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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 £38.0 million (H1 2022: £34.9
million)
o Revenues on a constant currency basis increased 15%
· Gross margins 41% (H1 2022: 45%)
· Adjusted EBITDA at £0.7 million (H1 2022: £1.7 million)
· Loss per share of 1.93p (H1 2022: earnings per share: 1.96p)
· Cash generated by operations increased to £4.8m (H1 2022:
£3.0m)
· Cash balances increased to £20.6m (30 September 2022 £12.9m)
Operational
· Revenue in China and Japan increased by 14% to £9.7 million (H1
2022: £8.5 million)
· Revenue in USA and Canada increased by 26% to £8.2 million (H1
2022: £6.5 million)
· US FDA and Veterinary Drugs Directorate in Canada approval received
for use of Aivlosin® 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
020 8447 8899
ECO Animal Health Group plc
David Hallas (Chief Executive Officer)
Christopher Wilks (Chief Financial Officer)
IFC Advisory
Graham Herring 020 3934 6630
Zach Cohen
Singer Capital Markets (Nominated Adviser & Joint Broker)
Philip Davies 020 7496 3000
Sam Butcher
Investec (Joint Broker)
Gary Clarence 020 7597 5970
Carlo Spingardi
Lydia Zychowska
Equity Development
Hannah Crowe 020 7065 2692
Matt Evans
CHAIRMAN AND CHIEF EXECUTIVE'S COMBINED STATEMENT
FOR THE SIX MONTHS ENDED 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 £88.3m of revenue and £7.7m Adjusted EBITDA
Financial Performance
Group revenue was 9% higher in H1 2023 at £38.0 million (H1 2022: £34.9
million). China and Japan revenue of £9.7 million represented 26% of Group
revenue (H1 2022: 24%). On a constant currency basis the Group's revenue in H1
2023 was £40.1 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 £28.3 million (H1 2022: £26.4 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 £14.2 million
were 13% higher than the comparative period last year (H2 2022: £12.6
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
£3.6 million (H1 2022: £4.2 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
£0.7 million (H1 2022: £1.7 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 £4.8 million (H1 2022: £3.0 million).
Continuing close management of working capital - in particular inventories and
receivables - has resulted in a cash balance of £20.6 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
(£'m) (£'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 £3.4 million were received from
China.
The Group's committed banking facilities remain at £15.0 million, being a
£5.0 million overdraft facility and a £10 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 £2.6 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
2023 2022 H1 23 vs H1 22 31 March 2023
(£'m) (£'m) % Change (£'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 £38.0 million (H1 2022: £34.9 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® 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® 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 £2.9 million (H1 2022:
£2.2 million). Thailand remained the largest single market for the Group's
products in this region with revenue increasing to £3.6 million (H1 2022:
£3.5 million), supported with good sales into Bangladesh, Pakistan, Malaysia
and Vietnam of £1.2 million (H1 2022: £1.6 million). Revenue in Latin
America decreased 3% to £7.7 million (H1 2022: £7.9 million), with Brazil
representing the largest market at £4.2 million (H1 2022: £4.2 million).
Brazil's exports of pork to China continued during the period providing strong
demand for Aivlosin®. Mexico revenue in H1 2023 was £0.3 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 £0.5
million higher than H1 2022. Within the continent, Spain remained the largest
single market with revenues of £0.8 million in the six months ended 30
September 2023 (H1 2022: £1.0 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 £3.6 million (H1 2022:
£4.2 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®
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® 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 £88.3m of revenue and £7.7m Adjusted EBITDA
Dr Andrew
Jones
David Hallas
Non-executive
Chairman
Chief Executive Officer
CONSOLIDATED INCOME STATEMENT
Six months to 30.09.23 (unaudited) Six months to 30.09.22 (unaudited) Year ended 31.03.23 (audited)
Notes £000's £000's £000'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
Diluted (loss)/earnings per share (pence) 7 (1.93) 1.95 1.47
Adjusted EBITDA (Non-GAAP measure) 6 705 1,670 7,235
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Six months to 30.09.23 (unaudited) Six months to 30.09.22 (unaudited) Year ended 31.03.23 (audited)
£000's £000's £000'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 Capital Share Premium Revaluation Reserve Other Reserves Foreign Exchange Reserve Retained Earnings Total Non-controlling Interest Total Equity
£000's £000's £000's £000's £000's £000's £000's £000's £000'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 - - - - - 100 100 - 100
scheme assets
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 Capital Share Premium Revaluation Reserve Other Reserves Foreign Exchange Reserve Retained Earnings Total Non-controlling Interest Total Equity
£000's £000's £000's £000's £000's £000's £000's £000's £000'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 - - - - - 24 24 - 24
scheme assets
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 (unaudited) As at 30.09.22 (unaudited) As at 31.03.23 (audited)
Notes £000's £000's £000'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 to 30.09.23 (unaudited) Six months to 30.09.22 (unaudited) Year ended 31.03.23 (audited)
£000's £000's £000'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, London, 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 & Japan North America S & SE Asia Latin America Europe Rest of World Total
/U.K.
£000's £000's £000's £000's £000's £000's £000's £000'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 to 30.09.23 (unaudited) Six months to 30.09.22 (unaudited) Year ended 31.03.23 (audited)
£000's £000's £000'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 (unaudited) Six months to 30.09.22 (unaudited) Year ended 31.03.23 (audited)
Earnings Weighted average number of shares Per share amount Earnings Weighted average number of shares Per share amount Earnings Weighted average number of shares Per share amount
£000's 000's pence £000's 000's pence £000's 000's pence
(Loss)/earnings attributable to ordinary shareholders on continuing operations (1,307) 67,722 (1.93) 1,324 67,722 1.96 1,008 67,722 1.49
after tax
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 rights Drug registrations, patents and license costs Total
£000's £000's £000's £000'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 £449,600 (RMB 3,916,015).
During the period Zhejiang ECO Biok Animal Health Products Limited paid
dividends of £225,029 (RMB 1,960,000) to ECO Animal Health Group plc (H1
FY2023: £144,828) and £2,702,641 (RMB 23,540,000) to ECO Animal Health
Limited (H1 FY2023: £1,739,409).
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, London, N14 6BN
Tel: 020 8447 8899
COMPANY NUMBER 01818170
INFORMATION AT www.ecoanimalhealth.com
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