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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Animalcare Group PLC | AQSE:ANCR.GB | Aquis Stock Exchange | Ordinary Share | GB0032350695 |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 243.00 | 238.00 | 248.00 | 243.00 | 243.00 | 243.00 | 0.00 | 06:51:45 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
From Jan 2023 to Jan 2025
TIDMANCR
RNS Number : 3886U
Animalcare Group PLC
28 March 2023
Animalcare Group plc
("Animalcare", the "Company" or the "Group")
Preliminary Unaudited Results for the year ended 31 December 2022
28 March 2023. Animalcare Group plc (AIM: ANCR), the international animal health business, announces its preliminary unaudited results for the year ended 31 December 2022.
Financial Highlights
-- Revenues of GBP71.6m (2021: GBP74.0m) reflecting growth from product launches offset by moderation in post-pandemic demand, conclusion of distribution agreements and application of EU laws in Spain to reduce antibiotic use
-- Focus on Top 40 brands and an improved sales mix drove marked 3.5% improvement in gross margins
-- Careful targeting of SG&A investment, including Orthros-related R&D, contributed to underlying* EBITDA of GBP13.1m (2021: GBP13.5m); underlying* EBITDA margin 18.3% (2021: 18.2%)
-- Reported profit before tax was GBP2.5m (2021: GBP0.9m)
-- Underlying* basic earnings per share increased by 5.0% to 12.6 pence (2021: 12.0 pence); reported basic earnings per share of 3.3 pence (2021: 0.1 pence loss per share)
-- Supported by good rates of cash conversion, net debt was GBP5.4m at year end (2021: GBP5.3m) maintaining the Group's capacity to invest in growth strategy
-- Board proposes final dividend of 2.4 pence per share, in line with 2021
Strategic and Operational Highlights
-- Daxocox becomes a top 10 selling product in the Group's portfolio
-- Plaqtiv+ dental range launched after receiving accreditation from Veterinary Oral Health Council
-- Identicare re-positioned as subscription-based services business under specialist digital leadership
-- Preclinical pipeline projects initiated following licensing and R&D collaboration agreement with Orthros Medical to explore therapeutic potential of VHH antibodies
-- Tailored talent management programme implemented to identify and develop future leaders -- Doug Hutchens and Sylvia Metayer joined the Group Board as Non-Executive Directors -- Sustainability Task Force established to develop and drive Group-wide ESG strategy
* Alternative Performance Measures (APMs) are reconciled to reported results in the Chief Financial Officer's review and within the notes to the unaudited consolidated financial statements.
Commenting on the full year results, Chief Executive Officer, Jenny Winter said: "The way that Animalcare responded to a series of headwinds in 2022 underlines the resilience and agility of our business and the attractive fundamentals of the animal health market.
"Revenue growth for the full year was impacted by a combination of moderating market demand, the discontinuation of some distribution contracts and implementation of EU laws to limit the use of antibiotics. Nevertheless, I am pleased that we were able to deliver against several of our key performance indicators, notably gross margins which benefited from our continuing focus on the Top 40 selling brands. Good rates of cash conversion kept our year-end net debt position well below our leverage target, maintaining the strong financial platform that supports the Group's pursuit of its long-term growth strategy.
"It's clear that much of the growth in veterinary pharmaceuticals is attributable to innovative new products. That's reflected in our numbers. Daxocox, our treatment for osteoarthritic pain in dogs continues to grow, comfortably becoming a Top 10 Animalcare brand during the year. In addition, Plaqtiv+ our dental health range, the first brand to emerge from our STEM joint venture, was launched in the second quarter to an enthusiastic response from many of our customers. This was also a year that Identicare began to come to the fore. Returning double-digit revenue growth over the period , Identicare responded positively to the re-positioning of the business to a subscription-based services model under specialist digital leadership.
"Operationally, we continue to make progress against our strategic objectives, including the ongoing pursuit of growth opportunities through M&A, partnerships and in-licensing. The licensing and research collaboration agreement with Orthros Medical, which we signed in March 2022, provides us with an exciting foothold in the promising field of VHH antibodies and strengthens our early-stage pipeline. Investing in our people is critically important to the success of our business, not least in the field of sales and marketing excellence. Alongside this we reached all parts of our business with our tailored behavioural programme in 2022 and are now implementing a consistent approach to the development of our future leaders.
"Looking ahead to 2023, we have confidence in the continued resilience of our business and the attractive fundamentals of our markets. And while we recognise the inherent uncertainties in the current macroeconomic climate we anticipate a return to revenue growth over the full year."
Analyst webcast
A briefing for analysts will be held at 10:30 BST on Tuesday 28 March 2023 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_ircSmi85QaSaRkXPtuScog
A copy of the analyst presentation will be made available on the Group website shortly after the webcast.
This announcement contains inside information for the purposes of Article 7 of Regulation (EU) No 596/2014.
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/investor relations communications@animalcaregroup.com Stifel Nicolaus Europe Limited (Nominated Adviser & Joint Broker) Ben Maddison Nick Adams Nicholas Harland Francis North +44 (0)20 7710 7600 Panmure Gordon (Joint Broker) Corporate Finance Freddy Crossley/Emma Earl Corporate Broking Rupert Dearden +44 (0)20 7886 2500
Chair's Statement
Animalcare's performance in 2022 highlighted the resilience of our business and the markets in which we operate as we continued to make progress against our strategic priorities.
Revenues for the full year were GBP71.6m, a 3.3% decline that reflects a moderation in post-pandemic demand combined with factors such as the conclusion of product distribution agreements and the application of EU laws in Spain designed to reduce antibiotic usage.
At GBP13.1m, underlying EBITDA declined broadly in line with revenues thanks to a favourable product mix and disciplined management of SG&A costs. After adjusting for underlying items totalling GBP6.5m (2021: GBP8.6m), profit before tax on a reported basis was GBP2.5m (2021: GBP0.9m).
A good cash conversion rate of 78% (2021: 109%) maintained the healthy state of the Group's financial platform with net debt standing at GBP5.4m (2021: GBP5.3m) by the year end and leverage well below our stated target range of one to two times underlying EBITDA. This solid balance sheet position continues to support the Group's pursuit of value-creating opportunities that have the potential to grow our business over the coming years.
In March 2022 we reached an agreement with Netherlands-based Orthros Medical to secure a global licence for innovative VHH antibody candidates, initially addressing canine osteoarthritis. This exciting early-stage research and development collaboration helps build our pipeline in a fast-growing disease area that we know well. Elsewhere, we continue to seek out investments that can extend our geographic footprint and add to our product line-up in the shorter term, whether through M&A or partnerships.
Rationalisation of the Group's portfolio, which is now materially complete, continues to bear fruit. Management focus on larger more profitable products, combined with the discontinuation of several lower value "tail" treatments, has concentrated our firepower to the benefit of our gross margins. Against this backdrop it was particularly satisfying to see Daxocox, our innovative treatment for osteoarthritis-related pain in dogs, enter the top 10 selling products in our portfolio less than two years after coming to market. It was also pleasing to see the Plaqtiv+ dental range contribute to earnings following planned launches in the second quarter.
The Group's proven resilience and robust financial position support the Board's decision to propose a final dividend of 2.4 pence per share (2021: 2.4 pence per share).
The experience and skills of the Animalcare team drive our business forward. It's vital, therefore, that we continue to build the capabilities we need, now and into the future. In 2022 we rolled out a tailored programme to develop the next generation of leaders across the Group. We also invested in the sales and marketing excellence required to succeed in this dynamic and increasingly innovation-driven market.
In our previous Annual Report, we laid out our Group-wide approach to the environmental, social and governance (ESG) pillars of sustainable development. During the last 12 months we have noted an increasing interest in ESG-related topics among a number of our stakeholders. While recognising that we are at the early stage of our journey in this area, we have established important foundations with the creation of a dedicated Sustainability Task Force chaired by CFO Chris Brewster to advise on aspects of sustainability, including identification of material issues to our stakeholders and the potential impact on our business.
Despite the uncertain economic environment, we see reasons for optimism as we look ahead. The attractive fundamentals of our animal health markets and the strong position of the Group provide us with the confidence to continue investing in our long-term growth strategy.
Following the appointment of Doug Hutchens as a Non-Executive Director at the beginning of the year, we welcomed Sylvia Metayer to the Board in May 2022. Subsequently, she took over as Chair of the Audit and Risk Committee at the Group's AGM. Sylvia brings a wealth of financial and commercial experience gained most recently at Sodexo SA, a global leader in food and facility management outsourcing. I know that Sylvia will be of huge value as the Group continues to implement its long-term growth strategy.
No review of the year would be complete without recognition for the skills and commitment of the Animalcare team across all our markets. Our progress in 2022 was made possible through their efforts. I'd also like to thank you, our shareholders, for your continued support in our Company as we strive to achieve better animal health.
Jan Boone
Non-Executive Chair
Chief Executive Officer's Review
Looking back at 2022, we have reasons to be pleased with several of our key indicators - not least positive margin growth and good cash conversion - as we continue to benefit from a strong balance sheet in the pursuit of our long-term growth strategy.
Strong finances
Revenues for the full year reflected a moderation in demand after the pronounced spike in post-pandemic veterinary activity seen in 2021 across Europe. Termination of certain Companion Animals distribution agreements and the application of EU regulations in Spain designed to reduce the widespread use of antibiotics in Production Animals, exerted further downward pressure on overall revenues. As a result, the headline sales figure of GBP71.6m was down 3.3% at actual exchange rates (2.5% at constant exchange rates).
Our focus on bigger-selling, more profitable products in our portfolio continued to deliver results, driving much improved gross margins of 56.8% (2021: 53.3%). Carefully targeted interventions on pricing also helped us mitigate the impact of inventory and logistics inflation.
Following on from the significant progress we have made in recent years to reduce our debt and improve our balance sheet, the Group delivered positive cash conversion in line with our goals. As a result, net debt stood at GBP5.4m at the year end with leverage well below the target range of one to two times underlying EBITDA (0.4 times underlying EBITDA). Maintaining such a strong financial platform is critical to our strategy, enabling us to pursue value-creating opportunities through a combination of M&A, partnerships and pipeline projects.
Key leadership
In 2022 we continued to invest in building the skills and behaviours that will drive our business forward. Identifying and developing the next generation of leaders has been a clear theme over the course of the year with the introduction of a consistent approach to the management of our talent. This initiative is also designed to dovetail with our branded "High Challenge High Support" programme of behavioural development.
Market data show that innovative products are driving much of the growth in the animal health sector. This dynamic is hard-wired into our business strategy. It's crucial, therefore, that our people are equipped with industry-leading skills to engage with customers and explain how these new technologies can benefit animal health and wellbeing in the appropriate settings. That's why we intensified our focus on sales and marketing excellence during 2022.
In partnership with Gallup, we carry out an annual survey of employee engagement. Recognising that we recorded a decline of 2% in our overall 2022 score, the data we gather through this process provides us with a rich source of insights as we seek to identify areas for improvement down to team level.
We extended a warm welcome to two new Non-Executive Directors in 2022. Doug Hutchens joined the company in February while Sylvia Metayer assumed her role in May. Doug's impressive background in veterinary medicine and R&D and Sylvia's senior level commercial leadership experience are already making a positive mark on the Group.
Growth portfolio
Our product portfolio acts as both a solid platform and a driver of growth. In recent years we have refined our product line-up, concentrating attention on larger-selling, higher margin brands while disposing of smaller "tail" products, some of which offered little more than a distraction. This rationalisation programme is now effectively complete with approximately 150 brands offering a comprehensive yet manageable portfolio. Though our Production Animals business remains a valuable part of the overall mix, it is evident that the Companion Animals segment offers greater growth potential. Consequently, that's where we direct more of our investment.
In 2022, our top 40 selling brands accounted for approximately 78% of total product sales, marginally down on the prior year. It was particularly satisfying to see Daxocox, our novel treatment for osteoarthritis-related pain in dogs, comfortably enter the top 10 ranking of Animalcare products. Additionally, our Plaqtiv+ dental health range, the first product to emerge from the STEM joint venture with Kane Biotech Inc., contributed to earnings following the later than expected accreditation from the influential Veterinary Oral Health Council (VOHC).
Identicare Ltd, the Group's UK-based pet microchipping and pet owner-focused services company, which we carved out from our pharmaceutical business under specialist leadership during 2021, delivered double-digit revenue growth over the period.
Business development
Achieving growth via inorganic business development routes is a core strategic objective for the Group. This is made possible by a financial platform that has been materially strengthened in recent years. Over the course of 2022 our dedicated business development team focused their efforts on the identification and pursuit of value-creating deals that can build our pipeline, add to revenues at attractive levels of profitability and extend our operational footprint and sales and marketing reach.
Our agreement with Netherlands-based Orthros Medical, signed in March 2022, secured an exclusive licence for VHH antibody technology with an initial focus on canine osteoarthritis. Though still in the early stages, the partnership has all the hallmarks of a collaborative template for our business.
Innovative pipeline
In 2022 the Group stepped up R&D investment as we continued to build an innovative pipeline that is capable of generating sustainable growth; we expect to further increase spend as a proportion of sales in 2023.
The aforementioned licensing and collaboration agreement with Orthros Medical has generated a number of preclinical projects exploring the potential for VHH antibodies, initially for the treatment of osteoarthritis-related pain in dogs. This is an expanding area of the market in which we are recognised for our knowledge and expertise. Following the European approval of Daxocox in 2021, we are also leveraging our product development capability to pursue life cycle management opportunities that can extend the therapeutic and commercial reach of our long-acting COX-2 inhibitor.
Summary and outlook
Though the Group fell short of its revenue expectations in 2022 due to a combination of moderating market demand and other more specific factors, we made positive progress on gross margins, helping us maintain our strong financial position, and with it our ability to invest in growth opportunities.
Looking ahead, we remain confident in the resilience of our business and the wider animal health market which has seen record levels of pet ownership in many countries. We continue to be mindful of macroeconomic uncertainties, including inflationary pressures, but we anticipate a return to revenue growth for the full year.
Our people deserve huge credit for the commitment they have shown in 2022. I'd like to record my thanks for their hard work as we continue to deliver on our long-term growth strategy.
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 UK-adopted international accounting standards ("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
Hot Features
Premium
Unaudited
2022 2021 % Change
GBP'000 GBP'000 at AER
---------------------------- --------- -------- --------
Revenue 71,616 74,024 (3.3%)
Gross Profit 40,659 39,418 3.2%
Gross Margin % 56.8% 53.3% 3.5%
Underlying Operating Profit 9,753 10,593 (7.9%)
Underlying EBITDA 13,131 13,455 (2.4%)
Underlying EBITDA margin % 18.3% 18.2% 0.1%
Underlying Basic EPS (p) 12.6p 12.0p 5.0%
---------------------------- --------- -------- --------
Trading activity in 2022 reflected the continued moderation of market growth across Europe from the exceptionally high levels of post pandemic-related demand in 2021. The continuing commercial focus on our larger, higher margin brands was the main driver of much-improved gross margins. The Group's strong balance sheet and good levels of cash generation allow us to continue to invest to support future growth.
Revenues were GBP71.6m (2021: GBP74.0m), a decline of 3.3% at AER (2.5% at CER). An analysis by product category is shown in the table below:
Unaudited
2022 2021 % Change
GBP'000 GBP'000 at AER
------------------- --------- -------- --------
Companion Animals 50,217 51,326 (2.2%)
Production Animals 15,674 16,980 (7.7%)
Equine & other 5,725 5,718 0.1%
------------------- --------- -------- --------
Total 71,616 74,024 (3.3%)
------------------- --------- -------- --------
Companion Animals revenue, which continues to represent around 70% of Group turnover, declined by 2.2% to GBP50.2m, impacted by moderating demand levels across Europe as noted above together with the loss of distribution rights of certain key brands. In part, this was offset by sales growth from new products, which contributed GBP2.1m (2021: GBP2.2m), predominantly driven by Daxocox and Plaqtiv+, the latter launching during Q2 following the later than expected VOHC (Veterinary Oral Health Council) accreditation. In addition, Identicare, the Group's small but growing UK-based pet microchipping and pet owner-focused services business, delivered 13% revenue growth over the period. One year on from bringing in specialist leadership, we are pleased with the progress in transitioning the business to a subscription-based services model with recurring revenues.
Production Animal revenues, which are largely generated by our South Region business, declined by 7.7% versus the prior year to GBP15.7m, predominantly due to the application of EU laws in Spain designed to further reduce the widespread use of antibiotics.
Equine and other sales were broadly flat versus 2021 at GBP5.7m during a period in which we took Danilon, one of our largest brands, back into the UK business, giving the Group more control over supply and our commercial offering.
Revenues generated by our Top 40 brands, collectively accounting for approximately 78% of sales, reduced by 0.9%, predominantly impacted by the conclusion of distribution rights within our Companion Animals portfolio as noted earlier. The continuing commercial focus on these larger, higher-margin brands, together with a more favourable sales mix, are the key drivers of the 3.5% improvement in our gross margins. While the Group has been affected by inventory and logistic price increases, the net impact on gross and EBITDA margins during the year has not been significant as we have taken mitigating pricing actions where possible. However, we remain alert to the accelerating inflationary pressures impacting our overall cost base as we progress into 2023.
Underlying EBITDA declined by 2.4% to GBP13.1m, broadly in line with revenues. Disciplined management of SG&A costs in the light of the moderating revenues enabled us to deliver EBITDA margins at approximately the same level as the prior year. SG&A expenses increased during the year to GBP27.5m (2021: GBP26.0m) as we continue to invest in our people and drivers of future growth such as new products and pipeline projects, the latter including R&D expenditure related to the early-stage collaboration with Orthros Medical.
The underlying effective tax rate of 16.4% (2021: 24.4%) has decreased versus 2021 primarily reflecting the geographic mix of profits and the prior year one-off impact of the enactment of the 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 was 5.0% ahead of prior year at 12.6 pence (2021: 12.0 pence).
Overview of statutory financial results
Statutory Group profit after tax for the year (after accounting for the non-underlying items shown in the table and discussed below) was GBP2.0m (2021: GBP0.1m loss), with statutory earnings per share at 3.3 pence (2021: 0.1 pence loss per share).
Unaudited
------------------------------------- ----------- --------------- --------------- ---------- ---------
Acquisition,
restructuring,
2022 Amortisation integration 2022 2021
Underlying and impairment and other Statutory Reported
results of intangibles costs results results
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------------------- ----------- --------------- --------------- ---------- ---------
Revenue 71,616 - - 71,616 74,024
Gross profit 40,659 - - 40,659 39,418
Selling, general & administrative
expenses (28,547) (3,794) (219) (32,560) (31,339)
Research & development expenses (2,363) (667) - (3,030) (3,132)
Net other operating income/(expense) 4 - (919) (915) (197)
Impairment losses - (918) - (918) (2,761)
------------------------------------- ----------- --------------- --------------- ---------- ---------
Operating profit/(loss) 9,753 (5,379) (1,138) 3,236 1,989
Net finance expenses (642) - - (642) (856)
Share in net loss of joint
ventures (52) - - (52) (188)
------------------------------------- ----------- --------------- --------------- ---------- ---------
Profit/(loss) before tax 9,059 (5,379) (1,138) 2,542 945
Taxation (1,487) 725 185 (577) (1,022)
------------------------------------- ----------- --------------- --------------- ---------- ---------
Profit/(loss) for the year 7,572 (4,654) (953) 1,965 (77)
Basic earnings/(loss) per
share (p) 12.6p - - 3.3p (0.1p)
------------------------------------- ----------- --------------- --------------- ---------- ---------
Underlying EBITDA is reconciled to the statutory measures in the table above and within the notes to the unaudited consolidated financial statements.
Non-underlying items totalling GBP6.5m (2021: GBP8.6m) relating to profit before tax have been incurred in the year, as set out in note 4. These principally comprise:
1. Amortisation and impairment of acquisition-related intangibles of GBP5.4m (2021: GBP8.3m). The current year charge primarily comprises amortisation in relation to the reverse acquisition of Ecuphar NV and previous acquisitions made by Ecuphar NV (GBP4.5m) and a non-cash impairment charge of Research & Development assets that formed part of the acquired development pipeline, the principal driver for which was manufacturing challenges that have significantly impacted the timing and costs to resume supply with appropriate commercial returns.
2. Expenses relating to acquisition, business development, integration, restructuring and other costs of GBP1.1m (2021: GBP0.3m) including the reorganisation and restructuring of our Benelux and UK operations, the latter relating to the carve-out of Identicare in 2021, manufacturing transfers and relocation of our Spain and UK offices.
Dividends
An interim dividend of 2.0 pence per share was paid in November 2022.
The Board is proposing a final dividend of 2.4 pence per share (2021: 2.4 pence per share). Subject to shareholder approval at the Annual General Meeting to be held on 13 June 2023, the final dividend will be paid on 14 July 2023 to shareholders whose names are on the Register of Members at close of business on 16 June 2023. The ordinary shares will become ex-dividend on 15 June 2023.
The Board continues to closely monitor the dividend policy, recognising the Group's need for investment to drive future growth and dividend flow to deliver overall value to our shareholders.
Cash flow and net debt
We entered 2022 in a healthy position following the significant progress made during 2021 in reducing our debt and increasing the Group's financial strength. With the net debt to underlying EBITDA leverage ratio comfortably below our stated target range of one to two times, we continue to pursue value-creating opportunities through M&A, partnerships and pipeline projects.
The Group delivered good cash generation during the year following the very strong cash conversion performance in 2021. In line with our expectations, our cash conversion moderated during the financial year, while remaining on average within the previous target 90-100% range over 2021 and 2022.
Unaudited
2022 2021
GBP'000 GBP'000
----------------------------------------- --------- --------
Underlying EBITDA 13,131 13,455
Net cash flow from operations 9,429 14,023
Non-underlying items 847 611
Underlying net cash flow from operations 10,276 14,634
----------------------------------------- --------- --------
Underlying cash conversion % 78.3% 108.8%
----------------------------------------- --------- --------
Net cash flow generated by our operations reduced to GBP9.4m (2021: GBP14.0m). Working capital increased by GBP1.9m in the year compared to a GBP2.2m reduction during 2021. This movement, chiefly attributable to significantly higher receivables as a result of revenue phasing towards the year end, was largely offset by increased payables. Inventories increased by GBP2.7m from the lower than expected position at the end of 2021, primarily driven by normalisation of our stock profile following restocking of delayed supply together with some investment in strategic inventories to maintain strong service levels. The increase in working capital was in part offset by a GBP0.7m reduction in cash taxes mainly due to a combination of geographic mix of profits and lower settlement of prior year taxes.
We are targeting a year-on-year improvement in cash conversion for the financial year ending 31 December 2023, with a profile broadly consistent with the first and second halves of 2022.
GBP'000
----------------------------------------- -------
Net debt at 1 January 2022 (5,330)
Net cash flow from operations 9,429
Net capital expenditure (2,794)
Investments in joint venture (325)
Net finance expenses (1,732)
Dividends paid (2,644)
Foreign exchange on cash and borrowings (715)
Movement in IFRS 16 lease liabilities (1,291)
----------------------------------------- -------
Net debt at 31 December 2022 (Unaudited) (5,402)
----------------------------------------- -------
Net capital expenditure of GBP2.8m (2021: GBP2.7m) largely comprises investment in our product development pipeline of GBP1.3m, including GBP0.4m in relation to the first licence milestone payment to Orthros Medical. The balance of expenditure relates chiefly to investment in our business systems, including CRM, ERP and IT infrastructure within Identicare, and the relocation of our UK office.
The net debt to underlying EBITDA leverage ratio was approximately 0.4 times, consistent with 2021 and comfortably below the Group's stated target range of one to two times underlying EBITDA.
Borrowing facilities
The Group has total facilities of EUR51.5m (GBP45.7m) to 31 March 2025, provided by a syndicate of four banks comprising a committed revolving credit facility (RCF) of EUR41.5m (GBP36.8m) and a EUR10.0m (GBP8.9m) acquisition line, the latter of which cannot be utilised to fund operations.
The Group manages its banking arrangements centrally through cross-currency cash pooling. Funds are swept daily from its various bank accounts into central bank accounts to optimise the Group's net interest payable position.
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%.
Net of cash balances totalling GBP6.0m, GBP4.4m of the RCF was utilised at the year end, leaving headroom of GBP38.4m.
As at 31 December 2022 and throughout the financial year, all covenant requirements were met with significant headroom across all three measures.
Going concern
The Directors have prepared cash flow forecasts for a period of at least 12 months from the release of these results (the going concern assessment period). These forecasts indicate that the Group will have sufficient funds and liquidity to meet its obligations as they fall due, taking into consideration market conditions, the profile of cash generation, the Group's financial position (including the level of headroom available within the bank facilities and compliance with the financial covenants associated with these facilities), bank facility maturity and principal risks.
Accordingly, the Directors continue to adopt the going concern basis in preparing the financial statements.
Summary and outlook
While our revenue performance, which was impacted by a combination of factors, was not as strong as expected, the Group has made positive progress on gross margins and demonstrated agility in managing our cost base in line with trading levels. Good levels of cash conversion have also maintained our strong financial platform.
Mindful of the current economic environment, we are confident in the resilience of the Group and the animal health sector, underpinned by historically high levels of pet ownership.
With our strong balance sheet, we believe the Group remains well placed to deliver on our long-term growth strategy and we continue to explore business and product development opportunities.
Chris Brewster
Chief Financial Officer
28 March 2023
Consolidated Income Statement (Unaudited)
Year ended 31 December 2022
For the year ended 31 December
----- -------------------------------------------------------------------------
Unaudited
Non-Under-lying
Non-Underlying (note
Underlying (note 4) Total Underlying 4) Total
------------------------ ----- ---------- -------------- -------- ---------- --------------- ----------
2022 2022 2022 2021 2021 2021
Notes GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------ ----- ---------- -------------- -------- ---------- ---------------- ------------
Revenue 5 71,616 - 71,616 74,024 - 74,024
Cost of sales (30,957) - (30,957) (34,606) - (34,606)
------------------------- ----- ---------- -------------- -------- ---------- ---------------- ------------
Gross profit 40,659 - 40,659 39,418 - 39,418
------------------------- ----- ---------- -------------- -------- ---------- ---------------- ------------
Research and development
expenses (2,363) (667) (3,030) (2,181) (951) (3,132)
Selling and marketing
expenses (13,547) - (13,547) (12,277) - (12,277)
General and
administrative
expenses (15,000) (4,013) (19,013) (14,482) (4,580) (19,062)
Net other operating
income/(expense) 4 (919) (915) 115 (312) (197)
Impairment losses - (918) (918) - (2,761) (2,761)
------------------------- ----- ---------- -------------- -------- ---------- ---------------- ------------
Operating profit/(loss) 9,753 (6,517) 3,236 10,593 (8,604) 1,989
------------------------- ----- ---------- -------------- -------- ---------- ---------------- ------------
Finance costs 6 (1,752) - (1,752) (2,613) - (2,613)
Finance income 7 1,110 - 1,110 1,757 - 1,757
------------------------- ----- ---------- -------------- -------- ---------- ---------------- ------------
Finance costs net (642) - (642) (856) - (856)
------------------------- ----- ---------- -------------- -------- ---------- ---------------- ------------
Share of net loss of
joint
venture accounted for
using
the equity method 12 (52) - (52) (188) - (188)
------------------------- ----- ---------- -------------- -------- ---------- ---------------- ------------
Profit/(loss) before tax 9,059 (6,517) 2,542 9,549 (8,604) 945
------------------------- ----- ---------- -------------- -------- ---------- ---------------- ------------
Income tax expense 8 (1,487) 910 (577) (2,325) 1,303 (1,022)
------------------------- ----- ---------- -------------- -------- ---------- ---------------- ------------
Profit/(loss) for the
period 7,572 (5,364) 1,956 7,224 (7,301) (77)
------------------------- ----- ---------- -------------- -------- ---------- ---------------- ------------
Net profit/(loss)
attributable
to:
The owners of the
parent 7,572 (5,607) 1,965 7,224 (7,301) (77)
Earnings per share for
profit/(loss)
attributable
to the ordinary equity
holders of the Company:
Basic earnings per share 9 12.6p - 3.3p 12.0p - (0.1p)
Diluted earnings per
share 9 12.5p - 3.2p 12.0p - (0.1p)
------------------------- ----- ---------- -------------- -------- ---------- ---------------- ------------
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 categorised as 'non-underlying' and are analysed in detail in note 4 to these financial statements. The accompanying notes form an integral part of these unaudited consolidated financial statements.
Consolidated statement of comprehensive income (unaudited)
Year ended 31 December 2022
For the year ended
31 December
--------------------
Unaudited
2022 2021
GBP'000 GBP'000
----------------------------------------------------------- ----------- -------
Profit/(loss) 1,965 (77)
Other comprehensive income/(expense)
Exchange differences on translation of foreign operations* 488 (638)
------------------------------------------------------------ ----------- -------
Other comprehensive income/(expense), net of tax 488 (638)
------------------------------------------------------------ ----------- -------
Total comprehensive income/(expense) for the year,
net of tax 2,453 (715)
------------------------------------------------------------ ----------- -------
Total comprehensive income/(expense) attributable to:
The owners of the parent 2,453 (715)
------------------------------------------------------------ ----------- -------
* May be reclassified subsequently to profit and loss
Consolidated statement of financial position (unaudited)
Year ended 31 December 2022
For the year ended
31 December
------------------------
Notes
Unaudited Restated*
2022 2021
GBP'000 GBP'000
------------------------------------------------------ ----- ----------- ---------
Assets
Non-current assets
Goodwill 10 50,853 50,337
Intangible assets 11 25,283 30,213
Property, plant and equipment 448 132
Right-of-use-assets 16 2,924 1,658
Investments in joint ventures 12 1,305 1,290
Deferred tax assets 8 3,567 1,963
Other financial assets 70 90
Other non-current assets - 24
------------------------------------------------------- ----- -----------
Total non-current assets 84,450 85,707
------------------------------------------------------- ----- ----------- ---------
Current assets
Inventories 13,474 10,328
Trade receivables 13,568 7,135
Other current assets 715 1,200
Cash and cash equivalents 6,035 5,633
------------------------------------------------------- ----- -----------
Total current assets 33,792 24,296
------------------------------------------------------- ----- ----------- ---------
Total assets 118,242 110,003
------------------------------------------------------- ----- ----------- ---------
Liabilities
Current liabilities
Lease liabilities 16 (852) (723)
Trade payables (15,497) (10,021)
Current tax liabilities (623) (471)
Accrued charges and contract liabilities 14 (1,276) (1,083)
Other current liabilities (4,027) (2,156)
------------------------------------------------------- ----- -----------
Total current liabilities (22,275) (14,454)
------------------------------------------------------- ----- ----------- ---------
Non-current liabilities
Borrowings 13 (8,426) (9,243)
Lease liabilities 16 (2,159) (996)
Deferred tax liabilities 8 (4,773) (4,271)
Contract liabilities 14 (372) (675)
Provisions (340) (408)
Other non-current liabilities (911) (1,157)
------------------------------------------------------- ----- -----------
Total non-current liabilities (16,981) (16,750)
------------------------------------------------------- ----- ----------- ---------
Total Liabilities (39,256) (31,204)
------------------------------------------------------- ----- ----------- ---------
Net assets 78,986 78,799
------------------------------------------------------- ----- ----------- ---------
Equity
Share capital 15 12,019 12,019
Share premium 15 132,798 132,798
Reverse acquisition reserve (56,762) (56,762)
Accumulated losses (11,977) (11,676)
Other reserves 2,908 2,420
Equity attributable to the owners of the parent 78,986 78,799
Total equity 78,986 78,799
------------------------------------------------------- ----- ----------- ---------
*Restated as detailed in note 18
Consolidated statement of changes in equity (unaudited)
Year ended 31 December 2022
Attributable to the owners of the parents
Reverse
Share Share Accumulated acquisition Other Total
capital premium losses reserve reserve equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
-------------------------------- -------- -------- ----------- ------------ -------- -------
At 1 January 2022 12,019 132,798 (11,676) (56,762) 2,420 78,799
--------------------------------- -------- -------- ----------- ------------ -------- -------
Net profit - - 1,965 - - 1,965
Other comprehensive income - - - - 488 488
--------------------------------- -------- -------- ----------- ------------ -------- -------
Total comprehensive income - - 1,965 - 488 2,453
--------------------------------- -------- -------- ----------- ------------ -------- -------
Dividends paid - - (2,644) - - (2,644)
Share-based payments - - 378 - - 378
--------------------------------- -------- -------- ----------- ------------ -------- -------
At 31 December 2022 (Unaudited) 12,019 132,798 (11,977) (56,762) 2,908 78,986
--------------------------------- -------- -------- ----------- ------------ -------- -------
Attributable to the owners of the parents
Reverse
Share Share Accumulated acquisition Other Total
capital premium losses reserve 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 of 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
----------------------------- -------- -------- ----------- ------------ -------- -------
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 (unaudited)
Year ended 31 December 2022
For the year ended
31 December
----------------------
Notes Unaudited
2022 2021
GBP'000 GBP'000
Operating activities
Profit before tax 2,542 945
Non-cash and operational adjustments
Share in net loss of joint venture 12 52 188
Depreciation of property, plant and equipment 1,118 1,185
Amortisation of intangible assets 11 6,685 7,217
Impairment of intangible assets 11 918 2,761
Share-based payment expense 542 249
Gain on disposal of fixed assets (146) (396)
Non-cash movement in provisions 202 120
Movement allowance for bad debt and inventories 105 760
Finance income (260) (459)
Finance expense 1,001 1,221
Impact of foreign currencies (235) 88
Fair value adjustment contingent consideration 140 (17)
Gain on disposal of IFRS 16 and initial recognition (6) -
Movements in working capital
(Increase)/decrease in trade receivables (5,875) 3,541
(Increase)/decrease in inventories (2,735) 1,356
Increase/(decrease) in payables 6,706 (2,698)
Income tax paid (1,325) (2,038)
--------------------------------------------------------------- ----- ----------
Net cash flow from operating activities 9,429 14,023
--------------------------------------------------------------- ----- ---------- --------
Investing activities
Purchase of property, plant and equipment 11 (407) (557)
Purchase of intangible assets (2,540) (2,658)
Proceeds from the sale of property, plant and equipment
(net) 153 540
Capital contribution in joint venture 12 (325) (289)
--------------------------------------------------------------- ----- ----------
Net cash flow used in investing activities (3,119) (2,964)
--------------------------------------------------------------- ----- ---------- --------
Financing activities
Repayment of loans and borrowings (1,320) (6,952)
Repayment of IFRS 16 lease liability 16 (996) (1,024)
Receipts from issue of share capital - 76
Dividends paid 15 (2,644) (2,403)
Interest paid (444) (447)
Other financial expense (297) (213)
Decrease in other financial assets 5 -
-------------------------------------------------------------- ----- ----------
Net cash flow used in financing activities (5,696) (10,963)
--------------------------------------------------------------- ----- ---------- --------
Net increase of cash and cash equivalents 614 96
Cash and cash equivalents at beginning of year 5,633 5,265
Exchange rate differences on cash and cash equivalents (212) 272
--------------------------------------------------------------- ----- ---------- --------
Cash and cash equivalents at end of year 6,035 5,633
--------------------------------------------------------------- ----- ---------- --------
For the year ended
31 December
----------------------
Notes Unaudited
2022 2021
GBP'000 GBP'000
Reconciliation of net cash flow to movement in
net debt
Net increase in cash and cash equivalents in the
year 614 96
Cash flow from decrease in debt financing 1,320 6,952
Foreign exchange differences on cash and borrowings (715) 1,146
----------------------------------------------------------- ----- ----------
Movement in net debt during the year 1,219 8,194
----------------------------------------------------------- ----- ---------- --------
Net debt at the start of the year (5,330) (13,616)
Movement in lease liabilities during the year 16 (1,291) 92
----------------------------------------------------------- ----- ---------- --------
Net debt at the end of the year (5,402) (5,330)
----------------------------------------------------------- ----- ---------- --------
Notes to the unaudited consolidated financial statements
Year ended 31 December 2022
1. Financial information
The unaudited financial information set out above does not constitute the Company's statutory accounts for the years ended 31 December 2022 and 31 December 2021. The financial information for the year ended 31 December 2021 is derived from the statutory accounts for 2021 which have been delivered to the Registrar of Companies. 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. The audit of the statutory accounts for the year ended 31 December 2022 is not yet complete. Accordingly, the financial information for 2022 is presented unaudited in the preliminary announcement.
2. Basis of preparation
The Group financial statements have been prepared and approved by the Directors. The financial information has been prepared in accordance with UK-adopted international accounting standards ("IFRS") and the applicable legal requirements of the Companies Act 2006, except for the revaluation of certain financial instruments. They have also been prepared in accordance with the requirements of the AIM Rules.
3. Summary of significant accounting policies
Going concern
The Group's financing arrangements consist of a committed revolving credit facility of EUR41.5m (GBP36.8m) and a EUR10.0m (GBP8.9m) acquisition line, the latter of 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 2022 and throughout the financial year, all covenant requirements were met with significant headroom across all three measures.
The Directors have prepared cash flow 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 and liquidity 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 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.
4. Non-underlying items
For the year
ended 31 December
--------------------
Unaudited
2022 2021
GBP'000 GBP'000
--------------------------------------------------------- ----------- -------
Amortisation and impairment of acquisition related
intangibles
Classified within research and development expenses 667 951
Classified within general and administrative expenses 3,794 4,580
Impairment losses 895 2,761
----------------------------------------------------------- -----------
Total amortisation and impairment of acquisition-related
intangibles 5,356 8,292
----------------------------------------------------------- ----------- -------
Restructuring costs 282 17
Acquisition and integration costs 335 188
Impairment on intangibles 23 -
Divestments and business disposals (146) (462)
COVID-19 2 11
Long-term incentive plan 220 -
UK and Spain office relocation costs 182 111
Other non-underlying items 263 447
----------------------------------------------------------- -----------
Total non-underlying items before taxes 6,517 8,604
----------------------------------------------------------- ----------- -------
Tax impact (910) (1,303)
----------------------------------------------------------- -----------
Total non-underlying items after taxes 5,607 7,301
----------------------------------------------------------- ----------- -------
The following table shows the breakdown of non-underlying items before taxes by category for 2022 and 2021:
For the year
ended 31 December
-----------------------
Unaudited
2022 2021
GBP'000 GBP'000
------------------------------------------------------- --- ------------- -------
Classified within research and development expenses 667 951
Classified within general and administrative expenses 4,013 4,580
Classified within net other operating (income)/expense 919 312
Impairment losses 918 2,761
------------------------------------------------------------ ------------- -------
Total non-underlying items before taxes 6,517 8,604
------------------------------------------------------------ ------------- -------
The 2022 GBP4,013k general and administrative expenses principally encompasses amortisation and impairment of acquisition related intangibles of GBP3,794k plus the GBP220k long-term incentive plan charge.
Non-underlying items totalling GBP6,517k (2021: GBP8,604k) relating to profit before tax have been incurred in the year. These principally comprise:
-- Amortisation and impairment of acquisition-related intangibles of GBP5,356k (2021: GBP8,292k). The current year charge primarily comprises amortisation in relation to the reverse acquisition of Ecuphar NV and previous acquisitions made by Ecuphar NV of GBP4,461k (2021: GBP5,531k) and a non-cash impairment charge of Research & Development assets (GBP895k; 2021: GBP 2,761k) that formed part of the acquired development pipeline, the principal driver for which was manufacturing challenges that have significantly impacted the timing and costs to resume supply with appropriate commercial returns.
-- Expenses relating to restructuring costs of GBP282k (2021: GBP17k) principally relate to the closure of our warehouse in Belgium and subsequent out-sourcing to a third-party logistics provider, together with costs associated with the reorganisation of our UK operations following the carve-out of Identicare in 2021.
-- Acquisition and integration costs of GBP335k (2021: GBP188k) primarily relate to costs associated with manufacturing transfers and the cessation of production animals sales in Benelux.
-- Costs associated with the relocation of our Spain and UK operations totalling GBP182k (2021: GBP111k) include one-off move costs and dilapidation provisions.
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 finance income, plus income taxes and deferred taxes, plus depreciation, amortisation and impairment and is an alternative performance measure. Underlying EBITDA equals EBITDA plus non-underlying items and is an alternative performance measure. EBITDA and underlying EBITDA are reconciled to statutory measures below.
The following table summarises the segment reporting from continuing operations for 2022 and 2021. 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
----------------------
Unaudited
2022 2021
GBP'000 GBP'000
Revenues 71,616 74,024
Gross Profit 40,659 39,418
Gross Profit % 57% 53%
Segment underlying EBITDA 13,131 13,455
Segment underlying EBITDA % 18% 18%
Segment EBITDA 11,971 13,143
------------------------------- ----------- -------
Segment EBITDA % 17% 18%
------------------------------- ----------- -------
The underlying and segment EBITDA is reconciled with the consolidated net profit/(loss) for the year as follows:
For the year
ended 31 December
--------------------
Unaudited
2022 2021
GBP'000 GBP'000
--------------------------------------------------------------- ---------- --------
Underlying EBITDA 13,131 13,455
Non-recurring expenses (excluding amortisation and impairment) (1,160) (312)
EBITDA 11,971 13,143
Depreciation, amortisation and impairment (8,735) (11,154)
---------------------------------------------------------------- ---------- --------
Operating profit 3,236 1,989
Finance costs (1,752) (2,613)
Finance income 1,110 1,757 Share of net loss of joint venture accounted for using the equity method (52) (188) Income taxes (1,637) (1,371) Deferred taxes 1,060 349 ---------------------------------------------------------------- ---------- -------- Profit/ (loss) for the period 1,965 (77) ---------------------------------------------------------------- ---------- --------
Segment assets excluding deferred tax assets located in Belgium, Spain, Portugal, the United Kingdom and other geographies are as follows:
For the year
ended 31 December
--------------------
Unaudited
2022 2021
GBP'000 GBP'000
------------------------------------------------- ----------- -------
Belgium 7,510 8,834
Spain 3,695 2,811
Portugal 4,234 4,061
UK 59,184 62,157
-------------------------------------------------- ----------- -------
Other 6,260 5,881
-------------------------------------------------- ----------- -------
Non-current assets excluding deferred tax assets 80,883 83,744
-------------------------------------------------- ----------- -------
Revenue by product category
For the year
ended 31 December
--------------------
Unaudited
2022 2021
GBP'000 GBP'000
------------------- ----------- -------
Companion animals 50,217 51,326
Production animals 15,674 16,980
Equine 5,698 5,637
Other 27 81
-------------------- ----------- -------
Total 71,616 74,024
-------------------- ----------- -------
Revenue by geographical area
For the year
ended 31 December
--------------------
Unaudited
2022 2021
GBP'000 GBP'000
----------------------- ----------- -------
Belgium 3,354 4,023
The Netherlands 1,627 1,769
United Kingdom 15,257 15,471
Germany 10,056 10,373
Spain 19,724 21,035
Italy 8,404 8,885
Portugal 4,215 4,193
European Union - other 7,199 6,971
Asia 494 681
Middle East Africa 17 1
Other 1,269 622
------------------------ ----------- -------
Total 71,616 74,024
------------------------ ----------- -------
Revenue by category
For the year
ended 31 December
--------------------
Unaudited
2022 2021
GBP'000 GBP'000
Product sales 69,642 72,651
Services sales 1,974 1,373
---------------- ----------- -------
Total 71,616 74,024
---------------- ----------- -------
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. Finance costs
Finance costs include the following elements:
For the year
ended 31 December
--------------------
Unaudited
2022 2021
GBP'000 GBP'000
------------------------------------------------------- ----------- -------
Interest expense 444 447
Foreign currency losses 985 1,912
Change in fair value - losses on financial instruments 124 85
Other finance costs 199 169
-------------------------------------------------------- ----------- -------
Total 1,752 2,613
-------------------------------------------------------- ----------- -------
7. Finance income
Finance income includes the following elements:
For the year
ended 31 December
--------------------
Unaudited
2022 2021
GBP'000 GBP'000
-------------------------------- ----------- -------
Foreign currency exchange gains 1,060 1,754
Income from financial assets 39 1
Other finance income 11 2
--------------------------------- ----------- -------
Total 1,110 1,757
--------------------------------- ----------- -------
8. Income tax
Current tax liabilities
The tax payable relates to income taxes of GBP623k (2021: GBP471k).
The following table shows the breakdown of the tax expense for 2022 and 2021:
For the year
ended 31 December
--------------------
Unaudited
2022 2021
GBP'000 GBP'000
-------------------------------------------------------- ----------- -------
Current tax charge (1,685) (1,371)
Tax adjustments in respect of previous years 48 -
Total current tax charge (1,637) (1,371)
Deferred tax - origination and reversal of temporary
differences 774 458
Deferred tax - adjustments in respect of previous years 286 (109)
--------------------------------------------------------- ----------- -------
Total deferred tax credit 1,060 349
--------------------------------------------------------- ----------- -------
Total tax expense for the year (577) (1,022)
--------------------------------------------------------- ----------- -------
The total tax expense can be reconciled to the accounting profit as follows:
For the year
ended 31 December
--------------------
Unaudited
2022 2021
GBP'000 GBP'000
------------------------------------------------------- ----------- -------
Profit before tax 2,542 945
Share of net loss of joint ventures 52 188
-------------------------------------------------------- ----------- -------
Profit before tax, excl. Share in net loss of joint
venture 2,594 1,133
Tax at 19.00% (2021: 19.00%) (493) (215)
Effect of:
Overseas tax rates (389) (386)
Non-deductible expenses (99) (180)
Use of tax losses previously not recognised (24) 76
Changes in statutory enacted tax rate 93 (273)
Tax adjustments in respect of previous year 334 (109)
Non-recognition of deferred tax on current year losses (21) (105)
Usage of formerly non-recognised deferred tax assets
on timing differences 15 50
R&D relief 53 200
Other (46) (80)
-------------------------------------------------------- ----------- -------
Income tax expense as reported in the consolidated
income statement (577) (1,022)
-------------------------------------------------------- ----------- -------
The tax credit of GBP910k (2021: GBP1,303k) shown within "non-underlying items" on the face of the consolidated income statement, which forms part of the overall tax charge of GBP577k (2021: GBP1,022k), relates to the items in note 4.
The tax rates used for the 2022 and 2021 reconciliation above are the corporate tax rates of 25.00% (Belgium), 19.00% (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.
Deferred taxes at the balance sheet date have been measured using the UK enacted tax rate, being 25% from 1 April 2023.
Deferred tax
(a) Recognised deferred tax assets and liabilities
Assets Liabilities Total
------------------ ------------------ ------------------
Unaudited Unaudited Unaudited
2022 2021 2022 2021 2022 2021
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------- ------- --------- ------- --------- -------
Goodwill - (125) (1,290) (923) (1,290) (1,048)
Intangible assets 329 243 (2,722) (3,435) (2,393) (3,192)
Property, plant and equipment - (186) (707) (195) (707) (381)
Financial fixed assets 1 1 - - 1 1
Inventory - (11) (54) (40) (54) (51)
Trade and other receivables/(payables) 71 94 - 59 71 153
Borrowings 565 182 - 223 565 405
Provisions 4 3 - - 4 3
Accruals and deferred income 32 13 - 40 32 53
Tax losses carried forward 2,565 1,749 - - 2,565 1,749
Total 3,567 1,963 4,773 (4,271) (1,206) (2,308)
---------------------------------------- --------- ------- --------- ------- --------- -------
(b) Movements during the year
Movement of deferred taxes during 2022:
Balance
as at 31
Balance Foreign December
as at 1 January Recognised exchange Unaudited
2022 in income adjustments 2022
GBP'000 GBP'000 GBP'000 GBP'000
--------------------------------------- ---------------- ---------- ------------ ----------
Goodwill (1,048) (176) (66) (1,290)
Intangible assets (3,192) 782 17 (2,393)
Property, plant and equipment (381) (296) (30) (707)
Financial fixed assets 1 - - 1
Inventory (51) - (3) (54)
Trade and other receivables/(payables) 153 (62) (20) 71
Accruals and deferred income 53 (23) 2 32
Borrowings 405 133 27 565
Provisions 3 - 1 4
Tax losses carry forward and other
tax benefits 1,749 702 114 2,565
---------------------------------------- ---------------- ---------- ------------ ----------
Net deferred tax (2,308) 1,060 42 (1,206)
---------------------------------------- ---------------- ---------- ------------ ----------
Movement of deferred taxes during 2021:
Balance Foreign Balance
at 1 January Recognised exchange at 31 December
2021 in income 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 receivables/(payables) 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)
---------------------------------------- ------------- ---------- ------------ ---------------
Tax losses
The Group has unused tax losses, tax credits and notional interest deduction available in an amount of GBP11,361k (2021: GBP7,435k).
Deferred tax assets have been recognised on available tax losses carried forward for some legal entities, resulting in amounts recognised of GBP 2,565k (2021: GBP 1,749k). This was based on management's estimate that sufficient positive taxable profits will be generated in the near future for the related legal entities with fiscal losses. It is expected that GBP32k of the deferred tax asset will be recovered within the next 12 months and the remaining GBP2,533k of the deferred tax asset will be recovered after 12 months.
The non-recognised deferred tax assets of Ecuphar NV on temporary differences decreased by GBP15k in 2022 (2021: GBP50k).
9. Earnings per share
Diluted earnings per share amounts are calculated by dividing the net profit attributable to ordinary equity holders 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 was used in the earnings per share computations:
Profit/(loss) before continuing operations
For the year ended 31 December
------------------------------------------
Unaudited Unaudited
2022 2021 2022 2021
Underlying Underlying Total Total
GBP'000 GBP'000 GBP'000 GBP'000
----------------------------------------- ---------- ---------- --------- ----------
Net profit/(loss) for the year 7,572 7,224 1,965 (77)
------------------------------------------ ----------
Net profit/loss attributable to ordinary
equity
holders of the parent adjusted for
the effect of dilution 7,572 7,224 1,965 (77)
------------------------------------------ ---------- ---------- --------- ----------
Average number of shares (basic and diluted)
For the year ended 31 December
---------------------------------------------------
Unaudited Unaudited
2022 2021 2022 2021
Number of shares Underlying Underlying Total Total
------------------------------------ ---------- ---------- --------------- ----------
Weighted average number of ordinary
shares
for basic earnings per share 60,175,407 60,081,167 60,175,407 60,081,167
Dilutive potential ordinary share
options 629,087 376,836 629,087 376,836
------------------------------------- ---------- ---------- --- ---------- ----------
Weighted average number of ordinary
shares
adjusted for effect of dilution 60,804,494 60,458,003 60,804,494 60,458,003
------------------------------------- ---------- ---------- --- ---------- ----------
Basic earnings/(loss) per share
For the year ended 31 December
-------------------------------------------
Unaudited Unaudited
2022 2021 2022 2021
Underlying Underlying Total Total
in pence in pence in pence in pence
From operations attributable to the ordinary
equity holders of the company 12.6 12.0 3.3 -0.1
---------------------------------------------- ----------
Total basic earnings per share attributable
to
the ordinary equity holders of the company 12.6 12.0 3.3 -0.1
---------------------------------------------- ---------- ---------- --------- --------
Diluted earnings/(loss) per share
For the year ended 31 December
-------------------------------------------
Unaudited Unaudited
2022 2021 2022 2021
Underlying Underlying Total Total
in pence in pence in pence in pence
------------------------------------ ---------- ---------- --------- --------
From operations attributable to the
ordinary
equity holders of the Company 12.5 12.0 3.2 -0.1
------------------------------------- ---------- ---------- --------- --------
Total diluted earnings per share
attributable
to the ordinary equity holders of
the Company 12.5 12.0 3.2 -0.1
------------------------------------- ---------- ---------- --------- --------
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
---------------------
Unaudited
2022 2021
GBP'000 GBP'000
CGU: Pharmaceuticals 50,853 50,337
---------------------------------------------------- ------------
Total 50,853 50,337
---------------------------------------------------- ------------ -------
The changes in the carrying value of the goodwill can be presented as follows for the years 2022 and 2021:
Total
GBP'000
As at 1 January 2021 50,988
Disposals -
Other -
Currency translation (651)
------------------------ -------
As at 31 December 2021 50,337
------------------------ -------
As at 1 January 2022 50,337
Disposals -
Impairment -
Currency translation 516
------------------------ -------
As at 31 December 2022 50,853
------------------------ -------
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:
Unaudited
2022 2021
------------------------------ --------- ------
Discount rate (pre-tax) % 14.2 11.8
Growth rate (in perpetuity) % 2.0 1.9
------------------------------ --------- ------
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, using the long-term growth rate, 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 the environmental disclosures made in the Sustainability report 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 GBP15.5m 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 GBP11.6m but would not give rise to an impairment.
11. Intangible assets
The changes in the carrying value of the intangible assets can be presented as follows for the years 2022 and 2021:
Product
Patents, portfolios
Research distribution and product
& Development rights development Capitalised *Assets As restated
assets and licences costs software under construction Total*
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------------- -------------- ------------- ------------ -------------------- ------------
Acquisition
value/cost
As at 1 January
2021 18,655 19,266 37,616 2,149 51 77,737
--------------- -------------- ------------- ------------ -------------------- ------------
Additions 1,247 - 1,030 1,080 499 3,856
Disposals (4,934) (57) (134) (20) (43) (5,188)
Transfers (2,195) - 2,195 - - -
Currency
translation (327) (961) (1,140) (119) (13) (2,560)
--------------- -------------- ------------- ------------ -------------------- ------------
As at 31 December
2021 (Restated*) 12,446 18,248 39,567 3,090 494 73,845
--------------- -------------- ------------- ------------ -------------------- ------------
Additions 719 - 603 1,218 - 2,540
Disposals (982) - (90) (55) (4) (1,131)
Transfers 375 - - - (375) -
Currency
translation 241 760 978 146 12 2,137
--------------- -------------- ------------- ------------ -------------------- ------------
As at 31 December
2022 12,799 19,008 41,058 4,399 126 77,391
(Unaudited)
--------------- -------------- ------------- ------------ -------------------- ------------
Amortisation
--------------- -------------- ------------- ------------ -------------------- ------------
As 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 79 - 1,851
--------------- -------------- ------------- ------------ -------------------- ------------
As at 31 December
2021 (Restated*) (4,955) (14,374) (22,417) (1,886) - (43,632)
--------------- -------------- ------------- ------------ -------------------- ------------
Amortisation (1,239) (1,325) (3,233) (888) - (6,685)
Disposals 676 - 89 61 - 826
Impairments (868) - (32) (18) - (918)
Currency
translation (151) (693) (753) (102) - (1,699)
--------------- -------------- ------------- ------------ -------------------- ------------
As at 31 December
2022 (6,537) (16,392) (26,346) (2,833) - (52,108)
(Unaudited)
--------------- -------------- ------------- ------------ -------------------- ------------
Net carrying value
As at 31 December
2022 6,262 2,616 14,712 1,566 126 25,283
(Unaudited)
As at 31 December
2021 (restated*) 7,491 3,874 17,150 1,204 494 30,213
*Restatement as described in note 18
Research and development assets relate 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 IT driven by accelerated CRM software investment and website and platform development relating to Identicare Ltd.
The total amortisation charge for 2022 is GBP6,685k (2021: GBP7,217k) which is included in the 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 is GBP4,461k (2021: GBP5,531k) relating to acquisition-related intangibles and GBP2,224k (2021: GBP1,686k) relating to other intangibles.
A total impairment charge of GBP918k (2021: GBP2,761k) was recorded during the financial year. Thereof GBP895k (2021: GBP2,761k) is related to a non-cash impairment charge of acquisition-related intangibles of Research & Development assets.
In 2022, Animalcare Group plc invested in intangibles for an amount of GBP2,540k (2021: GBP3,357k).
On 24 March 2022, the Group 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, and during the period, Animalcare made upfront payments to Orthros Medical totalling EUR500k. These are included as intangible assets "product portfolios and product development costs". 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, a significant proportion of which are linked to successful commercialisation. In addition, single digit royalties will be due on the net sales of the products. These payments are expected to be paid out of the Group's operating cash flow.
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$1.5m was already paid in prior years, CA$0.5m during the financial year and CA$1.0m still payable over 20 months.
The Group has a call option, for a period until 28 September 2026, to acquire an additional 18% 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 in STEM 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. In the prior year, the Group made its first licence payment of CA$0.5m. The following payment is due in 2023, resulting in a short-term payment of CA$692k or GBP425k, and a long-term payable of CA$748k or GBP459k.
Further, for the capital contribution, the outstanding short-term liability is GBP371k (2021: GBP277k), shown in the balance sheet as other current liability. The outstanding long-term liability is GBP254k (2021: GBP502k), shown in the balance sheet as other non-current liability.
% of ownership
interest Carrying amount
Place of
business/
Name of country Nature Measurement Unaudited
entity of incorporation 2022 2021 of relationship method 2022 2021
GBP'000 GBP'000
-------------- ------------------- -------- ------- ----------------- -------------- ---------- --------
STEM Animal
Health Inc. Canada 33.34% 33.34% Joint Venture Equity method 1,305 1,290
-------------- ------------------- -------- ------- ----------------- -------------- ---------- --------
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 first reflects the amounts presented in the financial statements of the relevant joint venture followed by Animalcare's share of those amounts.
Unaudited
For the year ended For the year ended
31 December 2022 31 December 2021
-------------------- ---------------------
GBP'000 GBP'000
-------------------- ---------------------
Non-current assets 321 547
Current assets 1,511 945
-------------------------- -------------------- ---------------------
Total assets 1,832 1,492
-------------------------- -------------------- ---------------------
Current liabilities 825 525
-------------------------- --------------------
Total liabilities 825 525
-------------------------- -------------------- ---------------------
Net assets 1,007 967
-------------------------- -------------------- ---------------------
Group Share 336 322
-------------------------- -------------------- ---------------------
Goodwill 561 561
-------------------------- -------------------- ---------------------
Fair value identified
intangibles 555 554
-------------------------- -------------------- ---------------------
Deferred tax liability (147) (147)
-------------------------- -------------------- ---------------------
Investment value in
joint venture 1,305 1,290
-------------------------- -------------------- ---------------------
Summarised statement of comprehensive income:
Unaudited For the year ended
For the year ended 31 December 2021
31 December 2022
GBP'000 GBP'000
------------------------------------ -------------------- -------------------
Sales 1,581 856
Operating expenses (1,651) (1,338)
Financial result, net 65 55
------------------------------------ -------------------- -------------------
Net loss for the year (5) (427)
------------------------------------ -------------------- -------------------
Group share in net loss
for the year (2) (142)
------------------------------------ -------------------- -------------------
Depreciation on fair value
adjustments on intangible
fixed assets (net of deferred
tax) (50) (46)
------------------------------------ -------------------- -------------------
Total Group share in net
loss for the year (52) (188)
------------------------------------ -------------------- -------------------
Other comprehensive income 67 21
------------------------------------ -------------------- -------------------
Group share in total comprehensive
income/ (expense) 15 (167) ------------------------------------ -------------------- -------------------
Reconciliation of the aforementioned financial information with the net carrying amount of the investment of STEM Animal Health Inc. in the consolidated financial statements:
Unaudited
For the year ended For the year ended
31 December 2022 31 December 2021
GBP'000 GBP'000
------------------------------ -------------------- ---------------------
As at 1 January 1,290 1,457
Acquisition in joint venture - -
Group share of net loss
for the year (52) (188)
Foreign currency translation
differences 67 21
------------------------------ -------------------- ---------------------
As at 31 December 1,305 1,290
------------------------------ -------------------- ---------------------
13. Borrowings
The loans and borrowings include the following:
For the year
ended
31 December
------------------
Interest Unaudited
rate Maturity 2022 2021
---------------- ---------- --------- -------
GBP'000 GBP'000
Revolving credit facilities Euribor +1.50% March 25 4,435 5,462
Acquisition loan Euribor +1.75% March 25 3,011 1,719
Lease liabilities See note 16 11,437 10,962
----------------------------- ---------------------------- --------- -------
Total loans and borrowings
---------------------------- --------------- --------- --------- -------
Of which
Non-current 10,585 10,239
Current 852 723
----------------------------------------------------------- --------- -------
Borrowing facilities
The Group has total facilities of EUR51.5m to 31 March 2025, provided by a syndicate of four banks, comprising a committed revolving credit facility (RCF) of EUR41.5m and a EUR10.0m acquisition line, the latter of which cannot be utilised to fund operations.
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.
The Group manages its banking arrangements centrally through cross-currency cash pooling. Funds are swept daily from its various bank accounts into central bank accounts to optimise the Group's net interest payable position.
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%.
Net of cash balances totalling GBP6.0m, GBP4.4m of the RCF was utilised at the year end, leaving headroom of GBP38.4m.
As at 31 December 2022 and throughout the financial year, all covenant requirements were met with significant headroom across all three measures.
Net debt reconciliation
As at 31 December
-------------------
Unaudited
2022 2021
GBP'000 GBP'000
-------------------------- ---------- -------
Net debt
Cash and cash equivalents 6,035 5,633
Borrowings (8,426) (9,244)
Lease liabilities (3,011) (1,719)
--------------------------- ---------- -------
Total (5,402) (5,330)
--------------------------- ---------- -------
Liabilities from
financing activities Other assets
-------------------------------- ----------------------- ------------ --------
Borrowings Leases Cash Total
-------------------------------- ------------- -------- ------------ --------
GBP'000 GBP'000 GBP'000 GBP'000
Net debt as at 1 January 2020 (17,069) (1,812) 5,265 (13,616)
Financing cash flows 6,952 1,077 96 8,125
New leases - (1,037) - (1,037)
Foreign exchange adjustments - 105 272 377
Other charges
Interest Income / (expense) 873 (53) - 820
Net debt as at 31 December 2021 (9,244) (1,720) 5,633 (5,331)
--------------------------------- ------------- -------- ------------ --------
Financing cash flows 1,320 1,086 614 3,020
New leases - (2,142) - (2,142)
Foreign exchange adjustments - (145) (212) (357)
Other charges
Interest expense (502) (90) - (592)
Net debt as at 31 December 2022
(Unaudited) (8,426) (3,011) 6,035 (5,402)
--------------------------------- ------------- -------- ------------ --------
14. Accrued charges and contract liabilities
Accrued charges and contract liabilities consists of the following:
For the year
ended
31 December
------------------
Unaudited
2022 2021
GBP'000 GBP'000
------------------------------------------- --------- -------
Accrued charges 777 923
Contract liabilities - due within one year 512 168
Other (13) (8)
-------------------------------------------- --------- -------
Total due within one year 1,276 1,083
-------------------------------------------- --------- -------
Contract liabilities - due after one year 372 675
-------------------------------------------- --------- -------
Accrued charges of GBP777k (2021: GBP923k) mainly include Ecuphar Veterinaria (GBP406k), Ecuphar NV (GBP64k), Belphar (GBP235k) and UK (GBP70k) and are mostly related to payroll and accrued bank interest costs.
Contract liabilities are liabilities that arise from certain services sold by the Group's subsidiary Identicare Limited.
Historically, and in return for a single upfront payment, Identicare Limited 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 2022, Identicare Limited 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
----------------------
Unaudited
2022 2021
GBP'000 GBP'000
------------------------------------------------------ ----------- ---------
Balance at the beginning of the year 843 790
Contract liabilities to following years 418 170
Release of contract liabilities from previous years (377) (117)
------------------------------------------------------- ----------- ---------
Balance at the end of the year 884 843
------------------------------------------------------- ----------- ---------
The contract liabilities fall due as follows:
For the year
ended 31 December
----------------------
Unaudited
2022 2021
GBP'000 GBP'000
Within one year 512 168
After one year 372 675
---------------------------------- ----------- ---------
Balance at the end of the year 884 843
---------------------------------- ----------- ---------
15. Number of shares to be disclosed
For the year ended
Share Capital 31 December
----------------------
Unaudited
Number of shares 2022 2021
--------------------------------------------------- ---------- ----------
Allotted, called up and fully paid ordinary shares
of 20p each 60,092,161 60,092,161
------------------------------------------------------ ---------- ----------
For the year
ended
31 December
------------------
Unaudited
2022 2021
GBP'000 GBP'000
--------------------------------------------------- --------- -------
Allotted, called up and fully paid ordinary shares
of 20p each 12,019 12,019
------------------------------------------------------ --------- -------
The following share transactions have taken place during the year ended 31 December 2022:
For the year
ended
31 December
-------------------
Number
of shares GBP'000
-------------------------------- ---------- -------
At 1 January 2022 60,092,161 12,019
At 31 December 2022 (Unaudited) 60,092,161 12,019
----------------------------------- ---------- -------
Dividends
For the year
ended
31 December
------------------
Unaudited
2022 2021
GBP'000 GBP'000
Ordinary final dividend as at 31 December 2020 of 2.0p
per share - 1,201
Ordinary interim dividend paid as at 31 December 2021 of
2.0p per share - 1,202
Ordinary final dividend as at 31 December 2021 of 2.4p
per share 1,442 -
Ordinary interim dividend paid as at 31 December 2022 of
2.0p per share 1,202 -
------------------------------------------------------------ --------- -------
2,644 2,403
----------------------------------------------------------- --------- -------
An interim dividend of 2.0 pence per share was paid in November 2022.
The Board is proposing a final dividend of 2.4 pence per share (2021: 2.4 pence per share). Subject to shareholder approval at the Annual General Meeting to be held on 13 June 2023, the final dividend will be paid on 14 July 2023 to shareholders whose names are on the Register of Members at close of business on 16 June 2023. The ordinary shares will become ex-dividend on 15 June 2023.
16. IFRS 16 Leases
The balance sheet shows the following amounts relating to leases as at 31 December 2022:
Unaudited
As at 31 As at
December 31 December
2022 2021
GBP'000 GBP'000
------------------------------ --------- -------------
Buildings 1,639 579
Vehicles 1,257 1,079
Other 28 -
------------------------------ --------- -------------
Total right-of-use assets 2,924 1,658
------------------------------ --------- -------------
Current lease liabilities 852 723
Non-current lease liabilities 2,159 996
------------------------------ --------- -------------
Total lease liabilities 3,011 1,719
------------------------------ --------- -------------
Below are the carrying amounts of right-of-use assets recognised and the movements during the year:
Land Vehicles Other Total
and buildings
GBP'000 GBP'000 GBP'000 GBP'000
Acquisition value/cost
-------------- -------- ------- -------
As at 1 January 2021 1,570 2,029 84 3,683
--------------------------------------- -------------- -------- ------- -------
Additions 336 881 - 1,217
Disposals (286) (425) (63) (774)
Transfers 3 - (3) -
Currency Translation (84) (134) (2) (220)
Contract modifications (12) (61) - (73)
--------------------------------------- -------------- -------- ------- -------
As at 31 December 2021 1,527 2,290 16 3,833
--------------------------------------- -------------- -------- ------- -------
Additions 1,343 678 30 2,051
Disposals (855) (415) (14) (1,284)
Currency Translation 104 128 1 233
Contract modifications (5) 75 - 70
--------------------------------------- -------------- -------- ------- -------
As at 31 December 2022 (Unaudited) 2,114 2,756 33 4,903
--------------------------------------- -------------- -------- ------- -------
Depreciation
As at 1 January 2021 (739) (1,071) (83) (1,893)
Depreciation charge for the year (428) (634) (4) (1,066)
Disposals 173 393 63 629
Transfers (6) - 6 -
Contract modifications 9 31 - 40
Currency translation 43 70 2 115
--------------------------------------- -------------- -------- ------- -------
As at 31 December 2021 (948) (1,211) (16) (2,175)
--------------------------------------- -------------- -------- ------- -------
Depreciation charge for the year (358) (662) (3) (1,023)
Disposals 855 415 14 1,284
Contract modifications - 27 - 27
Currency translation (24) (68) - (92)
--------------------------------------- -------------- -------- ------- -------
As at 31 December 2022 (Unaudited) (475) (1,499) (5) (1,979)
--------------------------------------- -------------- -------- ------- -------
Net book value
At 31 December 2022 1,639 1,257 28 2,924
--------------------------------------- -------------- -------- ------- -------
Below are the values for the movements in lease liability during the year:
Lease Liability
GBP'000
----------------------------------- ---------------
As at 1 January 2022 1,719
Additions 2,066
Disposals (6)
Interest expense 90
Payments (1,086)
Modifications 82
Currency translation adjustment 146
------------------------------------ ---------------
As at 31 December 2022 (Unaudited) 3,011
------------------------------------ ---------------
The following amounts are recognised in the income statement:
Unaudited
For the year
ended 31 December
2022
GBP'000
---------------------------------------------------- ------------------
Depreciation expense of right-of-use assets (1,023)
Interest expense on lease liabilities (90)
Gain on disposal of IFRS 16 assets 6
Expense relating to short-term leases and low-value
assets (108)
---------------------------------------------------- ------------------
Total amount recognised in the income statement (1,215)
---------------------------------------------------- ------------------
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 part of the claim, amounting to EUR157,836 (GBP139,988), may be valid. Following various discussions and correspondence, during which the parties were unable to reach an 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 (GBP383,824). The process involving the expert auditor is ongoing. Other than the EUR157,836 (GBP139,988), which may be valid, and is written off from the outstanding other receivables from Vetdis, no further provision in respect of this matter has been included in the financial statements.
18. Restatement of comparative figures
Intangible Assets (note 11) has been restated to reclassify 'Assets under construction' that were previously presented as Property, Plant and Equipment as Intangible Assets as they related to research and development. The impact on the balances for the year ended 31 December 2021 and 1 January 2022 is as follows:
As at 31
December 2021
GBP'000
Previously stated
------------------------------------- ---------------
Intangible assets 29,719
Property, plant and equipment 626
Adjusted
------------------------------------- ---------------
Intangible assets 494
Property, plant and equipment (494)
Restated
------------------------------------- ---------------
Intangible assets 30,213
Property, plant and equipment 132
19. Annual Report
This unaudited 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 2022 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: Moorside, Monks Cross, York, YO32 9LB, United Kingdom.
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END
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