Half-yearly report
5 December 2008
ECO Animal Health Group plc
Interim Results for the six months ended 30 September 2008
Key features
· Turnover on continuing operations rises over 24 per cent to £8.03 million (2007: £6.46 million).
· EBITDA on continuing operations doubles to £1.47 million (2007: £0.73 million).
· Aivlosin sales (in US dollars) 35 per cent ahead of same period last year
· Net cash at period end of £3.8 million
· Unchanged Interim dividend of 1.7 pence (net) per share; scrip dividend alternative will again be
offered to shareholders
· Sale of Aquarium Products completed
Peter Lawrence, Chairman of ECO Animal Health Group plc, commented:
"The strength of the first half performance should continue and it is
encouraging that the very significant investment that we have made over a number
of years in the development of our product ranges is beginning to show results.
Our balance sheet is debt free and while our markets will remain tough as the
major economies adjust to slower growth rates, we look forward with confidence
and optimism to delivering further value to our shareholders"
Contacts:
ECO Animal Health Group plc
Peter Lawrence 020 8336 6190
Spiro Financial
Anthony Spiro 020 8336 6196
Cenkos Securities plc (Nominated Adviser)
Stephen Keys 020 7397 8926
Elizabeth Bowman 020 7397 8928
ECO Animal Health Group plc is a leader in the development, registration and
marketing of pharmaceutical products for animals. Our products for these global
growth markets promote well-being. Our financial goals are achieved through the
careful and responsible application of science to generate value for our
shareholders.
CHAIRMAN'S STATEMENT
I am pleased to report that we have maintained the good progress reported in the
previous trading year. ECO has built on last year and delivered a strong
performance for the six months to 30 September 2008 with good advances in sales
and profit.
Turnover for the six months to 30 September 2008 on continuing operations rose
over 24 per cent to £8.03 million (2007: £6.46 million) while EBITDA (earnings
before interest, tax, depreciation, amortisation and share based payments)
doubled to £1.47 million (2007: £0.73 million).
On October 1, the day following the period under review, we completed the sale
of the business and assets of Interpet LLC, our US based operation, which trades
as Aquarium Products, to Sergeant's Pet Care Products, Inc. of Omaha, Nebraska.
The consideration is a cash payment of $500,000 that will be followed by an earn
out based on a rising percentage of net sales over the next five years. The
Board believes that this will achieve the best and fairest price for the
business. Sergeant's has very strong distribution and the Aquarium Products
range will benefit from being part of this much larger organisation. The past
few years has been a difficult period for Aquarium Products and the efforts of
its management team are much appreciated. This sale concludes our programme of
disposing of non-core operations and finally leaves us totally focused on animal
health.
The Board is declaring an unchanged Interim dividend of 1.7 pence (net) per
share, which will be paid on 19 May 2009 to shareholders on the register on 17
April 2009. In addition, the Board will again offer a scrip dividend alternative
and a circular will be sent to shareholders in due course.
In June 2008 we left the London Stock Exchange's Electronic Trading Service
(SETS) and reverted to the market maker led system. The Company also agreed to
its shares being traded on PLUS Markets in addition to AIM. As a further step
to lower volatility in its share price, the Company is today issuing Notice of
an Extraordinary General Meeting to be held on 21 January 2009 to seek
shareholder approval for the Company to buy back up to one per cent of its
issued share capital to be held in Treasury for later reissue. The liquidity of
smaller companies remains low and in many cases small trades can cause
disproportionate fluctuations in the share price. I believe that the ability to
buy back shares when there is an over supply and hold them in Treasury for
reissue later to satisfy demand,should help smooth our share price performance.
Operations
ECO Animal Health's sales were 24 per cent ahead of the level achieved during
the first six months of last year. The global sales value of Aivlosin® in US
dollars was over 35 per cent higher and the Ecomectin® range was up some 50 per
cent compared with the same period last year. Overall margins continue to
improve as the product mix benefits from higher weightings of the Aivlosin® and
Ecomectin® ranges. In July I reported on our new distribution strategy for
Aivlosin® in Europe. We have now appointed a number of national and regional
distributors, selected for their local knowledge of the poultry industry.
Candidates for the distribution rights for Aivlosin® for pigs have been
identified and we expect that multiple contracts will be signed shortly. ECO
will be responsible for selling Aivlosin® for both pigs and poultry in
the UK and just for poultry in France.
Sales from the new poultry market distributors look promising. Further market
penetration in Europe is expected during 2009 when we plan selling a new
formulation, with a more cost effective dose rate, for the treatment of ileitis,
an enteric disease of pigs. In addition, we have recently been granted a further
marketing authorisation for a new swine premix formulation, an `all in one
granule' with superior handling properties, which should be well received by
pork producers.
In Japan we are appointing a new distributor and have added an ileitis claim to
our Aivlosin® premix formulations for pigs. This should have a significant and
positive effect on sales of our patented macrolide antibiotic. Another important
Aivlosin® registration was obtained in Chile. Trading in both Brazil and China
continues to develop encouragingly with sales in China more than double the
level of last year boosted by a significant increase in exports.
The global programme to gain marketing authorisations for Aivlosin® continues
apace and we still anticipate receiving our first registrations for the
important North American markets in 2010. With these new approvals and the
submission of our registration applications for the balance of our antiparasitic
range, our portfolio of marketing authorisations worldwide has increased in both
number and value.
Meanwhile, research and development of Aivlosin® for the treatment of more
indications and in different species, is progressing well. Development studies
for our planned new range of pet medications have continued along our projected
time lines. We expect to add a new range of products to our existing Ecoheart
dog heartworm tablet and our Ecomectin® horse paste, during 2010/11.
The supply chain cost saving project, which we commenced last year, has begun to
deliver tangible benefits with our contracted manufacturers of key products,
which includes an ambitious cost reduction programme associated with the supply
of Aivlosin®. We have consolidated our UK regulatory departments into ECO's
London office in order to shorten lines of communication and enhance efficiency.
Board membership
On 18 September 2008 we announced the appointment of David Danson as a non-
executive director following the retirement of Gavin Casey. David is a
veterinary surgeon who has spent many years in company management. He brings
invaluable experience in the animal health sector and also significant public
company expertise. This will be of enormous benefit to us particularly in our
dealings with the various regulatory bodies.
Outlook
The strength of the first half performance should continue and it is encouraging
that the very significant investment that we have made over a number of years in
the development of our product ranges is beginning to show results. Our balance
sheet is debt free and while our markets will remain tough as the major
economies adjust to slower growth rates, we look forward with confidence and
optimism to delivering further value to our shareholders.
Peter Lawrence
Executive chairman
5 December 2008
CONSOLIDATED INCOME STATEMENT
FOR THE SIX MONTHS TO 30 SEPTEMBER 2008
Six months Six months Year
ended ended ended
30.09.08 30.09.07 31.03.08
(unaudited) (unaudited) (audited)
£000 £000 £000
REVENUE
Continuing operations 8,027 6,457 16,481
Discontinued activities 395 453 -
__________ __________ __________
8,422 6,910 16,481
Cost of sales (5,376) (4,786) (10,803)
__________ __________ __________
GROSS PROFIT 3,046 2,124 5,678
Administrative expenses (2,005) (1,643) (3,702)
Currency gains/(losses) 73 (87) (23)
Amortisation of marketing authorisations (1,210) (1,014) (2,169)
Share based payments (59) (131) (257)
Other operating income 80 210 152
__________ __________ __________
OPERATING PROFIT/(LOSS)
Continuing operations 159 (430) (321)
Discontinued activities (234) (111) -
Loss on sale of division (591) - (315)
__________ __________ __________
(LOSS) ON ORDINARY
ACTIVITIES BEFORE INTEREST (666) (541) (636)
Net interest receivable/(payable) 43 (195) (374)
__________ __________ __________
(LOSS) ON ORDINARY
ACTIVITIES BEFORE TAXATION (623) (736) (1,010)
Taxation 190 - 314
__________ __________ __________
(LOSS) ON ORDINARY
ACTIVITIES AFTER TAXATION (433) (736) (696)
__________ __________ __________
__________ __________ __________
ATTRIBUTABLE TO:
Equity holders of the parent (564) (753) (784)
Minority interest 131 17 88
__________ __________ __________
(433) (736) (696)
__________ __________ __________
__________ __________ __________
BASIC (LOSS) PER SHARE (1.24)p (2.363)p (2.36)p
FULLY DILUTED (LOSS) PER SHARE (1.24)p (2.360)p (2.36)p
____________________________________________________________________________________
£000 £000 £000
Earnings on continuing operations before
interest taxation,depreciation,amortisation,
share based payments and exceptional items 1,471 730 2,503
: on a per share basis 3.24p 2.29p 7.54p
CONSOLIDATED BALANCE SHEET
AS AT 30 SEPTEMBER 2008
final £91k is Recognition of spah exceptional and usage, set off by prepaid/drug reg salaries
£59k capitalised. £32k prepaid
As at As at As at
30.09.08 30.09.07 31.03.08
(unaudited) (unaudited) (audited)
£000 £000 £000
ASSETS
Non Current Assets
Property,Plant & Equipment 1,224 1,367 1,349
Goodwill & Other Intangibles 34,862 33,783 34,798
Investments 284 342 281
__________ __________ __________
36,370 35,492 36,428
CURRENT ASSETS
Inventories 3,893 4,782 3,826
Trade and other receivables 8,021 8,337 8,354
Deferred tax 228 185 228
Other taxes and social security 225 320 151
Cash and cash equivalents 4,640 1,360 6,143
__________ __________ __________
17,007 14,984 18,702
__________ __________ __________
Total Assets 53,377 50,476 55,130
__________ __________ __________
Current Liabilities
Trade and other payables (2,522) (4,880) (3,523)
Short term borrowings (650) (3,155) (79)
Current portion of long term borrowings (201) (210) (558)
Corporation tax (33) (630) (358)
Other taxes and social security (179) (119) (83)
Dividends (2,494) (1,850) (600)
__________ __________ __________
(6,079) (10,844) (5,201)
Total Assets Less Current Liabilities 47,298 39,632 49,929
Non Current Liabilities
Long term borrowings - (630) (186)
Long term provisions - (111) -
__________ __________ __________
47,298 38,891 49,743
__________ __________ __________
__________ __________ __________
Equity
Capital and reserves
Called up share capital 2,275 1,695 2,256
Share premium 37,457 26,504 37,095
Revaluation reserve 253 256 253
Other reserves 865 679 806
Retained earnings 5,616 9,255 8,686
__________ __________ __________
46,466 38,389 49,096
Minority interest 832 502 647
__________ __________ __________
__________ __________ __________
Total Equity 47,298 38,891 49,743
__________ __________ __________
__________ __________ __________
RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS FOR
THE PERIOD TO 30 SEPTEMBER 2008
Share Share Other Revaluation Retained Total Minority Total
Capital Premium Reserves Reserves Earnings Interest Equity
Account Account
£000 £000 £000 £000 £000 £000 £000 £000
At 1 April 2007 1,559 21,367 548 256 12,474 36,204 2 36,206
Arising on
consolidation of ECO-Biok - - - - - - 512 512
Loss for the period - - - - (784) (784) 88 (696)
Foreign currency
translation differences - - - - (488) (488) 45 (443)
Arising on issue of
shares in the period 697 15,728 - - - 16,425 - 16,425
Dividends - - - - (2,436) (2,436) - (2,436)
Depreciation written back - - - (3) - (3) - (3)
Share based payments - - 258 - - 258 - 258
Actuarial losses on pension
scheme - - - - (80) (80) - (80)
______ ______ ______ ______ ______ ______ ______ ______
At 31 March 2008 2,256 37,095 806 253 8,686 49,096 647 49,743
Loss for the period - - - - (564) (564) 131 (433)
Foreign currency
translation differences - - - - (26) (26) 54 28
Arising on issue
of shares in the period 19 362 - - - 381 - 381
Dividends - - - - (2,480) (2,480) - (2,480)
Share based payments - - 59 - - 59 - 59
______ ______ ______ ______ ______ ______ ______ ______
At 30 September 2008 2,275 37,457 865 253 5,616 46,466 832 47,298
______ ______ ______ ______ ______ ______ ______ ______
______ ______ ______ ______ ______ ______ ______ ______
Prior interim period
At 1 April 2007 1,559 21,367 548 256 12,474 36,204 2 36,206
Arising on consolidation
of ECO-Biok - - - - - - 483 483
Loss for the period - - - - (753) (753) 17 (736)
Foreign currency
translation differences - - - - (619) (619) - (619)
Arising on issue of
shares in the period 136 5,137 - - - 5,273 - 5,273
Dividends - - - - (1,847) (1,847) - (1,847)
Share based payments - - 131 - - 131 - 131
______ ______ ______ ______ ______ ______ ______ ______
At 30 September 2007 1,695 26,504 679 256 9,255 38,389 502 38,891
______ ______ ______ ______ ______ ______ ______ ______
______ ______ ______ ______ ______ ______ ______ ______
ECO ANIMAL HEALTH GROUP PLC (FORMERLY LAWRENCE PLC)
CONSOLIDATED CASH FLOW STATEMENT
FOR THE SIX MONTHS TO 30 SEPTEMBER 2008
Six months ended Six months ended Year ended
30.09.08 30.09.07 31.03.08
(unaudited) (unaudited) (audited)
£000 £000 £000
(Loss) from operations (666) (541) (321)
Adjustment for:
Depreciation of plant and equipment 61 70 217
Amortisation of intangible assets 1,797 1,014 2,169
Actuarial pension losses - - (80)
(Decrease) in pension provision - - (110)
Share based payments 59 131 257
Foreign exchange differences 28 (618) (444)
________ ________ ________
Operating cash flow before
movement in working capital 1,279 56 1,688
(Increase) in inventories (67) (985) (97)
Decrease in receivables 234 688 526
(Decrease) in payables (880) (898) (2,292)
________ ________ ________
Cash generated from/(absorbed by) operations 566 (1,139) (175)
Interest paid (76) (197) (414)
Taxation (134) - (2)
________ ________ ________
Net cash inflow/(outflow) from
operating activities 356 (1,336) (591)
Cash flows from investing activities
Acquisition of ECO Biok - (61) -
(Less cash acquired with ECO Biok) - 276 276
Investment in Brazilian Office - (62) -
Purchase of property plant and equipment (25) (10) (142)
Disposal of property plant and equipment 85 - -
Costs of acquiring drug registrations (1,860) (2,419) (4,552)
Interest received 119 2 40
________ ________ ________
Net cash (used in) investing activities (1,681) (2,274) (4,378)
________ ________ ________
Cash flows from financing activities
Issue of shares 380 5,273 16,425
(Repayment of) bank borrowings (186) (709) (444)
Dividends paid (586) (530) (2,368)
________ ________ ________
Net cash (used in)/received from financing
activities (392) 4,034 13,613
________ ________ ________
Net (decrease)/increase in cash and cash
equivalents (1,717) 424 8,644
Cash and cash equivalents at the beginning
of the period 5,506 936 (3,138)
________ ________ ________
Cash and cash equivalents at the end of
the period 3,789 1,360 5,506
________ ________ ________
________ ________ ________
ECO ANIMAL HEALTH GROUP PLC (FORMERLY LAWRENCE PLC)
NOTES TO THE PRELIMINARY RESULTS FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2008
1. Basis of preparation- The unaudited interim results for the six months
ended 30 September 2008 have been prepared by the Group in accordance with
IFRS and the accounting policies that were applied when the Group prepared
its financial statements for the year ending 31 March 2008.
2. The summary of results for the year ended 31 March 2008 does not constitute
statutory accounts within the meaning of Section 240 of the Companies Act
1985.The full financial statements for that year were filed with the Registrar
of Companies. The auditors' report on those accounts was unqualified and
did not contain a statement under section 237(2) or section 237(3) of the
Companies Act 1985.
3. Revenue is derived from the Group's animal pharmaceutical business.
4. Earnings per share
September September March
2008 2007 2008
Unaudited Unaudited Audited
Weighted average number of 45,424 31,864 33,199
share in issue (000's)
Fully diluted weighted average 45,425 31,901 33,223
number of shares in issue (000's)
(Loss) attributable to equity (564) (753) (784)
holders of the company (£000's)
Basic (loss) per share (pence) (1.242) (2.363) (2.362)
Fully diluted (loss) per (1.242) (2.360) (2.360)
share (pence)
5. This financial information was approved by the Board on 4th December 2008
6. Copies of this interim report are being sent to all of the Company's
shareholders. Further copies can be obtained from the Company's registered
office at 78 Coombe Road, New Malden, Surrey, KT3 4QS.
--------------------------------------------------------------------------------
DIRECTORS AND OFFICERS: Peter Lawrence (Chairman)
Marc Loomes (Director)
Julia Trouse (Director)
Kevin Stockdale (Finance Director)
David Danson (Non-Executive Director) (appointed 18 September 2008)
Julia Trouse (Company Secretary)
REGISTERED OFFICE : 78,Coombe Road, New Malden, Surrey, KT3 4QS
Tel: 020-8336 2900 Fax:020-8336 0909
NUMBER : 1818170 WEBSITE : www.ecoanimalhealthgroupplc.com
REGISTRARS : Share Registrars Ltd, 9,Lion and Lamb Yard, Farnham, Surrey, GU9 7LL
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