1st dealings on AIM
Ritchey PLC
15 January 2008
For release: 0800hrs 15 January 2008
Ritchey plc ('Ritchey' or the 'Company')
First day's dealings on AIM
Ritchey plc ('Ritchey'), announces that dealings in its shares commence on AIM
today (EPIC code: 'ANCR'). This follows completion of the acquisition of
Animalcare Limited ('the Acquisition'), a wholly owned subsidiary of Genus
Animal Health Limited (a member of the Genus plc group), for a total
consideration of up to £14 million; a placing of 13,632,000 new ordinary shares
at 55 pence per share to raise approximately £6.4 million net of expenses ('the
Placing');; and the decision to move from PLUS Market to AIM. At the EGM of the
Company held on 11 January 2008, shareholders approved the change of name of the
Company to Animalcare Group plc. It is now expected that this name change will
be effected at Companies House within the next few days.
The balance of the total consideration for the Acquisition, after applying the
proceeds of the Placing, has been funded out of £8.2 million of new bank
facilities.
The total consideration for the Acquisition will comprise an initial cash
payment of £13.4 million and deferred cash consideration of up to £600,000. The
deferred consideration relates to a new product currently in development and
payment of it is contingent upon Animalcare securing a manufacturing contract
for the product; and manufacturing the first batch of the product. This payment
will fall due between 31 January and 31 May 2008.
James Lambert, Simon Riddell, Nick Downshire and Stephen Wildridge, all
Directors of Ritchey, participated in the Placing, together investing a total of
approximately £1 million in the Company. Details of their holdings after the
placing, and those of other Directors, are given below.
Simon Riddell, Chief Executive of Ritchey, commented:
'The enlarged group commands strong positions in niche areas supplying both the
livestock and companion animal markets, and offering excellent growth
opportunities. We have ambitious plans which include increasing sales through
our established customer base and distribution network, broadening our product
range, entering new markets and selectively making acquisitions.'
CONTACTS
Ritchey plc
James Lambert (Chairman) 07850 702042
Simon Riddell (Chief Executive) 01765 689541
Brewin Dolphin (NOMAD and Broker)
Neil Baldwin 0845 270 8610
Bankside Consultants (Financial PR) 020 7367 8888
Simon Bloomfield or Andy Harris
INFORMATION ON THE EXISTING RITCHEY BUSINESS
Business overview
Ritchey's core business is the supply of premium quality livestock products to
agricultural retailers for onward sale to farmers. The Group's main product is
livestock identification ear tags used on cattle and sheep which are necessary
to comply with EU requirements. Other products include products for calving,
lambing and farrowing, footcare and handling, a range of grooming products for
sheep and cattle, and equine, veterinary, pet and hygiene products. A
substantial proportion of the Group's products are bought in from a variety of
suppliers though the tags are largely manufactured in house.
Ritchey uses a partnership approach to the agricultural supply industry.
Emphasis is placed on co-operation with its customers facilitated by regular
visits and an experienced customer services team that is available to answer
both product and legislative queries. The Directors consider that it is this
partnership approach, along with its in-house expertise and liaison with
external expertise which has secured the sound reputation of the Ritchey brand.
The business currently sells to about 1,000 customers with around 75 of these
regarded as major accounts comprising large agricultural retailers such as
Wynnstay Limited, Farmway Limited and Mole Valley Farmers. In addition Fearing,
acquired in 2001, supplies a range of agricultural products directly to about
10,000 farmers.
History and Development
The business of Ritchey was established in the early 1970's to distribute cattle
ear tags in the UK for use in livestock management. Non-tag products were added
to its portfolio over the next 20 years. Following the outbreak of BSE In the
1990's the obligatory tagging of cattle for the purpose of providing
traceability of livestock movement was introduced in the UK. In future years,
further legislative changes extended the tagging regime to other species thereby
providing favourable trading conditions for Ritchey.
In recent years, the Group has made several acquisitions to broaden its product
offering and in December 2002 the Company joined OFEX (now Plus Markets). These
acquisitions included:
* Fearing Limited (acquired July 2001): a mail order business selling cattle
tags and related products;
* Brookwick Ward & Co Limited (acquired July 2002): equine health and
grooming products;
* Petcode Business (acquired November 2003): a distributor of identification
chips to vets, and animal charities; and
* Travik Limited (acquired March 2006): a contract manufacturer of liquid
cleaning products, such as vehicle grime remover, to commercial customers
including Halfords.
Although the Group had previously enjoyed high margins and strong market share,
in recent years Ritchey has been faced with a number of challenges in its
markets including increased competition resulting in pressure on margins. The
Company suffered declining financial performance from 2002 through 2006.
Additionally the Company was hampered by historic underinvestment in Ritchey's
existing operating management systems.
The management team was significantly strengthened by the appointment of Simon
Riddell as Managing Director in July 2005 and James Lambert as Chairman in
October 2005. A strategic review was undertaken which identified the need to
improve the performance of the Company in areas such as product offering and
quality, customer service, management processes, overheads and the marketing of
the Ritchey and Fearing brands.
The new management team is now well established, and the operational changes are
beginning to deliver significant benefits. The year ended 30 June 2007 showed an
improved financial performance with the Company generating earnings before
exceptional items and goodwill impairment of £556,000 (£449,000).
Products and services
Identification tags
The Group's largest business category by sales is the supply of identification
tags primarily for cattle and sheep. EU regulations require that all livestock
are identified with a unique reference number provided by the local agricultural
department, e.g. DEFRA for England. The reference number for cattle and sheep is
marked on an identification tag whilst for pigs the mark can be applied directly
to the animal. Livestock cannot enter the food chain without the correct
identification.
Latest DEFRA estimates indicate there are 10.3 million cattle and 33.6 million
sheep in the UK. Based on data supplied by DEFRA, the Directors believe that
Ritchey has a market share of approximately 20 percent providing significant
growth opportunities for the Group.
Ritchey also supplies other identification products, primarily for Health &
Safety and asset management purposes, to commercial customers such as Fire &
Rescue Services. The Directors consider that this area of business has
cnsiderable growth potential.
Agricultural supplies
Ritchey supplies a wide range of livestock products to the agricultural sector
such as marking, vaccination & drenching, weighing, clipping, lambing & calving
and grooming.
Fearing
Fearing was acquired in 2001 and is a complementary business to Ritchey
supplying directly to farmers via mail order, allowing the group to cover both
routes to market. Whilst this is a potential source of conflict, the company
takes great care to maintain separate brand identities. Fearing also sells
animal microchips under the Petcode brand to vets and animal charities.
Equine Products
Ritchey also sell a range of equine products focused on the distribution of the
Oster branded grooming and clipping products to equine retailers.
Liquid chemicals
Following the acquisition of Travik in March 2006, the Group manufactures a
range of liquid cleaning products for sale to commercial customers, and various
products such as iodine for sale under the Ritchey brand.
Current product development
Ritchey entered into a four year contract from 2006 to exclusively distribute
Daploma tags in the UK and Ireland. This agreement gives Ritchey access to RFID
technology, which should be beneficial to the Group going forward in addressing
impending regulatory changes discussed below. This also allows Ritchey to access
different price points for tags without cannibalising Ritchey's existing sales.
In sheep tags, Ritchey is developing a time-saving automatic tagger, expected to
launch early in 2008, in response to competition products, mainly the Roxan
Adamatic automatic sheep tagger recently acquired by Allflex.
Regulatory framework
Following previous Foot & Mouth and BSE outbreaks in the UK there have been
increasing levels of UK and EU derived legislation regarding the management and
movement of livestock and the generation of accurate information before
livestock enters the food chain. In the UK this regulation is primarily carried
out through DEFRA, SEERAD & DARD. Relevant existing legislation which influences
the marketplace in which Ritchey operates includes:
* Cattle Identification Regulations (1998) / Cattle Database Regulations
(1998): Cattle born after 1 January 1998 require one tag in each ear bearing
the same unique number which must be ordered from a DEFRA approved
manufacturer such as Ritchey. This number must then be notified to the
relevant government agency. The first tag must comply with certain
specifications such as font and colour although the secondary tag may be
plastic or metal and may contain a microchip/Radio Frequency ID device
('RFID').
* Single Payment Scheme (2005): Under the Common Agricultural Reform
package, the Single Payment Scheme replaced several existing schemes with
one new single payment. Each farmer applying under the new scheme receives
an entitlement for each hectare of eligible land (including all arable and
horticultural land as well as temporary grassland) that he declares in his
application.
* Introduction of electronic identification (EID): EU Directive number 21/
2004 states that sheep and goats within the EU must be identified with an
EID tag and a visual tag from January 2008. It is extremely unlikely that
DEFRA and the devolved administrations will be in a position to implement
this in January 2008 since the technology is not yet proven and the details
of electronic identification (e.g. the numbering sequence on the chip) have
yet to be agreed. In addition the key farming organisations (NFU, National
Sheep Association) are bitterly opposed to the implementation of compulsory
EID for sheep due to the very substantial extra costs involved. The
introduction of compulsory EID is unlikely to take place before early 2009.
* Withdrawal of the Hill Farmers Allowance (HFA): A key challenge facing
the sheep farming industry in particular is the potential withdrawal of the Hill
Farm Allowance from 2008/09. The Hill Farm Allowance was introduced in 2001 as
part of a Government initiative to support rural development and is due to
continue until 2013. Early withdrawal would be very damaging to the UK's sheep
farming industry, of which around half is estimated to comprise of hill breeds.
DEFRA are aware that outright withdrawal of the subsidy would be disastrous for
both the industry and the upland environment and have signalled that payments
are likely to continue in some form after this, possibly as an environmental
subsidy.
INFORMATION ON ANIMALCARE
Overview of the business
Animalcare markets and sells a range of licensed veterinary pharmaceuticals,
animal identification microchips and other veterinary supplies to wholesalers
for onward distribution to veterinary surgeons in the UK and the Republic of
Ireland. It also supplies to charities such as the PDSA and the RSPCA.
Animalcare's focus is within the growing companion animal sector (cats, dogs,
horses and other small animals) with a presence in parts of the livestock and
food production animal sector.
Animalcare has an established UK sales force that promotes its range of
pharmaceutical and other veterinary products to veterinary surgeons in the UK
and Republic of Ireland. On the whole does not sell the products directly to the
veterinary surgeons; it encourages them to order from their veterinary
wholesaler who stocks and supply Animalcare products as well as other brands.
The Directors consider that building and maintaining these customer
relationships is therefore key to the Animalcare business.
Animalcare has established a successful track record of managing products
licensed from other manufacturers. The business has recently begun to expand its
own intellectual property benefiting from a range of measures taken to promote
the development of veterinary pharmaceuticals and broaden their geographical use
within the EU.
Animalcare has been wholly owned by the Genus plc group since 1999. The
Directors understand that Animalcare has not been a core part to Genus strategy
for some time, and has operated with tight cash constraints. The Directors
believe Animalcare represents a robust platform from which Ritchey can grow and
develop a broader European veterinary supply business.
Products and Services
All the manufacturing of Animalcare's products is outsourced. It has
approximately 1,400 items in its established product range across the following
broad categories:
idENTICHIP
IdENTICHIP is a microchip, with its own unique identification number, and
electromagnetic coil contained in a capsule the size of a grain of rice. It is
implanted into the nape of an animal's neck in a quick and painless manner. The
chip remains inactive until it is scanned by a special RFiD scanner. Once
implanted into an animal it is a permanent means of identification throughout
the life of the animal.
idENTICHIP was introduced in 1989 as the first UK animal identification
microchip and remains the market leader (the Directors estimate it has a 33 per
cent market share) due to its patented innovations such as its anti-migration
collar (which ensures that the chip does not move around the body following
implant) and temperature reading abilities (which provides and efficient,
non-invasive way to check a pets temperature). There are now over two million
animals with idENTICHIP in the UK.
The product is imported from the US and is directly sold by the Animalcare sales
force in the UK and Republic of Ireland for companion animals, including horses,
under an exclusive distribution agreement.
Pharmaceuticals
Animalcare sells an established range of over 40 proprietary branded veterinary
licensed pharmaceuticals divided into four main categories: (1) antibiotics, (2)
analgesics and anaesthetics (3) vitamins, and (4) speciality pharmaceuticals.
The Directors believe that the quality, both of its pharmaceutical products and
technical support, is a major strength.
Animalcare is actively developing new products to add to its range in order to
offer its customers a wider range of effective therapies discussed more
thoroughly in the paragraph headed 'New Product Development' below.
Aqupharm Intravenous Infusions and accessories
Aqupharm was the first veterinary licensed intravenous fluid range and is still
the market leader for the treatment of dehydration and shock in cats and dogs.
The Aqupharm fluids range is complemented by an array of fluid therapy
accessories including drip poles, infusion pumps, catheters and giving sets. The
combined marketing of the range of fluids and accessories is a profitable
segment for Animalcare and one in which the Board believes there is scope for
further development.
Animalcare supplies the above products directly to veterinary wholesalers and
markets the products directly to veterinary practices through a team of 11 staff
operating in the UK and Republic of Ireland, with idENTICHIP, locate and
database services sold directly by Animalcare.
Other
Animalcare also sells an extensive range of hygiene consumables, trauma
management products, veterinary equipment and instruments including
orthopaedics, diagnostics, instrumentation and theatre equipment, and a wide
range of pet healthcare products.
Database Services
Once an animal has an idENTICHIP implanted, its unique identification number is
registered by Animalcare on Anibase, which currently contains 2.5m registered
animals. Animalcare generates revenues every time an entry is amended by the pet
owner. Animalcare uses the database to sell the proactive pet location service,
Pet Locate, for missing pets, and provides targeted pet insurance offerings in
addition to small scale use by third party services.
The Directors believe that there are other potential commercial uses and
applications for this data.
Insurance
In conjunction with Pet Protect Limited (a subsidiary of Domestic & General
plc), Animalcare provides a variety of pet healthcare policies providing
insurance cover for vet's fees. Animalcare is able to utilise its Anibase
database to exploit this market segment. Animalcare receives commission on new
policies taken out by a member of the public as well as repeat commission on
renewed policies.
New Product Development
Animalcare has taken advantage of the harmonisation of licensing regulations
within the EU which enables regulatory dossiers developed for the approval of a
product in one EU member state to be used in support of registration of the same
product in other EU member states. It has established a development pipeline for
generic veterinary pharmaceutical products to serve the needs of its core
markets in the UK and Republic of Ireland whilst at the same time registering
the same products for distribution in other key markets of the EU. The Directors
believe that the large number of veterinary medicines coming out patent and
losing regulatory data protection linked to the harmonisation of veterinary
medicine regulation within the EU will provide Animalcare with a significant
opportunity to expand its business and intellectual property base.
In developing this area, management intend to specifically target those markets
where they consider competition to be weak or unlikely to enter. European
partnerships are expected to provide Animcalcare with a number of advantages,
including a division of costs and the ability to pursue a number of new products
at any one time thereby spreading risks of failure.
Animalcare currently has four major drug development programmes in late stage
development and another five in the early evaluation stage of development all
based around its core therapeutic areas of cardiovascular, analgesia/sedation,
anti-infectives and the central nervous system.
The projects in late stage development are:
Project A - Benazecare
Animalcare has obtained a Marketing Authorisation ('MA') for a generic version
of Benazepril, a treatment for hypertension (high blood pressure) and
cardiovascular disease in dogs. Management estimate an addressable market, based
on sales of the incumbent product, of £6.6 million in Europe and is confident of
gaining a foothold in this market through its existing sales force and through
marketing and promotions.
Project B - Aqupharm Large Animal
This is a formulation of a 5 litre pack size of the Aqupharm fluids range, for
the treatment of large animals such horses and cattle. This has completed its
assessment by the Veterinary Medicines Directorate in the UK and received
approval in September 2007.
Project C - 'Poppy'
Poppy is a morphine-derived analgesic for post operative pain in cats and dogs
which is intended to be introduced in eight EU territories. Management believe
they could benefit from first mover advantage in Europe as no similar product is
currently approved for marketing. Pain management is a growing area in the
veterinary field with an increased consciousness of the issue amongst veterinary
surgeons. Management estimate the size of the UK market for this product to be
around £1.75 million.
Project D - 'Gouda'
Application for an MA under the Decentralised Procedure in eight EU member
states for the generic version of a widely used beta-lactam antibiotic has been
made and approval is expected in early 2008. Distribution in certain markets
will be managed by both Animalcare and a Dutch partner. Management estimate the
size of the UK market for this product to be around £5.1 million.
Regulatory framework
The development and sale of veterinary medicines within the EU occurs within a
well controlled and regulated environment. EU Directive 2001/82/EC (as amended
by Directive 2004/28/EC) established the legal framework for national
authorisations issued by the regulatory authorities of the Member State. Council
Regulation 726/2004 replaced Council Regulation 2309/93 which originally
established the European Medicines Agency and the Centralised Procedure.
In addition to the normal protections afforded to medicines and veterinary
medicines by appropriate patents the registration data files relating to
specific dosage forms of veterinary medicines in the EU are also afforded 10
years data protection the data of the grant of the first Marketing Authorisation
for any use within the EU.
This harmonised regulatory framework not only provides robust initial protection
and easier EU wide registration to proprietary veterinary medicines but is now
providing the mechanism by which they can be challenged more quickly and
effectively on a wider scale once the protected periods have elapsed
MARKET OVERVIEW
The animal healthcare market for biological, anti-infectives and other
pharmaceuticals was estimated to be worth in excess of $9.45bn in 2006. The key
markets are America (c.35 per cent), Western Europe (c.30 per cent) and the Far
East (c.16 per cent) (Source: International Federation for Animal Health).
The Companion Animal Market
The companion animal market has been growing in its significance to the overall
animal health market. The National Office of Animal Health ('NOAH') estimate
that the total market for authorised animal medicines in the UK was worth £410
million in 2006. Around 55 per cent of this was spent on the companion animal
goods sector on which Animalcare is focused. This expenditure on companion
animal goods has increased from 47 per cent of expenditure on animals in 1999.
The Directors believe that the relative growth in expenditure has been brought
about by a number of factors such as:
* continued advancement of medical science knowledge;
* new product development has historically been a significant contributor to
growth;
* demographic factors and rising life expectancy of companion animals;
* an increasing propensity by pet owners to spend on animal healthcare; and
* increasing take up of insurance products.
The Directors believe that this growth is set to continue.
Veterinary Practices
The market is highly fragmented with around 90 per cent of the total 3,932
practices in the UK being small independents (Source: Royal College of
Veterinary Surgeons Annual Accounts 2007). The top five groups have a combined
market share of 6 per cent (by number of practices) although the trend in recent
years has been a reduction in mixed animal practices, with a polarisation to
either small animal or large animal only.
UK Agricultural Market
Ritchey's key agricultural markets have been difficult in recent years due to
competition from low cost overseas producers, chiefly South America and New
Zealand, the ban on livestock exports following the 2001 Foot & Mouth outbreak
and the reduction in subsidies due to the review of the EU Common Agricultural
Policy. Whilst the economics of beef production remain challenging, recent price
increases have transformed the profitability of the dairy industry. Furthermore,
competition for sheep production from New Zealand looks set to diminish in
future years as New Zealand farms switching from sheep to more profitable dairy.
GROWTH STRATEGY AND OPPORTUNTIES FOR THE ENLARGED GROUP
The cornerstone of the Group's strategy will be to focus on building leading
positions in premium high value products distributed via established channels to
the livestock and companion animal markets. The Directors also believe that due
to the fragmented nature of the market significant consolidation opportunities
exist and therefore the Group intends to seek complementary acquisitions at the
appropriate time. In addition the Group intends to enter new geographies by
developing Animalcare's European distribution capacity and by seeking products
with foreign Marketing Authorisations for distribution in the UK.
The Directors intend to pursue this strategy by exploiting the following
opportunities available to the Enlarged Group:
Organic opportunities
From its core identification business Ritchey has expanded its product range,
much of which is now third-party sourced. The Directors believe there are
further opportunities to develop this facet of the business. The Company will
look to increase market share of existing products by working more closely with
major customers and to introduce new products to complement the existing range
for sale through the existing customer base. The Directors consider that the
supply of other identification products, primarily for Health & safety and asset
management purposes. Has considerable growth potential.
Strengthen the Group's current product range in the UK through the introduction
of new, independently developed generic products
Historically Animalcare either acquired distribution contracts for out of
patent, generic products from third party suppliers or, for a limited number of
products, obtained generic licences for which it outsourced production. Over the
last three years, Animalcare has pursued a different strategy of sourcing its
own veterinary medicines that are about to come out of patent, building a
pan-European regulatory dossier and obtaining its own marketing authorisations
in important European markets. Animalcare sells or markets over 40 licensed
products and owns a total of 34 trade marked brands, four new products
applications at an advanced stage of development and a further pipeline of
products at an early stage of development.
Animalcare aims to be a profitable niche player in the veterinary supplies
market, concentrating on key segments of the companion animal sector, developing
its own generic medicines, partnering with low cost producers and, as available,
developing proprietary medicines.
Regulatory Changes
Historically, both facets of the Enlarged Group have benefited by responding to
changes in regulation. For example the outbreak of BSE and Foot & Mouth led to
the introduction of obligatory tagging of cattle and sheep whilst the
introduction of tighter controls on veterinary medicines boosted demand for
Animalcare's products.
Whilst the introduction of electronic tagging remains uncertain, the Directors
believe that such a move would create a significant opportunity, building on all
the expertise of the Enlarged Group.
Synergy benefits
Whilst not a significant factor driving the rationale for the Acquisition, the
Directors expect that the Acquisition will lead to some synergistic benefits,
for example the use of Travik for the production of veterinary lubricants and
disinfectants. The Directors also anticipate deriving benefits from co-marketing
the Group's two identification products, idENTICHIP and Petcode. idENTICHIP is a
relatively higher value offering and the Directors envisage that the addition of
Petcode at a lower price point would afford the combined offering greater scope
for market penetration, particularly in the charities market where Animalcare
does not currently focus. In addition the Directors have identified the future
potential to reduce the number of locations from which the Enlarged Group will
operate.
Supply chain
Consolidation by Ritchey's agricultural retailers should provide the Group with
opportunities to grow volumes and cross-sell other products.
Improve commercial exploitation of the existing product range
The two facets of the Enlarged Group have traditionally focused marketing and
supply efforts towards two distinct customer bases, namely veterinary suppliers
and farmers. The Enlarged Group will have marketing and distribution systems in
place to improve the commercial exploitation of the existing product range.
Develop the Company's operations outside the UK, primarily in Europe
Animalcare has sought to broaden its product range and the end markets to which
it distributes. It has achieved this both through the sale of its existing
products in other European jurisdictions and by seeking out foreign products
with marketing authorisation in their domestic markets to license and distribute
in the UK. Animalcare is establishing distribution agreements for some of its
products in certain markets of the European Union, and has identified several
new foreign products that it would like to develop. Animalcare has also
established a direct presence in Ireland, with a view to establishing itself in
other European markets.
Build a collaborative network of partners in key European markets to co-develop
generic products for the EU and potentially other markets.
The Directors believe that the partnership model accelerates and expands the
product development pipeline, whilst at the same time reduces cost and risk.
Animalcare is collaborating in three product development consortia with up to
three partners in each consortium. It is the intention that the resulting
marketing authorisations that are hoped to be obtained are exploited by the
partners in their core markets and by distribution partners in non-core markets.
Growth through veterinary medicines
A large number of proprietary medicines are losing both patent and data
protection across Europe whilst the availability of generic active
pharmaceutical ingredients has improved. The registration of veterinary
medicines in the EU has been simplified and harmonised making for an easier
process. The Directors believe that a knowledge and understanding exists within
the management team of Animalcare for this successful model of pan-European
generics in another life science industry to be replicated across the Enlarged
Group.
KEY BUSINESS STRENGTHS OF THE ENLARGED GROUP
The Directors believe that the combination of Animalcare and Ritchey offers an
opportunity for increased growth and value through business expansion
opportunities and the application of Ritchey's existing business model. The
following demonstrate how the Directors anticipate extra value can be extracted
from the Enlarged Group:
Greater range of products
Ritchey has been exploring diversification into different areas of operation,
yet still within the Company's areas of core skills and expertise, in order to
achieve sustained growth. The Enlarged Group has significantly more capacity and
a wider portfolio of strong brands and so can greatly diversify output,
positioning the Enlarged Group favourably for future growth.
Greater capacity
The Enlarged Group operates with a total of 25,000 square feet of warehouse and
over 150 employees and will therefore be able to actively seek a greater number
of contracts of greater volume.
Greater flexibility and efficiency in output
Having a greater range of products at its disposal, the Enlarged Group will be
able to customise supply schedules and concentrate output on particular areas
when efficient to do so in order to boost overall productivity.
Diversified customer base
The majority of Ritchey's customers are private farmers whereas of Animalcare
serves primarily are veterinary wholesalers and practices. In markets where
customer demand for goods is potentially highly susceptible to events such as
disease epidemics (e.g. foot and mouth disease) this diversification of the
customer base should serve to mitigate some of this risk.
Strong management team
The Directors and senior managers have considerable experience in the animal
health sector. Key members of the management team have experience in
significantly larger organisations which will prove useful in integrating the
two businesses into the Enlarged Group and in implementing the Enlarged Group's
growth strategy.
As at 30 June 2007, Ritchey had 108 employees and Animalcare had 50 employees.
REASONS FOR ACQUISITION, ADMISSION AND THE PLACING
The key reasons for seeking Admission at this time are as follows:
1. to provide funding for the Acquisition;
2. to provide working capital for the Enlarged Group's future organic
growth;
3. to establish a more diverse shareholder base in order to facilitate
future acquisitions through the use of equity; and
4. to provide liquidity which, in conjunction with its Share Option
Schemes, will help to motivate and retain key senior employees.
5. to raise the profile of the Enlarged Group
DIRECTORS
The Board at Admission comprises the following:
James Lambert (aged 49) - Non-executive Chairman
James was appointed Chairman in October 2005 having been a non-executive
director since 2003. He started at Richmond Foods in 1998, leading a series of
acquisitions to make Richmond the largest ice cream manufacturer by volume in
the UK. He has a strong track record of making money for shareholders. Richmond
exited the stock market in April 2006 when it was bought by Oaktree Capital
Limited for £176 million and merged with Roncadin. James is now running the
enlarged group which is one of the largest in Europe.
Simon Riddell (aged 46) - Chief Executive
Appointed to the Board of Ritchey in July 2005, Simon has extensive background
in marketing consumer products. A graduate in Land Economy from Cambrideg, he
subsequently spent 10 years at Procter & Gamble, becoming a Marketing Director
in the Babycare division. Prior to joining Ritchey in July 2005, he spent five
years with Mayborn plc managing the Sangenic nappy business since acquired by
3i.
Stephen Wildridge (aged 51) - Managing Director - Animalcare
Stephen spent 16 years with Rhone-Poulenc (now Sanofi-Aventis) in a variety of
Sales, Marketing and Strategic Planning and General Managing roles encompassing
agro-chemicals, animal health and animal nutrition. Subsequently, he spent five
years with Monsanto as General Manager of Operations for Northern Europe. He was
appointed Managing Director of Animalcare in April 2003 and developed the
strategic plan for the business and the new product development programme. He
currently sits on the board of the National Office for Animal Health (NOAH).
Stephen Hall (aged 54) - Financial Director
Stephen qualified as an ACCA chartered accountant in 1979 and an FCCA in 1986.
He has commercial accounting experience in several industries including the
Electricity Supply Industry, Timber and Waste Disposal in addition to
Agriculture.
Following admission, Stephen has taken up the role of Commercial Director for
the Enlarged Group responsible for managing legal, IT and purchasing.
Geoff Rhodes (aged 62) - Non-Executive Director
Geoff has a background in farming and agriculture and was educated at Askham
Bryan agricultural college. Following a spell at agricultural machinery
manufacturer British Lely, he joined Ritchey Tagg as general manager in 1972. He
was Managing Director of Ritchey Tagg (now Ritchey plc) from 1972 until he
retired in 2005 continuing as a non-executive Director of the Company.
Nick Downshire (aged 48) - Non-Executive Director
Nick Downshire has been a director of Ritchey since 1998. He trained as a
Chartered Accountant with Touche Ross before transferring to the corporate
finance department where he worked for three years on acquisitions, flotations
and new ventures. Following this he worked for 13 years at Scheduling Technology
Group Limited, a venture capital backed international software company, becoming
Finance Director up until the sale of the business in 2001. He currently manages
an estate in Yorkshire and also holds non-executive directorships of a hotel
business, an RFID company, a Lloyd's underwriting company and Farmway, an
agricultural products supplier.
The Board has embarked upon a campaign to identify potential candidates with the
relevant skill set, experience and knowledge to fulfil the role of Group Finance
Director and intends to make a suitable appointment as soon as prcaticable.
SUMMARY FINANCIAL INFORMATION ON THE ENLARGED GROUP
the results for Ritchey for the last three financial years to 30 June 2007 are
set out below.
Year ended Year ended 30 Year ended
30 June 2005 June 2006 30 June 2007
£'000 £'000 £'000
Turnover 7,555 7,852 8,286
Gross profit 4,213 4,378 4,782
EBITDA 563 602 813
Net Assets 5,685 5,818 6,137
Net cash from operating 200 646 985
activities
the results for Animalcare for the 12 months to 31 March 2005, the 15 months to
30 June 2006 and the 12 months to 30 June 2007 are set out below.
Year ended 15 months
31 March 2005 ended 30 June
2006 Year ended
30 June 2007
£'000 £'000 £'000
Turnover 6,525 8,589 7,596
Gross profit 3,243 4,367 3,759
EBITDA 1,706 2,121 1,618
Net Assets 1,019 (259) (96)
Net cash from operating 731 1,141 1,294
activities
DIRECTORS' SHAREHOLDINGS
Immediately after Admission the following Directors will be interested in the
issued Ordinary Share capital of the Company.
Percentage
Number of of Issued
Ordinary Ordinary
Name Shares Share Capital
J S Lambert 803,373 4.07
S F Riddell 732,727 3.71
S Hall 151,780 0.77
G C Rhodes 696,500 3.53
N Downshire 1,461,809 7.40
S Wildridge 444,000 2.25
TOTAL 4,290,189 21.73
AIM RULE 26
The Company's website, the content of which complies with AIM Rule 26, is at
www.animalcaregroup.co.uk
END
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The company news service from the London Stock Exchange
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