TIDMEAH
RNS Number : 6720U
Eco Animal Health Group PLC
27 November 2023
27 November 2023
ECO Animal Health Group pc ("ECO", the "Company" or the
"Group")
(AIM: EAH)
Results for the six months ended 30 September 2023
HIGHLIGHTS
Financial
-- Group Revenue increased 9% to GBP38.0 million (H1 2022: GBP34.9 million)
o Revenues on a constant currency basis increased 15%
-- Gross margins 41% (H1 2022: 45%)
-- Adjusted EBITDA at GBP0.7 million (H1 2022: GBP1.7 million)
-- Loss per share of 1.93p (H1 2022: earnings per share: 1.96p)
-- Cash generated by operations increased to GBP4.8m (H1 2022: GBP3.0m)
-- Cash balances increased to GBP20.6m (30 September 2022 GBP12.9m)
Operational
-- Revenue in China and Japan increased by 14% to GBP9.7 million (H1 2022: GBP8.5 million)
-- Revenue in USA and Canada increased by 26% to GBP8.2 million (H1 2022: GBP6.5 million)
-- US FDA and Veterinary Drugs Directorate in Canada approval
received for use of Aivlosin (R) in pregnant and lactating sows
-- Successful recent Capital Markets Day highlighted significant
potential unrecognised future value in R&D pipeline
-- ESG - 'A' rating by Integrum ESG
David Hallas, Chief Executive Officer of ECO Animal Health Group
plc, commented : "I am very pleased to see continuing revenue
growth, despite currencies headwinds for a large part of this first
half. Adjusting for the currency effect underlying growth in
revenues increased by 15%. We expect gross margins to improve in
the second half due to sales mix and improvements in Cost of Goods.
We have strong visibility over second half revenue. The Board looks
forward with cautious optimism to reporting the full year numbers
in line with market expectations .
I was particularly proud to showcase, at our recent Capital
Markets Day, some of the great results we are seeing in our R&D
programme. We plan to make further disclosure as our projects
progress; the intention being to build shareholder knowledge and
confidence around our future potential".
Forward-Looking Statements
This announcement contains certain forward-looking statements.
The forward-looking statements reflect the knowledge and
information available to the Company and Group during preparation
and up to the publication of this announcement. By their very
nature, these statements depend upon circumstances and relate to
events that may occur in the future and thereby involving a degree
of uncertainty. Therefore, nothing in this announcement should be
construed as a profit forecast by the Company or Group.
Contacts
ECO Animal Health Group plc
David Hallas (Chief Executive Officer)
Christopher Wilks (Chief Financial Officer) 020 8447 8899
IFC Advisory
Graham Herring
Zach Cohen 020 3934 6630
Singer Capital Markets (Nominated Adviser
& Joint Broker)
Philip Davies
Sam Butcher 020 7496 3000
Investec (Joint Broker)
Gary Clarence
Carlo Spingardi
Lydia Zychowska 020 7597 5970
Equity Development
Hannah Crowe
Matt Evans 020 7065 2692
CHAIRMAN AND CHIEF EXECUTIVE'S COMBINED STATEMENT
FOR THE SIX MONTHSED 30 SEPTEMBER 2023
The Board is pleased to present the results for the Group for
the six months ended 30 September 2023 ("H1 2023"). During the
first half of the financial year, the Group experienced positive
global sales momentum and despite currency headwinds our results
show good revenue growth. The Group expects that the typical
pattern of demand will result in a stronger second half to our
year. The Group's revenue since September 2023, current order books
and run rate of sales from the Group's stocking locations provides
90% coverage of the projected second half revenue (94% of full year
consensus market forecasts*). Phasing and mix of revenues,
inventory usage and costs all support the forward view of gross
margins. We invested further in our promising R&D pipeline and
we continued to grow our commercial footprint in anticipation of
the introduction of new products. The Board is also proud to have
been awarded an 'A' rating for ESG - the highest grade possible -
by Integrum ESG, higher than some 300 companies ranked in our
sub-sector. This highlights our continuing/ efforts to improve our
impact on not only the environment but also the communities we work
with.
* The Board understands that current consensus figures for FY23
are GBP88.3m of revenue and GBP7.7m Adjusted EBITDA
Financial Performance
Group revenue was 9% higher in H1 2023 at GBP38.0 million (H1
2022: GBP34.9 million). China and Japan revenue of GBP9.7 million
represented 26% of Group revenue (H1 2022: 24%). On a constant
currency basis the Group's revenue in H1 2023 was GBP40.1 million;
an increase of 15% compared with H1 2022. The principal currency
effects were from a weaker US Dollar and Chinese RMB compared with
Sterling during the period.
Excluding China and Japan, revenue from other markets grew by
7%, in aggregate, to GBP28.3 million (H1 2022: GBP26.4
million).
The gross margin in H1 2023 was 41% (H1 2022: 45%). A
combination of foreign exchange effects and cost of purchases of
the active pharmaceutical ingredient ("API"), as well as certain
increased costs of manufacture outside of China have impacted the
gross margins. In addition, depreciation of the company's factory
equipment in China was charged to Cost of Sales in the period (in
2022, during the factory rebuild, depreciation was charged to
administrative costs). It is expected that the revenue and API
effects will in part reverse in H2 2023. The Gross margin movement
may be analysed as follows:
%
Gross margin in the six months ended 30 September
2022 45.3
F/x impact on revenue (3.5)
F/x impact on cost of sales 0.9
Impact of API inventory sales lag (1.1)
China depreciation charged to cost of sales (0.5)
Other increased cost of manufacture (0.3)
------
Gross margin in the six months ended 30 September
2023 40.8
------
Administrative expenses excluding foreign exchange gains at
GBP14.2 million were 13% higher than the comparative period last
year (H2 2022: GBP12.6 million). This arose in the main from
increased personnel costs offset in part by savings in legal, audit
and professional.
Research and development ("R&D") expenses shown in the
income statement together with the amounts capitalised were in
aggregate a cash investment of GBP3.6 million (H1 2022: GBP4.2
million). This represented 9.0% of revenue generated in the period
(H1 2022: 12.0%).
Earnings before interest, tax, depreciation, amortisation and
impairment, share based payments and foreign exchange movements
("Adjusted EBITDA") were GBP0.7 million (H1 2022: GBP1.7 million).
This reduction arose as a direct consequence of the higher revenue
offset by lower gross margin and increased personnel costs.
Cash generated from operations was GBP4.8 million (H1 2022:
GBP3.0 million). Continuing close management of working capital -
in particular inventories and receivables - has resulted in a cash
balance of GBP20.6 million which is significantly greater than at
30 September 2022 and comparable to the level at 31 March 2023.
Cash balances at 30 September 2023 can be analysed as follows:
At 30 September
2023 2022
(GBP'm) (GBP'm)
Held in UK 6.1 2.8
Held in non-China subsidiaries 2.9 2.0
Held in China 100% owned subsidiary 1.5 4.1
Held in China 51% owned subsidiary 10.1 4.0
20.6 12.9
--------- ---------
The Group repatriates cash from China by annual dividend
declaration; this is subject to withholding taxes of 5% and is paid
according to the relevant shareholdings. On a day--to--day basis,
the Board considers the cash held in the Group's joint venture
subsidiary in China to be unavailable to the Group outside of
China; accordingly, cash management and funds available for
investment in R&D is based upon the cash balances outside of
China.
During July 2023, two dividends totalling GBP3.4 million were
received from China.
The Group's committed banking facilities remain at GBP15.0
million, being a GBP5.0 million overdraft facility and a GBP10
million revolving credit facility. These facilities expire on 30
June 2026 and were undrawn as at 30 September 2023.
Basic loss per share in the six months ended 30 September 2023
was 1.93p (H1 2022: EPS 1.96p). The prior period EPS benefited from
the exchange rate gain reported in the period of GBP2.6 million in
the six months ended 30 September 2022.
Business Performance
The geographical analysis of the Group's revenue in the six
months ended 30 September 2023 compared to the prior period in 2022
and the full year ended 31 March 2023 was as follows:
Revenue Summary 6 months ended 30 September Year ended
H1 23 vs 31 March
2023 2022 H1 22 2023
(GBP'm) (GBP'm) % Change (GBP'm)
China and Japan 9.7 8.5 14% 26.4
North American (USA and Canada) 8.2 6.5 26% 15.2
South and Southeast Asia 7.8 7.4 5% 16.8
Latin America 7.7 7.9 (3%) 18.1
Europe 3.4 2.9 17% 6.0
Rest of World and UK 1.2 1.7 (29%) 2.8
Total Group 38.0 34.9 9% 85.3
--------------------------------- -------------- -------------- --------- -----------
Group revenue increased by 9% to GBP38.0 million (H1 2022:
GBP34.9 million). As stated earlier, on a constant currency basis
the increase in revenue was 15% in H1 2023 compared with H1 2022.
The main components of this revenue improvement were from China and
the USA. As noted in the Group's FY23 Annual Report the strong
trading in the final quarter ended 31 March 2023 carried over into
the spring and early summer months; this demand for Aivlosin (R)
was driven by disease incidence, in particular Porcine Reproductive
and Respiratory Syndrome ("PRRS") virus. Similarly, the strength in
the USA market was associated with prevalence of disease and strong
key account relationships. The improvement in European revenue was
offset by a phasing of revenues derived from North African
markets.
Aivlosin(R) continues to gain market share from other longer
established branded antimicrobials. The growth seen in Southeast
Asia during the last four or five years has continued during 2023.
The poor poultry market in India in recent years has recovered with
revenue increasing to GBP2.9 million (H1 2022: GBP2.2 million).
Thailand remained the largest single market for the Group's
products in this region with revenue increasing to GBP3.6 million
(H1 2022: GBP3.5 million), supported with good sales into
Bangladesh, Pakistan, Malaysia and Vietnam of GBP1.2 million (H1
2022: GBP1.6 million). Revenue in Latin America decreased 3% to
GBP7.7 million (H1 2022: GBP7.9 million), with Brazil representing
the largest market at GBP4.2 million (H1 2022: GBP4.2 million).
Brazil's exports of pork to China continued during the period
providing strong demand for Aivlosin (R) . Mexico revenue in H1
2023 was GBP0.3 million higher than the equivalent period last year
and the remaining counties in Latin America were broadly consistent
year on year. Revenue derived from Europe was GBP0.5 million higher
than H1 2022. Within the continent, Spain remained the largest
single market with revenues of GBP0.8 million in the six months
ended 30 September 2023 (H1 2022: GBP1.0 million).
Accelerated growth through R&D investment
Work on the Group's promising pipeline of new products has
continued at pace during the first half of this financial year with
GBP3.6 million (H1 2022: GBP4.2 million) spent during the period.
We held a Capital Markets Day ("CMD") on 9 November 2023 during
which a great deal of detail was provided on the Group's pair of
Mycoplasma vaccines for poultry, the Group's novel injectable
antimicrobial, the Group's very promising PRRS virus vaccine and
combination PCV2/MHyo vaccine for swine and the Group's approach to
a vaccine for necrotic enteritis in poultry. These latter three
projects employ highly novel monoclonal technology approaches and
promise to deliver significant technological disruption to the
prevention of these diseases. We highlighted some very significant
efficacy results which describe statistically significant immunity
to disease challenge when compared with control groups
incorporating placebo, untreated and treated with commercially
available existing products. The presentations at the CMD concluded
with an assessment of the revenue and profit contribution potential
in the R&D portfolio as well as a description of the net
present value and internal rate of return of the projects when
assessed over their product life cycle.
The Board considers the R&D portfolio to be rich in
opportunity and investment in this programme to be in shareholders'
best interests. These new products are complementary to our
extremely successful existing Aivlosin (R) based business,
addressing the same markets, producers, distributors and disease
complexes. It is envisaged that as revenue and profits begin to be
generated from these new product introductions the resulting
cashflow will be applied in a progressive way to dividend
distribution further enhancing shareholder value.
Strategy
Following the refresh of the Group's strategy in the Autumn of
2022, a year later the leadership team once again reviewed the
Group's direction and priorities. This resulted in an endorsement
of the vision and values of the Group. The embodiment of these
values is in the "3 C's" - these being Curiosity, Commitment and
Collaboration. Furthermore, the focus on delivering the class
leading products promised by the R&D effort was reinforced as
the primary opportunity to deliver shareholder value. Specific
actions arising involve prioritising projects with a balance of net
present value, risk, proximity to market and size of funding
requirement. In addition, key actions have been taken in relation
to building the operational capabilities and manufacturing
collaborations to fulfil the commercial needs of the new
products.
The Group is open to and will pursue further collaboration
including technical partnering, licensing and M&A activity.
People
The Board acknowledges the value that our people relationships
bring to the business. Whether it is current team members who
describe the 3C's in their everyday, prospective members of staff
for whom the 3C's resonate, customers, R&D partners commercial
partners or shareholders we understand the value of engagement and
the additive effect of a team working collectively. Engagement
surveys and environment, social and governance initiatives have
continued to enshrine these values. The Board extends its sincere
gratitude to all our people, customers, partners and collaborators
as we seek to maximise shareholder and stakeholder value.
Outlook
The Group expects that the historically observed increased
demand for Aivlosin (R) associated with the Northern Hemisphere
winter will once again result in a stronger second half to our
year. 94% of the market consensus revenue* is covered by
year-to-date revenue, order books and run rate from the Group's
stocking locations. Additionally, the first half currency headwinds
have normalised and the phasing and mix of revenues, inventory
usage and costs all support the forward profitability view. The
Board will continue during the remainder of this financial year to
invest in our extremely exciting new product pipeline.
The Board looks forward with cautious optimism to reporting the
full year numbers in line with market expectations*.
* The Board understands that current consensus figures for FY23
are GBP88.3m of revenue and GBP7.7m Adjusted EBITDA
Dr Andrew Jones David Hallas
Non-executive Chairman Chief Executive Officer
CONSOLIDATED INCOME STATEMENT
Six months Six months Year
to 30.09.23 to 30.09.22 ended
(unaudited) (unaudited) 31.03.23
(audited)
Notes GBP000's GBP000's GBP000's
Revenue 6 38,009 34,859 85,311
Cost of sales (22,508) (19,063) (46,935)
------------- ------------- -----------
Gross profit 15,501 15,796 38,376
40.8% 45.3% 45.0%
Other income 29 242 357
Research and development expenses (2,098) (2,923) (5,920)
Administrative expenses (14,016) (10,032) (27,866)
------------- ------------- -----------
(Loss)/profit from operating activities (584) 3,083 4,947
Finance income 76 42 104
Finance costs (166) (137) (656)
------------- ------------- -----------
Net finance cost (90) (95) (552)
Share of profit of associate 47 51 45
------------- ------------- -----------
47 51 45
(Loss)/profit before income tax (626) 3,039 4,440
Income tax charge 8 (580) (929) (1,349)
------------- ------------- -----------
(Loss)/profit for the period (1,206) 2,110 3,091
============= ============= ===========
(Loss)/profit attributable to:
Owners of the parent Company (1,307) 1,324 1,008
Non-controlling interest 101 785 2,083
------------- ------------- -----------
(Loss)/profit for the period (1,037) 2,110 3,091
============= ============= ===========
(Loss)/earnings per share (pence) 7 (1.93) 1.96 1.49
============= ============= ===========
(1 . 93
Diluted (loss)/earnings per share (pence) 7 ) 1.95 1.47
============= ============= ===========
Adjusted EBITDA (Non-GAAP measure) 6 705 1,670 7,235
============= ============= ===========
CONSOLIDATED STATEMENT OF COMPREHENSIVE
INCOME
Six months Six months Year
to 30.09.23 to 30.09.22 ended
(unaudited) (unaudited) 31.03.23
(audited)
GBP000's GBP000's GBP000's
(Loss)/profit for the period (1,206) 2,110 2,064
Other comprehensive income/(loss):
Items that may be reclassified to profit
or loss:
Foreign currency translation differences (1,285) 276 (586)
Items that will not be reclassified to profit
or loss:
Remeasurement of defined benefit pension
schemes - - 100
------------- ------------- -----------
Other comprehensive (loss)/income for the
year (1,285) 276 (486)
------------- ------------- -----------
Total comprehensive (loss)/income for the
year (2,491) 2,386 1,578
Attributable to:
Owners of the parent Company (2,070) 1,506 (229)
Non-controlling interest (421) 880 1,807
------------- ------------- -----------
(2,491) 2,386 1,578
============= ============= ===========
CONSOLIDATED STATEMENT OF CHANGES IN
EQUITY
Share Share Revaluation Other Foreign Retained Total Non-controlling Total
Capital Premium Reserve Reserves Exchange Earnings Interest Equity
Reserve
GBP000's GBP000's GBP000's GBP000's GBP000's GBP000's GBP000's GBP000's GBP000's
Balance as at
31
March 2022 3,381 63,319 657 106 2,188 12,413 82,064 12,284 94,348
Profit for the
year - - - - - 1,008 1,008 2,083 3,091
Other comprehensive income:
Foreign
currency
movement - - - - (310) - (310) (276) (586)
Actuarial
gains
on pension
scheme assets - - - - - 100 100 - 100
--------- --------- ------------ --------- --------- --------- --------- ---------------- ---------
Total
comprehensive
income for
the year - - - - (310) 1,108 798 1,807 2,605
--------- --------- ------------ --------- --------- --------- --------- ----------------
Transactions with owners:
Share-based
payments - - - - - 408 408 - 408
Dividends - - - - - - - (1,810) (1,810)
--------- --------- ------------ --------- --------- --------- --------- ---------------- ---------
Transactions
with
owners - - - - - 408 408 (1,810) (1,402)
--------- --------- ------------ --------- --------- --------- --------- ---------------- ---------
Balance as at
31
March 2023 3,381 63,319 657 106 1,878 13,929 83,270 12,281 95,551
========= ========= ============ ========= ========= ========= ========= ================ =========
Loss for the
period - - - - - (1,307) (1,307) 101 (1,206)
Other comprehensive income:
Foreign
currency
movement - - - - (763) - (763) (522) (1,285)
Total
comprehensive
loss for the
period - - - - (763) (1,307) (2,070) (421) (2,491)
--------- --------- ------------ --------- --------- --------- --------- ----------------
Transactions with owners:
Issue of
shares
in the year 1 - - - - - 1 - 1
Share-based
payments - - - - - 320 320 - 320
Dividends - - - - - - - (2,814) (2,814)
--------- --------- ------------ --------- --------- --------- --------- ---------------- ---------
Transactions
with
owners 1 - - - - 320 321 (2,814) (2,493)
--------- --------- ------------ --------- --------- --------- --------- ---------------- ---------
Balance at 30
September
2023 3,382 63,319 657 106 1,115 12,942 81,521 9,046 90,567
========= ========= ============ ========= ========= ========= ========= ================ =========
CONSOLIDATED STATEMENT OF CHANGES IN
EQUITY
Share Share Revaluation Other Foreign Retained Total Non-controlling Total
Capital Premium Reserve Reserves Exchange Earnings Interest Equity
Reserve
GBP000's GBP000's GBP000's GBP000's GBP000's GBP000's GBP000's GBP000's GBP000's
Balance as at
31
March 2021 3,379 63,258 656 106 1,092 13,410 81,901 13,414 95,315
Lossfor the
year - - - - - (686) (686) (19) (705)
Other
comprehensive
income:
Foreign
currency
movement - - - - 1,096 - 1,096 1,099 2,195
Deferred tax
on
revaluation
of freehold
property - - 1 - - - 1 - 1
Actuarial
gains on
pension
scheme assets - - - - - 24 24 - 24
--------- --------- ------------ --------- --------- --------- --------- ---------------- ---------
Total
comprehensive
income for
the year - - 1 - 1,096 (662) 435 1,080 1,515
--------- --------- ------------ --------- --------- --------- --------- ---------------- ---------
Transactions
with
owners:
Issue of
shares in
the year 2 61 - - - - 63 - 63
Share-based
payments - - - - - 342 342 - 342
Dividends - - - - - (677) (677) (2,210) (2,887)
--------- --------- ------------ --------- --------- --------- --------- ---------------- ---------
Transactions
with
owners 2 61 - - - (335) (272) (2,210) (2,482)
--------- --------- ------------ --------- --------- --------- --------- ---------------- ---------
Balance as at
31
March 2022 3,381 63,319 657 106 2,188 12,413 82,064 12,284 94,348
========= ========= ============ ========= ========= ========= ========= ================ =========
Profit for the
period - - - - - 1,325 1,325 785 2,110
Other
comprehensive
income:
Foreign
currency
movement - - - - 181 - 181 95 276
--------- --------- ------------ --------- --------- --------- --------- ---------------- ---------
Total
comprehensive
income for
the period - - - - 181 1,325 1,506 880 2,386
--------- --------- ------------ --------- --------- --------- --------- ---------------- ---------
Transactions
with
owners:
Share-based
payments - - - - - 175 175 - 175
Dividends - - - - - - - (1,810) (1,810)
--------- --------- ------------ --------- --------- --------- --------- ---------------- ---------
Transactions
with
owners - - - - - 175 175 (1,810) (1,635)
--------- --------- ------------ --------- --------- --------- --------- ---------------- ---------
Balance as at
30
September
2022 3,381 63,319 657 106 2,369 13,913 83,745 11,354 95,099
========= ========= ============ ========= ========= ========= ========= ================ =========
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Group
As at 30.09.23 As at 30.09.22 As at 31.03.23
(unaudited) (unaudited) (audited)
Notes GBP000's GBP000's GBP000's
Non-current assets
Intangible assets 9 36,639 35,058 35,636
Property, plant and equipment 5,834 4,835 6,097
Investment property - 227 0
Right-of-use assets 3,857 1,635 4,282
Investments 274 264 252
Deferred tax assets 579 523 559
--------------- --------------- ---------------
Total non-current assets 47,183 42,542 46,826
Current assets
Inventories 19,497 32,853 22,409
Trade and other receivables 25,748 24,832 26,850
Income tax recoverable 1,647 1,598 2,947
Other taxes and social security 461 801 394
Cash and cash equivalents 20,577 12,883 21,658
Assets held for sale 230 - 230
--------------- --------------- ---------------
Total current assets 68,160 72,967 74,489
--------------- --------------- ---------------
TOTAL ASSETS 115,343 115,509 121,315
Current Liabilities
Trade and other payables (15,020) (13,242) (14,523)
Provisions (5,301) (4,512) (5,178)
Income tax payable (116) (351) (1,017)
Other taxes and social security payable (151) (481) (516)
Lease liabilities (934) (97) (884)
Dividends (50) (50) (50)
--------------- --------------- ---------------
Total current liabilities (21,572) (18,733) (22,168)
--------------- --------------- ---------------
Net current assets 46,588 54,234 52,321
--------------- --------------- ---------------
Total assets less current liabilities 93,771 96,776 99,147
Non-current liabilities
Lease liabilities (3,204) (1,677) (3,596)
--------------- --------------- ---------------
TOTAL ASSETS LESS TOTAL LIABILITIES 90,567 95,099 95,551
=============== =============== ===============
EQUITY
Issued share capital 3,382 3,381 3,381
Share premium account 63,319 63,319 63,319
Revaluation reserve 657 657 657
Other reserves 106 106 106
Foreign exchange reserve 1,115 2,369 1,878
Retained earnings 12,942 13,913 13,929
--------------- --------------- ---------------
Shareholders' funds 81,521 83,745 83,270
Non-controlling interests 9,046 11,354 12,281
--------------- --------------- ---------------
TOTAL EQUITY 90,567 95,099 95,551
=============== =============== ===============
Consolidated Cash Flow Statement
Group
Six months Six months Year
to 30.09.23 to 30.09.22 ended
(unaudited) (unaudited) 31.03.23
(audited)
GBP000's GBP000's GBP000's
Cash flows from operating activities
(Loss)/profit before income tax (627) 3,039 4,440
Adjustment for:
Finance income (76) (42) (104)
Finance cost 166 137 656
Foreign exchange (gain)/loss (219) (2,573) (468)
Depreciation 452 162 812
Amortisation of right-of-use assets 203 196 452
Revaluation of investment property - - (3)
Amortisation of intangible assets 533 546 1,087
Share of associate's results (47) (51) (45)
Share based payment charge 320 175 408
------------- ------------- -----------
Operating cash flows before movements
in working capital 705 1,589 7,235
Change in inventories 2,535 (1,671) 7,776
Change in receivables 2,349 4,153 (1,843)
Change in payables (793) (1,593) 3,802
Change in provisions and pensions 16 502 1,439
------------- ------------- -----------
Cash generated from operations 4,812 2,980 18,409
Finance costs (6) (71) (451)
Income tax (135) (1,039) (2,052)
------------- ------------- -----------
Net cash from operating activities 4,671 1,870 15,906
Cash flows from investing activities
Acquisition of property, plant and equipment (386) (1,255) (3,562)
Purchase of intangibles (1,536) (1,300) (2,419)
Finance income 76 42 104
------------- ------------- -----------
Net cash (used in)/from investing activities (1,846) (2,513) (5,877)
Cash flows from financing activities
Proceeds from issue of share capital 1 - -
Interest paid on lease liabilities (160) (67) (205)
Principal paid on lease liabilities (112) (202) (387)
Dividends paid (2,813) (1,810) (1,810)
------------- ------------- -----------
Net cash (used in)/from financing activities (3,084) (2,079) (2,402)
Net (decrease)/increase in cash and
cash equivalents (259) (2,722) 7,627
Foreign exchange movements (822) 1,291 (283)
Balance at the beginning of the period 21,658 14,314 14,314
------------- ------------- -----------
Balance at the end of the period 20,577 12,883 21,658
============= ============= ===========
NOTES TO THE PRELIMINARY RESULTS FOR THE SIX MONTHS TO 30
SEPTEMBER 2023
1. General information
ECO Animal Health Group plc ("the Company") and its subsidiaries
(together "the Group") manufacture and supply animal health
products globally.
The Company is traded on the AIM market of the London Stock
Exchange and is incorporated and domiciled in the UK. The address
of its registered office is The Grange, 100 High Street, Southgate,
Lond on, N14 6BN.
2. Summary of the Group's significant accounting policies
2.1 Basis of preparation
The financial information for the period to 30 September 2023
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 year ended 31 March 2023.
This Interim Statement has not been audited or reviewed by the
Group's auditors.
2.2 Statement of compliance
This Interim Statement is prepared in accordance with IAS 34
"Interim Financial Reporting". Accordingly, whilst the Interim
Statement has been prepared in accordance with IFRS, and the
primary statements follow the format of the annual financial
statements, only selected notes are included - those that provide
an explanation of events and transactions that are significant to
an understanding of the changes in financial position and
performance of the Group since the last annual reporting date. IAS
34 states a presumption that anyone who reads the Group's Interim
Statement will also have access to its most recent annual report.
Accordingly, annual disclosures are not repeated in this Interim
Statement.
3. Changes to significant accounting policies and other restatements
The principal accounting policies which are adopted by the Group
in the preparation of its financial statements are set out in in
the consolidated financial statements of the Group for the year
ended 31 March 2023. These policies have been consistently applied
to all prior years. The Group's accounting policies have been
consistently applied in accordance with IFRS continued into the six
months ended 30 September 2023.
As set out in the consolidated financial statements of the Group
for the year ended 31 March 2023, new standards and amendments came
into effect during the financial year. These standards and
amendments do not have a material impact.
For the March 2023 Annual Report and Accounts, the Group
reviewed the accounting for share incentive awards made to
employees of subsidiary companies and concluded that the previous
approach to recording the transaction in the balance sheet of the
parent company should be by increasing the value of the investment
in subsidiary, rather than recording it as an intercompany
receivable. Accordingly, the prior year balance sheets of the
Parent company have been restated to show this presentation. There
is no impact or effect on the consolidated financial
statements.
Full details are given in the Annual Report and Accounts for the
year ended 31 March 2023, and there is no financial effect on the
interim consolidated financial statements.
4. Revenue is derived from the Group's animal pharmaceutical businesses.
5. Principal risks and uncertainties
The principal risks and uncertainties relating to the Group were
set out on pages 10-13 of the Group's Annual Report and Accounts
for the year ended 31 March 2023. The key exposures are to foreign
currency exchange rates, potential delays in obtaining marketing
authorisations, single sources of supply for some raw materials,
disease impact on growth, trade debtor recovery and recession in
major regions of the world leading to reduced demand for the
Group's products have remained unchanged since the year end.
6. Segment information
Management has determined the operating segments based on the
reports reviewed by the Board to make strategic decisions. The
Board considers the business from a geographical perspective.
Geographically, management considers the performance in the
Corporate/UK, China and Japan, North America, South and South East
Asia, Latin America, Europe and the Rest of the World. Revenues are
geographically allocated by the destination of customer. The
performance of these geographical segments is measured using
Earnings before Interest, Tax, Depreciation and Amortisation
("Adjusted EBITDA**"), adjusted to exclude share-based payments,
revaluation, impairment and personnel related litigation matters.
Adjusted EBITDA is a non-GAAP measure used by the management to
assess the underlying business performance.
Corporate China North S & SE Latin Europe Rest Total
/U.K. & Japan America Asia America of World
GBP000's GBP000's GBP000's GBP000's GBP000's GBP000's GBP000's GBP000's
Six months to 30.09.23
(unaudited)
Sale of goods 503 9,705 8,193 7,746 7,722 3,481 562 37,912
Royalties - - - - - - 97 97
---------- --------- --------- --------- --------- --------- ---------- ---------
Revenue from external
customers 503 9,705 8,193 7,746 7,722 3,481 659 38,009
---------- --------- --------- --------- --------- --------- ---------- ---------
Adjusted EBITDA** (8,363) 1,948 3,267 2,591 763 364 354 925
Six months to 30.09.22
(unaudited)
Sale of goods 756 8,507 6,465 7,460 7,868 2,894 834 34,784
Royalties - - - - - - 75 75
---------- --------- --------- --------- --------- --------- ---------- ---------
Revenue from external
customers 755 8,507 6,465 7,460 7,868 2,894 909 34,859
---------- --------- --------- --------- --------- --------- ---------- ---------
Adjusted EBITDA** (6,448) 2,657 2,195 2,972 1,318 1,091 458 4,243
Year ended 31 March
2023
Sale of goods 1,303 26,374 15,172 16,759 18,107 6,073 1,338 85,126
Royalties - - - - - - 185 185
---------- --------- --------- --------- --------- --------- ---------- ---------
Revenue from external
customers 1,303 26,374 15,172 16,759 18,107 6,073 1,523 85,311
---------- --------- --------- --------- --------- --------- ---------- ---------
Adjusted EBITDA** (19,101) 9,340 5,463 6,767 3,059 1,486 689 7,703
A reconciliation of adjusted EBITDA for reportable segments to
profit from operating activities is provided as follows:
Six months Six months Year ended
to 30.09.23 to 30.09.22 31.03.23
(unaudited) (unaudited) (audited)
GBP000's GBP000's GBP000's
Adjusted EBITDA for reportable
segments 925 4,243 7,703
Depreciation (452) (240) (812)
Amortisation of right-of-use assets (203) (197) (452)
Revaluation of investment property - - 3
Amortisation (533) (546) (1,087)
Share-based payment charges (320) (175) (408)
------------- ------------- -----------
(Loss)/profit from operating activities (583) 3,085 4,948
------------- ------------- -----------
Foreign exchange movement (220) (2,573) (468)
------------- ------------- -----------
Adjusted EBITDA for the Group 705 1,670 7,235
============= ============= ===========
7. (Loss)/earnings per share
The calculation of basic earnings per share is based on the
post-tax profit for the year divided by the weighted average number
of shares in issue during the year.
Six months to 30.09.23 Six months to 30.09.22 Year ended 31.03.23
(unaudited) (unaudited) (audited)
Earnings Weighted Per Earnings Weighted Per Earnings Weighted Per
average share average share average share
number amount number amount number amount
of of of shares
shares shares
GBP000's 000's pence GBP000's 000's pence GBP000's 000's pence
(Loss)/earnings
attributable to
ordinary
shareholders
on continuing
operations
after tax (1,307) 67,722 (1.93) 1,324 67,722 1.96 1,008 67,722 1.49
Dilutive effect
of share
options - - - - 349 - - 918 -
--------- --------- -------- --------- --------- -------- --------- ---------- --------
Diluted
(loss)/earnings
per share (1,307) 67,722 (1.93) 1,324 68,071 1.95 1,008 68,640 1.47
========= ========= ======== ========= ========= ======== ========= ========== ========
The diluted EPS figure reflects the impact of historic grants of
share options and is calculated by reference to the number of
options granted for which the average share price for the year was
in excess of the option exercise price. As the Group's result for
the six months ended 30 September 2023 was loss, there was no
dilutive effect on the earnings per share in this period.
8. Taxation
The effective rate of the tax charge in the six months to 30
September 2023 is 93%, which is higher than the effective rate in
the six months to 30 September 2022 of 31%. This reflects
withholding taxes on dividends received during the period and the
impact on the tax charge of finalising prior year tax
computations.
9. Intangible assets
Group Goodwill Distribution Drug registrations, Total
rights patents and license
costs
GBP000's GBP000's GBP000's GBP000's
Cost
At 31 March 2022 17,930 407 23,292 41,629
Additions - - 1,300 1,300
--------- ------------- --------------------- ---------
At 30 September 2022 17,930 407 24,592 42,929
Additions - - 1,119 1,119
--------- ------------- --------------------- ---------
At 31 March 2023 17,930 407 25,711 44,048
Additions - - 1,536 1,536
--------- ------------- --------------------- ---------
At 30 September 2023 17,930 407 27,247 45,584
========= ============= ===================== =========
Amortisation
At 31 March 2022 - (158) (7,167) (7,325)
Charge for the period - (10) (536) (546)
--------- ------------- --------------------- ---------
At 30 September 2022 - (168) (7,703) (7,871)
Charge for the period - (10) (531) (541)
--------- ------------- --------------------- ---------
At 31 March 2023 - (178) (8,234) (8,412)
Charge for the period - (10) (523) (533)
--------- ------------- --------------------- ---------
At 30 September 2023 - (188) (8,757) (8,945)
========= ============= ===================== =========
Net Book Value
At 30 September 2023 17,930 219 18,490 36,639
========= ============= ===================== =========
At 31 March 2023 17,930 229 17,477 35,636
========= ============= ===================== =========
At 30 September 2022 17,930 239 16,889 35,058
========= ============= ===================== =========
At 31 March 2022 17,930 249 16,125 34,304
========= ============= ===================== =========
The amortisation and impairment charges are included within
administrative expenses in the income statement.
The Group continuously reviews the status of its research and
development activity, paying close attention to the likelihood of
technical success and the commercial viability of development
projects. In the period to September 2023 there were no indications
that any development projects for which costs have previously been
capitalised were unlikely to achieve technical success or
commercial viability.
10. Related party transactions
Interest and management charges from Parents to the other Group
companies
During the period Zhejiang ECO Animal Health Ltd paid dividends
to ECO Animal Health Ltd of GBP449,600 (RMB 3,916,015).
During the period Zhejiang ECO Biok Animal Health Products
Limited paid dividends of GBP225,029 (RMB 1,960,000) to ECO Animal
Health Group plc (H1 FY2023: GBP144,828) and GBP2,702,641 (RMB
23,540,000) to ECO Animal Health Limited (H1 FY2023:
GBP1,739,409).
This financial information was approved by the board on 26
November 2023.
This interim statement is available on the Group's website.
DIRECTORS AND OFFICERS Andrew Jones (Non-Executive Chairman)
David Hallas (Chief Executive)
Chris Wilks (Chief Financial Officer)
Tracey James (Non-Executive Director)
Frank Armstrong (Non-Executive Director)
REGISTERED OFFICE The Grange, 100 High Street, Southgate, Lond
on, N14 6BN
Tel: 020 8447 8899
COMPANY NUMBER 01818170
INFORMATION AT www.ecoanimalhealth.com
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END
IR BFBPTMTJTBIJ
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