Animalcare Group plc Results Presentation for 12 months to 30 th June - - PowerPoint PPT Presentation

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Animalcare Group plc Results Presentation for 12 months to 30 th June - - PowerPoint PPT Presentation

Animalcare Group plc Results Presentation for 12 months to 30 th June 2017 CEO Chris Cardon COO Iain Menneer CFO Chris Brewster Disclaimer NOT FOR PUBLICATION, DISTRIBUTION OR RELEASE, DIRECTLY OR INDIRECTLY, IN OR INTO THE UNITED


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Animalcare Group plc

Results Presentation for 12 months to 30th June 2017

CEO – Chris Cardon COO – Iain Menneer CFO – Chris Brewster

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Disclaimer

NOT FOR PUBLICATION, DISTRIBUTION OR RELEASE, DIRECTLY OR INDIRECTLY, IN OR INTO THE UNITED STATES OR ANY OTHER JURISDICTION IN WHICH THE DISTRIBUTION OR RELEASE WOULD BE UNLAWFUL. ANY FAILURE TO COMPLY WITH THESE RESTRICTIONS MAY CONSTITUTE A VIOLATION OF APPLICABLE SECURITIES LAWS. The information contained in this document relating to Animalcare Group plc (the “Company”) and to be communicated during the presentation of these slides, including the talks given by presenters, any question and answer session and any documents or other materials distributed at or in connection with the presentation (together, this “presentation”) is strictly confidential, and is supplied on the understanding that it will be held in confidence, and not copied, reproduced, distributed, published or disclosed to third parties. This presentation does not constitute a prospectus or admission document or form part of any offer or invitation to purchase, sell or subscribe for, or any solicitation of any such offer to purchase, sell or subscribe for, any securities in the Company nor shall this presentation or any part of it, or the fact of its distribution, form the basis of, or be relied on in connection with, any contract therefor. This presentation is not for distribution, directly or indirectly, in whole or in part, in or into the United States, Australia, Canada, Japan, the Republic of South Africa or any jurisdiction where it would be unlawful to do so. The distribution of this presentation or any information contained in it may be restricted by law in certain jurisdictions, and any person into whose possession any document containing this presentation or any part of it comes should inform themselves about, and observe, any such restrictions. No reliance may be placed, for any purposes whatsoever, on the information contained in this presentation or on its completeness and this presentation should not be considered a recommendation by the Company, Panmure Gordon (UK) Limited (“Panmure”), any of their respective directors, partners, officers, employees, advisers or any other party in relation to any purchase of or subscription for securities of the Company. No representation or warranty, express or implied, is given by or on behalf of the Company or Panmure or any of their respective directors, partners, officers, employees, advisers or any other persons as to the accuracy, fairness or sufficiency of the information or opinions contained in this presentation and none of the information contained in this presentation has been independently verified by any person. Save in the case of fraud, no liability is accepted for any errors, omissions or inaccuracies in such information or opinions. The information contained in this presentation is intended to be made available only to persons who qualify to receive it as (A) persons in member states of the European Economic Area who are “qualified investors” within the meaning of article 2(1)(e) of the Prospectus Directive; and (b) in the United Kingdom, persons who (i) have professional experience in matters relating to investments and fall within article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the "Order"); or (ii) are persons falling within article 49(2)(a) to (d) ("high net worth companies, unincorporated associations, etc") of the Order; or (iii) are persons to whom it may otherwise be lawfully communicated. It is a condition of your receiving this presentation that you have confirmed to the Company and produced evidence satisfactory to Company that you are within one of the categories described above. This presentation is not an offer of securities for sale in the United States. The ordinary shares of the Company have not been registered under the US Securities Act of 1933, as amended (the "Securities Act") or under any securities laws of any state or other jurisdiction of the United States. Accordingly, the ordinary shares of the Company may not be offered, sold, taken up, exercised, resold, renounced, transferred or delivered, directly or indirectly, in or into, the United States or to, or for the account or benefit of, US Persons (as defined in Regulation S under the Securities Act) absent registration under, or pursuant to an applicable exemption from, the registration requirements of the Securities Act and in compliance with any relevant state securities

  • laws. There will be no public offer of securities in the United States.

The information contained in this presentation is confidential and must not be copied, reproduced, published, distributed, disclosed or passed to any other person at any time without the prior written consent of the Company. This presentation may include inside information under Regulation (EU) No 596/2014 (Market Abuse Regulation) and accordingly, by accepting and attending this presentation, attendees at this presentation agree not to use all or any of the information contained herein to deal, for its account or the account of any third party, directly or indirectly, in any securities of the Company before the information is made public. This presentation may include opinions, forward-looking statements and estimates, many of which are based upon various assumptions including, without limitation, management's intentions going forward, projects or product development that is underway or may be undertaken or management's examination of historical operating trends, data contained in the Company’s records and other data available from third parties. Forward-looking statements speak only as at the date of the 2016 full-year results announcement and the Company and its advisers expressly disclaim any obligations or undertaking to release any update of, or revisions to, any forward-looking statements in this presentation. Although the Company believes that these assumptions were reasonable when made, these assumptions are inherently subject to significant uncertainties and contingencies which are difficult or impossible to predict and are beyond its control, and the Company may not achieve or accomplish these expectations, beliefs or projections. Neither the Company, nor any of its members, directors, officers, agents, employees or advisers intend

  • r have any duty or obligation to supplement, amend, update or revise any of the opinions, forward-looking statements or estimates contained in this presentation. No statement in the

presentation is intended to be, or intended to be construed as, a profit forecast or profit estimate or to be interpreted to mean that earnings per Company share for the current or future financial years will necessarily match or exceed the historical earnings per Company share. As a result, no undue reliance should be placed on such statements.

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Introduction

▪ Animalcare Group plc is a pan-European sales, marketing and product development company serving the Animal Health market ▪ In July 2017 Animalcare Group plc acquired Ecuphar NV of Belgium ▪ Financial year changed to 31st December

Reporting Animalcare twelve months to 30th June 2017, Ecuphar six months to 30th June 2017, and proforma Enlarged Group for six months to 30th June 2017 ▪ New Animalcare Group plc maintains its investment case of being a growing, dividend paying business, investing for further growth

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Ecuphar

European Animal Health

Animalcare

UK Animal Health

Pureplay CAP

Enlarged Group Post-Acquisition

  • No. of products

NPD pipeline Customer type 21 lic drugs + care products 18 projects veterinary clinics 29 lic drugs + 8 vaccines + care prod. 11 projects veterinary clinics 50 lic drugs + 8 vaccines + care products 29 projects veterinary clinics Product focus(1)

(1) CAP: Companion animal products; FAP: Farm (production) animal products, H: Horse products (2) Proforma Interim Results for the Enlarged Group for 6 months to 30th June 2017 (3) Ecuphar employees including consultants

48% CAP 42% FAP

10% H 8% H

59% CAP 33% FAP Manufacturing

  • utsourced
  • utsourced
  • utsourced

Direct sales 1 country 6 countries 7 countries Export markets 12 & 14 new agreements signed 37 countries > 50 countries

  • No. employees(3)

Revenue / EBITDA(2) 60+ (inc. 22 sales reps) £8.0m / £1.8m 200+ (inc. 76 sales reps) & 28 agents £37.0m / £4.5m 260+ (inc. 98 sales reps) & 28 agents £45.0m / £6.3m

  • No. of patents

10 10

Enlarged Group

Pan-European Animal Health

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Business Model

▪ Products are sourced through in-house development, as well as through product acquisitions, strategic alliances and distribution partnerships ▪ Vet practices are the end customers and targeted by the sales teams, although they are usually invoiced and physically supplied through wholesalers

In-House Product Development Licensed-In Products Products on Distribution Owned & Licensed Products – Contract Manufactured Warehouse Wholesaler Vet Clinic Owned & Licensed Products Distributed by 3rd Parties ROW Acquired Products

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Animalcare Results for 12 months to 30th June 2017

Prior to Acquisition

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Product Groups & Revenue Performance – FY17

68%

Revenue £10.8m

Market

  • UK companion animal market value

c.£344m, +1% growth

(www.noah.co.uk)

Performance

  • Overall revenue growth +17.2%
  • UK growth +11.7%, Export growth

+60.1% to £1.7m

  • Gross margins benefited from

favourable sales mix and COGS initiatives – focus remains on margin protection

13%

Revenue

£2.1m

Market

  • Expected reduction as a result of

compulsory microchipping for dogs in UK

Performance

  • Group revenue decline -21.5%
  • Microchip sales down -34%
  • Pricing remains competitive
  • Database services revenue

declined -3.1%, principally driven by insurance commissions

  • Change of business model at year

end to mitigate decline

19%

Revenue

£2.9m

Market

  • Group dominated by Infusion

Accessories (62% of sales) and Hygiene range (20% of sales)

Performance

  • Revenue growth +5.5%
  • Infusion accessories revenue

+17%; others -8.4%

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4.5 4.6 2.8

Operating Cash Flow

£m

  • Revenue growth +7.9% to £15.9m
  • Underlying* EBITDA growth +13.0% to £4.0m. Underlying* Basic EPS +14.6%
  • Operating cash flow reduced by £1.8m. However cash position strong at £6.3m. Enabled the business to:

– Continue to build value in product development pipeline (FY17: £2.0m, FY16 £1.6m, FY15 £0.8m) – Invested in working capital and infrastructure to support growth

  • Second interim dividend of 4.7p per share – maintaining Animalcare policy

*Underlying measures are before the effect of exceptional costs and other items

Strong performance for the 12 months to 30th June 2017

Financial Results

13.5 14.7 15.9

Revenue

£m 3.4 3.5 4.0

Underlying* EBITDA

£m 12.6 13.0 14.9

Underlying* Basic EPS

Pence

2015 2016 2017 2015 2016 2017 2015 2016 2017 2015 2016 2017

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  • 2.0

4.0 6.0 8.0 10.0 12.0 14.0 16.0 18.0 20.0 2016 Share dilution Gross profit R&D expenses Personnel costs Other 2017 (0.1) (0.1) 13.0

7.8

Underlying Basic EPS Analysis

Change +14.6%

4.6 (1.0) (1.5) 14.9

  • R&D costs increased by £0.2m, people costs up £0.3m, reflecting investment to support

future growth

  • Underlying operating margin increased by 80bps to 22.5%
  • Analysis excludes exceptional costs of £0.8m – £0.6m in relation to Ecuphar merger
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Cash Flow Analysis

£’000

(2,090) (573)

Overall financial performance strong – delivered market expectations

Change (£0.9m)

  • As expected, investment in working capital to support growth has continued. £0.4m

reduction of stock delivered in H2 supported by new supply chain team

  • Strong momentum in building value in our NPD pipeline continues – expenditure in H1 flat

at £0.6m but increased in H2 to £1.4m. Total FY17 spend £2.0m (FY16: £1.6m)

  • Post FY17, £4.0m utilised to part fund the acquisition of Ecuphar; offset by debt drawdown
  • 2,000

4,000 6,000 8,000 10,000 12,000 30.06.16 Underlying EBITDA Working capital Investing (capex) Exceptionals Dividends Other 30.06.17 (1,422) (462) (271) 3,964 7,118 6,264

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Ecuphar Results for 6 months to 30th June 2017

Prior to Acquisition

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Ecuphar has Two Business Segments

Pharmaceuticals

69% of revenue 95% of Underlying EBITDA

▪ Development and marketing of veterinary pharmaceutical products ▪ Broad portfolio of over 300 veterinary products covering pharmaceuticals, vaccines, biocides and nutraceuticals ▪ Focus on niche markets incl.

  • dontology, dermatology,

surgery / anaesthesia and

  • tology

Wholesale

31% of revenue 5% of Underlying EBITDA

▪ Wholesale of veterinary pharmaceuticals, supplies and instruments to Belgian vet practices ▪ Stable business

10 20 30 40 50 '14 '15 '16

Revenue (£m)(1)

10 20 30 '14 '15 '16

(1) For the years ending 31 December

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Ecuphar Financials – Income Statement

£m Revenue % change Gross Margin % of revenue Underlying EBITDA % of revenue Underlying Net Earnings y/e Dec 2016 68.4 28.3 41.4% 8.9 13.0% 4.0 H1 2017 H1 2017 37.0 15.1 40.8% 4.5 12.2% 2.1

  • H1 2016 IFRS comparatives are

not available

  • Revenue growth approx. 4% at

constant exchange rates, split equally between pharma & wholesale segments

  • Strong momentum in Italy,

Germany, Portugal and export markets

  • Reduction in Belgium principally

driven by continuing pressure of antibiotics legislation

  • Investment in people &

marketing resulting in 0.8% decline in EBITDA %

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Ecuphar Financials – Cash Flow Analysis

Change + £1.2m

£’000

  • Investment in working capital is mainly driven by higher stock levels built in the first half to

anticipate price increases and sales growth

  • Capex principally NPD related and on plan
  • Net debt reduced by £0.7m to £23.1m
  • 1,000

2,000 3,000 4,000 5,000 6,000 31.12.16 Underlying EBITDA Working capital Investing (capex) Financing Taxation Other 30.06.17 (1,261) (412) (557) (92) 4,546 951 2,127 (1,048)

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Post-Transaction – July 2017 onwards

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Aggregated Proforma Results for 6 months to 30th June 2017

£m Revenue % change Gross Margin % of revenue Underlying EBITDA % of revenue Underlying Net Earnings Animalcare H1 2017 Total H1 2017 45.0 19.5 43.3% 6.3 14.0% 3.6 Ecuphar H1 2017 37.0 15.1 40.8% 4.5 12.2% 2.1 8.0 4.4 54.5% 1.8 22.5% 1.5 Total 2016* 83.9 37.0 44.1% 12.9 15.3% 7.1

  • Underlying EBITDA excludes exceptional items – expect transaction costs to be in the region of

£4.0m for financial year ending 31 December 2017

*Aggregated financials are calendarised for Animalcare for the 12 months ended 31 December 2016

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▪ Integration of Animalcare and Ecuphar initiated with potential to create significant long-term value ➢ Systems and IT – to improve CRM, communication, business information ➢ Supply chain – to harmonise where possible to benefit from scale ➢ Product development – to combine expertise and pipeline ➢ Country management – to simplify reporting lines and responsibilities ➢ HR – to focus on policies & procedures, engagement and development ➢ Finance – to identify strategy and structure required for the listed environment and to support business

Integration

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A Specialist Pan-European Animal Health Company

Distribution network Own sales organisation

▪ Business model ➢ Combination of own products & licenses ➢ Focus on both NPD and sales & marketing ➢ Experienced and capable management enhanced ▪ Geographical sales opportunities ➢ Cross-selling through higher margin own sales channels ▪ Commercial advantages of critical mass ➢ Critical scale in the large and growing animal health market ➢ Appealing distribution partner ➢ Significant operating efficiencies ➢ Opportunities in fragmented market

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Group Strategy

▪ Develop wider network partnership opportunities ▪ Leverage platform with accretive opportunities ▪ Diversify the product portfolio into additional therapeutic areas Short-term Mid-term Longer-term ▪ Initiate cross selling opportunities ▪ Implement business integration ➢ Combine product development activities ➢ Supply chain optimization ▪ Shift towards broadening pipeline to include novel therapies

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Combined Product Development Pipeline

Market Indication Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Project A FAP Gastrointestinal Project B CAP Antibacterial ANCR ECU Project C CAP Otology Development: Data generation from clinical trials Project D CAP Cardiovascular Regulatory: License application submission and registration Project E CAP Vaccine Commercial: New product launch Project F CAP Cardiovascular Project G EQ Anti-Inflammatory Project H CAP Topical Project I CAP Endocrine Project J CAP Antibacterial Project K CAP Analgesic Project L CAP & FAP Antiseptic Project M CAP Antibacterial Project N CAP Opthalmic Project O CAP Gastrointestinal Project P CAP Gastrointestinal Project Q CAP Opthalmic Project R CAP Topical Project S CAP Cardiovascular Project T CAP Antibacterial Project U CAP Ophthalmology Project V EQ Anti-inflammatory Project W EQ Endocrine Project X CAP Endocrine Project Y CAP Dermatology Project Z CAP Anti-inflammatory Project AA EQ Anti-inflammatory Project AB CAP Anti-inflammatory Project AC CAP Analgesic

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In Conclusion

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In Conclusion

▪ Integration of Animalcare and Ecuphar initiated ▪ Strong management and organisation to deliver value ▪ Enlarged Group performing to management expectations ▪ Creating a platform for further growth ▪ Solid pipeline of new products ▪ Growing, cash generative, dividend paying ▪ Board reiterates its confidence in the Enlarged Group’s future prospects and expectations for earnings accretion in 2018 and beyond

Opportunity to become the leading pan- European veterinary pharmaceutical business

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Appendix

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Animalcare Group plc Board

Non-Executive Directors Executive Directors

Jan Boone – Chairman ➢ CEO Lotus Bakeries Ed Torr – Senior Independent ➢ Former Director of Product and Business Development, Dechra Pharmaceuticals PLC James Lambert ➢ Former Chairman Animalcare Group plc Marc Coucke ➢ Founder and former CEO Omega Pharma Nick Downshire ➢ Former NED Animalcare Group plc CEO – Chris Cardon ➢ Founder and former CEO Ecuphar COO – Iain Menneer ➢ Former CEO Animalcare Group plc CFO – Chris Brewster ➢ Former CFO Animalcare Group plc

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▪ April: 2017 Results, including 12 month period for Ecuphar and 5 ½ month period for Animalcare ▪ May: AGM ▪ June: Dividend payment ▪ September: Interim results for Enlarged Group ▪ November : Second dividend payment

2018 Financial Calendar

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