Trading in the 12 months to June 2017 was characteristically strong at Animalcare (ANCR). Overseas expansion and the launch of eight new products in the UK led to a 17 per cent rise in licensed veterinary medicines revenues to £11m, which helped the veterinary group report £4m of adjusted cash profits – a 13 per cent year-on-year increase. But these numbers bear little resemblance to the new Animalcare. After the period end, the group merged with Belgian veterinary group Ecuphar, which generated revenue and adjusted cash profits of £37m and £4.5m respectively in the first six months of 2017.
There is a lot to be gained from this deal. Ecuphar has a direct salesforce in many of the regions where Animalcare currently sells via distributors and merging these operations will help improve margins. Ecuphar also has 11 new medicines in the short- and long-term pipeline, which complement the 18 products being developed by Animalcare.
However, there are concerns about Ecuphar’s £23m debt, which has now been absorbed into Animalcare’s balance sheet. But chief financial officer Chris Brewer reassures that the combined group will use its strong operating cash flows – £2.4m in the reported period at Animalcare – to pay back those loans and maintain the group’s progressive dividend policy.
Animalcare has changed its year-end following the acquisition, meaning annual results will cover the 18 months to December 2017. Brokers have yet to update their guidance.
| ANIMALCARE GROUP (ANCR) | ||||
| ORD PRICE: | 373p | MARKET VALUE: | £223m | |
| TOUCH: | 365-380p | 12-MONTH HIGH / LOW: | 458p | 272p |
| DIVIDEND YIELD: | 1.8% | PE RATIO: | 32 | |
| NET ASSET VALUE: | 39.8p* | NET CASH: | £6.3m | |
| Year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2013 | 12.1 | 2.3 | 9.1 | 5.3 |
| 2014 | 12.9 | 2.7 | 10.3 | 5.5 |
| 2015 | 13.5 | 3.0 | 12.1 | 6.1 |
| 2016 | 14.7 | 3.1 | 12.5 | 6.5 |
| 2017 | 15.9 | 2.8 | 11.7 | 6.7 |
| % change | +8 | -9 | -6 | +3 |
| Ex-div: | 26 Oct | |||
| Payment: | 24 Nov | |||
| *Includes intangible assets of £17.3m, or 29p a share | ||||
