TIDMEAH
6 December 2017
ECO Animal Health Group plc ("ECO") (AIM: EAH)
Results for the six months ended 30 September 2017
ECO ANIMAL HEALTH REPORTS ANOTHER STRONG PERFORMANCE
HIGHLIGHTS
Financials
-- 35% increase in adjusted EBITDA to GBP8.5m (2016: GBP6.3m).
-- 10% increase in pre-tax profit to GBP5.9m (2016: GBP5.3m)
-- 8% increase in sales to GBP29.2m (2016: GBP26.9)
-- 11% increase in gross profit to GBP14.2m (2016: GBP12.8m) on improved
margin
-- 13% increase in earnings per share to 6.39p (2016: 5.68p)
-- 28% increase interim dividend to 3.2p (2016: 2.5p)
-- 36% increase in cash generation from operations to GBP7.2m (2016: GBP5.4m)
leaving net cash of over GBP20 million at the period end.
Operations
-- Demand for Aivlosin® continues to grow strongly
-- Strong performances in all major geographic areas, bar Latin America
excluding Mexico
-- New marketing authorisations gained in America and Malaysia - further
authorisations are expected in Canada and South East Asia.
-- Continued investment in new routes to market, product development and
people to support future growth.
Peter Lawrence, Executive Chairman of ECO Animal Health Group
plc, commented:
"The second half of the year has started well with a strong and
growing order book. ECO has a sound balance sheet with good and
reliable cash generation. The Company continues to invest in
research and product development programmes to obtain further
marketing authorisations and efficiencies in production. I look
forward with confidence to reporting another set of impressive
results in 2018".
Contacts:
ECO Animal Health Group plc
Peter Lawrence 020 8336 6190
Marc Loomes 020 8447 6906
Spiro Financial
Anthony Spiro 020 8336 6196
Peel Hunt LLP (Nominated Adviser)
Dan Webster, Adrian Trimmings, George Sellar 020 7418 8900
N+1 Singer (Joint broker)
Mark Taylor 020 7496 3069
ECO Animal Health Group plc is a leader in the development,
registration and marketing of pharmaceutical products for animals.
Our products for these global growth markets promote well-being.
Our financial goals are achieved through the careful and
responsible application of science to generate value for our
shareholders.
Chairman's statement
I am pleased to report that ECO Animal Health Group has
delivered another set of record results for the six months to 30
September 2017. ECO provides essential medications to the ever
growing global animal protein production industry. The success of
the Company reflects its investment over many years in obtaining
marketing authorisations, which are a legal requirement in all of
the countries it serves. Currently it holds several hundred
marketing authorisations and its products are prescribed and sold
in more than sixty countries.
The Company's consistent strategic focus is to concentrate on
offering its medications into the key global food production
markets. The standards imposed by the regulatory bodies that
licence the use of pharmaceuticals for veterinary use are becoming
ever more stringent. Consequently, the regulatory authorities
require more in depth evaluation of drugs than ever before. ECO
already satisfies these enhanced requirements, which means that it
has a competitive advantage and is well placed to capitalise on
further commercial opportunities.
Financial performance
Profit before tax in the period under review increased by over
10 per cent to almost GBP5.9m (2016: GBP5.3m) while sales advanced
by over 8 per cent to GBP29.2m (2016: GBP26.9m). Earnings before
interest, tax, depreciation, amortisation, share based payments,
non-controlling (minority) interest and foreign exchange movements
were almost GBP8.5m (2017: GBP6.3m) an increase of over 35 per
cent. Gross profit advanced by 11 per cent to GBP14.2m (2016:
GBP12.8m) and earnings per share rose 12.5 per cent to 6.39 pence
per share (2016: 5.68 pence). Cash generated from operations
remained robust advancing to GBP7.2m (2016: GBP5.4m).
Margins continued to improve compared to the same period last
year, reflecting the success of our strategy to concentrate our
sales effort on high value products, which offer the best long term
returns for the Company.
Over recent months sterling has strengthened a little against
major currencies. ECO continues to invoice more than 97 per cent of
its sales in foreign currencies but the effect of the slightly
stronger pound since our March 2017 year end has meant that the
currency gains the Company benefitted from last year have not been
repeated. Nevertheless, control of overheads meant that profit from
operating activities was up over 30 per cent at GBP5.9m.
The board is pleased to declare an interim dividend of 3.2 pence
per share (2016: 2.5 pence) to be paid on 12 April 2018 to
shareholders on the register on 23 March 2018. This increase of 28
per cent reflects the board's continued confidence in the
sustainable growth of our international business and the consequent
implementation of a progressive dividend policy.
Operations:
Sales of Aivlosin®, our patented molecule for the treatment of
economically important diseases in pigs and poultry, increased by
almost 18 per cent in sterling during the period under review.
Aivlosin® is prescribed under strict veterinary control at low, yet
efficacious, dose rates for short duration treatments of specified
diseases. It meets all current guidelines for the responsible use
of antimicrobials, which when used appropriately, help to promote
animal welfare and food safety.
Sales in the USA rose 33 per cent in sterling, compared with the
same period last year, reflecting strong growth of the Aivlosin®
water soluble granule formulation for use in swine suffering from
enteric (gut) diseases. In late July, the Center for Veterinary
Medicine (CVM) of the US Food and Drug Administration (FDA)
approved this formulation for a new label indication. The approval
applied to the control of swine respiratory disease (SRD)
associated with Bordetella bronchiseptica, Haemophilus parasuis,
Pasteurella multocida, and Streptococcus suis, which are important
bacterial respiratory pathogens. Early sales of the Aivlosin®
medicated feed additive formulation, which was approved at the end
of March 2016, also contributed to revenue in the period. In
Canada, sales were also significantly ahead. The SRD application is
still under review by the Veterinary Drugs Directorate of Health
Canada, which when approved, will add to sales in North
America.
Revenue growth in South East Asia was buoyant. The regulatory
files supporting the marketing authorisation granted by the
European Medicines Agency in June 2016 for the use of Aivlosin®
water soluble granules in chickens laying eggs for human
consumption, with a zero day drug withdrawal period for eggs, were
submitted to a number of countries in the region. Approvals were
obtained in Thailand, prior to this period, and in Malaysia during
the period; further approvals are expected. The granting of a zero
withdrawal period is a significant advantage to egg producers, who
as a result are not required to destroy eggs laid while birds are
being treated. These new licenses underpin our development of
closer relationships with major poultry producers, particularly
those in the key egg producing markets of South East Asia.
Both Europe and Japan posted strong sales growth across the
portfolio, reflecting our development of closer ties with key
customers in these more mature markets.
Last year in China our subsidiary, Zhejiang ECO Biok Animal
Health Products, delivered exceptional sales growth. The current
year's sales reflect the organisation's consolidation of its strong
position during a period of softer pork prices and in advance of
strategic initiatives to target poultry producers. Sales of
Aivlosin® continued to grow and the net profit in China increased
by more than 20 per cent over the same period last year, once again
reflecting the effectiveness of our overall strategy.
The excellent performance of Aivlosin® across the majority of
geographies was tempered by continuing weakness in some Latin
American markets including Brazil, mainly due to slow regulatory
responses and a generally weak economic environment. Sales in
Mexico, on the other hand, were very strong. This performance was
boosted by our first Aivlosin® approval for the medication of
drinking water for the treatment of infections caused by Mycoplasma
in poultry laying eggs for human consumption with a zero day drug
withdrawal period for eggs in Latin America, received in January
2017.
People
David Danson, who completed nine years as a non executive
director, will retire on 1 December from the board in accordance
with corporate governance guidelines. I would like to thank David
for his wise counsel, which has been invaluable and reflects his
extensive business experience and Council membership of the Royal
College of Veterinary Surgeons. Andrew Jones joined us as a non
executive director on 1 December. Andrew brings a wealth of board
experience gained across large listed, private equity backed and
small to medium sized enterprises. Andrew's particular focus is on
the life sciences sector and importantly, the animal health
industry.
While I have been executive chairman of the Company since its
formation, the time is right for my role to become non executive.
This change will take effect from 1 January 2018 and conforms to
best practice corporate governance.
Outlook:
The second half of the year has started well with a strong and
growing order book. ECO has a sound balance sheet with good and
reliable cash generation. The Company continues to invest in
research and product development programmes to obtain further
marketing authorisations and efficiencies in production. I look
forward with confidence to reporting another set of impressive
results in 2018.
Peter A Lawrence
05 December 2017
CONSOLIDATED INCOME STATEMENT FOR THE SIX MONTHS TO 30 SEPTEMBER
2017
Six months Six months Year
to to ended
30.09.17 30.09.16 31.03.17
Notes (unaudited) (unaudited) (audited)
GBP000 GBP000 GBP000
Revenue 3 29,204 26,939 61,422
Cost of sales (14,970) (14,153) (31,103)
Gross Profit 14,234 12,786 30,319
Other operating income 138 98 379
Administrative expenses (6,050) (6,774) (14,232)
Currency (losses)/profits (300) 277 (55)
Amortisation of intangible (1,700) (1,593) (3,088)
assets
Share based payments (380) (240) (678)
Profit from operating 5,942 4,554 12,645
activities:
Net finance (costs)/income (102) 724 784
Share of profit of associate 24 31 23
Profit before income tax 5,864 5,309 13,452
Income tax charge (641) (806) (1,453)
Profit for the period from 5,223 4,503 11,999
continuing operations
Attributable to:
Owners 4,188 3,632 10,565
Minority interest 1,035 871 1,434
5,223 4,503 11,999
BASIC EARNINGS PER SHARE 5 6.39p 5.68p 16.35p
FULLY DILUTED EARNINGS 5 6.37p 5.65p 16.17p
PER SHARE
Earnings from continuing
activities before
interest, taxation,
depreciation,
amortisation
and share based payments 8,185 6,552 17,009
Exclude foreign exchange 300 (277) 55
differences
EBITDA 8,485 6,275 17,064
CONSOLIDATED STATEMENT OF
COMPREHENSIVE INCOME
FOR THE SIX MONTHS TO
30 SEPTEMBER 2017
Six months Six months Year
to to ended
30.09.17 30.09.16 31.03.17
(unaudited) (unaudited) (audited)
GBP000 GBP000 GBP000
Profit for the period 5,223 4,503 11,999
Foreign currency translation (482) 998 1,030
differences
Defined benefit pension plan - - (483)
- actuarial losses
Deferred tax on revaluations - - 10
Other comprehensive income (482) 998 557
for the period
Total comprehensive income 4,741 5,501 12,556
for the period
Attributable to:
Owners 3,858 4,341 10,829
Minority interest 883 1,160 1,727
4,741 5,501 12,556
CONSOLIDATED
STATEMENT
OF CHANGES
IN EQUITY
FOR THE SIX
MONTHS TO
30 SEPTEMBER 2017
Share Share Other Revaluation Treasury Retained Total Minority Total
Capital Premium Reserves Reserves Reserve Earnings Interest Equity
Account Account
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
At 1 April 2016 3,205 55,590 2,028 654 (1,144) 21,824 82,157 3,202 85,359
Profit for - - - - - 10,565 10,565 1,434 11,999
the year
Other
comprehensiveincome:
Foreign - - - - - 737 737 293 1,030
currencydifferences
Actuarial - - - - - (483) (483) - (483)
(losses)
onpension
scheme assets
Deferred taxation - - - 10 - - 10 - 10
change inrate
Total - - - 10 - 10,819 10,829 1,727 12,556
comprehensive
income
for the year
Transactions with
ownersrecorded
directly in
equity
Contributions by
anddistributions
to owners
Movement - - - - 1,144 - 1,144 - 1,144
in
TreasuryReserve
arising
fromdisposal
of jointly
ownedshares
Issue of shares 66 2,517 - - - - 2,583 - 2,583
in the year
Sale of treasury - 47 - - - 60 107 - 107
shares
Share-based - - 678 - - - 678 - 678
payments
Transfers on - - (257) - - 257 - - -
expiry
of options
Dividends - - - - - (3,667) (3,667) (587) (4,254)
relating
to 2016
Transactions 66 2,564 421 - 1,144 (3,350) 845 (587) 258
with owners
Balance as at 31 3,271 58,154 2,449 664 - 29,293 93,831 4,342 98,173
March 2017
Total
comprehensive
incomefor
the period:
Profit for - - - - - 4,188 4,188 1,035 5,223
the period
Other
comprehensiveincome
Foreign - - - - - (330) (330) (152) (482)
currency
translationdifferences
Total - - - - - 3,858 3,858 883 4,741
comprehensive
income
for the period
Transactions
with owners
Issue of shares 17 568 - - - - 585 - 585
in the year
Share based - - 380 - - - 380 - 380
payments
Transfer to - - (294) - - 294 - - -
retained
earnings
on option expiry
Dividends - - - - - (1,635) (1,635) (1,389) (3,024)
Total 17 568 86 - - (1,341) (670) (1,389) (2,059)
transactions
withowners
At 30 September 3,288 58,722 2,535 664 - 31,810 97,019 3,836 100,855
2017
Prior interim
period
At 1 April 2016 3,205 55,590 2,028 654 (1,144) 21,824 82,157 3,202 85,359
Total
comprehensiveincome
for the period:
Profit for - - - - - 3,632 3,632 871 4,503
the period
Other
comprehensive
income
Foreign - - - - - 709 709 289 998
currency
translationdifferences
Total - - - - - 4,341 4,341 1,160 5,501
comprehensive
income
for the period
Transactions
with owners
Issue of shares 30 1,165 - - - - 1,195 - 1,195
in the year
Movement - - - - 1,134 - 1,134 - 1,134
in
TreasuryReserve
arising
fromdisposal
of jointly
ownedshares
Disposal of - 47 - - - 59 106 - 106
treasury
shares
Share based - - 240 - - - 240 - 240
payments
Transfer - - (244) - - 244 - - -
to
retainedearnings
on option expiry
Dividends - - - - - (1,209) (1,209) (586) (1,795)
Total 30 1,212 (4) - 1,134 (906) 1,466 (586) 880
transactions
withowners
At 30 September 3,235 56,802 2,024 654 (10) 25,259 87,964 3,776 91,740
2016
CONSOLIDATED STATEMENT
OF FINANCIAL POSITION
As at As at As at
30.09.17 30.09.16 31.03.17
(unaudited) (unaudited) (audited)
Notes GBP000 GBP000 GBP000
ASSETS
Non current assets
Goodwill and other 7 55,956 51,975 53,883
intangibles
Property,plant 8 1,888 1,851 1,865
and equipment
Investment property 9 185 185 185
Investments 113 98 97
58,142 54,109 56,030
Current assets
Inventories 18,830 16,636 19,675
Trade and other receivables 14,583 15,393 16,158
Income tax recoverable 470 163 395
Other taxes and social 961 565 897
security
Cash and cash equivalents 20,304 18,525 20,602
55,148 51,282 57,727
Total assets 113,290 105,391 113,757
Current liabilities
Trade and other payables (10,260) (11,617) (13,733)
Income tax (244) (377) (238)
Other taxes and social (702) (770) (447)
security
Dividends (40) (37) (39)
(11,246) (12,801) (14,457)
Total assets less current 102,044 92,590 99,300
liabilities
Non current liabilities
Deferred tax (1,189) (750) (1,027)
Dilapidations on - (100) (100)
property leases
100,855 91,740 98,173
Equity
Capital and reserves
Called up share capital 3,288 3,235 3,271
Share premium 58,722 56,802 58,154
Treasury Reserve - (10) -
Revaluation reserve 664 654 664
Other reserves 2,535 2,024 2,449
Retained earnings 31,810 25,259 29,293
97,019 87,964 93,831
Minority interest 3,836 3,776 4,342
Total equity 100,855 91,740 98,173
CONSOLIDATED STATEMENT
OF CASH FLOWS
Six months to Six months to Year ended
30.09.17 30.09.16 31.03.17
(unaudited) (unaudited) (audited)
GBP000 GBP000 GBP000
Cashflows from operating
activities
Profit before tax 5864 5309 13452
Adjustment for:
Net finance costs 102 (724) (784)
Depreciation of property 139 134 264
plant and equipment
Losses/(gains) on disposal - 1 37
of non-current assets
Amortisation of intangible 1,700 1,593 3,088
assets
Impairment of intangible - - 297
assets
Pension payments - - (76)
Share of associate's results (24) (31) (23)
Share based payments 380 240 678
Operating cash flow 8,161 6,522 16,933
before movement
in working capital
Change in inventories 845 (1,043) (4,082)
Change in receivables 1,511 (1,812) (3,195)
Change in payables (3,318) 1,774 3,445
Cash generated from 7,199 5,441 13,101
operations
Income tax (paid) (548) (555) (1,286)
Net cash inflow from 6,651 4,886 11,815
operating activities
Cash flows from investing
activities
Purchase of property (194) (86) (265)
plant and equipment
Costs of acquiring (3,773) (4,231) (7,931)
drug registrations
Finance income 61 84 103
Net cash (used in) investing (3,906) (4,233) (8,093)
activities
Cash flows from financing
activities
Proceeds from issue of 585 2,435 3,834
share capital and sale
ofjointly owned and
treasury shares
Dividends paid (3,024) (1,795) (4,252)
Net cash from financing (2,439) 640 (418)
activities
Net increase in cash 306 1,293 3,304
and cash equivalents
Foreign exchange movements (604) 1,567 1,633
Cash and cash equivalents at 20,602 15,665 15,665
the beginning of theperiod
Cash and cash equivalents 20,304 18,525 20,602
at the end of theperiod
NOTES TO THE PRELIMINARY RESULTS FOR THE SIX MONTHS TO 30
SEPTEMBER 2017
1. Basis of preparation The financial information for the period
to 30 September 2017 does not constitute statutory accounts as
defined by Section 435 of the Companies Act 2006. It has been
prepared in accordance with the accounting policies set out in, and
is consistent with, the audited financial statements for the twelve
months to 31 March 2017.
The Group applies revised IAS 1 "Presentation of Financial
Statements (2007)". As a result, the Group presents all non-owner
changes in equity in consolidated statements of comprehensive
income and all owner changes in equity in consolidated statements
of changes in equity.
2. Statement of compliance The interim financial statements do
not include all of the information required for full annual
financial statements and do not comply with all of the disclosure
requirements in IAS 34 "Interim Financial Reporting". Accordingly,
whilst the interim statements have been prepared in accordance with
IFRS, they cannot be construed as being in full compliance with
IFRS and should be read in conjunction with the consolidated
financial statements of the Group for the year ended 31 March
2017.
3. Revenue is derived from the Group's animal pharmaceutical
businesses.
4. Principal risks and uncertainties These were set out on pages
63-66 of the notes to the consolidated financial statements for the
year ended 31 March 2017. The key exposures are to foreign currency
exchange rates, potential delays in obtaining marketing
authorisations and single sources of supply for some raw materials
and have remained unchanged since the year end.
5.Earnings per share
Six months to Six months to Year ended
30.09.17 30.09.16 31.03.17
(unaudited) (unaudited) (audited)
Weighted average number of 65,517 63,992 64,638
shares in issue (000's)
Fully diluted weighted 65,787 64,301 65,356
average number
of shares in issue(000's)
Profit attributable 4,188 3,632 10,565
to equity
holders of the
company (GBP's)
Basic earnings per 6.39 5.68 16.35
share (pence)
Fully diluted earnings 6.37 5.65 16.17
per share (pence)
6.Dividends
Six months to Six months to Year ended
30.09.17 30.09.16 31.03.17
(unaudited) (unaudited) (audited)
GBP000 GBP000 GBP000
Dividend in respect of the
year ended 31 March 2016
at 1.9p/5.7p per ordinary share - 1,209 3,675
Dividend in respect of the
year ended 31 March 2017
at 2.5p per ordinary share 1,635 - -
Dividend waived by employee - - (8)
benefit trust
1,635 1,209 3,667
Dividend paid by subsidiary to
non-controlling interests
(minorities) 1,389 586 -
3,024 1,795 3,667
The company paid a further dividend of 4.6p per share on 6
October 2017, after the period end. The total paid was GBP3.02
million.
7.Intangible non-current assets
Distribution Development
Goodwill Rights Costs Total
Cost GBP000 GBP000 GBP000 GBP000
Cost at 1 April 2016 17,930 1,442 59,712 79,084
Additions - - 4,231 4,231
Cost at 30 September 17,930 1,442 63,943 83,315
2016
Additions - - 4,007 4,007
Contributions from - - (307) (307)
third parties
Cost at 31 March 2017 17,930 1,442 67,643 87,015
Additions - - 3,773 3,773
Cost at 30 September 17,930 1,442 71,416 90,788
2017
Amortisation
Amortisation at - 687 29,060 29,747
1 April 2016
Charge for the period - 36 1,557 1,593
Amortisation at 30 - 723 30,617 31,340
September 2016
Charge for the period - 36 1,459 1,495
Impairment charge - - 297 297
Amortisation at - 759 32,373 33,132
31 March 2017
Charge for the period - 39 1,661 1,700
Amortisation at 30 - 798 34,034 34,832
September 2017
Net book value at 17,930 644 37,382 55,956
30 September2017
Net book value at 17,930 683 35,270 53,883
1 April 2017
Net book value at 17,930 719 33,326 51,975
30 September2016
Net book value at 17,930 755 30,652 49,337
1 April 2016
8.Property, plant and equipment
Fixtures,
Freehold Plant and fittings & Motor
Property Machinery equipment Vehicles Total
Cost GBP000 GBP000 GBP000 GBP000 GBP000
Cost at 1 April 2016 730 1,658 710 53 3,151
Additions - 30 24 32 86
Disposals - (13) - - (13)
Foreign exchange - 84 1 8 93
movements
Cost at 30 September 730 1,759 735 93 3,317
2016
Additions - 17 131 31 179
Disposals - (267) - (47) (314)
Foreign exchange - 32 (1) (2) 29
movements
Cost at 1 April 2017 730 1,541 865 75 3,211
Additions - 51 143 - 194
Foreign exchange - (30) - (5) (35)
movements
Cost at 30 September 730 1,562 1,008 70 3,370
2017
Depreciation
Depreciation at - 772 507 39 1,318
1 April 2016
Charge for 5 84 43 2 134
the period
Disposals - (12) - - (12)
Foreign exchange - 24 - 2 26
movements
Depreciation at 30 5 868 550 43 1,466
September 2016
Charge for 8 82 35 5 130
the period
Disposals - (240) - (37) (277)
Foreign exchange - 27 2 (2) 27
movements
Depreciation at 13 737 587 9 1,346
1 April 2017
Charge for 6 76 52 5 139
the period
Foreign exchange - (3) - - (3)
movements
Depreciation at 30 19 810 639 14 1,482
September 2017
Net book value
Net book value at 30 711 752 369 56 1,888
September 2017
Net book value at 717 804 278 66 1,865
1 April 2017
Net book value at 30 725 891 185 50 1,851
September 2016
Net book value at 730 886 203 14 1,833
1 April 2016
9.Investment property
Freehold
Property Total
Valuation GBP000 GBP000
Valuation at 1 April 2016, 30 September 2016, 189 189
31March 2017 and 30 September 2017
Depreciation
Depreciation at 1 April 2016, 30 September 4 4
2016,31 March 2017 and 30 September 2017
Net Book Value
Net Book Value at 1 April 2016, 30 September2016, 185 185
31 March 2017 and 30 September 2017
This financial information was approved by the board on 05
December 2017.
Copies of this interim report are being sent to all of the
Company's shareholders. Further copies can be obtained from the
Company's registered office at 78 Coombe Road, New Malden, Surrey
KT3 4QS.
DIRECTORS AND OFFICERS Peter Lawrence (Chairman)
Marc Loomes (Chief Executive)
Kevin Stockdale (Finance Director)
Julia Trouse (Executive Director and Company Secretary)
Brett Clemo (Executive Director)
Andrew Jones (Non-Executive Director, appointed 1stDecember 2017)
Anthony Rawlinson (Non-Executive Director)
REGISTERED OFFICE 78 Coombe Road, New Malden, Surrey. KT3 4QS
Tel: 020-8336-2900 Fax: 020-8336-0909
COMPANY NUMBER 01818170
INFORMATION AT www.ecoanimalhealthgroupplc.com
LEI: 2138009XN9DJ3YP70B55
Classification: 1.2. Half yearly financial reports and audit
reports/limited reviews
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(END) Dow Jones Newswires
December 06, 2017 02:00 ET (07:00 GMT)
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