REG - Eco Animal Health Gp - Results for the Six Months Ended 30 September 2024
28/11/2024 07:00
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RNS Number : 9269N Eco Animal Health Group PLC 28 November 2024
28 November 2024
ECO Animal Health Group plc
Results for the six months ended 30 September 2024
ECO Animal Health Group plc ("ECO", the "Company", or the "Group") (AIM: EAH),
a rapidly growing global animal health company with a portfolio of marketed
veterinary products and a maturing proprietary R&D pipeline, today
announces its Half Year Report for the six months ended 30 September 2024 in
line with the guidance provided in the 1 October 2024 Trading Update.
HIGHLIGHTS
Financial
· Group Revenue decreased 13% to £33.2 million (H1 2023: £38.0
million)
o Revenues on a constant currency basis decreased 9%
· Gross margins 40.3% (H1 2023: 40.8%)
· Adjusted EBITDA at £0.4 million (H1 2023: £0.7 million)
· Loss per share of 2.50p (H1 2023: loss per share: 1.93p)
· Cash generated by operations before working capital increased to
£0.8 million (H1 2023: £0.7 million)
· Cash balances decreased to £18.3 million (30 September 2023
£20.6 million)
Operational
· Revenue in USA and Canada increased by 5% to £8.6 million (H1
2023: £8.2 million)
· Revenue in Latin America increased by 8% to £8.3 million (H1
2023: £7.7 million)
· Improving pork prices and better producer profitability improved
revenues during August and September 2024
· Rigorous control of input costs has supported gross margins at
about the same level as prior year
· New marketing approval for Aivlosin® in Paraguay
· Late-stage Mycoplasma vaccine projects for poultry continued to
progress towards regulatory submission according to plan, with launches
planned for 2025
· Disposal of non-core equine anti-parasitic product for £1.0
million
David Hallas, Chief Executive Officer of ECO Animal Health Group plc,
commented: "We are encouraged to see an improving revenue performance as we
head into the second half of our financial year. As outlined in our trading
statement in October, a combination of low disease incidence particularly in
China and Southeast Asia, combined with currency headwinds impacted our
performance over the summer months. Since then, the Group has seen demand
accelerate with 82% of the market consensus* revenue now covered by
year-to-date revenue, order books and run rate from the Group's stocking
locations. ECO's trading performance is typically second-half weighted and we
have observed renewed strength in seasonal trading patterns. This, supported
by rigorous cost control, provides confidence that full-year profitability
will be in line with market consensus*.
"Meanwhile, ECO maintains its targeted focus on its dual future strategy of
continuing to support the Aivlosin® franchise and targeted investment in the
R&D pipeline, the engine of future growth. The Company believes that over
time these investments will generate significant value for shareholders. ECO
is on track and expected to deliver value from the R&D pipeline in the
next 12 months and continue over the next decade."
* Market consensus for the year ending 31 March 2025 is
understood to be revenue of £85 million and EBITDA of £7.2 million
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)
ICR Healthcare
Mary-Jane Elliott 020 3934 6630
Jessica Hodgson
Singer Capital Markets (Nominated Adviser & Joint Broker)
Phil Davies 020 7496 3000
Sam Butcher
Investec (Joint Broker)
Gary Clarence 020 7597 5970
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 2024
The Board is pleased to present the results for the Group for the six months
ended 30 September 2024 ("H1 2024"). During the first half of the financial
year, the Group experienced continuing sales momentum in key territories
despite currency headwinds. In China and Southeast Asia our results were
impacted by a slow start to the Summer months in China and the loss of a key
customer in Thailand. The Group expects that the typical pattern of demand
will result in a significantly stronger second half to our year. The Group's
revenue since September 2024, current order books and run rate of sales from
the Group's stocking locations provides 82% (H1 2023 - 90%) visibility of full
year consensus market forecast revenue*. Control of input costs has supported
gross margins at about the same level as prior year and administrative costs
have been controlled such that our net profitability is only marginally below.
We increased our investment in our promising R&D pipeline and we continued
to grow our commercial footprint, gaining a new marketing authorisation for
our flagship product Aivlosin® in Paraguay demonstrating the continued
strength of the Aivlosin® franchise.
* Current consensus figures for the year ending 31
March 2025 are £85m of revenue and £7.2m Adjusted EBITDA
Financial Performance
Group revenue was 13% lower in H1 2024 at £33.2 million (H1 2023: £38.0
million). China and Japan revenue of £8.2 million represented 25% of Group
revenue (H1 2023: 26%). On a constant currency basis, the Group's revenue in
H1 2024 was £34.4 million; a decrease of 10% compared with H1 2023. The
principal currency effects were from a weaker US Dollar and Chinese RMB
compared with Sterling during the period.
The gross margin in H1 2024 was 40.3% (H1 2023: 40.8%). Gross margins were
impacted by exchange rate losses but offset by savings in cost of sales. The
Gross margin movement may be analysed as follows:
%
Gross margin in the six months ended 30 September 2023 40.8
F/x impact on revenue (2.2)
F/x impact on cost of sales 1.3
Reduction in API costs 1.9
Mix, other (1.5)
Gross margin in the six months ended 30 September 2024 40.3
Administrative expenses excluding foreign exchange gains at £13.4 million
were 4.5% lower than the comparative period last year (H1 2023: £14.0
million). This arose in the main from decreased personnel costs (lower bonus
accruals, vacancies and f/x savings in US Dollar paid employees). Legal, audit
and professional costs were 34% lower than in the prior period due to better
credit control leading to lower expected credit loss provisions.
Research and development ("R&D") expense and amounts capitalised were in
aggregate a cash investment of £4.1 million (H1 2023: £3.6 million). This
represented 12% of revenue generated in the period (H1 2023: 9%). R&D
expensed to the P&L was £2.4 million (H1 2023: £2.1 million); this
represented progress in the mid-stage and early pipeline with a number of key
proof of concept trials showing good early results. The late-stage Mycoplasma
vaccine projects for poultry continued to progress towards regulatory
submission according to plan.
Earnings before interest, tax, depreciation, amortisation and impairment,
share based payments and foreign exchange movements ("Adjusted EBITDA") were
£0.4 million (H1 2023: £0.7 million). This reduction arose as a direct
consequence of the lower revenue offset by lower administrative expenses.
As previously announced the Group sold its licences to market an
anti-parasitic equine product to its manufacturing partner in Italy. This
sale resulted in a gain of £1.0 million. This gain is treated as
exceptional and not part of the Group's reported Adjusted EBITDA.
Cash generated from operations was £nil (H1 2023: £4.8 million). The
underlying cash profits in the period (operating cash flows before movements
in working capital) remained strong at £0.8 million (H1 2023: £0.7 million).
The unwind of year end trade payables resulted in an adverse movement in
working capital. Inventory remained in line with the year end level and
trade receivable showed strong post year end recovery (generating £5.3m
cash). Cash balances at 30 September 2024 can be analysed as follows:
At 30 September
2024 2023
(£'m) (£'m)
Held in UK 6.9 6.1
Held in non-China subsidiaries 1.2 2.9
Held in China 100% owned subsidiary 1.5 1.5
Held in China 51% owned subsidiary 8.7 10.1
18.3 20.6
The Group repatriates cash from China by annual dividend declarations; 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 June 2024, two dividends totalling £3.0 million (H1 2023: £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 £10.0 million revolving credit
facility. These facilities expire on 30 June 2026 and were undrawn as at 30
September 2024.
Basic loss per share in the six months ended 30 September 2024 was 2.50p (H1
2023: loss 1.93p).
Business Performance
The geographical analysis of the Group's revenue in the six months ended 30
September 2024 compared to the prior period in 2023 and the full year ended 31
March 2024 was as follows:
Revenue Summary 6 months ended 30 September Year ended
2024 2023 H1 24 vs H1 23 31 March 2024
(£'m) (£'m) % Change (£'m)
China and Japan 8.2 9.7 (15%) 24.7
North America (USA and Canada) 8.6 8.2 5% 18.5
South and Southeast Asia 5.1 7.8 (35%) 17.4
Latin America 8.3 7.7 8% 19.9
Europe 2.1 3.4 (38%) 6.5
Rest of World and UK 0.9 1.2 (25%) 2.4
Total Group 33.2 38.0 (13%) 89.4
Group revenue decreased by 13% to £33.2 million (H1 2023: £38.0 million). On
a constant currency basis the decrease in revenue was 9% in H1 2024 compared
with H1 2023. The main components of this overall revenue reduction were China
(a reduction of £2.3 million - 27%), Mexico (a reduction of £1.3 million -
44%), Europe (a reduction of £1.3 million - 38%) and South and Southeast Asia
(a reduction of £2.7 million - 35%). Offsetting these falls were gains in
Japan (£0.8 million), USA and Canada (£0.4 million), Brazil and other Latin
America countries (£1.9 million).
The lower revenue performance in China was due in the main to low disease
incidence during the early summer months of 2024 compared with the equivalent
period in 2023 but stronger pork prices and better producer profitability
improved revenues during August and September 2024. It is expected that these
stronger performances will result in a significantly stronger H2 in China.
The comparative reduction in Mexico revenue in H1 2024 compared with H1 2023
was due to 2023 being particularly strong - inventory shortages in January to
March 2023 resulted in strong distributor demand in the first few months of H1
2023.
The reduction in Europe revenue was mostly due to the withdrawal from Russia
(£0.5 million) and the withdrawal from sale of a loss-making product sold in
Ireland (£0.5 million). We continue to expect a new licensing approval for
Aivlosin® (poultry) in the Kingdom of Saudi Arabia.
The reduction in Southeast Asia arose mainly due to the loss of a key Thailand
customer and the change in the distributor in Vietnam resulting in a slow
period until the new distributor is appointed. Furthermore, regulatory
approval delays in Philippines and Bangladesh have also held this geographical
sector back.
The USA, Canada and Japan have traded well due to market share gains, new
customer wins and overall market growth.
The macro-economic outlook for the production animal health market remains
strong. According to Stonehaven Consulting, pork and poultry consumption is
corelated to population growth. Over the past 25 years, consumption of pork
and poultry products increased by 70%, rising from 157kTon to 268kTon,
compared to population growth of 34% over the same period. With nearly 2
billion more people expected to require more food over the next 25 years,
demand for animal protein is set to grow.
Stonehaven Consulting also assessed the animal health product market,
revealing a 5-year Compound Annual Growth Rate ("CAGR") of 5.8% in medicated
feed additives, 0% for anti-infectives, and 6.4% for vaccines. Notably the
disease prevention market, particularly vaccines, is predicted to continue
expanding at a CAGR of 3.1% over the next seven years compared with relatively
modest growth rate of 1.2% to 1.8% per annum in the disease treatment markets.
This further underpins the Group's strategic expansion into vaccines and
biologicals whilst recognising that the market remains robust for disease
treatment.
Accelerated growth through R&D investment
The Board continues to believe that the R&D portfolio is extremely
valuable and will create long-term value for shareholders. The products in our
pipeline are highly complementary to our successful existing Aivlosin® based
business, addressing the same markets, producers, distributors and diseases.
As revenue and profits are generated from these new products the resulting
cashflow will be applied in a progressive way to dividend distribution further
enhancing shareholder value.
The Group's promising pipeline of new products has continued development
according to plan with £4.1 million (H1 2023: £3.6 million) spent during the
period. We plan to hold a Capital Markets Day ("CMD") during the final quarter
of our financial year; this will follow up on the developments since our last
CMD held in November 2023 and provide a status summary of the R&D
portfolio.
Preparation for manufacture of the Group's pair of Mycoplasma vaccines for
poultry involving technology transfer from the Group's own research lab to the
appointed contract manufacturing organisation has been moving ahead and proof
of concept trials have been initiated for the necrotic enteritis vaccine for
poultry.
Strategy
The Group's strategy is to protect and expand the flagship branded
anti-microbial Aivlosin® while making targeted investment in our R&D
pipeline of targeted new product development. Our strategy review has endorsed
this vision, objectives and pathway. The value in Aivlosin® will be
reinforced through further investment in technical and marketing support,
while we continue to invest in our valuable R&D pipeline to progress to
commercialisation.
Specific priorities have been identified to bring our near to market projects
to completion, preparations for their launch are well underway and business
partners identified. Defence against generic competition within the Aivlosin®
business arena is robust and reinforced with sound technical and marketing
initiatives.
The Group is actively pursuing opportunities to collaborate through licencing
in or buying new products and licencing out late and mid stage R&D
programmes.
Our values
Our values, the "3 C's" of Curiosity, Commitment and Collaboration are, we
believe, the critical success factors which will drive the Group towards
achieving its vision.
People
Our people, selected from the best in the animal health industry ensures that
the Group's ambitions are achievable. The alignment of personal values and
the Group's values -are central to employee engagement. The Group is proud of
its social and charitable initiatives, particularly as many of these are
employee led. The Board wishes to thank our people for their continuing
diligence, active engagement and effort throughout the period.
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. 82% 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. The Board will continue during the
remainder of this financial year to invest in our exciting new product
pipeline and pursue options to realise value.
The Board looks forward with cautious optimism to reporting the full year
numbers in line with revised market expectations.
Dr Andrew
Jones
David Hallas
Chairman
Chief Executive Officer
CONSOLIDATED INCOME STATEMENT
Six months to 30.09.24 (unaudited) Six months to 30.09.23 (unaudited) Year ended 31.03.24 (audited)
Notes £000's £000's £000's
Revenue 6 33,182 38,009 89,422
Cost of sales (19,818) (22,508) (51,739)
Gross profit 13,364 15,501 37,683
40.3% 40.8% 42.1%
Administrative expenses (13,388) (14,016) (29,394)
Research and development expenses (2,350) (2,098) (4,169)
Other income 148 29 66
Exceptional items 7 1,046 - (651)
Operating (loss)/profit (1,180) (584) 3,535
Share of profit of associate 40 47 53
Finance income 59 76 150
(Loss)/profit before financing and income tax (1,081) (461) 3,738
Finance costs (336) (166) (764)
(Loss)/profit before income tax (1,417) (626) 2,974
Income tax charge 9 (343) (580) (966)
(Loss)/profit for the year (1,760) (1,206) 2,008
(Loss)/profit attributable to:
Owners of the parent Company (1,697) (1,307) 1,048
Non-controlling interest (63) 101 960
(Loss)/profit for the year (1,760) (1,206) 2,008
(Loss)/earnings per share (pence) 8 (2.50) (1.93) 1.55
Diluted (loss)/earnings per share (pence) 8 (2.50) (1.93) 1.52
Adjusted EBITDA (Non-GAAP measure) 6 445 705 8,046
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Six months to 30.09.24 (unaudited) Six months to 30.09.23 (unaudited) Year ended 31.03.24 (audited)
£000's £000's £000's
(Loss)/profit for the year (1,760) (1,206) 2,008
Other comprehensive loss:
Items that may be reclassified to profit or loss:
Foreign currency translation differences (240) (1,285) (1,828)
Items that will not be reclassified to profit or loss:
Remeasurement of defined benefit pension schemes - - 43
Other comprehensive loss for the year (240) (1,285) (1,785)
Total comprehensive (loss)/income for the year (2,000) (2,491) 223
Attributable to:
Owners of the parent Company (1,684) (2,070) 1
Non-controlling interest (316) (421) 222
(2,000) (2,491) 223
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 at 31 March 2023 3,381 63,319 657 106 1,878 13,929 83,270 12,281 95,551
Profit for the year - - - - - 1,048 1,048 960 2,008
Other comprehensive income:
Foreign currency differences - - - - (1,090) - (1,090) (738) (1,828)
Actuarial gains on pension - - - - - 43 43 - 43
scheme assets
Total comprehensive income for the year - - - - (1,090) 1,091 1 222 223
Transactions with owners:
Issue of shares in the year 6 - - - - - 6 - 6
Revaluation reserve - - (386) - - 386 - - 0
Share-based payments - - - - - 413 413 - 413
Dividends - - - - - - - (2,813) (2,813)
Transactions with owners 6 - (386) - - 799 419 (2,813) (2,394)
Balance at 31 March 2024 3,387 63,319 271 106 788 15,819 83,690 9,690 93,380
Loss for the period - - - - - (1,697) (1,697) (63) (1,760)
Other comprehensive income:
Foreign currency differences - - - - 13 - 13 (253) (240)
Total comprehensive income for the period - - - - 13 (1,697) (1,684) (316) (2,000)
Transactions with owners:
Share-based payments - - - - - 186 186 - 186
Dividends - - - - - - - (1,065) (1,065)
Transactions with owners - - - - - 186 186 (1,065) (879)
Balance at 30 September 2024 3,387 63,319 271 106 801 14,308 82,192 8,309 90,501
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 FINANCIAL POSITION
Group
As at 30.09.24 (unaudited) As at 30.09.23 (unaudited) As at 31.03.24 (audited)
Notes £000's £000's £000's
Non-current assets
Intangible assets 10 39,561 36,639 38,351
Property, plant and equipment 4,296 5,834 4,802
Right-of-use assets 3,274 3,857 3,672
Investments 310 274 268
Deferred tax assets 1,316 579 1,437
Total non-current assets 48,757 47,183 48,530
Current assets
Inventories 16,745 19,497 16,955
Trade and other receivables 26,778 25,748 32,175
Income tax recoverable 991 1,647 2,687
Other taxes and social security 160 461 526
Cash and cash equivalents 18,298 20,577 22,374
Assets held for sale - 230 18
Total current assets 62,972 68,160 74,735
TOTAL ASSETS 111,729 115,343 123,265
Current Liabilities
Trade and other payables (10,826) (15,020) (17,353)
Provisions (5,143) (5,301) (5,859)
Income tax payable 30 (116) (687)
Other taxes and social security payable (306) (151) (632)
Lease liabilities (574) (934) (646)
Dividends (50) (50) (50)
Total current liabilities (16,869) (21,572) (25,227)
Net current assets 46,103 46,588 49,508
Total assets less current liabilities 94,860 93,771 98,038
Non-current liabilities
Deferred tax liabilities (1,279) - (1,279)
Lease liabilities (3,080) (3,204) (3,379)
TOTAL ASSETS LESS TOTAL LIABILITIES 90,501 90,567 93,380
EQUITY
Issued share capital 3,387 3,382 3,387
Share premium account 63,319 63,319 63,319
Revaluation reserve 271 657 271
Other reserves 106 106 106
Foreign exchange reserve 801 1,115 788
Retained earnings 14,308 12,942 15,819
Shareholders' funds 82,192 81,521 83,690
Non-controlling interests 8,309 9,046 9,690
TOTAL EQUITY 90,501 90,567 93,380
Consolidated Cash Flow Statement
Group
Six months to 30.09.24 (unaudited) Six months to 30.09.23 (unaudited) Year ended 31.03.24 (audited)
£000's £000's £000's
Cash flows from operating activities
(Loss)/Profit before income tax (1,417) (627) 2,974
Adjustment for:
Finance income (59) (76) (150)
Finance cost 336 166 764
Foreign exchange (gain)/loss 1,158 (219) 572
Depreciation 451 452 958
Amortisation of right-of-use assets 316 203 683
Amortisation of intangible assets 560 533 1,154
Impairment of right-of-use assets - - 80
Share of associate's results (40) (47) (53)
Share based payment charge 186 320 413
Exceptional items (736) - 306
Operating cash flows before movements in working capital 755 705 7,701
(Increase)/decrease in inventory (153) 2,535 4,741
Decrease/(increase) in receivables 5,298 2,349 (4,961)
(Decrease)/increase in payables (5,571) (793) 2,456
(Decrease)/increase in provision and pensions (333) 16 554
Cash (used in)/generated from operations (4) 4,812 10,491
Finance costs (130) (6) (473)
Income tax 627 (135) (601)
Net cash from/(used in) operations 493 4,671 9,417
Cash flows from investing activities
Acquisition of property, plant and equipment (100) (386) (502)
Proceeds from sale of property, plant and equipment - - 1,058
Purchase of intangibles (1,769) (1,536) (4,122)
Proceeds from sale of horse paste business 380 - -
Finance income 59 76 150
Net cash (used in)/from investing activities (1,430) (1,846) (3,416)
Cash flows from financing activities
Proceeds from issue of share capital - 1 6
Interest paid on lease liabilities (206) (160) (291)
Principal paid on lease liabilities (282) (112) (593)
Dividends paid (1,065) (2,813) (2,813)
Net cash used in financing activities (1,553) (3,084) (3,691)
Net (decrease)/increase in cash and cash equivalents (2,490) (259) 2,310
Foreign exchange movements (1,586) (822) (1,594)
Balance at the beginning of the period 22,374 21,658 21,658
Balance at the end of the period 18,298 20,577 22,374
NOTES TO THE PRELIMINARY RESULTS FOR THE SIX MONTHS TO 30 SEPTEMBER 2024
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 2024 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 2024.
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 2024. 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 2024.
As set out in the consolidated financial statements of the Group for the year
ended 31 March 2024, new standards and amendments came into effect during the
financial year. These standards and amendments do not have a material impact.
4. Revenue
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 2024. The key exposures identified at 31 March 2024 were: a high
dependency on a single product, potential threat from generic producers,
multiple new product launches in a single year, quality risk regarding new
biologicals manufacturing, foreign currency exchange rates, disease impact on
growth, the risk that tech transfer from R&D to manufacture fails or is
delayed, and recession in major regions of the world leading to reduced demand
for the Group's products. These risks 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
Southeast 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, Amortisation and exceptional items
adjusted to exclude share-based payments and impairment ("Adjusted EBITDA" and
is referred to in the table below). Adjusted EBITDA is a non-GAAP measure used
by the business to assess the underlying business performance.
Corporate China & Japan North America S & SE Asia Latin America Europe Rest of World Total
/UK
£000's £000's £000's £000's £000's £000's £000's £000's
Six months to 30.09.24 (unaudited)
Sale of goods 583 8,164 8,594 5,079 8,334 2,145 283 33,182
Royalties - - - - - - - -
Revenue from external customers 583 8,164 8,594 5,079 8,334 2,145 283 33,182
Adjusted EBITDA (7,856) 1,827 2,384 1,723 540 531 138 (713)
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
Year ended 31 March 2024
Sale of goods 925 24,656 18,480 17,440 19,891 6,452 1,529 89,373
Royalties - - - - - - 49 49
Revenue from external customers 925 24,656 18,480 17,440 19,891 6,452 1,578 89,422
Adjusted EBITDA (17,281) 7,007 7,229 5,612 3,578 488 842 7,474
A reconciliation of Adjusted EBITDA for reportable segments to profit from
operating activities is provided as follows:
Six months to 30.09.24 (unaudited) Six months to 30.09.23 (unaudited) Year ended 31.03.24 (audited)
£000's £000's £000's
Adjusted EBITDA for reportable segments (713) 925 7,474
Depreciation (451) (452) (958)
Amortisation of right-of-use assets (316) (204) (683)
Amortisation (560) (533) (1,154)
Impairment of right-of-use assets - - (80)
Exceptional items 1,046 - (651)
Share-based payment charges (186) (320) (413)
Profit from operating activities (1,180) (584) 3,535
Foreign exchange differences 1,158 (220) 572
Adjusted EBITDA for the Group 445 705 8,046
7. Exceptional items
Six months to 30.09.24 (unaudited) Six months to 30.09.23 (unaudited) Year ended 31.03.24 (audited)
£000's £000's £000's
Cessation of distribution business - - (933)
Profit on disposal of properties - - 282
Disposal of equine anti parasitic product line 1,046 - -
1,046 - (651)
8. (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 30.09.24 (unaudited) Six months to 30.09.23 (unaudited) Year ended 31.03.24 (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
Earnings attributable to ordinary shareholders on continuing operations after (1,697) 67,745 (2.50) (1,307) 67,722 (1.93) 1,048 67,745 1.55
tax
Dilutive effect of share options - - - - - - - 1,335 -
Diluted earnings per share (1,697) 67,745 (2.50) (1,307) 67,722 (1.93) 1,048 69,080 1.52
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 2024 was loss,
there was no dilutive effect on the earnings per share in this period.
9. Taxation
The effective rate of the tax charge in the six months to 30 September 2024 is
minus 22% which is lower than the effective rate in the six months to 30
September 2023 of 93%. The effective rate reflects the impact of tax losses
incurred without recognising a corresponding deferred tax asset and of
withholding taxes suffered on dividends received during the period.
10. Intangible assets
Group Goodwill Distribution rights Drug registrations, patents and licence costs Total
£000's £000's £000's £000's
Cost
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
At 31 March 2023 - - 2,567 2,567
Disposal - - (268) (268)
At 31 March 2024 17,930 407 29,546 47,883
Additions - - 1,770 1,770
At 30 September 2024 17,930 407 31,316 49,653
Amortisation
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)
Charge for the period - (10) (577) (587)
At 31 March 2024 - (198) (9,334) (9,532)
Charge for the period - (10) (550) (560)
At 30 September 2024 - (208) (9,884) (10,092)
Net book value
At 30 September 2024 17,930 199 21,432 39,561
At 31 March 2024 17,930 209 20,212 38,351
At 30 September 2023 17,930 219 18,490 36,639
At 31 March 2023 17,930 229 17,477 35,636
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
2024 there were no indications that any development projects for which costs
have previously been capitalised were unlikely to achieve technical success or
commercial viability.
11. Related party transactions
Interest and management charges from Parent to the other Group companies
During the period Zhejiang ECO Animal Health Ltd paid dividends of £1,860,759
(RMB 17,118,983) to ECO Animal Health Ltd (H1 2023: £449,600).
During the period Zhejiang ECO Biok Animal Health Products Limited paid
dividends of £85,217 (RMB 784,000) to ECO Animal Health Group plc (H1 2023:
£225,029) and £1,023,478 (RMB 9,416,000) to ECO Animal Health Limited (H1
2023: £2,702,641).
This financial information was approved by the Board on 27 November 2024.
This interim statement is available on the Group's website.
DIRECTORS AND OFFICERS Dr Andrew Jones (Non-Executive Chairman)
David Hallas (Chief Executive Officer)
Chris Wilks (Chief Financial Officer)
Tracey James (Non-Executive Director)
Dr Frank Armstrong (Non-Executive Director)
Joachim Hasenmaier (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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