada. Royalties are also payable as part of this transaction and have been accrued as part of the contingent consideration liabilities.

Accounting Standards

The accounting policies adopted are outlined in note 1 to the financial statements in the 2022 Annual Report.

In April 2021, the IFRS Interpretations Committee published its final agenda decision on Configuration and Customisation costs in a Cloud Computing Arrangement. The agenda decision considers how a customer accounts for configuration or customisation costs in
a cloud computing arrangement. The agenda decision does not have a material impact on the Group in respect of the current period or prior periods (note 5). There are no other accounting policy changes which have materially impacted the 2022 financial year.

Going Concern

The Directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. Accordingly, they continue to adopt the going concern basis of accounting in preparing these annual financial statements.

In reaching this conclusion, the Directors have given due regard to the following:

• The Group's business activities, together with factors likely to impact the future growth and operating performance;

• The financial position of the Group, its cash flows, available debt facilities and compliance with the financial covenants associated with the Group's borrowings, which are described in the financial statements;

• The cash generated from operations, available cash resources and committed bank and other facilities and their maturities, which taken together, provide confidence that the Group will be able to meet its obligations as they fall due; and

• Post balance sheet events (see note 20).

As at 30 June 2022, the Group had net debt of £208.2 million (2021: £200.2 million), and had available cash balances and unutilised committed borrowing facilities of £271.2 million. Further information on available resources and committed bank facilities is provided in notes 18 and 21 to the financial statements of the 2022 Annual Report.

Subsequent Events

On 20 July 2022, the Group acquired 100% of the share capital of Piedmont Animal Health, Inc. (Piedmont) for US$210.0 million (£175.0 million) in cash. Piedmont is an established product development business with a strong track record of developing products for multi-national animal health companies.

On 26 August 2022, the Group acquired 100% of the share capital of the Med-Pharmex Holdings, Inc. group of companies (Med-Pharmex) for US$260.0 million (£221.5 million) in cash. Med-Pharmex is an established platform business with manufacturing, product development and regulatory capabilities, and has several products already approved and being sold in the US market.

Summary

Our business continued to benefit from strong market conditions which remained heightened from pre COVID-19 levels accelerating growth in our existing business. This excellent revenue performance, particularly in North America, has been facilitated by a robust global supply chain and supplemented by healthy incremental contributions from our product acquisitions in the year.

R&D expenditure was lower than expected during the period, but we continued to invest heavily in our people and have seen the rest of our cost base return to more normalised levels following COVID-19.

The Group's balance sheet and cash flows are strong, enabling us to continue to consider further relevant acquisition and investment opportunities as they arise.

Paul Sandland
Chief Financial Officer
5 September 2022

Key Performance Indicators

Existing Revenue Growth
Existing revenue includes the impact of previous acquisitions where there is a comparator period, and therefore growth rates are stated on a like-for-like basis.	Performance 11.8% Increase 2022 £669.4m 2021 £608.0m 2020 £515.2m 2019 £481.8m 2018 £407.1m
Commentary Dechra's existing business grew by 6.4% in EU Pharmaceuticals (excluding third party manufacturing), and by 21.3% in NA Pharmaceuticals.
Relevance to Strategy A key driver of our strategy is to deliver sustainable sales growth through delivering our pipeline maximising our existing portfolio and expanding geographically.   1 2 3

Underlying Diluted Earnings Per Share Growth
Underlying profit after tax divided by the diluted average number of shares, calculated on the same basis as note 11 to the Accounts.	Performance 14.0% Increase 2022 120.84p 2021 108.14p 2020 92.19p 2019 90.01p 2018 76.45p
Commentary This reflects profit growth from the existing and acquired products and benefiting from lower net finance costs driven by foreign exchange gains realised.
Relevance to Strategy Underlying diluted EPS is a key indicator of our performance and the return we generate for our stakeholders. It is one of the performance conditions of the LTIP. 1 2 3 4  Long Term Incentive Plan (LTIP) performance condition

Underlying Return on Capital Employed
Underlying operating profit expressed as a percentage of the average of the opening and closing operating assets (excluding cash/debt and net tax liabilities).	Performance 70bps Increase 2022 19.5% 2021 18.8% 2020 15.4% 2019 15.6% 2018 15.4%
Commentary There was an increase in ROCE during the year reflecting the increased contribution from the Group's existing business. The Group's target is 15%.
Relevance to Strategy As we look to grow the business, it is important that we use our capital efficiently to generate returns superior to our costs of capital in the medium to long term. It underpins the performance conditions of the LTIP. 1 2 3 4 5 Long Term Incentive Plan (LTIP) performance condition

Cash Conversion
Cash generated from operations before tax and interest payments as a percentage of underlying operating profit.	Performance 660bps Increase 2022 93.7% 2021 87.1% 2020 99.4% 2019 85.0% 2018 81.9%
Commentary Cash conversion increased during the year as a result of the increase in working capital representing a smaller proportion of the underlying operating profit compared to the prior year.
Relevance to Strategy Our stated aim is to be a cash generative business. Cash generation supports investment in the pipeline, acquisitions and people. 1 2 3 4

New Product Revenue
Revenue from new products as a percentage of total Group revenue. A new product is defined as any molecule launched in the last five years.	Performance 960bps decrease 2022 10.8% 2021 20.4% 2020 16.7% 2019 16.7% 2018 11.9%
Commentary New product revenue reflects market penetration of product launches in the year and new product right acquisitions made in the second half offset by products no longer defined as new. The new product right acquisitions will deliver a greater uplift next year.
Relevance to Strategy This measure shows the delivery of revenue in each year from new products launched in the prior five years, on a rolling basis. It shows the performance of our R&D and sales and marketing organisations when launching newly developed or in-licensed or acquired products. 1 2 3

Lost Time Accident Frequency Rate (LTAFR)
All accidents resulting in the absence or inability of employees to conduct a full range of their normal working activities for a period of more than three workings days after the day when the incident occurred, normalised per 100,000 hours worked.	Performance 88.9% Increase 2022 0.17 2021 0.09 2020 0.17 2019 0.21 2018 0.00
Commentary The lost time accident frequency increased this year to 0.17. All of the incidents occurred in our manufacturing sites. None of these incidents resulted in a work-related fatality or disability.
Relevance to Strategy The safety of our employees is core to everything we do. We are committed to a strong culture of safety in all our workplaces. 6 7 8

Employee Turnover
Number of leavers during the period as a percentage of the average total number of employees in the period.		Performance 250 bps Increase 2022 16.0% 2021 13.5% 2020 12.4% 2019 13.6% 2018 15.9%
Commentary We saw an increase in employee turnover in the period due to a reorganisation at Londrina, Brazil and resignations across the business.
Relevance to Strategy Attracting and retaining the best employees is critical to the successful execution of our strategy. 6 8
Key to Strategic Growth Drivers : 1 Pipeline Delivery 2 Portfolio Focus 3 Geographical Expansion 4 Acquisition		Key to Strategic Enablers: 5 Technology 6 People 7 Manufacturing and Supply Chain 8 ESG

How the Business Manages Risk

Effective risk management and control is key to the delivery of our business strategy and objectives.

Our risk management and control processes are designed to identify, assess, mitigate and monitor significant risks, and provide reasonable, but not absolute, assurance that the Group will be successful in delivering its objectives.

Risk Management Process

Our strategy informs the setting of objectives across the business and is widely communicated. Strategic risks and opportunities are identified as an integral part of our strategy setting process, whilst operational, financial, compliance and emerging risks are identified as an integral part of our functional planning and budget setting processes.

The Board oversees the risk management and internal control framework and the Audit Committee reviews the effectiveness of the risk management process and the internal control framework.

Our Senior Executive Team (SET) owns the risk management process and is responsible for managing specific Group risks. The SET members are also responsible for embedding sound risk management in strategy, planning, budgeting, performance management, and operational processes within their respective Operating Segments and business units.

The Board and the SET together set the tone and decide the level of risk and control to be taken in achieving the Group's objectives.

SET members present their risks, controls and mitigation plans to the Board for review on a rolling programme throughout the year, whilst the Board undertakes a full review of the risk management process biannually. The SET is responsible for conducting self-assessments of their risks and the effectiveness of their control processes. Where control weaknesses are identified, remedial action plans are developed, and these are included in the risk reports presented to the Board.

Internal Audit coordinates the ongoing risk reporting process and provide independent assurance on the internal control framework.

Emerging Risks

Emerging risks are new risks that are unlikely to impact the business in the next year but have the potential to evolve over a longer term and could have a significant impact on our ability to achieve our objectives. They may develop into key risks or may not arise at all.

As part of our risk management process, both the Board and SET are tasked with identifying and assessing our emerging risks. These are then monitored on an ongoing basis and reviewed alongside existing risks.

Ukraine

Russia's invasion of Ukraine has had some impact on our business, with increased energy costs and additional supply chain uncertainty. Our sales to Russia, which were not material, have also ceased. We will continue to monitor the situation in Ukraine and the associated impacts this may have on our principal risks, with regard to our markets, supply chain and people. 

Dechra Culture

The Dechra Values are the foundation of our entire business culture including our approach to risk management and control. The Board expects these Values to drive the behaviours and actions of all employees. We encourage an open communication style where it is normal practice to escalate issues promptly so that appropriate action can be taken quickly to minimise any impact on the business.

Internal Control Framework

Our internal control framework is designed to ensure:

• proper financial records are maintained;

• the Group's assets are safeguarded;

• compliance with laws and regulations; and

• effective and efficient operation of business processes.

The key elements of the control framework are described below:

Management Structure

Our management structure has clearly defined reporting lines, accountabilities and authority levels. The Group is organised into business units. Each business unit is led by a SET member and has its own management team.

Policies and Procedures

Our key financial, legal and compliance policies that apply across the Group are:

• Code of Business Conduct and How to Raise a Concern;

• Delegation of Authorities;

• Dechra Finance Manual, including Tax and Treasury policies;

• Anti-Bribery and Anti-Corruption;

• Data Protection;

• Health and Safety;

• Sanctions; and

• Charitable Donations.

Strategy and Business Planning

We have a five-year strategic plan which is developed by the SET and endorsed by the Board annually. Business objectives and performance measures are defined annually, together with budgets and forecasts. Monthly business performance reviews are conducted at both Group and business unit levels.

Operational Controls

Our key operational control processes are as follows:

• Product Pipeline Reviews: We review our pipeline regularly to identify new product ideas and assess the fit with our product portfolio, prioritise development projects, review whether products in development are progressing according to schedule, and assess the expected commercial return on new products.

• Lifecycle Management: We manage and monitor lifecycle management activities for our key products to meet evolving customer needs.

• Pricing Policies: We manage and monitor our national and European pricing policies to deliver equitable pricing for each customer group.

• Product Supply: We continue to develop our demand forecasting and supply planning processes, with monthly reviews of demand and production forecasts, inventory controls, and remediation plans for products that are out of supply.

• Quality Assurance: Each of our manufacturing sites has an established Quality Management System. These systems are designed to ensure that our products are manufactured to a high standard and in compliance with the relevant regulatory requirements.

• Pharmacovigilance: Our regulatory team operates a robust system with a view to ensuring that any adverse reactions and product complaints related to the use of our products are reported and dealt with promptly.

• Financial Controls: Our controls are designed to prevent and detect financial misstatement or fraud and operate at three levels:

− Entity Level Controls performed by senior managers at Group and business unit level;

− Month end and year end procedures performed as part of our regular financial reporting and management processes; and

− Transactional Level Controls operated on a day-to-day basis.

The key controls in place to manage our principal risks are described in the table below. Internal Audit provides independent and objective assurance and advice on the design and operation of the Group's internal control framework. The internal audit plan seeks to provide balanced coverage of the Group's material financial, operational and compliance control processes.

Improvements in 2022

We have continued to strengthen and improve our governance and control processes and the following changes have been implemented:

• New governance and oversight processes to provide transparency of performance, decisions and actions across the manufacturing and supply network.

• We have continued to make improvements to our manufacturing, quality and supply processes, with additional investments in people and production facilities.

• Recruitment of a new Head of Good Distribution Practices and Head of Good Practices to further strengthen the Quality team.

• Launched an independent hotline to enable employees to submit confidential reports using our How to Report a Concern Procedure.

• Roll out of an enhanced Financial Control Framework in response to the BEIS white paper on Restoring Trust in Audit and Corporate Governance. This will put the business in a strong position to comply with the potential requirements of the BEIS proposals.

• Our Environmental, Social and Governance (ESG) strategy has been further enhanced. We continue to execute our 'Making a Difference' plan as well as working towards our commitment of setting verifiable targets across the entire value chain through the Science Based Targets initiative. 

Plans for 2023

We will continue to refine and strengthen our internal control framework where required in response to changes in our risk profile and improvement opportunities identified by business management, quality assurance and internal audit. Our Manufacturing and Supply processes continue to be the primary focus area for 2023.

We also plan to make further improvements and enhancements to our Sustainability strategy, financial control framework and Group policies.

Understanding Our Key Risks

Link to Strategic Growth Driver and Enabler	Risk	Potential Impact	Control and Mitigating Actions	Trends
2	1 Market Risk:  The growth of veterinary buying groups and corporate customers impacts the distribution landscape. We sell and promote primarily to veterinary practices and distribute our products through wholesaler and distributor networks in most markets. In a number of mature markets, veterinarians have established buying groups to consolidate their purchasing, and corporate customers are continuing to expand.	The growth of corporate customers and buying groups represents an opportunity to increase sales volumes and revenue but may result in reduced margins.	We manage and monitor our national and European pricing policies to deliver equitable pricing for each customer group. Our relationships with larger customers are managed by key account managers. Our marketing strategy is designed to support veterinarians in retaining customers by promoting the benefits of our product portfolio in our major therapeutic areas.	No change
1 2 3	2 Competitor Risk:  Competitor products launched against one of our leading brands (e.g. generics or a superior product profile). We depend on data exclusivity periods or patents to have exclusive marketing rights for some of our products. Although we maintain a broad portfolio of products, our unique products like Vetoryl and Zycortal have built a market which continues to be attractive to competitors.	Revenues and margins may be adversely affected should competitors launch a novel or generic product that competes with one of our unique products upon the expiry or early loss of patents. Costs may increase due to defensive marketing activity.	We focus on lifecycle management strategies for our key products such that they can fulfil evolving customer requirements. Product patents are monitored, and defensive strategies are developed towards the end of the patent life or the data exclusivity period. We monitor market activity prior to competitor products being launched and develop a marketing response strategy to mitigate competitor impact.	Increased risk

1	3 Product Development and Launch Risk:  Failure to deliver major products either due to pipeline delays or newly launched products not meeting revenue expectations. The development of pharmaceutical products is a complex, risky and lengthy process involving significant financial, R&D and other resources. Products that initially appear promising may be delayed or fail to meet expected clinical or commercial expectations or face delays in regulatory approval. It can also be difficult to predict whether newly launched products will meet commercial expectations.	A succession of clinical trial failures could adversely affect our ability to deliver shareholder expectations and could also damage our reputation and relationship with veterinarians. Our market position in key therapeutic areas could be affected, resulting in reduced revenues and profits. Where we are unable to recoup the costs incurred in developing and launching a product this would result in impairment of any intangible assets recognised.	Potential new development opportunities are assessed from a commercial, financial and scientific perspective by a multi-functional team to allow senior management to make decisions as to which ones to progress. The pipeline is discussed regularly by senior management, including the Chief Executive Officer and Chief Financial Officer. Regular updates are also provided to the Board. Each development project is managed by project leaders who chair project team meetings. Before costly pivotal studies are initiated, smaller proof of concept pilot studies are conducted to assess the effects of the drug on target species and for the target indication. In respect of all new product launches a detailed marketing plan is established and progress against that plan is regularly monitored by a new product launch team. The Group has detailed market knowledge and retains close contact with customers through its management and sales teams which are trained to a high standard.	No change
1 2 7	4 Supply Chain Risk:  Inability to maintain supply of key products due to manufacturing, quality or product supply problems in our own facilities or those of third party suppliers. We rely on third parties for the supply of all raw materials for products that we manufacture in-house. We also purchase many of our finished products from third party manufacturers.	Raw material supply failures may cause: • increased product costs due to difficulties in obtaining scarce materials on commercially acceptable terms; • product shortages due to manufacturing delays; or • delays in clinical trials due to shortage of trial products. Shortages in manufactured products and third party supply failures on finished products may result in lost sales. Whilst the impact of COVID-19 on the supply chain is receding, materials price inflation and the Russian invasion of Ukraine have created new supply chain challenges. However our robust response to recent developments has seen the supply chain risk remain stable.	We monitor the performance of our key suppliers and act promptly to source from alternative suppliers where potential issues are identified. The Group's top products are regularly reviewed in order to identify the key suppliers of materials or finished products. A dedicated external network team exists to manage and support our CMOs to deliver quality products to our regulatory specifications. Demand forecasting and supply planning processes are in place, with monthly reviews of demand and production forecasts, inventory levels, and remediation plans for products that are out of supply. Processes are in place to monitor and improve product robustness, including quality and technical analyses of key products and engagement with internal and external regulatory stakeholders. Business continuity plans are in place at our key manufacturing sites. A new procurement structure and performance measures are being implemented to improve supplier performance management and implement a second source strategy.	No change

1 2 3	5 Regulatory Risk:  Failure to meet regulatory requirements. We conduct our business in a highly regulated environment, which is designed to ensure the safety, efficacy, quality, and ethical promotion of pharmaceutical products. Failure to adhere to regulatory standards or to implement changes in those standards could affect our ability to register, manufacture or promote our products.	Delays in regulatory reviews and approvals could impact the timing of a product launch and have a material effect on sales and margins. Any changes made to the manufacturing, distribution, marketing and safety surveillance processes of our products may require additional regulatory approvals, resulting in additional costs and/or delays. Non-compliance with regulatory requirements may result in delays to production or lost sales. Regulatory risk is increasing due to a lack of clarity around Regulation 2019/6; with the new veterinary regulation that legislates for the authorisation, use and monitoring of veterinary medicinal products in the European Union. The Regulation was applied in all EU Member States from January 2022.	The Group strives to exceed regulatory requirements and ensure that its employees have detailed experience and knowledge of the regulations. Manufacturing and Regulatory teams have established quality systems and standard operating procedures in place. A dedicated External Network Quality Director supports our CMOs in complying with our regulatory specifications. Regular contact is maintained with all relevant regulatory bodies in order to build and strengthen relationships and facilitate good communication lines. The Regulatory and Quality teams update their knowledge of regulatory developments and implement changes in business procedures to comply with new requirements. Where changes are identified which could affect our ability to market and sell any of our products, a response team is created in order to mitigate the risk. External consultants are used to audit our manufacturing quality systems. Our Regulatory team operates a robust Pharmacovigilance (PV) process to report any adverse reactions and product complaints related to the use of our products.	Increased risk
4	6 Acquisition Risk:  Identification of acquisition opportunities and their potential integration. Identification of suitable opportunities and securing a successful approach involves a high degree of uncertainty. Acquired products or businesses may fail to deliver expected returns due to over-valuation or integration challenges.	Failure to identify or secure suitable targets could slow the pace at which we can expand into new markets or grow our portfolio. Acquisitions could deliver lower profits than expected or result in intangible assets impairment.	We have defined criteria for screening acquisition targets, and we conduct commercial, clinical, financial, environmental and legal due diligence. The Board reviews acquisition plans and progress regularly and approves all potential transactions. The SET manages post acquisition integration and monitors the delivery of benefits and returns through a defined process.	No change

3 4 6	7 People Risk:  Failure to resource the business to achieve our strategic ambitions, particularly on geographical expansion and acquisition. As Dechra expands into new markets and acquires new businesses or science, we recognise that we may need additional people with different skills, experience and cultural knowledge to execute our strategy successfully in those markets and business areas. Our growth plans and future success are also dependent on retaining knowledgeable and experienced senior managers and key staff. Post COVID-19, recruitment has been challenging with increased competition for the best talent.	Failure to recruit, develop and retain quality people could result in: • overstretched resources; • weakened succession planning; • capability gaps in new markets; or • challenges in integrating new acquisitions. This could lead to erosion of our competitive advantage, and delay implementation of our strategy. Recent wage inflation has the potential to impact workforce stability.	The Group HR Director reviews the organisational structure with the SET and the Board twice a year to confirm that the organisation is fit for purpose and to assess the resourcing implications of planned changes or strategic imperatives. A development programme is in place to identify opportunities to recruit new talent and develop existing potential. A talent acquisition team and applicant tracking software are in place. The Nomination Committee oversees succession planning for the Board and the SET. Succession plans are in place for the SET together with development plans for key senior managers. Remuneration packages are reviewed on an annual basis in order to help ensure that the Group can continue to retain, incentivise and motivate its employees.	Increased risk
2 3	8 Antimicrobials Regulatory Risk:  Continuing pressure on reducing antimicrobial use. The issue of the potential transfer of antibacterial resistance from animals to humans is subject to regulatory discussions globally. Whilst new EU regulations restricting antimicrobial use in animals were not implemented in 2022, there remains continuing pressure on reducing antibiotic risk. This is driven by market & cultural trends.	Reduction in sales of our antimicrobial product range. Our reputation could be adversely impacted if we do not respond appropriately to government regulations and recommendations.	Regular contact is maintained with relevant veterinary authorities to enable us to have a comprehensive understanding of regulatory changes. We strive to develop new products and minimise antimicrobial resistance concerns. We communicate appropriate antimicrobial use in line with best practice.	No change
1 2 6	9 Climate:  Severe weather patterns caused by climate change or natural disaster cause damage to manufacturing or distribution facilities impacting our ability to meet customer demand. In addition, the business will face transition risk, such as carbon pricing, change in raw material pricing and movement to renewable energy sources.	Damage to our facilities as a result of climate change could impact our abilities both to supply and manufacture product, which may weaken customer confidence and impact performance, both over a shorter and longer term. Natural disaster could impact on local employability and the communities in which our sites are based.	Dechra has committed to setting verifiable targets across the entire value chain through the Science Based Target initiative (SBTi), with a Letter of Intention already submitted. Dechra has also joined the UNFCCC Race to Zero.  Scenario planning has been conducted for both physical and transition risks to enable us to mitigate climate related risks.  The share of key products manufactured by Dechra, as opposed to CMOs, will be increased in order to manage physical risks better. Dechra is preparing to implement an internal shadow carbon price to bring clarity and to identify climate-related opportunities and the best areas to reduce emissions. Renewable electricity is generated from an existing solar plant at our Zagreb site. We are investigating other renewable energy sources across the Group.	No change

5	10 Cybersecurity and IT Failure Risk: Information security breach or significant disruption to our IT systems, resulting from a cyber-attack or failure of key IT software or infrastructure.		Failure to prevent or adequately respond to a data breach or cyber-attack could result in business disruption, fines, loss of personal data or loss of intellectual property/commercially sensitive information. Software or infrastructure failure could result in significant disruption to operations and management decision making.	Regular information security and data protection training for employees. Key systems are replicated across dual servers and backed-up. Disaster and data recovery plans are in place and tested regularly. Data encryption and multi-factor authentication is employed on mobile devices. Business interruption and cyber insurance is in place.		New
Key to Strategic Growth Drivers: 1 Pipeline Delivery 2 Portfolio Focus 3 Geographical Expansion 4 Acquisition			Key to Strategic Enablers: 5 Technology 6 People 7 Manufacturing and Supply Chain 8 ESG

 

Consolidated Income Statement

For the year ended 30 June 2022

	Note	2022			2021
		Underlying £m	Non- underlying* (notes 3, 4 & 5)   £m	Total £m	Underlying £m	Non- underlying* (notes 3, 4 & 5) £m	Total £m
Revenue	2	681.8	-	681.8	608.0	-	608.0
Cost of sales		(296.5)	(0.5)	(297.0)	(262.1)	-	(262.1)
Gross profit		385.3	(0.5)	384.8	345.9	-	345.9
Selling, general and administrative expenses		(178.6)	(74.6)	(253.2)	(151.3)	(73.8)	(225.1)
Research and development expenses		(32.4)	(3.7)	(36.1)	(32.4)	(4.4)	(36.8)
Operating profit	2	174.3	(78.8)	95.5	162.2	(78.2)	84.0
Finance income	3	5.7	-	5.7	-	3.8	3.8
Finance expense	4	(8.8)	(13.5)	(22.3)	(11.7)	(1.0)	(12.7)
Share of loss of investments accounted for using the equity method	6	(1.2)	(0.1)	(1.3)	(0.4)	(0.7)	(1.1)
Profit/(loss) before taxation		170.0	(92.4)	77.6	150.1	(76.1)	74.0
Income taxes	7	(38.3)	18.9	(19.4)	(32.5)	14.0	(18.5)
Profit/(loss) for the year		131.7	(73.5)	58.2	117.6	(62.1)	55.5
Earnings per share
Basic	9			53.72p			51.33p
Diluted	9			53.40p			51.03p
Dividend per share (interim paid and final proposed for the year)	8			44.89p			40.50p

*	The Group presents a number of non-GAAP Alternative Performance Measures (APMs). This allows investors to understand better the underlying performance of the Group, by excluding non-underlying items as set out in note 5.

Consolidated Statement of Comprehensive Income

For the year ended 30 June 2022

	Note	2022 £m	2021 £m
Profit for the year		58.2	55.5
Other comprehensive income/(expense):
Items that may be reclassified subsequently to profit or loss:
Foreign currency cash flow hedges
- fair value movements		-	(1.7)
Foreign currency translation differences for foreign operations		15.7	(28.0)
Income tax relating to components of other comprehensive income/(expense)	7	(0.4)	(0.2)
		15.3	(29.9)
Total comprehensive income for the period		73.5	25.6

Consolidated Statement of Financial Position

At 30 June 2022

	Note	2022 £m	2021 £m
ASSETS
Non-current assets
Intangible assets	10	730.5	715.8
Property, plant and equipment		100.3	87.0
Investments	6	15.8	17.1
Deferred tax assets	11	2.3	2.0
Total non-current assets		848.9	821.9
Current assets
Inventories		175.7	149.5
Corporation tax receivable		11.0	17.6
Trade and other receivables		136.8	106.7
Cash and cash equivalents		120.9	118.4
Total current assets		444.4	392.2
Total assets		1,293.3	1,214.1
LIABILITIES
Current liabilities
Borrowings and lease liabilities	12	(3.3)	(3.1)
Trade and other payables		(136.8)	(113.5)
Contingent consideration	16	(6.4)	(22.6)
Corporation tax payable		(12.2)	(16.6)
Total current liabilities		(158.7)	(155.8)
Non-current liabilities
Borrowings and lease liabilities	12	(325.8)	(315.5)
Contingent consideration	16	(104.0)	(57.6)
Provisions	13	(2.2)	(3.5)
Deferred tax liabilities	11	(35.8)	(48.8)
Total non-current liabilities		(467.8)	(425.4)
Total liabilities		(626.5)	(581.2)
Net assets		666.8	632.9
EQUITY
Issued share capital		1.1	1.1
Share premium account		413.9	411.6
Hedging reserve		-	-
Foreign currency translation reserve		3.4	(11.9)
Merger reserve		84.4	84.4
Retained earnings		164.0	147.7
Total equity		666.8	632.9

The financial statements were approved by the Board of Directors on 5 September 2022 and were signed on its behalf by:

Ian Page
Chief Executive Officer
5 September 2022

Paul Sandland
Chief Financial Officer
5 September 2022

Company number: 3369634

 

Consolidated Statement of Changes in Shareholders' Equity

For the year ended 30 June 2022

	Issued share capital £m	Share premium account £m	Hedging reserve £m	Foreign currency translation reserve £m	Merger reserve £m	Retained earnings £m	Total equity £m
Year ended 30 June 2021
At 1 July 2020	1.1	409.3	-	16.3	84.4	126.4	637.5
Profit for the period	-	-	-	-	-	55.5	55.5
Foreign currency cash flow hedge
- fair value movements	-	-	(1.7)	-	-	-	(1.7)
Foreign currency translation differences for foreign operations	-	-	-	(28.0)	-	-	(28.0)
Income tax relating to components of other comprehensive expense	-	-	-	(0.2)	-	-	(0.2)
Total comprehensive (expense)/income	-	-	(1.7)	(28.2)	-	55.5	25.6
Reclassified to cost of acquired intangibles	-	-	1.7	-	-	-	1.7
Transactions with owners:
Dividends paid	-	-	-	-	-	(37.9)	(37.9)
Share-based payments	-	-	-	-	-	3.7	3.7
Shares issued	-	2.3	-	-	-	-	2.3
Total contributions by and distributions to owners	-	2.3	-	-	-	(34.2)	(31.9)
At 30 June 2021	1.1	411.6	-	(11.9)	84.4	147.7	632.9
Year ended 30 June 2022
At 1 July 2021	1.1	411.6	-	(11.9)	84.4	147.7	632.9
Profit for the period	-	-	-	-	-	58.2	58.2
Foreign currency cash flow hedge
- fair value movements	-	-	-	-	-	-	-
Foreign currency translation differences for foreign operations	-	-	-	15.7	-	-	15.7
Income tax relating to components of other comprehensive income	-	-	-	(0.4)	-	-	(0.4)
Total comprehensive income	-	-	-	15.3	-	58.2	73.5
Transactions with owners:
Dividends paid	-	-	-	-	-	(44.8)	(44.8)
Share-based payments	-	-	-	-	-	2.9	2.9
Shares issued	-	2.3	-	-	-	-	2.3
Total contributions by and distributions to owners	-	2.3	-	-	-	(41.9)	(39.6)
At 30 June 2022	1.1	413.9	-	3.4	84.4	164.0	666.8

Hedging Reserve

The hedging reserve represents the cumulative fair value gains or losses on derivative financial instruments for which cash flow hedge accounting has been applied, net of tax. There have been no cash flow hedges in the current year.

Foreign Currency Translation Reserve

The foreign currency translation reserve contains exchange differences on the translation of subsidiaries with a functional currency other than Sterling and exchange gains or losses on the translation of liabilities that hedge the Company's net investment in foreign subsidiaries.

Merger Reserve

The merger reserve represents the excess of fair value over nominal value of shares issued in consideration for the acquisition of subsidiaries where statutory merger relief has been applied in the financial statements of the Parent Company.

Consolidated Statement of Cash Flows

For the year ended 30 June 2022

	Note	2022 £m	2021 £m
Cash flows from operating activities
Operating profit		95.5	84.0
Non-underlying items	5	78.8	78.2
Underlying operating profit		174.3	162.2
Adjustments for:
Depreciation		11.1	11.0
Amortisation and impairment	2	5.2	4.5
Release of government grant		(0.7)	(0.6)
Loss on disposal of leased assets		0.7	-
Loss on disposal of intangible assets		-	0.3
Equity settled share-based payment expense		3.3	2.8
Underlying operating cash flow before changes in working capital		193.9	180.2
Increase in inventories		(19.3)	(36.6)
Increase in trade and other receivables		(23.4)	(19.7)
Increase in trade and other payables		14.9	20.3
Cash generated from operating activities before interest, taxation and non-underlying items		166.1	144.2
Cash outflows in respect of non-underlying items	5	(2.8)	(3.0)
Cash generated from operating activities before interest and taxation		163.3	141.2
Interest paid		(7.0)	(7.7)
Interest on lease liabilities		(0.5)	(0.5)
Income taxes paid		(32.9)	(43.9)
Net cash generated from operating activities		122.9	89.1
Cash flows from investing activities
Proceeds from disposal of property, plant and equipment		-	0.2
Proceeds from disposal of intangible assets		-	0.2
Interest received		0.1	-
Acquisition of subsidiaries (net of cash acquired)		(0.8)	(0.9)
Acquisition of investment in associates		-	(0.8)
Purchase of property, plant and equipment		(20.3)	(18.9)
Capitalised development expenditure		(1.2)	(1.3)
Purchase of acquired intangible non-current assets		(54.4)	(111.2)
Purchase of other intangible non-current assets		(1.7)	(3.4)
Net cash used in investing activities		(78.3)	(136.1)
Cash flows from financing activities
Proceeds from the issue of share capital		2.3	2.3
Repayment of borrowings		-	(15.9)
Principal elements of lease payments		(3.6)	(3.6)
Dividends paid	8	(44.8)	(37.9)
Net cash used in financing activities		(46.1)	(55.1)
Net decrease in cash and cash equivalents		(1.5)	(102.1)
Cash and cash equivalents at start of period		118.4	227.4
Exchange differences on cash and cash equivalents		4.0	(6.9)
Cash and cash equivalents at end of period		120.9	118.4
Reconciliation of net cash flow to movement in net borrowings
Net decrease in cash and cash equivalents		(1.5)	(102.1)
New borrowings and lease liabilities		(3.8)	(5.8)
Repayment of borrowings and lease liabilities		4.1	20.0
Exchange differences on cash and cash equivalents		4.0	(6.9)
Retranslation of foreign borrowings		(11.2)	22.4
Other non-cash changes		0.4	(0.2)
Movement in net borrowings in the period		(8.0)	(72.6)
Net borrowings at start of period		(200.2)	(127.6)
Net borrowings at end of period		(208.2)	(200.2)

Cash conversion is defined as cash generated from operating activities before interest and taxation as a percentage of underlying operating profit.

Notes to the Consolidated Financial Statements

1.  Status of Accounts

These summary financial statements have been prepared in accordance with UK-adopted International Accounting Standards in conformity with the requirements of the Companies Act 2006 as it applies to companies reporting under those standards. The Board of Directors approved the preliminary announcement on 5 September 2022.

2. Operating Segments

As discussed below, the Group has three reportable segments which are based on information provided to the Board of Directors, deemed to be the Group's chief operating decision maker. Several operating segments which have similar economic characteristics have been aggregated into the reporting segments. In undertaking this aggregation, the assessment determined that the aggregated segments have similar products, production processes, customers and overall regulatory environments.

The European Pharmaceuticals Segment comprises Dechra Veterinary Products EU, Dechra Veterinary Products International and Dechra Pharmaceuticals Manufacturing & Supply. This Segment operates internationally and manufactures and markets Companion Animal Products (CAP), Equine, Food producing Animal Products (FAP) and Nutrition. This Segment also includes third party manufacturing and other revenues from non-core activities.

The NA Pharmaceuticals Segment consists of Dechra Veterinary Products US, Dechra Veterinary Products Canada, and Dechra Productos Veterinarios (Mexico), which sell CAP, Equine and FAP in those territories. The Segment also includes our manufacturing units based in Melbourne, Florida and Fort Worth, Texas. This Segment also includes third party manufacturing and other revenues from non-core activities.

The Pharmaceuticals Research and Development Segment includes all of the Group's pharmaceutical research and development activities. This Segment has no revenue. Reconciliation of reportable segment revenues, profit or loss and liabilities and other material items:

	2022 £m	2021 £m
Revenue by segment
European Pharmaceuticals	406.7	388.5
NA Pharmaceuticals	275.1	219.5
	681.8	608.0
Underlying operating profit/(loss) by segment
European Pharmaceuticals	131.5	127.8
NA Pharmaceuticals	87.7	75.9
Pharmaceuticals Research and Development	(32.4)	(32.4)
Underlying segment operating profit	186.8	171.3
Corporate and other unallocated costs	(12.5)	(9.1)
Underlying operating profit	174.3	162.2
Amortisation of acquired intangibles	(72.8)	(75.2)
Cloud computing arrangement costs	(2.8)	-
Impairment of assets	(2.9)	-
Rationalisation of manufacturing organisation	-	(1.6)
Expenses relating to acquisitions and subsequent integration activities	(0.3)	(1.4)
Total operating profit	95.5	84.0
Finance income	5.7	3.8
Finance expense	(22.3)	(12.7)
Share of loss of investments accounted for using the equity method	(1.3)	(1.1)
Profit before taxation	77.6	74.0
Total liabilities by segment
European Pharmaceuticals	(141.3)	(137.5)
NA Pharmaceuticals	(110.6)	(60.5)
Pharmaceuticals Research and Development	(4.7)	(5.9)
Segment liabilities	(256.6)	(203.9)
Corporate loans and revolving credit facility	(313.7)	(302.7)
Corporate accruals and other payables	(8.2)	(9.2)
Current and deferred tax liabilities	(48.0)	(65.4)
	(626.5)	(581.2)

	2022 £m	2021 £m
Revenue by product category
CAP	508.4	442.6
Equine	49.5	44.8
FAP	78.8	77.0
Nutrition	35.0	31.7
Other	10.1	11.9
	681.8	608.0
Additions to intangible non-current assets by segment (including through business combinations)
European Pharmaceuticals	23.5	97.1
NA Pharmaceuticals	75.1	40.2
Pharmaceuticals Research and Development	0.3	0.1
Corporate and central costs	-	1.4
	98.9	138.8
Additions to Property, Plant and Equipment by segment (including through business combinations)
European Pharmaceuticals	20.5	19.8
NA Pharmaceuticals	2.4	5.9
Pharmaceuticals Research and Development	0.5	0.4
Corporate and central costs	0.8	0.3
	24.2	26.4
Depreciation, impairment and amortisation by segment
European Pharmaceuticals	63.4	67.1
NA Pharmaceuticals	26.1	22.4
Pharmaceuticals Research and Development	0.5	0.5
Corporate and central costs	0.8	0.7
	90.8	90.7
The total depreciation, amortisation and impairment charge is made up of the following:
Non-underlying
Amortisation and impairment - selling, general and administrative expenses	70.8	70.8
Amortisation - research and development expenditure	3.7	4.4
	74.5	75.2
Underlying
Amortisation and impairment	5.2	4.5
Depreciation	11.1	11.0
	16.3	15.5

Geographical Information

The following table shows revenue based on the geographical location of customers and non-current assets based on the country of domicile of the entity holding the asset:

	2022 Revenue £m	2022 Non- current assets £m	2021 Revenue £m	2021 Non- current assets £m
UK	58.2	31.8	56.9	30.8
Germany	62.3	2.9	64.8	3.1
Rest of Europe	212.9	378.8	204.8	406.3
USA	258.3	278.3	206.5	215.2
Rest of World	90.1	157.1	75.0	166.5
	681.8	848.9	608.0	821.9

3. Finance Income

Underlying	2022 £m	2021 £m
Finance income arising from:
- Cash and cash equivalents	0.1	-
- Foreign exchange gains	5.6	-
Underlying finance income	5.7	-

Non-underlying	2022 £m	2021 £m
Finance income arising from:
- Foreign exchange gains on contingent consideration	-	3.8
Non-underlying finance income	-	3.8
Total finance income	5.7	3.8

 

4. Finance Expense

Underlying	2022 £m	2021 £m
Finance expense arising from:
- Financial liabilities at amortised cost	8.3	8.3
- Lease liability interest	0.5	0.5
- Foreign exchange losses	-	2.9
Underlying finance expense	8.8	11.7

Non-underlying	2022 £m	2021 £m
Finance expense arising from:
- Foreign exchange losses on contingent consideration	10.1	-
- Unwind of discount associated with contingent consideration	3.4	1.0
Non-underlying finance expense	13.5	1.0
Total finance expense	22.3	12.7

 

5. Non-underlying Items

Non-underlying items charged/(credited) comprise:

	2022 £m	2021 £m
Amortisation of acquired intangibles
- classified within selling, general and administrative expenses	69.1	70.8
- classified within research and development expenses	3.7	4.4
Cloud computing arrangement costs	2.8	-
Impairment of assets	2.9	-
Expenses relating to acquisitions and subsequent integration activities	0.3	1.4
Rationalisation of manufacturing organisation	-	1.6
Non-underlying operating loss	78.8	78.2
Amortisation of notional acquired intangibles from equity accounting for associates	0.7	0.7
Share of realised non-underlying profit of investments accounted for using the equity method	(0.6)	-
Foreign exchange losses/(gains) on contingent consideration	10.1	(3.8)
Unwind of discount associated with contingent consideration	3.4	1.0
Non-underlying loss before tax	92.4	76.1
Tax on non-underlying loss before tax items	(21.1)	(16.6)
Revaluation of deferred tax balances following the change in the US, Dutch and UK tax rates	2.2	4.8
Release of fair value provision on acquisition	-	(2.2)
Non-underlying loss after tax	73.5	62.1

Amortisation of acquired intangibles reflects the amortisation of the fair values of future cash flows recognised on acquisition in relation to the identifiable intangible assets acquired.

Cloud computing arrangement costs of £2.8 million relate to the initial costs of the programme to implement the Manufacturing and Supply function's new ERP and Electronic Quality Management systems, the total cost of which is expected to be £25.0 million over the next five years. Included within underlying administrative expenses is £1.5 million of other cloud computing arrangement costs which relate to the implementation of the Salesforce customer relationship management system in Europe, and the implementation of a global payroll platform. The £2.8 million of non-underlying expenses have been settled in the year.

Impairment of assets predominantly relates to the impairment of certain assets prior to the sale of the Agricultural Chemicals business in January 2022 (£1.0 million) and the impairment of a small number of In-Process Research and Development assets recognised on the acquisition of AST Farma and Le Vet (£1.7 million).

Expenses relating to acquisitions and subsequent integration activities represents costs incurred during the acquisition of Piedmont Animal Health, Inc. (£0.3 million). Additional acquisition expenses of c. £3.0 million are expected to be incurred in relation to the acquisition and integration of Piedmont Animal Health, Inc. and the Med-Pharmex Holdings, Inc. group of companies over the next two years. Costs of £0.2 million relating to the product rights acquisitions made during the year have been taken through underlying expenses.

Foreign exchange losses on contingent consideration is driven by the depreciation of Sterling against the US and Australian Dollars.

The revaluation of the deferred tax balances arises as a result of an increase in the US (£1.1 million), Dutch (£0.8 million) and UK (£0.3 million) corporation tax rates.

6. Interests in Associate

	2022 £m	2021 £m
1 July 2021 and 2020	17.1	17.4
Additions	-	0.8
Share of underlying loss after tax	(1.2)	(0.4)
Non-underlying realised profit from continuing operations	0.6	-
Share of amortisation of notional intangible asset identified on acquisition (net of tax)	(0.7)	(0.7)
30 June 2022 and 2021	15.8	17.1

The Group holds 49.5% of the issued share capital of Medical Ethics Pty Ltd, which is the holding company of Animal Ethics Pty Ltd. The Group has considered other factors when assessing control, and concluded that it has significant influence but not control of the associate. There is no change in the accounting treatment of the entity from the prior year. The company is incorporated in Australia, which is also the principal place of business. The registered address is c/o Level 3, 649 Bridge Road, Richmond, Victoria 3121, Australia. The company has share capital consisting solely of ordinary shares, which are directly owned by the Group. Medical Ethics Pty Ltd is a private company and there is no quoted market price available for its shares. There are no contingent liabilities relating to the Group's interest in the associate.

The Group's share of the loss arising from its investment in Medical Ethics includes the effect of harmonising the accounting policies and of amortising the fair value adjustments (net of tax), which are treated as non-underlying. The milestone of AUD26.0 million that was paid to Animal Ethics Pty Ltd in the year relating to the licensing agreement for the marketing authorisations of Tri-Solfen^® in Australia and New Zealand is eliminated in the Group's income statement. The Group's share of this will be realised over the life of the agreement.

7. Income Taxes

	2022 £m	2021 £m
Current tax  - UK corporation tax	2.2	2.8
- overseas tax	29.7	26.8
- adjustment in respect of prior years	2.8	(2.6)
Total current tax expense	34.7	27.0
Deferred tax  - origination and reversal of temporary differences	(15.7)	(14.5)
- adjustment in respect of tax rates	2.2	4.8
- adjustment in respect of prior years	(1.8)	1.2
Total deferred tax credit	(15.3)	(8.5)
Total income tax charge in the Consolidated Income Statement	19.4	18.5

The tax on the Group's profit before taxation differs from the standard rate of UK corporation tax of 19.0% (2021: 19.0%). The differences to this rate are explained below:

	2022 £m	2021 £m
Profit before taxation	77.6	74.0
Tax at 19.0% (2021: 19.0%)	14.7	14.1
Effect of:
- expenses not deductible	0.8	1.8
- research and development related tax credits	(0.2)	(0.3)
- patent box tax credits	(1.5)	(3.1)
- other incentives	(1.6)	(0.3)
- share of results in associates	0.2	-
- effects of overseas tax rates	3.8	2.9
- adjustment in respect of prior years	1.0	(1.4)
- change in tax rates	2.2	4.8
Total income tax charge in the Consolidated Income Statement	19.4	18.5

Recurring items in the tax reconciliation include: research and development related tax credits and patent box incentives; expenses not deductible; and the share of results in associates. The effective tax rate is 25.0% (excluding non-underlying items the effective tax rate is 22.5%).

Tax (Charge)/Credit Recognised Directly in Equity

	2022 £m	2021 £m
Deferred tax on other equity movements	(0.4)	(0.2)
Tax charge recognised in Consolidated Statement of Comprehensive Income	(0.4)	(0.2)
Corporation tax on equity settled transactions	0.3	0.2
Deferred tax on equity settled transactions	(0.7)	0.7
Total tax (charge)/credit recognised in Equity	(0.4)	0.9

On 27 December 2021, the Dutch government enacted legislation to increase the top rate of corporate income tax from 25.0% to 25.8% with effect from 1 January 2022. Dutch deferred tax assets and liabilities have been recalculated accordingly.

The UK Finance Bill 2021 substantively enacted on 24 May 2021, included an increase in the main rate of UK corporation tax from 19% to 25%, effective 1 April 2023. UK deferred tax assets and liabilities as at 30 June 2022 have been recalculated accordingly, based on the Group's best estimate of the timing of the unwind of existing temporary differences.

At 30 June 2022, the Group held a current provision of £5.9 million (2021: £5.7 million) in respect of uncertain tax positions. The resolution of these tax matters may take many years. The range of reasonably possible outcomes within the next financial year is a release of the provision of between £0.3 million to £3.9 million.

EU CFC Challenge

The Group continues to monitor developments in relation to EU State Aid investigations. On 25 April 2019, the EU Commission's final decision regarding its investigation into the UK's Controlled Foreign Company (CFC) regime was published. It concluded that the legislation up until December 2018 does partially represent State Aid. This decision was upheld by the EU General Court on 8 June 2022, when it dismissed the UK Government's annulment application. The UK Government has since confirmed its intention to lodge an appeal to the EU Court of Justice.

The Group considers that the potential amount of additional tax payable remains between £nil and £4.0 million depending on the basis of calculation and the outcome of HMRC's appeal to the EU Court of Justice. Based on current advice, the Group does not consider any provision is required in relation to this investigation. This judgement is based on current interpretation of legislation and professional advice.

The Group received charging notices from HMRC in January and February 2021 under The Taxation (Post Transition Period) Bill for part of the exposure (£2.75 million) and has paid this to HMRC. As the Group considers that HMRC's appeal will be successful, the charging notices which were settled in full during the previous period (£2.75 million) are recorded as current tax receivables on the basis that the amount will be repaid in due course.

Future Tax Charge

The Group's future tax charge, and its effective tax rate could be affected by several factors including the impact of the implementation of the OECD's Base Erosion and Profit Shifting ('BEPS') actions, and changes in applicable tax rates and legislation in the territories in which it operates.

8. Dividends

	2022 £m	2021 £m
Final dividend paid in respect of prior year but not recognised as a liability in that year: 29.39 pence per share (2021: 24.00 pence per share)	31.8	25.9
Interim dividend paid: 12.00 pence per share (2021: 11.11 pence per share)	13.0	12.0
Total dividend 41.39 pence per share (2021: 35.11 pence per share) recognised as distributions to equity holders in the period	44.8	37.9
Proposed final dividend for the year ended 30 June 2022: 32.89 pence per share (2021: 29.39 pence per share)	35.6	31.8
Total dividend paid and proposed for the year ended 30 June 2022: 44.89 pence per share (2021: 40.50 pence per share)	48.6	43.8

In accordance with IAS 10 'Events After the Balance Sheet Date', the proposed final dividend for the year ended 30 June 2022 has not been accrued for in these financial statements. It will be shown as a deduction from equity in the financial statements for the year ending 30 June 2023. There are no income tax consequences. The final dividend for the year ended 30 June 2021 is shown as a deduction from equity in the year ended 30 June 2022.

9. Earnings per Share

Earnings per ordinary share have been calculated by dividing the profit attributable to equity holders of the parent after taxation for each financial period by the weighted average number of ordinary shares in issue during the period.

	2022 Pence	2021 Pence
Basic earnings per share
- Underlying*	121.57	108.77
- Basic	53.72	51.33
Diluted earnings per share
- Underlying*	120.84	108.14
- Diluted	53.40	51.03

* Underlying measures exclude non-underlying items as defined in note 1.

The calculations of basic and diluted earnings per share are based upon:

	2022 £m	2021 £m
Earnings for underlying basic and underlying diluted earnings per share	131.7	117.6
Earnings for basic and diluted earnings per share	58.2	55.5

	Number	Number
Weighted average number of ordinary shares for basic earnings per share	108,332,583	108,119,864
Impact of share options	654,836	630,725
Weighted average number of ordinary shares for diluted earnings per share	108,987,419	108,750,589

At 30 June 2022, there are 305,468 options (2021: 401,672) that are excluded from the EPS calculations as they are not dilutive for the period presented but may become dilutive in the future.

10. Intangible Assets

	Goodwill £m	Software £m	Development costs £m	Patent rights & marketing authorisations £m	Other intangibles £m	Acquired intangibles £m	Total £m
Cost
At 1 July 2020	253.8	21.7	15.9	5.4	-	791.4	1,088.2
Additions	-	2.8	1.5	-	-	134.5	138.8
Disposals	-	(0.9)	(0.6)	-	-	-	(1.5)
Transfers between categories	-	-	(1.2)	1.2	-	-	-
Remeasurement (note 30)	-	-	-	-	-	4.9	4.9
Foreign exchange adjustments	(17.7)	(0.5)	(0.5)	(0.1)	-	(49.5)	(68.3)
At 30 June 2021 and 1 July 2021	236.1	23.1	15.1	6.5	-	881.3	1,162.1
Additions	-	1.0	1.8	-	-	96.1	98.9
Disposals	-	-	-	(3.3)	-	(0.7)	(4.0)
Transfers between categories	-	0.2	(1.7)	0.4	1.1	-	-
Remeasurement (note 30)	-	-	-	-	-	(24.2)	(24.2)
Foreign exchange adjustments	9.3	0.1	0.2	0.1	0.1	27.4	37.2
At 30 June 2022	245.4	24.4	15.4	3.7	1.2	979.9	1,270.0
Accumulated Amortisation
At 1 July 2020	-	9.0	9.8	3.5	-	373.7	396.0
Charge for the year	-	3.2	0.6	0.5	-	75.2	79.5
Impairments	-	-	0.2	-	-	-	0.2
Disposals	-	(0.8)	(0.2)	-	-	-	(1.0)
Transfers between categories	-	-	(0.8)	0.8	-	-	-
Foreign exchange adjustments	-	(0.2)	(0.1)	(0.2)	-	(27.9)	(28.4)
At 30 June 2021 and 1 July 2021	-	11.2	9.5	4.6	-	421.0	446.3
Charge for the year	-	3.5	0.6	0.4	-	72.8	77.3
Impairments	-	-	-	-	0.7	1.7	2.4
Disposals	-	-	-	(3.4)	-	(0.6)	(4.0)
Foreign exchange adjustments	-	0.1	-	0.1	0.1	17.2	17.5
At 30 June 2022	-	14.8	10.1	1.7	0.8	512.1	539.5
Net book value
At 30 June 2022	245.4	9.6	5.3	2.0	0.4	467.8	730.5
At 30 June 2021	236.1	11.9	5.6	1.9	-	460.3	715.8

£0.8 million of the marketing authorisations relate to the Vetivex^® range of products. Ownership of the marketing authorisations rests with the Group in perpetuity. There are not believed to be any legal, regulatory or contractual provisions that limit their useful lives. Vetivex is an established range of products which are relatively simple in nature and there are a limited number of players in the market. Accordingly, the Directors believe that it is appropriate that the marketing authorisations are treated as having indefinite lives for accounting purposes.

The software intangible asset net book value includes £7.4 million relating to the ERP system in the EU Pharmaceuticals Segment; this has a remaining amortisation period of 3 years.

Goodwill is allocated across cash generating units that are expected to benefit from that business combination. Key assumptions made in this respect are given in note 14 of the financial statements of the 2022 Annual Report.

In accordance with the disclosure requirements of IAS 38 'Intangible Assets', the components of acquired intangibles are summarised below:

	Commercial relationships £m	Pharmacological process £m	Brand £m	Capitalised development costs £m	Product rights £m	Total £m
Cost
At 1 July 2020	8.7	53.2	16.6	410.0	302.9	791.4
Additions	-	-	-	-	134.5	134.5
Remeasurement	-	-	-	-	4.9	4.9
Foreign exchange adjustments	(0.6)	(6.1)	(1.7)	(27.6)	(13.5)	(49.5)
At 30 June 2021 and 1 July 2021	8.1	47.1	14.9	382.4	428.8	881.3
Additions	-	-	-	-	96.1	96.1
Remeasurement	-	-	-	-	(24.2)	(24.2)
Disposals	-	-	-	-	(0.7)	(0.7)
Foreign exchange adjustments	0.2	6.8	1.8	12.0	6.6	27.4
At 30 June 2022	8.3	53.9	16.7	394.4	506.6	979.9
Accumulated Amortisation
At 1 July 2020	5.9	34.7	7.9	155.9	169.3	373.7
Charge for the year	1.8	4.4	1.4	42.3	25.3	75.2
Foreign exchange adjustments	(0.4)	(4.1)	(0.9)	(11.5)	(11.0)	(27.9)
At 30 June 2021 and 1 July 2021	7.3	35.0	8.4	186.7	183.6	421.0
Charge for the year	1.3	3.6	1.2	37.0	29.7	72.8
Impairments	-	-	-	1.7	-	1.7
Disposals	-	-	-	-	(0.6)	(0.6)
Foreign exchange adjustments	(0.8)	5.3	2.0	5.5	5.2	17.2
At 30 June 2022	7.8	43.9	11.6	230.9	217.9	512.1
Net book value
At 30 June 2022	0.5	10.0	5.1	163.5	288.7	467.8
At 30 June 2021	0.8	12.1	6.5	195.7	245.2	460.3

The table below provides further detail on the goodwill, acquired intangibles and their remaining amortisation period.

Significant assets	Description of acquired intangibles	Goodwill carrying value £m	Acquired intangibles carrying value £m	Sub-Total carrying value £m	Remaining amortisation period on acquired intangibles
Intangible assets arising from the acquisition of Dermapet	Product, marketing and distribution rights	0.4	11.2	11.6	3 ½ years
Intangible assets arising from the acquisition of Eurovet	Technology, product, marketing and distribution rights	37.7	0.2	37.9	½ year
Goodwill arising from the acquisition of Vetxx		16.4	-	16.4	N/A
Intangible assets arising from the acquisition of Genera	Product, brand, technology, marketing and distribution rights		0.1		½ year
			0.2		3 ½ years
			5.1		8 ½ years
		5.3		10.7	Genera - total
Intangible assets arising from the acquisition of Putney	Product, brand, technology, pharmacological process, marketing and distribution rights		4.0		4 years
			10.3		4 years
			32.4		6 years
		54.1		100.8	Putney - total

Significant assets	Description	Goodwill carrying value £m	Acquired Intangibles carrying value £m	Sub-Total carrying value £m	Remaining amortisation period on acquired intangibles
Intangible asset arising from the acquisition of Apex	Product and technology		10.9		11 years
			1.6		8 years
		9.0		21.5	Apex - total
Intangible assets related to the licensing and distribution of Tri-Solfen® (excluding ANZ territories)	Marketing and distribution rights	-	28.4	28.4	10 years
Intangible asset related to an injectable solution licensing agreement	Marketing and distribution rights	-	5.8	5.8	10 years
Intangible assets arising from the acquisition of AST Farma and Le Vet	Product, brand, technology, marketing and distribution rights		37.1		5 ½ years
			45.8		4 ½ years
			10.1		6 years
			0.3		½ year
		98.7		192.0	AST Farma and Le Vet - total
Intangible assets related to an injectable solution licensing agreement	Marketing and distribution rights	-	5.9	5.9	15 years
Intangible assets arising from the acquisition of Caledonian	Product, brand, technology, marketing and distribution rights	0.9	2.6	3.5	6 ½ years
Intangible assets arising from the acquisition of Dechra Brasil Produtos Veterinarios LTDA	Product, brand, technology, marketing and distribution rights	9.0	6.3 0.2 0.2	15.7	6 ½ years 1 ½ years 4 ½ years Brazil - total
Intangible assets arising from the acquisition of Ampharmco	Product and technology rights	6.7	0.1 5.4 0.5 5.9	18.6	½ year 15 ½ years 12 ½ years 12 ½ years Ampharmco - total
Intangible assets arising from the acquisition of Mirataz	Product and technology rights	-	34.5 3.9 0.7	39.1	7 ½ years 8 ½ years 8 ½ years Mirataz - total
Intangible assets arising from the acquisition of Osurnia	Product, marketing and distribution rights	-	85.9	85.9	8 years
Intangible assets related to the licensing and distribution of Tri-Solfen® (ANZ territories)	Product, marketing and distribution rights	-	22.1	22.1	14 years
Intangible assets arising from the acquisition of Laverdia	Product, marketing and distribution rights	-	62.7	62.7	10 years
Intangible assets arising from Isoflurane and Sevoflurane	Product, marketing and distribution rights	-	8.4	8.4	9 ½ years
Intangible assets arising from Sucromate	Product, marketing and distribution rights	-	6.1	6.1	9 ½ years
Other individually immaterial goodwill and acquired intangibles		7.2	12.9	20.1
		245.4	467.8	713.2

 

11. Deferred Taxes

Recognised Deferred Tax Assets and Liabilities

Deferred tax assets and liabilities are analysed in the statement of financial position after offset, to the extent there is a legally enforceable right, of balances within countries as follows:

	2022 £m	2021 £m
Deferred tax assets	2.3	2.0
Deferred tax liabilities	(35.8)	(48.8)
	(33.5)	(46.8)

Deferred tax assets and liabilities are attributable to the following, prior to any allowable offset:

	Assets		Liabilities		Net
	2022 £m	2021 £m	2022 £m	2021 £m	2022 £m	2021 £m
Intangible assets	-	-	(42.9)	(51.1)	(42.9)	(51.1)
Property, plant and equipment	-	-	(4.8)	(3.7)	(4.8)	(3.7)
Inventories	1.5	0.9	-	-	1.5	0.9
Receivables/payables	7.2	4.1	-	-	7.2	4.1
Share-based payments	0.9	1.7	-	-	0.9	1.7
Losses	0.6	0.7	-	-	0.6	0.7
R&D tax credits	3.0	0.5	-	-	3.0	0.5
Employee benefit obligations	1.0	0.1	-	-	1.0	0.1
	14.2	8.0	(47.7)	(54.8)	(33.5)	(46.8)

 

12. Borrowings and Lease Liabilities

	2022 £m	2021 £m
Current liabilities:
Lease liabilities	3.3	3.1
	3.3	3.1
Non-current liabilities:
Lease liabilities	12.1	12.8
Senior loan notes	125.5	115.1
Bank loans	189.7	189.7
Arrangement fees netted off	(1.5)	(2.1)
	325.8	315.5
Total borrowings	329.1	318.6

On 22 December 2021, the Group entered into an Amendment and Restatement Agreement in relation to the £340.0 million Revolving Credit Facility (RCF) maturing 25 July 2024. With effect from 1 January 2022, any new Borrowings drawn on the RCF will now use Risk Free Reference (RFR) rates instead of LIBOR rates. The relevant RFR rates for the principal Borrowings of the Group will be SONIA (for Borrowings in GBP), SOFR (for Borrowings in USD) and EURIBOR (for Borrowings in EUR). The interest rate charged on any new Borrowings drawn under the RCF will be the relevant RFR rate plus the Margin plus a Credit Adjustment Spread (CAS). The Margin on this Facility is a minimum of 1.3% and a maximum of 2.2%, dependent upon the Leverage (the ratio of Total Net Debt to Adjusted EBITDA) of the Group. The CAS charged on the RCF will be a minimum of 0.0326% and a maximum of 0.42826%, dependent upon the term and currency of the new Borrowings. The CAS will not be charged on any new Borrowings in EUR currency. At 30 June 2022, £189.7 million was drawn against the £340.0 million RCF. The facility is not secured on any specific assets of the Group but is supported by a joint and several cross guarantee structure. All covenants were met during the year ended 30 June 2022.

In January 2020, the Group undertook a Private Placement raising EUR50.0 million and USD100.0 million (under seven and ten year new senior secured notes respectively) which remains fully drawn at 30 June 2022. The Private Placement amounts are not secured on any specific assets of the Group, but are supported by a joint and several cross guarantee structure. Interest is charged on the EUR50.0 million amount at a fixed rate of 1.19% until maturity (January 2027). Interest is charged on the USD100.0 million amount at a fixed rate of 3.34% until maturity (January 2030).

On 14 July 2022, the Group undertook a further Private Placement raising EUR50.0 million and EUR100.0 million (under seven and ten year new senior secured notes respectively), refer to note 20.

No interest has been capitalised during the year (2021: £nil).

'Phase 2' of the amendments to IFRS 9, IAS 39 and IFRS 7 requires that, for financial instruments measured using amortised cost measurement, changes to the basis for determining the contractual cash flows required by interest rate benchmark reform are reflected by adjusting their effective interest rate. No immediate gain or loss is recognised. These expedients are only applicable to changes that are required by interest rate benchmark reform, which is the case if, the change is necessary as a direct consequence of interest rate benchmark reform and the new basis for determining the contractual cash flows is economically equivalent to the previous basis. For the year ended 30 June 2022, the Group has applied the practical expedients provided under 'Phase 2' to amendments to its RCF.

The maturity of the bank loans and senior loan notes is as follows:

	2022 £m	2021 £m
Between two and five years	232.6	189.7
Over five years	82.6	115.1
	315.2	304.8

The maturity of the lease liabilities is as follows:

	2022 £m	2021 £m
Within one year	3.3	3.1
Between one and two years	2.5	2.5
Between two and five years	3.5	3.7
Over five years	6.1	6.6
	15.4	15.9

 

13. Provisions

	Deferred Rent £m	Provision for PPE grant £m	Dilapidations £m	Total £m
At start of period	(0.3)	(0.9)	(2.3)	(3.5)
Provision released	-	-	1.0	1.0
Provision utilised	0.1	0.1	-	0.2
Foreign exchange differences	(0.1)	0.2	-	0.1
At end of period	(0.3)	(0.6)	(1.3)	(2.2)

The Group has received advanced payment for rental income on its facilities in Portland. This has been recognised at amortised cost and is being utilised over the period of the rental contract expiring in January 2025.

Genera, the manufacturing site in Croatia, has received advanced funding (PPE grant) for the refurbishment of the manufacturing facility for a third party manufacturing contract. The funding has been recognised at amortised cost and is being utilised over the life of the property, plant and equipment until 2025.

On the acquisition of Ampharmco, the Group established a fair value provision for dilapidations of a warehouse property. The provision will be utilised over the period to the expiry of the lease on 31 December 2022.

In the prior year, the Group established a fair value provision of £1.9 million for dilapidations of two warehouse properties in Skipton. During the year the Group acquired one of the warehouse properties in Skipton and consequently £1.0 million of the provision has been released, £0.2 million credited to the income statement and £0.8 million released against the fixed asset in line with IFRS 16. The provision for the remaining warehouse will be utilised over the period to the expiry of the lease in March 2025.

14. Foreign Exchange Rates

The following primary exchange rates have been used in the translation of the results of foreign operations:

	Average rate for 2021	Closing rate at 30 June 2021	Average rate for 2022	Closing rate at 30 June 2022
Australian Dollar	1.8035	1.8476	1.8347	1.7594
Brazilian Real	7.2518	6.8819	6.9892	6.3189
Danish Krone	8.3981	8.6664	8.7826	8.6684
Euro	1.1287	1.1654	1.1807	1.1652
US Dollar	1.3466	1.3850	1.3316	1.2103

 

15. Acquisitions and Disposals

The Group completed the following product rights acquisitions in the year:

• the acquisition of Rompun^® (xylazine injection) and Butorphanol Tartrate Injection from Elanco™ Animal Health for USD4.0 million (£3.0 million). A payment of £0.2 million was also made for inventory;

• the acquisition of Sucromate™ Equine sterile suspension from Thorn Bioscience L.L.C. for USD9.0 million (£6.5 million). A payment of £8,000 was also made for inventory;

• the acquisition of ProVet APC™ and ProVet BMC systems from Hassinger Biomedical and DSM Medical for USD4.0 million (£3.0 million). A payment of £0.1 million was also made for inventory;

• the acquisition of Isoflurane^® and Sevoflurane^® from Halocarbon Life Sciences L.L.C. for USD12.0 million (£8.7 million); and

• the acquisition of verdinexor (Laverdia^®) from Anivive Lifesciences, Inc for USD97.5 million (£71.9 million). Following the initial payment of USD19.0 million (£14.0 million) there are subsequent milestone payments totalling USD45.5 million (£33.5 million) due in future years on the achievement of various approval and sales milestones for the product in the USA, UK, EU, Brazil, Australia, Japan and Canada. Royalties payable as part of the transaction have been accrued as part of the contingent consideration liabilities recognised.

The Group has considered the amendments to IFRS 3 'Business Combinations' and applied the optional concentration test to the transactions noted above that include the acquisition of inventory. Accordingly, it has been concluded that substantially all the value arising from the transaction relates to the product rights which are recognised as an intangible asset.

On 26 January 2022, Genera dd (a 100% subsidiary of the Group) sold the trademarks and registrations, inventory and accounts receivable balances associated with the Agricultural Chemicals business for HRK 27.0 million (£3.0 million). The assets were fair valued to be HRK 27.0 million (£3.0 million) following a non-underlying impairment of £1.0 million (£0.5 million to cost of sales and £0.5 million to administrative expenses). In the period to 30 June 2022, the business contributed £0.4 million to net revenue (2021: £5.1 million), this reflecting the seasonality of revenue. The Group has concluded that this disposal does not represent a discontinued operation.

16. Contingent Consideration Liabilities

	2022 £m	2021 £m
Contingent consideration - less than one year	6.4	22.6
Contingent consideration - more than one year	104.0	57.6
	110.4	80.2

The consideration for certain acquisitions and licensing agreements includes amounts contingent on future events such as development milestones or sales performance. The Group has provided for the fair value of this contingent consideration as follows:

	Tri-Solfen®  m	StrixNB® & DispersinB® £m	Injectable  Solution 1 £m	Injectable  Solution 2 £m	Mirataz £m	Phycox® £m	Laverdia £m	Other £m	Total £m
As at 1 July 2020	33.0	0.8	3.3	4.4	10.9	2.3	-	1.5	56.2
Additions	24.7	-	-	-	-	-	-	3.2	27.9
Remeasurement through intangibles	2.3	0.1	(0.6)	(2.3)	5.4	(0.1)	-	0.1	4.9
Cash payments: investing activities	(2.8)	(0.3)	(0.8)	(0.2)	(0.6)	(0.9)	-	(0.4)	(6.0)
Finance expense	0.6	-	-	-	0.1	0.1	-	0.2	1.0
Foreign exchange adjustments	(1.6)	-	(0.3)	(0.1)	(1.4)	(0.2)	-	(0.2)	(3.8)
At 30 June 2021	56.2	0.6	1.6	1.8	14.4	1.2	-	4.4	80.2
Additions	-	-	-	-	-	-	57.9	2.7	60.6
Remeasurement through intangibles	(12.0)	0.3	-	0.1	(2.9)	0.3	(7.9)	(2.1)	(24.2)
Cash payments: investing activities	(14.6)	(0.4)	(0.8)	(1.9)	(0.7)	(0.8)	-	(0.5)	(19.7)
Finance expense	1.5	-	0.1	-	0.4	-	1.2	0.2	3.4
Foreign exchange adjustments	1.5	0.1	0.2	-	1.8	0.1	6.3	0.1	10.1
At 30 June 2022	32.6	0.6	1.1	-	13.0	0.8	57.5	4.8	110.4

The table below shows on an indicative basis the sensitivity to reasonably possible changes in key inputs to the valuations of the contingent consideration liabilities. There will be a corresponding opposite impact on the intangible asset.

	Tri-Solfen®	StrixNB® & DispersinB®	Injectable  Solution 1	Injectable  Solution 2	Mirataz	Phycox®	Laverdia	Other
Increase/(decrease) in financial liability
10% increase in royalty forecasts £m	2.6	0.1	N/A	N/A	1.2	0.1	2.9	0.2
10% decrease in royalty forecasts £m	(2.6)	(0.1)	N/A	N/A	(1.4)	(0.1)	(2.9)	(0.2)
1% increase in discount rates £m	(1.9)	-	-	-	(0.6)	-	(2.7)	(0.1)
1% decrease in discount rates £m	2.1	-	-	-	0.5	-	3.0	0.1
5% appreciation in Sterling £m	(1.6)	-	(0.1)	-	(0.6)	-	(2.7)	(0.2)
5% depreciation in Sterling £m	1.7	-	0.1	-	0.7	-	3.0	0.1
Discount rate range in 2022 financial year	5.2% -25.0%	11.6% -27.1%	11.6%	11.6%	7.3% -9.4%	11.6%	5.1% -14.6%	10.2% -11.6%
Discount rate range in 2021 financial year	0.0% -19.7%	10.4%-11.7%	9.2%	9.2%	7.5% -9.9%	10.4%	N/A	8.6% -10.4%
Aggregate undiscounted cash outflow in relation to royalties (remaining term of royalty agreement)
2022 £m (years)	50.4 (14.0)	0.8 (5.0)	N/A	N/A	19.8 (8.5)	0.9 (1.0)	51.3(10.0)	2.9 (5.0)
2021 £m (years)	58.5 (15.0)	0.8 (6.0)	N/A	N/A	22.5 (9.5)	1.3 (2.5)	N/A	3.4 (10.0)

The consideration payable for Tri-Solfen^® is expected to be payable over a number of years, and relates to development milestones and sales performance. During the year, the development milestones and sales performance royalties have been remeasured. At 30 June 2022, the liability was discounted between 5.2% and 25.0%. The broad range of discount rates in respect of this licensing agreement reflects the commercial makeup of the arrangement, with discount rates for milestone payments related to regulatory approvals being lower and based on a cost of debt approach and those with more variability in timing and quantum of future cash flows being higher and based on a Capital Asset Pricing Model based approach, also taking into account systematic risk associated with elements of the future cash flows. The gross value of the development milestones is AUD13.0 million.

The consideration payable for Laverdia is expected to be payable over a number of years, and relates to approval milestones and sales performance. At 30 June 2022, the liability was discounted between 5.1% and 14.6% reflecting the commercial makeup of the arrangement similar to Tri-Solfen^®. The gross value of the approval and sales performance (non-royalty) milestones is USD45.5 million.

The consideration payable for Mirataz, StrixNB^® and DispersinB^®  relates to sales performance and is expected to be payable over a number of years.

The consideration remaining for a licensing agreement for an injectable solution relates to development milestones. Phycox relates
to sales performance and arose as part of the acquisition of the trade and assets of PSPC Inc. in 2014.

Where a liability is expected to be payable over a number of years the total estimated liability is discounted to its present value. With the exception of Phycox, all contingent consideration liabilities relate to licensing agreements.

17. Related Party Transactions

Subsidiaries

The Group's ultimate Parent Company is Dechra Pharmaceuticals PLC. A listing of subsidiaries is shown within the financial statements of the Company's 2022 Annual Report.

Transactions with Key Management Personnel

The details of the remuneration, Long Term Incentive Plans, shareholdings, share options and pension entitlements of individual Directors are included in the Directors' Remuneration Report in the 2022 Annual Report.

Associates

On 5 February 2021, the Group entered into a licensing agreement with Animal Ethics Pty Ltd for the marketing authorisations of Tri-Solfen^® in Australia and New Zealand for a total consideration of AUD31.0 million (£16.9 million). An upfront payment of AUD5.0 million (£2.8 million) was payable on signing, with the balance of AUD26.0 million (£14.1 million) paid in July 2021 on the first commercial sale by Dechra into the Australian market. Royalty payments of AUD0.9 million (£0.5 million) were paid on net sales in the year. The contingent consideration in relation to sales milestones is disclosed in note 16.

The Group holds 49.5% of the issued share capital of Medical Ethics Pty Ltd. Refer to note 6 for further information on the results of the associate in the period.

In 2017 the Group entered into a licensing agreement with Animal Ethics Pty Ltd for Tri-Solfen^® for which the fair value of associated contingent consideration is disclosed in note 16.

18. Off Balance Sheet Arrangements

The Group has no off balance sheet arrangements to disclose as required by S410A of the Companies Act 2006.

19. Contingent Liabilities

The Group continues to monitor developments in relation to EU State Aid investigations. On 25 April 2019, the EU Commission's final decision regarding its investigation into the UK's Controlled Foreign Company (CFC) regime was published. It concluded that the legislation up until December 2018 does partially represent State Aid. This decision was upheld by the EU General Court on 8 June 2022, when it dismissed the UK Government's annulment application. The UK Government has since confirmed its intention to lodge an appeal to the EU Court of Justice.

The Group considers that the potential amount of additional tax payable remains between £nil and £4.0 million depending on the basis of calculation and the outcome of HMRC's appeal to the EU Court of Justice. Based on current advice, the Group does not consider any provision is required in relation to this investigation. This judgement is based on current interpretation of legislation and professional advice.

The Group received charging notices from HMRC in January and February 2021 under The Taxation (Post Transition Period) Act for part of the exposure (£2.75 million) and has paid this to HMRC. As the Group considers that HMRC's appeal will be successful, the charging notices which were settled in full during the previous period (£2.75 million) are recorded as current tax receivables on the basis that the amount will be repaid in due course.

At 30 June 2022, contingent liabilities arising in the normal course of business amounted to £12.4 million (2021: £13.0 million) relating to licence and distribution agreements. The stage of development of the projects underpinning the agreements dictates that a commercially stable product is yet to be achieved, and accordingly an intangible asset and a contingent consideration liability have not been recognised.

20. Subsequent Events

On 14 July 2022 the Group undertook a further Private Placement raising EUR50.0 million and EUR100.0 million (under seven and ten year new senior secured notes respectively), the proceeds of which were used to repay existing debt. Interest is charged on the EUR50.0 million senior secured notes at a fixed rate of 3.64% until maturity, and 3.93% on the EUR100.0 million senior secured notes.

On 20 July 2022, the Group acquired 100% of the share capital of Piedmont Animal Health Inc (Piedmont) for USD210.0 million in cash. Piedmont is an established product development business with a track record of developing products for multi-national animal health companies. The initial assessment of the assets and liabilities acquired is that they comprise Intangible Assets (principally In-Process Research and Development) and an immaterial amount of Working Capital and Other Assets/Liabilities. A fair value assessment is in the process of being performed and this, along with the other requirements of IFRS 3 'Business Combinations', will be reported in the Group's Half Year Report and Financial Statements for the year to 30 June 2023.

On 21 July 2022, the Group successfully completed a share placing of 5,364,683 new ordinary shares, representing approximately 5% of the existing issued share capital of the Company, at a price of 3430 pence per placing share, raising gross proceeds of £184.0 million which were largely deployed to fund the Piedmont acquisition.

On 26 August 2022, the Group acquired 100% of the share capital of the Med-Pharmex Holdings Inc group of companies (Med-Pharmex) for USD260.0 million in cash. Med-Pharmex is an established platform business with manufacturing, product development and regulatory capabilities and has several products already approved and being sold in the US market. The initial assessment of the assets and liabilities acquired is incomplete due to additional analysis needed on certain areas, which could be material, including the tax assets and liabilities arising on closing. Whilst a preliminary assessment of fair values has not been finalised, the net assets acquired include Intangible Assets, Property, Plant and Equipment and Working Capital. A fair value assessment is in the process of being performed and this, along with the other requirements of IFRS 3 'Business Combinations', will be reported in the Group's Half Year Report and Financial Statements for the year to 30 June 2023.

21. Underlying Operating Profit, EBITDA, ROCE and Profit Before Taxation Reconciliation

	2022 £m	2021 £m
Operating profit
Underlying operating profit/EBIT is calculated as follows:
Operating profit	95.5	84.0
Non-underlying operating expenses (note 5)	78.8	78.2
Underlying operating profit/EBIT	174.3	162.2
Depreciation	11.1	11.0
Amortisation and impairment	5.2	4.5
Underlying earnings before interest, tax, depreciation and amortisation (EBITDA)	190.6	177.7
Profit before taxation
Underlying profit before taxation is calculated as follows:
Profit before taxation	77.6	74.0
Non-underlying operating expenses	78.8	78.2
Amortisation of notional acquired intangibles from equity accounting for associates	0.7	0.7
Share of realised non-underlying profit of investments accounted for using the equity method	(0.6)	-
Foreign exchange losses/(gains) on contingent consideration	10.1	(3.8)
Unwind of discount associated with contingent consideration	3.4	1.0
Underlying profit before taxation	170.0	150.1

Return on capital employed	2022 £m	2021 £m
Net assets
Adjusted for:	666.8	632.9
Net debt	208.2	200.2
Net corporate tax liability/ (asset)	1.2	(1.0)
Net deferred tax liability (note 11)	33.5	46.8
Closing operating assets	909.7	878.9
Opening operating assets	878.9	843.8
Average operating assets	894.3	861.4
	2022 £m	2021 £m
Underlying operating profit	174.3	162.2
Average operating assets	894.3	861.4
Return on capital employed	19.5%	18.8%

22. Other information

The financial information set out above does not constitute the Company's statutory accounts for the years ended 30 June 2022 or 2021 but is derived from the 2022 and 2021 accounts. Statutory accounts for 2021 have been delivered to the Registrar of Companies and those for 2022 will be delivered in due course. The external auditor has reported on those accounts; the report was (i) unqualified, (ii) did not include references to any matters to which the external auditor drew attention by way of emphasis without qualifying the reports and (iii) did not contain statements under section 498(2) or (3) of the Companies Act 2006.

23. Preliminary Statement

This Preliminary statement is not being posted to Shareholders.  The Annual Report and Accounts for the year ended 30 June 2022 will be sent to shareholders shortly.  Further copies will be available from the Company's Registered Office: 24 Cheshire Avenue, Cheshire Business Park, Lostock Gralam, Northwich CW9 7UA.  Email: [e-mail]. Copies will also be available on the Company website www.dechra.com.

24. Directors' Responsibility Statement Required under the Disclosure and Transparency Rules

The responsibility statement below has been prepared in connection with the Company's full Annual Report and Accounts for the year ended 30 June 2022. Certain parts of that Report are not included within this announcement. We confirm to the best of our knowledge:

a)  the Group Financial Statements, which have been prepared in accordance with UK-adopted international accounting standards, give a true and fair view of the assets, liabilities, financial position and profit of the Group;

b)  the 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 and financial position of the Company; and

c)  the Strategic Report includes a fair review of the development and performance of the business and the position of the Group and Company, together with a description of the principal risks and uncertainties that it faces.

Signed by the order of the Board: Ian Page, Chief Executive Officer Paul Sandland, Chief Financial Officer 5 September 2022

 

END

 

 

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