US Performance

"The underlying performance within the US remains strong with our key products, Vetoryl and Felimazole, growing by 11.6% and 16.3% respectively."

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US Pharmaceuticals

Revenue from this Segment delivered growth of 4.7% in the year, hampered by third party supply issues with the ophthalmic and dermatological ranges. Third party supply problems for our leading dermatological product, Animax, persisted throughout the year and an enforced change to a new API supplier resulted in a complete out of stock situation. Every effort is being made by our supplier to produce the validation batches required to submit a variation for the change in API supplier. It is possible that the product could be back in production for the end of our current financial year. As the product is clinically unique it is considered that we should be able to recover the majority of historic sales once Animax becomes available again.

We had also anticipated that at least one of our licensed veterinary ophthalmic products would have been back in production within the financial year being reported. However, the review period by the FDA was longer than expected and we still await approval for the change in manufacturer. If we are successful in this first round review by the FDA, products should be available for marketing within the first half of the financial year ending June 2014. If a second round review is required, the relaunch will be extended into the third or fourth quarter.

The underlying performance within the US remains strong with our key products, Vetoryl and Felimazole, growing by 11.6% and 16.3% respectively. We continue to increase our reputation in the US with an ongoing educational programme on the conditions which our key products treat; within the year we held almost 100 meetings with over 3,300 veterinarians in attendance. We have continued to strengthen our sales team and have also appointed a new director of marketing, Nancy Zimmerman, who is already having a positive impact.

In December 2012 we completed an agreement to in-license three new companion animal products: A-Cyst, Polyglycan SA and PolyChews. None of these products will make a material impact; however, they complement our existing range of specialist companion animal products and will make a contribution to the growth of our US business. Development continues on the new in-licensed generic product outlined in the Half Yearly Report. Following an initial review by the FDA, it is unlikely this product will receive registration in the 2013/2014 financial year.

Group Information Technology

Following the appointment of a new Group IT Director on 2 April 2012 a new Group IT strategy has been defined and implemented. The essence of the proposed strategy, which commenced in August 2012, is to standardise applications and hardware across the Group and to implement a network and infrastructure to support the implementation of the Oracle ERP project. The second phase of the Oracle implementation is progressing well with Bladel manufacturing expected to go live in the second quarter of the new financial year. Future roll outs will include our European and US subsidiaries as well as Group consolidation.

People

Anne-Francoise Nesmes was appointed to the Board as Chief Financial Officer on 22 April 2013. She joined the Group and the Board from GlaxoSmithKline PLC ("GSK"). Anne-Francoise is a high calibre finance professional with international pharmaceutical, manufacturing and commercial experience.

Tony Griffin, formerly Chief Executive Officer of the AUV Group, was appointed as a Director of Dechra on 1 November 2012. Tony has played a key role in the integration of the Eurovet business into Dechra. In addition to his PLC Board responsibilities Tony's principal responsibility is his role as the Managing Director of Dechra Veterinary Products Europe ("DVP EU").

Two new Independent Non-Executive Directors were also appointed to the Board. Julian Heslop commenced his role on 1 January 2013 and Ishbel Macpherson on 1 February 2013. Julian served as Chief Financial Officer of GSK between 2005 and 2011, having previously held senior roles in both GSK and Grand Metropolitan PLC. Ishbel currently holds a number of Non-Executive roles and has previously had 20 years' experience as an investment banker specialising in mid-market corporate finance.

Neil Warner has confirmed his intention to stand down as a Non-Executive Director at the forthcoming Annual General Meeting. I would like to take this opportunity to thank Neil for his commitment to Dechra over the past ten years and wish him well in his future. Neil is also our Senior Independent Director and Chairman of the Audit Committee. On his retirement from Board Ishbel Macpherson will be appointed as the Senior Independent Director and Julian Heslop as the Chairman of the Audit Committee.

The US animal health market is approximately $15 billion, out of a total US spend of $50 billion on pets