Dechra Pharmaceuticals : 20 September 2022 Notice of 2022 Annual General Meeting

Annual Report and Accounts

for the year ended 30 June 2022

Company Number: 3369634

Celebrating 25 years of Continuous Growth and Improvement in Animal Health and Welfare

Celebrating 25 Years

of Continuous

Growth and

Improvement in

Animal Health

and Welfare

Read more about our Top Ten Key Strategic Developments on pages 04 to 06

Welcome to our Annual Report and Accounts

Overview

Highlights	IFC
Chair's View	01
25 Years	02
Top Ten Key Strategic Developments	04
Dechra at a Glance	08
Our Values and Culture	10
Our Key Strengths	11
Strategic Report
Chief Executive Officer's Statement	14
Our Marketplace	18
Our Business Model	22
Delivering Our Strategy	26
Our Strategic Progress Over the Last Five Years	28
Strategy in Action	30
Product Development	35
Global Product Offering	40
Financial Review	42
Key Performance Indicators	50
Section 172 Statement Stakeholder Engagement	52
Our Environment	64
Sustainability	68
Task Force on Climate-related Financial Disclosures	70
Non-Financial Information Statement	74
How the Business Manages Risk	75
Understanding Our Key Risks	78
Viability Statement	81
Governance
Letter from the Chair on Governance	84
Governance at a Glance	86
Board of Directors and Senior Executive Team	88
Board Leadership and Company Purpose	92
Division of Responsibilities	103
Composition, Succession and Evaluation	107
Audit, Risk and Internal Control	117
Directors' Remuneration Report	125
Directors' Report - Other Disclosures	151
Statement of Directors' Responsibilities	153
Financial Statements
Independent Auditors' Report	156
Consolidated Income Statement	165
Consolidated Statement of Comprehensive Income	166
Consolidated Statement of Financial Position	167
Consolidated Statement of Changes in	168
Shareholders' Equity
Consolidated Statement of Cash Flows	169
Notes to the Consolidated Financial Statements	170
Company Statement of Financial Position	214
Company Statement of Changes in Shareholders'	215
Equity
Notes to the Company Financial Statements	216
Financial History	225
Additional Information
Glossary	228
Shareholder Information	230
Advisers	IBC

View our online Annual Report at: dechra.annualreport2022.com

Highlights

Revenue

Underlying Operating Profit

£681.8m

£174.3m

AER: +12.1.0% CER: +13.8%

AER: +7.5% CER: +9.4%

2022

£681.8m

2022

£174.3m

2021

£608.0m

2021

£162.2m

2020

£515.1m

2020

£128.3m

2019

£481.8m

2019

£127.4m

2018

£407.1m

2018

£99.2m

Underlying Diluted Earnings Per Share

Dividend Per Share

120.84p

44.89p

AER: +11.7% CER: +14.0%

AER: +10.8% CER: +10.8%

2022

120.84p

2022

44.89p

2021

108.14p

2021

40.50p

2020

92.19p

2020

34.29p

2019

90.01p

2019

31.60p

2018

76.45p

2018

25.50p

Reported Operating Profit

£95.5m

AER: +13.7% CER: +16.2%

2022 £95.5m

2021 £84.0m

2020 £52.2m

2019 £39.0m

2018 £34.1m

Strategic Progress

• Strong organic growth in all key markets and across all therapeutic segments
• Pipeline strengthened through own innovation and acquisition
• International portfolio strengthened through numerous product approvals
• Successfully completed two material company acquisitions post year-end: Piedmont and Med-Pharmex
• Executed numerous bolt-on product acquisitions to complement existing equine and CAP portfolios

Reported Diluted Earnings Per Share

53.40p

AER: +4.6% CER: +7.5%

2022 53.40p

2021 51.03p

2020 32.76p

2019 30.07p

2018 37.04p

Financial Performance

• Revenue growth of 13.8% to £681.8 million
• Underlying operating profit increased by 9.4% to £174.3 million
• Reported operating profit increased by 16.2% to £95.5 million
• Strong cash generation of £163.3 million representing cash conversion of 93.7%
• Underlying diluted EPS increase of 14.0% to 120.84 pence
• Full year dividend increased by 10.8% to 44.8 pence

Our Product Pipeline

A key strategic priority for the Group is the delivery and strength of the pipeline. We currently have 41 projects in the product development process:

Feasibility

Research

Development

Registration

14

7

15

5

Chair's

View

We have delivered another strong set of financial results and we continue to execute our strategy successfully."

Alison Platt

Overview

Introduction

Welcome to our 2022 Annual Report, which is my first report as Chair of the Company.

This year marks Dechra's 25th anniversary. Our Values, our Culture, people, and strategy have established Dechra as one of the leading and fastest growing global animal health companies in the world. It was a privilege to meet the 100 colleagues who attended the Global Team Meeting in Cheshire to celebrate this milestone, where it was evident that the culture at Dechra is a major asset in attracting and retaining high quality professionals and people spoke openly of the empowerment they feel, the ability to operate at pace that affords and the support they feel from the Group.

During the year, we were able to recommence site visits as pandemic- related restrictions eased. The visit to Uldum, Denmark not only provided an opportunity to meet the employees at this site, but also to see the new warehouse recently commissioned. I look forward to further site visits over the coming year.

Board Changes

There have been a number of Board changes in the 2022 financial year, which included the retirement of Tony Rice on 31 December 2021and the appointment of John Shipsey on 1 June 2022. Julian Heslop will retire on 5 September 2022. I would, on behalf of the Board, like to express our thanks and gratitude for the huge contribution both Tony and Julian have made to the Board over their tenure as Non-Executive Directors.

Diversity

Dechra is committed to building high performing diverse teams at all levels in the organisation. It was always our plan to meet, and prior to our recent elevation to the FTSE 100 (in December 2021), to exceed the Parker Recommendations for FTSE 250 companies. We remain cognisant of the ongoing requirements regarding diversity targets, and the Committee has retained an executive search firm for diverse talent to assist with the succession plan for our Remuneration Chair.

Progress this Year

Like all businesses, we have had to overcome a number of challenges this year, from post-COVID-19 normalisation to rising inflation. However, we have delivered another strong set of financial results and we continue to execute our strategy successfully. We have made a number of excellent acquisitions, have strengthened our development pipeline and have increased our geographical footprint.

ESG

The external world is constantly changing, and the role businesses play in tackling global and societal change is increasingly articulated through codes of corporate governance and investor sentiment. As Dechra Chair, I feel a key part of the role is to enable the whole Board to help the business navigate the right path in terms of creating shareholder value and positively impacting the animals, people and areas of our planet touched by our operations. Our focus on human rights through a commitment to a living wage globally and our significant investment in a credible environmental sustainability programme are solid examples of our ability to have a positive impact by living our Values. Further information in relation to our Sustainability strategy and ambitions can be found in our inaugural Sustainability Report on our website.

Looking Ahead

The acquisition of Piedmont Animal Health and Med-Pharmex together with the new equity raise and refinancing of debt facilities, which took place after the year end, all provide reasons to be optimistic for the year ahead and beyond. The global animal health market remains resilient, and Dechra is well positioned to continue its sustainable growth strategy.

Alison Platt

Non-Executive Chair

5 September 2022

Report Strategic

Governance

Statements Financial

Information Additional

Stock Code: DPH

01