Preliminary Results

1
Preliminary Results for the year ended 30 June
2005
2
Preliminary Results

Year ended 30
June 2005 2004 Turnover 208.2m 186.8m 11 Op
erating profit (pre-exceptional items goodwill
amortisation) 11.0m 9.2m 20 Pre-tax
profit (pre-exceptional items goodwill
amortisation) 9.4m 8.1m 17 Adjusted Earnings
per Share (pre-exceptional items goodwill
amortisation) 13.39p 11.28p 19 Full year
dividend 5.20p 4.70p 11 Dividend
cover (pre-exceptional items goodwill
amortisation) 2.6 times
2.4 times
3
Financials - Pharmaceuticals

• 2005 2004
• 000 000
• Turnover 21,381 18,900 13
• Operating profit 4,197 3,118 35
• Own-branded pharmaceutical sales growth of 19
• Continued strong recovery in manufacturing
  operation
• 19 increase in product development expenditure -
  1.33m vs 1.12m

4
Financials - Services

• 2005 2004
• 000 000
• Turnover 192,541 173,100 11
• Operating profit 8,029 7,098 13
• Turnover growth 11
• Buoyant market conditions
• Significant account gains
• Improvement in operating margin 4.17 vs 4.10
• Laboratories business continues to progress

5
Financials - Balance Sheet
2005 2004 000 000 Balance Sheet Fixed assets
- intangibles 5,710 5,174 -
tangibles 5,201 5,224 -------- -------- 10,911 1
0,398 Net working capital 8,430 10,043 Net
debt (4,859) (10,110) Provisions - deferred
tax - (174) -------- -------- Net
assets 14,482 10,157 -------- -------- Stock
turn 9.5 times 11.5 times Debtor
days 43 44 Creditor days 61 53
6
Financials - Cash Flow

• 2005 2004
• 000 000
• Cash Flow
• Inflow from operations 13,228 10,576
• of operating profit 127 125
• Capital expenditure
• - intangible assets 1,100 -
• tangible assets 1,010 666
• -------- --------
• 2,110 666
• Depreciation 935 988

7
Financials

• International Financial Reporting Standards
• Results to be re-stated for
• Goodwill amortisation
• Development costs
• Share based payments
• Deferred tax
• Proposed dividend
• Other minor adjustments
• Likely modest increase in reported profit for
  year ended 30 June 2005
• Shareholders funds will increase

8
Preliminary Results
Business Review 2005
9
Developments

• New head of Product Development and Regulatory
  Affairs appointed
• US national relocated to UK
• Broad experience of US and EU Regulatory bodies
• Knowledge already proving invaluable
• Vetivex licenses acquired
• Immediate market share gains
• Leverage of the brand through new products
• Marketing agreements
• Orion Pharma Vetoryl and Felimazole in
  Nordics
• Veterinaria Vetoryl, Felimazole and
  Equipalazone in Switzerland
• Vétoquinol Vetoryl and Felimazole in Canada
• Intervet renewal of Equipalazone in Germany

10
Pharmaceutical Development

• Vetoryl
• Expedited review granted in USA
• - efficacy and safety sections submitted
• Mutual recognition submitted for EU
• New blister packs approved in UK
• New low dose (30mg) approved in UK
• Development of 10mg maintenance dose commenced
• Dossier submitted to Canadian authorities
• Felimazole
• Expedited review granted in USA
• - field trials commencing
• 2.5mg approved in UK
• Dossier submitted to Canadian authorities

11
Pharmaceutical Development

• Urilin
• First generic license in UK
• First entrant in 1.9 million UK market
• Thyroxyl
• Profit share joint venture with USA patent
  holders, GeoPharma, Inc.
• Unique oral solution and tablets
• Launched in USA July 2005
• Easier and improved dosing
• Favourable results on comparative trials with
  brand leader
• EU opportunities being explored as part of the
  worldwide marketing agreement
• Ovuplant
• I.P. owned by Peptech
• UK licensed
• Mutual recognition commenced

12
Pharmaceuticals - Sales Marketing

• Branded veterinary licensed pharma portfolio
  19
• Own developed and branded products performed
  well
• Vetoryl 36
• Felimazole 71
• Instruments consumables
• Sales 12
• Key distributor relationships reflect part of
  growth
• UK distribution agreement with Zi Medical
• Direct mail business - pdq

13
Pharmaceuticals - DVP (USA)

• American market largest in the world - 10 times
  UK
• US fledgling operation established April 2005
• Located in Kansas City centre of US animal
  health
• President and National Sales Manager appointed
• Thyroxyl Oral Solution launched July 2005
• Unique liquid formulation
• Dechra Veterinary Products established in USA
  prior to launch of key products
• Distribution agreements reached
• Increasing Brand awareness

14
Pharmaceuticals - Manufacturing

• Significant improvement in operational
  efficiencies
• Sales up 15
• New business secured
• Six new product ranges added to existing
  customer ranges
• Five new third party contract customers secured
• New laboratory to support in-house product
  development programme
• Facility extended
• Stock consolidated on site
• Additional offices, laboratory and training room

15
Services - Wholesaling Distribution

• Market share increased to 43
• Better purchasing and added-value services
  reflected in gross margin improvement
• Own ranges Valu and Vet Remedy increased market
  penetration
• New depot in Scotland
• Increased presence in the region
• Two additional depots in Southern England
• Improved service levels
• Substantial new contract wins
• Improvement of facilities

16
Services - Laboratories

• Q4 - new accounts started to feed through
• New services introduced at NWL
• Allervet - allergy testing
• PetScreen - new chemotherapy assay
• Extended same day courier services
• New assays introduced at CSLS

17
Prospects

• Business continues to perform in-line with
  management expectations
• US launch of Thyroxyl - provides opportunity to
  build market presence in American endocrinology
  market ahead of launch of Vetoryl and
  Felimazole
• Strategic alliances and agreements provide
  solid foundation to drive international business
• Pursuing further partnerships with human pharma
  and veterinary healthcare creating additional
  global opportunities
• Group focused to achieve further market
  penetration and profitability

18
Divisional Summary
2005 2004 000 000 Turnover Pharmaceuticals
21,381 18,900 Services 192,541 173,100 Inter
division (5,725) (5,157) -------- -------- 208
,197 186,843 -------- -------- Operating profit
(pre-exceptional items and goodwill
amortisation) Pharmaceuticals 4,197 3,118 Servic
es 8,029 7,098 USA (185) - Central
costs (1,065) (1,032) -------- -------- 10,976
9,184 -------- --------