NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN WHOLE OR IN PART IN, INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OR REGULATIONS OF SUCH JURISDICTION

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION

22 May 2023

Dechra Pharmaceuticals PLC
("Dechra" or the "Company")

Trading update

Dechra issues the following unaudited trading update in respect of the financial year ending 30 June 2023.

The Board is confident that Dechra's end customer demand has continued to be ahead of the animal health market in its major geographies. However, the trading environment during the period January to April 2023 has been more volatile and challenging than anticipated when the Board reported its interim results on 27 February 2023.

In the US, the impact of the now widely reported de-stocking by US wholesalers has been deeper and longer than initially expected and had a material impact on Q3 (January to March 2023) performance, although there are encouraging signs that this is now re-bounding. We have continued to see strong end customer demand as evidenced by product sales from wholesalers out to veterinary clinics, independent data for which shows year-on-year sales are up approximately 11%¹ during the period January to April 2023.

A similar de-stocking pattern has also been experienced in the UK during April 2023, due to certain wholesalers managing financial year-end inventory levels, although order patterns are beginning to show signs of normalising. In the rest of Europe, the market appears to be slowing in response to the changing macro-economic environment and country specific dynamics.

Accordingly, the Board confirms that full year underlying operating profit for the year ending 30 June 2023 will be below £186 million, the guidance provided within the Company's interim results announced on 27 February 2023^{2, 3}.

The Board is confident that the Group remains very well positioned to continue to grow over the medium and longer term despite the unprecedented and, by nature, short term trading headwinds. The fundamentals of the business and strategy remains strong, our underlying markets remain in structural growth, we continue to grow in our chosen markets and we have an established, highly experienced and focused management team. Our strategy is robust, including  a very attractive development pipeline of new products to underpin our future growth, supported by a strong balance sheet.

The Company remains in discussion with EQT X EUR SCSp and EQT X USD SCSp, each represented by its manager (gérant) EQT Fund Management S.à r.l. (collectively referred to as "EQT") regarding a possible all-cash recommended offer of 4,070 pence per ordinary share. As announced on 11 May 2023, in accordance with Rule 2.6(a) of the City Code on Takeovers and Mergers (the "Code"), EQT is required, by not later than 5.00 pm (London time) on 2 June 2023 either to announce a firm intention to make an offer for Dechra in accordance with Rule 2.7 of the Code or to announce that it does not intend to make an offer.  

As such the Company remains in an offer period as defined by the Code and is restricted in providing further guidance at this stage.

There can be no certainty that any firm offer will be made for Dechra. A further announcement will be made as appropriate.

Notes

1.    Source: Animalytix Customer Transactional (ACT) Records

2.    Immediately prior to the announcement of the Company's interim results on 27 February 2023 the analyst expectations range for the underlying operating profit for the year ending 30 June 2023 published on the Company's website was £186 million to £199 million

3.    The revised guidance provided in this announcement also constitutes a profit forecast for the purposes of Rule 28.1 of the Code and the Company will provide the requisite directors' confirmation statement pursuant to Rule 28.1(c)(i) should any announcement regarding a firm offer for the Company be made pursuant to Rule 2.7 of the Code

The person responsible for arranging the release of this announcement on behalf of Dechra is Melanie Hall, Company Secretary.

This announcement has been made without the consent of EQT.

Enquiries:

Rule 26.1

In accordance with Rule 26.1 of the Code, a copy of this announcement will be available on the Company's website at www.dechra.com. The content of the website referred to in this announcement is not incorporated into and does not form part of this announcement.

Important Notice

The information in this announcement has not been audited or otherwise independently verified and no representation or warranty, express or implied, is made as to, and no reliance should be placed on, the fairness, accuracy, completeness or correctness of the information or opinions contained herein. None of the Company or any of its affiliates, advisors or representatives shall have any liability whatsoever (in negligence or otherwise) for any loss whatsoever arising from any use of this announcement, or its contents, or otherwise arising in connection with this announcement.

This announcement does not constitute or form part of any offer or invitation to sell, or any solicitation of any offer to purchase any shares in the Company, nor shall it or any part of it or the fact of its distribution form the basis of, or be relied on in connection with, any contract or commitment or investment decisions relating thereto, nor does it constitute a recommendation regarding the shares of the Company.

The release, distribution or publication of this announcement in whole or in part, directly or indirectly in, into or from jurisdictions outside the United Kingdom may be restricted by law and therefore persons into whose possession this announcement comes should inform themselves about, and observe, such restrictions. Any failure to comply with the restrictions may constitute a violation of the securities law of any such jurisdiction.

Certain statements, statistics and projections in this announcement are or may be forward looking. By their nature, forward‑looking statements involve a number of risks, uncertainties or assumptions that may or may not occur and actual results or events may differ materially from those expressed or implied by the forward-looking statements. Accordingly, no assurance can be given that any particular expectation will be met and reliance should not be placed on any forward-looking statement. Accordingly, forward-looking statements contained in this announcement regarding past trends or activities should not be taken as representation that such trends or activities will continue in the future. You should not place undue reliance on forward-looking statements, which are based on the knowledge and information available only at the date of this announcement's preparation.

The Company does not undertake any obligation to update or keep current the information contained in this announcement, including any forward‑looking statements, or to correct any inaccuracies which may become apparent and any opinions expressed in it are subject to change without notice.

References in this announcement to other reports or materials, such as a website address, have been provided to direct the reader to other sources of information on Dechra which may be of interest. Neither the content of Dechra's website nor any website accessible by hyperlinks from Dechra's website nor any additional materials contained or accessible thereon, are incorporated in, or form part of, this announcement.

Investec Bank plc ("Investec"), which is authorised in the United Kingdom by the Prudential Regulation Authority ("PRA") and regulated in the UK by the Financial Conduct Authority ("FCA") and the PRA, is acting exclusively for the Company and no one else in connection with the subject matter of this announcement and shall not be responsible to anyone other than the Company for providing the protections afforded to clients of Investec, nor for providing advice in connection with any matter referred to herein. Neither Investec nor any of its affiliates (nor any of its or their respective directors, officers, employees, representatives or agents) owes or accepts any duty, liability or responsibility whatsoever (whether direct, indirect, consequential, whether in contract, in tort, under statute or otherwise) to any person who is not a client of Investec in connection with this announcement, any statement contained herein or otherwise.