Chris Cardon founded Belgian animal health company Ecuphar in 2003 and began his pan-European expansion by developing products and making acquisitions. His university buddy Marc Couke – founder of the Belgian pharma giant Omega – came on board four years later to help fund further expansion across the continent, subsequently facilitated by the acquisition of Animalcare (ANCR), of which the two friends own 46 per cent.
Mr Cardon structured the cross-channel deal as a reverse takeover to keep the target’s management and shareholders happy. But neither seems fully satisfied: Iain Meneer, who led Animalcare for 10 years until the merger, left in early 2018, while investors have sent the share price down 47 per cent since the deal completed in July 2017.
Their concerns are unlikely to have been eased by these full-year results. Adjusted cash profit (Ebitda) margins came in at 11 per cent, compared with 13 per cent in the old Ecuphar and 21 per cent in the old Animalcare as difficult trading conditions in Europe forced the group to slash prices. Consequently, combined group cash profit fell 9 per cent to £11.8m.
But chief financial officer Chris Brewster is confident that margins will start to improve once the Animalcare products begin to be sold via Ecuphar’s own distribution channels in Europe. That’s why broker Panmure Gordon thinks adjusted pre-tax profit will accelerate to £9.1m in 2019, from £7.5m in 2018 and £6.1m in 2017 (EPS: 14.5p, 13.2p and 11.3p, respectively).
| ANIMALCARE (ANCR) | ||||
| ORD PRICE: | 193p | MARKET VALUE: | £116m | |
| TOUCH: | 190-195p | 12-MONTH HIGH: | 413p | LOW: 189p |
| DIVIDEND YIELD: | 3.5% | PE RATIO: | 481 | |
| NET ASSET VALUE: | 149p* | NET DEBT: | 29% | |
| Year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2016** | 68.4 | 5.15 | 14.8 | na |
| 2017 | 83.7 | 0.54 | 0.4 | 6.7 |
| % change | +22 | -89 | -97 | - |
| Ex-div: | 7 Jun | |||
| Payment: | 6 Jul | |||
| *Includes intangible assets of £105m, or 176p a share | ||||
| **Pre-merger Ecuphar numbers. Animalcare annual results to June 2017 reported in September | ||||
