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Animalcare reports positive trading

By BFN News | 07:22 AM | Thursday 14 July, 2016


Animalcare (ANCR) reported a positive trading performance for the year ended 30 June 2016. Revenues across the Group were up by 8.6% to £14.7m (2015: £13.54m) and underlying operating profits are expected to be broadly in line with last year, exceeding market expectations. Revenue from sales of the Licensed Veterinary Medicines group was up 7.7% to £9.24m (2015: £8.58m), with growth driven by full year sales of new distribution products launched late in the prior period. The Companion Animal Identification group revenues increased by 16% to £2.68m (2015: £2.31m). Legislation making it compulsory to microchip dogs in the United Kingdom had little effect until the very last minute of its introduction in April 2016. A short-lived but significant increase in sales accounted for most of the increase along with continued strong performance from database services. Sales from the Animal Welfare Products group improved by 4.9% to £2.78m (2015: £2.65m) driven by our growing infusion accessories range. In line with one of our stated strategic objectives a dedicated export manager was employed at the start of the financial year and as a result sales to territories outside the UK have grown by 22.8%, ahead of management expectations. We expect both underlying operating profit and basic underlying EPS to be broadly in line with prior year, ahead of market expectations during a period of further strengthening of the core business. The year-end cash position was £7.1m (30th June 2015: £5.8m) with the business continuing to generate strong levels of cash through its investment phase. For the second year, planned investment in our product pipeline has increased significantly on the prior year to circa £1.5m (2015: £0.8m). SUMMARY AND OUTLOOK During the full year Animalcare re-launched its market leading intravenous fluids with a new European contract manufacturer allowing the range to be extended, product presentation and margin to be improved. We are planning the launch of several new products in the new financial year, some on distribution and others from our own in-house development pipeline. It is expected that the compulsory microchipping legislation for dogs in the UK will result in a decline in the available dog market. However, Animalcare has plans to evolve the established business model to build upon the anticipated lower revenue levels. The product development pipeline is progressing well; investment has increased 8-fold in the space of two years and is already producing returns. The result of the EU referendum has introduced some uncertainty in the UK economy and in particular sterling weakness which the Group will continue to monitor. This will impact the cost of a large proportion of our pharmaceutical products imported from mainland Europe, denominated in Euros, and microchips supplied in USD. However this is balanced in part by the increasing level of Euro-denominated sales outside the UK and in the short-term, our hedging position. Notwithstanding the above, the Group has a strong balance sheet and our long-term business plans are unchanged and being actively pursued without delay. Following the strong trading performance in the year, particularly from the licensed veterinary medicines group, the board remains confident about the prospects for the new financial year and is pleased with the momentum of the product development pipeline and the new UK distribution opportunities the company has attracted. In addition, export opportunities will have increasing significance on the success of the business in the coming two to three years. Story provided by StockMarketWire.com

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