TIDMANCR
RNS Number : 8798T
Animalcare Group PLC
30 March 2021
Animalcare Group plc
("Animalcare", the "Company" or the "Group")
Full Year Results for the 12 months ended 31 December 2020
30 March 2021. Animalcare Group plc (AIM: ANCR), the
international animal health business, announces its audited full
year results for the year ended 31 December 2020.
Financial Highlights
-- Revenues of GBP70.5m, a 0.9% decline (2.0% at CER) on prior
year (2019: GBP71.1m), demonstrating resilience in the face of
COVID-19 disruption to key markets
-- Underlying* EBITDA decreased by 8.0% to GBP12.1m (2019:
GBP13.1m) mainly due to increased investment in growth in second
half, partially offset by reduced SG&A spend in the first
half
-- Statutory profit before tax, incorporating non-underlying
items, increased to GBP0.2m (2019: GBP1.6m loss), with reported
basic profit per share at 0.4 pence (2019: 2.2 pence loss per
share)
-- Continued strong underlying* cash conversion of 102.9% (2019: 118.4%)
-- Net debt further reduced by GBP4.2m to GBP13.6m. Net debt to
underlying* EBITDA leverage ratio reduced to 1.1 times (2019: 1.4
times)
-- Proposed final dividend of 2.0 pence per share
Strategic and Operational Highlights
-- Creation of STEM Animal Health Inc., joint venture with Kane
Biotech Inc. to commercialise and develop biofilm-targeting
treatments
-- Internal pipeline on track to deliver with Daxocox
(enflicoxib) receiving positive opinion from Europe's CVMP in
February 2021
-- Significant progress in rebalancing, refocusing and defragmenting of product portfolio
-- New organisation structure implemented to support delivery of growth strategy
-- 11% improvement in employee engagement levels measured in annual Gallup survey
-- Investment in sales and marketing excellence in advance of
Daxocox and STEM launches in H2 2021
* Underlying measures are before the effect of non-underlying
items which excludes fair value adjustments on acquired inventory,
amortisation of acquired intangibles and acquisition and
integration costs. A reconciliation to statutory measures is
provided in the Chief Financial Officer's Review.
Commenting on the full year results, Chief Executive Officer,
Jenny Winter said: "It's testament to Animalcare's resilience,
agility and focus that we were able to further strengthen our
financial position and make significant strategic progress during
an extraordinarily challenging year.
"The impact of COVID-19 was felt across all our markets in 2020,
especially in the second quarter and most acutely in the Companion
Animals sector. But despite widespread disruption to the operation
of veterinary practices, we returned revenues ahead of market
expectations, delivered continuing strong cash conversion and
further reduced our net debt while investing in drivers of future
growth.
"Strategically, we made significant headway across all areas of
focus. The CVMP's positive opinion for Daxocox in February 2021,
and the product's anticipated launch in the second half of the
year, represents a major milestone for our pipeline. On the
business development front, our September 2020 agreement with Kane
Biotech opens up near- and long-term opportunities for exciting
biofilm-targeting technologies. Optimisation of our existing
portfolio remains a priority and we have continued to rebalance,
refocus and defragment our line-up of products with a target to
improve margins and concentrate sales and marketing resources on a
smaller number of bigger brands.
"The pandemic threw the importance of effective leadership into
even sharper relief in 2020. So I'm especially pleased that our
latest annual employee survey showed a striking improvement in
engagement levels. We also reshaped our organisational structure to
better drive our growth strategy.
"The encouraging trading levels over the early months of 2021,
combined with the evident benefits of the mass vaccination
programmes and the adaptations made by the Group, makes us
confident that we will return to normal business conditions and
growth this year.
"Thanks to the skills and commitment of our people across all
our markets, Animalcare has entered 2021 in a strong position and
we continue to execute our long-term growth strategy."
Analyst webcast
A briefing for analysts will be held at 10:30 BST on Tuesday 30
March 2021 via Zoom webcast. Analysts wishing to join should use
the following link to register and receive access details.
https://stifel.zoom.us/webinar/register/WN__a7kMxBWRU6X4TyjaKTXrw
A copy of the analyst presentation will be made available on the
Group website shortly after the webcast.
About Animalcare
Animalcare Group plc is a UK AIM-listed international veterinary
sales and marketing organisation. Animalcare operates in seven
countries and exports to approximately 40 countries in Europe and
worldwide. The Group is focused on bringing new and innovative
products to market through its own development pipeline,
partnerships and via acquisition.
For more information about Animalcare, please visit
www.animalcaregroup.com or contact:
Animalcare Group plc +44 (0)1904 487 687
Jenny Winter, Chief Executive Officer
Chris Brewster, Chief Financial Officer
Media relations communications@animalcaregroup.com
Stifel Nicolaus Europe Limited
(Nominated Adviser & Joint Broker)
Ben Maddison
Fred Walsh
Nick Adams +44 (0)20 7710 7600
Panmure Gordon
(Joint Broker)
Corporate Finance
Freddy Crossley/Emma Earl
Corporate Broking
Rupert Dearden +44 (0)20 7886 2500
Chairman's Statement
By any measure, 2020 was an extraordinarily challenging year.
For Animalcare it was also a year of significant achievement and
strategic progress.
The resilience we demonstrated over the last 12 months has
further strengthened our financial position, enabling us to
continue the pursuit of our long-term growth strategy. While I
would not claim that Animalcare has been immune to the pandemic,
it's fair to say that the agility of our organisation and the
decisive actions taken by our management team have enabled us to
resist its worst effects.
While our revenues and Underlying EBITDA were affected by
disruption to our markets it's satisfying to report that our
performance more than lived up to market expectations. In the
second half of the year, when COVID-19 re-emerged across our
markets, we grew our sales by 3.0% compared to the previous period.
After underlying adjustments totalling GBP7.8m (2019: GBP10.8m) the
profit before tax on a reported basis was GBP0.2m (2019: GBP1.6m
loss before tax).
Transforming profit into cash has long been a priority for the
Group so it was pleasing to see our cash conversion rate improve
over the course of the year. The average conversion rate for 2019
and 2020 combined was above 100%, evidence of our ability to
generate strong and sustained levels of cash. This improvement in
cash generation was the main contributor to a further reduction in
our net debt. At the year-end our net debt stood at GBP13.6m, down
24% compared to GBP17.8m as at 31 December 2019. And by 28 February
2021 it had been reduced to GBP12.9m.
The Group's resilient trading, strong financial position and our
confident outlook have supported the Board's decision to propose a
final dividend of 2.0 pence per share (2019: Nil pence per
share).
Our 2020 performance stands out because we achieved it during a
period of real uncertainty where our concern for the safety of our
people and the communities around us required different ways of
thinking and working. This agility allowed our employees to adapt
to the rapidly evolving operational and therapeutic needs of
veterinary practices, continuing to add value to our customers who
themselves were often operating in uncharted territory. We were
also able to flex our cost base, reviewing our capex priorities and
making decisive changes to SG&A spend during the first half
while continuing to invest in our people, our pipeline and business
development opportunities.
Structurally, the diversity of our business came to the fore in
2020. Our balanced geographical footprint and significant presence
in the Production Animals segment, which was less affected by the
pandemic than Companion Animals, benefited our overall trading
performance.
The strong platform we have built in recent years provided us
with the capacity to pursue business development opportunities
during 2020 and equips us with the full range of appropriate
funding options into the future. In September we finalised a deal
with Canada-based Kane Biotech to create STEM Animal Health Inc., a
joint venture to exploit the potential of biofilm-targeting
anti-infective technology. Animalcare will commercialise existing
STEM products in markets outside the Americas while working
together to develop new treatments. The agreement gives us access
to attractive biofilm products today and influence over products of
the future.
It has been an important period for our internal pipeline too.
E-6087 - now known as Daxocox - is a novel and differentiated COX-2
inhibitor for the treatment of chronic pain in dogs. The February
2021 positive opinion from the Committee for Veterinary Medicinal
Products is a significant milestone for the Group and represents
many years of hard work and investment. We are confident that
Daxocox will be a significant new treatment option for vets. It
also has the potential to lift the Group into a high-value and
fast-growing segment of the animal health market. Subject to final
EU approval, we plan to launch Daxocox across our markets early in
the second half of 2021.
As you read this year's annual report I hope you notice our new
branding which we unveiled in March 2021. The redesign of our
visual identity creates a consistent family look and feel across
the Group and better supports our strategic growth ambitions over
the coming years.
Looking ahead, it's evident that the economic and operational
uncertainty that prevailed in 2020 will remain a feature in 2021.
However, we expect that mass vaccination, combined with the lessons
learned by veterinary practices and the adaptations made by
Animalcare, will support a recovery in our markets. Over the longer
term, the attractive fundamentals of the animal health sector and
the strong position of the Group give us the confidence to continue
investing in growth opportunities.
On behalf of the Board, I'd like to thank our employees for
their exceptional performance during these challenging times. And
thank you to all our shareholders for your continued support.
Jan Boone
Non-executive Chairman
Chief Executive Officer's Review
Despite the disruption experienced by our markets due to the
pandemic I'm delighted to report that we made significant advances
against all five of our strategic priorities over the course of the
year.
The Group's performance in 2020 speaks volumes for the
resilience of our business and the agility of our organisation
while our strategic progress demonstrates our capacity and
commitment to target sustainable growth.
Strong finances
Our growth strategy is enabled by a strong financial platform.
With that in mind we continue to pursue opportunities that drive
revenues and improve margins while maintaining our focus on cash
conversion and the management of net debt.
Total revenues for 2020 were GBP70.5m (2019: GBP71.1m), a
decline of 0.9% year-on-year (2.0% decline at Constant Exchange
Rates) due to the impact of COVID-19 with the negative impact
weighted towards the first half. For the six months to the end of
December 2020 sales were up 3.0% to GBP36.0m (2019: GBP35.0m).
Reversing a pattern seen in recent years, the 4.6% growth in the
Production Animals segment was higher than in Companion Animals.
This reflects the restrictions placed on public-facing veterinary
practices during the pandemic and underlines the continued
importance of Production Animals to our balanced and diverse
business. We expect revenues to assume a more recognisable shape
during 2021 as controls on Companion Animal practices are relaxed
and eventually return to normal.
At GBP12.1m, underlying EBITDA reflected the decisive actions to
reduce SG&A and capex spend in the first half followed by
increased investment in growth drivers for the six months to the
end of December. Profit before tax on a statutory basis was
GBP0.2m. Cash conversion improved in the second half of the year
and the average rate for 2019 and 2020 combined was in excess of
100% of underlying EBITDA, demonstrating our ability to generate
strong and sustained levels of cash.
We further reduced net debt by GBP4.2m to GBP13.6m at the end of
2020, largely as a result of the second half improvement in cash
conversion. This equates to a year-on-year reduction in net debt of
24%. Indeed, the net debt figure stood at GBP12.9m by 28 February
2021. The Group's improving financial position provides capacity
for further investment in business development and pipeline
opportunities that support our long-term growth strategy.
Key leadership
During 2020 we continued to build a highly skilled and high
performing team driven by a shared sense of purpose and values.
Our business development capability - a key enabler of our
growth strategy - has been further strengthened. And as we prepare
for 2021 launches of Daxocox and products from our STEM joint
venture, we are investing in commercial excellence skills across
the Group.
Two notable milestones in the development of our organisation
came as post-period events - the restructuring of our senior
leadership and the read-out of the 2020 employee engagement
survey.
In January 2021, we unveiled a new organisation structure
designed to support delivery of our growth strategy. The move to a
smaller and highly experienced Senior Executive Team (SET) will
support clear, informed and rapid decision making. The team will
focus on maintaining our existing business; achieving new product
launch excellence; and driving future growth.
We've created three new roles: Directors for North Europe and
South Europe to drive operations in the countries and a Strategic
Product and Business Development Director to lead future growth
strategy, including all business development activities and the
clinical and technical development of new products.
Just as feedback from our customers helps us refine our approach
to great customer service, our employee engagement survey shows us
how we're doing from the perspective of our employees. We use the
Gallup Q12-survey results to understand what our teams value most
in their workplace, to identify opportunities for improvement and
to track our progress over time.
In 2019 we conducted our first company-wide survey. Our 2020
Gallup survey, which completed in January 2021, saw employee
participation increase to 89% percent. Despite the challenge of
COVID-19, our overall 2020 survey results were very positive with
an 11% increase in engagement levels compared to the previous year.
I'm proud of that improvement which puts us in the upper percentile
rank of Gallup's participant database.
Growth portfolio
Maintaining the health of our existing business is a core
objective of our strategy. A strong base creates sustainable value
for shareholders and generates the cash flows to invest in
differentiated products which will drive future growth.
From a market segment perspective, we continue to target
Companion Animals and Equine where we see the biggest growth
opportunities over the long term. For Production Animals, we aim to
maintain our important presence in our chosen markets. These
priorities are mirrored in our research and development
targets.
We also continue to make significant headway in our efforts to
rebalance, refocus and defragment our portfolio of products.
Reducing the number of smaller "tail" or lower value products
allows us to concentrate our commercial resources on assets with
growth prospects and higher margins. In 2017, the portfolio
consisted of around 330 brands which subsequently has been reduced
to approximately 200 brands. Increased management focus on a
smaller number of bigger products was evident in a 3.2% growth rate
for the top 40 brands in 2020.
Tracking progress is crucial as we continue to improve the
quality and shape of our portfolio. With that objective in mind, we
are committed to grow total revenues and improve gross margins
while reducing the number of brands over the longer term to
approximately 150.
Products can exit our portfolio for a variety of reasons. That
can be as a result of our rationalisation programme, due to the
natural expiry of a contract or because the product is no longer a
strategic fit. In this latter category is Adequan which Animalcare
had planned to launch in Europe under an agreement with American
Regent Animal Health. In light of regulatory delays, this agreement
was mutually terminated in January 2021. The decision is not
expected to have a significant impact on future revenues.
Business development
Critical to our growth ambitions is our ability to discover and
pursue attractive opportunities that originate outside the Company.
It is no surprise that our business development team has been
particularly active in 2020, in spite of the pandemic. Reinforcing
our capability in this space, which we expect to further develop
during 2021, has enabled us to identify attractive opportunities
more efficiently and determine their potential more rapidly.
Currently, we are involved in a number of discussions that have the
potential to offer value-creating partnerships or in-licensing
opportunities. We also believe we have the necessary financial
strength to realise the right deals and are open to use the full
range of appropriate funding options to deliver growth
opportunities.
In September 2020 we signed a CA$5 million agreement with
Canada-based firm, Kane Biotech Inc. to create a joint venture
called STEM Animal Health Inc. that is responsible for
commercialising and developing products based on biofilm-targeting
anti-infective technology. Under the agreement, we will market and
sell Kane Biotech's existing Companion Animal range of oral care
products in European and Asian markets as well as collaborate on
the development of new biofilm treatments for animals. We plan to
launch STEM products in the second half of 2021 following
completion of the manufacturing transfer process to a European
base.
This is a sustainable agreement with a creative deal structure
that gives us access to attractive products today and influence
over the development pipeline of biofilm products of the
future.
Innovative pipeline
Our internal pipeline showed important signs of bearing fruit
with our novel COX-2 inhibitor making steady progress through its
regulatory review over the period. Daxocox (enflicoxib) was
submitted for EU and UK approval in January 2020 for the treatment
of pain in dogs and received a positive opinion from the Committee
for Medicinal Products for Veterinary Use (CVMP) in February 2021.
Following the CVMP's recommendation, a decision on marketing
authorisation is expected early in the second quarter.
We see this as a hugely important step in the journey to market
for Daxocox, a product that has the potential to play a leading
role in the Animalcare growth story. Subject to final approval, we
plan to launch Daxocox across European markets in the second half
of 2021. It's a source of pride that Daxocox is the sole property
of the Group and the development programme is led and managed by
the Animalcare team with support from an external CRO.
While we continue to pursue opportunities to strengthen our
internal pipeline, we have initiated a number of lifecycle
management projects to support our commercial ambitions for Daxocox
and are adding biofilm-targeting programmes from our STEM joint
venture. Creating a pipeline of differentiated products - whether
generated in-house or through partnerships, in-licensing or
acquisitions - is one of the key elements of our growth
strategy.
New look, same commitment
By now I hope you have noticed our rebranding of the Group
companies. A strong brand will support our growth ambitions. And we
believe this consistent "family feel" better reflects the qualities
of Animalcare Group: our scale and reach; our science-driven
approach; our blend of local knowledge and global co-ordination;
our agility; and our approachability. It's a new look, but with the
same all-in commitment to our customers and to the cause of better
animal health.
Summary and outlook
We entered 2020 in a solid financial position. And despite the
uncertainty and disruption wreaked by the pandemic we emerged from
this testing year with an even stronger platform enabling us to
continue investing in our growth strategy.
Looking ahead to 2021, it's prudent to assume that the
coronavirus will have other challenges for us. However, the
efficacy of the new vaccines combined with the proven adaptability
of the veterinary sector and the agility of our own organisation
makes us confident that normality will return to our markets during
2021.
We are encouraged by demand levels we are seeing in the first
quarter of the year and barring further disruption from COVID-19 we
expect revenues to grow over the course of 2021. We also plan to
invest in new product launches of Daxocox and the STEM oral health
range while continuing to seek opportunities to strengthen our
pipeline.
The resilience and commitment of our people throughout this
period has been remarkable. We've supported each other and have
remained focused on our priorities. That has been evident in our
business performance and in our strategic achievements in 2020. I'd
like to thank all our employees for their extraordinary efforts in
extraordinary times. That experience will serve us well as we
continue to implement our growth strategy.
Jennifer Winter
Chief Executive Officer
Chief Financial Officer's Review
Underlying and Statutory Results
To provide comparability across reporting periods, the Group
presents its results on both an underlying and statutory (IFRS)
basis. The Directors believe that presenting our financial results
on an underlying basis, which excludes non-underlying items, offers
a clearer picture of business performance. IFRS results include
these items to provide the statutory results. All figures are
reported at actual exchange rates (AER) unless otherwise stated.
Commentary will include references to constant exchange rates (CER)
to identify the impact of foreign exchange movements. A
reconciliation between underlying and statutory results is provided
at the end of this financial review.
Overview of Underlying financial results - Continuing
Operations
% Change
2020 2019 at AER
GBP'000 GBP'000 %
---------------------------- -------- -------- --------
Revenue 70,494 71,124 (0.9%)
Gross Profit 36,559 36,972 (1.1%)
Gross Margin % 51.9% 52.0% (0.1%)
Underlying Operating Profit 8,561 9,462 (9.5%)
Underlying EBITDA 12,091 13,137 (8.0%)
Underlying EBITDA margin
% 17.2% 18.5% (1.3%)
Underlying Basic EPS (p) 10.6p 12.0p (11.7%)
---------------------------- -------- -------- --------
Despite significant disruption to the animal health market
caused by COVID-19, the Group trading performance was resilient
with revenues at GBP70.5m (2019: GBP71.1m), a decline of 0.9%
year-on-year (2.0% decline at CER). Revenue by product category is
shown in the table below:
% Change
2020 2019 at AER
GBP'000 GBP'000 %
------------------- -------- -------- --------
Companion Animals 44,808 46,464 (3.6%)
Production Animals 19,720 18,844 4.6%
Equine & other 5,966 5,816 2.6%
------------------- -------- -------- --------
Total 70,494 71,124 (0.9%)
------------------- -------- -------- --------
Companion Animals revenue decreased by 3.6% to GBP44.8m,
principally reflecting pandemic-related disruption to veterinary
activity across Europe, particularly during the first half. As we
entered Q2 veterinary practices remained open for business in the
majority of our markets though virus containment measures
restricted opening hours and consultations. The impact of COVID-19
was felt most strongly in the UK, which saw large-scale closures of
veterinary practices and all but urgent and emergency cases being
seen.
Evidence of a return to more normal customer activity in the
majority of our markets was observed during the second half, with
revenues up c3.0% versus the prior period.
The greater emphasis on emergency-only treatments reduced
opportunities for interaction with many veterinary practices. This
had the effect of slowing or deferring new product launches.
Notwithstanding these dynamics, growth from newly introduced
products contributed GBP1.9m of sales (2019: GBP1.5m) principally
driven by Metrocare, Doxycare and Procanicare.
In contrast, Production Animals revenue improved by 4.6% on the
prior year to GBP19.7m, largely driven by growth in Italy and
Spain, with the latter benefiting from the restructuring initiated
at the end of 2019. Large animal practices in general were less
impacted by COVID-19 due to the more industrial nature of this
market.
Equine and other sales increased by 2.6% to GBP6.0m. This was
primarily due to stock build within our international partner
channel in advance of a manufacturing transfer, which will unwind
during 2021.
Our existing portfolio continues to be shaped by focus on our
core higher margin brands, initiatives to reduce fragmentation and
expiry or cessation of distribution deals. Our top 40 products grew
by 3.2% offset in particular by termination of distribution deals
within our Companion Animal portfolio effected during 2018.
Underlying EBITDA decreased by 8.0% to GBP12.1m (2019: GBP13.1m)
with EBITDA margin declining to 17.2% (2019: 18.5%). During the
first half we took decisive action to realign SG&A spend with
revenue. Together with the benefit of cost efficiencies generated
during 2019, this resulted in a reduction in SG&A costs as a
percentage of sales. As we previously reported, and due to the
confidence in the resilience of our business, we subsequently
increased investment in our people and drivers of future growth,
including those related to business development, sales and
marketing excellence and our new novel product Daxocox. As a
result, SG&A expenses as a percentage of revenue increased to
34.8% (2019: 33.5%).
The underlying effective tax rate of 20.1% (2019: 21.5%) has
reduced versus prior year principally driven by recognition and
utilisation of tax losses. We continue to optimise research and
development tax credits.
Reflecting the points noted above, underlying basic EPS
decreased by 11.7% to 10.6 pence (2019: 12.0 pence).
Overview of reported financial results
Reported Group profit after tax for the year (after accounting
for the non-underlying items shown in the table and discussed
below) was GBP0.2m (2019: GBP1.3m loss), with reported earnings per
share at 0.4 pence (2019: 2.2 pence loss per share).
Acquisition,
restructuring,
2020 Amortisation integration 2020 2019
Underlying and impairment and other Reported Reported
results of intangibles costs results results
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------------------- ----------- --------------- --------------- --------- ---------
Revenue 70,494 - - 70,494 71,124
Gross Profit 36,559 - - 36,559 36,972
Selling, general and administrative
expenses (25,627) (4,800) - (30,427) (29,356)
Research and development expenses (2,386) (1,100) - (3,486) (4,093)
Net other operating income/(expense) 15 - (1,858) (1,843) (4,814)
------------------------------------- ----------- --------------- --------------- --------- ---------
Operating profit/(loss) 8,561 (5,900) (1,858) 803 (1,291)
Net finance expenses (511) - - (511) (317)
------------------------------------- ----------- --------------- --------------- --------- ---------
Share in net loss of joint ventures (93) - - (93) -
------------------------------------- ----------- --------------- --------------- --------- ---------
Profit/(loss) before tax 7,957 (5,900) (1,858) 199 (1,608)
Taxation (1,604) 1,197 442 35 270
------------------------------------- ----------- --------------- --------------- --------- ---------
Profit/(loss) for the year 6,353 (4,703) (1,416) 235 (1,338)
Basic EPS (p) 10.6p 0.4p (2.2p)
------------------------------------- ----------- --------------- --------------- --------- ---------
Non-underlying items totalling GBP7.8m (2019: GBP10.8m) relating
to profit before tax have been incurred in the year, as set out in
note 4. These principally comprise:
1. Amortisation and impairment of acquisition-related
intangibles of GBP5.9m (2019: GBP7.6m). This charge primarily
comprises amortisation in relation to the reverse acquisition of
Ecuphar NV and previous acquisitions made by Ecuphar NV. The
decrease versus 2019 largely reflects the prior year non-cash
impairment of three projects within the acquired product
development pipeline at a fair value of GBP1.5m that failed to meet
technical, competitive or commercial milestones.
2. Acquisition and integration costs of GBP0.7m (2019: GBP0.6m).
This includes costs associated with the STEM Animal Health
transaction and integration costs in connection with the
acquisition of Ecuphar NV, including manufacturing transfer costs
as we continue to strengthen and simplify our supply chain.
3. Restructuring costs of GBP0.4m (2019: GBP1.8m) largely
relating to further reorganisation of the Production Animals
business unit in Spain that was initiated in late 2019. The prior
year charge primarily relates to the R&D and Technical &
Regulatory team centralisation and associated costs of implementing
the headcount reduction.
Dividends
An interim dividend of 2.0 pence per share was paid in November
2020.
The Board is proposing a final dividend of 2.0 pence per share
(2019: Nil pence per share) reflecting the resilient trading
performance, strong financial position and our confident outlook.
Subject to shareholder approval at the Annual General Meeting to be
held on 9 June 2021 the final dividend will be paid on 2 July 2021
to shareholders whose names are on the Register of Members at close
of business on 4 June 2021. The ordinary shares will become
ex-dividend on 3 June 2021.
The Board continues to closely monitor the dividend policy,
recognising the Group's need for investment to drive future growth
and dividend flow to deliver overall value to our shareholders.
Cash flow and net debt
We entered 2020 in a strong financial position following the
significant progress made during 2019 in improving our cash
conversion and reducing our net debt - both important in providing
capacity for further investment in business development and
pipeline opportunities that support our long-term growth
strategy.
As projected, following a significant improvement in the second
half of the year as our underlying stock profile returned to nearer
historic levels, we are pleased to report that the Group has
delivered another strong underlying cash conversion performance of
102.9% (2019: 118.4%) as set out in the table below:
2020 2019
GBP'000 GBP'000
------------------------------ -------- --------
Underlying EBITDA 12,091 13,137
Net cash flow from operations 11,117 13,071
Non-underlying items 1,324 2,485
Underlying net cash flow from
operations 12,446 15,556
------------------------------ -------- --------
Cash conversion % 102.9% 118.4%
------------------------------ -------- --------
Net cash flow generated by our operations decreased to GBP11.1m
(2019: GBP13.1m). Working capital was broadly flat year on year
with the GBP1.6m increase in our inventories offset by movements in
other trade working capital. In line with expectations, the
increase in inventories was principally due to strategic stock
build in respect of manufacturing transfers across three key brands
as part of their lifecycle management, certain of which will be
held through to the second half of 2022.
Net debt reduced by GBP4.2m over the full year and stood at
GBP13.6m on 31 December 2020. This improvement was largely driven
by the continued strong cash conversion noted above.
GBP'000
---------------------------------------- --------
Net debt at 1 January 2020 (17,812)
Net cash generated from operations 11,117
Net capital expenditure (2,313)
Investments in joint venture (593)
Net finance expenses (1,650)
Dividends paid (1,201)
Foreign exchange on cash and borrowings (1,290)
Movement in IFRS16 lease liabilities 124
---------------------------------------- --------
Net debt at 31 December 2020 (13,618)
---------------------------------------- --------
Net capital expenditure of GBP2.3m (2019: GBP2.4m) largely
comprises investment in our product development pipeline of
GBP1.7m. The most significant component of this figure relates to
the completion of the initial clinical programme for Daxocox
(enflicoxib). Following the CVMP's positive opinion in February
2021, and subject to receipt of marketing authorisation expected in
Q2, Daxocox will launch early in the second half. The balance of
expenditure largely relates to continuing investment in our IT
infrastructure to deliver our objective of common platforms across
the Group.
The net debt to underlying EBITDA leverage ratio was 1.1 times
(2019: 1.4 times) versus the bank covenant of 3.5 times. At 31
December 2020, total facilities were GBP46.3m, of which GBP16.3m,
net of cash balances, was utilised, leaving headroom of
GBP30.3m.
Borrowing facilities
At 31 December 2020, the Group's financing arrangements
consisted of a committed revolving credit facility of EUR41.5m, a
EUR10m acquisition line, which cannot be utilised to fund our
operations, and EUR4.1m investment loans. All facilities were due
to expire on 31 March 2022.
As at 31 December 2020, all covenant requirements were met with
significant headroom across all three measures.
During the first quarter we have been in discussions with our
four syndicate banks to extend our existing banking facilities from
31 March 2022 to 31 March 2025. We have completed renewals with
three of the four banks and expect to finalise the remaining
documentation with the fourth in early April. The facilities remain
subject to the following covenants which are in operation at all
times:
-- Net debt to underlying EBITDA ratio of 3.5 times
-- Underlying EBITDA to interest ratio of minimum 4 times
-- Solvency (total assets less goodwill/total equity less goodwill) greater than 25%
Acquisitions
On 28 September 2020 the Group announced that it had entered
into an agreement with Canada-based biotech company Kane Biotech
Inc. under which the parties formed STEM Animal Health Inc.
("STEM"), a company dedicated to treating biofilm-related ailments
in animals. The Group acquired a one-third stake in STEM for a cash
consideration of CA$3m, payable over 48 months, of which CA$1m
(GBP0.6m) was paid during the financial year. The Group has an
option, for a period of six years, to acquire an additional
one-sixth stake in STEM for CA$4m.
Separately, we also announced that we had entered into a
licensing agreement, under which we will invest a further CA$2m,
consisting of an initial payment along with a series of potential
payments linked to various milestones, for rights to commercialise
products in global veterinary markets outside the Americas.
Both the equity investment in STEM and the licensing fee are
expected to be paid from existing cash resources. We expect the
agreement to be earnings enhancing in 2022.
Going concern
The Group continued to build a solid financial platform in 2020
and despite the uncertainty and challenges caused by COVID-19,
entered 2021 in a further improved financial position. As at 28
February 2021 net debt was GBP12.9m (31 December 2020: GBP13.6m).
Headroom on the banking facilities, including cash on balance
sheet, was GBP29.3m (31 December 2020: GBP30.3m).
In the early part of 2021 demand has been encouraging as both
Animalcare and the veterinary market continue to demonstrate
resilience during the pandemic. While our trading performance
remains robust, the directors have assessed the principal risks and
considered the impact of a "severe but plausible" downside scenario
for COVID-19 for the next 12 months as part of the Group's adoption
of the going concern basis. The major variables are the depth and
the duration of COVID-19 and the Group has run a series of future
trading scenarios to June 2022 to factor in a range of downside
revenue estimates with mitigating actions on cost and cash flow.
These downside scenarios principally mirror the challenging
conditions observed during Q2 2020, over a range of timescales,
where the impact of the pandemic was most significant. As
demonstrated in H1 2020, our scenario planning also reflects our
agility in responding to a downturn via reducing or deferring costs
to align with revenue and carefully managing our cash flows.
The outputs from these scenarios indicate that the Group would
operate well within its committed revolving credit facility of
EUR41.5m and maintain headroom against all covenant obligations
throughout the period to June 2022. Accordingly, the Directors
continue to adopt the going concern basis of preparation.
Summary and outlook
We continue to deliver against our strategic objective of
strengthening our financial base and are pleased to report another
strong cash performance and further reduction in both net debt and
net debt to underlying EBITDA leverage versus 2019.
Market demand in the first quarter is showing positive signs
with a marked increase in revenues compared to the same period in
2020. Looking further ahead, and subject to the receipt of
marketing authorisation in the EU and the UK, we continue to
prepare for the launch of Daxocox during the second half. Together
with the STEM oral health range, we expect these new products to
support revenue growth over the full financial year and more
significantly from 2022.
We will also continue to optimise and refine our existing
portfolio. This will reduce fragmentation and increase commercial
focus to drive growth within our higher margin core product range.
In connection with this, the Group's Belgium subsidiary
discontinued the local commercialisation of several antibiotics and
other lower margin products under a legacy distribution contract.
There is not expected to be an impact on market expectations for
2021 and beyond where the focus will, consistent with the Group's
strategy, continue to be on higher margin products.
Our strong balance sheet provides the capacity to assess
investment opportunities that support our long-term growth
strategy. We expect to increase investment versus prior year to
build and strengthen our pipeline.
Whatever further challenges 2021 presents, we are confident that
the Group's financial platform and its focus on a clear growth
strategy mean Animalcare will continue to be well placed to take
advantage of opportunities in a market with attractive
fundamentals.
Chris Brewster
Chief Financial Officer and Company Secretary
30 March 2021
Consolidated Income Statement
Year ended 31 December 2020
For the year ended 31st December
---------------------------------------------------------------------
Non-Underlying Non-Underlying
Underlying (note 4) Total Underlying (note 4) Total
2020 2020 2020 2019 2019 2019
Notes GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
-------------------------- ------ ----------- --------------- --------- ----------- --------------- ---------
Revenue 5 70,494 - 70,494 71,124 - 71,124
Cost of sales (33,935) - (33,935) (34,152) - (34,152)
-------------------------- ------ ----------- --------------- --------- ----------- --------------- ---------
Gross profit 36,559 - 36,559 36,972 - 36,972
-------------------------- ------ ----------- --------------- --------- ----------- --------------- ---------
Research and development
expenses (2,386) (1,100) (3,486) (2,922) (1,171) (4,093)
Selling and marketing
expenses (12,325) - (12,325) (11,862) - (11,862)
General and
administrative
expenses (13,302) (4,800) (18,102) (12,723) (4,771) (17,494)
Net other operating
(expense)/income 15 (1,858) (1,843) (3) (4,811) (4,814)
-------------------------- ------ ----------- --------------- --------- ----------- --------------- ---------
Operating profit/(loss) 8,561 (7,758) 803 9,462 (10,753) (1,291)
-------------------------- ------ ----------- --------------- --------- ----------- --------------- ---------
Financial expenses 6 (1,051) - (1,051) (1,856) - (1,856)
Financial income 7 540 - 540 1,539 - 1,539
-------------------------- ------ ----------- --------------- --------- ----------- --------------- ---------
Financial net result (511) - (511) 3,395 - 3,395
-------------------------- ------ ----------- --------------- --------- ----------- --------------- ---------
Share in net loss of
joint ventures accounted
for using the equity
method 12 (93) - (93) - - -
-------------------------- ------ ----------- --------------- --------- ----------- --------------- ---------
Profit/(loss) before
tax 7,957 (7,758) 199 9,145 (10,753) (1,608)
-------------------------- ------ ----------- --------------- --------- ----------- --------------- ---------
Income tax 8 (1,604) 1,639 35 (1,966) 2,236 270
-------------------------- ------ ----------- --------------- --------- ----------- --------------- ---------
Net profit/(loss) 6,353 (6,119) 234 7,179 (8,517) (1,338)
-------------------------- ------ ----------- --------------- --------- ----------- --------------- ---------
Net profit/(loss)
attributable
to:
The owners of the parent 6,353 (6,119) 234 7,179 (8,517) (1,338)
Earnings per share for
profit/(loss)
attributable
to the ordinary equity
holders of the Company:
Basic earnings per share 9 10.6p 0.4p 12.0p (2.2p)
Diluted earnings per
share 9 10.6p 0.4p 12.0p (2.2p)
-------------------------- ------ ----------- --------------- --------- ----------- --------------- ---------
In order to aid understanding of underlying business
performance, the Directors have presented underlying results before
the effect of exceptional and other items. These exceptional and
other items are analysed in detail in note 4 to these financial
statements. The accompanying notes form an integral part of these
consolidated financial statements.
Consolidated Statement of Comprehensive Income
Year ended 31 December 2020
For the year ended
31st December
--------------------
2020 2019
GBP'000 GBP'000
------------------------------------------------------- --------- ---------
Net profit/(loss) for the year 234 (1,338)
Other comprehensive income
Cumulative translation differences* 508 (795)
------------------------------------------------------- --------- ---------
Other comprehensive income/(loss), net of tax 508 (795)
------------------------------------------------------- --------- ---------
Total comprehensive income/(loss) for the year, net of
tax 742 (2,133)
------------------------------------------------------- --------- ---------
Total comprehensive income/(loss) attributable to:
The owners of the parent 742 (2,133)
------------------------------------------------------- --------- ---------
* May be reclassified subsequently to profit & loss.
Consolidated Statement of Financial Position
Year ended 31 December 2020
For the year ended
31st December
--------------------
2020 2019
Notes GBP'000 GBP'000
------------------------------------------------ ----- --------- ---------
Assets
Non-current assets
Goodwill 10 50,987 50,454
Intangible assets 11 37,812 43,000
Property, plant and equipment 265 312
Right-of-use-assets 16 1,790 1,917
Investments in joint ventures 12 1,457 -
Deferred tax assets 8 2,220 1,524
Other financial assets 63 59
Other non-current assets 48 72
------------------------------------------------ ----- --------- ---------
Total non-current assets 94,642 97,338
------------------------------------------------ ----- --------- ---------
Current assets
Inventories 12,797 11,102
Trade receivables 10,142 10,891
Other current assets 1,589 2,746
Cash and cash equivalents 5,265 6,165
------------------------------------------------ ----- --------- ---------
Total current assets 29,793 30,904
------------------------------------------------ ----- --------- ---------
Total assets 124,435 128,242
------------------------------------------------ ----- --------- ---------
Liabilities
Current liabilities
Borrowings 13 (637) (612)
Lease liabilities 16 (951) (830)
Trade payables (11,348) (10,334)
Tax payables (553) (1,288)
Accrued charges and deferred income 14 (2,686) (2,063)
Other current liabilities (3,202) (2,799)
------------------------------------------------ ----- --------- ---------
Total current liabilities (19,377) (17,926)
------------------------------------------------ ----- --------- ---------
Non-current liabilities
Borrowings 13 (16,432) (21,428)
Lease liabilities 16 (861) (1,106)
Deferred tax liabilities 8 (4,804) (5,176)
Deferred income 14 (556) (599)
Provisions (96) (118)
Other non-current liabilities (717) (118)
------------------------------------------------ ----- --------- ---------
Total non-current liabilities (23,466) (28,427)
------------------------------------------------ ----- --------- ---------
Total Liabilities (42,843) (46,353)
------------------------------------------------ ----- --------- ---------
Net assets 81,592 81,889
------------------------------------------------ ----- --------- ---------
Equity
Share capital 15 12,012 12,012
Share premium 15 132,729 132,729
Reverse acquisition reserve (56,762) (56,762)
Accumulated losses (9,445) (8,640)
Other reserves 3,058 2,550
Equity attributable to the owners of the parent 81,592 81,889
Non-controlling interest - -
------------------------------------------------ ----- --------- ---------
Total equity 81,592 81,889
------------------------------------------------ ----- --------- ---------
Consolidated Statement of Changes in Equity
Year ended 31 December 2020
Attributable to the owners of the parents
------------------------------------------------------------------
Retained
earnings/ Reverse Non-
Share Share Accumulated acquisition Other controlling Total
capital premium losses reserve reserve Total interest equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------------------- -------- -------- ------------ ------------ -------- -------- ------------ --------
At 1st January,
2020 12,012 132,729 (8,640) (56,762) 2,550 81,889 - 81,889
--------------------- -------- -------- ------------ ------------ -------- -------- ------------ --------
Net profit - - 234 - - 234 - 234
Other comprehensive
income - - - - 508 508 - 508
--------------------- -------- -------- ------------ ------------ -------- -------- ------------ --------
Total comprehensive
expense - - 234 - 508 742 - 742
--------------------- -------- -------- ------------ ------------ -------- -------- ------------ --------
Dividends paid - - (1,201) - - (1,201) - (1,201)
Share based payments - - 162 - - 162 - 162
--------------------- -------- -------- ------------ ------------ -------- -------- ------------ --------
At 31st December,
2020 12,012 132,729 (9,445) (56,762) 3,058 81,592 - 81,592
--------------------- -------- -------- ------------ ------------ -------- -------- ------------ --------
Attributable to the owners of the parents
-----------------------------------------------------------------------
Retained
earnings/ Reverse Non-
Share Share Accumulated acquisition controlling Total
capital premium losses reserve Other reserve Total interest equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------------------- -------- -------- ------------ ------------ ------------- -------- ------------ --------
At 1st January,
2019 12,012 132,729 (4,732) (56,762) 3,345 86,592 - 86,592
--------------------- -------- -------- ------------ ------------ ------------- -------- ------------ --------
Net loss - - (1,338) - - (1,338) - (1,338)
Other comprehensive
income - - - - (795) (795) - (795)
--------------------- -------- -------- ------------ ------------ ------------- -------- ------------ --------
Total comprehensive
expense - - (1,338) - (795) (2,133) - (2,133)
--------------------- -------- -------- ------------ ------------ ------------- -------- ------------ --------
Dividends paid - - (2,642) - - (2,642) - (2,642)
Exercise of share
options - - - - - - - -
Share based payments - - 72 - - 72 - 72
--------------------- -------- -------- ------------ ------------ ------------- -------- ------------ --------
At 31st December,
2019 12,012 132,729 (8,640) (56,762) 2,550 81,889 - 81,889
--------------------- -------- -------- ------------ ------------ ------------- -------- ------------ --------
Reverse acquisition reserve
Reverse acquisition reserve represents the reserve that has been
created upon the reverse acquisition of Animalcare Group plc.
Other reserve
Other reserve mainly relates to currency translation
differences. These exchange differences arise on the translation of
subsidiaries with a functional currency other than Sterling.
Consolidated Cash Flow Statement
Year ended 31 December 2020
For the year ended
31st December
--------------------
2020 2019
Notes GBP'000 GBP'000
-------------------------------------------------------- ----- --------- ---------
Operating activities
Profit/(loss) before tax 199 (1,608)
Non-cash and operational adjustments
Share in net result of joint ventures 12 93 -
Depreciation of property, plant and equipment 1,243 1,270
Amortisation of intangible assets 12 8,149 8,222
Impairment of intangible assets 12 19 1,632
Share-based payment expense 162 72
(Gain)/loss on disposal of fixed assets (16) 35
Non-cash movement in provisions 534 694
Movement allowance for bad debt and inventories 509 648
Financial income (219) (608)
Financial expense 815 1,250
Impact of foreign currencies (82) (330)
Loss/gain on disposal of IFRS16 & initial recognition 1 -
Non-cash movement on transition to IFRS 16 - 3
Other (2) (21)
Movements in working capital
Decrease/(Increase) in trade receivables 640 3,098
Decrease/(Increase) in inventories (1,615) 2,492
(Decrease)/increase in payables 883 (3,842)
Income tax (paid)/received (196) 99
-------------------------------------------------------- ----- --------- ---------
Net cash flow from operating activities 11,117 13,106
-------------------------------------------------------- ----- --------- ---------
Investing activities
Purchase of property, plant and equipment (177) (48)
Purchase of intangible assets 12 (2,258) (2,343)
Proceeds from the sale of property, plant and equipment
(net) 122 -
Capital contribution in joint venture 13 (593) -
-------------------------------------------------------- ----- --------- ---------
Net cash flow used in investing activities (2,906) (2,391)
-------------------------------------------------------- ----- --------- ---------
Financing activities
Proceeds from loans and borrowings and convertible
debt (6,002) (8,070)
Repayment of loans and borrowings (5) (30)
Repayment of IFRS16 lease liability 17 (1,081) (1,053)
Dividends paid 16 (1,201) (2,642)
Interest paid (516) (617)
Other financial expense (53) (27)
-------------------------------------------------------- ----- --------- ---------
Net cash flow used in financing activities (8,858) (12,439)
-------------------------------------------------------- ----- --------- ---------
Net decrease in cash and cash equivalents (647) (1,724)
Cash and cash equivalents at beginning of year 6,165 8,035
Exchange rate differences on cash and cash equivalents (253) (146)
-------------------------------------------------------- ----- --------- ---------
Cash and cash equivalents at end of year 5,265 6,165
-------------------------------------------------------- ----- --------- ---------
Reconciliation of net cash flow to movement in
net debt
Net decrease in cash and cash equivalents in the
year (647) (1,724)
Cash flow from decrease in debt financing 6,007 8,100
Foreign exchange differences on cash and borrowings (1,290) 1,336
-------------------------------------------------------- ----- --------- ---------
Movement in net debt during the year 4,070 7,712
-------------------------------------------------------- ----- --------- ---------
Net debt at the start of the year (17,812) (23,588)
Movement in lease liabilities during the year 17 124 (1,936)
-------------------------------------------------------- ----- --------- ---------
Net debt at the end of the year (13,618) (17,812)
-------------------------------------------------------- ----- --------- ---------
Notes to the Consolidated Financial Statement
Year ended 31 December 2020
1. Financial information
The financial information set out above does not constitute the
Company's statutory accounts for the years ended 31 December 2020
and 31 December 2019. The financial information for 2019 is derived
from the statutory accounts for 2019 which have been delivered to
the Registrar of Companies. The Auditor has reported on the 2019
accounts; their report was (i) unqualified, (ii) included reference
to a material uncertainty related to going concern to which the
auditor drew attention by way of emphasis without qualifying their
report and (iii) did not contain a statement under section 498 (2)
or (3) of the Companies Act 2006. The external auditor has reported
on the 2020 accounts; the report was (i) unqualified, (ii) did not
include references to any matters to which the external auditor
drew attention by way of emphasis without qualifying the reports
and (iii) did not contain statements under section 498(2) or (3) of
the Companies Act 2006.
2. Basis of preparation
The Group financial statements have been prepared and approved
by the Directors under the historical cost convention, except for
the revaluation of certain financial instruments, in accordance
with International accounting standards in conformity with the
requirements of the Companies Act 2006 and international financial
reporting standards adopted pursuant to Regulations (EC) NO
1606/2002 as it applies in the European Union. They have also been
prepared in accordance with the requirements of the AIM Rules.
The consolidated financial statements cover the year ended 31
December 2020 and compromise the consolidated results of the
Group.
The notes to this preliminary announcement are unaudited in
relation to 2020 and extracted from the audited financial
statements in relation to 2019.
3. Summary of significant accounting policies
Going concern
An analysis of the factors likely to impact on the Group's
future business activities, performance and strategy are set out in
the Chief Executive's Review and Chief Financial Officer's Review.
The uncertainty as to the future impact on the Group of the recent
COVID-19 outbreak has been considered as part of the Group's
adoption of the going concern basis.
At 31 December 2020, the Group's financing arrangements
consisted of a committed revolving credit facility of EUR41.5m, a
EUR10m acquisition line, which cannot be utilised to fund our
operations, and EUR4.1m investment loans. All facilities were due
to expire on 31 March 2022.
During the first quarter we have been in discussions with our
four syndicate banks to extend our existing banking facilities from
31 March 2022 to 31 March 2025. We have completed renewals with
three of the four banks and expect to finalise the remaining
documentation with the fourth in early April.
The facilities are subject to the following covenants which are
in operation at all times:
-- Net debt to underlying EBITDA ratio of maximum 3.5 times
-- Underlying EBITDA to interest ratio of minimum 4 times
-- Solvency (total assets less goodwill/total equity less goodwill) greater than 25%
As at 31 December 2020, all covenant requirements were met with
significant headroom across all three measures.
In the early part of 2021 demand has been encouraging as both
Animalcare and the veterinary market continue to demonstrate
resilience during the pandemic. While our trading performance
remains robust, the directors have assessed the principal risks and
considered the impact of a "severe but plausible" downside scenario
for COVID-19 for the next 12 months as part of the Group's adoption
of the going concern basis. The major variables are the depth and
the duration of COVID-19 and the Group has run a series of future
trading scenarios to June 2022 to factor in a range of downside
revenue estimates with mitigating actions on cost and cash flow.
These downside scenarios principally mirror the challenging
conditions observed during Q2 2020, over a range of time, where the
impact of the pandemic was most significant. As demonstrated in H1
2020, our scenario planning also reflects our agility in responding
to a downturn via reducing or deferring costs to align with revenue
and carefully managing our cash flows.
The outputs from these scenarios indicate that the Group would
operate well within its committed revolving credit facility of
EUR41.5m and maintain headroom against all covenant obligations
throughout the period to June 2022. Accordingly, the Directors
continue to adopt the going concern basis of preparation.
4. Non-recurring
For the year ended
31st December
--------------------
2020 2019
GBP'000 GBP'000
--------------------------------------------------------------- --------- ---------
Amortisation and impairment of acquisition related intangibles
Classified within research and development expenses 1,100 1,171
Classified within general and administrative expenses 4,800 4,771
Classified within net other operating expenses - 1,619
--------------------------------------------------------------- --------- ---------
Total amortisation and impairment of acquisition-related
intangibles 5,900 7,561
--------------------------------------------------------------- --------- ---------
Restructuring costs 415 1,795
Acquisition and integration costs 698 550
Brexit-related costs 5 243
Divestments and business disposals 85 173
COVID-19 283 -
Other non-underlying items 372 431
--------------------------------------------------------------- --------- ---------
Total non-underlying items before taxes 7,758 10,753
--------------------------------------------------------------- --------- ---------
Tax impact (1,639) (2,236)
--------------------------------------------------------------- --------- ---------
Total non-underlying items after taxes 6,119 8,517
--------------------------------------------------------------- --------- ---------
The amortisation charge of acquisition-related intangibles
largely relates to the Esteve acquisition of GBP2,047k (2019:
GBP2,020k), the Riemser acquisition of GBP373k (2019: GBP369k) and
the reverse acquisition of Animalcare Group plc of GBP3,479k (2019:
GBP3,629k). The prior year impairment charge of GBP1,619k largely
reflects the non-cash impairment of three projects within the
acquired product development pipeline at a fair value of GBP1.5m
that failed to meet technical, competitive or commercial
milestones.
During the year the Group incurred restructuring costs of
GBP415k (2019: GBP1,795k) largely relating to reorganisation of the
Production Animals business unit in Spain. The prior year charge
primarily relates to the R&D and Technical & Regulatory
team centralisation and associated costs of implementing the
headcount reduction.
Acquisition and integration costs of GBP698k (2019: GBP550k)
include costs associated with the STEM Animal Health transaction
and integration costs in connection with the acquisition of Ecuphar
NV, including manufacturing transfer costs as we continue to
strengthen and simplify our supply chain.
5. Segment information
Following the sale of the wholesale business on 4 September
2018, the Group now only reports one segment, being
"Pharmaceuticals". This reporting segment is used for management
purposes.
The Pharmaceutical segment is active in the development and
marketing of innovative pharmaceutical products that provide
significant benefits to animal health.
The measurement principles used by the Group in preparing this
segment reporting are also the basis for segment performance
assessment. The Board of Directors of the Group acts as the Chief
Operating Decision Maker. As a performance indicator, the Chief
Operating Decision Maker controls performance by the Group's
revenue, gross margin, Underlying EBITDA and EBITDA. EBITDA is
defined by the Group as net profit plus finance expenses, less
financial income, plus income taxes and deferred taxes, plus
depreciation, amortisation and impairment. Underlying EBITDA equals
EBITDA plus non-underlying items.
The following table summarises the segment reporting from
continuing operations for 2020 and 2019. As management's
controlling instrument is mainly revenue-based, the reporting
information does not include assets and liabilities by segment and
is as such not presented per segment.
Pharma
GBP'000
-------------------------------------- --------
For the year ended 31st December 2020
Revenues 70,494
Gross Profit 36,559
Gross Profit % 52%
Segment underlying EBITDA 12,091
Segment underlying EBITDA % 17%
Segment EBITDA 10,231
Segment EBITDA % 15%
For the year ended 31st December 2019
Revenues 71,124
Gross Profit 36,972
Gross Profit % 52%
Segment underlying EBITDA 13,137
Segment underlying EBITDA % 18%
Segment EBITDA 9,925
Segment EBITDA % 14%
The segment EBITDA is reconciled with the consolidated net
profit/(loss) of the year as follows:
For the year ended
31st December
--------------------
2020 2019
GBP'000 GBP'000
------------------------------------------ --------- ---------
Segment EBITDA 10,231 9,925
Depreciation, amortisation and impairment (9,428) (11,216)
------------------------------------------ --------- ---------
Operating profit/(loss) 803 (1,291)
Financial expenses (1,051) (1,856)
Financial income 540 1,539
Share in net loss of joint ventures (93) -
Income taxes (985) 36
Deferred taxes 1,020 234
------------------------------------------ --------- ---------
Net profit/(loss) 234 (1,338)
------------------------------------------ --------- ---------
Segment assets excluding deferred tax assets and financial
instruments located in Belgium, Spain, Portugal, the United Kingdom
and other geographies are as follows:
For the year ended
31st December
--------------------
2020 2019
GBP'000 GBP'000
----------------------------------------------------- --------- ---------
Belgium 11,353 14,325
Spain 2,476 2,424
Portugal 4,276 3,997
UK 68,042 70,572
Other 6,275 4,496
----------------------------------------------------- --------- ---------
Non-current assets excluding deferred tax assets and
financial instruments 92,422 95,814
----------------------------------------------------- --------- ---------
Revenue by product category
For the year ended
31st December
--------------------
2020 2019
GBP'000 GBP'000
-------------------------------------- --------- ---------
Companion animals 44,808 46,464
Production animals 19,720 18,844
Horses 5,947 5,681
Petfood, Instrumentation and Services 19 135
-------------------------------------- --------- ---------
Total 70,494 71,124
-------------------------------------- --------- ---------
Revenue by geographical area
For the year ended
31st December
--------------------
2020 2019
GBP'000 GBP'000
----------------------- --------- ---------
Belgium 9,502 9,303
The Netherlands 1,326 2,106
United Kingdom 11,553 14,137
Germany 10,746 10,337
Spain 17,990 18,644
Italy 7,935 6,142
Portugal 4,554 4,598
European Union - other 5,621 4,925
Asia 782 471
Middle East Africa 81 44
Other 404 417
----------------------- --------- ---------
Total 70,494 71,124
----------------------- --------- ---------
Revenue by category
For the year ended
31st December
--------------------
2020 2019
GBP'000 GBP'000
--------------- --------- ---------
Product sales 69,443 69,946
Services sales 1,051 1,178
--------------- --------- ---------
Total 70,494 71,124
--------------- --------- ---------
Product revenue is recognised when the performance obligation is
satisfied at a point in time. Service revenue is recognised by
reference of the stage of completion.
6. Financial expenses
Financial expenses include the following elements:
For the year ended
31st December
--------------------
2020 2019
GBP'000 GBP'000
------------------------------------------------------- --------- ---------
Interest expense 516 618
Foreign currency losses 418 1,120
Change in fair value - losses on financial instruments 17 -
Other financial expenses 100 118
------------------------------------------------------- --------- ---------
Total 1,051 1,856
------------------------------------------------------- --------- ---------
7. Financial income
Financial income includes the following elements:
For the year ended
31st December
--------------------
2020 2019
GBP'000 GBP'000
-------------------------------- --------- ---------
Foreign currency exchange gains 518 1,509
Income from financial assets 13 30
Other financial income 9 -
-------------------------------- --------- ---------
Total 540 1,539
-------------------------------- --------- ---------
8. Income tax
Income tax
The following table shows the breakdown of the tax expense for
2020 and 2019:
For the year ended
31st December
--------------------
2020 2019
GBP'000 GBP'000
----------------------------------------------------- --------- ---------
Current tax charge (830) (617)
Tax adjustments in respect of previous years (155) 653
----------------------------------------------------- --------- ---------
Total current tax charge (985) 36
----------------------------------------------------- --------- ---------
Deferred tax - origination and reversal of temporary
differences 950 272
Deferred tax - adjustments in respect of previous
years 70 (38)
Total deferred tax credit 1,020 234
----------------------------------------------------- --------- ---------
Total tax income/(expense) for the year 35 270
----------------------------------------------------- --------- ---------
The total tax expense can be reconciled to the accounting profit
as follows:
For the year ended
31st December
--------------------
2020 2019
GBP'000 GBP'000
------------------------------------------------------- --------- ---------
Profit/(loss) before tax 199 (1,608)
Share in net loss of joint ventures 93 -
------------------------------------------------------- --------- ---------
Profit/(loss) before tax, excl. share in net loss
of joint ventures 292 (1,608)
Tax at 19.00% (2019: 19.00%) (55) 305
Effect of:
Overseas tax rates (262) (181)
Non-deductible expenses (109) (146)
Income not subject to tax - 31
Derecognition of formerly recognised deferred tax
assets - (3)
Other permanent tax differences - -
Other taxes (7) (60)
Use of tax losses previously not recognised 181 109
Changes in statutory enacted tax rate (4) 27
Tax adjustments in respect of previous year (85) 615
Non recognition of deferred tax on current year losses (423) (429)
Recognition of formerly recognised deferred tax assets
on TLCF 821 (6)
Current tax-to be booked - 8
Other (22) -
Income tax expense as reported in the consolidated
income statement 35 270
------------------------------------------------------- --------- ---------
The tax credit of GBP1,639k (2019: GBP2,236k) shown within
"non-underlying items" on the face of the consolidated income
statement, which forms part of the overall tax credit of GBP35k
(2019: GBP270k) relates to the items in note 4.
The tax rates used for the 2020 and 2019 reconciliation above
are the corporate tax rates of 25.00% (Belgium), 25.00% (the
Netherlands), 30.70% (Germany), 33.00% (France), 25.00% (Spain),
24.00% (Italy), 21.00% (Portugal) and 19.00% (the United Kingdom).
These taxes are payable by corporate entities in the
above-mentioned countries on taxable profits under tax law in that
jurisdiction.
T he March 2021 Budget announced an increase in the UK standard
rate of corporation tax to 25% from 1 April 2023. The legislation
was not enacted during the year so deferred tax has been provided
using the enacted rate of 19%. If deferred tax was calculated using
the 25% rate the net deferred tax liability recognised at the
balance sheet date would be increased from GBP3,747k to
GBP5,005k.
A similar tax reform in Belgium was substantially enacted in
December 2017. The tax rate will gradually decrease from 33.99%
(2017) to 29.58% in 2018 and 2019 and to 25.00% from 2020
onwards.
Deferred taxes at the balance sheet date have been measured
using the enacted tax rates and reflected in these financial
statements.
Deferred tax
(a) Recognised deferred tax assets and liabilities
Assets Liabilities Total
------------------ ------------------ ------------------
2020 2019 2020 2019 2020 2019
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
-------- -------- -------- -------- -------- --------
Goodwill (150) (7) (785) (765) (935) (772)
Intangible assets 275 719 (4,048) (4,490) (3,773) (3,771)
Property, plant and
equipment (309) (244) (130) (155) (439) (399)
Financial fixed assets 1 1 - - 1 1
Inventory (22) (8) (19) (21) (41) (29)
Trade and other payables/receivables 120 3 46 (1) 166 2
Borrowings 272 295 132 112 404 407
Accruals and deferred
income 104 6 - - 104 6
Tax losses carried forward 1,929 759 - 144 1,929 903
------------------------------------- -------- -------- -------- -------- -------- --------
Total 2,220 1,524 (4,804) (5,176) (2,584) (3,652)
------------------------------------- -------- -------- -------- -------- -------- --------
(b) Movements during the year
Movement of deferred taxes during 2020:
Balance Balance
at Foreign at 31st
1 January Recognised Disposal exchange December
2020 in income of subsidiaries adjustments 2020
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------------------- ---------- ---------- ---------------- ------------ ---------
Goodwill (772) (118) - (45) (935)
Intangible assets (3,771) (37) - 35 (3,773)
Property, plant and equipment (399) (21) - (19) (439)
Financial fixed assets 1 - - - 1
Inventory (29) (10) - (2) (41)
Trade and other payables/receivables 2 165 - (1) 166
Accruals and deferred income 6 97 - 1 104
Borrowings 407 (24) - 21 404
Tax losses carry forward and
other tax benefits 903 968 - 58 1,929
------------------------------------- ---------- ---------- ---------------- ------------ ---------
Net deferred tax (3,652) 1,020 - 48 (2,584)
------------------------------------- ---------- ---------- ---------------- ------------ ---------
Movement of deferred taxes during 2019:
Balance Balance
at Foreign at 31st
1 January Recognised Disposal exchange December
2019 in income of subsidiaries adjustments 2019
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------------------- ---------- ---------- ---------------- ------------ ---------
Goodwill (609) (197) - 34 (772)
Intangible assets (4,135) 405 - (41) (3,771)
Property, plant and equipment 2 (411) - 10 (399)
Financial fixed assets 1 - - - 1
Inventory (18) (13) - 2 (29)
Trade and other payables/receivables 46 (44) - - 2
Accruals and deferred income - 6 - - 6
Borrowings - 420 - (13) 407
Tax losses carry forward and
other tax benefits 891 68 - (56) 903
------------------------------------- ---------- ---------- ---------------- ------------ ---------
Net deferred tax (3,822) 234 - (64) (3,652)
------------------------------------- ---------- ---------- ---------------- ------------ ---------
Tax losses
The Group has unused tax losses, tax credits and notional
interest deduction available in an amount of GBP7.532k for 2020
(2019: GBP3,014k).
Deferred tax assets have been recognised on available tax losses
carried forward for some legal entities, resulting in amounts
recognised of GBP1,929k (2019: GBP759k). This was based on
management's estimate that sufficient positive taxable basis will
be generated in the near future for the related legal entities with
fiscal losses.
9. Earnings per share
Diluted earnings per share amounts are calculated by dividing
the net profit attributable to ordinary equity holder of the parent
Company by the weighted average number of ordinary shares
outstanding during the year plus the weighted average number of
ordinary shares that would be issued on conversion of all potential
dilutive ordinary shares.
The following income and share data were used in the earnings
per share computations:
Profit/(loss) before continuing operations
For the year ended 31st December
--------------------------------------------
2020 2019 2020 2019
Underlying Underlying Total Total
GBP'000 GBP'000 GBP'000 GBP'000
--------------------------------------- ----------- ----------- -------- --------
Net profit/(loss) 6,353 7,179 234 (1,338)
--------------------------------------- ----------- ----------- -------- --------
Net profit attributable to ordinary
equity holders of the parent adjusted
for the effect of dilution 6,353 7,179 234 (1,338)
--------------------------------------- ----------- ----------- -------- --------
Average number of shares (basic and diluted)
For the year ended 31st December
------------------------------------------------
2020 2019 2020 2019
Number of shares Underlying Underlying Total Total
---------------------------------------- ----------- ----------- ---------- ----------
Weighted average number of ordinary
shares for basic
earnings per share 60,057,161 60,057,161 60,057,161 60,057,161
---------------------------------------- ----------- ----------- ---------- ----------
Dilutive potential ordinary shares 42,581 - 42,581 -
Weighted average number of ordinary
shares adjusted for effect of dilution 60,099,742 60,057,161 60,099,742 60,057,161
---------------------------------------- ----------- ----------- ---------- ----------
Basic earnings/(loss) per share
For the year ended 31st December
----------------------------------------------
2020 2019 2020 2019
Underlying Underlying Total Total
in pence in pence in pence in pence
-------------------------------------------- ----------- ----------- --------- ---------
From operations attributable to the
ordinary equity holders of the company 10.6 12.0 0.4 (2.2)
-------------------------------------------- ----------- ----------- --------- ---------
Total basic earnings per share attributable
to the ordinary equity holders of the
company 10.6 12.0 0.4 (2.2)
-------------------------------------------- ----------- ----------- --------- ---------
Diluted earnings/(loss) per share
For the year ended 31st December
----------------------------------------------
2020 2019 2020 2019
Underlying Underlying Total Total
in pence in pence in pence in pence
-------------------------------------------- ----------- ----------- --------- ---------
From operations attributable to the
ordinary equity holders of the Company 10.6 12.0 0.4 (2.2)
-------------------------------------------- ----------- ----------- --------- ---------
Total basic earnings per share attributable
to the ordinary equity holders of the
Company 10.6 12.0 0.4 (2.2)
-------------------------------------------- ----------- ----------- --------- ---------
10. Goodwill
On acquisition, goodwill acquired in a business combination is
allocated to the cash-generating units which are expected to
benefit from that business combination. This cash-generating unit
corresponds to the nature of the business, following the separate
division Pharmaceuticals. The goodwill has been allocated to the
cash-generating unit "CGU" as follows:
For the year ended
31st December
--------------------
2020 2019
GBP'000 GBP'000
--------------------- --------- ---------
CGU: Pharmaceuticals 50,987 50,454
--------------------- --------- ---------
Total 50,987 50,454
--------------------- --------- ---------
The changes in the carrying value of the goodwill can be
presented as follows for the years 2020 and 2019:
Total
GBP'000
---------------------- --------
At 1st January 2019 50,937
Disposals -
Currency translation (483)
---------------------- --------
At 31st December 2019 50,454
---------------------- --------
At 1st January 2020 50,454
Disposals -
Impairment -
Currency translation 533
---------------------- --------
At 31st December 2020 50,987
---------------------- --------
Goodwill allocated to the Pharmaceuticals CGU includes goodwill
recognised as a result of past business combinations of Esteve,
Equipharma NV, Ecuphar BV, Cardon Pharmaceuticals NV and the
reverse acquisition of Animalcare Group plc in 2017.
The discount rate and growth rate (in perpetuity) used for value
in use calculations are as follows:
2020 2019
------------------------------ ---- ----
Discount rate (pre-tax) % 10.2 11.8
Growth rate (in perpetuity) % 2.0 2.0
------------------------------ ---- ----
Cash flow forecasts are prepared using the current operating
budget approved by the Directors, which covers a five-year period
and an appropriate extrapolation of cash flows beyond this. The
cash flow forecasts assume revenue and profit growth in line with
our strategic priorities.
The Group's impairment review is sensitive to change in
assumptions used, most notably the discount rates and the
perpetuity growth rates.
A 1.0% increase in discount rates would cause the value in use
of the CGU to reduce by GBP21.8m but would not give rise to an
impairment. A 1.0% reduction in perpetuity growth rates would cause
the value in use of the CGU to reduce by GBP16.8m, but would not
give rise to an impairment. " The CGU is robust to small reductions
in short-term cash flows, whether driven by lower sales growth,
lower operating profits or lower cash conversion. A 59.5% reduction
in total annual cash flows would give rise to an impairment of
GBP100k. An increase in discount rates to 20.7% or a reduction in
perpetuity growth rates to (18.8%) would each give rise to an
impairment in the CGU of GBP100k.
11. Intangible assets
The changes in the carrying value of the intangible assets can
be presented as follows for the years 2020 and 2019:
Patents, Product portfolios
distribution and product
In-process rights and development Capitalized
R&D licenses costs software Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------------------- ---------- ------------- ------------------ ----------- --------
Acquisition value
---------------------- ---------- ------------- ------------------ ----------- --------
At 1st January 2019 17,079 19,108 40,668 1,181 78,036
---------------------- ---------- ------------- ------------------ ----------- --------
Additions 1,582 251 208 302 2,343
Disposals (1,830) (62) (46) - (1,938)
Transfers (88) (136) (3) 88 (139)
Currency translation (217) (723) (826) (61) (1,827)
Other 1,395 - (1,395) 6 6
---------------------- ---------- ------------- ------------------ ----------- --------
At 31st December 2019 17,921 18,438 38,606 1,516 76,481
---------------------- ---------- ------------- ------------------ ----------- --------
Additions 1,592 39 51 573 2,255
Disposals (1,104) - (1,957) (14) (3,075)
Transfers - - - - -
Currency translation 246 789 916 74 2,025
Other - - - - -
---------------------- ---------- ------------- ------------------ ----------- --------
At 31st December 2020 18,655 19,266 37,616 2,149 77,686
---------------------- ---------- ------------- ------------------ ----------- --------
Amortisation
---------------------- ---------- ------------- ------------------ ----------- --------
At 1st January 2019 (3,536) (7,721) (14,816) (629) (26,702)
---------------------- ---------- ------------- ------------------ ----------- --------
Amortisations (1,546) (2,851) (3,490) (335) (8,222)
Disposals 1,828 62 13 - 1,903
Impairments (1,632) - - - (1,632)
Transfers - 136 3 - 139
Currency translation 72 405 521 39 1,037
Other 1 - - (5) (4)
---------------------- ---------- ------------- ------------------ ----------- --------
At 31st December 2019 (4,813) (9,969) (17,769) (930) (33,481)
---------------------- ---------- ------------- ------------------ ----------- --------
Amortisations (1,473) (2,805) (3,508) (363) (8,149)
Disposals 1,080 - 1,958 14 3,052
Impairments - (19) - - (19)
Currency translation (93) (511) (619 (54) (1.277)
Transfers 44 - - (44) -
Other - - - - -
---------------------- ---------- ------------- ------------------ ----------- --------
At 31st December 2020 (5,255) (13,304) (19,938) (1,377) (39,874)
---------------------- ---------- ------------- ------------------ ----------- --------
Net carrying value
At 31st December 2020 13,400 5,962 17,678 772 37,812
At 31st December 2019 13,108 8,469 20,837 586 43,000
---------------------- ---------- ------------- ------------------ ----------- --------
In-process research and development relates to acquired
development projects as part of the Esteve business combination in
2015, the reverse acquisition of Animalcare Group plc in 2017 and
external and internal in-process R&D costs for which the
capitalisation criteria are met. Patents, distribution rights and
licences include amounts paid for exclusive distribution rights as
well as distribution rights acquired as part of the Esteve business
combination in 2015 and the reverse acquisition of Animalcare Group
plc in 2017.
Product portfolios and product development costs relate to
amounts paid for acquired brands as well as external and internal
product development costs capitalised on the development projects
in the pipeline for which the capitalisation criteria are met.
The total amortisation charge for 2020 is GBP8,149k (2019:
GBP8,222k) which is included in lines cost of sales, research and
development expenses, sales and marketing expenses and general and
administrative expenses of the consolidated income statement.
Included in the total amortisation and impairment charge is
GBP5,900k (2019: GBP7,561k) relating to acquisition related
intangibles.
In 2020, Animalcare Group plc recorded an impairment charge of
GBP19k (2019: GBP1,632k).
12. Investments in joint ventures
On 28 September 2020 the Group announced that it has entered
into an agreement with Canada-based biotech company Kane Biotech
Inc. under which the parties formed STEM Animal Health Inc.
("STEM"), a company dedicated to treating biofilm-related ailments
in animals. The Group acquired, via its 100% subsidiary Ecuphar NV,
33,34% in STEM for a cash consideration of CA$3m, payable over 48
months, of which CA$1m was paid during the financial year. Based on
the existing voting rights (33%) and other contractual
arrangements, the Group does not have power over the investee.
Accordingly, the investment such accounted for the investment in
STEM through the equity method in its consolidated financial
statements.
Both the equity investment in STEM and the licensing fee are
expected to be paid from existing cash resources. The Group expect
the agreement to be earnings enhancing in 2022.
% of ownership
interest Carrying amount
---------------- ------------------
2020 2019 2020 2019
Place of
business/country Nature of Measurement
Name of entity of incorporation % % relationship method GBP'000 GBP'000
--------------- ------------------ --------- ----- ------------- ------------- -------- --------
STEM Animal
Health Inc. Canada 33.34% 0 Joint Venture Equity method 1,457 0
--------------- ------------------ --------- ----- ------------- ------------- -------- --------
The tables below provide summarised financial information for
the Joint Venture in STEM Animal Health Inc. which is material to
the group. The information disclosed reflects the amounts presented
in the financial statements of the relevant joint venture and not
Animalcare's share of those amounts.
For the year
ended 31st December
2020
GBP'000
---------------------------------- --------------------
Non-current assets 760
Current assets 911
---------------------------------- --------------------
Total assets 1,671
---------------------------------- --------------------
Non-current liabilities 0
Current liabilities 297
---------------------------------- --------------------
Total liabilities 297
---------------------------------- --------------------
Net assets 1,374
---------------------------------- --------------------
Group Share 458
Goodwill 552
Fair value identified intangibles 608
Deferred tax liability (161)
---------------------------------- --------------------
Investment value in joint venture 1,457
---------------------------------- --------------------
Summarised statement of comprehensive income:
For the year
ended
31st December
2020
GBP'000
----------------------------------------------------------- --------------
Sales 134
Operating expenses (378)
Financial result, net (1)
----------------------------------------------------------- --------------
Net loss for the year (245)
Group share in net loss for the year (82)
Depreciation on fair value adjustments on intangible fixed
assets (net of deferred tax) (11)
----------------------------------------------------------- --------------
Total group share in net loss for the year (93)
Other comprehensive expense (18)
----------------------------------------------------------- --------------
Group share in total comprehensive expense (111)
----------------------------------------------------------- --------------
Reconciliation of the aforementioned financial information with
the net carrying amount of the investment of STEM Animal Health
Inc. in the consolidated financial statements:
As per 31 December 2019 0
---------------------------------------------- -----
Acquisition in joint venture 1,568
Group share of net profit/(loss) for the year -93
Foreign currency translation differences -18
---------------------------------------------- -----
As per 31 December 2020 1,457
---------------------------------------------- -----
13. Borrowings
The loans and borrowings include the following:
For the year ended
31st December
--------------------
Interest 2020 2019
rate Maturity GBP'000 GBP'000
------------------------------ -------- -------- --------- ---------
Other loans 1.56% - 9
Euribor
Revolving credit facilities +1.50% Mar-22 12,227 16,845
Euribor
Roll over investment facility +1.50% Mar-22 797 1,358
Euribor
Acquisition loan +1.75% Mar-22 4,045 3,828
See note
Lease liabilities 22 1,812 1,936
------------------------------ -------- -------- --------- ---------
Total loans and borrowings 18,881 23,976
------------------------------ -------- -------- --------- ---------
Of which
Non-current 17,293 22,534
Current 1,588 1,442
------------------------------ -------- -------- --------- ---------
Revolving credit facilities and roll over investment
facilities
The Group's financing arrangements are split equally amongst
four syndicate banks. The current agreements consist of:
-- EUR41.5m revolving credit facilities
-- EUR10m available acquisition financing
-- EUR4.08m investment loans
The loans have a variable, EURIBOR based interest rate,
increased with a margin of 1.50% or 1.75%. As at 31 December 2020
the revolving credit facilities and the acquisition financing had a
bullet maturity in March 2022.
During March 2021 we agreed an extension to our existing banking
facilities with our syndicate of banks, extending the maturity date
to 31 March 2025.
14. Accrued charges and deferred income
Accrued charges and deferred income consist of the
following:
For the year ended
31st December
--------------------
2020 2019
GBP'000 GBP'000
-------------------------------------- --------- ---------
Accrued charges 2,450 1,898
Deferred income - due within one year 234 173
Other 2 (8)
-------------------------------------- --------- ---------
Total due within one year 2,686 2,063
-------------------------------------- --------- ---------
Deferred income - due after one year 556 599
-------------------------------------- --------- ---------
Accrued charges mainly relate to accrued product development
expenses of GBP882k (2019: GBP790k) and several accrued charges
relating to commissions and bonuses in Animalcare for an amount of
GBP653k (2019: GBP508k), Ecuphar Veterinaria for an amount of
GBP538k (2019: GBP294k) and GBP307k (2019: GBP261k) for Belphar.
Deferred income are contract liabilities that arise from certain
services sold by the Group's subsidiary Animalcare Ltd. In return
for a single upfront payment, Animalcare Ltd commits to a fixed
term contract to provide certain database, pet reunification and
other support services to customers. There is no contractual
restriction on the amount of times the customer makes use of the
services. At the commencement of the contract, it is not possible
to determine how many times the customer will make use of the
services, nor does historical evidence provide indications of any
future pattern of use. As such, income is recognised evenly over
the term of the contract, currently between eight and 14 years.
Movements in the Group's deferred income liabilities during the
current year are as follows:
For the year ended
31st December
--------------------
2020 2019
GBP'000 GBP'000
----------------------------------------------- --------- ---------
Balance at the beginning of the year 772 807
Income deferred to following years 201 160
Release of income deferred from previous years (183) (195)
----------------------------------------------- --------- ---------
Balance at the end of the year 790 772
----------------------------------------------- --------- ---------
The deferred income liabilities fall due as follows:
For the year ended
31st December
--------------------
2020 2019
GBP'000 GBP'000
------------------------------- --------- ---------
Within one year 234 173
After one year 556 599
------------------------------- --------- ---------
Balance at the end of the year 790 772
------------------------------- --------- ---------
15. Equity
Share capital
For the year ended
31st December
--------------------------------------------------- ----------------------
Number of shares 2020 2019
--------------------------------------------------- ---------- ----------
Allotted, called up and fully paid Ordinary Shares
of 20p each 60,057,161 60,057,161
--------------------------------------------------- ---------- ----------
For the year ended
31st December
--------------------
2020 2019
GBP'000 GBP'000
--------------------------------------------------- --------- ---------
Allotted, called up and fully paid Ordinary Shares
of 20p each 12,012 12,012
--------------------------------------------------- --------- ---------
Dividends
For the year ended
31st December
--------------------
2020 2019
GBP'000 GBP'000
---------------------------------------------------- --------- ---------
Ordinary final dividend paid for the period ended
31st December 2018 of 2.4p per share - 1,441
Ordinary interim dividend paid for the period ended
31st December 2019 of 2.0 per share - 1,201
Ordinary final dividend paid for the period ended
31st December 2020 of 2.0 per share 1,201 -
---------------------------------------------------- --------- ---------
1,201 2,642
---------------------------------------------------- --------- ---------
The proposed final dividend of 2.0 pence per share is subject to
approval of shareholders at the Annual General Meeting and has not
been included as a liability as at 31st December 2020, in
accordance with IAS 10 "Events After the Balance Sheet Date".
16. IFRS 16 Leases
The balance sheet shows the following amounts relating to leases
as at 31st December 2020:
31 December 1 January
2020 2020
GBP'000 GBP'000
------------------------------ ----------- ---------
Buildings 831 893
Vehicles 958 989
Other 1 35
------------------------------ ----------- ---------
Total right-of-use assets 1,790 1,917
------------------------------ ----------- ---------
Current lease liabilities 951 830
Non-current lease liabilities 861 1,106
------------------------------ ----------- ---------
Total lease liabilities 1,812 1,936
------------------------------ ----------- ---------
Below are the carrying amounts of right-of-use assets recognised
and the movements during the year:
Land and
buildings Vehicles Other Total
GBP'000 GBP'000 GBP'000 GBP'000
------------------------------------- ---------- -------- -------- --------
Acquisition value
------------------------------------- ---------- -------- -------- --------
At 31st December 2019 1,271 1,587 81 2,939
------------------------------------- ---------- -------- -------- --------
Additions 343 583 - 926
Disposals and contract modifications (30) (225) (2) (257)
Transfers (71) - - (71)
Currency Translation 57 84 5 146
------------------------------------- ---------- -------- -------- --------
At 31st December 2020 1,570 2,029 84 3,683
------------------------------------- ---------- -------- -------- --------
Depreciation
At 31st December 2019 (378) (598) (46) (1,022)
Depreciation charge for the year (433) (619) (31) (1,083)
Disposals and contract modifications 22 181 (3) 200
Transfers 71 - - 71
Currency translation (21) (35) (3) (59)
------------------------------------- ---------- -------- -------- --------
At 31st December 2020 (739) (1,071) (83) (1,893)
------------------------------------- ---------- -------- -------- --------
Net book value
At 31st December 2020 831 958 1 1,790
------------------------------------- ---------- -------- -------- --------
Below are the values for the movements in lease liability during
the year:
Lease Liability
GBP'000
---------------------- ---------------
At January 1st 2020 1,936
Additions 926
Disposals (57)
Interest expense 59
Payments (1,140)
CTA 88
---------------------- ---------------
At December 31st 2020 1,812
---------------------- ---------------
The following amounts are recognised in the income
statement:
For the year
ended 31st December
2020
GBP'000
----------------------------------------------------------- --------------------
Depreciation expense of right-of-use assets (1,083)
Interest expense on lease liabilities (59)
(Loss)/gain on disposal of IFRS16 assets -
Expense relating to short-term leases and low-value assets (187)
----------------------------------------------------------- --------------------
Total amount recognised in the income statement (1,329)
----------------------------------------------------------- --------------------
Cash-flows relating to leases are presented as follows:
-- Cash payments for the principal portion of the lease
liabilities as cash flows from financing activities;
-- Cash payments for the interest portion consistent with
presentation of interest payments chosen by the Group, and;
-- Short-term lease payments, payments for leases of low-value
assets and variable lease payments that are not included in the
measurement of the lease liabilities as cash flows from operating
activities.
17. Events after balance sheet date
During the first quarter we have been in discussions with our
four syndicate banks to extend our existing banking facilities from
31 March 2022 to 31 March 2025. We have completed renewals with
three of the four banks and expect to finalise the remaining
documentation with the fourth in early April.
18. Annual Report
This Preliminary financial information is not being sent to
Shareholders.
A further announcement will be made when the Annual Report and
Accounts for the year ended 31(st) December 2020 will be made
available on the Company's website and copies sent to
shareholders.
Further copies will be available to download on the Company's
website at: www.animalcaregroup.com and will also be available from
the Company's registered office address: 10 Great North Way, York
Business Park, Nether Poppleton, York, YO26 6RB
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END
FR SEIESUEFSEED
(END) Dow Jones Newswires
March 30, 2021 02:00 ET (06:00 GMT)
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