Dechra Enjoys Continued Underlying Growth

LONDON -- Dechra Pharmaceuticals (ISE: DPH.L) -- the international group that focuses on the veterinary market, particularly "companion animal" products -- opened up over 1% this morning, on release of its preliminary results for the first half of 2012.

Group revenue was up 9.5% at 426 million pounds, underlying operating profit rose 15% to 36.6 million pounds, and underlying pre-tax profit increased to 9.6% to 33 million pounds. On a constant currency basis, pre-tax profit was up 17.3% -- the ninth successive year of double-digit growth.

Net borrowings increased significantly, up to 86.7 million pounds from 34.1 million pounds at the end of the first half of 2011, but that was because of a new debt facility required to partially fund the acquisition of the Dutch company Eurovet Animal Health. Net borrowings now stand at 1.8 times pro-forma EBITDA of the enlarged Group.

The company is increasing its final dividend to 8.5 pence per share, which means its total dividend for 2012 has risen 10.3% compared to 2011.

Ian Page, chief executive, commented:

The Group has delivered strong growth throughout the financial year and continues to progress its strategic objective of building a high margin, cash generative veterinary products business. Both revenue and profit growth have been driven by the performance of our Pharmaceutical segments; predominantly from the solid organic growth of our licensed pharmaceuticals...

Historically the majority of the Group's turnover and profitability were derived from our Services segment. However, due to our clear strategic objective to develop a high growth, cash generative veterinary products business, Group profits are now predominantly derived from our Pharmaceutical segments.

Although Dechra's share price has had something of a choppy ride in 2012, and has slipped back almost 13% from its highs of February this year, long-term shareholders definitely won't be complaining at Dechra's performance -- up around 1,000% from its lows of 2003.

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