REG - Eco Animal Health Gp - Notice of Results and Trading Update

ECO Animal HealthAnnouncement

08/08/2022 07:00

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RNS Number : 1701V  Eco Animal Health Group PLC  08 August 2022

8 August 2022

ECO Animal Health Group plc

(''ECO", the "Company" or the "ECO Group") (AIM: EAH)

Notice of Results and Trading Update

ECO Animal Health Group plc, a leader in the development, registration and
marketing of pharmaceutical products for global animal health markets, is
pleased to provide an update to its expected results for the year ended 31
March 2022.

The audit for the year ended 31 March 2022 is proceeding to its conclusion and
it is expected that the results will be released on or around the 18(th)
August 2022.

Overall, the Group expects to report revenue for the year ended 31 March 2022
in excess of £82m and EBITDA of approximately £6.5m, which includes an
exchange rate gain of £1m and the effect of the items referred to below.

It has recently come to our attention that certain aspects of a sales tax
related to imported products in a foreign jurisdiction where we operate
through a subsidiary company, might have been applicable. ECO has been
importing an increasing volume of product into this country in recent years.
This issue is at an early stage and no tax payment has yet been determined.
However, it is likely that a substantial tax settlement could be required in
due course and an estimated sum of £2.5million has been provided for in our
results for the year ended 31 March 2022. The sum has been apportioned to
appropriate years and charged to Cost of Sales within the Income statement.
The impact of this item in the year ended 31 March 2022 was a reduction in
EBITDA of £1m.

In addition, certain development costs amounting to £0.3m which were
initially capitalised but which on subsequent review were judged to not now
meet the required specific criteria for capitalisation have resulted in a
higher than expected charge for R&D in the consolidated income
statement.

The first quarter of financial year 2021/22 saw ECO deliver record China
revenue due to a favourable combination of industry structural changes and
restocking of the pig herd after the ASF epidemic together with changes in
regulations for use of antibiotics in feed created exceptional levels of
demand and sales opportunity for Aivlosin®.  China revenue in the first
quarter of financial year 2022/23 was significantly below that of the record
levels recorded in the prior year.  This is a direct consequence of
continuing low profitability and poor cashflow within major producers.
However, gross margins in China were strong in the first quarter, reflecting
the particular mix of customers.  Elsewhere, Rest of World revenue grew
strongly compared with the first quarter ended 30 June 2021.

A recent Improvement in pork pricing in China provides us with some optimism
for the rest of the year and the Board continues to review overheads and
capital expenditure levels in relation to trading trends.

 

The information contained within this announcement is deemed by the Group to
constitute inside information as stipulated under the Market Abuse Regulations
(EU) No. 596/2014 ("MAR") as it forms part of United Kingdom domestic law by
virtue of the European Union (Withdrawal) Act 2018. Upon the publication of
this announcement via a Regulatory Information Service ("RIS"), this inside
information is now considered to be in the public domain.

For further information please contact:

 ECO Animal Health Group plc                                     020 8447 8899

 David Hallas (CEO)

 Christopher Wilks (CFO)

 IFC Advisory                                                    020 3934 6630

 Graham Herring

 Zach Cohen

 Singer Capital Markets (Nominated Adviser & Joint Broker)       020 7496 3000

 Mark Taylor

 George Tzimas

 Investec (Joint Broker)                                         020 7597 5970

 Gary Clarence

 Brough Ransom

 Carlo Spingardi

 Peel Hunt LLP (Joint Broker)                                    020 7418 8900

 Dr Christopher Golden

 James Steel

 

 Equity Development  020 7065 2692

 Hannah Crowe

 Matt Evans

 

 About ECO Animal Health

ECO Animal Health Group plc researches, develops and commercialises products
for livestock. Our business strategy is to generate shareholder value by
achieving the maximum sales potential from the existing product portfolio
whilst investing in Research and Development ("R&D") for new products,
particularly vaccines, and seeking to in-license new products.

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