Preliminary Results for the year ended 30 June 2005

Preliminary Results Year ended 30 June Turnover£208.2m£186.8m+11% Operating profit (pre-exceptional items & goodwill amortisation) £11.0m£9.2m+20% Pre-tax profit (pre-exceptional items & goodwill amortisation) £9.4m£8.1m+17% Adjusted Earnings per Share (pre-exceptional items & goodwill amortisation) 13.39p11.28p+19% Full year dividend5.20p4.70p+11% Dividend cover (pre-exceptional items & goodwill amortisation) 2.6 times 2.4 times

Financials - Pharmaceuticals £000£000 Turnover21,38118,900+13% Operating profit4,1973,118+35% Own-branded pharmaceutical sales growth of 19% Continued strong recovery in manufacturing operation 19% increase in product development expenditure - £1.33m v s £1.12m

Financials - Services £000 Turnover192,541173,100+11% Operating profit8,0297,098+13% Turnover growth 11% Buoyant market conditions Significant account gains Improvement in operating margin – 4.17% v s 4.10% Laboratories business continues to progress

Financials - Balance Sheet £000 Balance Sheet Fixed assets - intangibles5,7105,174 - tangibles5,2015, ,91110,398 Net working capital8,43010,043 Net debt(4,859)(10,110) Provisions - deferred tax-(174) Net assets14,48210, Stock turn9.5 times11.5 times Debtor days4344 Creditor days6153

Financials - Cash Flow £000 Cash Flow Inflow from operations13,22810,576 % of operating profit127%125% Capital expenditure - intangible assets1, tangible assets1, , Depreciation935988

Financials International Financial Reporting Standards Results to be re-stated for: Goodwill amortisation Development costs Share based payments Deferred tax Proposed dividend Other minor adjustments Likely modest increase in reported profit for year ended 30 June 2005 Shareholders’ funds will increase

Preliminary Results Business Review 2005

New head of Product Development and Regulatory Affairs appointed US national – relocated to UK Broad experience of US and EU Regulatory bodies Knowledge already proving invaluable Vetivex ® licenses acquired Immediate market share gains Leverage of the brand through new products Marketing agreements Orion Pharma : Vetoryl ® and Felimazole ® in Nordics Veterinaria : Vetoryl ®, Felimazole ® and Equipalazone ® in Switzerland Vétoquinol : Vetoryl ® and Felimazole ® in Canada Intervet : renewal of Equipalazone ® in Germany Developments

Vetoryl ® Expedited review granted in USA - efficacy and safety sections submitted Mutual recognition submitted for EU New blister packs approved in UK New low dose (30mg) approved in UK Development of 10mg maintenance dose commenced Dossier submitted to Canadian authorities Felimazole ® Expedited review granted in USA - field trials commencing 2.5mg approved in UK Dossier submitted to Canadian authorities Pharmaceutical Development

Urilin ® First generic license in UK First entrant in £1.9 million UK market Thyroxyl Profit share joint venture with USA patent holders, GeoPharma, Inc. Unique oral solution and tablets Launched in USA July 2005 Easier and improved dosing Favourable results on comparative trials with brand leader EU opportunities being explored as part of the worldwide marketing agreement Ovuplant ® I.P. owned by Peptech UK licensed Mutual recognition commenced Pharmaceutical Development

Branded veterinary licensed pharma portfolio + 19% Own developed and branded products performed well Vetoryl ® +36% Felimazole ® +71% Instruments & consumables Sales +12% Key distributor relationships reflect part of growth UK distribution agreement with Zi Medical Direct mail business - pdq Pharmaceuticals - Sales & Marketing

American market largest in the world - 10 times UK US fledgling operation established April 2005 Located in Kansas City – centre of US animal health President and National Sales Manager appointed Thyroxyl Oral Solution launched July 2005 Unique liquid formulation Dechra Veterinary Products established in USA prior to launch of key products Distribution agreements reached Increasing Brand awareness Pharmaceuticals - DVP (USA)

Significant improvement in operational efficiencies Sales up 15% New business secured Six new product ranges added to existing customer ranges Five new third party contract customers secured New laboratory to support in-house product development programme Facility extended Stock consolidated on site Additional offices, laboratory and training room Pharmaceuticals - Manufacturing

Market share increased to 43% Better purchasing and added-value services reflected in gross margin improvement Own ranges Valu and Vet Remedy increased market penetration New depot in Scotland Increased presence in the region Two additional depots in Southern England Improved service levels Substantial new contract wins Improvement of facilities Services - Wholesaling & Distribution

Q4 - new accounts started to feed through New services introduced at NWL Allervet - allergy testing PetScreen - new chemotherapy assay Extended same day courier services New assays introduced at CSLS Services - Laboratories

Business continues to perform in-line with management expectations US launch of Thyroxyl - provides opportunity to build market presence in American endocrinology market ahead of launch of Vetoryl ® and Felimazole ® Strategic alliances and agreements provide solid foundation to drive international business Pursuing further partnerships with human pharma and veterinary healthcare creating additional global opportunities Group focused to achieve further market penetration and profitability Prospects

Divisional Summary £000 Turnover Pharmaceuticals21,38118,900 Services192,541173,100 Inter division(5,725)(5,157) ,197186, Operating profit (pre-exceptional items and goodwill amortisation) Pharmaceuticals4,1973,118 Services8,0297,098 USA(185)- Central costs(1,065)(1,032) ,9769,