Dechra Pharmaceuticals PLC

Dechra Pharmaceuticals PLC

Annual Report and Accounts for the year ended 30 June 2012

2. Operating Segments

The Group has four reportable segments, as discussed below, which are based on information provided to the Board of Directors, which is deemed to be the Group's chief operating decision maker. Several operating segments which have similar economic characteristics have been aggregated into the reporting segments.

The Services segment comprises National Veterinary Services, Dechra Laboratory Services and Dechra Specialist Laboratories. This segment services UK veterinary practices in both the companion animal and livestock sectors.

The European Pharmaceuticals segment comprises Dechra Veterinary Products EU, Eurovet and Dechra Manufacturing. Dechra Manufacturing manufactures the vast majority of our own branded licensed pharmaceutical products, which are marketed through DVP EU and Eurovet. This segment operates internationally and is unique in having its sole area of specialisation in companion animal products.

The US Pharmaceuticals segment consists of Dechra Veterinary Products US which sells companion animal pharmaceuticals into that territory.

The Pharmaceuticals research and development segment includes all of the Group's pharmaceutical research and development activities.

There are varying levels of intersegment trading. Intersegment pricing is determined on an arm's length basis.

Reconciliations of reportable segment revenues, profit or loss and liabilities and other material items:

2012
£'000
2011
£'000
Revenue by segment
Services— total315,672296,258
 — intersegment(518)(190)
European Pharmaceuticals— total104,76489,287
 — intersegment(13,443)(12,225)
US Pharmaceuticals— total20,36316,107
 — intersegment(797)
426,041389,237
Operating profit/(loss) by segment
Services11,05613,087
European Pharmaceuticals28,90422,506
US Pharmaceuticals5,8634,838
Pharmaceuticals research and development(5,735)(5,221)
Segment operating profit40,08835,210
Corporate and other unallocated costs(3,487)(3,387)
Underlying operating profit36,60131,823
Amortisation of acquired intangibles(10,871)(8,938)
Rationalisation costs(2,525)(474)
Acquisition costs(2,315)(693)
Total operating profit20,89021,718
Finance income2192,144
Finance expense(4,289)(5,348)
Profit before taxation16,82018,514
Total liabilities by segment
Services(55,244)(58,337)
European Pharmaceuticals(22,058)(14,465)
US Pharmaceuticals(14,221)(13,837)
Pharmaceuticals research and development(685)(654)
Segment liabilities(92,208)(87,293)
Corporate loans and revolving credit facility(118,229)(63,814)
Corporate accruals and other payables(2,804)(2,094)
Current and deferred tax liabilities(37,498)(18,834)
(250,739)(172,035)
Additions to intangible non-current assets by segment
Services211158
European Pharmaceuticals121,1408,244
US Pharmaceuticals40,056
Pharmaceuticals research and development4471,212
121,79849,670
2012
£'000
2011
£'000
Additions to Property, Plant and Equipment by segment
Services484280
European Pharmaceuticals10,469874
US Pharmaceuticals1063
Pharmaceuticals research and development13686
11,0991,303
Depreciation and amortisation by segment
Services700438
European Pharmaceuticals10,5249,091
US Pharmaceuticals2,8001,961
Pharmaceuticals research and development322407
14,34611,897

Geographical Information

The following table shows revenue based on the geographical location of customers and non-current assets based on the country of domicile of the entity holding the asset:

2012
Revenue
£'000
2012
Non-current
assets
£'000
2011
Revenue
£'000
2011
Non-current
assets
£'000
UK322,06324,164305,73729,156
Rest of Europe72,358180,65456,45266,954
USA25,85737,77416,10736,709
Rest of World5,76310,941
426,041242,592389,237132,819

No customer accounted for more than 10% of total Group revenue.

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