TIDMANCR
RNS Number : 3079G
Animalcare Group PLC
29 March 2022
Animalcare Group plc
("Animalcare", the "Company" or the "Group")
Full Year Results for the year ended 31 December 2021
29 March 2022. Animalcare Group plc (AIM: ANCR), the
international animal health business, announces its audited full
year results for the year ended 31 December 2021.
Financial Highlights
-- Revenues grew 5.0% to GBP74.0m (8.0% up at CER) on strong
Companion Animals demand and contribution from new products
-- Improved gross margins drove double-digit increase in
underlying* EBITDA to GBP13.5m as profitability benefited from
continuing focus on top selling brands (2020: GBP12.1m)
-- Statutory profit before tax, incorporating non-underlying
items of GBP0.9m (2020: GBP0.2m), with reported basic loss per
share of 0.1 pence (2020: 0.4 pence profit per share)
-- Continued strong underlying* cash conversion of 108.8% (2020:
102.9%) reduced net debt to GBP5.3m at year end, further
strengthening Group's capacity to support investment in growth
strategy
-- Proposed final dividend of 2.4 pence per share (2020: 2.0 pence per share)
Strategic and Operational Highlights
-- Daxocox approved in EU and UK and launched successfully
across all markets, generating GBP1.2m in second half sales
-- Further optimisation of portfolio yields 8.3% increase in
revenues generated by top 40 selling brands
-- Sandra Single joins Senior Executive Team in newly created
Strategic Product and Portfolio Director role
-- Continuing investment in people focuses on Group-wide sales
and marketing excellence and leadership development
-- Pipeline strengthened through post-period end early-stage
licencing and collaboration agreement with Orthros Medical for
innovative VHH antibodies therapy
* 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: "Positive trading performance and improved
margins combined to further strengthen our financial platform as we
continue to invest in the future success of the Group.
"Growth in revenues over the year was driven by attractive
fundamentals and increased demand in our Companion Animals markets.
Profitability, meanwhile, benefited from our ongoing focus on the
top selling brands supported by contributions from newly launched
products. Continuing strong cash conversion drove a further marked
reduction in net debt putting us comfortably below our net debt to
underlying EBITDA leverage target range thereby increasing our
deal-making flexibility.
"Operationally, we made good progress against our strategic
priorities. Daxocox, our novel COX-2 inhibitor for
osteoarthritis-related pain in dogs, received marketing approval in
the EU and the UK in April 2021 and launched successfully in the
second half. In a post-period event we made important advances on
the business development front through an early-stage licencing and
collaboration agreement with Orthros Medical, initially to develop
new arthritis treatments that exploit the innovative potential of
VHH antibodies.
"We recognise that investing in our people is as important as
investing in our pipeline and other areas of our business. It's
exciting, therefore, to see the roll-out of consistent Group-wide
leadership development and sales and marketing frameworks to ensure
we maintain and build competitiveness in our fast-evolving, dynamic
markets.
"Early sales performance in 2022 is in line with management
expectations and we are confident that we can continue to grow
revenues while facing marked inflationary and foreign exchange
headwinds. It's a credit to the commitment, agility and skill of
the Animalcare team that the Group is in a strong position as we
set our sights on delivering another successful year."
Analyst webcast
A briefing for analysts will be held at 10:30 BST on Tuesday 29
March 2022 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_LQ129OkwTsmm3fYVAmeQzg
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
Nick Adams
Nick Harland +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
I am delighted to report that 2021 was a year of delivery for
Animalcare. Positive trading performance on the back of resurgent
demand further strengthened our financial platform as we continued
to make significant progress against our strategic priorities.
After a particularly challenging 2020, in which the Animalcare
team demonstrated resilience and agility in the face of the
COVID-19 pandemic, we delivered a healthy level of growth across
the year.
At GBP74.0m, total revenues were 5.0% ahead of the prior year,
an increase of 8.0% at constant exchange rates. The principal
driver of growth was the recovery in the Companion Animals market
with demand boosted by positive fundamentals such as increased pet
ownership and the relative relaxation of pandemic controls on the
operation of veterinary practices. Our Companion Animals segment,
which also benefited from newly introduced products, grew by 14.6%
over the period.
Underlying EBITDA, a key measure of profit, increased at a
double-digit percentage rate to GBP13.5m as margins benefited from
a favourable product mix, even accounting for an increase in
SG&A-related investment in our people. The ongoing management
of our product portfolio is also having a positive impact; efforts
to retire smaller "tail" products continue, concentrating
management attention on bigger selling brands with higher returns
and higher potential. After underlying adjustments totalling
GBP8.6m (2020: GBP7.8m) the profit before tax on a reported basis
was GBP0.9m (2020: GBP0.2m).
Cash generation was again a feature of our performance with a
particularly strong cash conversion rate of 108.8% helping to
reduce net debt to GBP5.3m by year end. This represents a 60%
improvement for the year (2020: GBP13.6m), placing us well below
our target leverage range and further equipping us with the
financial muscle to invest in pipeline and commercial growth
opportunities.
The Group's positive trading performance, robust financial
position and confident outlook have supported the Board's decision
to propose a final dividend of 2.4 pence per share (2020: 2.0 pence
per share).
Organisationally, the move to a regional management structure at
the beginning of the year has had a positive impact, enabling a
more focused Senior Executive Team to concentrate decision-making
on performance and growth opportunities. Investment in our people
remains a priority so the roll out of a new leadership development
programme that will provide a consistent approach is an important
step for the Group.
This has been a significant year for our internal pipeline with
the launch of Daxocox, our novel COX-2 inhibitor for the treatment
of osteoarthritis-related pain in dogs. We received marketing
approval in the EU and the UK in April and commenced launch
activities across our markets in the second half of the year. We're
still at an early stage with Daxocox but are encouraged by progress
to date and remain confident that this product can have a growing,
positive impact on animals and their owners for years to come. Life
cycle management projects are under way to extend the potential of
Daxocox into new indications and new territories.
Consistent with our strategy, we continue to focus on external
business development opportunities: from pipeline partnerships with
long-term potential to commercial deals that deliver earnings
growth in the nearer term. STEM Animal Health Inc., the joint
venture we established with Kane Biotech in September 2020, is soon
to reach our markets with the launch of the first Plaqtiv+ range of
dental treatment products that exploit the benefits of anti-biofilm
technology to combat oral infections. Additionally, in a post
period event, we reached a research and development partnership
with Netherlands-based Orthros Medical to explore the promising
therapeutic potential of novel antibodies in a veterinary setting.
This collaboration and R&D agreement gives us access to
innovative VHH antibody technology thereby substantially
strengthening our early-stage pipeline, a key building block of our
long-term growth strategy.
Animalcare has always strived to be a good corporate citizen
wherever we operate. Historically, we have viewed this through a
local lens. But as we grow, so do the expectations of a widening
set of stakeholders. In our annual report we lay out the steps we
will take to create a meaningful, achievable and measurable
Group-wide plan that ensures we operate sustainably across our
markets in a co-ordinated manner.
Looking to the future, we believe the attractive fundamentals
that helped fuel demand during 2021 will continue to support growth
in 2022; sales in the early part of the year provide grounds for
optimism on that score while we navigate and manage headwinds,
notably in the form of inflation and foreign exchange. Overall,
however, the long-term positives of the animal health market and
the strong position of the Group continue to give us confidence to
invest in value-creating growth opportunities.
I'd like to take this opportunity to welcome Dr Douglas Hutchens
to the Board of Animalcare Group plc whose appointment as
Non-Executive Director was announced on 10 February 2022. Douglas's
expertise in veterinary medicine and R&D combined with his
extensive network will prove invaluable as we pursue our long-term
growth strategy.
On behalf of the Board, I'd also like to recognise our employees
for delivering such a positive performance in 2021 and thank our
shareholders for their continuing support.
Jan Boone
Non-Executive Chairman
Chief Executive Officer's Review
2021 was a year to celebrate for Animalcare. The continuing
evolution of our product portfolio, which saw significant
contributions from new products such as Daxocox, helped deliver
positive results in a growing and dynamic animal health market.
This performance further strengthened the Group's financial
position, equipping us with the firepower to invest in
opportunities that are consistent with our growth strategy.
Organisationally, we continued to build the scalable and
sustainable business platform required to support delivery of our
long-term ambitions.
Strong finances
Pleasingly, we delivered positive results against all our key
financial parameters.
Revenues for the year were GBP74.0m, an increase of 5.0% on the
prior year, or 8.0% at constant exchange rates. Group sales
performance largely mirrored the strong uptick in demand seen
across the Companion Animals market which was propelled by
attractive fundamentals such as increased pet ownership and a
loosening of COVID-related restrictions on veterinary practices
during the year. The rapid recovery in trading conditions was
visible in exceptionally strong Q1 revenues compared to the same
period in 2020. We expect to see a more normal pattern of sales for
the opening months of 2022.
Benefiting from a favourable product mix, our gross margin of
53.3% was ahead of the prior year (2020: 51.9%). This contributed
to underlying EBITDA of GBP13.5m (2020: GBP12.1m) which grew ahead
of revenue even allowing for the absorption of increased SG&A
costs chiefly related to investment in our people and sales and
marketing excellence. After underlying adjustments totalling
GBP8.6m (2020: GBP7.8m) the profit before tax on a reported basis
was GBP0.9m (2020: GBP0.2m).
The Group's very strong cash conversion rate of 108.8% helped
drive net debt lower to GBP5.3m as of 31 December 2021, a
remarkable 60% reduction over the 12 months.
This was a significant achievement and an important milestone.
After several years of concerted effort to improve our balance
sheet, we are now comfortably below our stated target leverage
range of 1 to 2 times underlying EBITDA. This increases our
investment capacity and flexibility in the continued pursuit of
pipeline and business development opportunities that support our
long-term growth strategy.
Key leadership
In 2021 we made important strides to further align our
capabilities and structure with our growth strategy.
At the beginning of the year, we adopted a regional model
overseen by a slimmed down Senior Executive Team (SET). Built
around the South Region (Spain, Portugal and Italy) and North
Region (UK, Germany, Belgium and Netherlands), the new structure
has increased management focus on performance and growth
opportunities while streamlining decision-making.
To help embed this approach we have deployed a number of our key
people to regional or Group roles. That has the effect of improving
operational efficiency and consistency as we continue to build a
scalable organisation that can adapt and flex as we grow. We are
also investing in company-wide skills development, most notably in
the area of sales & marketing excellence. It's vital that we
continue to forge capability in this space as we introduce
innovative new products in increasingly competitive and dynamic
veterinary markets that have seen changes in ways of working, often
accelerated by the pandemic.
More broadly, we are implementing a company-wide initiative to
develop the cadre of leaders that will steer Animalcare to a
successful future. Built around the proven principles of "high
challenge, high support", this programme will help us to nurture
the strong talent that exists at all levels across the Group.
Our annual Gallup employee survey is a valuable management tool
that helps us pinpoint opportunities to maintain and build levels
of engagement across the business. Following on from an
exceptionally positive survey result in 2020, we saw a slight (4%)
decrease in the overall engagement measure for 2021. Naturally, we
would like to see that score improve year on year. But we also
recognise that this rating keeps us well ahead of Gallup's European
average benchmark of companies.
Through the survey, employees told us that they felt more of a
"One Team" spirit, noticed an improvement in communication and
cross-country collaboration and appreciated increased training and
development opportunities.
They have also helped us set priorities for 2022 including
better understanding of our strategic pillars in a changing
marketplace, improved internal communication process and associated
use of digital tools and the roll-out of our leadership
programme.
Strategic Product and Portfolio Director
We're delighted to welcome Sandra Single to the Animalcare team
who has joined us as Strategic Product and Portfolio Director and
as a member of the Group's Senior Executive Team. In the newly
created role Sandra is accountable for the alignment of internally
and externally sourced products to drive future growth. She leads
the Technical, R&D, Quality, Regulatory and Project Management
teams and works alongside the Group's specialist Business
Development resource on potential deals. Sandra brings a wealth of
research, development, portfolio management and licensing
experience to the Group.
Growth portfolio
Maintaining a high quality and competitive portfolio is key to
our future success. It serves as both a solid foundation and an
engine of growth. In 2021, we continued with our efforts to
rationalise the number of smaller "tail" products, thereby
concentrating management and sales & marketing attention on
bigger selling, higher margin products. Collectively, our top 40
selling brands accounted for approximately 75% of total revenue, an
increase of 8.3% compared with the prior year.
In 2021 we were delighted to see Daxocox enter that top 40
category. Our novel treatment for osteoarthritis-related pain in
dogs was introduced in the second half and generated GBP1.2m in
sales. Though we are launching into a vigorous marketplace,
increasingly characterised by large corporate veterinary groups, we
remain confident Daxocox will be our biggest selling product within
the next five to ten years.
We continue to see the greatest growth potential in the
Companion Animals and Equine segments of our business, particularly
over the longer term. Consequently, that's where we direct most of
our investment. However, our Production Animals business continues
to enjoy positive fundamentals and generate attractive returns.
Indeed, while the revenues derived from this product category
declined by 13.9% versus 2020, adjusting for the previously
mentioned discontinuation of a legacy distribution agreement in
Belgium at the beginning of 2021, our retained Production Animals
business grew sales and margins over the year.
Business development
Seeking out pipeline and business development opportunities
through partnerships or acquisitions is a central element of our
growth strategy. It's never an easy task, but there are attractive
opportunities. Indeed, I don't recall many occasions during the
year when we were not involved in talks over one or more promising
agreements.
Animalcare's strong balance sheet, backed by an experienced
business development team, equips us with the financial resources
and skills to convert these opportunities into reality. It's
particularly satisfying, therefore, to have struck an early-stage
research and development agreement with Netherlands-based Orthros
Medical. Announced on 24 March 2022, the licensing and
collaboration deal seeks to unlock the exciting therapeutic
potential of VHH antibodies, initially for the treatment of canine
osteoarthritis. This agreement represents a key building block in
our long-term growth strategy in an area of therapeutic focus and
significant market growth.
In addition, the first products from STEM Animal Health Inc. -
our joint venture with Kane Biotech signed in September 2020 - are
soon to hit the market following completion of manufacturing
transfer and the start of listing negotiations with key customers.
We have also extended our commercial reach through a distribution
agreement with Virbac to market and sell Daxocox in most European
countries outside Animalcare's direct territories.
Innovative pipeline
Daxocox received marketing authorisation for EU countries and
the UK in April 2021. Launch activities kicked off at the end of
the first half of the financial year and are under way across all
our markets. R&D life cycle management programmes for Daxocox
have been initiated to target new indications, new formulations and
geographic expansion. For the STEM joint venture, coactive+ biofilm
and Dispersin B pipeline projects have been initiated, with a
particular focus on otitis.
Our early-stage agreement with Orthros Medical provides an
important new dimension to our growing pipeline as we pursue the
potential for novel VHH antibody technology that we believe will
become an increasing feature of veterinary treatment.
To support delivery of pipeline opportunities, total R&D
investment reached GBP1.3m. We expect this to increase in 2022 as
we invest in our VHH antibodies partnership with Orthros Medical
and other future growth opportunities.
Summary and outlook
We entered 2021 at pace with exceptional revenue and profit
growth rates in the first quarter driven by a post-pandemic
recovery in Companion Animals demand. While we saw a return to more
normal trading levels across the rest of the year, we delivered a
very positive overall performance and a further significant
improvement in the Group's financial position, enabling us to
continue investing in our long-term growth strategy.
Early sales activity in 2022 is in line with management
expectations, although compared to 2021 we anticipate a more even
balance between the first and second halves as the grip of COVID-19
loosens over time. Across the full year we expect our revenue and
growth momentum to continue while we navigate inflationary and
foreign exchange headwinds. Whatever conditions we encounter, I
know that we can continue to call on the commitment, agility, focus
and professionalism of the Animalcare team on our journey to become
a leading company in our chosen markets.
I'd like to thank each of our employees for their hard work and
dedication. It's hugely appreciated by all members of the senior
management team.
Jenny 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
% Change
2021 2020 at AER
GBP'000 GBP'000 %
----------------------------- --------- --------- ---------
Revenue 74,024 70,494 5.0%
Gross Profit 39,418 36,559 7.8%
Gross Margin % 53.3% 51.9% 1.4%
Underlying Operating Profit 10,593 8,561 23.7%
Underlying EBITDA 13,455 12,091 11.3%
Underlying EBITDA margin % 18.2% 17.2% 1.0%
Underlying Basic EPS (p) 12.0p 10.6p 13.2%
----------------------------- --------- --------- ---------
We are pleased to report a positive trading performance with
revenue growth and improved gross margins leading to a double-digit
increase in underlying EBITDA. The Group delivered very strong cash
conversion which drove a significant reduction in net debt during
the year, further strengthening our capacity to invest in our
long-term growth strategy.
Revenues grew to GBP74.0m (2020: GBP70.5m), up 5.0% on the prior
year (8.0% at CER). As anticipated, revenue growth was weighted
towards the first half as a result of exceptional veterinary demand
in Q1 and markets returning to more normal levels over the course
of the financial year.
Revenue by product category is shown in the table below:
% Change at
2020 2020 AER
GBP'000 GBP'000
-------------------- -------- -------- ------------
Companion Animals 51,326 44,808 14.5%
Production Animals 16,980 19,720 (13.9%)
Equine & other 5,718 5,966 (4.1%)
-------------------- -------- -------- ------------
Total 74,024 70,494 5.0%
-------------------- -------- -------- ------------
Companion Animals revenue, which represented approximately 69%
of Group turnover, is the key driver of our overall revenue growth,
increasing by 14.5% to GBP51.3m. This growth can be attributed to
strong in-year market dynamics across Europe, in particular during
the first half of the year, newly introduced products, which
contributed GBP2.2m (2020: GBP1.9m) and continued focus on driving
value from our key (top 40) brands. Daxocox, our novel COX-2
inhibitor pain treatment for dogs, added GBP1.2m to revenue,
predominantly during the second half.
In contrast, Production Animals revenue declined by 13.9% versus
the prior year to GBP17.0m. This is primarily driven by the
discontinuation of a legacy distribution contract of several
antibiotics and other lower margin products within the Group's
Belgium subsidiary. Production Animals remains an important part of
our South Region business, accounting for approximately 40% of
regional revenues. Within this region, Production Animals sales
increased by 3.0% compared to 2020.
As expected, Equine and other sales decreased by 4.1% to GBP5.7m
primarily due to prior year stock build within our international
partner channel in advance of the manufacturing transfer of
Danilon, which was completed during the year.
During 2021, we maintained our emphasis on optimising our
portfolio to reduce fragmentation and drive commercial focus
towards our larger selling, higher margin, brands. As a result, we
entered 2022 with a portfolio that is close to our target of
approximately 150 brands. Revenues from the top 40 brands grew by
8.3%, predominantly driven by new product launches during 2021 and
2020, while improving our gross margins.
The strong revenue growth and higher margin product mix drove a
significant improvement in our operating profitability with
underlying EBITDA at GBP13.5m (2020: GBP12.1m), an increase of
11.3% versus prior year. SG&A costs increased during the year
to GBP26.0m (2020: GBP24.5m) principally driven by investments in
sales and marketing activities and our people. As a result,
SG&A expenses as a percentage of revenue increased to 35.1%
(2020: 34.7%).
The underlying effective tax rate of 24.4% (2020: 20.1%) has
increased versus prior year primarily reflecting the geographic mix
of profits and the one-off impact of the substantively enacted
increase in corporate tax rates in the UK (from 19% to 25%
effective 1 April 2023) on deferred tax balances. We continue to
optimise research and development tax credits.
Reflecting the points noted above, underlying basic EPS
increased by 13.2% to 12.0 pence (2020: 10.6 pence).
Overview of reported financial results
Reported Group loss after tax for the year (after accounting for
the non-underlying items shown in the table and discussed below)
was GBP0.1m (2020: GBP0.2m profit), with reported loss per share at
0.1 pence (2020: 0.4 pence earnings per share).
2021 Amortisation Acquisition, 2021 2020
Underlying and impairment restructuring, Reported Reported
results of intangibles integration results results
GBP'000 GBP'000 and other GBP'000 GBP'000
costs
GBP'000
-------------------------------------- ------------ ---------------- ---------------- ---------- ----------
Revenue 74,024 - - 74,024 70,494
Gross Profit 39,418 - - 39,418 36,559
Selling, general & administrative
expenses (26,759) (4,580) - (31,339) (30,427)
Research & development
expenses (2,181) (951) - (3,132) (3,486)
Net other operating income/(expense) 115 (2,761) (312) (2,958) (1,843)
--------------------------------------- ------------ ---------------- ---------------- ---------- ----------
Operating profit/(loss) 10,593 (8,292) (312) 1,989 803
Net finance expenses (856) - - (856) (511)
--------------------------------------- ------------ ---------------- ---------------- ---------- ----------
Share in net loss of joint
ventures (188) - - (188) (93)
--------------------------------------- ------------ ---------------- ---------------- ---------- ----------
Profit/(loss) before tax 9,542 (8,292) (312) 945 199
Taxation (2,325) 1,256 47 (1,022) 35
--------------------------------------- ------------ ---------------- ---------------- ---------- ----------
Profit/(loss) for the
year 7,224 (7,036) (265) (77) 234
Basic earnings/(loss)
per share (p) 12.0p - - (0.1p) 0.4p
--------------------------------------- ------------ ---------------- ---------------- ---------- ----------
Non-underlying items totalling GBP8.6m (2020: GBP7.8m) 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 GBP8.3m (2020: GBP5.9m). This charge primarily
comprises amortisation in relation to the reverse acquisition of
Ecuphar NV and previous acquisitions made by Ecuphar NV. The
increase versus 2020 primarily reflects the non-cash impairment of
four projects that formed part of the acquired development
pipeline, the principal drivers for which are:
-- the recall and suspension of all products containing
ranitidine for human use by European and US authorities.
Consequently, Animalcare has ceased development of ranitidine for
animal use; and
-- technical and manufacturing issues that have significantly
impacted the timing of supply and expected commercial returns of an
equine product.
2. Expenses relating to acquisition, business development,
integration, restructuring and other costs of GBP0.8m (2020:
GBP1.5m) including the carve out and partnership of Identicare Ltd,
our microchipping and database services business, with effect from
1 January 2022, reorganisation and restructuring of our Belgium and
UK logistic operations and relocation of our Spanish office;
3. GBP0.5m income in respect of product divestments as we
continue to focus on our core higher margin brands.
Dividends
An interim dividend of 2.0 pence per share was paid in November
2021.
The Board is proposing a final dividend of 2.4 pence per share
(2020: 2.0 pence per share) in line with pre-COVID levels. Subject
to shareholder approval at the Annual General Meeting to be held on
7 June 2022, the final dividend will be paid on 8 July 2022 to
shareholders whose names are on the Register of Members at close of
business on 10 June 2022. The ordinary shares will become
ex-dividend on 9 June 2022.
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 have made significant progress during 2021 in reducing our
debt and increasing our financial capacity for M&A and pipeline
opportunities that support our long-term growth. The main driver
for this was our very strong cash conversion performance as set out
in the table below:
2021 2020
GBP'000 GBP'000
------------------------------------------ --------- ---------
Underlying EBITDA 13,455 12,091
Net cash flow from operations 14,023 11,117
Non-underlying items 611 1,324
Underlying net cash flow from operations 14,634 12,441
------------------------------------------ --------- ---------
Underlying cash conversion % 108.8% 102.9%
------------------------------------------ --------- ---------
Net cash flow generated by our operations increased to GBP14.0m
(2020: GBP11.1m). Net working capital reduced by GBP2.2m primarily
due to lower than expected receivables as a result of phasing of
trading towards year end. Inventories reduced by GBP1.4m driven by
delayed supply, a large proportion of which came into stock during
Q1. The reduction in net working capital was in part offset by a
GBP1.8m increase in cash taxes mainly due to a combination of
geographic mix of profits, phasing of payments, settlement of prior
year taxes and reduced cash receipts in respect of R&D tax
credits.
As we expect trading and inventory patterns to be more balanced
over the current financial year ending 31 December 2022, we
anticipate cash conversion to be lower in 2022, but remain on
average over 2021 and 2022 within the target 90-100% range.
Net debt reduced by GBP8.3m over the full year and stood at
GBP5.3m on 31 December 2021. This significant improvement was
largely driven by the very strong cash conversion noted above.
Exchange rate variations benefited the net debt position by
GBP1.1m.
GBP'000
----------------------------------------- ---------
Net debt at 1 January 2021 (13,618)
Net cash generated from operations 14,023
Net capital expenditure (2,675)
Investments in joint venture (289)
Net finance expenses (1,684)
Issue of share options 76
Dividends paid (2,403)
Foreign exchange on cash and borrowings 1,148
Movement in IFRS 16 lease liabilities 92
----------------------------------------- ---------
Net debt at 31 December 2021 (5,330)
----------------------------------------- ---------
Net capital expenditure of GBP2.7m (2020: GBP1.5m) largely
comprises investment in our product development pipeline of
GBP1.3m, the most significant components of which relate to Daxocox
and milestone licence payments to STEM Animal Health inc, together
with GBP1.0m of expenditure relating to continuing investment in
our IT infrastructure, including new regulatory and quality
management systems and website and platform development relating to
Identicare Ltd.
The net debt to underlying EBITDA leverage ratio was
approximately 0.4 times (FY20: 1.1 times) comfortably below the
Group's stated target range of 1-2 times underlying EBITDA.
Borrowing facilities
During the first half of the year, we completed an exercise with
our four syndicate banks to extend our existing banking facilities
from 31 March 2022 to 31 March 2025.
The Group's financing arrangements consist of a committed
revolving credit facility of EUR41.5m and a EUR10m acquisition
line, which cannot be utilised to fund our operations. The
investment loan facility was repaid in full at the time of
renewal.
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; and
-- Solvency (total assets less goodwill/total equity less goodwill) greater than 25%.
As at 31 December 2021 and throughout the financial year, all
covenant requirements were met with significant headroom across all
three measures.
At 31 December 2021, total facilities were GBP43.3m, of which
GBP3.6m, net of cash balances, was utilised, leaving headroom of
GBP39.7m.
Going concern
The Directors have prepared cashflow forecasts for a period of
at least 12 months from the date of signing of these financial
statements (the going concern assessment period). These forecasts
indicate that the Group will have sufficient funds to meet its
obligations as they fall due, taking into account the potential
impact of "severe but plausible" downside scenarios to factor in a
range of downside revenue estimates, including further unexpected
COVID disruptions, and higher than expected inflation across our
cost base, with corresponding mitigating actions.
The output from these scenarios shows the Group has adequate
levels of liquidity from its committed facilities and complies with
all its banking covenants throughout the going concern assessment
period. Accordingly, the Directors continue to adopt the going
concern basis of preparation.
Summary and outlook
We delivered a strong set of results driven by growing demand in
our Companion Animals segment, underpinned by strong market
fundamentals which have moderated as we progressed through the
financial year. Demand levels in the early part of 2022 are
encouraging and in line with expectations that revenue and profit
delivery will be more balanced over the current financial year
compared to 2021.
Our very strong underlying cash conversion led to a significant
reduction in net debt and the net debt to underlying EBITDA
leverage ratio. We hence enter 2022 with increased capacity and
flexibility to pursue business and product development
opportunities. Our licensing and collaboration agreement with
Orthros Medical, announced on 24 March 2022, is the first step
towards increasing investment in our product development
pipeline.
Chris Brewster
Chief Financial Officer
29 March 2022
Consolidated income statement
Year ended 31 December 2021
For the year ended 31 December
--------------------------------------------------------------------------
Non-Underlying Non-Underlying
Underlying (note 4) Total Underlying (note 4) Total
2021 2021 2021 2020 2020 2020
Notes GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
-------------------- ----- ---------- -------------- -------- ---------- -------------- --------
Revenue 5 74,024 - 74,024 70,494 - 70,494
Cost of sales (34,606) - (34,606) (33,935) - (33,935)
--------------------- ----- ---------- -------------- -------- ---------- -------------- --------
Gross profit 39,418 - 39,418 36,559 - 36,559
--------------------- ----- ---------- -------------- -------- ---------- -------------- --------
Research and
development
expenses (2,181) (951) (3,132) (2,386) (1,100) (3,486)
Selling and marketing
expenses (12,277) - (12,277) (12,325) - (12,325)
General and
administrative
expenses (14,482) (4,580) (19,062) (13,302) (4,800) (18,102)
Net other operating
(expense)/income 115 (3,073) (2,958) 15 (1,858) (1,843)
--------------------- ----- ---------- -------------- -------- ---------- -------------- --------
Operating
profit/(loss) 10,593 (8,604) 1,989 8,561 (7,758) 803
--------------------- ----- ---------- -------------- -------- ---------- -------------- --------
Financial expenses 6 (2,613) - (2,613) (1,051) - (1,051)
Financial income 7 1,757 - 1,757 540 - 540
--------------------- ----- ---------- -------------- -------- ---------- -------------- --------
Financial expenses
net (856) - (856) (511) - (511)
--------------------- ----- ---------- -------------- -------- ---------- -------------- --------
Share in net loss of
joint
ventures accounted
for
using the equity
method 12 (188) - (188) (93) - (93)
--------------------- ----- ---------- -------------- -------- ---------- -------------- --------
Profit/(loss) before
tax 9,549 (8,604) 945 7,957 (7,758) 199
--------------------- ----- ---------- -------------- -------- ---------- -------------- --------
Income tax 8 (2,325) 1,303 (1,022) (1,604) 1,639 35
--------------------- ----- ---------- -------------- -------- ---------- -------------- --------
(Loss)/profit for the
year 7,224 (7,301) (77) 6,353 (6,119) 234
--------------------- ----- ---------- -------------- -------- ---------- -------------- --------
Net profit/(loss)
attributable
to:
The owners of the
parent 7,224 (7,301) (77) 6,353 (6,119) 234
Earnings per share
for
profit/(loss)
attributable
to the ordinary
equity
holders of the
Company:
Basic earnings per
share 9 12.0p - (0.1p) 10.6p - 0.4p
Diluted earnings per
share 9 12.0p - (0.1p) 10.6p - 0.4p
--------------------- ----- ---------- -------------- -------- ---------- -------------- --------
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.
Consolidated statement of comprehensive income
Year ended 31 December 2021
For the year ended
31 December
----------------------
2021 2020
--------- ---------
GBP'000 GBP'000
-------------------------------------------------------- --------- ---------
(Loss)/ profit for the year (77) 234
Other comprehensive income
Cumulative translation differences* (638) 508
--------------------------------------------------------- --------- ---------
Other comprehensive (loss)/ income, net of tax (638) 508
--------------------------------------------------------- --------- ---------
Total comprehensive (loss)/ income for the year, net of
tax (715) 742
--------------------------------------------------------- --------- ---------
Total comprehensive (loss)/ income attributable to:
The owners of the parent (715) 742
--------------------------------------------------------- --------- ---------
* May be reclassified subsequently to profit & loss
Consolidated statement of financial position
Year ended 31 December 2021
For the year ended 31 December
----------------------------------
Notes 2021 2020
GBP'000 GBP'000
------------------------------------------------------ ----- --------------- ---------------
Assets
Non-current assets
Goodwill 10 50,337 50,987
Intangible assets 11 29,719 37,812
Property, plant and equipment 626 265
Right-of-use-assets 16 1,658 1,790
Investments in joint ventures 12 1,290 1,457
Deferred tax assets 8 1,963 2,220
Other financial assets 90 63
Other non-current assets 24 48
------------------------------------------------------- ----- --------------- ---------------
Total non-current assets 85,707 94,642
------------------------------------------------------- ----- --------------- ---------------
Current assets
Inventories 10,328 12,797
Trade receivables 7,135 10,142
Other current assets 1,200 1,589
Cash and cash equivalents 5,633 5,265
------------------------------------------------------- ----- --------------- ---------------
Total current assets 24,296 29,793
------------------------------------------------------- ----- --------------- ---------------
Total assets 110,003 124,435
------------------------------------------------------- ----- --------------- ---------------
Liabilities
Current liabilities
Borrowings 13 - (637)
Lease liabilities 16 (723) (951)
Trade payables (10,021) (11,348)
Tax payables (471) (553)
Accrued charges and contract liabilities 14 (1,083) (2,686)
Other current liabilities (2,156) (3,202)
------------------------------------------------------- ----- --------------- ---------------
Total current liabilities (14,454) (19,377)
------------------------------------------------------- ----- --------------- ---------------
Non-current liabilities
Borrowings 13 (9,243) (16,432)
Lease liabilities 16 (996) (861)
Deferred tax liabilities 8 (4,271) (4,804)
Contract liabilities 14 (675) (556)
Provisions (408) (96)
Other non-current liabilities (1,157) (717)
------------------------------------------------------- ----- --------------- ---------------
Total non-current liabilities (16,750) (23,466)
------------------------------------------------------- ----- --------------- ---------------
Total Liabilities (31,204) (42,843)
------------------------------------------------------- ----- --------------- ---------------
Net assets 78,799 81,592
------------------------------------------------------- ----- --------------- ---------------
Equity
Share capital 15 12,019 12,012
Share premium 15 132,798 132,729
Reverse acquisition reserve (56,762) (56,762)
Accumulated losses (11,676) (9,445)
Other reserves 2,420 3,058
Equity attributable to the owners of the parent 78,799 81,592
------------------------------------------------------- ----- --------------- ---------------
Total equity 78,799 81,592
------------------------------------------------------- ----- --------------- ---------------
Consolidated statement of changes in equity
Year ended 31 December 2021
Attributable to the owners of the parents
-------------------------------------------------------------
Retained
earnings/ Reverse
Share Share Accumulated acquisition Total
capital premium losses reserve Other reserve equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------------------------- -------- -------- ------------ ------------ ------------- -------
At 1 January 2021 12,012 132,729 (9,445) (56,762) 3,058 81,592
----------------------------- -------- -------- ------------ ------------ ------------- -------
Loss for the year - - (77) - - (77)
Other comprehensive expense - - - - (638) (638)
----------------------------- -------- -------- ------------ ------------ ------------- -------
Total comprehensive expense - - (77) - (638) (715)
----------------------------- -------- -------- ------------ ------------ ------------- -------
Dividends paid - - (2,403) - - (2,403)
Exercise of share options 7 69 - - - 76
Share based payments - - 249 - - 249
----------------------------- -------- -------- ------------ ------------ ------------- -------
At 31 December 2021 12,019 132,798 (11,676) (56,762) 2,420 78,799
----------------------------- -------- -------- ------------ ------------ ------------- -------
Attributable to the owners of the parents
Retained
earnings/ Reverse
Share Share Accumulated acquisition Total
capital premium losses reserve Other reserve equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------------------------- -------- -------- ------------ ------------ ------------- -------
At 1 January 2020 12,012 132,729 (8,640) (56,762) 2,550 81,889
----------------------------- -------- -------- ------------ ------------ ------------- -------
Profit for the year - - 234 - - 234
Other comprehensive income - - - - 508 508
----------------------------- -------- -------- ------------ ------------ ------------- -------
Total comprehensive expense - - 234 - 508 742
----------------------------- -------- -------- ------------ ------------ ------------- -------
Dividends paid - - (1,201) - - (1,201)
Share based payments - - 162 - - 162
----------------------------- -------- -------- ------------ ------------ ------------- -------
At 31 December 2020 12,012 132,729 (9,445) (56,762) 3,058 81,592
----------------------------- -------- -------- ------------ ------------ ------------- -------
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 2021
For the year ended
31 December
----------------------
Notes 2021 2020
GBP'000 GBP'000
-------------------------------------------------------------- ----- ---------- --------
Operating activities
Profit before tax 945 199
Non-cash and operational adjustments
Share in net loss of joint ventures 12 188 93
Depreciation of property, plant and equipment 1,186 1,243
Amortisation of intangible assets 11 7,217 8,149
Impairment of intangible assets 11 2,761 19
Share-based payment expense 249 162
Gain on disposal of fixed assets (396) (16)
Non-cash movement in provisions 120 534
Movement allowance for bad debt and inventories 760 509
Financial income (459) (219)
Financial expense 1,221 815
Impact of foreign currencies 88 (82)
Fair value adjustment contingent consideration (17) -
Movements in working capital
Decrease in trade receivables 3,540 640
Decrease/(Increase) in inventories 1,356 (1,615)
(Decrease)/increase in payables (2,698) 882
Income tax paid (2,038) (196)
--------------------------------------------------------------- ----- ---------- --------
Net cash flow from operating activities 14,023 11,117
--------------------------------------------------------------- ----- ---------- --------
Investing activities
Purchase of property, plant and equipment (557) (177)
Purchase of intangible assets 11 (2,658) (2,258)
Proceeds from the sale of property, plant and equipment
(net) 540 122
Capital contribution in joint venture 12 (289) (593)
--------------------------------------------------------------- ----- ---------- --------
Net cash flow used in investing activities (2,964) (2,906)
--------------------------------------------------------------- ----- ---------- --------
Financing activities
Proceeds from loans and borrowings and convertible
debt (8,476) (6,002)
Repayment of loans and borrowings 1,524 (5)
Repayment of IFRS16 lease liability 16 (1,024) (1,081)
Receipts from issue of share capital 76 -
Dividends paid 15 (2,403) (1,201)
Interest paid (447) (516)
Other financial (expense)/income (213) (53)
--------------------------------------------------------------- ----- ---------- --------
Net cash flow used in financing activities (10,963) (8,858)
--------------------------------------------------------------- ----- ---------- --------
Net increase/(decrease)in cash and cash equivalents 96 (647)
Cash and cash equivalents at beginning of year 5,265 6,165
Exchange rate differences on cash and cash equivalents 272 (253)
--------------------------------------------------------------- ----- ---------- --------
Cash and cash equivalents at end of year 5,633 5,265
--------------------------------------------------------------- ----- ---------- --------
For the year ended
31 December
----------------------
Notes 2021 2020
--------- ---------
GBP'000 GBP'000
Reconciliation of net cash flow to movement in
net debt
Net increase in cash and cash equivalents in the
year 96 (647)
Cash flow from decrease in debt financing 6,952 6,007
Foreign exchange differences on cash and borrowings 1,148 (1,290)
----------------------------------------------------------- ----- --------- ---------
Movement in net debt during the year 8,196 4,070
----------------------------------------------------------- ----- --------- ---------
Net debt at the start of the year (13,618) (17,812)
Movement in lease liabilities during the year 16 92 124
----------------------------------------------------------- ----- --------- ---------
Net debt at the end of the year (5,330) (13,618)
----------------------------------------------------------- ----- --------- ---------
Notes to the consolidated financial statements
Year ended 31 December 2021
1. Financial information
The financial information set out above does not constitute the
Company's statutory accounts for the years ended 31 December 2021
and 31 December 2020. The financial information for 2020 is derived
from the statutory accounts for 2020 which have been delivered to
the Registrar of Companies and those for 2021 will be delivered in
due course. The Auditor has reported on those accounts; their
report was (i) unqualified, (ii) did not include references to any
matters 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.
2. Basis of preparation
The Group financial statements have been prepared and approved
by the Directors, except for the revaluation of certain financial
instruments in accordance with UK-adopted international accounting
standards ('IFRS') and the applicable legal requirements of the
Companies Act 2006. They have also been prepared in accordance with
the requirements of the AIM Rules.
The consolidated financial statements cover the year ended 31
December 2021 and compromise the consolidated results of the Group.
The financial information included in this preliminary announcement
has been prepared on the same basis as set out in the Annual Report
2021.
3. Summary of significant accounting policies
Going concern
The Directors have prepared cashflow forecasts for a period of
at least 12 months from the date of signing of the financial
statements (the going concern assessment period). These forecasts
indicate that the Group will have sufficient funds to meet its
obligations as they fall due, taking into account the potential
impact of "severe but plausible" downside scenarios to factor in a
range of downside revenue estimates, including further unexpected
COVID disruptions, and higher than expected inflation across our
cost base, with corresponding mitigating actions.
The output from these scenarios shows the Group has adequate
levels of liquidity from its committed facilities and complies with
all its banking covenants throughout the going concern assessment
period. Accordingly, the Directors continue to adopt the going
concern basis of preparation.
The Group's financing arrangements consist of a committed
revolving credit facility of EUR41.5m and a EUR10m acquisition
line, which cannot be utilised to fund our operations. 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; and
-- Solvency (total assets less goodwill/total equity less goodwill) greater than 25%.
As at 31 December 2021 and throughout the financial year, all
covenant requirements were met with significant headroom across all
three measures.
4. Non-underlying items
For the year
ended
31 December
----------------
2021 2020
GBP'000 GBP'000
--------------------------------------------------------- ------- -------
Amortisation and impairment of acquisition related
intangibles
Classified within research and development expenses 951 1,100
Classified within general and administrative expenses 4,580 4,800
Classified within net other operating expenses 2,761 -
----------------------------------------------------------- ------- -------
Total amortisation and impairment of acquisition-related
intangibles 8,292 5,900
----------------------------------------------------------- ------- -------
Restructuring costs 17 415
Acquisition and integration costs 188 698
Brexit-related costs - 5
Divestments and business disposals (462) 85
COVID-19 11 283
Other non-underlying items 558 372
----------------------------------------------------------- ------- -------
Total non-underlying items before taxes 8,604 7,758
----------------------------------------------------------- ------- -------
Tax impact (1,303) (1,639)
----------------------------------------------------------- ------- -------
Total non-underlying items after taxes 7,301 6,119
----------------------------------------------------------- ------- -------
The amortisation charge of acquisition-related intangibles
largely relates to the Esteve acquisition of GBP1,980k ( 2020 :
GBP2,047k), the Riemser acquisition of GBP212k ( 2020 : GBP373k)
and the reverse acquisition of Animalcare Group plc of GBP3,375k (
2020 : GBP3,479k).
The impairment charge of GBP 2,761k (2020: GBPnil) primarily
reflects the non-cash impairment of four projects that formed part
of the acquired development pipeline, the principal drivers for
which are:
-- the recall and suspension of all products containing
ranitidine for human use by European and US authorities.
Consequently, Animalcare has ceased development of ranitidine for
animal use; and
-- technical and manufacturing issues that have significantly
impacted the timing of supply and expected commercial returns of an
equine product.
Expenses relating to acquisition, business development,
integration, restructuring and other costs of GBP0.8m (2020:
GBP1.5m) include the carve out and partnership of Identicare Ltd,
our microchipping and database services business, with effect from
1 January 2022, reorganisation and restructuring of our Belgium and
UK logistic operations and the relocation of our Spanish
office.
Finally, strong focus on core higher margin brands have led to
several product divestments with associated income on sale of
GBP462k ( 2020 : GBP85k ).
5. Segment information
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 2021 and 2020 . 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.
For the year ended
31 December
----------------------
2021 2020
GBP'000 GBP'000
---------------------------- --------- ---------
Pharma
Revenues 74,024 70,494
Gross Profit 39,418 36,559
Gross Profit % 53% 52%
Segment underlying EBITDA 13,455 12,091
Segment underlying EBITDA % 18% 17%
Segment EBITDA 13,143 10,231
----------------------------- --------- ---------
Segment EBITDA % 18% 15%
----------------------------- --------- ---------
The segment EBITDA is reconciled with the consolidated net
profit/(loss) of the year as follows:
For the year ended
31 December
----------------------
2021 2020
GBP'000 GBP'000
--------------------------------------------- ---------- --------
EBITDA 13,143 10,231
Depreciation, amortisation and impairment (11,154) (9,428)
---------------------------------------------- ---------- --------
Operating profit/(loss) 1,989 803
Financial expenses (2,613) (1,051)
Financial income 1,757 540
Share in net profit/(loss) of joint ventures (188) (93)
Income taxes (1,371) (985)
Deferred taxes 349 1,020
---------------------------------------------- ---------- --------
(Loss)/profit for the year (77) 234
---------------------------------------------- ---------- --------
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
31 December
-----------------------
2021 2020
GBP'000 GBP'000
------------------------------------------------------ ---------- ---------
Belgium 8,834 11,353
Spain 2,811 2,476
Portugal 4,061 4,276
UK 62,157 68,042
Other 5,881 6,275
------------------------------------------------------- ---------- ---------
Non-current assets excluding deferred tax assets and
financial instruments 83,744 92,422
------------------------------------------------------- ---------- ---------
Revenue by product category
For the year
ended
31 December
----------------
2021 2020
GBP'000 GBP'000
------------------- ------- -------
Companion animals 51,326 44,808
Production animals 16,980 19,720
Equine 5,637 5,947
Other 81 19
-------------------- ------- -------
Total 74,024 70,494
-------------------- ------- -------
Revenue by geographical area
For the year
ended 31 December
--------------------
2021 2020
GBP'000 GBP'000
----------------------- --------- ---------
Belgium 4,023 9,502
The Netherlands 1,769 1,326
United Kingdom 15,471 11,553
Germany 10,373 10,746
Spain 21,035 17,990
Italy 8,885 7,935
Portugal 4,193 4,554
European Union - other 6,971 5,621
Asia 681 782
Middle East Africa 1 81
Other 622 404
------------------------ --------- ---------
Total 74,024 70,494
------------------------ --------- ---------
Revenue by category
For the year
ended
31 December
----------------
2021 2020
GBP'000 GBP'000
--------------- ------- -------
Product sales 72,651 69,443
Services sales 1,373 1,051
---------------- ------- -------
Total 74,024 70,494
---------------- ------- -------
Product revenue is recognised when the performance obligation is
satisfied at a point in time. Service revenue is recognised by
reference to the stage of completion.
6. Financial expenses
Financial expenses include the following elements:
For the year
ended
31 December
----------------
2021 2020
GBP'000 GBP'000
------------------------------------------------------- ------- -------
Interest expense 447 516
Foreign currency losses 1,912 418
Change in fair value - losses on financial instruments 85 17
Other financial expenses 169 100
-------------------------------------------------------- ------- -------
Total 2,613 1,051
-------------------------------------------------------- ------- -------
7. Financial income
Financial income includes the following elements:
For the year
ended
31 December
----------------
2021 2020
GBP'000 GBP'000
-------------------------------- ------- -------
Foreign currency exchange gains 1,754 518
Income from financial assets 1 13
Other financial income 2 9
--------------------------------- ------- -------
Total 1,757 540
--------------------------------- ------- -------
8. Income tax
Income tax
The following table shows the breakdown of the tax expense for
2021 and 2020 :
For the year
ended
31 December
----------------
2021 2020
GBP'000 GBP'000
-------------------------------------------------------- ------- -------
Current tax charge (1,371) (830)
Tax adjustments in respect of previous years - (155)
--------------------------------------------------------- ------- -------
Total current tax charge (1,371) (985)
--------------------------------------------------------- ------- -------
Deferred tax - origination and reversal of temporary
differences 458 950
Deferred tax - adjustments in respect of previous years (109) 70
Total deferred tax credit 349 1,020
--------------------------------------------------------- ------- -------
Total tax (expense)/income for the year (1,022) 35
--------------------------------------------------------- ------- -------
The total tax expense can be reconciled to the accounting profit
as follows:
For the year
ended
31 December
----------------
2021 2020
GBP'000 GBP'000
------------------------------------------------------------ ------- -------
Profit before tax 945 199
Share in net loss/(profit) of joint ventures (188) (93)
------------------------------------------------------------- ------- -------
Profit before tax, excl. Share in net loss of joint
ventures 1,133 292
Tax at 19.00% (2020: 19.00%) (215) (55)
Effect of:
Overseas tax rates (386) (262)
Non-deductible expenses (180) (109)
Other taxes - (7)
Use of tax losses previously not recognised 76 181
Changes in statutory enacted tax rate (273) (4)
Tax adjustments in respect of previous year (109) (85)
Non recognition of deferred tax on current year losses (105) (423)
Recognition of formerly non-recognised deferred tax
assets on TLCF 50 821
R&D relief 200 44
Other (80) (66)
------------------------------------------------------------- ------- -------
Income tax (expense)/income as reported in the consolidated
income statement (1,022) 35
------------------------------------------------------------- ------- -------
The tax credit of GBP1,303k ( 2020 : GBP1,639k ) shown within
"non-underlying items" on the face of the consolidated income
statement, which forms part of the overall tax charge of GBP1,022k
( 2020 : GBP35k credit) relates to the items in note 4.
The tax rates used for the 2021 and 2020 reconciliation above
are the corporate tax rates of 25.00% (Belgium), 15.00% (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.
The March 2021 Budget resulted in an increase to the UK standard
rate of corporation tax to 25% from 1 April 2023. Given the
legislation was enacted during the year deferred taxes have been
adjusted accordingly reflecting the increase of the tax rate in the
future, resulting in a deferred tax charge of GBP273k.
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
---------------- ---------------- ----------------
2021 2020 2021 2020 2021 2020
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------- ------- ------- ------- ------- -------
Goodwill (125) (150) (923) (785) (1,048) (935)
Intangible assets 243 275 (3,435) (4,048) (3,192) (3,773)
Property, plant and equipment (186) (309) (195) (130) (381) (439)
Financial fixed assets 1 1 - - 1 1
Inventory (11) (22) (40) (19) (51) (41)
Trade and other payables/receivables 94 120 59 46 153 166
Borrowings 182 272 223 132 405 404
Provisions 3 - - - 3 -
Accruals and deferred income 13 104 40 - 53 104
Tax losses carried forward 1,749 1,929 - - 1,749 1,929
-------------------------------------- ------- ------- ------- ------- ------- -------
Total 1,963 2,220 (4,271) (4,804) (2,308) (2,584)
-------------------------------------- ------- ------- ------- ------- ------- -------
(b) Movements during the year
Movement of deferred taxes during 2021 :
Balance Recognised Foreign Balance
at 1 January in income exchange at 31 December
2021 adjustments 2021
GBP'000 GBP'000 GBP'000 GBP'000
------------------------------------- ------------- ---------- ------------ ---------------
Goodwill (935) (174) 61 (1,048)
Intangible assets (3,773) 600 (19) (3,192)
Property, plant and equipment (439) 34 24 (381)
Financial fixed assets 1 - - 1
Inventory (41) (13) 3 (51)
Trade and other payables/receivables 166 (11) (2) 153
Accruals and deferred income 104 (44) (7) 53
Borrowings 404 27 (26) 405
Provisions - - 3 3
Tax losses carry forward and other
tax benefits 1,929 (70) (110) 1,749
-------------------------------------- ------------- ---------- ------------ ---------------
Net deferred tax (2,584) 349 (73) (2,308)
-------------------------------------- ------------- ---------- ------------ ---------------
Movement of deferred taxes during 2020 :
Balance Recognised Foreign Balance
at 1 January in income exchange at 31
2020 adjustments December
2020
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)
-------------------------------------- ------------- ---------- ------------ ---------
Tax losses
The Group has unused tax losses, tax credits and notional
interest deduction available in an amount of GBP7,435k for 2021 (
2020 : GBP7,532k).
Deferred tax assets have been recognised on available tax losses
carried forward for some legal entities, resulting in amounts
recognised of GBP 1,749k ( 2020 : GBP 1,929k ). 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.
After re-evaluation it was decided that Ecuphar NV will not
recognise new deferred tax assets of GBP118k in 2021.
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 31 December
----------------------------------------
2021 2020 2021 2020
Underlying Underlying Total Total
GBP'000 GBP'000 GBP'000 GBP'000
------------------------------------------- ---------- ---------- ------- -------
Net profit/(loss) for the year 7,224 6,353 (77) 234
-------------------------------------------- ---------- ---------- ------- -------
Net profit/(loss) attributable to ordinary
equity holders of the parent adjusted
for the effect of dilution 7,224 6,353 (77) 234
-------------------------------------------- ---------- ---------- ------- -------
Average number of shares (basic and diluted)
For the year ended 31 December
----------------------------------------------
2021 2020 2021 2020
Number of shares Underlying Underlying Total Total
---------------------------------------- ---------- ---------- ---------- ----------
Weighted average number of ordinary
shares for basic
earnings per share 60,081,167 60,057,161 60,081,167 60,057,161
Dilutive potential ordinary shares
- share options 376,836 42,581 376,836 42,581
----------------------------------------- ---------- ---------- ---------- ----------
Weighted average number of ordinary
shares adjusted for effect of dilution 60,458,003 60,099,742 60,458,003 60,099,742
----------------------------------------- ---------- ---------- ---------- ----------
Basic earnings/(loss) per share
For the year ended 31 December
------------------------------------------
2021 2020 2021 2020
Underlying Underlying Total Total
in pence in pence in pence in pence
-------------------------------------------- ---------- ---------- -------- --------
From operations attributable to the
ordinary equity holders of the company 12.0 10.6 (0.1) 0.4
--------------------------------------------- ---------- ---------- -------- --------
Total basic earnings per share attributable
to the ordinary equity holders of the
company 12.0 10.6 (0.1) 0.4
--------------------------------------------- ---------- ---------- -------- --------
Diluted earnings/(loss) per share
For the year ended 31 December
------------------------------------------
2021 2020 2021 2020
Underlying Underlying Total Total
in pence in pence in pence in pence
-------------------------------------------- ---------- ---------- -------- --------
From operations attributable to the
ordinary equity holders of the Company 12.0 10.6 (0.1) 0.4
--------------------------------------------- ---------- ---------- -------- --------
Total basic earnings per share attributable
to the ordinary equity holders of the
Company 12.0 10.6 (0.1) 0.4
--------------------------------------------- ---------- ---------- -------- --------
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, being Pharmaceuticals.
The goodwill has been allocated to the cash-generating unit "CGU"
as follows:
For the year
ended 31 December
--------------------
2021 2020
GBP'000 GBP'000
--------------------- --------- ---------
CGU: Pharmaceuticals 50,337 50,987
---------------------- --------- ---------
Total 50,337 50,987
---------------------- --------- ---------
The changes in the carrying value of the goodwill can be
presented as follows for the years 2021 and 2020 :
Total
-------
GBP'000
At 1 January 2020 50,454
Currency translation 534
---------------------- -------
At 31 December 2020 50,988
---------------------- -------
Currency translation (651)
---------------------- -------
At 31 December 2021 50,337
---------------------- -------
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:
2021 2020
------------------------------ ---- ----
Discount rate (pre-tax) % 11.8 11.2
Growth rate (in perpetuity) % 1.9 2.0
------------------------------ ---- ----
In the prior year the discount rate (pre-tax) was incorrectly
disclosed as 10.2%. This has been restated to disclose the actual
pre-tax rate used in 2020 of 11.2%.
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. Further, we have assessed the potential
impact of climate change, with reference to our principal risks and
consider that the impact on the valuation of goodwill is
limited.
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 GBP19.9m 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 GBP15.3m 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 57.0% reduction in total annual cash flows
would give rise to an impairment of GBP100k. An increase in
discount rates to 20.1% or a reduction in perpetuity growth rates
to (18.6%) 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 2021 and 2020 :
In Process Patents, Product portfolios Capitalised Total
R&D distribution and product software
rights development
and licenses costs
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------------------------- ---------- ------------- ------------------ ----------- --------
Acquisition value/cost
--------------------------- ---------- ------------- ------------------ ----------- --------
At 1 January 2020 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)
Currency translation 246 789 916 74 2,025
---------------------------- ---------- ------------- ------------------ ----------- --------
At 31 December 2020 18,655 19,266 37,616 2,149 77,686
---------------------------- ---------- ------------- ------------------ ----------- --------
At 1 January 2021 18,655 19,266 37,616 2,149 77,686
---------------------------- ---------- ------------- ------------------ ----------- --------
Additions 1,247 - 1,030 1,080 3,357
Disposals (4,934) (57) (134) (20) (5,145)
Transfers (2,195) - 2,195 - -
Currency translation (327) (961) (1,140) (119) (2,547)
---------------------------- ---------- ------------- ------------------ ----------- --------
At 31 December 2021 12,446 18,248 39,567 3,090 73,351
---------------------------- ---------- ------------- ------------------ ----------- --------
In Process Patents, Product portfolios Capitalised Total
R&D distribution and product software
rights development
and licenses costs
--------------------------- ---------- ------------- ------------------ ----------- --------
Amortisation
--------------------------- ---------- ------------- ------------------ ----------- --------
At 1 January 2020 (4,813) (9,969) (17,769) (930) (33,481)
---------------------------- ---------- ------------- ------------------ ----------- --------
Amortisation (1,473) (2,805) (3,508) (363) (8,149)
Disposals 1,080 - 1,958 14 3,052
Impairments - (19) - - (19)
Transfers 44 - - (44) -
Currency translation (93) (511) (619) (54) (1,277)
---------------------------- ---------- ------------- ------------------ ----------- --------
At 31 December 2020 (5,255) (13,304) (19,938) (1,377) (39,874)
---------------------------- ---------- ------------- ------------------ ----------- --------
At 1 January 2021 (5,255) (13,304) (19,938) (1,377) (39,874)
---------------------------- ---------- ------------- ------------------ ----------- --------
Amortisation (1,387) (1,897) (3,303) (630) (7,217)
Disposals 4,211 57 46 55 4,369
Impairments (2,671) - (77) (13) (2,761)
Currency translation 147 770 855 88 1,860
Other - - - (9) (9)
---------------------------- ---------- ------------- ------------------ ----------- --------
At 31 December 2021 (4,955) (14,374) (22,417) (1,886) (43,632)
---------------------------- ---------- ------------- ------------------ ----------- --------
Net carrying value
At 31 December 2021 7,491 3,874 17,150 1,204 29,719
At 31 December 2020 13,400 5,962 17,678 772 37,812
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 capitalised software includes an IT driven by accelerated
CRM software investment and website and platform development
relating to Identicare Ltd.
The total amortisation charge for 2021 is GBP7,217k ( 2020 : GBP
8,149k ) 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
GBP8,292k ( 2020 : GBP5,900k ) relating to acquisition related
intangibles.
Further an impairment charge of GBP2,761k ( 2020 : GBP19k ) was
recorded during the financial year.
In 2021, the Group has invested in intangibles for an amount of
GBP 3,357k , which is GBP 699k higher than the additions reported
in the cashflow ( GBP 2,658k ). This is the result of the license
payable to STEM, which is only taken into capex for the actual cash
out part.
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, of which CA$1m
was paid in 2020, CA$0.5m during the financial year and CA$1.5m
still payable over 34 months. The Group has an option, for a period
of 5 years, to acquire an additional one-sixth stake in STEM for
CA$4 million. Based on the existing voting rights (33,34%) and
other contractual arrangements, the Group does not have power over
the investee. Accordingly, the investment is accounted for through
the equity method in the consolidated financial statements.
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 remaining equity investment in STEM and the licensing
fee are expected to be paid from existing cash resources.
During the financial year the group made its first license
payment of CA$0.5m. The following payment is due in 2023, therefore
only a long-term payable of CA$1.3m (GBP766k) is remaining.
Further, for the capital contribution, the outstanding short-term
liability is GBP277k (2020: GBP272k), shown in the balance sheet as
other current liability. The outstanding long-term liability is
GBP502k (2020: GBP717k), shown in the balance sheet as other
non-current liability. The Group expects the licencing agreement to
be earnings enhancing in 2022.
% of ownership
interest Carrying amount
Name of Place of business/country Nature Measurement
entity of incorporation 2021 2020 of relationship method 2021 2020
% % GBP'000 GBP'000
-------------- --------------------------- -------- ------- ----------------- -------------- -------- --------
STEM Animal
Health Inc. Canada 33.34% 33.34% Joint Venture Equity method 1,290 1457
-------------- --------------------------- -------- ------- ----------------- -------------- -------- --------
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 followed
by Animalcare's share of those amounts.
For the year ended For the year
31 December 2021 ended 31 December
2020
------------------- -------------------
GBP'000 GBP'000
------------------- -------------------
Non-current assets 547 760
Current assets 945 911
------------------------------------- ------------------- -------------------
Total assets 1,492 1,671
------------------------------------- ------------------- -------------------
Non-current liabilities 0 0
Current liabilities 525 297
------------------------------------- ------------------- -------------------
Total liabilities 525 297
------------------------------------- ------------------- -------------------
Net assets 967 1,374
------------------------------------- ------------------- -------------------
Group Share 322 458
Goodwill 561 552
Fair value identified intangibles 554 608
Deferred tax liability (147) (161)
------------------------------------- ------------------- -------------------
Investment value in joint venture 1,290 1,457
------------------------------------- ------------------- -------------------
Summarised statement of comprehensive income:
For the year ended For the year
31 December 2021 ended 31 December
2020
GBP'000 GBP'000
Sales 856 134
Operating expenses (1,338) (378)
Financial result, net 55 (1)
------------------------------------------ ------------------- -------------------
Net (loss)/profit for the year (427) (245)
Group share in net (loss)/profit
for the year (142) (82)
Depreciation on fair value adjustments
on intangible fixed assets (net
of deferred tax) (46) (11)
------------------------------------------ ------------------- -------------------
Total group share in net (loss)/profit
for year (188) (93)
Other comprehensive income 21 (18)
------------------------------------------ ------------------- -------------------
Group share in total comprehensive
income (167) (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 at 1 January 1,457 -
---------------------------------- ------ ------
Acquisition in joint venture - 1,568
Group share of net profit/(loss)
for the year (188) (93)
Foreign currency translation
differences 21 (18)
------------------------------------ ------ ------
As at 31 December 1,290 1,457
------------------------------------ ------ ------
13. Borrowings
The loans and borrowings include the following:
For the year
ended 31 December
--------------------
Interest Maturity 2021 2020
rate
--------- --------- --------- ---------
GBP'000 GBP'000
Euribor March
Revolving credit facilities +1.50% 25 5,462 12,227
Euribor March
Roll over investment facility +1.50% 25 - 797
Euribor March
Acquisition loan +1.75% 25 3,781 4,045
See note
Lease liabilities 16 1,719 1,812
------------------------------- ---------------------- --------- ---------
Total loans and borrowings 10,962 18,881
------------------------------------------------------- --------- ---------
Of which
Non-current 10,239 17,293
Current 723 1,588
------------------------------------------------------- --------- ---------
Revolving credit facilities and roll over investment
facilities
T he 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
The loans have a variable, Euribor-based interest rate,
increased with a margin of 1.50% or 1.75%. The revolving credit
facilities and the acquisition financing have a bullet maturity in
March 2025.
14. Accrued charges and contract liabilities
Accrued charges and contract liabilities consists of the
following:
For the year
ended 31 December
--------------------
2021 2020
GBP'000 GBP'000
------------------------------------------- --------- ---------
Accrued charges 923 2,450
Contract liabilities - due within one year 168 234
Other (8) 2
-------------------------------------------- --------- ---------
Total due within one year 1,083 2,686
-------------------------------------------- --------- ---------
Contract liabilities - due after one year 675 556
-------------------------------------------- --------- ---------
Accrued charges of GBP923k (2020: GBP2,450k) mainly include
Ecuphar Veterinaria (GBP451k), Ecuphar NV (GBP138k) and Belphar
(GBP266k) and are mostly related to pay-roll, marketing
authorisation holder fees and bank interest costs.
Contract liabilities arise from certain services sold by the
Group's subsidiary Identicare Ltd. Historically, and in return for
a single upfront payment, Identicare Ltd committed to providing
certain database, pet reunification and other support services to
customers over the life of the pet. 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.
Throughout 2021, Identicare Ltd also operated both monthly and
annual subscription-based services to pet owners, with income
recognised accordingly over the period of the subscription.
Movements in the Group's contract liabilities tables
outstanding:
For the year
ended 31 December
--------------------
2021 2020
GBP'000 GBP'000
---------------------------------------------------- --------- ---------
Balance at the beginning of the year 790 772
Contract liabilities deferred to following years 170 201
Release of contract liabilities from previous years (117) (183)
----------------------------------------------------- --------- ---------
Balance at the end of the year 843 790
----------------------------------------------------- --------- ---------
The contract liabilities fall due as follows:
For the year
ended 31 December
--------------------
2021 2020
GBP'000 GBP'000
------------------------------- --------- ---------
Within one year 168 234
After one year 675 556
-------------------------------- --------- ---------
Balance at the end of the year 843 790
-------------------------------- --------- ---------
15. Equity
Share capital
For the year ended
31 December
----------------------
Number of shares 2021 2020
--------------------------------------------------- ---------- ----------
Allotted, called up and fully paid Ordinary Shares
of 20p each 60,092,161 60,057,161
------------------------------------------------------ ---------- ----------
For the year
ended 31 December
--------------------
2021 2020
GBP'000 GBP'000
--------------------------------------------------- --------- ---------
Allotted, called up and fully paid Ordinary Shares
of 20p each 12,019 12,012
------------------------------------------------------ --------- ---------
The following share transactions have taken place during the
year ended 31 December 2021 :
For the year ended
31 December
Number of GBP'000
shares
-------------------------- ----------- -------
At 1 January 2021 60,057,161 12,012
Exercise of share options 35,000 7
At 31 December 2021 60,092,161 12,019
----------------------------- ----------- -------
Dividends
For the year
ended 31 December
--------------------
2021 2020
GBP'000 GBP'000
Ordinary interim dividend paid for the period ended 31
December 2020 of 2.0p per share - 1,201
Ordinary final dividend for the year ended 31 December
2020 of 2.0p per share 1,201 -
Ordinary interim dividend paid for the period ended 31
December 2021 of 2.0p per share 1,202 -
-------------------------------------------------------- --------- ---------
2,403 1,201
------------------------------------------------------- --------- ---------
16. IFRS 16 Leases
The balance sheet shows the following amounts relating to leases
as at 31 December 2021 :
31 December 1 January
2021 2021
----------- ---------
GBP'000 GBP'000
------------------------------ ----------- ---------
Buildings 579 831
Vehicles 1,079 957
Other - 1
------------------------------ ----------- ---------
Total right-of-use assets 1,658 1,789
------------------------------ ----------- ---------
Current lease liabilities 723 951
Non-current lease liabilities 996 861
------------------------------ ----------- ---------
Total lease liabilities 1,719 1,812
------------------------------ ----------- ---------
Below are the carrying amounts of right-of-use assets recognised
and the movements during the year:
Land and Vehicles Other Total
buildings
GBP'000 GBP'000 GBP'000 GBP'000
---------- -------- ------- -------
Acquisition value/cost
------------------------------------------- ---------- -------- ------- -------
At 1 January 2020 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
Other - - - -
------------------------------------------- ---------- -------- ------- -------
At 31 December 2020 1,570 2,029 84 3,683
------------------------------------------- ---------- -------- ------- -------
Additions 336 881 - 1,217
Disposals and contract modifications (286) (425) (63) (774)
Transfers 3 - (3) -
Currency Translation (84) (134) (2) (220)
Other (12) (61) - (73)
------------------------------------------- ---------- -------- ------- -------
At 31 December 2021 1,527 2,290 16 3,833
------------------------------------------- ---------- -------- ------- -------
Depreciation
At 1 January 2020 (378) (598) (46) (1,022)
Depreciation charge for the year (433) (619) (31) (1,083)
Disposals 22 181 (3) 200
Transfers 71 - - 71
Currency translation (21) (35) (3) (59)
------------------------------------------- ---------- -------- ------- -------
At 31 December 2020 (739) (1,071) (83) (1,893)
------------------------------------------- ---------- -------- ------- -------
Depreciation charge for the year (428) (634) (4) (1,066)
Disposals and contract modifications 182 424 63 669
Transfers (6) - 6 -
Currency translation 43 70 2 115
------------------------------------------- ---------- -------- ------- -------
At 31 December 2021 (948) (1,211) (16) (2,175)
------------------------------------------- ---------- -------- ------- -------
Net book value
At 31 December 2021 579 1,079 - 1,658
------------------------------------------- ---------- -------- ------- -------
Below are the values for the movements in lease liability during
the year:
Lease
Liability
GBP'000
-------------------- ----------
At 1 January 2021 1,812
Additions 1,217
Disposals (118)
Interest expense 53
Payments (1,077)
Modifications (61)
CTA (107)
--------------------- ----------
At 31 December 2021 1,719
--------------------- ----------
The following amounts are recognised in the income
statement:
For year ended
31 December
2021
GBP'000
----------------------------------------------------------- --------------
Depreciation expense of right-of-use assets (1,066)
Interest expense on lease liabilities (53)
(Loss)/gain on disposal of IFRS16 assets -
Expense relating to short-term leases and low-value assets (159)
----------------------------------------------------------- --------------
Total amount recognised in the income statement (1,278)
----------------------------------------------------------- --------------
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. Contingent liability relating to the sale of Medini NV
On 3 September 2018, Ecuphar NV sold the wholesale business
Medini NV to Vetdis Holding NV (Vetdis) under a Share Purchase
Agreement (SPA). In June 2019, Vetdis sent a letter to Ecuphar
claiming that Ecuphar had breached the SPA. Ecuphar disputes the
majority of the claim, however Ecuphar considers it likely that a
part of the claim, amounting to EUR126,430, may be valid. Following
various discussions and correspondence, during which the parties
were unable to reach any agreement, Vetdis issued formal court
papers on 29 May 2020. A full court hearing to consider the case
took place in the Commercial Court in Bruges on 2 March 2021. The
court did not decide on the merits of the claim, instead it
appointed an expert auditor to examine the documents and advise the
court on the claim. The court however ordered Vetdis to pay the
current account debt plus interest at 8%, and on 4 May 2021, Vetdis
made a payment of EUR432,762. The process involving the expert
auditor is ongoing. Other than the EUR126,430, which may be valid,
no further provision in respect of this matter has been included in
the financial statements.
18. Events after balance sheet date
On 1 January 2022, we entered into a partnership with an
entrepreneur to develop and drive growth within Identicare Ltd, the
Group's pet microchipping and consumer-focused services business.
In connection with this partnership, a growth share plan has been
put in place based on certain equity value-based performance
criteria.
On 24 March 2022, the Group announced that it has entered into
two early-stage agreements with Netherlands-based Orthros Medical,
a company focused on the research and early development of VHH
antibodies, also known as small single chain antibody fragments.
Under the terms of the deal, Animalcare will make upfront payments
to Orthros Medical totalling EUR500,000 and will fund some early
research activities as part of the collaboration. As the two
licensed preclinical candidates progress, Orthros Medical may
receive development, regulatory and commercial milestone payments
up to a total value of EUR11 million as well as single digit
royalties on net sales of the products. These payments are expected
to be paid out of the Group's operating cash flow.
19. 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 December 2021 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, UK.
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March 29, 2022 02:00 ET (06:00 GMT)
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