Annual Report & ACCOUNTS for the year ended 30 June 2014

HYR 2014

The Group has three reportable segments (four including the divested Services Segment), 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.

On 16 August 2013, the Group completed the disposal of the Services Segment. This Segment comprised National Veterinary Services, Dechra Laboratory Services and Dechra Specialist Laboratories. This Segment serviced UK veterinary practices in both the companion animal and livestock sectors. The Segment is a discontinued operation and was classified as held for sale at 30 June 2013. Refer to note 30 for further details and segmental analysis in relation to the Services Segment.

The European Pharmaceuticals Segment comprises Dechra Veterinary Products EU and Dechra Pharmaceuticals Manufacturing. This Segment operates internationally and manufactures and markets Companion Animal, Equine and Food producing Animal Products. This Segment also includes third party manufacturing sales.

The US Pharmaceuticals Segment consists of Dechra Veterinary Products US which sells companion animal pharmaceuticals into that territory. The Segment expanded during this financial year with the acquisition of PSPC Inc.'s manufacturing unit based in Melbourne, Florida.

The Pharmaceuticals Research and Development Segment includes all of the Group's pharmaceutical research and development activities. From a Board perspective, this Segment has no revenue income.

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

2014
£000
2013
£000
Revenue by segment
European Pharmaceuticals— total172,449168,684
— inter segment(35)
US Pharmaceuticals— total21,21520,889
— inter segment(58)(397)
193,571189,176
Operating profit/(loss) by segment
European Pharmaceuticals49,01645,819
US Pharmaceuticals5,9805,585
Pharmaceuticals Research and Development(8,248)(7,961)
Segment operating profit46,74843,443
Corporate and other unallocated costs(4,580)(4,335)
Underlying operating profit42,16839,108
Amortisation of acquired intangibles(16,543)(18,195)
Rationalisation costs(479)(2,577)
Acquisition costs(150)
Total operating profit24,99618,336
Finance income30273
Finance expense(3,856)(5,931)
Profit before taxation — continuing operations21,44212,478
Total liabilities by segment
Services (classified as held for sale in 2013)(53,961)
European Pharmaceuticals(23,615)(24,985)
US Pharmaceuticals(8,884)(6,602)
Pharmaceuticals Research and Development(633)(804)
Segment liabilities(33,132)(86,352)
Corporate loans and revolving credit facility(31,653)(113,110)
Corporate accruals and other payables(3,222)(3,496)
Current and deferred tax liabilities(27,961)(37,552)
(95,968)(240,510)
Revenue by product category
CAP98,74794,714
Equine12,58511,003
FAP35,86538,073
Diets28,37227,941
Third party manufacturing18,00217,445
193,571189,176
Additions to intangible non-current assets by segment (including through business combinations)
Services (classified as held for sale in 2013)88
European Pharmaceuticals1,3561,132
US Pharmaceuticals7,5673,143
Pharmaceuticals Research and Development1,0651,092
Corporate and central costs25
10,0135,455
Additions to Property, Plant and Equipment by segment (including through business combinations)
Services (classified as held for sale in 2013)733
European Pharmaceuticals2,9792,622
US Pharmaceuticals2,18518
Pharmaceuticals Research and Development5569
Corporate and central costs26223
5,2453,665
Depreciation and amortisation by segment
Services (included within discontinued operations)757
European Pharmaceuticals17,68418,360
US Pharmaceuticals1,9873,112
Pharmaceuticals Research and Development816426
Corporate and central costs5016
20,53722,671

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:

2014
Revenue
£000
2014
Non-
current
assets
£000
2013
Revenue*
£000
2013
Non-
current
assets
£000
UK49,41217,75248,95017,651
Germany38,5992,26036,3762,399
Rest of Europe71,918152,15874,285176,674
USA21,24242,27019,42838,946
Rest of World12,40010,137
193,571214,440189,176235,670

* £2,309,000 has been reclassified from UK to Rest of Europe due to customer reclassification.