THE DECHRA REPORT

An Analysis of Dechra Pharmaceuticals plc



An analysis of Dechra Pharmaceuticals plc

Overview of the company

Dechra Pharmaceuticals plc belongs to Drug Manufacturers industry involved in manufacturing and distributing the veterinary medicines. Dechra has two divisions

Pharmaceuticals products for animals such as dogs, cats and horses

Services such as veterinary product's supply and distributions

They have also been involved in laboratory services like microbiology, haematology, histology and pathology. Dechra wants to develop themselves as a high growth, cash generative business (dechraplc).

The Task: Part 1

In this section the focus would be on identifying what company has done over the past three to five years with respect to Investing, Financing and Dividends.

Investing: During these three years from 30 June 2013 to 30 June 2011, company has made considerable investment in their product­pipeline and their product development. In 2013, their investment in product­pipeline increased to 39% compares to last year worth to £8 million while this investment in 2012 increased with 10%. Beside this, they have also investment heavy amount in Research and Development i.e. 38.8% in order to support their product pipeline and to expand Group post-Eurovet acquisition. Furthermore, company has not made any fixed investment rather have reduced their Intangible assets in 2013 from £225,872 to £219,596. Acquisition of subsidiaries also reduced in these three years. Overall, company has invested much of their fund in products pipeline since this investment would be beneficial in future in term of revenues (dechraplc.com).

Financing: Looking at Total Debt to Equity ratios, in last three years company debt financing has been increased. In 2011, 66% of the operation financed through debt i.e. Borrowings were £ 64,587,000 (Current Debt and Capital Leases + Long-Term Obligations) and in 2012, this borrowing increased to £119,152,000 due to higher increase in Long-Term Obligations to 114,046,000 making 78% of debt financing. The reason was company heavily investing in R&D and product pipeline. During 2013, debt financing reduced 65% due to reduction in long term debt to 103,840,000. Still, financing structure state that company is partial leverage. Looking at previous years, this trend was below 20%, company increased their debt financing due to their investment. Nevertheless, this debt financing has been utilized in proper manner and this can be proved from their underlying operating profit which has been increased as change in their capital structure (Baker, Martin, 2012, p. 130). According to many researchers that there is a positive relationship between debt and revenue and this has been proved by company's trend. As they are increasing their debt, net income has also been increasing (dechraplc.com).

Source: Dechra Pharmaceuticals Annual report 2013

Dividends: Dechra Pharmaceuticals plc has been distributing dividend through these three years. Following is the data and date of dividend distributed by company (dechraplc.com).

Year

Interim/FinalDividend

Record Date

Payment Date

Dividendper share

2013

Final

8 November 2013

22 November 2013

9.66p

2013

Interim

15 March 2013

9 April 2013

4.34p

2012

Final

9 November 2012

23 November 2012

8.50p

2012

Interim

9 March 2012

10 April 2012

4.10p

2011

Final

11 November 2011

25 November 2011

8.40p

2011

Interim

11 March 2011

7 April 2011

3.70p

Source: Dechra Pharmaceuticals Website

Source: Dechra Pharmaceuticals Annual report 2013

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