Eco Animal Health Group PLC Notice of Results and Trading Update (1701V)

TIDMEAH

RNS Number : 1701V

Eco Animal Health Group PLC

08 August 2022

8 August 2022

ECO Animal Health Group plc

("ECO", the "Company" or the "ECO Group") (AIM: EAH)

Notice of Results and Trading Update

ECO Animal Health Group plc, a leader in the development, registration and marketing of pharmaceutical products for global animal health markets, is pleased to provide an update to its expected results for the year ended 31 March 2022.

The audit for the year ended 31 March 2022 is proceeding to its conclusion and it is expected that the results will be released on or around the 18(th) August 2022.

Overall, the Group expects to report revenue for the year ended 31 March 2022 in excess of GBP82m and EBITDA of approximately GBP6.5m, which includes an exchange rate gain of GBP1m and the effect of the items referred to below.

It has recently come to our attention that certain aspects of a sales tax related to imported products in a foreign jurisdiction where we operate through a subsidiary company, might have been applicable. ECO has been importing an increasing volume of product into this country in recent years. This issue is at an early stage and no tax payment has yet been determined. However, it is likely that a substantial tax settlement could be required in due course and an estimated sum of GBP2.5million has been provided for in our results for the year ended 31 March 2022. The sum has been apportioned to appropriate years and charged to Cost of Sales within the Income statement. The impact of this item in the year ended 31 March 2022 was a reduction in EBITDA of GBP1m.

In addition, certain development costs amounting to GBP0.3m which were initially capitalised but which on subsequent review were judged to not now meet the required specific criteria for capitalisation have resulted in a higher than expected charge for R&D in the consolidated income statement.

The first quarter of financial year 2021/22 saw ECO deliver record China revenue due to a favourable combination of industry structural changes and restocking of the pig herd after the ASF epidemic together with changes in regulations for use of antibiotics in feed created exceptional levels of demand and sales opportunity for Aivlosin(R). China revenue in the first quarter of financial year 2022/23 was significantly below that of the record levels recorded in the prior year. This is a direct consequence of continuing low profitability and poor cashflow within major producers. However, gross margins in China were strong in the first quarter, reflecting the particular mix of customers. Elsewhere, Rest of World revenue grew strongly compared with the first quarter ended 30 June 2021.

A recent Improvement in pork pricing in China provides us with some optimism for the rest of the year and the Board continues to review overheads and capital expenditure levels in relation to trading trends.

The information contained within this announcement is deemed by the Group to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014 ("MAR") as it forms part of United Kingdom domestic law by virtue of the European Union (Withdrawal) Act 2018. Upon the publication of this announcement via a Regulatory Information Service ("RIS"), this inside information is now considered to be in the public domain.

For further information please contact:

 
 ECO Animal Health Group plc 
  David Hallas (CEO) 
  Christopher Wilks (CFO)                       020 8447 8899 
 
   IFC Advisory 
   Graham Herring 
   Zach Cohen                                     020 3934 6630 
 
   Singer Capital Markets (Nominated Adviser 
   & Joint Broker) 
   Mark Taylor 
   George Tzimas                                  020 7496 3000 
 
   Investec (Joint Broker) 
   Gary Clarence 
   Brough Ransom                                  020 7597 5970 
   Carlo Spingardi 
 
   Peel Hunt LLP (Joint Broker) 
   Dr Christopher Golden 
   James Steel                                    020 7418 8900 
 
 
 Equity Development 
  Hannah Crowe 
  Matt Evans           020 7065 2692 
 

About ECO Animal Health

ECO Animal Health Group plc researches, develops and commercialises products for livestock. Our business strategy is to generate shareholder value by achieving the maximum sales potential from the existing product portfolio whilst investing in Research and Development ("R&D") for new products, particularly vaccines, and seeking to in-license new products.

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August 08, 2022 02:00 ET (06:00 GMT)