Animalcare Group (LSE:ANCR) — Full Year Results 2024

0:00 Good afternoon, and welcome to the ANIMALCARE GROUP PLC investor presentation. Throughout this recorded presentation, investors will be in listen only mode. Questions are encouraged and can be submitted at any time by the q and a tab situated on the right hand corner of your screen. Simply type in your questions and press send. The company may not be in a position to answer every question it receives during the meeting itself. However, the company can review all questions submitted today and publish responses where it's appropriate to do so. Before we begin, I'd like to submit the following poll, and then I'd like to hand you over to Jenny Winter, CEO. Good afternoon.

0:31 Hey. Good afternoon, everybody, and lovely to meet some of you you again and some of you for the first time. So Chris is with me, and we will go through the presentation. And then, hopefully, either as part of the presentation or separately, we'll answer any of the questions that have either been presubmitted or you may have today. So, thanks a lot for joining us. So we're gonna quick intro for those of you who don't know us terribly well, then Chris will go through the financial review. We'll talk a bit about our strategy for growth and then a little summary and outlook. So, hopefully, that works for everybody. If we start off just talking about 2024, from from my perspective and from our perspective, it doesn't matter how you look at '24.

1:18 For us, it was a transformational year, and that's for two specific areas. So on the left hand side of this slide, you can see from a a perspective of strategic execution. The first two on here, you know, they they were planned over a number of years, and so 2024 really was the fruition of some strategies that were put in place in 2120 and '21. So firstly, just on IdentiCare, those of you who've joined us before know that this was our microchipping business in just in The UK, but microchipping business. And when Chris and I looked at this, we realized that there was a huge opportunity for it, but it wasn't really core to the business that we were running in pharmaceuticals. So in 2021, we carved this business out, and we put in an expert leader and said, in about five years, wouldn't it be great if we could sell this for about 30,000,000?

2:12 And in reality, that's what happened last year, a bit earlier than we planned, but absolutely at the value. And that was a 17 times multiple, which for us was really good. So it delivered 25,000,000 into the group. The second, thing that came through in 2024 was we had a a minority share in Canadian, excuse me, Canadian biotech business. And during '23 and moving into '24, the majority shareholder wanted to sell out. And our equity, we we agreed to sell out to the the purchaser of the majority shareholder's share as well, and actually we doubled our equity. So that was a great return. And again, that generated some cash for us. What was really important about that deal is that the reason why we've taken equity in the first place was to secure a long term license for some dental products, which we'll talk about.

3:06 And, actually, when we did the deal in 2024, we not only retained that license, but we enhanced it as well as getting, a 100% return on our equity investment. Two other things that were important for us strategically last year. One was a product that you those of you who've met us before are familiar. We did a license on some antibodies, and we saw that they moved through and demonstrated clinical efficacy, which is a really important point along a long pathway, but a really important point. We also relooked at our pipeline, and we've now got, some additional assets in our pipeline. There's three further development projects, all of which if they come through and launch successfully, they'll be over a 10,000,000. So it's a really important process.

3:55 But I think the the really visible icing on the cake was obviously our purchase of Rand Lab, the Australian New Zealand veterinary business that specializes in equine products. And so we that actually completed on the January 3, so it sort of came over the year end. But that's a a really exciting acquisition for us. And, you know, not only is it immediately accretive, but it gives us opens up all sorts of opportunities that we're gonna talk to you about. So that was on a strategic front. Those things all came through. But what also was really, really satisfying and pleasing was that on the right hand side, our organic business growth. So our key products, Daxacox and Plattive grew at 30 to 40%, which is a really, really positive growth rate, and we expect that to continue.

4:43 And what that does and as the as the bigger brands at the top of our portfolio continue to grow, that compensates because we're always gonna have some turnover in this business for a number of reasons in terms of products that are going to decline, and we'll talk a bit more about that. The other good thing about 2024 was that we had growth in the three segments that we operate in. And just as a reminder, those three segments are companion animals, production animals, and equine. And so last year, we had growth in all of those three, and that's really important for us because it gives us that balance. It gives us the three legs to our stool. So that was good. We held the underlying EBITDA at 11.6, and that was that was a good result because actually 2024 was also a year of investment for us.

5:34 In order to drive the top line, we know that it's all about our sales and marketing teams and their expertise. And so we've continued to invest in those, excuse me, those teams. So we're we're pleased with eleven point six, and we're pleased that the investment is starting to come through because you see it in things like the growth of DAXCOX and PLC. Even though we did the Randlev deal, we've come out at the other side with a really strong balance sheet. We've got 20,000,000 available to continue to drive that growth through m and a and acquisitions. So for us, really exciting year, bit of a busy year, but we saw some great results coming through.

6:14 Regarding RAN Lab, this it's early days, but I'm really pleased to report that it's absolutely on track. It's doing exactly what we expected it to do. Sales are on track, cash, all of those good things. We're we're seeing Randleb continuing to perform in the way that we'd expected. And actually, if I look at it qualitatively, I think it's it's even a little bit better because we brought in or we confirmed in role a new general manager and a finance and ops person. And actually, the new general manager is already identifying opportunities for growth above what we'd expected. So that's really good news. There's some opportunities in UAE. There's some opportunities in New South Wales, and there's more opportunities for export using Randleb Australia as the base. So excited to see what comes of that, but as I say, early performance is absolutely on track.

7:08 Moving on to the right hand side of that summary in our portfolio, and this shows the top 10 products in our portfolio. The top 10 account for about 40% of our business. The top 20 account for 60%, and the top 40 account for 80. So you can you can see the the spread there. Really good thing about this portfolio, firstly, driving 9% revenue growth in 2024. So that's really important. So that's above the overall growth. So we're seeing growth in our big products, which is which is good. The other important thing is that out of the top ten, nine of the products are growing and only one is in decline. And the growth in some of those the products near the top eleven, seventeen, and nine, really important. Those are in some relatively old mature products, and this is another year of growth. So these products are continuing to grow year on year, and this drives a lot of the cash generation, a lot of the value.

8:07 So couple to pick out, if you look at number five, that's Daxicox, and you can see the march, of Daxicox through towards the top of the portfolio. Number nine is Plactiv, and you can see that at 27% growth continuing to drive up through and become even more important product. I guess next year, you'll see some RandLab products in the top top 10.

8:30 The other important thing to note is that, a good example of what is always going to happen in a business like this at number eight, And you can see that that product is in decline. Now if I took my dog to a vet and they tried to offer me that product for an infected ear, I'd probably say, could you give me a more up to date version? So we have to accept that some of our products are going to decline, and that's one of them. But what we've done in that instance is we've this year, we've launched a new product for the treatment of ear infections, and so that will gradually, we hope, take up some of the business that we're losing from from number eight. The purple shading are the ones that are novel or differentiated. So this means nobody can copy them. Nobody can do the same thing, and they're much safer from any price erosion.

9:17 So you can see see we've still got a mix, But actually, in reality, most of the others are doing pretty well, and they have strong brands and other ways of of avoiding that sort of price competition. So that's the top 10. The other important things for us that we look at are these two axes. Firstly, what do we own? And that means we own the regulatory marketing of authorization or we own the IP or we own the license. So nobody can take that away. It's up to us. And you can see that we've gradually increased our dependence on products that we own, and that's a really good thing. And RandLab takes us up to the 30%. And what we want to do is to keep moving so we get to 20%, 10% because we know that the sustainability of our portfolio is better when we own the product.

10:12 The other axis we look at, I referred to on the previous slide, was whether it's novel and differentiated or whether it could be, could have a competitor that looks just the same. And we're gradually moving to more of our products being novel. We probably, have moved have moved to seventy thirty and we're 30% to novel. And with the growth of that will continue to increase. And that's really important because that I think is a is is the the sort of lifeblood of the business moving forward. Okay. So really good progress on those two parameters. And so on slide eight, this is just really a summary of where we are at the end of 2024 in terms of, you know, where we've got to and our ability to to maximize any growth opportunities that come our way.

11:06 So I'm gonna hand over to Chris now. He's gonna talk specifically about the financials from 2024. Hi. Good afternoon, everyone. So I'm just gonna start on the summary slide, and, obviously, I'll give some more details on certain of these KPIs as they go through the deck. Just to set the scene, I think the the the title there of the slide, I think, is is really kinda hits the nail on the head in terms of a strong performance at the time that Jenny's talked about of, you know, it's a busy year strategically with the the the disposals and the acquisition of Randolph as, obviously, most of the work was done during that during the year. And really, that demonstrates the strength of the platform and the work that we've been doing on building that platform over the past years.

11:56 Jenny commented on earlier about the holding the EBITDA. A lot of that holding is is a time, and it's been in the past. It is when we've been investing in the particular talent base of our organization and also doing some work around the the structure of operation. So as a backdrop, really pleased to to deliver these results. Just some headlines to pick out. So on revenue, you can see the growth was 5%, 7% at constant exchange rates. If we split that 7%, it's about 5% volume and 2% price. So a lot of it's from volume growth, in particular, the brands that Jenny's talked about in the top 10. I'll come on to margin a little bit more detail, but the story here is it's largely FX, we're expecting that to to improve when we go into '25.

12:47 And as you can see, we had a really excellent year from a cash conversion perspective at a 103%. And an overview of financial results just to pick out a couple of things. So on gross margin, as I said, most of that movement is due to FX. The reason why is about 75 to 80% of our sales are denominated in euros. This is obviously before run up. And there's a slide in the in the appendix on FX, but that had about 1,600,000 impact on revenue. And clearly, that flows down into the the the gross margin. If we take our FX, the movement's really modest. That's a combination of we've had some increase in cost of goods.

13:33 We do put price increases through, as I said earlier, it was a two percent price impact on revenue. And then pleasingly, there's a real positive sales mix, again, linking back to the top 10 that Jenny talked about. And it's that positive sales mix that we're expecting to drive the margin improvement back to similar levels assuming constant exchange rates into 25. On EBITDA, as I said, so there's about 4% increase there, which we we feel we've managed really well. That's about a million. If you break down that million, over half of that is in our people base, which is that is a crucial underpin to to our platform and future growth. Increase in marketing spend, is really focused on driving those those top brands. And then that's at a time where we've managed some pretty significant wage inflation, notably in Spain where there was a mandatory catch up post COVID. So it's about fourteen percent there.

14:32 So in all in all, we've done a really good job to to manage that line. Just on there, a couple of other lines. So you can see the PBT is broadly flat. So the 10% increase in EPS is due to tax, specifically deferred tax. We'd expect that to normalize out in '25. And with run lab, you know, you're looking at an effective tax rate of broadly '26, which is where we were in '23.

15:02 Moving on to so this gives you a bit more detail on where the growth coming from across the three categories. I'll touch on '24, and then there's a couple of comments I'm I'm gonna make on '25. So in companion animals, for those we talked to at the half year, if you recall, that was flat at the half year. So I had a very good second half of the year as expected. So supply disruption phasing, etcetera, all all worked its way through. So this this part of business grew by about 3% to exchange rates. And, again, there's some the constant exchange rates were in the brackets. Again, growth from the top brands, and Jenny's mentioned those, and also the dental range, which is the Aurazyme Plaptic brands that grew by 15%.

15:50 Just to give you direction, the market for dental is one of the faster growing parts of the market. We've seen in the last ten years that the market has been growing by five to six. Dentals are probably above that in high single digits. So our portfolio is growing in advance of that. So that's really pleasing. New products contributed 1,400,000. So I think at the half year, we said there was some disruption in supply and some delays. They've all worked those way through. So we'll we'll we'll see those continue to grow during '25. On production animals, this had a really good year. And as a reminder, about 90% of this part of the business is in Southern Europe and international partners. So it's it's like it's there's not much in Northern Europe.

16:36 The balance the growth was was driven by growth in quite a few of our largest selling brands. We also mentioned a competitor out of stock that was actually in Germany. It's relatively small, about half a million. That was a that would normalize itself out next year. And then Aircrime, the story here is is Danylon. So we have 10% growth overall. Danylon is by far our largest brand. It was the second largest brand, as Jenny mentioned, and about 70% of the sales are in in The UK, and The UK had a very strong year with that brand.

17:12 I said earlier there's a couple of comments to make on '25. I think on production animals, just anchoring on the important contributor. This is our it's our cash cow, I'd call that. The gross margins are very good for a production animal portfolio. It's quite small but niche and profitable. The in general, the the level of allocation of overhead compared to companion animals, for example, is far less. So we talked in the past about wanting to hold the absolute revenues at about the 17,000,000 mark. We actually initiated a project during the year led by our Italian country manager, and we're looking at to some growth opportunities here. So we're the objective is to continue to to grow this part of the business. It'll be low single digit, but keep it growing because as you see, having all three parts of the business growing is really important to overall growth.

18:11 On equine, obviously, the most notable transition in this portfolio is the RandLab acquisition. On the earliest libraries. You know, we saw that this RandLab more than doubles that size of that portfolio. It also makes it more profitable because the the RandLab margins are around 70% in their portfolio versus so that's higher than what we've got. So this this should be growing very significantly this year and really adding to to profit. We also talked to that on this slide about that down along territory expansions. That will be relatively modest from a sales perspective, but an important anchor product when we start to look at potentially bringing some Randlef products into Europe over the next kind of two to three years subject to regulatory pathways.

19:02 On cash flow, I mentioned earlier that we had a really strong year from a operating cash perspective, so you can see how that's made up on the table on the right hand side, really driven by essentially two things. One, good control of working capital, and then secondly, lower cash taxes. So we've got still an eye on tax efficiency, particularly with r and d. Just moving to the bridge. So I've circled the free cash generation there. So really strong year. That was about 2,000,000 up on the prior year. Within that box, you can see there's about two and a half million of CapEx. That's largely as historically centered around r and d, and I'll come on to later what they're gonna look like.

19:47 But, again, a a really strong year from a free cash flow perspective. And and what that meant with the you can see that there's some significant movements in M and A, but we ended the year, as Jenny said, with a very strong balance sheet, so around 9,000,000 of debt. And then on a pro form a basis, we've ramped up included. The leverage is about 0.7 times, so below one, and that's where it's and the 20,000,000 is is giving us the capacity, so that's going levering up to two as an assumption. So that's where we get the 20,000,000 of capacity from.

20:25 On this capital allocation side, the left hand slide is is is largely unchanged or isn't changed. So couple of things to to bring out here is that I've talked about our you know, how we're managing our balance sheet and the discipline we've got. So we will we are prepared to leverage up to x if if needed for the right deal. Obviously, we didn't with Randhad because of the really successful equity raise. And then on new product development, Jenny's gonna give more details on how we're going to spend this, but we've talked, I think, for a while now about investing around two to 3% historic in r and d. And the benchmark really to truly grow your innovation pipeline is five to 10%. So we're expecting to invest around 5% of revenues this year, and then that will go probably upwards over that 5% to 10% range over the next five years.

21:15 On the right hand side, I just wanted to really highlight here how strong ANIMALCARE has been in the past at delivering the balance sheet. With RUN Lab, that deleverage profile will continue, probably get a bit stronger. And the reason we highlight is that the deleverage is really important to trade the prosody for another RUN Lab deal. So we're expecting to de lever by about half x per year. So we should be in net cash around 2027 subject to the M and A bolt ons. But and then, you know, at that time, hopefully, we'll be able to have the capacity to do another and do another roundup.

21:58 So a very, very quick summary. As I said, really pleased with the year, strong set of results at a time of, you know, lots going on strategically. And then and then, really, you know, the right hand side, as you say, we've got a really strong balance sheet to execute further m and a and licensing deals going forward. So my summary is we're in a really, really good position from a financial perspective. And I'll hand back to Jay. Sorry. Can you still hear me? Yeah. Got it now. Yeah. Yeah. Sorry. It's off. Yeah.

22:43 So I'm gonna talk about building blocks blocks for the future. And as Chris has says said, you know, the companion animal, equine, and production animal will continue to be a really important platform for us. And and they're all growing, equine more than the others. Randlab's a great opportunity. And where we really see our competitor strengths are on the relationships that we're building, the expertise that we're building in in the commercial teams. And this will help for new product introductions. It will help for continuing to drive Daxacox and Plectiv. So we're really clear that that's just a a very important part of our part of our success. We're also strengthening partnerships and really getting I for me, I think we're getting much better understanding, you know, who to work with and how to make the most of those partnerships.

23:36 RandLab clearly strengthens our footprint in Asia Pac as well. So really for us, and those of you who've met us before know that there's three things that drive our growth strategy, making sure organic growth is at least at market level, and you've heard from Chris that that's definitely the plan. Inorganic growth, small over the next couple of years, and and we keep talking about, you know, doing another Rand Lab in three years. Slightly bigger and put not called Rand Lab, but doing something in three years to make sure that we continue that progression and growth. And then the third area is, of course, developing a pipeline because the market is driven by novel and innovative, and vets want the science and the technology and the efficacy and improved safety. So we really do need to pay attention to the pipeline.

24:27 What I'm gonna do is just go through each of these areas and not go comprehensively into everything we're doing in them, but just to give you some examples of the way that we're working. So the first one using Daxicox as an example, you can see here and you've you've seen earlier that the the growth on Daxicox is great. It's around 40%. When you look at this graph, if you just park the green bits on the top for a minute, those are the sales to Fairbank who are our partner, who distribute and sell in markets where we don't have a sales force. And you can see that's quite bumpy. That's partly because they may order for a year and then not order the next year, for example. So so just ignoring that and then looking at the the the bars, which are our own markets, you can see that Spain is doing a great job.

25:17 There's nothing specific in the Spanish market that is driving that. That's all about our internal capability. And we've always known that Spain is one of our best markets. They've got really good reps who've been in place a long time, know their customers really well, and they're calling on the right customers with the right message, and you can see the impact that's having. So our primary strategy in 2025 is to make sure the learnings that we've got from the Spanish team are rolled out into all of our other markets. Fundamentally, Germany and The UK are always a bit slower in uptake, but you can see them starting to build now. So that's that's our primary focus, to continue that forty forty percent growth into the future. And, actually, if we got all of the countries up to the level that Daxicox is in Spain, then we're pretty quickly on that way to the five to 10,000,000 that we state on the bottom right corner.

26:13 So we're not just depending on that. We've done another few things around Daxicox to help build that franchise. The positioning of Daxacox is all around compliance and and convenience. And so we've launched some new strengths partly because the bigger dogs, they were having to have more than one tablet, and that doesn't fit with compliance and convenience. We've increased the shelf life, which is a really important thing for wholesalers and ordering patterns. We've also, submitted this year, which best case could launch late this year, but probably in '26 for some new indications. And and at the moment, this product is for chronic pain in osteoarthritis, so we've now submitted for approval in acute pain. So that expands the franchise.

26:58 And then the other thing is, and I talked about Vrbac, our partner pre previously. Vrbac are now submitting this in a whole range of countries outside of Europe. Until this year, we've been Europe, but we've got submissions in 10 or 11 countries, including South Africa and Australia, which could be quite significant markets for us through Burbank. So this is an example of how we're focused on growing organically. So DAXACOP's clearly the biggest driver. Plactive, we've got some opportunities that Chris mentioned. And so we're we're looking at that organic portfolio all of the time to keep it refreshed, keep building, and drive that growth. The second pillar is about m and a, and you'll got used to the same by now because I think we've all said it a few times. We won't do anything big in the short term, but we have got some bolt on opportunities.

27:51 A couple of million, that would drive revenue and EBITDA or would bring products in on a license, which maybe eighteen months, two years before we could launch. And the little schematic on the right hand side is one that is really a snapshot. So in fact, this slide was probably put together two weeks ago. It'll have changed already. But we've already got one nonbinding offer out in a geographic expansion for us. We've got a couple of in-depth discussions. When we talk about in-depth discussions, that means, you know, we've signed a confidentiality. We've exchanged information, and we're starting to look at things like, is it technically feasible? Is it strategic fit into the financials work? Early discussions are usually when we've got a a confidentiality in place, and we're just walking walking through the detail.

28:40 So you can see in our three areas that we're looking at for m and a, fueling growth, and building scale. Geography, that's very focused on the Asia Pacific region, but we also look at some opportunities in Europe. In terms of companies and brands, most of these are actually brands, looking at brands that we could bring in that could launch in the next eighteen months to three years.

29:03 And and so we've got six very active conversations, four of which brands, two companies, and some early discussion. When we talk about early assets, these are things that will need quite a lot of work to get to launch. They're obviously less expensive if you get them earlier. So we've got a couple of really interesting conversations going on there. So at any one time, this is the sort of activity that's going on behind the scene. Okay. And then, moving on, one of our main areas of of development is, of course, building on what we bought in terms of RandLab. And we'd always said there were three things that appealed to us about RandLab. The priority number one was it's immediately accretive, great cash, and and profitability. The second one was that it builds an equine franchise and helps us to expand into equine in other countries as well. You've already seen that we have Danolon, which is our lead brand, And what we're doing at the moment is working with Randlab to look at everything they have in their portfolio, what could we bring to Europe, what have we got in Europe in equine that we could take to Australia and New Zealand.

30:11 Ranlab are also doing their own product development focused on the Australian New Zealand market. We're looking at those products to see whether we could also bring those into Europe. We're doing our own work, the VHH antibodies, which I'll talk about in a minute. They one of the indications there is for horses. So we're working with the Rand Lab team to make sure that we could take those into Australia, New Zealand as well. And then finally, there are some other upsides that we're looking at in terms of building that franchise, helping use their expertise. There's some great people in the Rand Lab business. But also because Australia and New Zealand are really important acquired markets, having those as part of our company makes us more attractive to people who want to partner because it means that we actually have sales and marketing resources in all of the big

31:03 equine markets. And equine is a very interlinked it's the competition horses that race horses. You know, it's a very international kind of business. So I think that's really important. On the right hand side, this the third reason why we wanted to, make the Randlab acquisition was that it gives us a presence in Asia Pacific region. And already with RandLab, they have, a presence in UAE, New Zealand, and they export to places like Japan. And what we want to do is to build on the footprint of RandLab, keeping the sales and marketing intact as an equine specialty to bring in companion animals and companion animal business. And that's from two perspectives. One is our companion animal business that we could take into Australia and New Zealand, but also there are some really nice companion animal businesses in New Zealand in Australia that we think would really work well putting them together with the Randgler business.

32:02 So those two things are very active at the moment in terms of looking for growth opportunities. Moving on then to our pipeline, and I noticed in the in the pre submitted questions, there were quite a lot of conversations and questions about, VHH antibodies. But so I'll pick those up here if that works okay. But this is really demonstrating how we think about this pipeline. On the left hand side, we probably look at about 50 products a year, and we give them a quick look over, don't spend any money on, are they a strategic fit,

32:37 are they feasible, and do the financials work. And in that, we're only looking for novel and differentiated products. We don't want generics. We don't want products everybody else has got. This is really making sure we invest our relatively limited resources in the right things. And then then in that middle three to five years, so we make a decision that's the point at which some spend starts. Usually, three to five years really hard to predict because different products take different amounts of time depending on the size of the studies, at what time we get hold of them. But we usually assume somewhere between three and five years until they're actually launchable. And there's a there's a process that needs to go through. Those of you familiar with human pharmaceuticals, it's very similar. It's just smaller patient numbers and quicker.

33:25 So in human, you do phase one, two, and three. In animal health, we generally just do one clinical study. So it shortens that

33:33 a bit and certainly fewer numbers. So all products go through that. The, gray line just underneath the purple is just representing that we the spend early on is really very well controlled and very small, and it builds as you go forward. And so one of the things I would say to Chris, if we look at, you know, maybe five years time and you think, oh my god, you'd need to spend a significant amount of money. I always say that's great because it means we're just about to launch some really, really good products because they've gone all the way through, and we're just doing the final stage. Just a few words on the VHH antibodies. Those of you who are familiar with us, know that we did a deal with a Dutch company called Orthros.

34:18 That's a licensed deal. So we have the rights to these specific VHH antibodies from, Orthros to do and develop as we will. We did the early stage, very early stage development with Orthros as our development partner. We've just actually switched development partner to somebody who's much more familiar with the commercialization of assets. So we're we're still licensed from all Thros, but the development is actually being done by a different, development contract development organization. And so where we are with those, we've tested them in the clinic in a very, very small, very controlled study. We know that they do what they're supposed to do, but they're really early stage. So there's there's probably four or five years to go still on these antibodies.

35:08 Spend's really modest at the moment. Spend will increase as we go and get more certain about whether or not we can launch these. The deal is that at launch, we have the rights to them around the world, and we would pay a royalty back to all for us. But these are in effect they're licensed to us. So so those are really important important, but they're way off, and they're probably, I don't know, sort of 30 to 40% probability of getting to the other end, and we need to manage that. The really important thing is if they do get to the other end, they are game changing growth for us. So somewhere between the 50 and 100,000,000 revenue. So these are sort of really important. Won't spend much now, but if they come through, they really, really are truly game changing.

35:58 So, that's those ones. The next one along on our novel pain franchise, this is much more likely to get there. Famous last words, but more likely to get there. It's related to Daxacot. So we know a lot about these products, and these are in pain, and they'd be an injection and oral for dogs, cats, and horses. So that's a little bit further along, and we're working on those. Daxcock's expansion is here separate to the Vrbac contract. So Vrbac don't have a contract for all our countries, and we're just looking at the moment about North America and whether we can do something with cost in North America. We'll know fairly quickly as to, the FDA's view on it. And then the Rand Lab, new product development, they have four products that they're developing. And I mentioned earlier, we're looking at those to see whether we can bring those to Europe.

36:45 Those, whilst they are on the right hand side, they're relatively low cost. So they're not they're not expensive development programs. So that's the way we think about it. That's where the Orthros VHHs are in that program. And we aim to have at least one prescription medicine or big indication launched every year. So that's really important. This year, we're launching we're launching two new products in ears and skin. We also should be, well, we're launching the new strengths of that Scott, so we could, depending on regulatory timelines, start registering new indications. So we want to try and have new launches every year. It really helps keep the portfolio fresh and compensate for things that undoubtedly will drop out.

37:34 Just in terms of opportunity, you know, we've it's somewhere you know, if all of these come through, some would be at five, some would be ten, twenty, 30. Know, if if everything worked really well, it might be up to a 100. So that's the way that we work with this portfolio. Okay. So that was that was really me coming to an end just to just to reiterate. You know, 2024 was truly transformational, and we're seeing double digit growth in some of our great products, in our top products. RandLab acquisition gives us that Bitcoin and Asia Pacific opportunity as well as the opportunity in RandLab itself. We're looking at some new products. Some of them could be transformational, but we need to manage the fact that some of them are fairly early.

38:24 And our our balance sheet and our our, cash that we've got or the opportunity that we've got to spend means that we will be doing some smaller deals in the next couple of years. So I hope you you get the feeling that Chris and I are going into or we've come into '25 with confidence it's still there as we move towards the half year, and and it's really exciting about about the future. So that's the end of the formal presentation part, and we have time for q and a. Jenny, Chris, thank you very much for your presentation this afternoon. Ladies and gentlemen, please do continue to submit your questions just by using the q and a tab situated on the top right hand corner of your screen. Just while the company take a few moments to review those questions submitted today, I'd like to remind you that recording of this presentation along with a copy of the slides and the published q and a can be accessed via investor dashboard.

39:14 As you can see, we have received a number of questions throughout today's presentation. And, Jenny, could I please ask you to read out the questions and give responses where appropriate to do so, and I'll pick up from you at the end. Yep. I'm going to I've got two up in front of me that I'm going to address first. The first one I I will address, which was over the next five years, do you anticipate retiring to South France, or are you hungry to keep building animal care? My my French is appalling. I won't be going to the South Of France, whatever, I'm sure. And and, actually, you know, from my perspective, I think we've just got to the exciting point. Yeah. There's been a lot of work getting to this point and getting the business in such good shape, and I'm really excited about the next steps. So I have no plans for either heading off to South South Of France or retiring.

40:04 So so I'm I'm very excited about the future. And it was another relatively straightforward. I'm gonna give Chris all the difficult ones, but I'll I'll answer the next one because it's easy. The China a US tariff question. So we have one product that we import from The US. It's about a million euro in Germany, and that's the only exposure that we currently have identified, can identified. Now I always say that, you know, there might be a some small excipient, but it will be small buried in some product that we haven't yet found. But at the moment, we have we have very, very limited exposure to any tariff. Okay. So I'm just gonna there there was another question. Is the Chinese market an opportunity for the likes of Danilone or Azyme Plactib and Daxacox?

40:55 We currently don't have any marketing authorizations in in China. That's a a fairly strategic decision. It is it is very I was gonna say difficult. It's not difficult doing business in China, and I come from a business that have lots of exposure in China, and there is, you know, some there are some fantastic opportunities. We we haven't exploited them at the moment, simply because we want to make sure that if we do go into China, we go with a really reputable distribution partner that we really understand and do our proper due diligence. So we see that there's lots of opportunities elsewhere before we focus on China. K.

41:46 The HH antibody for horses move forward from here. Expected timelines. You know, I I mean, I think I did say I think it's probably four to five years still from launch to be a shorter regulatory profile because because it's horses and you you have to do fewer studies. But, there's quite a lot of work to do, and we need to, make sure we can commercially manufacture and all of those things. So probably four to five years. Chris, do you want to answer the AIM to main market question? Yes. Okay. So, yeah, there was a question on thoughts about moving the share listing from AIM to main market. I I think for us, and this is demonstrated by the really successful equity raise, AIM is working for us. So we see that we've got continued access to capital. We've got a really supportive shareholder base and strengthening and widening shareholder base with the equity raise. And secondly, as most of you know, the administrative burden between AIM and main market is different. So we think the flexibility of that plus continued access to capital means that we've got no plans to move to main market.

42:58 I'll pick up on the the exposure to US China tariffs. Jenny's mentioned about the direct impact on there, which we feel is, you know, is gonna be very small. Obviously, most of you have seen that there has been some big impacts on the currency market. So I'd reference the appendix in our deck because we tried to give some really clear guidance on on where that's going to be. If we where we stand now, I I think, you know, the good news is that the so so generally, a strengthening sterling is bad for us from a p and l translation perspective. I think the good news since the end of the year is that the euro strengthened a little bit against sterling, so that's positive for us.

43:44 But the Australian dollar has weakened relative significantly against sterling. I think we assumed the time of the deal at 195 and route 02/2005. And we're not changing any forecast at the moment because, obviously, it's quite hard to see where that volatility is going to land. But what we will do is give some really clear guidance at the half year about what the impact was or or will be at the half year and and full year. So we'll keep an eye on that. We had a really good question about proportion of revenue growth over the next three years split between new products, existing products in new market and acquisitions, so I'll just pick that up. I think for us, we see we see that kind of proportion being relatively similar or very similar to what the market's doing. So if we look at the last ten years, about 60% of growth in the animal health markets come from new products, whether it's innovations, new indications, etcetera. So so if we if we class new products, because typically, you you launch things like, example, that Jenny told you, and there's lots of things that we're doing with that in terms of territory expansions, etcetera. So so we'd be I think we'd be in line with that, but that will include DAXCOX and and and PLCTIVE and new products, obviously, that we're launching in '25, some of the ones that Jenny mentioned or or later on.

45:07 From an existing products in new markets, this is territory expansion. So we've got the partnership with Verve after that's Cox outside The US. Obviously, Jenny's mentioned US potential there. So we'd estimate about, you know, half of that you know, the remaining 40%, probably half will will will will come from those existing products into into new markets and then the balance is from the existing business. Then on acquisitions, we've talked about looking at a number of smaller bolt on opportunities. Jenny mentioned about companies and brands. Directionally in the next two, three years. Obviously, we've set them up well, the capacity, you know, around that, but, you know, target of between 5 to 10,000,000 of additional revenue on top of organic growth there. So, hopefully, that answers the question.

45:56 Thanks, Chris. I'm gonna come back to the most excited about the business in 2025. I think there were a couple on all for us. I I'd like to think we have covered them, but just a quick a quick comment. There's one that says, if not a long shot, r and d project with all for us. What's the development milestones and timelines of the next twelve to twenty four months? And what are the gating risks? Regulatory manufacturing partnering spent partnering partner dis dependency to the release of a product. I've sort of covered that, but just to reassure you, there is a there is a a very detailed development plan. We're in the stage of of we know it works, so we're just we're working on the molecule to make it the best we can possibly be. Once we've done that, we need to do a a safety study, and we then need to do our clinical study.

46:52 And then during that process, we'll look at scale up manufacturing. Once we've got all the data, then we come to a submission. So we've got a very clear sort of timeline. The partner dependency, as I mentioned, we've moved away from Orthros as a a development partner and moved to somebody who has has commercialized exactly this sort of product. And then the other one, if Orthros does lead to a product, how do you see the commercial model working? We will own the license, so we have the rights to sell it in any country that we want to sell it. And then there is a a royalty stream back to Orthros. I think that should have covered most of the Orthros ones. Yep. So I'm gonna come back to what's your most excited about for the business.

47:42 I I'm I'm excited about three things, really. First, I'm excited to see where Daxapot can take us because I think we've really got momentum in the product. We've got some exciting add ons to go, and I think that will be, a really exciting sort of journey over the next couple of years. In terms of m and a, I think the RandLab deal was fantastic, and I want to make sure that we build on that appropriately. So some of the work we're doing about building up that Asia Pacific opportunity is is really exciting. And then in the pipeline, I, I think there's a few really big milestones. I'm I'm generally very excited about our pipeline. I think getting to the next stage with the the VHH antibodies is is exciting, but the others are too. So I I'm I kind of I find the pipeline really motivating at the moment. So that's mine. I don't know, Chris, whether you have something different for most excited about the business? No. No.

48:44 Absolutely aligned with you, Jenny. I think the I think we've got lots to be excited about. I think, carrying on the m and a agenda, but I think the the pipeline's looking like we've got some really exciting opportunities. Obviously, the high risk, but, you know, some really nice opportunities. So I think we've come to the end of the questions. Does anybody else have a a quick check question to add? Jenny, Chris, thank you for answering all those questions you can from investors. And, of course, the company can review all questions submitted today, and we'll publish those response on the investor meet company platform. Just before redirecting investors to provide you with their feedback, which I know is particularly important to the company, Jenny, could I please just ask you for a few closing comments? Yeah. So I'd just like to thank everybody for attending.

49:30 It's really good to speak to this group of people. Your feedback and your questions are always spot on and and actually really helpful for us developing, you know, how how we share information with you in the future. So I really appreciate that. You probably have hopefully felt some of our excitement. You even heard the CFO say he was excited, so that's kind of a really positive message. And we look forward to speaking to you again at the interims. So thanks ever so much for your time. Jenny, Chris, thank you for updating investors today. Can I please ask investors not to close this session as you'll now be automatically redirected to provide your feedback in order that the management team can better understand your views and expectations? This will only take a few moments to complete, and I'm sure will be greatly valued by the company. On behalf of the management team of ANIMALCARE GROUP PLC, we'd like to thank you for attending today's presentation, and good afternoon to you all.

50:22 Thank you.