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Animalcare Group PLC (ANCR)

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Tuesday 25 September, 2018

Animalcare Group PLC

Half Year Results

RNS Number : 7859B
Animalcare Group PLC
25 September 2018
 

 

25 September 2018

 

Animalcare Group plc

("Animalcare", the "Company" or the "Group")

 

Interim Results for the six months ended 30 June 2018

 

Animalcare Group plc (AIM: ANCR), the pan-European Animal Health business, announces its interim results for the financial period ended 30th June 2018.

 

Financial Highlights

 

·     Pro-forma revenue growth of 6.4% at AER (4.8% CER) to £47.8m (2017: £44.9m)

 

·     Pro-forma underlying* EBITDA (excluding non-underlying items) increased by 5.1% to £6.3m (2017: £6.0m) reflecting improved translation of revenue growth through to profit through both focus on gross margin and cost control

 

·     £1.6m net cash generated from operations including a cash outflow from non-underlying items totaling £0.8m

 

·     76.7% increase in statutory net profit to £3.7m (2017: £2.1m) from total operations, resulting in basic underlying EPS of 6.2 pence (2017: 8.9 pence)

 

·     Proposed interim dividend of 2.0 pence per share, recognising the need to transition to a payment structure that reflects the change of year end to December

Total dividends per share since the reverse acquisition to 8.7 pence per share

 

Operational Highlights (including post-period)

 

·     Completed sale of Medini NV, Animalcare's wholesaling company, to Vetdis Holding for a total consideration of up to approximately £2.65 million

Sale consistent with Group's goal to focus on higher-margin veterinary pharmaceuticals business

Proceeds to be used initially to improve the Group's debt position and provide further support for product development, both organically and through strategic acquisitions

 

·     Strengthened management team with appointment of Jenny Winter as Chief Executive Officer of the Group from 1st October 2018

 

·     Restructured UK commercial team, in response to corporate consolidation of veterinary clinics in the UK, with greater focus on supporting larger corporate customers as well as continuing to provide strong service levels to independent practices.

 

·     Received positive opinion from the Committee for Medicinal Products for Veterinary European Medicines for a centralised registration for a new product (Cortacare), which will be launched in the UK in Q4 2018

 

·     Decentralised procedures for four new products submitted during the period with a further two planned in H2 2018. These six new products expected to be launched across a number of territories in 2019.

*underlying measures are before the effect of non-underlying items which excludes fair value adjustments on acquired inventory, amortisation of acquired intangibles and acquisition and integration costs

 

Jan Boone, Chairman of Animalcare Group plc, commenting on the results said: "Our focus is to become a leading pan-European animal health company and delivering maximum future value for our shareholders. Over the first half we have made good progress in line with this as well as improving the overall profitability of the Group. The sale of our Wholesale Division was an important further step in the process and underlines our strategy to concentrate resources on our higher-margin veterinary pharmaceuticals business, which we believe will continue to be the main driver growth in the business. This is an exciting time for Animalcare and we look forward to working with Jenny, our newly appointed CEO and presenting a further update on the Group's integration and growth strategy in due course." 

 

For further information, please contact:

 

Animalcare Group plc

Tel: 01904 487 687

Chris Cardon, Chief Executive Officer

 

Amber Fennell / Chris Welsh / Hendrik Thys

 

 

 

About Animalcare (www.animalcaregroup.co.uk)

Animalcare Group plc is a UK AIM listed veterinary sales, marketing and product development company resulting from the merger of Animalcare and Ecuphar NV.

 

Post-merger Animalcare is a pan-European animal health company, with a broad geographic footprint. The Company now has direct sales in seven countries (UK, Belgium, Netherlands, Spain, Portugal, Italy and Germany) and exports to approximately 50 markets worldwide.

 

The enlarged Company has nearly 100 sales representatives and 28 agents operating across Europe and owns 50 licensed drugs, eight vaccines and over 100 care and nutraceutical products.

 

Animalcare invests in developing its own pharmaceutical products, seeks distribution partnerships and product acquisitions.

 

For more information see Animalcare Ltd (www.animalcare.co.uk) and Ecuphar NV (www.ecuphar.com).

 

 

 

Chairman's Statement

 

Animalcare has made good progress over the first half of 2018 towards delivering the integration of our operations and improving the profitability of the Group, in line with the Board's expectations. Our rationale behind this transformational merger remains: to create a growing and successful pan European animal health business. The divestment of the wholesale business post-period end allows Animalcare to solely focus on developing and growing our higher margin veterinary pharmaceuticals business and combined with the recent appointment of Jenny Winter as Chief Executive Officer, we believe we have a strong foundation from which to create long-term shareholder value.

 

Financial Review

The Group completed the reverse acquisition of Ecuphar NV ("Ecuphar") on 13 July 2017. Accordingly, our statutory results for the half year to 30th June 2018 reflect six months trading of Ecuphar and Animalcare Group plc as previously constituted. The 2017 comparatives are for the Ecuphar business only. Following the divestment of the Wholesale business both the 2018 and 2017 half year financial information have been presented to show the Pharmaceuticals segment as continuing operations separately from the Wholesale segment, which has been classified as discontinued.

 

In order to help shareholders assess like-for-like performance, a pro-forma consolidated income statement has been prepared, which reflects six months trading from both Animalcare and Ecuphar for both 2018 and 2017 (including wholesale). On this pro-forma basis, the Group has delivered revenue growth of 6.4% at AER (4.8% CER) to £47.8m (2017: £44.9m). Underlying EBITDA (which excludes non-underlying items) increased by 5.1% to £6.3m (2017: £6.0m), demonstrating progress in improving the translation of revenue growth through to profit through both focus on gross margin and cost control. Our pharmaceuticals segment was the key driver of both the growth in revenue and in particular, underlying EBITDA.

 

The Group generated £1.6m net cash from operations in the first half which includes a cash outflow from non-underlying items totaling £0.8m. We have continued to invest in our product pipeline which is important to our future growth. Spend during the period was £1.8m and we remain on track to launch six new products across several territories during 2019.

 

On a statutory basis, Group revenue in our Pharmaceuticals segment increased by 40.1% to £35.3m (2017: £25.2m) driven by organic growth in the Ecuphar business which contributed £27.9m and £8.0m from the original Animalcare operations. Underlying EBITDA (which excludes non-underlying items as detailed in note 3) increased by 54.7% to £6.3m (2017: £4.0m) with £1.5m contributed by the Animalcare business which incorporates additional central costs including the enlarged Board of £0.2m. Including non-underlying items, which increased by £1.9m largely as a result of amortisation of acquired intangibles, the Group's profit after tax decreased to £0.7m (2017: £1.0m).

Further details on the financial performance, together with the impact of the sale of our wholesales business, can be found in the Business Review.

 

Board

We announced on 3rd August 2018 that Jenny Winter will join the Group as Chief Executive Officer from 1st October 2018. Jenny succeeds Chris Cardon, who will transition to Chief Strategy Officer, also effective from 1st October 2018. Jenny joins Animalcare from AstraZeneca with over twenty years' experience working in the pharmaceutical sector in various senior commercial roles. Jenny's wealth of experience will be pivotal in refining and executing Animalcare's post-acquisition strategy with a focus on creating a strong platform to drive growth. I would like to take the opportunity again to welcome Jenny to the Board and thank Chris for his significant achievements as Chief Executive Officer.

 

Dividend

The Board is proposing an interim dividend of 2.0 pence per share, recognising the need to transition to a payment structure that reflects the change of year end to December. This brings total dividends per share since the reverse acquisition to 8.7 pence per share. The Board intends to closely monitor the current dividend policy to ensure an appropriate balance between investment for future growth and dividend flow to deliver overall value to our shareholders.

 

Summary and Outlook

The Board is pleased with the continued revenue growth of the Group during the period and improving translation through to profit. Our ability to capitalise on growth in the wider market has now been improved by the divestment of the wholesale business, which will enable us to focus our resources on our higher-margin veterinary pharmaceuticals business. More broadly, management continues to work hard in continuing to deliver the integration of Animalcare and Ecuphar, which has created critical scale for the Group within the European animal health market and continues to progress. With Jenny joining the Company in October, it is our intention to present a further update on our integration and growth strategy at the time of the Group's full year trading update in January 2019.

 

This is an exciting time for Animalcare and with our strengthened leadership team, we are well placed to continue building Animalcare into a leading pan-European Animal Health company and delivering long-term value for our shareholders.

 

Jan Boone, Chairman

 

 

Business Review

Introduction

The Group completed the reverse acquisition of Ecuphar NV ("Ecuphar") on 13th July 2017. Accordingly, the Group's financial results for the six months period ended 30th June 2018 comprise the consolidated results of the Group with comparatives for the six months ended 30th June 2017 comprising the results of Ecuphar NV only.

In addition, following the divestment of our Wholesale business on 4th September 2018 both the 2018 and 2017 half year financial information have been presented to show the Pharmaceuticals segment as continuing operations separately from the Wholesale segment which has been classified as discontinued.

To help Shareholders to assess the Group, a Proforma Consolidated Income Statement has been provided, which reflects six months of trading from both entities for 2018 and 2017. On this basis the Group has delivered revenue growth of 6.4% at AER (4.8% at CER) to £47.8m (2017: £44.9m) and underlying EBITDA growth of 5.1% to £6.3m (2017: £6.0m).

Financial Review

Underlying financial results

A summary of the underlying financial results, which the Directors believe provides a clearer understanding of business performance, is shown below:

                                                                                                                           

Six Months to 30 June

2018

2018

2018

2017

2017

2017

% Change at AER

 

Continuing Operations

Discontinued Operations

Total

Continuing Operations

Discontinued Operations

Total

Continuing Operations

 

£'000

£'000

£'000

£'000

£'000

£'000

%

Revenue

35,340

12,429

47,769

25,224

11,758

36,982

40.1%

Gross Profit

19,262

1,197

20,459

13,937

1,173

15,110

38.2%

Gross Margin %

54.5%

9.6%

42.8%

55.3%

10.0%

40.8%

(0.8%)

Underlying Operating Profit

5,155

80

5,235

3,157

101

3,258

63.3%

Underlying EBITDA

6,227

110

6,337

4,026

161

4,187

54.7%

Underlying EBITDA margin %

17.6%

0.9%

13.3%

16.0%

1.4%

11.3%

1.6%

Underlying Profit after tax

3,684

36

3,720

2,047

58

2,105

80.0%

Basic Underlying EPS (p)

6.1p

0.1p

6.2p

8.6p

0.3p

8.9p

(29.1%)

 

Revenue

The Group delivered total revenue from continuing operations of £35.3m, an increase of 40.1% versus the prior year. This included £27.3m from the Ecuphar business, an increase of 8.5% (6.0% at CER) and £8.0m contribution from the acquired Animalcare operations. Revenue in all of our major markets in which we operate has shown growth, with the exception of Spain which has been adversely impacted by lower sales in productions animals.

 

Revenue by Product Category

Six Months to 30 June

2018

2017

% Change at AER

 

£'000

£'000

%

Companion Animals

23,566

13,889

69.7%

Production Animals

8,911

9,028

(1.3%)

Equine & other

2,863

2,307

24.1%

Total

35,340

25,224

40.1%

 

Companion Animals revenue increased by 69.7% to £23.6m, 57.6% of which was driven by the acquired Animalcare business with the balance of 12.1% delivered by the Ecuphar operations. Organic growth was primarily driven by strong annualised growth of rabbit vaccines launched in Germany in H1 2017 supported by growth of our key products including Orozyme (oral hygiene).  

Production Animals revenue declined by 1.3% on prior period largely driven by a 11.4% decline in sales of antibiotics to £3.1m (2017: £3.5m). This was offset by higher sales of in particular Dinalgen (anti-inflammatory) within our export business.

Equine sales increased by 24.1% to £2.9m due to phasing differences of export sales into the UK.

Operating results

 

Six Months to 30 June

2018

2017

% Change at AER

 

£'000

£'000

%

Underlying EBITDA

6,227

4,026

54.7%

Depreciation and amortisation

(1,072)

(869)

-

Underlying Operating Profit

5,155

3,157

63.3%

Non-underlying items

(3,753)

(1,627)

-

Reported Operating Profit

1,402

1,530

(8.4%)

 

 

 

 

Underlying EBITDA margin %

17.6%

16.0%

1.6%

Basic underlying EPS (p)

6.1p

8.6p

(29.1%)

Basic EPS (p)

1.2p

4.0p

(70.0%)

 

Underlying EBITDA from continuing operations (which excludes non-underlying items as described below and detailed in note 3) increased by 54.7% to £6.2m (2017: £4.0m) with £1.5m contributed by the Animalcare business which incorporates additional central costs including  the enlarged Board of £0.2m. Ecuphar's underlying EBITDA increased by 17.4% to £4.7m driven by strong growth in Spain and Germany partially offset by decline in both our Benelux and Italian operations.

Underlying EBITDA margin improved to 17.6% (2017:16.0%) reflecting the higher margin Animalcare business together with a 0.9% increase in the Ecuphar operations, largely driven by positive sales mix towards companion animal products and cost control. The latter is reflected in our operating costs, which have increased by £3.4m to £13.3m (2017: £9.9m) however have declined as a % of sales to 36.9% (2017:39.3%).

Non-underlying items

Non-underlying items incurred in the period are detailed in note 3 and primarily relate to acquisition related amortisation of £3.0m and integration and reorganisation costs of £0.7m (all figures are pre-tax)

 

Discontinued business

The sale of our wholesale division, announced on 4th September 2018, is consistent with our goal to focus on our higher-margin veterinary pharmaceuticals business. Of the £2.65m estimated total consideration, the Group has received an initial cash consideration of £2.05m including £1.72m in respect of intercompany loan balances due from the Wholesale Division to other Animalcare group companies. A further £0.37m payable to the Group on 30th June 2019 in relation to the remaining intercompany balance owed. The balance of approximately £0.23m is subject to achieving specific revenue targets between 1st July 2019 and 30th June 2020 and payable in July 2020.

We believe that the consideration is a fair valuation for our wholesaling business and see Vetdis Holding as an ideal company to take the business forward. The proceeds of the disposal will be used initially to improve the Group's debt position, but also provide further support for product development, both organically and through strategic acquisitions.

The disposed business has been accounted for as discontinued and the results of the wholesaling business are shown as loss on discontinued operations. This loss includes a £0.7m non-recurring impairment to the net asset value of the wholesaling business as at 30th June 2018 in order to account for such assets at their fair value, being the estimated total consideration of £2.65m noted above.

Earnings per share and dividend

The Group delivered a 76.7% increase in net profit to £3.7m (2017: £2.1m) from total operations, which, after taking into account the significant increase in the weighted average number of shares resulting from the reverse acquisition (see note 5), resulted in basic underlying EPS of 6.2 pence (2017: 8.9 pence).

The reported basic EPS, which incorporates non-underlying items, decreased to 0.1 pence (2017: 4.3 pence).

The Board is proposing an interim dividend of 2.0 pence per share, recognising the need to transition to a payment structure that reflects the change of year end to December. This brings total dividends per share since the reverse acquisition to 8.7 pence per share. The Boards intends to continue the current dividend policy, ensuring an appropriate balance between investment for future growth and dividend flow to deliver overall value to our shareholders.

 

Cash flow, net debt and borrowing facilities

 

£'000

Net debt at 1st January 2017

(25,908)

Net cash generated from operations

1,558

Net capital expenditure

(1,968)

Receipts from issue of share capital

111

Net finance expenses

(246)

Other cash movements

458

Foreign exchange on cash and borrowings

11

Net debt at 30th June 2018

(25,984)

 

The Group generated £1.6m net cash from operations (2017: £2.4m) which includes a cash outflow from non-underlying items totalling £0.8m. Working capital increased by £3.2m. This firstly reflects higher stocks in Belgium and Southern Europe, the latter reflecting a transition period of localising distribution facilities in Italy and Portugal. The balance primarily relates to decreased trade payables largely due to the unwind of supplier payables in relation to strategic stock build towards the end of 2017.

Net capital expenditure of £2.0m largely comprises investment in our product development pipeline of £1.8m from which six new products launches are expected in 2019. 

The net borrowing position at the end of the period of £26.0m was in line with the previous FY17 year end, representing net debt to underlying EBITDA banking covenant leverage of 2.2 times (maximum covenant ratio is 3.5 times). At 30th June 2018, total facilities were £45.6m, of which £31.3m, net of cash balances, was being utilised leaving headroom of £14.3m. These bank facilities, together with the Group's operational cash flow, indicate that the Group has sufficient facilities available to fund its operations and allow for future expansion. 

Operational Review

Product development

The product pipeline has continued to progress in line with expectations over the first half.  In June we received a positive opinion from the Committee for Medicinal Products for Veterinary European Medicines for a centralised registration for a new product (Cortacare), which will be launched in the UK late 2018. During the Period, decentralised procedures for four new products were submitted and a further two are planned in the second half of the year. It is expected that these six new products will be launched across a number of territories in 2019.

New products through strategic partnerships

We continue to seek to broaden our product portfolio through strategic partnerships and there are a number of opportunities we are exploring. Several new launches were due to take place in the first half of 2018 however these have been subject to delays by distribution partners. We expect to launch these products during H1 2019.  

In June we commenced distribution of Cosequin from US-based Nutramax, a nutritional supplement which promotes canine joint health. Sales to date have been above expectations. In July we signed an agreement with Assisi Animal Health for the distribution of "The Assisi Loop® or "Euro-loop 2.0" in Europe. This product is currently in pre-marketing phase with a modest impact expected in 2019.

People

We announced on 3rd August 2018 that Jenny Winter will join the Group as Chief Executive Officer from 1st October 2018. This will see Chris Cardon transition to Chief Strategy Officer, also effective from 1st October 2018, who will work with Jenny on delivering the Group's strategic objectives including new product introduction and identifying selective value-accretive acquisitions. We believe these changes create an optimal executive structure to take the business forward.

We continue to review and assess the roles required to deliver the integration of our operations and remain focused on, in particular, the optimal structure to manage and deliver benefits across the Group's increasingly complex supply chain.  

Market changes

The Corporate consolidation of veterinary clinics in the UK is continuing at pace and is emerging across Northern Europe. Our UK business has recently restructured its commercial team to put more focus on supporting the larger corporate customers as well as continuing to provide strong service levels to independent practices. We expect this trend to continue and will closely monitor and adapt our operations accordingly.

Integration

As noted above, we completed the sale of our wholesale division post-period end. The sale of our wholesale division is consistent with our goal to focus on our higher-margin veterinary pharmaceuticals business including the integration of our pharma operations. More specifically, we have commenced work on the implementation of SAP within the UK, which we expect to complete in H1 2019, delivering a common IT platform across the group to leverage benefits and efficiencies including more automation of the financial consolidation process. 

We remain on track to deliver the first meaningful cross-selling commercial benefits during 2019. We also continue to closely monitor our cost base and focus on efficiencies as we deliver the integration. 

Brexit

The outcome of ongoing Brexit negotiations remains unclear. However, the Company continues to assess the potential impact of all eventualities on its business with a view to being fully prepared post March 2019. Our priority is to maintain commercial supply of product to our customers. The acquisition enables the new Group to transfer its UK registered Marketing Authorisations for products sold in the EU to an existing legal entity within the Group. We will continue to closely monitor the Brexit situation and take the necessary actions to ensure business continuity.

Summary and outlook

The Group has delivered continued revenue growth in the period and translation through to profit is beginning to improve. The Board remains confident in the Group's ability to deliver revenue and profit growth compared to H2 FY17 in the second half in line with expectations, despite the delays in the launch of certain new products from our distribution partners.

Strategically and operationally it continues to be a transformational time for the Group with the continuing integration of our businesses, the divestment of our wholesale operation together with the changes in Executive personnel and structure. Such changes, we believe, will allow greater focus on our pharmaceutical operations and application of our strategic objectives to deliver growth and long-term value creation for our shareholders. With Jenny Winter joining on 1st October 2018, the Board and management team will provide a more in-depth update on the integration and growth strategy in January 2019.

 

Pro forma Consolidated Financial Information

As noted previously, to help Shareholders to assess the Group, a Proforma Consolidated Income Statement has been produced, which reflects six months of trading from both entities as below. Pro forma information has been prepared in a manner consistent with the accounting policies adopted by the Group in preparing the audited financial statements for the year ended 31st December 2017.

Proforma Consolidated Income Statement

 

Animalcare

Ecuphar

Total

Animalcare

Ecuphar

Total

Six Months to 30 June

2018

2018

2018

2017

2017

2017

 

£'000

£'000

£'000

£'000

£'000

£'000

Revenue

8,007

39,762

47,769

7,990

36,892

44,882

Gross Profit

4,271

16,188

20,459

4,360

15,110

19,470

Operating expenses

(4,875)

(14,844)

(19,719)

(3,399)

(13,479)

(16,878)

Operating (loss)/profit

(604)

1,344

740

961

1,631

2,592

Depreciation, amortisation & impairment

31

1,073

1,104

180

929

1,109

Non-underlying items

2,079

2,414

4,493

702

1,627

2,329

Underlying EBITDA

1,506

4,831

6,337

1,843

4,187

6,030

 

 

 

 

 

 

 

Net financial (expenses)/income

(26)

(220)

(246)

8

(287)

(279)

(Loss)/profit before tax

(630)

1,124

494

969

1,344

2,313

Taxation

180

(617)

(437)

(83)

(311)

(394)

Net (loss)/profit

(450)

507

57

886

1,033

1,919

 

 

 

 

 

 

 

Underlying net profit

1,220

2,500

3,720

1,500

2,105

3,615

 

 

 

 

 

 

 

Underlying basic EPS (p)

-

-

6.2p

-

-

6.0p

 

 

Compared to the statutory results, the unaudited proforma consolidated income statement includes six months of Animalcare Group plc's results in the 2017 comparatives. 

On a proforma basis, revenue increased by 6.4% at AER (4.8% at CER) to £47.8m. Revenue growth was balanced across both our pharmaceuticals and (now divested) wholesale operations. Growth in our pharmaceuticals segment was principally driven by a 7% increase in Companion Animals revenue to £23.6m offset by a 1.3% decline in Productions Animals revenue to £8.9m.   

 

Gross margins have declined by 0.6% to 42.8%, in line with our expectations and demonstrating progress when compared to the 1.5% decline for the full year 2017. The gross margin fall in the first half is principally driven by maintaining market share in the competitive environment at expense to margins, notably in the UK, together with lower margin sales mix within our companion animals and equine category, the latter in particular reflecting higher export sales.

 

Underlying EBITDA increased by 5.1% to £6.3m (2017: £6.0m), the growth being delivered by our pharmaceuticals segment which improved profitability by 6.5% at AER to £6.2m (2017: £5.8m).

 

The Group will continue to focus on improving the translation of revenue growth through to profit through both focus on gross margin and cost control. The pro-forma results are yet to reflect the full benefits from leveraging the Group's enlarged platform which include commercial synergies, operating efficiencies and optimisation of the R&D function. We will continue to maintain our focus on delivering the wide-ranging integration to deliver more meaningful value creation from 2019.

 

Condensed consolidated income statement (unaudited)

 

 

 

 

For the six months ended June 30

 

 

 

 

Underlying

 

Non-Underlying (note 3)

 

Total

 

Underlying

 

Non-Underlying (note 3)

 

Total

£'000

 

Notes

 

2018

 

2018

 

2018

 

2017 (Restated)

 

2017 (Restated)

 

2017 (Restated)

Revenue

 

 

 

36,057

 

 

36,057

 

26,265

 

 

26,265

Cost of sales

 

 

 

(16,766)

 

 

(16,766)

 

(12,281)

 

 

(12,281)

Gross profit

 

 

 

19,291

 

 

19,291

 

13,984

 

 

13,984

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Research and development expenses

 

 

 

(1,598)

 

(647)

 

(2,245)

 

(967)

 

(143)

 

(1,110)

Selling and marketing expenses

 

 

 

(6,591)

 

 

(6,591)

 

(5,355)

 

 

(5,355)

General and administrative expenses

 

 

 

(5,974)

 

(2,387)

 

(8,361)

 

(4,525)

 

(1,160)

 

(5,685)

Net other operating income / (expenses)

 

 

 

26

 

(719)

 

(693)

 

20

 

(324)

 

(304)


Operating profit/(loss)

 

 

 

5,155

 

(3,754)

 

1,402

 

3,157

 

(1,627)

 

1,530

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Financial expenses

 

 

 

(475)

 

 

(475)

 

(317)

 

 

(317)

Financial income

 

 

 

250

 

 

250

 

33

 

 

33


Profit/(loss) before tax

 

 

 

4,930

 

(3,754)

 

1,177

 

2,873

 

(1,627)

 

1,247

Income tax

 

 

 

(1,246)

 

809

 

(437)

 

(826)

 

553

 

(273)

Net profit/(loss) from continuing operations

 

 

 

3,684

 

(2,945)

 

740

 

2,047

 

(1,074)

 

974

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Result from discontinued operations

 

8

 

36

 

(719)

 

(683)

 

58

 

 

58

Net Profit/(loss)

 

 

 

3,720

 

(3,664)

 

57

 

2,105

 

(1,074)

 

1,032

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net profit/(loss) attributable to:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The owners of the parent

 

 

 

3,720

 

(3,664)

 

57

 

2,105

 

(1,074)

 

1,032


Earnings per share attributable to ordinary owners of the parent

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

 

6.2p

 

 

 

0.1p

 

8.9p

 

 

 

4.3p

Diluted

 

 

 

6.2p

 

 

 

0.1p

 

8.9p

 

 

 

4.3p


In order to aid understanding of underlying business performance, the Directors have presented underlying results before the effect of exceptional and other items. These exceptional and other items are analysed in note 3.

 

 

 

Condensed consolidated income statement (continued - unaudited)

 

 

 

 

 

For the 12 months ended December 31

 

 

 

 

Underlying

 

Non-Underlying (note 3)

 

Total

£'000

 

Notes

 

2017 (Restated)

 

2017 (Restated)

 

2017 (Restated)

Revenue

 

 

 

62,291

 

 

62,291

Cost of sales

 

 

 

(29,966)

 

(401)

 

(30,367)

Gross profit

 

 

 

32,325

 

(401)

 

31,924

 

 

 

 

 

 

 

 

 

Research and development expenses

 

 

 

(2,048)

 

(751)

 

(2,799)

Selling and marketing expenses

 

 

 

(12,592)

 

 

(12,592)

General and administrative expenses

 

 

 

(10,214)

 

(3,591)

 

(13,805)

Net other operating income / (expenses)

 

 

 

89

 

(1,801)

 

(1,713)


Operating profit/(loss)

 

 

 

7,560

 

(6,544)

 

1,016

 

 

 

 

 

 

 

 

 

Financial expenses

 

 

 

(735)

 

 

(735)

Financial income

 

 

 

96

 

 

96


Profit/(loss) before tax

 

 

 

6,921

 

(6,544)

 

377

Income tax

 

 

 

(1,746)

 

1,454

 

(292)

Net profit/(loss) from continuing operations

 

 

 

5,175

 

(5,090)

 

85

 

 

 

 

 

 

 

 

 

Result from discontinued operations

 

 8

 

109

 

(10)

 

99

Net Profit/(loss)

 

 

 

5,284

 

(5,100)

 

184

 

 

 

 

 

 

 

 

 

Net profit/(loss) attributable to:

 

 

 

 

 

 

 

 

The owners of the parent

 

 

 

5,284

 

(5,100)

 

184


Earnings per share attributable to ordinary owners of the parent

 

 

 

 

 

 

 

 

Basic

 

 

 

12.6p

 

 

 

0.4p

Diluted

 

 

 

12.5p

 

 

 

0.4p

 

In order to aid understanding of underlying business performance, the Directors have presented underlying results before the effect of exceptional and other items. These exceptional and other items are analysed in note 3.

 

Condensed consolidated statement of comprehensive income (unaudited)

 

 

 

 

For the six months ended June 30

 

For the 12 months ended December 31

£'000

 

 

 

2018

 

2017

 

2017

Net profit for the year

 

 

 

57

 

1,032

 

184


Other comprehensive income

 

 

 

 

 

 

 

 

Cumulative translation differences *

 

 

 

(20)

 

648

 

664


Other comprehensive income, net of tax

 

 

 

(20)

 

648

 

664

 

 

 

 

 

 

 

 

 

Total comprehensive income for the year, net of tax

 

37

 

1,680

 

848


Total comprehensive income attributable to:

 

 

 

 

 

 

 

 

The owners of the parent

 

 

 

37

 

1,680

 

848

 

 

 

 

 

 

 

 

 

* May be reclassified subsequently to profit & loss

 

 

 

 

 

 

 

 

 

Condensed consolidated statement of financial position (unaudited)

 

 

 

 

 

 

 

 

 

 

£'000

 

Notes

 

June 30, 2018

 

June 30, 2017

 

December 31, 2017

 

Assets

 

 

 

 

 

 

 

 

 

Non-current assets

 

 

 

 

 

 

 

 

 

Goodwill

 

 

 

51,294

 

10,273

 

51,413

 

Intangible assets

 

 

 

51,866

 

20,780

 

54,037

 

Property, plant & equipment

 

 

 

564

 

669

 

825

 

Deferred tax assets

 

 

 

2,158

 

1,408

 

1,603

 

Other financial assets

 

 

 

58

 

76

 

72

 


Total non-current assets

 

 

 

105,940

 

33,206

 

107,950

 

Current assets

 

 

 

 

 

 

 

 

 

Inventories

 

 

 

15,536

 

15,807

 

16,795

 

Trade receivables

 

 

 

12,612

 

11,822

 

16,680

 

Available-for-sale financial assets

 

 

 

 

470

 

464

 

Other current assets

 

 

 

1,453

 

821

 

1,934

 

Cash and cash equivalents

 

 

 

7,719

 

2,127

 

7,579

 

Assets classified as Held for Sale

 

8

 

4,853

 

 

 


Total current assets

 

 

 

42,173

 

31,047

 

43,452

 

Total assets

 

 

 

148,113

 

64,253

 

151,402

 

 

 

 

 

 

 

 

 

 

 

Liabilities

 

 

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

 

 

 

Borrowings

 

 

 

(360)

 

(637)

 

(633)

 

Trade payables

 

 

 

(10,038)

 

(13,145)

 

(14,128)

 

Tax payables

 

 

 

(2,442)

 

(1,269)

 

(2,741)

 

Accrued charges & deferred income

 

 

 

(1,931)

 

(518)

 

(2,116)

 

Other current liabilities

 

 

 

(1,144)

 

(2,089)

 

(1,980)

 

Liabilities associated with assets classified as held for sale

8

 

(1,926)

 

 

 

 

 

 

 

 

 

 

 

 

 


Total current liabilities

 

 

 

(17,841)

 

(17,658)

 

(21,598)

 

Non-current liabilities

 

 

 

 

 

 

 

 

 

Borrowings

 

 

 

(33,343)

 

(24,594)

 

(32,854)

 

Deferred tax liabilities

 

 

 

(6,224)

 

(275)

 

(6,454)

 

Deferred income

 

 

 

(813)

 

 

(780)

 

Provisions

 

 

 

(72)

 

(191)

 

(72)

 

Total non-current liabilities

 

 

 

(40,452)

 

(25,060)

 

(40,160)

 

 

 

 

 

 

 

 

 

 

 

Total Liabilities

 

 

 

(58,293)

 

(42,718)

 

(61,758)

 

 

 

 

 

 

 

 

 

 

 

Net Assets

 

 

 

89,820

 

21,535

 

89,644

 

 

 

 

 

 

 

 

 

 

 

Equity

 

 

 

 

 

 

 

 

 

Share capital

 

 

 

12,004

 

4,244

 

11,983

 

Share premium

 

 

 

132,678

 

6,687

 

132,588

 

Reverse acquisition reserve

 

 

 

(56,762)

 

5,146

 

(56,762)

 

Retained earnings

 

 

 

(1,262)

 

2,290

 

(1,347)

 

Other reserves

 

 

 

3,160

 

3,166

 

3,180

 

Equity attributable to the owners of the parent

 

 

 

89,818

 

21,533

 

89,642

 

Non-controlling interest

 

 

 

2

 

2

 

2

 

 

 

 

 

 

 

 

 

 

 

Total equity

 

 

 

89,820

 

21,535

 

89,644

 

 

Condensed consolidated statement of changes in equity (unaudited)

 

 

 

 

 

 

Attributable to the owners of the parents

 

 

 

 

£'000

 

 

 

Share
capital

 

Share
premium

 

Retained earnings

 

Reverse acquisition reserve

 

Other reserve

 

Total

 

Non-
controlling
interest

 

Total
equity

 

 

At 1 January, 2017

 

 

 

4,244

 

6,687

 

1,258

 

5,146

 

2,518

 

19,853

 

2

 

19,855

 

 

Net profit

 

 

 

 

 

1,032

 

 

 

1,032

 

 

1,032

 

 

Other comprehensive income

 

 

 

 

 

 

 

648

 

648

 

 

648

 

 

Total comprehensive income

 

 

 

 

 

1,032

 

 

648

 

1,680

 

 

1,680

 

 

At 30 June, 2017

 

 

 

4,244

 

6,687

 

2,290

 

5,146

 

3,166

 

21,533

 

2

 

21,535

 

 

 

 

 

 

 

 

 

Attributable to the owners of the parents

 

 

 

 

£'000

 

 

 

Share
capital

 

Share
premium

 

Retained earnings

 

Reverse acquisition reserve

 

Other reserve

 

Total

 

Non-
controlling
interest

 

Total
equity

 

 

At 1 January, 2017

 

 

 

4,244

 

6,687

 

1,258

 

5,146

 

2,518

 

19,853

 

2

 

19,855

 

 

Net profit

 

 

 

 

 

184

 

 

 

184

 

 

184

 

 

Other comprehensive income

 

 

 

 

 

 

 

662

 

662

 

 

662

 

 

Total comprehensive income

 

 

 

 

 

184

 

 

662

 

846

 

 

846

 

 

Dividends paid

 

 

 

 

 

(2,816)

 

 

 

(2,816)

 

 

(2,816)

 

 

Shares issued as consideration

 

 

 

5,750

 

94,880

 

 

 

 

100,630

 

 

100,630

 

 

Exercise of share options

 

 

 

275

 

3,953

 

 

 

 

4,228

 

 

4,228

 

 

Share issue cost

 

 

 

 

(1,218)

 

 

 

 

(1,218)

 

 

(1,218)

 

 

Arising on reverse acquisition

 

 

 

 

 

 

(61,908)

 

 

(61,908)

 

 

(61,908)

 

 

Issue of new shares

 

 

 

1,714

 

28,286

 

 

 

 

30,000

 

 

30,000

 

 

Share-based payments

 

 

 

 

 

27

 

 

 

27

 

 

27

 

 

At 31 December, 2017

 

 

 

11,983

 

132,588

 

(1,347)

 

(56,762)

 

3,180

 

89,642

 

2

 

89,644

 

 

 

 

 

 

 

 

Attributable to the owners of the parents

 

 

 

 

£'000

 

 

 

Share
capital

 

Share
premium

 

Retained earnings

 

Reverse acquisition reserve

 

Other reserve

 

Total

 

Non-
controlling
interest

 

Total
equity

 

 

At 1 January, 2018

 

 

 

11,983

 

132,588

 

(1,347)

 

(56,762)

 

3,180

 

89,642

 

2

 

89,644

 

 

Net profit

 

 

 

 

 

57

 

 

 

57

 

 

57

 

 

Other comprehensive expense

 

 

 

 

 

 

 

(20)

 

(20)

 

 

(20)

 

 

Total comprehensive income /(expense)

 

 

 

 

 

57

 

 

(20)

 

37

 

 

37

 

 

Share-based payments

 

 

 

 

 

28

 

 

 

28

 

 

28

 

 

Share capital issued

 

 

 

21

 

90

 

 

 

 

111

 

 

111

 

 

At 30 June, 2018

 

 

 

12,004

 

132,678

 

(1,262)

 

(56,762)

 

3,160

 

89,818

 

2

 

89,820

 

 

 

 

 

 

 

Condensed consolidated cash flow statements (unaudited)

 

 

 

 

 

For the six months ended June 30

 

For the year ended 31 December

 

£'000

 

Notes

 

2018

 

2017

 

2017

 

Operating activities

 

 

 

 

 

 

 

 

 

Profit before tax from continuing operations

 

 

 

1,177

 

1,247

 

377

 

Profit before tax from discontinued operations

 

8

 

(683)

 

96

 

167

 

Profit before tax

 

 

 

494

 

1,343

 

544

 

Non-cash and operational adjustments

 

 

 

 

 

 

 

 

 

Depreciation of property, plant & equipment

 

 

 

180

 

145

 

327

 

Amortization of intangible assets

 

 

 

3,961

 

2,099

 

6,053

 

Share-based payment expense

 

 

 

28

 

 

27

 

Loss/(gain) on disposal of property, plant & equipment

 

 

 

(1)

 

2

 

2

 

Non-cash impairment on assets held for sale

 

 

 

664

 

 

 

Movement in allowance for bad debt and inventories

 

 

 

234

 

317

 

652

 

Financial income

 

 

 

(238)

 

(37)

 

(91)

 

Financial expense

 

 

 

484

 

324

 

747

 

Impact of foreign currencies

 

 

 

 

 

25

 

Other

 

 

 

(9)

 

(50)

 

(30)

 

Movements in working capital

 

 

 

 

 

 

 

 

 

Increase/(decrease) in trade receivables

 

 

 

1,938

 

(356)

 

(2,079)

 

Increase in inventories

 

 

 

(1,627)

 

(2,460)

 

(1,359)

 

(Decrease)/increase in payables

 

 

 

(3,618)

 

1,598

 

(2,115)

 

Income tax paid

 

 

 

(932)

 

(190)

 

(278)

 

Net cash flow from operating activities

 

 

 

1,558

 

2,734

 

2,425

 

 

 

 

 

 

 

 

 

 

 

Investing activities

 

 

 

 

 

 

 

 

 

Purchase of property, plant & equipment

 

 

 

(147)

 

(78)

 

(184)

 

Purchase of intangible assets

 

 

 

(1,825)

 

(969)

 

(2,379)

 

Proceeds from the sale of property, plant & equipment (net)

 

4

 

30

 

31

 

Payments to acquire subsidiaries

 

 

 

 

 

(33,145)

 

Cash and cash equivalents acquired under reverse acquisition

 

 

 

6,293

 

Sale/(purchase)of available for sale financial investments

 

 

 

459

 

(33)

 

(45)

 

Net cash flow used in investing activities

 

 

 

(1,509)

 

(1,050)

 

(29,429)

 


Financing activities

 

 

 

 

 

 

 

 

 

Proceeds from loans & borrowings and convertible debt

 

 

521

 

43

 

8,298

 

Repayment of loans & borrowings

 

 

 

(287)

 

(319)

 

(649)

 

Receipts from issue of share capital

 

 

 

111

 

 

29,402

 

Dividends paid

 

 

 

 

 

(2,816)

 

Interest paid

 

 

 

(356)

 

(246)

 

(528)

 

Other financial expense

 

 

 

110

 

(40)

 

(129)

 

Net cash flow from financing activities

 

 

 

99

 

(562)

 

33,578

 

 

 

 

 

 

 

 

 

 

 

Net increase of cash & cash equivalents

 

 

 

148

 

1,122

 

6,574

 

Cash & cash equivalents at beginning of period

 

 

 

7,579

 

951

 

951

 

Exchange rate differences on cash & cash equivalents

 

 

 

2

 

54

 

54

 

Cash & cash equivalents reclassified as held for sale

 

8

 

(10)

 

 

 

Cash & cash equivalents at end of period

 

 

 

7,719

 

2,127

 

7,579

 

 

 

 

 

 

 

 

 

Condensed consolidated cash flow statements (continued - unaudited)

 

 

 

 

For the six months ended June 30

 

For the year ended December 31

 

£'000

 

 

 

2018

 

2017

 

2017

 

Reconciliation of net cash flow to movement in net debt

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net increase in cash and cash equivalents in the period

 

 

 

148

 

1,122

 

6,574

 

Cash flow from (increase)/decrease in debt financing

 

 

 

(234)

 

276

 

(7,649)

 

Foreign exchange differences on cash and borrowings

 

 

 

11

 

(720)

 

(1,051)

 

Movement in net debt in the period

 

 

 

(75)

 

678

 

(2,126)

 

Net debt at the start of the period

 

 

 

(25,908)

 

(23,782)

 

(23,782)

 

Net debt reclassified as held for sale

 

8

 

(1)

 

 

 

Net debt at the end of the period

 

 

 

(25,984)

 

(23,104)

 

(25,908)

 

 

 

 

 

Notes to the consolidated interim report

 

1

General Information

Animalcare Group plc ("the Company") is a company incorporated in England and Wales under the Companies Act 2006 and is domiciled in the United Kingdom. The condensed consolidated financial information as at, and for, the six months ended 30th June 2018 comprises the Company and its subsidiaries (together referred to as the "Group"). The nature of the Group's operations and its principal activities are set out in the latest Annual Report.

 

2

Basis of preparation and significant accounting policies

Basis of preparation and accounting policies

The condensed consolidated financial information for each of the six month periods ended 30th June 2018 and 30th June 2017 has not been audited and does not constitute statutory accounts as defined in Section 435 of the Companies Act 2006. The comparative information for the year ended 31st December 2017 does not constitute statutory accounts however is based on the statutory accounts for that year, on which the Group's auditors issued an unqualified report and which have been filed with the Register of Companies.

The prior year comparatives represent the substance of the reverse acquisition and are those of Ecuphar NV. More detailed information was set out in the latest Annual Report on page 52.

The condensed consolidated financial information for the six months ended 30th June 2018 was approved by the Board of Directors and authorised for issue on 25th September 2018.

Except as described below, the condensed consolidated financial information for the six months ended 30th June 2018 has been prepared using accounting policies consistent with those of the Company's annual accounts for the year ended 31st December 2017 which were prepared in accordance with International Financial Reporting Standards ("IFRS") as adopted by the European Union ("adopted IFRSs"), and which will form the basis of the 2018 Annual Report.

Taxes on income in the interim periods are accrued using the estimated tax rate that would be applicable for the full financial year.

The following standards and amendments were adopted from 1st January 2018, the start of the new financial year. None of them have a material impact on the results of the Group:

-       IFRS 9 "Financial Instruments" introduces new requirements for classification and measurement of financial assets and liabilities, impairment methodology and hedge accounts;

-       IFRS 15 "Revenue from contracts with customers" provides a single, principles-based five-step model for measuring and recognising revenue arising from contracts with customers.

Restatement of comparative information - Six months ended 30 June 2017

On 4th September 2018, the Group announced and completed the disposal of its wholesaling business Medini NV registered in Belgium, Legeweg 157i, 8020 Oostkamp.

In accordance with IFRS 5, the income statement for the six months ended 30 June 2017 has been restated to show continuing operations separately from discontinued operations. Both continuing and discontinued operations were restated to include elements relating to transactions between entities which were previously eliminated in the consolidation as intra-group.

Going Concern

The principal risks and uncertainties facing the Group remain those set out in the latest Annual Report on pages 24 and 25.

For the purposes of their assessment of the appropriateness of the preparation of the condensed consolidated financial information on a going concern basis, the Directors have considered the current cash position and forecasts of future trading including working capital and investment requirements.

The Group meets its day-to-day general corporate and working capital requirements through existing cash and bank facilities.

The Group's forecasts and projections, taking account of reasonable possible changes in trading performance, show that the Group should be able to operate within the level of its current facilities for at least the next 12 months. Accordingly, the adoption of the going concern basis in preparing the condensed consolidated financial information remains appropriate.

 

 

 

 

3

Non-Underlying items

 

 

 

 

For the six months ended June 30

 

For the year ended December 31

£'000

 

 

2018

 

2017

 

2017 (Restated)

Amortization of acquisition related intangibles

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

     Classified within Research and development expenses

 

 

647

 

143

 

751

     Classified within General and administrative expenses

 

 

2,387

 

1,160

 

3,590

Total amortization of acquisition related intangibles

 

 

3,034

 

1,303

 

4,341

 

 

 

 

 

 

 

 

Acquisition and integration costs

 

 

156

 

270

 

1,454

Fair value uplift of inventory acquired through reverse acquisition

 

 

 

 

401

Other non-underlying items

 

 

563

 

54

 

348

 

 

 

 

 

 

 

 

Total non-underlying items before taxes

 

 

3,754

 

1,627

 

6,544

 

 

 

 

 

 

 

 

Tax impact

 

 

(809)

 

(553)

 

(1,454)

 

 

 

 

 

 

 

 

Total non-underlying items after taxes from continuing operations

2,945

 

1,074

 

5,090

 

 

 

 

 

 

 

 

Other non-underlying items from discontinued operations

 

 

55

 

 

10

Impairment on disposal

 

 

664

 

 

 

 

 

 

 

 

 

 

Total non-underlying items after taxes

 

 

3,664

 

1,074

 

5,100

 

The amortisation charge of acquisition related intangibles largely relates to the Esteve acquisition £1,012k (31 December 2017: £2,017k; 30 June 2017: £991k) and the reverse acquisition of the Animalcare Group £1,838k (31 December 2017: £1,685k; 30 June 2017: £0k).

The impairment charge relating to discontinued operations of £664k represents the difference between the fair value of the consideration either received or receivable (as described in note 8) and the original book value of assets including allocated goodwill. 
 

4

Segment information - From continuing operations

For management purposes, the Group is organised into 2 segments: the Pharmaceuticals and the Wholesale segments. From 2018 onwards, the Group will only report one segment, being Pharmaceuticals, due to the sale of its Wholesaling business.

 

The Pharmaceutical segment is active in the development and marketing of innovative pharmaceutical products that provide significant benefits to animal health.

 

The Wholesale segment focussed on the sale of veterinary pharmaceuticals, supplies and instruments in the Belgian market and is presented under discontinued operations in the condensed consolidated interim financial information. 

 

The measurement principles used by the Group in preparing this segment reporting are also the basis for segment performance assessment. The Board of Directors of the Group acts as the Chief Operating Decision Maker. As a performance indicator, the Chief Operating Decision Maker controls performance by the Group's revenue, gross margin, Underlying EBITDA and EBITDA. EBITDA is defined by the Group as net profit plus finance expenses, less financial income, plus income taxes and deferred taxes, plus depreciation, amortisation and impairment. Underlying EBITDA equals EBITDA plus non-underlying items.

 

The following table summarises the segment reporting from continuing operations for each of the reportable periods. As management's controlling instrument is mainly revenue-based, the reporting information does not include assets and liabilities by segment and is as such not presented per segment.

£'000

 

Pharma

 

Wholesales

 

Total segments

 

Adjust-
ments & elimi-
nations

 

Consoli-
dated

For the six months ended 30 June 2018

 

 

 

 

 

 

 

 

 

 

Revenues

 

36,057

 

 

36,057

 

 

36,057

Gross Margin

 

19,281

 

 

19,281

 

 

19,281

Gross Margin %

 

53%

 

 

53%

 

 

53%

Segment underlying EBITDA

 

6,227

 

 

6,227

 

 

6,227

Segment underlying EBITDA %

 

17%

 

 

17%

 

 

17%

Segment EBITDA

 

5,508

 

 

5,508

 

 

5,508


Segment EBITDA %

 

15%

 

 

15%

 

 

15%

 

 

 

 

 

 

 

 

 

 

 

For the six months ended 30 June 2017

 

 

 

 

 

 

 

 

 

 

Revenues

 

26,265

 

 

26,265

 

 

26,265

Gross Margin

 

13,984

 

 

13,984

 

 

13,984

Gross Margin %

 

53%

 

 

53%

 

 

53%

Segment underlying EBITDA

 

4,026

 

 

4,026

 

 

4,026

Segment underlying EBITDA %

 

15%

 

 

15%

 

 

15%

Segment EBITDA

 

3,703

 

 

3,703

 

 

3,703


Segment EBITDA %

 

14%

 

 

14%

 

 

14%

 

 

 

 

 

 

 

 

 

 

 

For the year ended 31 December 2017

 

 

 

 

 

 

 

 

 

 

Revenues

 

62,291

 

 

62,291

 

 

62,291

Gross Margin

 

31,924

 

 

31,924

 

 

31,924

Gross Margin %

 

51%

 

 

51%

 

 

51%

Segment underlying EBITDA

 

9,698

 

 

9,698

 

 

9,698

Segment underlying EBITDA %

 

16%

 

 

16%

 

 

16%

Segment EBITDA

 

7,496

 

 

7,496

 

 

7,496


Segment EBITDA %

 

12%

 

 

12%

 

 

12%

 

 

 

 

 

 

 

 

Revenue by product category can be found below:

 

 

For the six months ended June 30

 

For the year ended December 31

£'000

 

2018

 

2017

 

2017

Companion animals

 

23,924

 

14,563

 

33,670

Production animals

 

9,270

 

9,395

 

23,680

Horses

 

2,821

 

2,221

 

4,682

Petfood, Instrumentation and Services

 

42

 

86

 

259

 

 

 

 

 

 

 

Total

 

36,057

 

26,265

 

62,291

 

A geographical analysis of revenue is provided below:

 

 

For the six months ended June 30

 

For the year ended December 31

£'000

 

2018

 

2017

 

2017

Europe

 

35,595

 

25,928

 

61,424

Belgium

 

3,801

 

3,704

 

8,781

The Netherlands

 

716

 

471

 

1,142

United Kingdom

 

8,879

 

1,365

 

9,459

Germany

 

5,052

 

4,156

 

8,907

Spain

 

9,953

 

10,624

 

20,909

Italy

 

2,500

 

2,007

 

4,458

Portugal

 

2,549

 

2,372

 

4,514

European Union - other

 

2,145

 

1,229

 

3,254

Asia

 

197

 

159

 

471

Middle East Africa

 

22

 

23

 

45

Other

 

243

 

155

 

351

 

 

 

 

 

 

 

Total

 

36,057

 

26,265

 

62,291

 

 

5

Earnings per share

Basic earnings per share amounts are calculated by dividing the net profit for the period attributable to ordinary equity holders of the parent company by the weighted average number of ordinary shares outstanding during the year.

The weighted average number of ordinary shares outstanding during the first half of 2017 has been calculated by multiplying the existing Ecuphar NV ordinary shares of 13,957,720 by the merger ratio of 63:37 Ecuphar/Animalcare (after taking into account dilution from the exercise of certain Animalcare share incentive arrangements) giving a total adjusted weighted average of 23,765,858 shares.

Diluted earnings per share amounts are calculated by dividing the net profit attributable to ordinary equity holder of the parent company by the weighted average number of ordinary shares outstanding during the year plus the weighted average number of ordinary shares that would be issued on conversion of all potential dilutive ordinary shares.

 

The following income and share data was used in the earnings per share computations: 

 

 

For the six months ended 30 June

 

For the year ended December 31

 

 

Underlying

 

Underlying

 

Total

 

Total

 

Underlying

 

Total

£'000

 

2018

 

2017

 

2018

 

2017

 

2017

 

2017

Net profit attributable to ordinary equity holders of the
parent for basic earnings

 

3,720

 

2,105

 

57

 

1,032

 

5,284

 

184

Dilutive effects

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net profit attributable to ordinary equity holders of the
parent adjusted for the effect of dilution

 

3,720

 

2,105

 

57

 

1,032

 

5,284

 

184

 

 

 

 

For the six months ended 30 June

 

For the year ended December 31

 

 

Underlying

 

Underlying

 

Total

 

Total

 

Underlying

 

Total

 

 

2018

 

2017

 

2018

 

2017

 

2017

 

2017

Weighted average number of ordinary shares for basic
earnings per share

 

59,986,095

 

23,765,848

 

59,986,095

 

23,765,858

 

41,998,692

 

41,998,692


Effect of dilution:

 

 

 

 

 

 

 

 

 

 

 

 

Dilutive potential ordinary shares

 

43,241

 

 

43,241

 

 

178,191

 

178,191

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average number of ordinary shares adjusted for
effect of dilution

 

60,029,336

 

23,765,848

 

60,029,336

 

23,765,858

 

42,176,883

 

42,176,883

 

Earnings per share are as follows:

 

 

 

For the six months ended 30 June

 

For the year ended December 31

 

 

Underlying

 

Underlying

 

Total

 

Total

 

Underlying

 

Total

 

 

2018

 

2017

 

2018

 

2017

 

2017

 

2017

Earnings per share attributable to ordinary owners
of the parent

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

6.2p

 

8.9p

 

0.1p

 

4.3p

 

12.6p

 

0.4p

Diluted

 

6.2p

 

8.9p

 

0.1p

 

4.3p

 

12.5p

 

0.4p

 

 

 

 

6

Dividends

 

 

The final dividend for the year ended 31st December 2017 of 2.0 pence per share was paid by the Company on 6th July 2018 hence the cash out is not included in the results for the six months ended 30th June 2018.

The directors have declared an interim dividend of [2.0] pence per share (2017: 4.7 pence per share) costing £1.2m (31 December 2017: £2,815k). It is payable on [X] November 2018 to shareholders whose names are on the Register of Members at close of business on [X] October 2018. The ordinary shares will become ex-dividend on [X] October 2018.

As the dividend was declared after the end of the period being reported, it has not been included as a liability as at 30th June 2018 in accordance with IAS 10 'Events after the Balance Sheet date'.

 

7

Related party transactions

 

 

There have been no new related party transactions that have taken place in the six months ended 30th June 2018.

 


 

 

8

 

Subsequent events

 

On 4th September 2018, the Group announced and completed the disposal of its Wholesaling business Medini NV registered in Belgium, Legeweg 157i, 8020 Oostkamp.

The Group is expected to recognise an impairment loss including expenses in relation to the disposal of approximately £0.7 million during the year ending 31st December 2018 which has been largely reflected in this interim financial information as shown in note 3. This is based on the total estimated consideration of £2.7 million and unaudited net asset value of £3.4 million, excluding intercompany debt, based on information as at 3rd of September 2018.

 

The Group has received an initial cash consideration of £0.33 million together with a further £1.72 million in respect of intercompany loan balances due from the Wholesale Division to other Animalcare group companies. A further £0.37 million is payable to on 30th June 2019 in relation to the remaining intercompany balance owed. The balance of approximately £0.23 million is subject to achieving specific revenue targets between 1st July 2019 and 30th June 2020 and payable in July 2020.

In accordance with IFRS 5, the income statement for both the six months ended 30 June 2017 and the twelve months ended 31 December 2017 have been restated to show continuing operations separately from discontinued operations. Both continuing and discontinued operations were restated to include elements relating to transactions between entities which were previously eliminated in the consolidation as intra-group.

The effect of including these elements is shown as consolidation adjustments.

For the six months ended June 30, 2018:

 

£'000

 

 

 

Continuing operations

 

Discontinued operations

 

Consolidation adjustments

 

Total continuing and discontinued operations

 

 

 

 

2018

 

2018

 

2018

 

2018

 

 

 

 

 

 

 

 

 

 

 

Revenue

 

 

 

36,057

 

12,429

 

(718)

 

47,769

Cost of sales

 

 

 

(16,766)

 

(11,232)

 

689

 

(27,309)

Gross Profit

 

 

 

19,291

 

1,197

 

(29)

 

20,459

 

 

 

 

 

 

 

 

 

 

 

Research and development expenses

 

 

 

(2,245)

 

 

 

(2,245)

Selling and marketing expenses

 

 

 

(6,591)

 

(833)

 

46

 

(7,378)

General and administrative expenses

 

 

 

(8,361)

 

(290)

 

(18)

 

(8,669)

Net other operating income / (expenses)

 

 

 

(693)

 

(736)

 

1

 

(1,427)

Operating profit/(loss)

 

 

 

1,402

 

(662)

 

 

740

 

 

 

 

 

 

 

 

 

 

 

Financial expenses

 

 

 

(475)

 

(29)

 

20

 

(484)

Financial income

 

 

 

250

 

7

 

(20)

 

238


Profit/(loss) before tax

 

 

 

1,177

 

(683)

 

 

494

 

 

 

 

 

 

 

 

 

 

 

Income tax

 

 

 

(437)

 

 

 

(437)

Net profit/(loss)

 

 

 

740

 

(683)

 

 

57

 

 

 

 

 

 

 

 

 

8

 

Subsequent events (continued)

For the six months ended June 30, 2017:

 

£'000

 

 

 

Continuing operations

 

Discontinued operations

 

Consolidation adjustments

 

As reported last year

 

 

 

 

2017

 

2017

 

2017

 

2017

 

 

 

 

 

 

 

 

 

 

 

Revenue

 

 

 

26,265

 

11,758

 

(1,041)

 

36,982

Cost of sales

 

 

 

(12,281)

 

(10,585)

 

993

 

(21,872)

Gross Profit

 

 

 

13,984

 

1,173

 

(48)

 

15,110

 

 

 

 

 

 

 

 

 

 

 

Research and development expenses

 

 

 

(1,110)

 

 

 

(1,110)

Selling and marketing expenses

 

 

 

(5,355)

 

(762)

 

16

 

(6,101)

General and administrative expenses

 

 

 

(5,685)

 

(313)

 

42

 

(5,956)

Net other operating income / (expenses)

 

 

 

(304)

 

1

 

(10)

 

(313)

Operating profit/(loss)

 

 

 

1,530

 

99

 

 

1,630

 

 

 

 

 

 

 

 

 

 

 

Financial expenses

 

 

 

(317)

 

(13)

 

6

 

(324)

Financial income

 

 

 

33

 

10

 

(6)

 

37


Profit/(loss) before tax

 

 

 

1,247

 

96

 

 

1,343

 

 

 

 

 

 

 

 

 

 

 

Income tax

 

 

 

(273)

 

(38)

 

 

(311)

Net profit/(loss)

 

 

 

974

 

58

 

 

1,032

 

For the twelve months ended December 31, 2017:

 

£'000

 

 

 

Continuing operations

 

Discontinued operations

 

Consolidation adjustments

 

As reported last year

 

 

 

 

2017

 

2017

 

2017

 

2017

 

 

 

 

 

 

 

 

 

 

 

Revenue

 

 

 

62,291

 

23,938

 

(2,553)

 

83,676

Cost of sales

 

 

 

(30,367)

 

(21,523)

 

2,477

 

(49,413)

Gross Profit

 

 

 

31,924

 

2,415

 

(76)

 

34,263

 

 

 

 

 

 

 

 

 

 

 

Research and development expenses

 

 

 

(2,799)

 

 

 

(2,799)

Selling and marketing expenses

 

 

 

(12,592)

 

(1,594)

 

88

 

(14,098)

General and administrative expenses

 

 

 

(13,805)

 

(625)

 

26

 

(14,404)

Net other operating income / (expenses)

 

 

 

(1,713)

 

(12)

 

(38)

 

(1,762)

Operating profit/(loss)

 

 

 

1,016

 

184

 

 

1,200

 

 

 

 

 

 

 

 

 

 

 

Financial expenses

 

 

 

(735)

 

(30)

 

18

 

(747)

Financial income

 

 

 

96

 

13

 

(18)

 

91


Profit/(loss) before tax

 

 

 

377

 

167

 

 

544

 

 

 

 

 

 

 

 

 

 

 

Income tax

 

 

 

(292)

 

(68)

 

 

(360)

Net profit/(loss)

 

 

 

85

 

99

 

 

184

 

 

8

 

Subsequent events (continued)

The net cash flow by discontinued operations can be found below:

£'000

 

 

 

For the six months ended June 30

For the 12 months ended December 31

 

 

 

 

2018

 

2017

 

2017

Net cash flow from operating activities

 

 

 

133

 

24

 

107

Net cash flow used in investing activities

 

 

 

(94)

 

(19)

 

(83)

Net cash flow from financing activities

 

 

 

(28)

 

(9)

 

(30)

 

 

 

 

 

 

 

 

 

Net increase of cash & cash equivalents

 

 

 

11

 

(4)

 

(6)

 

 

 

8

 

Subsequent events (continued)

 

The major classes of assets and liabilities of the Wholesaling business at the end of the reporting period are as follows:

 

£'000

 

 

 

30th June

 

 

 

 

2018

Assets

 

 

 

 

Non-current assets

 

 

 

 

Goodwill

 

 

 

105

Intangible assets

 

 

 

2

Property, plant & equipment

 

 

 

243


Total non-current assets

 

 

 

350

 

 

 

 

 

Current assets

 

 

 

 

Inventories

 

 

 

2,649

Trade receivables

 

 

 

2,431

Other current assets

 

 

 

77

Cash and cash equivalents

 

 

 

10


Total current assets

 

 

 

5,167

Allowance for reduction of assets held for sale

 

 

 

(664)

 

 

 

 

 

Total assets classified as held for sale

 

 

 

4,853

 

 

 

 

 

Liabilities

 

 

 

 

Current liabilities

 

 

 

 

Borrowings

 

 

 

(9)

Trade payables

 

 

 

(1,681)

Tax payables

 

 

 

(53)

Accrued charges & deferred income

 

 

 

(11)

Other current liabilities

 

 

 

(167)

Total current liabilities

 

 

 

(1,921)

 

 

 

 

 


Non-current liabilities

 

 

 

 

Deferred tax liabilities

 

 

 

(5)

Total non-current liabilities

 

 

 

(5)

 

 

 

 

 

Liabilities associated with assets classified as held for sale

 

 

 

(1,926)

 

 

 

 

 

Total net assets

 

 

 

2,927

 

 

9

 

Cautionary statement

This Interim Management Report ("IMR") consists of the Chairman's Statement and the Business Review, which have been prepared solely to provide additional information to shareholders to assess the Group's strategies and the potential for those strategies to succeed. The IMR should not be relied upon by any other party or for any other purpose.

The IMR contains a number of forward looking statements. These statements are made by the Directors in good faith based upon the information available to them up to the time of their approval of this report and such statements should be treated with caution due to the inherent uncertainties, including both economic and business risk factors, underlying any such forward looking information.

This IMR has been prepared for the Group as a whole and therefore emphasises those matters which are significant to Animalcare Group plc and its subsidiaries when viewed as a whole.

 

10

 

Interim report

The Group's Interim Report for the six months ended 30th June 2018 was approved and authorised for issue on 25th September 2018. Copies will be available to download on the Company's website at: www.animalcaregroup.co.uk.

 


This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact [email protected] or visit www.rns.com.
 
END
 
 
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