Interim Results

Dechra Pharmaceuticals PLC
26 February 2002





Issued by Citigate Dewe Rogerson, Birmingham

Date: Tuesday, 26 February 2002     Embargoed 7.00am



                           Dechra Pharmaceuticals PLC

         Manufacturers, distributors and marketers of pharmaceuticals,

              veterinary equipment and related goods and services


  • Turnover                                                                          £84.2m                 + 7%

  • Operating profit (pre-exceptionals)                                                £4.3m                  +8%

  • Pre-tax profit (pre-exceptionals)                                                  £3.7m                +15%*

  • Earnings per share (pre-exceptionals)                                              5.18p                +14%*

  • Interim dividend                                                                   1.37p                 +10%

  • Strong performance continues at NVS

  • Product development pipeline continues to deliver results


    - Second new in-house developed product for 2002 - Felimazole(R)

  • Arnolds signs exclusive Instrument Distribution Agreement for UK

  • New third-party manufacturing contracts secured by Dales

* on pro-forma figures for last year

'The first half of the year has seen the Group continuing to invest in its
future and develop its strategy.

'All three trading subsidiaries, namely, National Veterinary Services(R) ('
NVS'), Arnolds(R) and Dales(R) have continued to strengthen their brand profile
and their positions within the markets in which they operate.

'The second half has started well with trading in line with our expectations.

'With the Group's clearly defined strategic focus and its concentration on
providing high levels of service and quality to our customers, your Board looks
to the future with confidence.'

                                                       Ian Page, Chief Executive

                            FULL STATEMENT ATTACHED
Enquiries:
Ian Page, Chief Executive
07775 642222 (IP)
Simon Evans, Group Finance Director                       Fiona Tooley
Dechra(R) Pharmaceuticals PLC                             Citigate Dewe Rogerson
Today: 020 7282 8000                                      Today:     020 7282 8000
07775 642220 (SE)                                         Mobile:     [phone]
Thereafter: 01782 771100                                  Thereafter:     0121 455 8370
www.dechra.com

                                      -2-



                         Dechra(R) Pharmaceuticals PLC

           Interim Results for the six months ended 31 December 2001



STATEMENT BY THE CHIEF EXECUTIVE, IAN PAGE

Results

Turnover in the six months ended 31 December, 2001 increased by over 7% to £84.2
million (2000: £78.5m), all of which was organic growth.

In the period under review, Group operating margin (pre-exceptional items)
improved from 5.09% to 5.13%. Operating profit (pre-exceptionals) increased by
8% to £4.3 million (2000: £4.0m). On the same basis, pre-tax profit showed a
healthy 15% increase on the pro-forma result last year of £3.2 million.

Earnings per share (pre-exceptionals) increased by 14% to 5.18 pence compared to
a pro-forma 4.54p in 2000.

Net debt at the end of the period stood at £9.7 million against £10 million at
the comparable period last year and £8.7 million at the last year-end. The
increase since 30 June, 2001 reflects the substantial capital investment being
undertaken at Dales, our manufacturing facility based in Skipton, North
Yorkshire. The net interest payment of £0.6 million was covered 7 times by
operating profit.

Fixed asset additions in the first half amounted to £1.7 million, which
principally related to the expansion at Dales referred to above.

Dividend

In line with the Board's progressive dividend policy, we are pleased to announce
a 10% increase in the interim dividend to 1.37 pence (2000:1.25p). This dividend
will be paid on 8 April, 2002 to shareholders on the Register at the close of
business on 8 March, 2002.

Strategy

The Directors remain committed to the strategy set out at the time of flotation,
namely:


      • Development of the veterinary pharmaceutical portfolio

      • Exploitation of contract manufacturing opportunities

      • Further penetration of existing markets

      • Increasing export opportunities

We are also constantly reviewing acquisition opportunites that will enhance and
accelerate our strategic plan.

Review

The first half of the year has seen the Group continuing to invest in its future
and develop its strategy.

During this six month trading period, the foot and mouth epidemic continued to
have an impact on the veterinary market. However, in the latter part of the
period, there was some evidence of growth returning to the sector although it is
still too early to say what the long-term effects may be on the farming and
livestock industries generally.





continued...

                                      -3-



All three trading subsidiaries, namely, National Veterinary Services(R) ('NVS'),
Arnolds(R) and Dales(R) have continued to strengthen their brand profile and
their positions within the markets in which they operate.

NVS, our principal trading Company, has returned a particularly strong
performance as we continue to exploit our leading market position. In spite of
the challenging conditions, it is pleasing to report that we have grown ahead of
the market in this period by four percentage points. The computerised 'picking'
system installed last year is operating ahead of our expectations, thereby
improving our overall operational efficiency which in turn has had a favourable
impact on the Company's operating margin.

The second edition of our Vet2Pet retail catalogue has been well received by
veterinary practices as has Vet2Pet Lifetime Healthcare insurance. The new
revenues generated from these projects for veterinary practices and NVS
strengthens our competitive position whilst also enhancing gross margins.

Development of Vetcom(R), our electronic ordering and practice management system
continues; the latest version is currently undergoing final testing on-site
within practices. This advanced software not only generates regular rental
income for NVS but enhances veterinary practices' marketing and business
management capabilities.

Arnolds has once again continued to develop its own branded product portfolio.
In October last year, Arnolds successfully launched Vetoryl(R), a canine cancer
treatment. Sales to date have been most encouraging and have exceeded our
expectations. Since the end of the period being reported on, we are pleased to
announce that we have obtained a marketing authorisation for Felimazole(R), a
treatment for feline hyperthyroidism. This new in-house developed product will
make a positive contribution to the Group's trading results in the second half.

A key driver of our future growth strategy is to develop and market our
own-branded products internationally. To this end, Arnolds has signed alliance
agreements with two major international pharmaceutical companies to market two
of our unique own-branded in-house developed products on a pan-European basis.
Within these partnerships we are working to obtain marketing authorisations in
other European countries under the EU mutual recognition process. Although
revenues from these alliances are not anticipated in the current financial year,
we believe that the strengthened relationships will significantly benefit our
export opportunities in the future.

Arnolds is already the leading supplier of instruments and equipment to the UK
veterinary market. Since the period end, we have further strengthened our
position in this niche market through the signing of a distribution agreement
with a major Australian company to supply its products on an exclusive basis in
the UK.

Dales, our pharmaceutical manufacturing Company, will complete its twelve-month
major capital investment programme by April this year. We are pleased to report
that the Medicines Control Agency has now approved this new facility and we are
already utilising part of the increased capacity. This state-of-the-art unit
will yield operational efficiencies as we move forward in developing Arnolds'
own product range and building upon our third party contract manufacturing
relationships. New contracts have already been secured and a number of major
pharmaceutical companies are in the process of validating our facilities.







continued...

                                      -4-



People

The start of 2002 has, from a management perspective, seen some changes with
January experiencing both excellent and sad news for the Group.

We are very pleased to announce the appointment of Martin Roach as Managing
Director at NVS. His appointment follows my move to Group Chief Executive in
November last year. Martin has worked within the veterinary and pet retail
markets both within the UK and Europe for a number of years. His considerable
knowledge and expertise gained from within these markets further strengthens the
management team.

It was also with sadness that we announced the sudden death of our Chairman,
Peter Redfern. Peter had been Chairman since 1997 and played a key role in the
Group's development from our MBO in the same year to its Stock Market Listing in
September 2000. Over the years we have all gained and benefited from Peter's
immense experience and although he will be greatly missed by all of us he has
developed the team's capabilities and leaves a legacy upon which we can build.

In the interim, Malcolm Diamond, our Senior Non-Executive Director, has assumed
the role of Acting Chairman.

Competition Commission Review

Shareholders will be aware that on 9 October, 2001 the Competition Commission
announced that it intended to launch an enquiry into the supply in the UK of
prescription-only veterinary medicines, following a reference from the Director
General of Fair Trading under the Fair Trading Act 1973. The Commission is due
to report by January 2003.

The Group welcomes the enquiry and is fully co-operating with it. Your Board
does not regard the implications of such an enquiry as negative for Dechra's
existing or future plans and activities.

Prospects

The second half has started well with trading in line with our expectations.

NVS continues to strengthen its position principally through the increased
provision of additional value-added services to our veterinary practice
customers coupled with further operational and buying efficiencies.

Since our last financial year-end, Arnolds has introduced from its development
pipeline, two new pharmaceutical products. We will also continue to exploit its
strong and established position in the veterinary instruments and equipment
market.

As already stated, Dales has started to secure new manufacturing contracts and
we look forward to reporting further progress in the future.

With the Group's clearly defined strategic focus and its concentration on
providing high levels of service and quality to our customers, your Board looks
to the future with confidence.

                                      -5-



                           Dechra Pharmaceuticals PLC

                                Interim Results

                       CONSOLIDATED PROFIT & LOSS ACCOUNT


                                                        Note          Six Months Ended                Year Ended
                                                                    31.12.2001      31.12.2000         30.6.2001
                                                                         £'000           £'000             £'000
Turnover                                                                84,181          78,537           156,400
Cost of sales                                                         (74,143)        (69,177)         (137,208)
Gross profit                                                            10,038           9,360            19,192
Other operating expenses                                               (5,912)         (6,439)          (12,038)
 Operating profit                                                        4,126           2,921             7,154
Operating profit before exceptional items                                4,320           4,001             8,234
Exceptional items                                        1               (194)         (1,080)           (1,080)
Operating profit                                                         4,126           2,921             7,154
Net interest payable                                                     (593)         (1,753)           (2,382)
Profit on ordinary activities before taxation                            3,533           1,168             4,772
Tax on profit on ordinary activities                     3             (1,092)           (681)           (1,736)
Profit on ordinary activities after taxation                             2,441             487             3,036
Dividend                                                 4               (682)           (622)           (1,867)
Retained profit/(deficit) for the period                                 1,759           (135)             1,169
Earnings per ordinary share
- Basic                                                  5               4.90p           1.25p             6.86p
- Adjusted to exclude exceptional items                  5               5.18p           4.03p             9.30p
Fully diluted excluding exceptional items                5               5.16p           4.02p             9.27p

                                      -6-



                           Dechra Pharmaceuticals PLC

                                Interim Results

                      CONSOLIDATED BALANCE SHEET (Summary)


                                                                   Note                As at                       As at
                                                                               31.12.2001      31.12.2000      30.6.2001
                                                                                    £'000           £'000          £'000
Fixed assets
Tangible fixed assets                                                               5,318           3,296          4,317
Current assets
Stocks                                                                             20,424          16,669         16,460
Debtors                                                                            22,634          22,218         24,128
Cash at bank and in hand                                                            1,264           4,174          3,993
                                                                                   44,322          43,061         44,581
Creditors: amounts falling due within one year
Bank loans and overdraft                                                          (3,000)         (3,000)        (3,000)
Other creditors                                                                  (36,547)        (33,173)       (35,950)
                                                                                 (39,547)        (36,173)       (38,950)
Net current assets                                                                  4,775           6,888          5,631
Total assets less current liabilities                                              10,093          10,184          9,948
Creditors: amounts falling due after more than one year                           (7,433)        (10,587)        (9,047)
Net assets/(liabilities)                                                            2,660           (403)            901
Capital and reserves
Called-up share capital                                                               498             498            498
Share premium account                                                              26,783          26,783         26,783
Profit and loss account                                                          (24,621)        (27,684)       (26,380)
Equity shareholders' funds                                           6              2,660           (403)            901

                                      -7-



                           Dechra Pharmaceuticals PLC

                                Interim Results

                   CONSOLIDATED CASH FLOW STATEMENT (Summary)


                                                              Note           Six Months Ended                Year Ended
                                                                           31.12.2001       31.12.2000        30.6.2001
                                                                                £'000            £'000            £'000
Net cash flow from operating activities                        7                2,887          (1,395)            3,453
Returns on investments and servicing of finance                                 (575)          (7,090)          (7,712)
Taxation                                                                        (259)            (252)          (1,195)
Capital expenditure and financial investment                                  (1,665)            (647)          (1,771)
Acquisitions and disposals                                                      (180)            (100)            (100)
Equity dividends paid                                                         (1,245)                -            (622)
Cash outflow before financing                                                 (1,037)          (9,484)          (7,947)
Financing:
Shares issued less expenses                                                         -           27,662           27,662
New bank loans                                                                      -           15,000           15,000
Term loans repaid                                                             (1,500)         (37,962)         (39,462)
Capital element of finance lease payments                                       (192)            (268)            (486)
                                                                              (1,692)            4,432            2,714
Decrease in cash in the period                                                (2,729)          (5,052)          (5,233)

Reconciliation of net cash flow to movement in net debt:
                                                                             Six Months Ended                Year Ended
                                                                           31.12.2001       31.12.2000        30.6.2001
                                                                                £'000            £'000            £'000
Decrease in cash in the period                                                (2,729)          (5,052)          (5,233)
Cash outflow from change in debt and lease financing                            1,692           23,230           24,948
Change in net debt arising from cash flows                                    (1,037)           18,178           19,715
New finance leases                                                                  -            (625)            (860)
Movement in net debt in period                                                (1,037)           17,553           18,855
Net debt at start of period                                                   (8,680)         (27,535)         (27,535)
Net debt at end of period                                                     (9,717)          (9,982)          (8,680)

                                      -8-

                           Dechra Pharmaceuticals PLC

                                Interim Results

                                     NOTES

1.     Exceptional Items

                                                                  Six Months Ended                    Year Ended
                                                                31.12.2001        31.12.2000           30.6.2001
                                                                     £'000             £'000               £'000
Flotation costs                                                          -             1,080               1,080
Compensation for loss of office                                        194                 -                   -
                                                                       194             1,080               1,080


        The compensation for loss of office relates to the termination of the
        contract of Gary Evans, the former Chief Executive.

2.     Pro-Forma Results


        The key financial results are re-stated below on a pro-forma basis to
        reflect the fundamental change in funding structure of the Group as a
        result of being listed on the London Stock Exchange in the year ended 30
        June 2001 and to exclude the effect of the exceptional items:

                                                                  Six Months Ended                    Year Ended
                                                                31.12.2001        31.12.2000           30.6.2001
                                                                     £'000             £'000               £'000
Operating profit                                                     4,320             4,001               8,234
Profit on ordinary activities before taxation                        3,727             3,242               6,846
Profit on ordinary activities after taxation                         2,577             2,263               4,812
Basic pro-forma earnings per share                                   5.18p             4.54p               9.66p


               The pro-forma profit on ordinary activities after taxation may be
                                                          reconciled as follows:

                                                                   Six Months Ended                  Year Ended
                                                                 31.12.2001        31.12.2000         30.6.2001
                                                                      £'000             £'000             £'000
Profit on ordinary activities after taxation                          2,441               487             3,036
Exceptional items after taxation                                        136             1,080             1,080
Profit after taxation excluding exceptional costs                     2,577             1,567             4,116
Pro-forma interest adjustment after taxation                              -               696               696
Pro-forma profit after taxation                                       2,577             2,263             4,812


        The pro-forma interest adjustment for the year ended 30 June 2001
        reflects the effect on interest payable and other charges on bank and
        other loans (and the related tax effect) of replacing the funding in
        place prior to 22 September 2000 with that in place from 22 September
        2000 onwards as if this financing had been in place since 1 July 2000.



continued...

                                      -9-



3.     Taxation


        The tax charge reflects the full year's estimated effective rate on the
        Group's profit before exceptional items of 30.9% (2000: 30.3%).

4.     Dividends


        An interim dividend of 1.37p per share (2000: 1.25p) costing £682,000
        (2000: £622,000) has been declared. It is payable on 8 April 2002 to
        shareholders whose names are on the Register of Members at close of
        business on 8 March 2002. The ordinary shares will become ex-dividend on
        6 March 2002.

 5. Earnings Per Share


        Earnings per ordinary share have been calculated by dividing the profit
        on ordinary activities after taxation for each financial period by the
        weighted average number of ordinary shares in issue during the period.

        In order to exclude the effect of the exceptional items on the results
        of the Group, adjusted earnings per ordinary share have been based on
        the profit on ordinary activities after taxation for each financial
        period but excluding exceptional items.

        The number of shares used to calculate earnings per share is given
        below:

                                                               Six Months Ended                   Year Ended
                                                             31.12.2001         31.12.2000         30.6.2001
                                                                    No.                No.               No.
Number of ordinary shares for basic                          49,791,278         38,848,199        44,274,767

earnings per share
Impact of share options                                         162,202            156,236           132,093
Number of ordinary shares used for fully                     49,953,480         39,004,435        44,406,860

diluted earnings per share


        Pro-forma earnings per share for the year ended 30 June 2001 have been
        calculated assuming that the number of shares in issue on listing of
        49,791,278 were in issue during the whole of the financial period.

        The calculation of earnings attributable to ordinary shareholders is
        shown in note 2.

6.     Reconciliation of movements in shareholders' funds:

                                                               Six Months Ended                   Year Ended
                                                             31.12.2001         31.12.2000         30.6.2001
                                                                  £'000              £'000             £'000
Retained profit/(deficit) for the period                          1,759              (135)             1,169
New shares issued                                                     -             28,002            28,002
Costs of share issue                                                  -              (340)             (340)
Net addition to shareholders' funds                               1,759             27,527            28,831
Opening shareholders' funds                                         901           (27,930)          (27,930)
Closing shareholders' funds                                       2,660              (403)               901









continued...

                                      -10-



7.     Reconciliation of operating profit to operating cash flows:

                                                               Six Months Ended                   Year Ended
                                                             31.12.2001         31.12.2000         30.6.2001
                                                                  £'000              £'000             £'000
Operating profit                                                  4,126              2,921             7,154
Depreciation                                                        647                554             1,185
Profit on sale of tangible fixed assets                             (7)               (27)              (78)
Increase in stocks                                              (3,964)              (462)             (253)
Decrease/(increase) in debtors                                    1,494               (62)           (1,972)
Increase/(decrease) in creditors                                    591            (4,319)           (2,583)
Net cash flow from operating activities                           2,887            (1,395)             3,453

8.     Basis of preparation


        The interim financial information has been prepared on the basis of the
        accounting policies set out in the 2001 Annual Report and Accounts and
        was approved by the Board of Directors on 25 February 2002. The
        financial information set out above does not constitute statutory
        accounts within the meaning of the Companies Act 1985. Comparative
        figures for the year ended 30 June 2001 have been taken from the Group's
        audited statutory accounts, which have been delivered to the Registrar
        of Companies and in which the company's auditors expressed an
        unqualified opinion. The results for the six months to 31 December 2001
        are unaudited. They have been reviewed by the auditors KPMG Audit Plc.
        The review opinion is attached to these interim results.

        This statement of interim results will be sent to all shareholders.
        Copies will be available for members of the public upon application to
        the Company Secretary at Dechra House, Jamage Industrial Estate, Talke
        Pits, Stoke-on-Trent. ST7 1XW.

                                      -11-



   Independent Review Report by KPMG Audit Plc to Dechra Pharmaceuticals PLC



Introduction

We have been instructed by the Company to review the financial information set
out on pages 5 to 10 and we have read the other information contained in the
interim report and considered whether it contains any apparent misstatements or
material inconsistencies with the financial information.

Directors' Responsibilities

The interim report, including the financial information contained therein, is
the responsibility of, and has been approved by, the Directors. The Directors
are responsible for preparing the interim report in accordance with the Listing
Rules of the Financial Services Authority which require that the accounting
policies and presentation applied to the interim figures should be consistent
with those applied in preparing the preceding annual accounts except where they
are to be changed in the next annual accounts in which case any changes, and the
reasons for them, are to be disclosed.

Review Work Performed

We conducted our review in accordance with guidance contained in Bulletin 1999/
4: Review of interim financial information issued by the Auditing Practices
Board for use in the United Kingdom. A review consists principally of making
enquiries of Group management and applying analytical procedures to the
financial information and underlying financial data and based thereon, assessing
whether the accounting policies and presentation have been consistently applied
unless otherwise disclosed. A review is substantially less in scope than an
audit performed in accordance with Auditing Standards and therefore provides a
lower level of assurance than an audit. Accordingly we do not express an audit
opinion on the financial information.

Review Conclusion

On the basis of our review we are not aware of any material modifications that
should be made to the financial information as presented for the six months
ended 31 December 2001.



KPMG Audit Plc

Birmingham

25 February 2001



Financial Calendar

Financial year end     30 June 2002

Announcement of final results     September 2002

Annual General Meeting     October 2002

Full and final dividend payment     November 2002



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