Final Results
Dechra Pharmaceuticals PLC
02 September 2003
Issued by Citigate Dewe Rogerson Ltd, Birmingham
Date: Tuesday, 2 September 2003
Embargoed: 7.00am
Dechra Pharmaceuticals PLC
Preliminary Results for the year ended 30 June 2003
2003 2002
• Turnover £179.3m £170.2m
• Operating profit £8.2m £8.8m
(pre-goodwill amortisation & exceptionals)
• Pre-tax profit £6.75m £7.6m
(pre-goodwill amortisation & exceptionals)
• Adjusted Earnings per Share 9.39p 10.59p
(pre-goodwill amortisation & exceptionals)
• Maintained final dividend 2.75p 2.75p
total for year 4.12p 4.12p
• Further progress in product licensing and development - key to future growth
• North American product development and marketing rights secured for Vetoryl
• Arnolds - fastest growing of the Top 20 veterinary pharmaceutical companies
• Laboratory businesses - strong earnings enhancing performance
• NVS - significantly improved H2 operating margin, market share remains above
42%
• Net debt reduced by £4.3 million since 31 December 2002
'Although we have experienced a difficult and demanding financial year, we have
continued to invest significantly in product development, which is key to
delivering our medium and long term growth strategy. With strengthened
management teams across the Group, NVS now moving forward again and Arnolds and
the laboratory businesses continuing to deliver strong results, the Group is
well positioned to achieve sustained organic growth.'
Ian Page, Chief Executive
FULL STATEMENT ATTACHED
Enquiries:
Ian Page, Chief Executive Fiona Tooley
Simon Evans, Group Finance Director Katie Dale
Dechra(R) Pharmaceuticals PLC Citigate Dewe Rogerson
Today: 020 7282 8000 Today: 020 7282 8000
07775 642222 (IP) Mobile: 07785 703523
07775 642220 (SE) Thereafter: 0121 455 8370
Thereafter: 01782 771100
www.dechra.com
----------------
-2-
Dechra Pharmaceuticals PLC
Preliminary Results
for the year ended 30 June 2003
STATEMENT BY THE NON-EXECUTIVE CHAIRMAN, MICHAEL REDMOND
Introduction
The Group made an encouraging start to the financial year being reported,
producing a good first quarter performance with National Veterinary Services
reporting sales up 11% in that period. We were then affected by a decline in
market growth and the second quarter results were flat on the previous year. As
previously reported, this shortfall in sales, together with increased overheads
due to the expansion programme of the central warehouse facility at Stoke, a
trebling of insurance premiums and an aggressive pricing environment, impacted
on net margins during the first half.
As the veterinary market continued to remain flat during the first two months of
the second half, key initiatives were introduced to enhance operating margins
which resulted in an improved second half performance compared to the first
half. Our added-value services provided through National Veterinary Services
continued to perform well. Our overall market share remains in excess of 42%.
Sales of our own branded pharmaceuticals through Arnolds have grown
significantly during the year, principally through the success of recent
introductions to Arnolds' licensed veterinary product portfolio, including our
own developed products, Vetoryl(R) and Felimazole(R). We have also continued to
expand sales of core pharmaceuticals through our major European distributors.
Our laboratory businesses, NationWide Laboratories and Cambridge Specialist
Laboratory Services produced a strong earnings enhancing performance with
results being at their best ever. Customer orders, benefiting from synergies
created through the Group structure, were increased by 25%.
Our manufacturing operation, Dales Pharmaceuticals, saw turnover increase by
£2.7million, reflecting the integration of Anglian Pharma. A number of
initiatives and challenging new performance targets were introduced at this
facility in January this year and although progress has been made, the full
benefits of these actions in efficiency and productivity will not be realised
until the current financial year ending 30 June 2004.
Competition Commission Inquiry
The Competition Commission findings from its inquiry into the supply of
prescription only medicines in the UK were reported in April of this year. The
Commission provisionally concluded in the statement of issues released on 16
April 2002 that a scale monopoly exists in favour of National Veterinary
Services, our principal trading subsidiary.
In our statement issued on 20 September 2002, we stated that this was 'a purely
technical finding and did not imply that the situation operates or might be
expected to operate against the public's interest'. I am pleased to report that
the Competition Commission's findings issued on 11 April 2003 confirm this
statement. The remedies from the Report are unlikely to have any material impact
on the performance of Dechra.
We continue to believe that Dechra is in a strong position to service and
support the requirements of our existing and new customers when change is
implemented.
continued...
-3-
Product Development and Licensing
Key to the future strategic growth of the Group's business is the development of
new licensed products within its veterinary drug portfolio that can be marketed
and sold both in the UK and internationally. The lead time for development,
regulatory approval through to marketing and distribution of veterinary drugs
can take up to five years. As we widen our exposure to this part of our business
our product development expenditure will increase accordingly.
During the year ended June 2003, we have made significant investments in product
licensing and marketing authorisations. In particular, the Group made an initial
payment of £784,000 as part of its exclusive rights to the intellectual property
in Trilostane, the active compound in the Group's proprietary drug Vetoryl, in
respect of animal health applications in the USA and Canada.
Financial Highlights
Group turnover increased 5.4% from £170.2 million to £179.3 million, whilst
operating margin (pre-goodwill amortisation and exceptional items) reduced from
5.15% to 4.55%. Pre-tax profit (pre-goodwill amortisation and exceptional items)
was £6.75 million against £7.60 million in 2002. Adjusted earnings per share
(pre-goodwill amortisation and exceptional items), was 9.39 pence (2002: 10.59
pence) Net debt at the end of the period remained broadly in line with last
year at £15 million.
Dividend
The Board is recommending a maintained final dividend of 2.75 pence per share
(2002: 2.75 pence per share). This, together with the interim dividend of 1.37
pence per share gives a total for the year of 4.12 pence per share. The total
dividend is covered 2.3 times by profit after taxation before exceptional items
and goodwill amortisation. If approved at the Annual General Meeting on 23
October 2003, the final dividend will be paid on 26 November 2003 to
shareholders on the Register as at 31 October 2003.
People
In May, we welcomed Neil Warner to the Main Board as a Non-Executive Director.
Neil is Finance Director at Chloride Group PLC, a position he has held since
1997. His technical skills in financial control, tax and treasury enhance and
strengthen the scope of the Board in delivering continuous improvement across
the Group.
At the same time, in order to service our customers and drive our strategy
forward, we made a number of additional senior operating management appointments
across the Group and these are covered under the Chief Executive's Review.
Following the AGM in October, Mike Annice will step down from the Main Board in
order to allow him to concentrate on the on-going development of Dales.
On behalf of the Board and shareholders, I would like to welcome all new staff
who joined the Group during the last year whilst also thanking all our people
across the Group's subsidiaries for all the hard work and dedication that they
have demonstrated throughout the year.
Prospects
We believe that the Group has made operational improvements and progress in
delivering our strategy despite the challenges the business faced both
commercially and economically in 2003.
Following our actions to improve operational efficiencies around the Group
together with the further development and growth of our own licensed and branded
pharmaceuticals portfolio both in the UK and internationally, we remain
cautiously optimistic that the Group will continue to see an improved trading
performance in 2004.
-4-
Dechra Pharmaceuticals PLC
Preliminary Results
for the year ended 30 June 2003
REVIEW BY THE CHIEF EXECUTIVE, IAN PAGE
Throughout the year our business and the veterinary market in which we trade
have faced significant economic and commercial challenges. Although the Group
results are lower than we originally envisaged at the start of the financial
year, I believe that all our businesses are now stronger in management and
infrastructure to deliver and support future growth opportunities. Furthermore,
significant advancements in delivering our key strategic objectives have been
made which we believe will deliver strong medium and long term growth.
Distribution and Services
National Veterinary Services ('NVS') is the UK's leading veterinary wholesaler
and a supplier of added value services to veterinary practices. NVS had a solid
start to the year, however in the second quarter sales declined. External
market data also showed a downturn in the overall market during this period.
The shortfall in budgeted sales at NVS combined with the other factors detailed
in the Chairman's statement coupled with a general lack of confidence within
veterinary practices created by the Competition Commission Report, impacted on
our performance. Initiatives implemented in the second half to respond to these
challenges have subsequently resulted in an improvement in gross margins,
efficiency and cost controls which is reflected in a much better second half
performance.
The year has seen a number of significant developments at NVS. We have
developed a stronger management team with the appointment of a new divisional
Finance Director, Dan Shipman, Sales and Marketing Director, Sheryl Greentree,
and Buying Director, Colin Higham. The skills of the new team have been
instrumental in implementing the changes that will deliver future growth.
Vetcom(R) Windows, our in-house developed practice management software system,
continues to provide operational benefits to customers and has now been
installed in almost 100 veterinary practices. The advanced practice management
facilities will assist veterinary practices throughout the UK in developing good
business practices and allow them to drive their businesses forward. Within the
year we also developed Vetcom 'Handyscan', a barcode based ordering system which
was launched in June 2003. The system enables veterinary practices to improve
their stock control through barcode technology and allows them to place orders
directly with NVS or to download data into the Vetcom practice management
system. NVS are continuing to develop leading veterinary information technology
solutions for veterinary practices.
In July 2003 we introduced the NVS own branded 'Valu' range of quality products
at economic prices, initially focussing on disposables such as surgical gloves,
bandages, swabs and syringes. These products will assist veterinary practices
to reduce their daily costs of essential items whilst at the same time will
provide NVS with a competitive edge over other wholesalers, which will allow us
to deliver improved margins to both ourselves and our veterinary customers.
The warehouse expansion and site development, which doubled capacity, is now
complete. The improved facilities will lead to greater efficiency and improved
quality systems as we move forward. To support our high levels of service to
customers we have enhanced our Customer Services introducing extended office
opening hours and installing new customer call centre technology.
NVS is in the process of implementing an extension to our semi-automated picking
system which will include an automatic weight checking system. This will deliver
operating efficiencies and improved order accuracy.
continued...
-5-
Sales and Marketing
Arnolds Veterinary Products ('Arnolds'), the Group's veterinary sales and
marketing business based in Shrewsbury, is a market leader in a number of
specialist pharmaceutical sectors and also supplies a wide range of instruments
and consumable products. Arnolds' growth in pharmaceuticals at 32.2% was the
highest growth seen by any of the top twenty veterinary pharmaceutical suppliers
within the UK. This was predominantly driven by our new products, however
further good growth was also achieved on our mature market leading products such
as Equipalazone(R), Intubeaze(R) and Intra-epicaine(R). Two of our most recently
licensed products, Vetoryl and Felimazole, are making an increasingly
significant contribution.
Vetoryl achieved sales in excess of £1 million during the year and achieved a
high market penetration, with 51% of all veterinary practices now using Vetoryl
on a regular basis. High levels of brand recognition have been gained through an
on-going education process as we continue to assist veterinarians in the
diagnosis and treatment of dogs with Cushing's disease. Felimazole has achieved
significant growth during the second half since we announced that a new licence
has been granted for the product to be used for life-time stabilisation of
feline hyperthyroidism. Sales by the end of the financial year were approaching
£0.5 million with sales in the fourth quarter in particular indicating an uplift
in sales in the coming year.
Key structural changes have been implemented throughout the year. In October
2002 UK Sales and Marketing was divided into two business units, one with
specific focus on the sale of capital equipment and consumables, the other,
being the larger team, focussing on the sale of pharmaceuticals. This has been a
significant factor in driving forward exceptional growth.
Towards the end of the year we merged our Export and UK administration
operations into one cohesive unit. This has resulted in better customer service
through faster response times and improved communications. Operational
efficiencies are now also being realised from these initiatives.
We have also strengthened the technical team with the appointment of a second
veterinary advisor and have added further resource into the Regulatory and
Licensing department.
In a very competitive market we have achieved growth within a number of sectors
of our instruments, disposables and agency products. Our agency agreements,
namely Portex(R), 3m(R) and Global Veterinary Products (formerly Cook Veterinary
Products) have continued to deliver good results. The overall performance from
this part of the business has been offset by a decrease in sales of Braun(R)
sutures, an agency agreement which has seen erosion in sales as a result of
cheap imports.
Manufacturing
Dales Pharmaceuticals ('Dales'), the Group's manufacturing operation based in
Skipton, North Yorkshire has experienced a demanding year.
Following the acquisition of Anglian Pharma plc in April 2002, its manufacturing
operations were transferred to our site in Skipton, allowing an increased
service offering in the manufacturing and production of liquids, ointments and
solid dose pharmaceuticals. Following the commissioning of a new liquids
products facility at Dales the transfer was completed to schedule in January
2003. The enlarged business, which involved the manufacture of over 60 products
and the associated licence variations, and which doubled the headcount at
Skipton has taken longer to integrate than originally anticipated. Although
Dales has now made significant progress towards the full integration, the
benefits have not been realised within the year.
continued...
-6-
Although the year has seen many challenges for Dales it is pleasing to note that
this business has been successful in retaining all its key customers and has
also gained new accounts during the course of the year. These include a new
third party contract manufacturing account where commercial production started
at the end of June 2003. This £0.5 million contract with a major pharmaceutical
company involved several months of technical transfer work carried out in
collaboration with the customer.
Laboratory Services
The Group's laboratory businesses are NationWide Laboratories ('NWL'), a full
service provider of clinical and diagnostic pathology services to the veterinary
profession in the UK, and Cambridge Specialist Laboratory Services ('CSLS'), a
provider of highly specialised diagnostic services with a principal focus on
veterinary endocrinology and in high quality immunoassay measurement techniques.
Both NWL and CSLS have made considerable progress in the year with turnover
increasing 35% on the year immediately preceding acquisition. Operating margin
also improved across both businesses, resulting in operating profit more than
doubling.
The past financial year has seen improvements across the laboratory businesses,
with growth in customer orders, a considerable expansion of facilities, the
strengthening of both the technical specialist and management teams together
with the synergistic benefits from across the Group as a whole.
NWL has updated and increased its testing repertoire, particularly in respect of
veterinary endocrinology and has also enhanced its schedule of UKAS accredited
test procedures. The extension to the facilities allows the laboratory to
process diagnostic samples more efficiently and comfortably whilst providing
capacity for significant growth of the business in the future.
In April 2003, we took the step of re-branding the trading style of the
business, from 'North Western Laboratories' to 'NationWide Laboratories'. This
change better reflects the true nature of the geographical area now served by
the laboratory, across the UK.
During the year we secured new contracts for both businesses, partly reflecting
the synergistic relationships that have developed with other Group companies.
NWL has been able to widen its services to its clients by offering the
collection of diagnostic specimens through the NVS distribution network whilst
at the same time NWL benefited from sales leads from NVS territory managers.
Additionally NWL has assisted NVS in sourcing lower cost laboratory products for
resale.
NWL and CSLS have benefited from the appointment of Dr. Peter Graham as Managing
Director. Peter is one of the world's leading veterinary endocrine specialists,
and joined us from Michigan State University, where he ran the world's largest
dedicated veterinary diagnostic endocrinology laboratory.
We have further developed and integrated the laboratory businesses into the
Group and have identified a number of new product and service opportunities
which will enhance future growth.
Product Development and Licensing
During the year we successfully secured a number of partnerships and licensing
agreements. The on-going product development programme continues to deliver good
opportunities for medium and long-term growth.
continued...
-7-
Within the UK the long-term usage licence for Felimazole has been granted. Two
further products have been submitted for licensing and are expected to deliver
products for marketing within the next twelve months. Additional licences for
new dosing regimes for both Felimazole and Vetoryl are also being prepared,
these licences once granted will further increase market penetration of these
key products.
In May 2003 the Group entered a joint venture partnership with LAB International
(R) Inc. ('LAB'), a Canadian based drug development company. The partnership will
run for an initial period of five years and strengthens the Group strategy to
further develop and accelerate our licensed branded veterinary pharmaceutical
portfolio. Under the partnership LAB provides research studies on selected
therapeutic agents whilst Dechra is responsible for the formulation and
regulatory submission of these products. I am pleased to report that we have
already started work on the development of two generic veterinary
pharmaceuticals.
Of even greater significance, is the sub-licence agreement concluded in May 2003
with Bioenvision(R) Inc. to develop Vetoryl for future marketing in the USA and
Canada. This veterinary drug, which as I have already indicated has been
successfully developed and marketed in the UK by Arnolds is highly effective in
the treatment of Cushing's disease, an endocrine disorder in dogs. Vetoryl's
introduction into the North American market, which is some ten times larger than
the UK, represents a substantial opportunity for Dechra.
The current Vetoryl licence submission is still being developed with a view to
submitting the product for mutual recognition within Europe during the current
financial year. Negotiations are at an advanced stage with a major pharma
company as a potential marketing partner for the EU market.
Product development expenditure is directly related to recognised quantifiable
projects that have a high probability of being delivered to market. Several new
projects are being investigated, including two potential cross-over products
from human pharma and an equine laminitis research project being conducted in
association with The Royal Veterinary College.
Summary
Although we have experienced a difficult and demanding financial year, we have
continued to invest significantly in product development, which is key to
delivering our medium and long term growth strategy. With strengthened
management teams across the Group, NVS now moving forward again and Arnolds and
the laboratory businesses continuing to deliver strong results, the Group is
well positioned to achieve sustained organic growth.
-8-
Dechra Pharmaceuticals PLC
Preliminary Results
for the year ended 30 June 2003
REVIEW BY THE GROUP FINANCE DIRECTOR, SIMON EVANS
Summary of Results
2003 2002
Before After Before After
Exceptional Exceptional Exceptional Exceptional
Items and Items and Items and Items and
Goodwill Goodwill Goodwill Goodwill
Amortisation Amortisation Amortisation Amortisation
Turnover £179.3m £179.3m £170.2m £170.2m
Operating profit £8.2m £7.1m £8.8m £8.5m
Profit before tax £6.75m £5.7m £7.6m £7.3m
Earnings per share 9.39p 7.52p 10.59p 10.12p
Dividend per share 4.12p 4.12p 4.12p 4.12p
Operating Results
The Group achieved a profit before tax, exceptional items and goodwill
amortisation of £6.75 million for the year, a decrease of 11.3% compared to last
year calculated on the same basis. The results reflect a difficult year in which
the Group has suffered the double impact of challenging market conditions
combined with a number of cost increases.
Group turnover increased by 5.4% (which included the full year effect of
acquisitions made in 2002) compared to 8.3% on a like-for-like basis last year.
This principally reflected slower sales growth at NVS. However, sales of our
own branded pharmaceuticals, our key strategic focus, increased by 32.2%
compared to last year.
Gross margin improved from 12.1% to 12.8%. This was due to the relatively high
gross margins of the acquired businesses and the benefit of the margin
improvement initiatives undertaken at NVS during the second half of the
financial year.
Operating costs before exceptional items and goodwill amortisation increased
growth by 26.0% above last year. This represented 8.3% of sales compared to 6.9%
last year.
The principal cost increases were:
•insurance premiums increased from £219,000 to £573,000
•product development expenditure increased from £525,000 to £997,000
•acquisitions added £1.2 million to the cost base
•expansion of the NVS facility added £250,000 to the cost base
Excluding the above, the cost increase above last year was 6.7% which
represented further investment in people and systems to strengthen our core
businesses.
Overall, Group operating margin (before exceptional items and goodwill
amortisation) reduced slightly from 5.15% to 4.55%.
continued...
-9-
Net Interest Charge
The net interest charge increased to £1.4 million from £1.2 million, principally
reflecting the additional borrowings to partly fund the acquisitions made in the
latter part of the year ended 30 June 2002.
Interest was covered 5.8 times by operating profit before goodwill amortisation
and exceptional items.
Exceptional Item
The exceptional item comprised the costs of integrating the operations of Dales
and Anglian onto a single site at Skipton together with the costs of
reorganising the Group's trading operations into a single statutory entity.
Taxation
The current year tax charge on profit before exceptional items and goodwill
amortisation is 30.4%, slightly higher than the standard UK corporation tax rate
of 30%. The difference is principally due to certain expenses that are not
allowable for tax. There was a credit in respect of prior years of £91,000 and
this reduced the overall tax charge on profit before exceptional items and
goodwill amortisation to 29.1%.
Earnings per Share and Dividend
Adjusted earnings per share (before exceptional items and goodwill amortisation)
was 9.39p. The proposed final dividend is maintained at 2.75p per share making a
total maintained dividend for the year of 4.12p. The total dividend is covered
2.3 times by profit after taxation (before exceptional items and goodwill
amortisation).
Capital Expenditure
Total capital expenditure for the year was £1.6 million. The main items included
the addition of a liquids manufacturing suite at Dales to allow the transfer of
production of the acquired Anglian business and an expansion of the NationWide
Laboratories premises to enable future growth.
In addition, the Group spent £784,000 including legal costs as the first stage
payment for the acquisition of the rights to Vetoryl in the North American
market. Further stage payments of US$0.75 million and US$3.0 million are due on
the submission of a new animal drug application to the US Food and Drug
Administration and the granting of a marketing authorisation respectively.
During the year the Group entered into a sale and leaseback of its van and car
fleet. This raised net proceeds of £0.5 million after settling outstanding hire
purchase liabilities.
Cash Flow and Net Debt
The Group achieved an increased operating cash flow to £6.5 million (2002: £6.4
million) despite the lower level of profits this year. This reflects the
continued strong focus on cash management.
The second half of the financial year saw a strong cash inflow which reduced net
debt by £4.3 million compared to 31 December 2002. Net debt at 30 June 2003 was
£15.0 million, broadly similar to the figure at 30 June 2002.
Balance Sheet and Shareholders' Funds
Shareholders' funds increased to £7.47 million during the year reflecting the
retained profit.
Working capital increased from £8.9 million to £11.1 million. Stock turn
improved from 7.8 times to 9.0 times due to a reduction in stocks at NVS, whilst
debtor days were broadly similar to last year at 46 days (2002: 45 days).
Creditor days reduced from 66 to 58 due to a reduction in creditors inherited
from the Anglian acquisition together with a reduction in stock purchased under
deferred payment terms.
-10-
Dechra Pharmaceuticals PLC
Preliminary Results
Consolidated Profit and Loss Account
for the year ended 30 June 2003
2003 2002
Notes Before Exceptional Before Exceptional
Exceptional Items Exceptional Items
Items and Goodwill Items and Goodwill
and Goodwill Amortisation and Goodwill Amortisation
Amortisation (note 1) Total Amortisation (note 1) Total
£'000 £'000 £'000 £'000 £'000 £'000
Turnover 179,309 - 179,309 170,202 - 170,202
Cost of sales (156,319) - (156,319) (149,664) - (149,664)
-------------------------------------------------------------------------------------------------------------
Gross profit 22,990 - 22,990 20,538 - 20,538
Distribution (7,252) - (7,252) (6,166) - (6,166)
costs
Administrative (7,576) (1,061) (8,637) (5,599) (295) (5,894)
expenses
-------------------------------------------------------------------------------------------------------------
Operating profit 1 8,162 (1,061) 7,101 8,773 (295) 8,478
Net interest 2 (1,416) - (1,416) (1,170) - (1,170)
payable and
similar charges
-------------------------------------------------------------------------------------------------------------
Profit on ordinary
activities before
taxation 6,746 (1,061) 5,685 7,603 (295) 7,308
Tax on profit on 3 (1,960) 108 (1,852) (2,308) 58 (2,250)
ordinary
activities
-------------------------------------------------------------------------------------------------------------
Profit on ordinary 4,786 (953) 3,833 5,295 (237) 5,058
activities after
taxation
Dividends 4 (2,093) (2,069)
-------------------------------------------------------------------------------------------------------------
Retained profit 1,740 2,989
for the financial
year
-------------------------------------------------------------------------------------------------------------
Earnings per
ordinary share
Basic 5 9.39p (1.87p) 7.52p 10.59p (0.47p) 10.12p
Diluted 5 9.36p (1.86p) 7.50p 10.56p (0.47p) 10.09p
All amounts relate to continuing operations.
There were no other recognised gains and losses other than shown above.
-11-
Dechra Pharmaceuticals PLC
Preliminary Results
Consolidated Balance Sheet
as at 30 June 2003
2003 2002
£'000 £'000
Fixed assets
Intangible assets 5,730 5,284
Tangible assets 5,572 6,324
------- --------
11,302 11,608
------- --------
Current assets
Stocks 17,296 19,302
Debtors 28,001 25,822
------- --------
45,297 45,124
Creditors: amounts falling due within one year (42,420) (42,445)
------- --------
Net current assets 2,877 2,679
------- --------
Total assets less current liabilities 14,179 14,287
Creditors: amounts falling due after more than one year (6,708) (8,538)
------- --------
Net assets 7,471 5,749
------- --------
Capital and reserves
Called up share capital 510 504
Shares to be issued - 750
Share premium account 26,783 26,783
Merger reserve 1,720 994
Profit and loss account (21,542) (23,282)
------- --------
Total equity shareholders' funds 7,471 5,749
------- --------
Reconciliation of Movements in Shareholders' Funds
2003 2002
£'000 £'000
At 1 July 2002 5,749 1,010
Profit for the financial year 3,833 5,058
Dividends (2,093) (2,069)
New shares issued 732 1,000
(Decrease)/increase in shares to be issued (750) 750
------- --------
At 30 June 2003 7,471 5,749
------- --------
-12-
Dechra Pharmaceuticals PLC
Preliminary Results
Consolidated Cash Flow Statement
year ended 30 June 2003
Note 2003 2002
£'000 £'000
Net cash inflow from operating activities 6 6,542 6,397
Returns on investment and servicing of finance
Interest received 62 16
Interest paid (1,400) (1,103)
Interest element of finance lease rentals (46) (39)
------- -------
Net cash outflow for returns on investment and servicing of (1,384) (1,126)
finance
Taxation
Corporation tax paid (2,066) (2,155)
Capital expenditure
Purchase of tangible fixed assets (1,553) (2,845)
Purchase of intangible fixed assets (784) -
Sale of tangible fixed assets 1,113 141
------- -------
Net cash outflow for capital expenditure and financial (1,224) (2,704)
investment
Acquisitions and disposals
Acquisitions of subsidiary undertakings 32 (3,214)
Overdrafts of acquired businesses - (429)
Purchase of business - (180)
------- -------
Net cash inflow/(outflow) for acquisitions and disposals 32 (3,823)
Equity dividends paid (2,078) (1,927)
------- -------
Cash outflow before financing (178) (5,338)
Financing
New bank loans - 3,000
Term loans repaid (2,842) (3,364)
Capital element of finance lease payments (568) (401)
------- -------
Net cash outflow from financing (3,410) (765)
------- -------
Decrease in cash in the period (3,588) (6,103)
(Bank overdraft)/cash at 30 June 2002 (2,110) 3,993
------- -------
Bank overdraft at 30 June 2003 (5,698) (2,110)
------- -------
Reconciliation of Net Cash Flow to Movement in Net Debt
2003 2002
£'000 £'000
Decrease in cash during the period (3,588) (6,103)
Cash inflow from new loans - (3,000)
Debt repayments 2,842 3,364
Repayment of finance leases 568 401
------- -------
Change in net debt resulting from cash flows (178) (5,338)
New finance leases (75) (418)
Loan stock issued - (500)
Other non cash changes (7) (8)
------- -------
Movement in net debt in the period (260) (6,264)
Net debt at 1 July 2002 (14,728) (8,464)
------- -------
Net debt at 30 June 2003 (14,988) (14,728)
======= =======
-13-
Dechra Pharmaceuticals PLC
Preliminary Results
Notes to the Financial Statements
year ended 30 June 2003
1. Exceptional Items and Goodwill Amortisation
2003 2002
£'000 £'000
Reorganisation and rationalisation costs 500 -
Compensation for loss of office - 194
------- --------
Total exceptional items 500 194
Goodwill amortisation 561 101
------- --------
Total exceptional items and goodwill amortisation 1,061 295
------- --------
The reorganisation and rationalisation costs relate to the integration of the
Group's manufacturing operations onto a single site at Skipton, together with
the costs of reorganising the Group's trading operations into a single statutory
entity.
The compensation for loss of office in 2002 relates to the termination of the
contract of Gary Evans, the former Chief Executive, and associated legal fees.
2. Net Interest Payable and Similar Charges
2003 2002
£'000 £'000
Bank loans and overdrafts 1,316 1,070
Amortisation of arrangement fees 97 74
Other loans 19 3
Finance charges payable on finance leases and hire purchase 46 39
contracts ------- --------
Total interest payable 1,478 1,186
Bank deposit and other interest receivable (62) (16)
------- --------
Net interest payable and similar charges 1,416 1,170
------- --------
3. Tax on Profit on Ordinary Activities
2003 2002
£'000 £'000
Current taxation
UK Corporation tax charge 1,866 2,281
Adjustments in respect of prior periods (63) (35)
------- --------
Total current tax charge for the year 1,803 2,246
------- --------
Deferred taxation
Origination and reversal of timing differences 77 (24)
Adjustments in respect of prior periods (28) 28
------- --------
Total deferred tax charge for the year 49 4
------- --------
Tax on profit on ordinary activities 1,852 2,250
------- --------
Tax credit included above attributable to exceptional 108 58
operating items ------- --------
4. Dividends
2003 2002
£'000 £'000
Interim paid 1.37p per share (2002: 1.37p) 691 682
Final proposed 2.75p per share (2002: 2.75p) 1,402 1,387
------- --------
2,093 2,069
------- --------
continued...
-14-
5. Earnings per Share
Earnings per ordinary share have been calculated by dividing the profit on
ordinary activities after taxation for each financial year by the weighted
average number of ordinary shares in issue during the year
2003 2002
pence pence
Basic earnings per share after exceptional items and
goodwill
amortisation 7.52 10.12
Effect of exceptional items 0.77 0.27
-------- --------
Basic earnings per share before exceptional item 8.29 10.39
Effect of goodwill amortisation 1.10 0.20
-------- --------
Adjusted earnings per share 9.39 10.59
-------- --------
Diluted earnings per share 7.50 10.09
Effect of exceptional items 0.76 0.27
-------- --------
Diluted earnings per share before exceptional 8.26 10.36
items
Effect of goodwill amortisation 1.10 0.20
-------- --------
Adjusted diluted earnings per share 9.36 10.56
-------- --------
£'000 £'000
The calculation of basic and diluted earnings per
share is based upon:
Earnings for basic and diluted earnings per share 3,833 5,058
calculations
Exceptional items 392 136
-------- --------
Earnings for basic and diluted earnings per share
calculations before
exceptional items 4,225 5,194
Goodwill amortisation 561 101
-------- --------
Earnings for adjusted and adjusted diluted earnings 4,786 5,295
per share -------- --------
No. No.
Weighted average number of ordinary shares for basic 50,975,037 49,989,015
and adjusted
earnings per share
Impact of share options 164,117 151,049
-------- --------
Weighted average number of ordinary shares for 51,139,154 50,140,064
diluted and adjusted
diluted earnings per share
-------- --------
6. Reconciliation of Operating Profit to Operating Cash Flow
2003 2002
£'000 £'000
Operating profit 7,101 8,478
Depreciation 1,248 1,289
Goodwill amortisation 561 101
Profit on disposal of tangible fixed assets (100) (43)
Decrease/(increase) in stocks 1,698 (2,223)
Increase in debtors (2,197) (601)
Decrease in creditors (1,769) (604)
-------- --------
Net cash inflow from operating activities 6,542 6,397
-------- --------
continued...
-15-
7. Analysis of Net Debt
Cash Other
Inflow/ Non-Cash
At 1 July (Outflow) Changes At 30 June
2002 2003
£'000 £'000 £'000 £'000
Borrowings due after one (8,200) - 1,561 (6,639)
year
Bank overdraft (2,110) (3,588) - (5,698)
Other borrowings due within (3,728) 2,842 (1,568) (2,454)
one year
Finance leases (690) 568 (75) (197)
--------- -------- -------- -----------
(14,728) (178) (82) (14,988)
--------- -------- -------- -----------
Major non-cash transactions:
During the year the group entered into finance lease arrangements in respect of
assets with a total capital value at the inception of the leases of £75,000
(2002: £133,000) and finance leases with a total capital value of £nil (2002:
£285,000) arising on the acquisitions of subsidiaries.
8. Pensions
The Group operates a defined contribution pension scheme for certain employees.
The Group contributed between 4% and 12% of pensionable salaries which amounted
to £281,000 (2002:£191,000).
9. Statutory Accounts
The financial information set out above does not constitute the Company's
statutory accounts for the years ended 30 June 2002 or 2003 but is derived from
those accounts. Statutory accounts for 2002 have been delivered to the
Registrar of Companies, and those for 2003 will be delivered following the
Company's Annual General Meeting. The auditors have reported on those accounts;
their reports were unqualified and did not contain statements under Section 237
(2) or (3) of the Companies Act 1985.
10. This statement is not being posted to shareholders. The Report &
Accounts for the year ended 30 June 2003 will be posted to shareholders shortly.
Further copies will be available from the Company's Registered Office: Dechra
House, Jamage Industrial Estate, Talke Pits, Stoke on Trent, ST7 1XW. Email:
corporate.enquiries@nvs-ltd.co.uk.
11. Annual General Meeting
The Annual General Meeting will be held at 10.00am on Thursday, 23 October 2003
at The Manor House Hotel, Audley Road, Alsager, Stoke on Trent, Staffordshire,
ST7 2QR.
This information is provided by RNS
The company news service from the London Stock Exchange
Tuesday, 14th May 2024
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