delivering our global growth strategy half year ......dec 31, 2015 · fap business unit successful...
TRANSCRIPT
DELIVERING OUR GLOBAL GROWTH STRATEGY
HALF YEAR PRESENTATION 2016
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Dechra Pharmaceuticals PLC Half-Yearly Results
Six months ended 31 December 2015
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Strong performance in the first half
Delivering solid sales growth
Strong financial performance
New product registrations and
launches
Investing in M&A
Sales up 15% at CER
Investment in NA and new subsidiaries
EPS up by 18%
Entry into poultry vaccines First steps into Latin America*
Osphos® launch in EU 3 product approvals received,
including Zycortal®
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* Note: Brovel was acquired on 13 January 2016
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Reported Financial Results ‘Sustained double digit growth’
Growth Growth
2015 2014 at AER (1) at CER (2)
£m £m % %
Revenue 110.7 100.9 9.7% 14.9%
Gross profit 63.5 56.9 11.6% 18.8%
Gross profit % 57.4% 56.4%
Underlying operating profit 26.3 23.1 13.9% 24.2%
EBIT % 23.8% 22.9%
Underlying profit before tax 24.9 22.7 9.7% 20.3%
Underlying EBITDA 28.7 24.8 15.7% 24.6%Underlying diluted EPS (pence) 21.99p 20.51p 7.2% 17.6%
Dividend per share (pence) 5.55p 5.12p 8.4% 8.4%
(1) Actual Exchange Rate (2) Constant Exchange Rate
Six months ended 31 December
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Post Acquisition Genera Results ‘Strategic review underway to improve
future performance’
H1 2016£m
Revenue 3.4
Gross profit 1.2
Gross profit % 35.3%
Underlying operating loss (0.2)
EBIT % (5.9%)
Amortisation of acquired intangibles (0.4)
Fair value uplift of inventory (1.0)
Rationalisation costs (0.1)
Reported loss after tax (1.7)
Post Acquisition
Note: Genera was acquired on 20 October 2015
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Sales by Categories ‘All categories performing well, except for Diets’
Revenue Growth Growth
H1 2016 (AER) (CER)£m
Companion Animal Products 62.6 11.8% 14.8% Equine 9.5 17.3% 19.8% Food producing Animal Products 15.4 8.5% 19.0% Sub-Total Pharmaceuticals 87.5 11.7% 16.1% Diets 11.6 (12.1%) (2.3%) Other* 11.6 23.4% 28.7% Total 110.7 9.7% 14.9%
* Other includes third party manufacturing and other non-core businesses in Genera
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FAP Analysis ‘Recovery driven by our expansion strategy’
+13%
+11%
-5%
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Geographical expansion
4.0%
New products 1.3%
Acquisitions 3.7%
Organic growth 5.9%
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Revenue Growth ‘Successful execution of our strategy drives growth’
14.9%
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Gross Margins ‘Positive impact of mix outweighs margin dilution
from expansion’
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EU Segment Performance ‘Solid business performance masked by
exchange rate headwinds’
8.1%
0.9% 2.6%
12.6%
EU Segment includes Genera, which contributed £3.4m revenue post acquisition
CAP growth in the majority of our focus therapeutic areas Profit margins maintained despite investment in expansion
28.2% in PY vs 28.6% in H1 16
Revenue £m EBIT £m
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NA Segment Performance ‘Continued momentum’
51.9%
59.1%
55.6%
61.1%
Excellent sales performance
Canada subsidiary performing in line with expectations
Profit margins maintained despite investment in expansion 35.1% in PY vs 35.5% in H1 16
Revenue £m EBIT £m
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30.4
33.2
1.4
1.1 0.9
0.5 0.4
1.5
25.0
27.0
29.0
31.0
33.0
35.0
H1 2015 SG&A USinfrastructure
Acquisition Geographicexpansion
Pipeline Inflation FX impact H1 2016 SG&A
SG&
A (£
m)
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Selling, General and Admin Expenses ‘Expenses increase in line with expectations’
30.1% of revenue (1)
30.0% of revenue (1)
(1) At CER
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Trade and Other Working Capital ‘Increase due to investments in NA
and acquisitions’
Acquisition contributed 64% of the total working capital growth year on year
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£25.8 £26.9
£6.4 £10.8
£9.8
0.0
5.0
10.0
15.0
20.0
25.0
30.0
35.0
40.0
45.0
50.0
Dec 14 Dec 15
Valu
e of
wor
king
Cap
ital £
m
EU Pharma North America Acquisition®
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Net Debt ‘Additional borrowings to fund Genera acquisition’
£mNet cash - June 2015 13.4Increase in operating cash 20.0Dermapet milestone payment (3.3)Dividend (10.4)Share issuance 0.5Exchange differences (3.1)Net cash pre-acquisition 17.1Genera equity acquisition (26.5)Genera debt acquired (8.4)Net debt - December 2015 (17.8)
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EPS Analysis ‘Organic growth impacted by currency’
20.51 20.36
24.11
2.12
0.15
0.84 0.46
21.99
5.05
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H1 2015 Sharedilution
Sub-total Operatingprofit
growth
Interest Tax H1 2016(CER)
FX H1 2016(AER)
EPS
in p
ence
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Good progress executing our strategy
Portfolio focus
Pipeline delivery
Geographic expansion
Acquisition
Sustained momentum FAP recovery
Osphos launch in EU Zycortal and 2 FAP products
approved
Entry into poultry vaccines First steps into Latin America
Strong growth in US New territories entered
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Portfolio Focus ‘Sustained momentum’
Sales
CAP +15%
Equine +19%
FAP +19%
Diets (2%)
Other +29%
Other +29%
CAP growth in the majority of our focus therapeutic areas
Expansion strategy delivers
early signs of success in FAP
Launch of Osphos drives our Equine sales
Diets are still recovering from prior year’s supply issues
Genera added c.4% to revenue growth
£111m +15%
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Portfolio Focus ‘FAP recovery’
Creation of a dedicated FAP business unit
Successful start of our
Polish subsidiary driving FAP growth
Decline in Germany continues, but has slowed down in all other markets
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Portfolio Focus ‘SpecificTM Diets repositioning’
5% TO GOOD CAUSES. THAT’S MORE THAN A DROP IN THE OCEAN.
New campaign now rolled out across all countries
Key markets have returned to growth (e.g. France)
Loss of a major contract
in Scandinavia has impacted sales
Increased collaboration and sharing of best practices between the country teams
11.6
13.2
0.2
0.1
1.3
0.1
0.1
0.4
11.0 12.0 13.0 14.0
H1 2015
FX
Other
Netherlands
Scandinavia
France
Portugal
H1 2014
Diets Revenue (£m) ®
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Pipeline Delivery ‘Regulatory milestones met successfully ’
EU – Q4 16 US – Q4 16
Navicular syndrome
EU – Q2 and Q3 16
Addison’s disease
Phenocillin
Water soluble antibiotics
EU - Q4 16 (Solamocta)
EU - Q2 17 (Phenocillin)
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Pipeline Delivery ‘A novel and innovative product - Zycortal’
Product: For use as replacement therapy for the mineralocorticoid deficit in dogs with primary hypoadrenocorticism (Addison’s disease)
Disease: Canine hypoadrenocorticism or Addison’s disease, incidence 0.034% - 0.056%
Reported symptoms range from loss of appetite, lethargy, depression, weakness, vomiting, diarrhoea, weight loss, shivering, tremors and/or muscle stiffness, slow heart rate/low blood pressure, low body temperature
UK launch in April 2016, then EU and US ®
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Geographical Expansion ‘Sustained double digit growth in NA’
02468
10
H1 14 H1 15 H1 16
£m (a
t AER
)
EBIT Evolution
Differentiated product portfolio meeting veterinarians’ needs
Clear marketing messages
supported by technical expertise
Investment in people: 79 engaged employees in the US, of which 50 are field sales
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Geographical Expansion ‘Entering new territories’
Poland and Canada performing to expectations
New greenfield subsidiary
in Austria
Mexico and the Balkans entered through acquisition
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Acquisition ‘Acquisitions support the delivery of
our strategy’
Genera
Entry into poultry vaccines and addition to FAP portfolio
€36.6m funded through cash and debt
Integration plan being formulated, ready for communication in March 2016
First EU vaccine for Newcastle Disease approved by EMA
Brovel
Platform to launch Dechra products in Mexico and future
access to Latin America
Acquired post reporting period for US$5.0m
Family owned business
Diversified portfolio
Revenue: £2.6m in 2015
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Delivering on our 2016 commitments
Deliver incremental profit through value enhancing acquisitions
Deliver revenue growth • Current trading in line with
expectations
Obtain Zycortal’s approval
Open a new subsidiary in Austria Complete integration of Genera,
subject to completion
Strengthen therapeutic sectors
Innovate and generate profit growth
Seize growth opportunities in new markets
Achieved
Achieved
In line with expectations
On-track
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Appendices
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Summary Balance Sheet
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30 June
2015 2014 2015£m £m £m
Total non-current assets 211.8 204.4 183.5
Working capital 47.5 32.2 31.7Cash and cash equivalents 45.1 36.3 45.9
Borrowings (63.0) (33.3) (32.5)Corporate and deferred tax (27.1) (27.6) (25.0)Other liabilities (9.1) (9.1) (9.1)
Total net assets 205.2 202.9 194.5
(1) Actual Exchange Rate
31 December (1)
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Currency
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Currency exposure Euro € 1% variation in £/€ impacts underlying diluted EPS by approximately +/- 1.1%
US$ 1% variation in £/$ impacts underlying diluted EPS by approximately+/- 0.3%
Currency Average Rates H1 2015 H1 2016 % change
£ / € 1.260 1.394 10.63%
£ / $ 1.632 1.538 (5.76%)
Current exchange rates are c. £/€ 1.29 and £/$ 1.45
If these exchange rates had applied throughout the period, the underlying diluted EPS would be approximately 13% higher
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Glossary • AER: Actual exchange rate • CAP: Companion Animal Products • CER: Constant exchange rate • EMA: European Medicines Authority • EPS: Earnings per share • EU: Europe • FAP: Food producing Animal Products • FX: Foreign Exchange • NA: North America • Underlying results: exclude acquired intangibles and other one-off items such
as restructuring
Trademarks • Trademarks appear throughout this document in italics. Dechra and the
Dechra “D” logo are registered trademarks of Dechra Pharmaceuticals PLC.
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Dechra is an international specialist veterinary pharmaceuticals and related products business. Our expertise is in the development, manufacture, and sales and marketing of high quality products exclusively for veterinarians worldwide. Dechra’s business is unique as the majority of its products are used to treat medical conditions for which there is no other effective solution or have a clinical or dosing advantage over competitor products. For more information please visit: www.dechra.com
About Dechra
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This document contains certain forward-looking statements which reflect the knowledge and information available to the Company during the preparation and up to the publication of this document. By their very nature, these statements depend upon circumstances and relate to events that may occur in the future thereby involve a degree of uncertainty. Therefore, nothing in this document should be construed as a profit forecast by the Company.
22 February 2016
Forward-Looking Statements
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Dechra Pharmaceuticals PLC 24 Cheshire Avenue
Cheshire Business Park Lostock Gralam
Northwich CW9 7UA
T: +44 (0) 1606 814730 E: [email protected]
www.dechra.com
Stock Code: DPH
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