TIDMEAH
RNS Number : 5234T
Eco Animal Health Group PLC
25 November 2021
ECO Animal Health Group plc ("ECO")
(AIM: EAH)
Results for the six months ended 30 September 2021
HIGHLIGHTS
Financials
-- Sales at GBP38.5m (H1 2020: GBP42.5m)
-- EBITDA before exceptional impairment at GBP3.8m (H1 2020 restated*: GBP6.7m)
-- Profit before taxation of GBP0.9m (H1 2020 restated profit*: GBP4.8m)
-- Loss per share of 0.21p (H1 2020: restated Earnings per share*: 3.63p)
-- Cash generated by operations of GBP6.1m (H1 2020 restated*: GBP3.5m)
* Prior period figures have been restated to reflect adjustments
arising from the March 2021 audit
Operations
-- Growth in Southeast Asia markets (representing 16% of sales) with revenues up 50%
-- Encouraging vaccine trial results increased focus in the
R&D programme and resulted in the impairment of one non-core
R&D project
-- Significant decline in revenues from China (representing 41%
of total revenues; H1 2020: 49%) arising from sharp fall in pig
prices
-- Excluding China and Japan revenues overall increased by 5%
-- Expectation for China pork industry recovery in H2
Dr Andrew Jones, Non-executive Chairman of ECO Animal Health
Group plc, commented:
"This set of results has clearly been impacted by the dramatic
fall in the pig price in China which had a significant impact on
the industry and losses of up to US$200 per head. This resulted in
a significant decline in the demand for Aivlosin(R). However, we
are pleased to note that China revenues are at pre-ASF levels and
that there is continuing revenue growth in aggregate elsewhere. In
addition, we are excited to see the positive results of key
technical trials in some of our vaccine developments providing us
with confidence to continue our investment in these key projects.
We look forward to providing more detail on some of our new product
development initiatives in the coming months as well as anticipated
approvals. The Directors regard the situation in China as cyclical
and one which is expected to reverse and as a result, we are
confident and excited about the medium and longer term prospects
for the business"
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"). Upon the
publication of this announcement via a Regulatory Information
Service ("RIS"), this inside information is now considered to be in
the public domain.
Contacts:
ECO Animal Health Group plc
Marc Loomes (CEO)
Christopher Wilks (CFO)
Andrew Jones (Chairman) 020 8447 8899
IFC Advisory
Graham Herring
Zach Cohen 020 3934 6630
Singer Capital Markets (Nominated Adviser
& Joint Broker)
Mark Taylor
George Tzimas 020 7496 3000
Peel Hunt LLP (Joint Broker)
James Steel
Dr Christopher Golden 020 7418 8900
ECO Animal Health Group plc ("ECO" or "the Group") 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.
Chairman's statement
I am pleased to report that despite the continuing challenges of
travel restrictions presented by Covid-19, the Group outside of
China continues to grow in most of our major markets compared to
pre-pandemic levels. Unfortunately, the six months ended 30
September 2021 represented a period of much lower pork prices in
China and this has had a consequent and significant impact on the
Group's revenues and profitability.
Financial Performance
Revenue was 9% lower in the first six months to 30 September
2021 at GBP38.5 million (30 September 2020: GBP42.5 million),
driven by a sharp decline in revenues from China. China and Japan
represented 41% of Group revenue in the period (H1 2020: 49%).
Excluding China and Japan revenues, other markets grew by 5% in
aggregate. The strong performance in the six months ended 30
September 2020 was driven by an extraordinary year in China (a
recovery from the African Swine Fever ("ASF") outbreak); for
comparison the revenue performance for the Group before the ASF
outbreak in China (the six months ended 30 September 2018) was
GBP30 million.
The gross margin in the first half has been an average of 46%
(H1 2020: 48%) reflecting the revenue reduction in China, given it
is a higher margin territory.
Administrative expenses at GBP10.9 million were consistent with
the comparative period last year (H1 2020: GBP10.5 million).
Research and development expenditure shown in the income
statement together with the amounts capitalised represented a cash
investment of GBP4.0 million (H1 2020: GBP4.1 million),
representing 10.4% of revenue in the period (H1 2020: 9.6%).
A one-off impairment charge of GBP2.1 million was incurred in
the period on previously capitalised costs on a particular
development programme due to prioritisation given to other R&D
projects and the cessation of activity on a long running horse
paste project.
Earnings before interest, tax, depreciation, amortisation and
impairment, share based payments and foreign exchange movements
("Adjusted EBITDA") were GBP3.8 million (H1 2020: GBP6.7 million).
This decrease in profitability was directly a result of the lower
revenue in China.
Cash generated from operations (on a fully consolidated basis)
was GBP6.0 million (H1 2020: GBP3.5 million). This was a
particularly strong performance; improved receivables and judicious
management of payables helped to offset the reduced profits
generated in the period.
This cash generation after allowing for tax payments of GBP2.3m
(primarily tax paid in China) resulted in cash balances at the
period end of GBP22.9 million (31 March 2021: GBP19.5 million), of
which GBP22.7 million (31 March 2021: GBP13.7 million) was held in
the Group's 51% owned subsidiary in China. The Group continues to
work with our partner in China to establish the most efficient
mechanism for repatriating cash from China bearing in mind that the
Group's share of cash repatriated by dividend declaration is 51%
and subject to withholding taxes. On a day to day basis, the Board
considers the cash held in the Group's 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, which at 30 September 2021
was GBP0.2 million (31 March 2021 - GBP5.8 million). The Group's
committed overdraft facility remains at GBP5 million. The annual
dividend due from the Group's subsidiary in China is expected to be
received prior to the end of the current accounting period.
The EPS loss in the six months ended 30 September 2021 arises
after netting off our China JV partner's 49% share of profit (Eco's
51% group share of which forms part of the EPS calculation).
Business Performance
The geographical analysis of the Group's revenue in the six
months ended 30th September 2021 compared to the prior period in
2020 and the full year ended 31st March 2021 was as follows:
6 months ended 30
Revenue Summary September Year ended
31 March
2021 2020 2021 % change
(GBP'm) (GBP'm) (GBP'm) 2020 to 2021
China and Japan 15.7 20.8 58.9 (25%)
North America (USA and Canada) 6.0 6.4 13.9 (6%)
South and Southeast Asia 6.0 4.0 9.1 50%
Latin America 6.3 6.4 14.3 (2%)
Europe 2.9 3.4 6.6 (15%)
Rest of World and UK 1.6 1.5 2.8 7%
38.5 42.5 105.6 (9%)
-------------------------------- --------- --------- ----------- -------------
Group revenue reduced by 9% to GBP38.5 million compared to the
prior period in 2020 - a period during which global travel
continued to be restricted, supply chain interruption had economic
impact in many industries and trading with Europe in the post
transitionary phase of Brexit was challenging. The overall
reduction in Group revenue in the six months ended 30 September
2021 was primarily caused by a 25% reduction in revenue in China
and Japan; excluding this segment Group revenues overall increased
by 5%.
The Group reported record revenues in China in the year ended 31
March 2021 but as anticipated in our 2021 annual report, the
strength of the Chinese market was likely to ease significantly in
the current period. This was a year in which the Chinese pork
industry enjoyed unprecedented pricing for its product. The
shortage of pigs in the period after the African Swine Fever
("ASF") outbreak resulted in record value per farmed animal and a
consequent rapid investment to expand herd numbers. Individual
producers sought to increase market share funding this expansion
through equity raises and debt.
The Group's outlook statement in the 31 March 2021 Annual Report
together with the trading update statement released at the time of
the AGM in September 2021 signalled ongoing regional outbreaks of
ASF in China. A significant liquidation of swine stocks occurred
during the trading period ended 30 September 2021 which was in part
to avoid disease infection and partly to provide cashflow to
service debt. As a result, this has caused a sharp fall in the
wholesale market price for pork. The fall was exacerbated by
producers continuing to fatten pigs for longer than would normally
be the case, increasing the weight of animals sent to market. The
commodity price fell to such an extent that for most producers,
pigs were being produced at a loss. With this trading backdrop the
Group experienced a consequential fall in demand for our flagship
product Aivlosin(R).
Revenue in North America, in particular the USA, has been
broadly consistent and the return to pre-2019 levels of business
experienced last year has been maintained during this period. Pork
prices in the USA and Canada have been generally stable and this
has resulted in continuing strong revenues. The North American
continent has seen some significant PRRS (Porcine reproductive and
respiratory syndrome) virus infection during the Autumn months and
this has resulted in continuing strong demand for Aivlosin(R) in
this market.
Southeast Asia has experienced a particularly strong period of
trading compared to last year. Revenue from Thailand has doubled
from GBP2m to GBP4m in the six months ended 30 September 2021
underpinned by new staff and strong technical marketing. A further
emerging opportunity in this segment is in Indonesia where the
Group is investing in sales resource to support this
opportunity.
Revenue in Latin America, as a group of markets, was consistent
despite supply chain issues relating to product quarantine
requirements in certain countries. Brazil continues to dominate
this segment, representing 48% of the total Latin America revenue
(42% in H1 2020). A slightly lower revenue in Mexico was offset by
stronger revenue in other markets such as Columbia, Bolivia and
Peru.
Revenue into Europe was adversely affected by transport
shortages and Brexit related challenges. The post Brexit
transitional arrangements expired and many customers within the EU
had differing views regarding documentation and supply chain
logistics for importation of our products. These issues have been
largely overcome and we look forward to fulfilling European demand
going forward.
Research and Development
During the last six months we have maintained our commitment to
our exciting R&D programme investing a further GBP4.0 million,
with a similar level of expenditure planned in H2. Some very
encouraging results have been achieved in our new product
development programmes. Novel vaccine technology was initially
focussed on Mycoplasma in poultry with two licensed-in vaccines now
in late-stage development. This has resulted in great efficacy in
key proof of concept studies and we are proceeding with pace into
dose optimisation work. Mycoplasmosis in both pigs and poultry are
diseases of significant economic importance. We look forward to
providing more detail on the new product development portfolio at
our upcoming Capital Markets Day which is expected to be held early
in the new year. An announcement on timing will be made in due
course.
Work continues to gain further marketing authorisations for
Aivlosin(R) - in particular in China and Brazil where gaps remain
in the approved use claims. It is expected that updates on these
programmes will be provided during the remainder of this financial
year.
The significant potential in the vaccine developments and the
promise shown by the trial work has resulted in a de-emphasis of
certain other projects. A long running development of a combined
horse paste (Ivermectin-Praziquantel) which has good potential as a
combined (one-shot) parasite treatment required further work on the
formulation. This was to be complementary to the long running and
low-level revenue from horse paste which the Group has always
enjoyed. It was decided that this project had become marginal; the
return profile was less attractive compared with other programmes
and work was ceased. Additionally, work was ceased on a pair of
Aivlosin based projects where the returns were deemed to be not as
attractive as other projects within the portfolio. Accordingly, a
one-off impairment charge of GBP2.08 million was taken on the
previously capitalised development costs. These are shown
separately on the face of the Income statement.
Dividend
The directors recognise the importance of the dividend to
shareholders. For the year ended 31 March 2021 a dividend of 1p per
share was declared and paid during October 2021. The Directors will
again assess the dividend at the year-end having due regard to the
Group's significant investment in new product development,
operating cash flow, and accessible cash balances.
Board composition
Earlier in July this year, we announced that Marc Loomes intends
to retire by 31 December 2022. The search to find a replacement for
Marc has been underway for some time and we are pleased with the
calibre and quality of candidates that have been identified. We
expect to be able to complete the selection process in the coming
months.
The board intends to add further independent non-executive
expertise. An announcement on this is likely to be made
shortly.
Covid-19
Covid-19 remains an on-going business challenge. We adapted very
well to remote working and have now also embraced "hybrid" working.
We have re-opened the office in Southgate but limited the number of
single day attendees. The teams have organised themselves to work
within these constraints in a safe and effective manner. We
continue to access customers using remote and electronic
communication, exploring novel ways of marketing and providing
technical support. Unfortunately travelling to China has not been
possible since the beginning of the pandemic but we continue to
monitor and explore ways in which we might be able to have some
physical interaction with our China based colleagues in the coming
months.
We remain exceedingly grateful to our staff members, customers
and suppliers in showing considerable fortitude during this time of
change.
Outlook
The China market remains of great importance to the Group. There
has been continued volatility in the Chinese porcine market during
October and November with the live pig price falling from around 20
RMB/kg to a low of 10 RMB/kg and recovering to the current levels
at about 17 RMB/kg. Whilst commodity prices have seen a rise in
recent weeks supported by government sponsored purchasing of pork
for frozen reserves, they are still trading at a level which is
below break-even for most producers. However, the late Autumn and
Winter period normally gives rise to an increase in demand for
Aivlosin(R), caused by increased disease prevalence in colder
months and greater pork consumption associated with Chinese
national holidays and festivals. We expect this seasonal effect to
feed through in improving revenue opportunities during the fourth
quarter of our financial year.
Furthermore, we expect stronger revenue in the Group's other
worldwide markets in the second half; this has traditionally been
the case and has contributed to the historically observed overall
second half weighting to the revenues and profits. We expect that
pattern of trading to recur during the remainder of this financial
year.
The Board considers the situation in China as cyclical and one
which will in due course reverse. This, together with positive
vaccine trial results, support the Board's confidence and
excitement about the medium and longer term prospects for the
Group.
Dr Andrew Jones
Non-Executive Chairman
25 November 2021
CONSOLIDATED INCOME STATEMENT
Six months Six months Year ended
to 30.09.21 to 30.09.20 31.03.21
Notes (unaudited) (unaudited) (audited)
GBP000's GBP000's GBP000's
Restated*
Revenue 5 38,474 42,530 105,607
Cost of sales (20,959) (22,098) (51,990)
------------ ------------ -----------
Gross Profit 17,515 20,432 53,617
Other income 16 397 319
Administrative expenses (10,852) (10,524) (22,296)
R&D expense (3,309) (4,093) (8,072)
Currency profits/(losses) 274 (843) (2,230)
Amortisation of intangible assets (586) (424) (898)
Share based payments (83) (85) (123)
Impairment of intangible assets 7 (2,085) - -
Profit from operating activities: 890 4,860 20,317
Net finance cost (53) (39) (71)
Share of profit of associate 47 - 38
Profit before income tax 884 4,821 20,284
Income tax benefit/(charge) (759) (623) (3,635)
------------
Profit for the period 125 4,198 16,649
============ ============ ===========
Attributable to:
Owner of parent company (140) 2,453 8,158
Non-controlling interest 265 1,745 8,491
125 4,198 16,649
============ ============ ===========
Earnings per share (pence) 6 (0.21) 3.63 12.08
Diluted earnings per share (pence) 6 (0.21) 3.49 12.07
Earnings before interest, taxation,
depreciation,
amortisation and share based payments
(EBITDA) 1,969 5,838 22,170
Exclude foreign exchange differences
and impairment 1,812 843 2,230
Adjusted EBITDA 3,781 6,681 24,400
============ ============ ===========
*Details of the restatement, which is unaudited, is presented in
note 3.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Six months Six months Year ended
to 30.09.21 to 30.09.20 31.03.21
(unaudited) (unaudited) (audited)
GBP000's GBP000's GBP000's
Restated*
Profit for the period 125 4,198 16,649
Other Comprehensive income/(losses) (net
of related tax effects):
Items that will or may be reclassified
to profit/(loss):
Foreign currency translation differences 254 507 (258)
Items that will not be reclassified:
Deferred tax on property revaluations - - 84
Defined benefit plan - actuarial losses - - (32)
Other comprehensive income/(losses)
for the period 254 507 (206)
Total comprehensive income for the
period 379 4,705 16,443
Attributable to:
Owners of the parent Company 37 2,991 8,233
Non-controlling interest 342 1,714 8,210
*Details of the restatement, which is unaudited, is presented in
note 3.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Share Share Foreign
Capital Premium Revaluation Other Exchange Retained Minority Total
Account Account Reserves Reserves Reserve Earnings Total Interest Equity
GBP000's GBP000's GBP000's GBP000's GBP000's GBP000's GBP000's GBP000's GBP000's
FOR THE YEARED
31 MARCH 2021
Balance as at
31 March
2020 3,377 62,882 572 106 526 7,220 74,683 5,766 80,449
Profit for the
year - - - - - 8,158 8,158 8,491 16,649
Other
comprehensive
income:
Foreign
currency
differences - - - - 23 - 23 (281) (258)
Deferred tax on
property
revaluations - - 84 - - - 84 - 84
Actuarial
gains/(losses)
on pension
scheme
assets - - - - - (32) (32) - (32)
Total
comprehensive
income for the
year - - 84 - 23 8,126 8,233 8,210 16,443
--------- --------- ------------ --------- --------- ---------- --------- --------- ---------
Transactions
with
owners recorded
directly
in equity:
Issue of shares
in
the year 2 376 - - - - 378 - 378
Share-based
payments - - - - - 123 123 - 123
Dividends - - - - - - - (562) (562)
Transactions
with
owners 2 376 - - - 123 501 (562) (61)
--------- --------- ------------ --------- --------- ---------- --------- --------- ---------
Balance as at
31 March
2021 3,379 63,258 656 106 549 15,469 83,417 13,414 96,831
========= ========= ============ ========= ========= ========== ========= ========= =========
FOR THE SIX
MONTHSED 30
SEPTEMBER
2021
Profit for the
period - - - - - (140) (140) 265 125
Other
comprehensive
income:
Foreign
currency
differences - - - - 177 - 177 77 254
Deferred tax on
property
revaluations - - 2 - - - 2 - 2
--------- --------- ------------ --------- --------- ---------- --------- --------- ---------
Total
comprehensive
income for the
period - - 2 - 177 (140) 39 342 381
Transactions
with
owners recorded
directly
in equity:
Issue of shares
in
the period 1 61 - - - - 62 - 62
Share-based
payments - - - - - 83 83 - 83
Deferred tax on
share-based
payments - - - - - - - - -
--------- --------- ------------ --------- --------- ---------- --------- --------- ---------
Total
transactions
with owners 1 61 - - - 83 145 - 145
========= ========= ============ ========= ========= ========== ========= ========= =========
Balance as at
30 September
2021 3,380 63,319 658 106 726 15,412 83,601 13,756 97,357
========= ========= ============ ========= ========= ========== ========= ========= =========
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Share Share Foreign
Capital Premium Revaluation Other Exchange Retained Minority Total
Account Account Reserves Reserves Reserve Earnings Total Interest Equity
GBP000's GBP000's GBP000's GBP000's GBP000's GBP000's GBP000's GBP000's GBP000's
FOR THE YEARED
31 MARCH 2020
Balance as at
31 March
2019 3,372 62,650 664 106 467 10,855 78,114 5,102 83,216
Profit for the
year - - - - - 3,895 3,895 1,593 5,488
Other
comprehensive
income:
Foreign
currency
differences - - - - 59 - 59 39 98
Deferred tax on
property
revaluations - - (92) - - - (92) - (92)
Actuarial
gains/(losses)
on pension
scheme
assets - - - - - 12 12 - 12
Total
comprehensive
income for the
year - - (92) - 59 3,907 3,874 1,632 5,506
--------- --------- ------------ --------- --------- ---------- --------- --------- ---------
Transactions
with
owners recorded
directly
in equity:
Issue of shares
in
the year 5 232 - - - - 237 - 237
Share-based
payments - - - - - 284 284 - 284
Deferred tax on
share-based
payments - - - - - (373) ( 373) - ( 373)
Dividends - - - - - (7,453) (7,453) (968) (8,421)
Transactions
with
owners 5 232 - - - (7,542) (7,305) (968) (8,273)
--------- --------- ------------ --------- --------- ---------- --------- --------- ---------
Balance as at
31 March
2020 3,377 62,882 572 106 526 7,220 74,683 5,766 80,449
========= ========= ============ ========= ========= ========== ========= ========= =========
FOR THE SIX
MONTHSED 30
SEPTEMBER
2020
Profit for the
period
- *restated - - - - - 2,453 2,453 1,745 4,198
Other
comprehensive
income:
Foreign
currency
differences - - - - 538 - 538 (31) 507
Total
comprehensive
income for the
period - - - - 538 2,453 2,991 1,714 4,705
--------- --------- ------------ --------- --------- ---------- --------- --------- ---------
Transactions
with
owners recorded
directly
in equity:
Issue of shares
in
the period - 6 - - - - 6 - 6
Share-based
payments - - - - - 85 85 - 85
Total
transactions
with owners - 6 - - - 85 91 - 91
--------- --------- ------------ --------- --------- ---------- --------- --------- ---------
Balance as at
30 September
2020 -
restated* 3,377 62,888 572 106 1,064 9,758 77,765 7,480 85,245
========= ========= ============ ========= ========= ========== ========= ========= =========
*Details of the restatement, which is unaudited, is presented in
note 3.
CONSOLIDATED STATEMENT OF FINANCIAL
POSITION
As at As at As at
30.09.21 30.09.20 31.03.21
(unaudited) (unaudited) (audited)
Notes GBP000's GBP000's GBP000's
Restated*
Non-current assets
Intangible assets 7 34,126 35,613 36,108
Property, plant and equipment 2,220 2,323 2,181
Investment property 305 305 305
Right-of-use assets 1,275 1,525 1,399
Investments 229 150 180
38,155 39,916 40,173
Current assets
Inventories 26,492 20,282 20,504
Trade and other receivables 27,252 28,083 32,452
Income tax recoverable 3,358 1,964 3,475
Other taxes and social security 748 359 496
Cash and cash equivalents 22,892 12,941 19,523
Total current assets 80,742 63,629 76,450
Total assets 118,897 103,545 116,623
Current liabilities
Trade and other payables (18,466) (16,304) (14,521)
Income tax (1,683) (25) (3,015)
Other taxes and social security (47) - (501)
Amounts due under leases (874) (375) (311)
Dividends (50) (50) (50)
Total current liabilities (21,120) (16,754) (18,398)
Net current assets/(liabilities) 59,622 46,875 58,052
------------ ------------ ----------
Total assets less current liabilities 97,777 86,791 98,225
Non-current liabilities
Deferred tax assets/(liabilities) 134 (338) (183)
Amounts due under leases (554) (1,208) (1,211)
Total assets less total liabilities 97,357 85,245 96,831
============ ============ ==========
Equity
Capital and reserves
Issued share capital 3,380 3,377 3,379
Share premium account 63,319 62,888 63,258
Revaluation reserve 658 572 656
Other reserves 106 106 106
Foreign exchange reserve 726 1,064 549
Retained earnings 15,412 9,758 15,469
Shareholders' funds 83,601 77,765 83,417
Non-controlling interests 13,756 7,480 13,414
Total equity 97,357 85,245 96,831
============ ============ ==========
*Details of the restatement, which is unaudited, is presented in
note 3.
CONSOLIDATED STATEMENT OF CASH FLOWS
Six months Year ended
to 30.09.21 to 30.09.20 31.03.21
(unaudited) (unaudited) (audited)
GBP000's GBP000's GBP000's
Restated*
Cash flows from operating activities
Profit/(loss) before income tax 884 4,456 20,284
Adjustment for: -
Finance income (83) (64) (129)
Finance cost 135 103 200
Foreign exchange (gain)/loss (654) (688) 559
Depreciation 215 155 430
Amortisation of right-of-use assets 198 187 403
Amortisation of intangible assets 586 789 898
Impairment of intangible assets 2,085 - -
Share of associate's results (47) - (38)
Share based payment charge 83 85 123
Operating cash flows before movements
in working capital 3,402 5,023 22,730
Change in inventories (5,660) (3,018) (3,698)
Change in receivables 5,217 563 (3,959)
Change in payables 3,091 952 753
------------ ------------ -----------
Cash generated from operations 6,051 3,520 15,826
Finance costs (68) (40) (79)
Income tax (2,288) (116) (3,766)
------------ ------------ -----------
Net cash from operating activities 3,695 3,364 11,981
------------ ------------ -----------
Cash flows from investing activities
Acquisition of property, plant and equipment (223) (231) (212)
Disposal of property, plant and equipment 1 - 11
Purchase of intangibles (689) (17) (861)
Finance income 83 64 129
Dividends received - - -
------------ ------------ -----------
Net cash (used in)/from investing activities (828) (184) (933)
------------ ------------ -----------
Cash flows from financing activities
Proceeds from issue of share capital 62 6 378
Interest paid on lease liabilities (67) (63) (122)
Principal paid on lease liabilities (195) (182) (378)
Dividends paid - - (562)
------------ ------------ -----------
Net cash (used in)/from financing activities (200) (239) (684)
------------ ------------ -----------
Net increase/(decrease) in cash and cash
equivalents 2,667 2,941 10,364
Foreign exchange movements 702 155 (686)
Balance at the beginning of the period 19,523 9,845 9,845
Balance at the end of the period 22,892 12,941 19,523
============ ============ ===========
*Details of the restatement, which is unaudited, is presented in
note 3.
NOTES TO THE PRELIMINARY RESULTS FOR THE SIX MONTHS TO 30
SEPTEMBER 2021
1. Basis of preparation
The financial information for the period to 30 September 2021
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 2021.
The Group applies revised IAS 1 "Presentation of Financial
Statements (2007)". As a result, the Group presents all non-owner
changes in equity in consolidated statements of comprehensive
income and all owner changes in equity in consolidated statements
of changes in equity.
These Interim Statements have not been audited or reviewed by
the Group's auditors.
2. Statement of compliance
This interim financial statement is prepared in accordance with
IAS 34 "Interim Financial Reporting". Accordingly, whilst the
interim statements have 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
report will also have access to its most recent annual report.
Accordingly, annual disclosures are not repeated in these interim
condensed reports.
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 2021. These policies have been consistently applied
to all prior years. Where necessary, and as detailed in the
consolidated financial statements of the Group for the year ended
31 March 2021, any corrections to the application of the Group's
accounting policies to comply with International Financial
Reporting Standards have been made as restatements of prior period
financial statements for the correction of errors in accordance
with IAS8 . The Group's accounting policies have been consistently
applied in accordance with IFRS continued into the six months ended
30 September 2021.
For the March 2021 annual report and accounts the group
revisited costs capitalised in periods prior to March 2018 to
assess whether there are adequate records to support the
capitalisation of costs. This review identified that some costs
arising in periods prior to March 2013 had been incorrectly
capitalised. Given the impracticality of obtaining the full records
that would have been needed to review all costs capitalised in that
period, a decision was taken to derecognise all costs relating to
periods prior to March 2011 and to de-recognise staff costs
capitalised in the period between March 2011 and March 2013. This
approach is equivalent to these assets not having been recognised
originally. The effect of the restatement is to decrease the net
book value of intangible assets held at September 2020 and to
decrease the deferred tax liability arising at that date in respect
of those assets.
Full details are given in the annual report and accounts for the
year ended 31 March 2021, but the financial effect is summarised
below.
Development costs adjustment: Impact on the Balance Sheet and
Income Statement
Balance sheet As reported Adjustment Adjustment As restated
as at to retained through as at
30.09.20 earnings Income Statement 30.09.20
GBP000's GBP000's GBP000's GBP000's
Intangible assets cost 60,974 (19,007) - 41,967
Accumulated amortisation (20,307) 14,225 365 (5,718)
Net Book Value 40,667 (4,782) 365 36,249
============ ============= ================== ============
Deferred tax liability (686) 373 (25) (338)
NOTES TO THE PRELIMINARY RESULTS FOR THE SIX MONTHS TO 30
SEPTEMBER 2021 (Continued)
3. Changes to significant accounting policies and other restatements (continued)
Income Statement As reported Adjustment Adjustment As restated
for 6 months to retained through for 6 months
ended 30.09.20 earnings Income Statement ended 30.09.20
GBP000's GBP000's GBP000's GBP000's
Amortisation charge 789 - (365) 424
Deferred tax charge 598 - 25 623
Cash and cash equivalents
Balances drawn on the bank overdraft facility are repayable on
demand and form an integral part of the cash management of the
Group. In the Statement of Cash Flows, the Group has presented cash
and cash equivalents net of balances outstanding on bank
overdrafts. This is an updated presentation in the Statement of
Cash Flows presented for the six months ended 30 September 2020,
where balances outstanding on bank overdraft (totalling GBP4,117
thousands) were presented within creditors.
4. Revenue is derived from the Group's animal pharmaceutical businesses.
5. Principal risks and uncertainties
These were set out on pages 20-22 of the Group's Annual Report
and Accounts for the year ended 31 March 2021. The key exposures
are to foreign currency exchange rates, potential delays in
obtaining marketing authorisations, single sources of supply for
some raw materials and trade debtor recovery and have remained
unchanged since the year end. In addition, the Annual Report and
Accounts highlighted disease impact to growth in emerging markets
as a key risk and this, in the form of ASF, is a principal
uncertainty.
6. Earnings per share
Six months Six months Year ended
to 30.09.21 to 30.09.20 31.03.21
(unaudited) (unaudited) (audited)
Restated
Weighted average number of shares in issue
(000's) 67,712 67,530 67,559
Fully diluted weighted average number of
shares in issue (000's) 67,712 70,313 67,603
Profit attributable to equity holders of
the company (GBP000's) (140) 2,453 8,158
Basic earnings per share (pence) (0.21) 3.63 12.08
Fully diluted earnings per share (pence) (0.21) 3.49 12.07
NOTES TO THE PRELIMINARY RESULTS FOR THE SIX MONTHS TO 30
SEPTEMBER 2021 (Continued)
7. Intangible non-current assets
Distribution Development
Goodwill rights Costs Total
GBP000's GBP000's GBP000's GBP000's
Cost
At 31 March 2020 - restated 17,930 407 22,977 41,314
Additions - - 17 17
At 30 September 2020 - restated 17,930 407 22,994 41,331
Additions - - 969 969
At 31 March 2021 17,930 407 23,963 42,300
Additions - - 689 689
Impairment - - (2,092) (2,092)
At 30 September 2021 17,930 407 22,560 40,897
========== ============= ============ ==========
Amortisation
At 31 March 2020 - restated - 120 5,174 5,294
Charge for the period -restated - 10 414 424
At 30 September 2020 - restated - 130 5,588 5,718
Charge for the period - 9 465 474
At 31 March 2021 - 139 6,053 6,192
Charge for the period - 9 577 586
Written back on impairment - - (7) (7)
At 30 September 2021 - 148 6,623 6,771
========== ============= ============ ==========
Net Book Value
At 30 September 2021 17,930 259 15,937 34,126
At 31 March 2021 17,930 268 17,910 36,108
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 2021 there were indications
that certain development projects for which costs have previously
been capitalised were unlikely to achieve technical success or
commercial viability. The capitalised costs in respect of these
projects have been impaired through the income statement during the
period.
This financial information was approved by the board on 24
November 2021.
Copies of this interim report are being sent to all the
Company's shareholders.
DIRECTORS AND OFFICERS Andrew Jones (Non-Executive Chairman)
Marc Loomes (Chief Executive)
Chris Wilks (Chief Financial Officer)
Anthony Rawlinson (Non-Executive Director)
Frank Armstrong (Non-Executive Director)
REGISTERED OFFICE 78 Coombe Road, New Malden, Surrey. KT3 4QS
Tel: 020 8447 8899
COMPANY NUMBER 01818170
INFORMATION AT www.ecoanimalhealthgroupplc.com
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IR BIBBTMTJTTIB
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November 25, 2021 02:00 ET (07:00 GMT)
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