ECO Animal Health Trading Statement
November 11 2019 - 1:00AM
UK Regulatory
TIDMEAH
ECO Animal Health Group plc
("ECO" or "the Group")
(AIM: EAH)
Trading, business update and board change
11 November 2019
ECO Animal Health Group plc issues an update today ahead of
release of its interim results for the six months ended 30
September 2019, which will be announced during December 2019.
Whilst certain important markets for the Group have
out-performed management's expectations in the first half of the
financial year, African Swine Fever ("ASF") has continued to have
an adverse impact on the Group's trading performance in China.
The well publicised effects of the ASF outbreak in China have
provided significant headwinds in our largest market. Further, the
China-USA trade tensions have further exacerbated the effect due to
the US swine producers having limited ability to capitalize on the
anticipated export market created by the pork shortage in China
leading to overproduction and depressed prices and margins in the
USA. As we have previously guided, these factors have had a
significant negative impact on Group revenues and in the six months
to 30 September 2019 our unaudited sales in China have declined by
approximately 60% compared to the same period in 2018.
We see some encouragement for the second half of the current
financial year with a reported reduction in the rate of new ASF
outbreaks in China and an indication of some restocking of pig
herds in certain high value producers, including with some of our
customers. However, there inevitably remains significant market
uncertainty which we continue to monitor.
As a result of the challenging trading conditions in China, the
Group's trading results for the six months ended 30 September 2019
will be below those achieved in the first half of 2018. Despite a
historical second half weighting to the Group's trading
performance, the continuing impact of ASF in China and South East
Asia and the uncertainty as to timing of a market recovery in
China, the Board would expect that full year trading performance
will be significantly below current market forecasts if these
trends continue.
Outside of China, Brazil and Mexico (pigs) and India (poultry)
have traded ahead of management's expectations due in part to
continuing market penetration and market share gains as well as a
benefit from swine exports to China in the wake of China-USA
trading tensions. Unaudited revenues for the six months to 30
September 2019 (ex-China) have seen low, double digit percentage
growth over the prior period in 2018.
Following the appointment of new financial leadership and
external auditors, the Group has identified the requirement to
correct the application of certain existing accounting policies in
order to comply with International Financial Reporting Standards.
Whilst this work is ongoing, areas of particular focus include
changes in revenue recognition (including treatment of discounts
and timing of shipments under IFRS 15) and the treatment of R&D
expenditure as the Group transitions from a product and technical
focus on Aivlosin, our flagship product, to a number of projects
and collaborations with major research institutions focusing on the
development of new vaccines (or biological products) in our target
sectors of pigs and poultry. It is expected that changes to the
accounting treatment of these items will lead to the restatement
(incorporating Prior Period Adjustments) of the Company's financial
statements for the year ended 31 March 2019 and the six months
ended 30 September 2018 which will be presented as comparatives in
the unaudited interim financial statements for the six months ended
30 September 2019.
The Board is also reviewing the accounting treatment of the
Company's US joint venture although any changes are likely to
affect balance sheet presentation only. This review of the
application of our accounting policies is a further step in the
Board's efforts to provide greater clarity, comparability and
consistency in the presentation of the Group's financial statements
as well as reflecting industry accounting best practice and better
reflecting the Group's current business model.
The Board is pleased to confirm the appointment of Dr Andy Jones
as Chairman of the Board of ECO with immediate effect. This follows
the three months during which Dr Jones was the Group's interim
Chairman and his leadership during this time confirmed his
exemplary skills and commitment to ensuring ECO has an appropriate
level of governance and oversight. In light of this, the Board will
focus its search on appointment of a further Independent
Non-Executive Director.
Marc Loomes, CEO said:
"ASF continues to have a major impact on our business in China,
but I am pleased with the progress we are making in other
territories which goes some way to mitigating this. Our interim
results to be released in December will clearly describe any
changes to our financial reporting following a significant project
to ensure ECO is reporting appropriately and leading with best
practice. Finally, I am delighted that Andy Jones has agreed to
become permanent Chairman and we look forward to expanding the
expertise management can tap into through the appointment of an
additional independent NED in due course."
Contacts:
ECO Animal Health Group plc 020 8447 6906
Marc Loomes (CEO)
Christopher Wilks (CFO)
IFC Advisory 020 3934 6630
Graham Herring
Zach Cohen
N+1 Singer (Nominated Adviser & Joint Broker) 020 7496 3000
Mark Taylor
Peter Steel
Alex Bond
Peel Hunt LLP (Joint Broker) 020 7418 8900
James Steel
Dr Christopher Golden
About ECO Animal Health Ltd
ECO Animal Health based in London U.K. is a leader in the
development, registration and marketing of pharmaceutical products
for global animal health markets. Its products for these growth
markets promote well-being in animals and include the novel
antimicrobial, Aivlosin®, as well as a range of generic therapeutic
products.
The information contained within this announcement is deemed by
the Group to constitute inside information as stipulated under the
Market Abuse Regulations (EU) No. 596/2014 ("MAR").Upon the
publication of this announcement via a Regulatory Information
Service ("RIS"), this inside information is now considered to be in
the public domain.
View source version on businesswire.com:
https://www.businesswire.com/news/home/20191110005034/en/
This information is provided by Business Wire
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November 11, 2019 02:00 ET (07:00 GMT)
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