Half-Yearly Review 2011 Six months ended 31 December 2010

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Overview

Group revenue increased by 4.0%

Underlying operating profit up 13.0%

Underlying earnings per share 15.60p

Strong performance from Dechra Veterinary Products EU and US

Resilient performance from Services in difficult economic conditions

Two earnings enhancing acquisitions completed

£0.4 million increase in product development spend as the pipeline continues to deliver results

Strong increase in dividend in line with underlying earnings

Balance sheet remains strong

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Half-Yearly Results Six months ended 31 December

2010 2009

Revenue £192.2m £184.8m +4.0%

Underlying operating profit* £14.5m £12.8m +13.0%

Operating profit £10.0m £8.8m

Underlying profit before taxation* £13.9m £13.7m +1.5%

Profit before taxation £9.0m £9.7m

Underlying basic earnings per share* 15.60p 15.37p +1.5%

Basic earnings per share 10.10p 10.85p

Interim dividend 3.70p 3.30p +12.1%

Net borrowings £49.6m £18.5m

Dividend cover* 4.2 times 4.6 times

* before amortisation of acquired intangibles, acquisition expenses, rationalisation costs, payments to acquire technology for the research and development programme, impairment charges and loss on extinguishment of debt

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Growth in Revenue and Underlying Operating Profit

Growth%

Revenue growthOrganic at constant currency 3.6Acquisitions 0.9Currency (0.5)

-------4.0

====Underlying operating profit growthOrganic at constant currency 9.1Acquisitions 5.3Currency (1.4)

-------13.0

====

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FinancialsEuropean Pharmaceuticals

2010 2009£’000 £’000

Revenue- core 43,381 41,313 +5.0%- acquisitions 296 -

--------- ---------43,677 41,313 +5.7%===== =====

Underlying operating profit- core 10,392 9,621 +8.0%- acquisitions 44 ---------- ---------

10,436 9,621 +8.5%===== =====

Pharmaceuticals revenue grew by 11.1% (excluding acquisitions)

Diets revenue increased by 5.6%

Reduction in contract manufacturing revenue due to expected lower than production from largest contract

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FinancialsUS Pharmaceuticals

2010 2009£’000 £’000

Revenue- core 5,136 5,350- acquisitions 1,340 -------- -------6,476 5,350 +21.0%==== ====

Underlying operating profit- core 1,208 309+290.9%- acquisitions 638 -------- -------1,846 309 +497.4%==== ====

Strong increase in profitability due to increased sales of own-developed products and benefit of DermaPet® acquisition

Core revenue impacted by ophthalmic and otic products supply issues

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FinancialsServices

2010 2009

£’000 £’000

Revenue 148,592 144,331+3.0%

Underlying operating profit 6,349 6,473-1.9%

NVS® profit level held despite increasingly competitive market place and disrupted December trading

Laboratories profit reduced due to very poor December trading

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FinancialsGroup Statement of Financial Position

2010 2009£’000 £’000

Balance SheetNon-current assets - intangible assets 125,873 90,574

- property, plant and equipment 7,714 8,108--------- ---------

133,587 98,682Net working capital 39,224 24,701Contingent and deferred consideration (14,800) -Current and deferred tax liabilities (16,652) (19,129)Net borrowings (49,648) (18,459)

--------- ---------Net assets 91,711 85,795

--------- ---------

Borrowings increased due to £33.0 million cost of acquisitions

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FinancialsGroup Cash Flow

2010 2009£’000 £’000

Cash FlowCash flow from operations before interest and taxation 842 7,397

Capital expenditure- Intangible assets 983 397- Property, plant and equipment 619 675

--------- ---------1,602 1,072

===== =====

Inventory days 55 49Receivable days 42 38Payable days 52 53

Increase in inventory levels ahead of bringing marketing of certain products back in-house and change of diets manufacturer

Extended payment terms offered to certain customers to meet competitive pressure

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Acquisition - DermaPet

Total potential consideration US$64.0 million

Funded by refinancing debt facility

Accelerates presence and scale of our US operation

Further strengthens the Group’s dermatological portfolio

Cost synergies identified and being delivered in H2

Opportunity to increase EU sales

Will be materially earnings enhancing in first full year

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Acquisition - Genitrix®

Total potential consideration £6.4 million

Funded from existing cash resources

Increases UK portfolio of veterinary products

Significant cost synergies identified and being delivered in H2

Recently approved UK product Libromide® being taken through Mutual Recognition

Will be earnings enhancing in first full year

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Product Development

Vetoryl® approved in Japan

Equidone® approved in USA

Two generics approved in the UK

Progress made on pipeline

New opportunities being explored

Organic ‘Specific®’ range launch imminent

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European PharmaceuticalsReview

Dechra Veterinary Products EU

Overall veterinary product growth of 8.0%

Both pharma and diets outperforming markets

New EU market opportunities; Belgium and Germany

Contracts completed for Specific to be marketed in USA and South Korea

Dales® Manufacturing

Application to achieve FDA compliance at ‘Dales’ ongoing

Fuciderm® Gel and Canaural® now manufactured at Dales

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US PharmaceuticalsReview

Dechra Veterinary Products US

Equidone launched

Sales and marketing teams strengthened

Vetoryl not yet fulfilling its potential

Supply issues on otic and ophthalmic products detract from strong performance

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ServicesReview

NVS

Operating efficiencies gained

Integrated ERP system go live planned for April 2011

Laboratories

Result affected by poor December performance

Largest client retained following tender

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International pharmaceutical and diets businesses delivering good growth

Strong growth in own products underpins Group strategy

General economic weakness resulting in competitive markets

New products and in-house marketing of our own products will enhance growth

Cost synergies will be delivered from recent acquisitions

Strong product development pipeline

Our strategy will continue to deliver shareholder value

Outlook

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Segmental Summary

2010 2009£’000 £’000

RevenueEuropean pharmaceuticals 43,677 41,313US pharmaceuticals 6,476 5,350Services 148,592 144,331Inter-segment (6,537) (6,220)

--------- ---------192,208 184,774

--------- ---------

Underlying operating profitEuropean pharmaceuticals 10,436 9,621US pharmaceuticals 1,846 309Services 6,349 6,473Research & development (2,456) (2,064)Corporate and other unallocated costs (1,700) (1,534)

--------- ---------14,475 12,805--------- ---------

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TrademarksTrademarks of the Dechra Group of companies appear throughout this document in italics.Dechra and the Dechra ‘D’ logo are registered Trademarks of Dechra Pharmaceuticals PLC.

The Malaseb Trademark is used under licence from Dermcare-Vet Pty. Ltd.

Forward-Looking StatementsThis 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 involving a degree of uncertainty. Therefore, nothing in this document should be construed as a profit forecast by the Company.

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