Results for the year ended 31 March 2025

14 July 2025

ECO Animal Health Group plc

("ECO" or the "Company")

Results for the year ended 31 March 2025

ECO Animal Health (AIM: EAH), a rapidly growing global animal health company with a portfolio of marketed veterinary products and a maturing proprietary R&D pipeline, announces its audited results for the year ended 31 March 2025.

HIGHLIGHTS

Financial

· Revenue in-line and adjusted EBITDA in-line with revised market expectations following strong second half to the year

· Group sales of £79.6m (2024: £89.4m)

o  North America revenue growth of 16%, contributing a growing share of Group revenues

· Constant currency revenue £81.6m (2024: £89.4m)

· Gross margin increased to 45% (2024: 42%), due to disciplined cost control and pricing, and geographical mix favouring high margin markets

· Adjusted EBITDA of £7.3m (2024: £8.0m), in line with consensus

· Adjusted EBITDA margin improved to 9.2% (2024: 9.0%)

· Research and development expenditure increased to £8.6m (2024: £8.3m), as planned

· Profit before tax increased to £4.0m (2024: £3.0m), driven in part by disposals of non-core assets

· Earnings per share increased by 61% to 2.49p (2024: 1.55p)

· Net cash at the end of the period £25.0m (2024: £22.4m), reinforcing the Group's strong balance sheet with 40% of cash held outside China (2024: 36%)

· RCF facility (£10m) and overdraft (£5m) available and undrawn

Operational

· Aivlosin® demand continues to be robust in key markets, with particular growth in North America

· Regulatory dossier for mycoplasma poultry vaccine ECOVAXXIN® MS submitted to EMA, with further submissions expected in next 12 months

· Broader progress across R&D pipeline, with up to 9 products expected to receive US and EU approval in the next 5 - 6 years

 Post-year end highlights

· Revenue in USA and China out performing budgets

· Gross margins strengthening

· South East Asia strong recovery with order book supporting outlook

· Continuing operational improvement including further ERP system roll-out across subsidiaries

· Launch of share buy-back to support future employee share incentives vesting

David Hallas, Chief Executive Officer of ECO Animal Health Group plc, commented: "We are pleased to report another robust financial year for ECO Animal Health, with favourable pricing, geographic mix and disciplined cost control driving an improvement in gross margin and continued cash generation. We've achieved this despite unusually challenging trading and market conditions, including lower disease incidence in some regions, currency headwinds and macroeconomic and political uncertainty."

"ECO is focused on advancing its R&D pipeline and the Company has continued to make targeted investment to position this as the engine of future growth. We are delighted to have submitted the dossier for Mycoplasma poultry vaccine ECOVAXXIN® MS, with further submissions expected in the next 12 months. This lays the foundations for multiple planned vaccine launches from 2026 onwards, which we believe will underpin the next phase of growth from our pipeline, and we look forward to updating the market on progress."

The information contained within this announcement is deemed by the Group to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014 ("MAR") as it forms part of United Kingdom domestic law by virtue of the European Union (Withdrawal) Act 2018. Upon the publication of this announcement via a Regulatory Information Service ("RIS"), this inside information is now considered to be in the public domain.

Forward-Looking Statements

This announcement contains certain forward-looking statements. The forward-looking statements reflect the knowledge and information available to the Company and Group during preparation and up to the publication of this announcement. By their very nature, these statements depend upon circumstances and relate to events that may occur in the future and thereby involving a degree of uncertainty. Therefore, nothing in this announcement should be construed as a profit forecast by the Company or Group.

Contacts

CHAIRMAN AND CHIEF EXECUTIVE OFFICER'S COMBINED STATEMENT

FOR THE YEAR ENDED 31 MARCH 2025

ECO strives to provide best in class, scientifically validated, ethical solutions to optimise the health, productivity and wellbeing of pigs and poultry.

Overview

We are pleased to update on another positive year for ECO, with continued investment in the Group's late-stage pipeline and further progress across our core commercial operations. This has been achieved despite challenging trading and market conditions, including lower disease incidence in some regions and currency headwinds.

We are particularly pleased to have advanced our regulatory and commercial readiness for our next generation of products. In particular, we were pleased to submit our first poultry vaccine Marketing Authorisation Application to the European Medicines Agency. This is an important milestone in our journey to advance our late-stage product pipeline to commercialisation, which we are targeting from 2026 and we believe will deliver significant long-term value to investors.

Strong product sales and robust profitability

Total revenues for the period were £79.6m (2024: £89.4m), reflecting a strong performance in the second half and momentum in key growth markets. Aivlosin®, the Group's patented antimicrobial used under veterinary prescription for respiratory and gastrointestinal disease in pigs and poultry, remains our flagship product and it has continued to grow in North America, Latin America and India. We secured new and renewed marketing authorisations in a number of geographies and saw a stabilisation of pork prices in major markets.

Sales of Aivlosin® were £72.9m (2024: £82.4m. Ecomectin® and all other non-core products contributed £6.7m (2024: £7.0m).

Gross margin was 45.1% (2024: 42.1%). Adjusted EBITDA was £7.3m (2024: £8.0m). The Group remained cash generative, maintaining a strong cash position across core regions.

The North America market grew by 18% at constant exchange rates, demonstrating another strong year of growth, and the strength of our market proposition in that region.

China had a subdued start but recovered with the six months to 31 March 2025 3% ahead of the prior year on a constant currency basis, benefitting from both strong disease demand and PRRSv eradication programmes.

South and South East Asia was down due to the loss of a major customer in Thailand. However we saw good growth in the nascent markets of Bangladesh, Philippines and Pakistan as we continue to expand our sales to new geographies.

Research and development pipeline and regulatory progress

We continued to make progress across our proprietary pipeline during the year, with R&D spend of £8.6m (2024: £8.3m), reflecting sustained investment in late-stage vaccine assets.

In March 2025, ECO submitted its first EU Marketing Authorisation Application to the European Medicines Agency for ECOVAXXIN® MS, a poultry vaccine targeting Mycoplasma synoviae. This represents a significant milestone for the Group, with commercial launch targeted for 2026. The submission complements our ongoing regulatory work in the US and Europe for ECOVAXXIN® MG, the sister vaccine against Mycoplasma gallisepticum.

We were pleased to host an R&D Day on March 13th 2025, where the leadership team presented a detailed update on the Group's innovation strategy and progress across the vaccine pipeline. Details can be found at: https://ecoanimalhealth.com/investors/reports-presentations/

Disposal of non-core assets

As part of our ongoing focus on core species and geographies, the Group completed the divestment of a number of non-core product lines. These included the equine product Ecomectin® Horsepaste, sold to ACME Drugs S.r.l. for €1.3m (£1.1m) in April 2024, as well as parasite treatment licences for sheep and cattle in Southern Africa, sold for a total of £0.5m in February 2025.

These disposals have allowed ECO to continue streamlining its focus and reinvesting proceeds into its R&D pipeline and share buyback programme to cover the potential vesting of employee share incentives.

People

On behalf of the Board, we would like to thank our global team for their continued dedication, professionalism and hard work during the year. Our people remain at the heart of ECO's success, and we were pleased to see a second year of improved results in our global engagement survey, reflecting the positive impact of new wellbeing, training and workplace initiatives.

We were also proud to again receive the highest Environment, Social and Governance (ESG) rating from Integrum ESG, a provider of independent ESG ratings. This underlines our commitment to continually improving our governance and prioritising social and environmental concerns in all aspects of the business.

During the period, we further strengthened the Group through targeted hires across science, development and commercial functions.

Governance and leadership transition

On 31 March 2025, Dr Andrew Jones retired as Chairman after six years in the role. We would like to thank Andrew for his leadership and his significant contributions to ECO's development and growth.

Following a planned succession process, we are pleased to confirm that Dr Joachim Hasenmaier has now assumed the role of Chairman. Joachim brings over two decades of international experience in animal health and has already made a strong contribution to the Board since joining in February 2024.

Dividend

ECO's current investment strategy is to reinvest to support its extensive and deep R&D pipeline, which the Board believes will deliver significant revenue and profit growth and long-term shareholder value. As such no dividend is recommended in respect of the year ended 31 March 2025.

Outlook

Aivlosin® continues to perform well in high-growth territories, and the Group remains well positioned to take market share in North America and Latin America. Trading continues to follow a seasonal pattern and remains second-half weighted. We are encouraged by improving market conditions in China.

The Group is focused on executing its commercial and R&D strategies, with multiple vaccine launches targeted from 2026. We look forward to updating shareholders as we continue to build a global leader in sustainable animal health.

As of the end of our financial year, the global macroeconomic environment was in a state of flux due to the evolving geopolitical and tariff landscape. This has had no material impact on our financial results. International trade tariffs in veterinary pharmaceuticals have been less affected than other sectors, at least at the time of writing. Post-year end we altered our pricing, which is expected to mitigate the current tariff impacts in North America. We remain vigilant to potential changes and continue to assess any implications on our pricing and global customer relationships. The Group will take appropriate action should the situation change and is actively exploring all possible solutions to mitigate any future disruption.

Dr Joachim Hasenmaier David Hallas,

Chairman Chief Executive Officer

REPORT OF THE CHIEF FINANCIAL OFFICER

FOR THE YEAR ENDED 31 MARCH 2025

Introduction

I am pleased to report a strong year with improving profits. Operationally the business' margins improved substantially and this translated into a significantly stronger cash balance at the end of the year.

The improving margins and resulting cashflow allowed strong progress to be made with the Group's new product developments and a significant milestone was reached during the year with the submission of the first vaccine for marketing approval.

The finance function led the implementation of a new ERP system during the year; the NetSuite project was delivered on time, within budget and without interruption to the normal routines in the business and financial reporting. Efficiencies have been delivered during this first year and more improvements are expected. This is something I am very proud of and demonstrates the Group's values in action.

Trading

Previous years have seen a pattern of stronger trading in the second half of the year. This is associated with disease prevalence in pigs during the northern hemisphere winter. This pattern of trading has continued in the year ended 31 March 2025 with the second half accounting for 58% (2024: 57%) of the annual revenue. The main contributors to the second half weight this year were China/Japan with a 64% H2 weight and North America also with a 60% H2 weight.

The geographical analysis of revenue corresponding to the Group's operating segments is as follows:

Overall all markets showed revenue declines year on year except for North America which has continued to grow strongly. As noted in our interim report, the exchange rates in the first half proved to be a headwind; in the second half of our financial year the exchange rates were more consistent with the prior year. The geographical analysis of revenue on a constant currency basis is as follows:

China revenue on a constant currency basis declined by 8% (£1.6m) but this decline was compensated by strong trading in Japan, an increase of 19% (£0.5m) year on year. However, China showed signs of improved performance in the second half being 3% ahead of prior year for the 6 months to 31 March 2025 on a constant currency basis. China's second half performance was strong driven by disease demand for Aivlosin in swine production - porcine reproductive and respiratory disease syndrome virus ("PRRSv") control and eradication programmes. This demand has continued since the year end.

At £21.4m (constant currency £21.9m), North America again grew strongly exceeding its previous highest revenue of £18.5m in the year ended 31 March 2024. The strength in this market was also disease driven - PRRSv as well as enteric disease resulted in demand for Aivlosin reaching record levels.

South and South East Asia revenue declined 30% on a constant currency basis. This was principally due to the loss of a major customer in Thailand and a slowdown in India and Vietnam. However, the year saw good growth in the nascent markets of Bangladesh, Indonesia, Malaysia, Philippines and Pakistan as we seek to access new markets and re-enter markets where previous marketing authorisations had expired and been re-issued.

Latin America comprises Brazil and Mexico (where the Group operates through wholly owned subsidiaries) and a group of other countries in South America where trade is conducted through exclusive distribution arrangements. Brazil on a constant currency basis was broadly flat year on year. Mexico performed poorly during the year; excess stock levels in the distribution channels and generic price pressure created some difficulties. Colombia had a poor year resulting from some rearrangement of the distribution arrangements which have now been resolved. Argentinaat £2m represented a 39% increase in revenue.

The European market segment is dominated by sales into Spain - £1.5m (2024: £1.8m) and Poland - £1.3m (2024: £1.3m). Spain accepted the resumption of sales of Aivlosin® Pre-Mix formulation in the period, reversing a hiatus in sales of this product in the year ended 31 March 2024. Sales in the UK at £1.1m (2024: £0.9m) is consistent with prior year.

Gross margins were 45.1% in the year ended 31 March 2025 (2024: 42.1%). This improvement in gross margins arose despite the foreign exchange impact of Sterling compared with the US Dollar and the Chinese Yuan. As noted above, on a constant currency basis the revenues for the year are £81.6m; recalculating the gross margin based on constant currency revenue would provide a gross margin of 46.2%. As anticipated in our interim report for the six months ended 30 September 2024, there was a strong recovery in the gross margins in the second half of the financial year - this was driven by the second half weighting and geographical mix favouring high margin markets.

The Group hedges its largest currency exposures through a layering of four forward contracts covering the four successive financial quarters and a portion of the anticipated US Dollar generation. On a quarterly basis these forward contracts are supplemented by additional layers, thus providing an averaging effect to the US Dollar- Sterling exchange rate. The hedging policy provides protection to net profit, earnings per share and cash but has no effect on gross profit or gross margin because the gains and losses are accounted for in finance costs.

Administrative expenses, at £28.7m (2024: £29.4m), show a 2% improvement; personnel costs reduced by 10% as a consequence of lower financial performance related bonus accruals.

All R&D programmes progressed well during the year, and the milestone of dossier submission to the regulatory authorities for our first mycoplasma poultry vaccine was reached - ECOvaxxin® MS. The group expects further submissions in the next and following years supporting the targeted investment in innovative vaccine technology. The strong market potential and technical success supports the capitalisation of late stage R&D expenditure which showed no indications of impairment. At the current time the Group capitalises expenditure on ECOVaxxin® MG and ECOVaxxin® MS as well as a long acting Florfenicol based anti-infective, ECOFlor, for swine respiratory disease.

Total cash expenditure on R&D (inclusive of that amount capitalised) in the year was £8.6m (2024: £8.3m). The total expenditure on R&D can be analysed as follows:

Overall R&D expenditure in the year was 4% higher than the prior year, reflecting increased spending on clinical stage assets. Expenditure on late stage assets (capitalised items) was 53% of total expenditure compared with 49% in the prior year. This R&D programme continues to be funded from the Group's cashflow and is 11% of revenue (2024 - 9%) expenditure ensures that all programmes (late, mid and early stage) receive the required funding to advance them according to plan. The R&D programme was described in some detail during the Group's R&D day held in March 2025.

More details of this presentation, as well as a video recording of the meeting are available on the Group's website.

EBITDA is a key performance measure for the Group; the removal of amortisation, depreciation and other non-cash charges to profit provides a good indication of the underlying cash trading performance of the business. The charge for amortisation of intangible assets in the year was £1.2m (2024: £1.2m). The adjusted EBITDA, operating profit excluding exceptional items, share based payments, depreciation, amortisation and foreign exchange gains and losses, at £7.3m (2024: £8.0m) was slightly above market expectations and was achieved despite challenging trading conditions and higher R&D expense by tight overhead costs control and strongly improved gross margins. Furthermore, the adjusted EBITDA margin, excluding foreign exchange movements and expressed as a percentage of revenue in the period, was 9.2% in the year ended 31 March 2025 compared with 9.0% in the year ended 31 March 2024.

Profit before income tax was higher in the year ended 31 March 2025 at £4.0m (2024: £3.0m). An important contributor to this increase was the exceptional gain during the year.

The exceptional items were profits on disposal of the non-core product line Ecomectin horse paste to an Italian distributor and parasite treatment licences for Southern Africa.

The Group's effective tax rate was 34% for the year ended 31 March 2025 (2024: 32%). Factors causing the effective rate to be greater than the headline UK rate of 25% are the withholding tax suffered on intragroup dividends received from China and the Group's policy of not recognising a deferred tax asset in respect of losses in the Group's parent company. The 2 percentage-point increase to 34% from 32% in the prior year is due to the more-restrictive R&D tax credit arrangements now in effect in the UK.

Earnings per share (EPS) has improved from 1.55 pence in the year ended 31 March 2024 to 2.49 pence per share in the year ended 31 March 2025 and diluted EPS has improved strongly from 1.52 pence in the year ended 31 March 2024 to 2.43 pence per share in the year ended 31 March 2025, due to improved gross margins, good cost control, and the exceptional gain described earlier.

Operating cash inflow before movements in working capital was £7.6m (2024: £7.7m). Continuing close management of working capital - in particular inventories and receivables - has resulted in operating cash flow of £12.1m (2024: £10.5m). Jurisdiction of cash balances were as follows:

The Group repatriates cash from China by annual dividend declaration; this is subject to withholding taxes of 5% and is paid according to the relevant shareholdings. On a day-to-day basis, the Board considers the cash held in the Group's joint venture subsidiary in China to be unavailable to the Group outside of China; accordingly, treasury management decisions and funds available for investment in R&D are based upon the cash balances outside of China.

During June 2024, two dividends totalling £2.8m (post withholding tax) were received from China. In addition, during June 2025, two dividends totalling £3.4m (post withholding tax) were received from China.

The Group's committed banking facilities remain at £15.0m, being a £5.0m overdraft facility and a £10m revolving credit facility. These facilities expire on30 June 2026 and were undrawn as at 31 March 2025.

The Group's inventory balance reduced to £14.6m on 31 March 2025 from £17.0m on 31 March 2024. This reduction was principally in finished goods and reflected the strong end to the year in China and the USA. Overall inventory days the annual cost of sales were steady at 122 days against 120 days for the prior year.

Trade receivables decreased from £32.2m at 31 March 2024 to £28.5m on 31 March 2025 with average debtor days (expressed as an average of the annual revenue) steady at 131 days (prior year: 131 days).

Simplified presentation of the Group

In response to certain stakeholder requests to provide a simplified description of the Group's performance we present the following analysis. The ECO Group can be thought of in three components, the first, a core trading business which manufactures and sells its products worldwide through wholly owned subsidiaries or direct to market. This applies to all territories except China where ECO operates through a 51% owned subsidiary. Cash returns from this China subsidiary is by way of a dividend.

Accordingly, the second component to this analysis of the Group is an investment in a China business that pays the Group an annual dividend. The third component of this analysis is an R&D business which employs a team of people undertakes studies and trials through third parties and has developed a body of intellectual property with rich potential for high future returns. 

With these three components in mind one can disaggregate the Group results using already disclosed information, as follows:

ECO Animal Health Group plc - Disaggregation analysis continued

\* The Group owns 51% of ECO Biok with 49% owned by a minority shareholder. Details of ECO Biok are disclosed in note 15.

By performing this analysis for prior years the following comparative performance for the core group can be set out as follows:

As disclosed previously the dividend from the China 51% subsidiary in respect of the year ended 31 December 2024 has been received at a value of £2.6m. The dividend received in the financial year ended 31 March 2025 was comparatively lower than prior years and the subsequent year because it reflected the year in which the new factory in China was built.

In summary the Group can be described as a core trading business which has delivered consistent (and rising) profitability in the last three years approaching £10m, rising cash generation and cash balances and which receives a consistent annual dividend of £2m - £3m and from which a new product development programme is being funded.

Christopher Wilks

Chief Financial Officer

CONSOLIDATED INCOME STATEMENT

FOR THE YEAR ENDED 31 MARCH 2025

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

FOR THE YEAR ENDED 31 MARCH 2025

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED 31 MARCH 2025

STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED 31 MARCH 2025

Company

STATEMENTS OF FINANCIAL POSITION (CO. NUMBER: 01818170)

AS AT 31 MARCH 2025

STATEMENTS OF CASH FLOWS

FOR THE YEAR ENDED 31 MARCH 2025

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 MARCH 2025

1. General information

ECO Animal Health Group plc ("the Company") and its subsidiaries (together "the Group") manufacture and supply animal health products globally.

The Company is traded on the AIM market of the London Stock Exchange and is incorporated and domiciled in the UK. The address of its registered office is The Grange, 100 High Street, Southgate, N14 6BN.

2. Summary of the Group and Company's significant accounting policies

2.1 Basis of preparation

These financial statements have been prepared in accordance with UK-adopted International Financial Reporting Standards. There were no changes to accounting policies on adoption of UK IFRSs.

The preparation of financial statements, in accordance with UK-adopted international accounting standards, requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Although these estimates are based on management's best knowledge of the amount, event or actions, actual results ultimately may differ from those estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and future periods if the revision affects both current and future periods. Further details of estimates and judgements are provided in note 2.29 and 2.30.

The principal accounting policies are set out below and have been applied consistently in dealing with items which are considered material in relation to the financial statements. They are prepared under the historical cost convention with the exception of certain items which are measured at fair value as described in the accounting policies below.

Going concern

After making appropriate enquiries, the Directors have, at the time of approving the financial statements, formed a judgement that there is a reasonable expectation that the Group and Company have adequate resources to continue in operational existence for the foreseeable future. For this reason, the Directors continue to adopt the going concern basis in preparing the financial statements.

This conclusion is based on a review of the resources available to the Group, taking account of the Group's financial projections together with available cash and committed borrowing facilities. The Directors have performed a reverse stress test on the business, by considering what quantum of revenue and gross margin reduction would be required to exhaust all available funds within 12 months of the date of approving the accounts, having due regard to the identified strategic risks. The Directors concluded that the likelihood of such a reduction was remote, and therefore that no material uncertainty exists in respect of going concern.

2.2 Adoption of new and revised standards

The below are the standards that are new/amended for accounting periods that begin on or after 1 January 2024:

• Classification of liabilities as current or non-current (Amendments to IAS 1);

• Deferred tax related to assets and liabilities arising from a single transaction (Amendments to IAS 12);

• Lease Liability in a Sale and Leaseback (Amendments to IFRS 16);

• Classification of Financial Instruments (Amendments to IFRS 9);

• Non-current liabilities with covenants (Amendments to IAS 1); and

• Supplier Finance Arrangements (Amendments to IAS 7 and IFRS 7).

No new standards or amendments that became effective in the financial year had a material impact in preparing these financial statements. There are a number of standards and amendments to standards which have been issued by the IASB that are effective in future accounting periods that have not been adopted early.

The following amendments are effective for annual reporting periods beginning on or after 1 January 2025:

· Guidance on the exchange rate to use when a currency is not exchangeable (Amendments to IAS 21);

· Accounting treatment for the sale or contribution of assets (Amendments to IFRS 10 and IAS 28).

The following amendments are effective for annual reporting periods beginning on or after 1 January 2026:

· Amendments to the classification and measurement of financial instruments (Amendments to IFRS 9 and IFRS 7);

· Annual Improvements to IFRS Standards 2022 - 2024 Cycle (covering amendments to IFRS 1, IFRS 7, IFRS 9, IFRS 10, IAS 7).

The following standards are effective for annual reporting periods beginning on or after 1 January 2027:

· IFRS 18 Presentation and Disclosure in Financial Statements;

· IFRS 19 Subsidiaries without Public Accountability: Disclosures.

Beyond the information above, it is not practicable to provide a reasonable estimate of the effect of these standards until a detailed review has been completed.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

FOR THE YEAR ENDED 31 MARCH 2025

2.3 Basis of consolidation

The consolidated financial statements comprise the accounts of the Company and its subsidiaries drawn up to 31 March 2025.

An entity is classed as a subsidiary of the Company when, as a result of contractual arrangements, the Company has the power to govern its financial and operating policies so as to obtain benefits from its activities.

The purchase method of accounting is used to account for the acquisition of subsidiaries by the Group. The cost of an acquisition is measured as the fair value of the assets given, equity instruments issued and liabilities incurred or assumed at the date of exchange. Identifiable assets acquired and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date, irrespective of the extent of any non-controlling interest. The excess of the cost of acquisition over the fair value of the Group's share of the identifiable net assets acquired is recorded as goodwill. If the cost of acquisition is less than the fair value, the difference is recognised directly in the income statement.

Accounting policies of subsidiaries have been changed where material to ensure consistency with the policies adopted by the Group. Although the subsidiaries in Brazil and China and the joint operations in the USA and Canada all have December year ends, the Group uses management accounts to the end of March to prepare the Group accounts.

Subsidiaries are wholly consolidated from the date on which control is transferred to the Group. They are deconsolidated from the date that control ceases.

Inter-company transactions, balances and unrealised gains on transactions between Group companies are eliminated on consolidation.

The Group initially recognises any non-controlling interest in the acquiree at the non-controlling interest's proportionate share of the acquiree's net assets. For each business combination, the Group elects whether to measure the non-controlling interests in the acquiree at fair value or at the proportionate share of the acquiree's identifiable net assets. Acquisition-related costs are expensed as incurred and included in administrative expenses. The Group has not elected to take the option to use fair value in acquisitions completed to date.

Profit or loss and each component of other comprehensive income are attributed to the equity holders of the parent of the Group and to the non-controlling interests, even if this results in the non-controlling interests having a deficit balance.

2.4 Segment reporting

Operating segments are reported in a manner consistent with the internal reporting to the chief operating decision-maker. The chief operating decision-maker who is responsible for allocating resources and assessing performance of the operating segments has been identified as the Board.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

FOR THE YEAR ENDED 31 MARCH 2025

2.5 Foreign currency translation

(a) Functional and presentation currency

Items included in the financial statements of each of the Group's entities are measured using the currency of the primary economic environment in which the entity operates ('functional currency'). The consolidated and Company financial statements are presented in Pounds Sterling, which is the Group and the Company's functional currency.

(b) Transactions and balances

Monetary assets and liabilities denominated in foreign currencies are translated into Pounds Sterling at the rates of exchange ruling at the date of the financial statements.

Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the date of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at period end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the income statement within administrative expenses.

Foreign exchange gains and losses that relate to borrowing and cash and cash equivalents are presented in the income statement within administrative expenses.

(c) Group companies

The results and financial position of all Group entities that have a functional currency different from the Group's functional and presentation currency are translated into the Group's functional and presentation currency as follows:

· assets and liabilities for each statement of financial position presented are translated at the closing exchange rate at the date of the statement of financial position;

· income and expenses for each income statement are translated at average exchange rates unless this average is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case the income and expenses are translated at the rate on the dates of the transaction; and

· all resulting exchange differences are recognised through other comprehensive income as a separate component of equity.

When a foreign operation is partially disposed or sold, exchange differences that were recognised in equity are recognised in the income statement as part of the gain or loss on sale. Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and translated at the closing exchange rate.

2.6 Financial instruments

Financial assets

Financial assets comprise mainly trade and other receivables and cash and cash equivalents in the consolidated statement of financial position. These financial assets arise principally from the provision of goods to customers and are measured at amortised cost.

Impairment provisions for current and non-current trade receivables are recognised based on the simplified approach within IFRS 9 using a provision matrix in the determination of the lifetime expected credit losses. During this process, the probability of the non-payment of the trade receivables is assessed with reference to historical data adjusted by forward-looking information. This probability is then multiplied by the amount of the expected loss arising from default to determine the lifetime expected credit loss for the trade receivables. For trade receivables, which are reported net, such provisions are recorded in a separate provision account with the loss being recognised within administrative expenses in the consolidated income statement. On confirmation that the trade receivable will not be collectable, the gross carrying value of the asset is written off against the associated provision.

Impairment provisions for receivables from related parties and loans to related parties are recognised based on a forward-looking expected credit loss model. The methodology used to determine the amount of the provision is based on whether there has been a significant increase in credit risk since initial recognition of the financial asset. For those where the credit risk has not increased significantly since initial recognition of the financial asset, 12-month expected credit losses along with gross interest income are recognised. For those where the credit risk has increased significantly, lifetime expected credit losses along with gross interest income are recognised. Where there is a high level of variation and uncertainty in possible outcomes, management will assess these on a probability weighted basis to determine an appropriate provision. For those that are determined to be credit impaired, lifetime expected credit losses along with interest income on a net basis are recognised.

The group uses forward foreign exchange contracts to manage its currency exposure. Certain foreign currency inflows that would typically be translated to sterling at spot to meet liabilities are sold forward to reduce the Group's exposure to fluctuations in exchange rates. The group has not opted to use hedge accounting for these instruments, and any changes in fair value are recognised in the income statement.

Financial liabilities

Financial liabilities comprise mainly trade and other payables and bank overdrafts in the consolidated statement of financial position. These financial liabilities are initially recognised at fair value and subsequently measured at amortised cost in accordance with IFRS 9.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

FOR THE YEAR ENDED 31 MARCH 2025

2.7 Goodwill

Goodwill arising on the acquisition of an entity represents the excess of the costs of acquisition over the Group's interest in the net fair value of the identifiable assets, liabilities and contingent liabilities of the entity recognised at the date of acquisition. Please refer to note 11 for further details.

Goodwill is initially recognised as an asset at cost and is subsequently measured at cost less any accumulated impairment losses. Goodwill is not subject to amortisation but is tested for impairment annually.

Negative goodwill arising on an acquisition is recognised directly in the income statement. On disposal of a subsidiary or a jointly controlled entity, the attributable amount of goodwill is included in the determination of the profit or loss recognised in the income statement on disposal. Goodwill arising before the date of transition to IFRS, on 1 April 2004, has been retained at the previous UK GAAP amounts, subject to being tested for impairment at that date. Goodwill written off to reserves under UK GAAP prior to 1998 has not been reinstated and is not included in determining any subsequent profit or loss on disposal.

2.8 Other intangible assets

Other intangibles are detailed in note 11. IAS 38 - Intangible Assets includes guidance on the accounting for research and development expenditure. Such an intangible asset is a resource that is controlled by the entity as a result of past events (for example, purchase or self-creation) and from which future economic benefits (inflows of cash or other assets) are expected. The three critical attributes of an intangible asset are:

· identifiability;

· control (power to obtain benefits from the asset); and

· future economic benefits (such as revenues or reduced future costs).

Identifiability

An intangible asset is identifiable when it:

· is separable (capable of being separated and sold, transferred, licensed, rented, or exchanged, either individually or together with a related contract); or

· arises from contractual or other legal rights, regardless of whether those rights are transferable or separable from the entity or from other rights and obligations.

Development expenditure - whether purchased or self-created (internally generated) is an example of an intangible asset, governed under IAS 38.

Recognition criteria

IAS 38 requires an entity to recognise an intangible asset (at cost) if, and only if:

· it is probable that the future economic benefits that are attributable to the asset will flow to the entity; and

· the cost of the asset can be measured reliably.

IAS 38 includes additional recognition criteria for internally generated intangible assets.

Expenditure on the research phase of an internal project is expensed as incurred. Expenditure in the development phase of an internal project is capitalised if the entity can demonstrate:

a) the technical feasibility of completing the intangible asset so that it will be available for use or sale.

b) its intention to complete the intangible asset and use or sell it.

c) its ability to use or sell the intangible asset.

d) how the intangible asset will generate probable future economic benefits. Among other things, the entity can demonstrate the existence of a market for the output of the intangible asset or the intangible asset itself or, if it is to be used internally, the usefulness of the intangible asset.

e) the availability of adequate technical, financial and other resources to complete the development and to use or sell the intangible asset.

f) its ability to measure reliably the expenditure attributable to the intangible asset during its development.

The probability of future economic benefits must be based on reasonable and supportable assumptions about conditions that will exist over the life of the asset.

If an entity cannot distinguish the research phase of an internal project to create an intangible asset from the development phase, the entity treats the expenditure for that project as if it were incurred in the research phase only.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

FOR THE YEAR ENDED 31 MARCH 2025

2.8 Other intangible assets (continued)

The Group context of IAS 38

Since the early start-up stages of the business, the Group has and continues to invest significant expenditure in research and development into new animal treatments and therapies. This has resulted in a significant family of pharmaceutical treatments for pigs and poultry. Branded as Aivlosin®, this product has developed over 20 years into treatments for multiple respiratory and intestinal infections - each of which have separate regulatory and marketing approvals in each target market. The work to bring Aivlosin® from the laboratory to the commercial farm has moved through the classical phases of pharmaceutical development and the ECO Animal Health R&D model can be described by the following broad phases:

• The discovery phase - in vitro, in laboratory.

• The proof of concept phase - key efficacy trials in small groups of animals.

• The exploratory development phase - optimisation of dose, economic validation.

• The full development phase - building the data set for dossier submission.

• Submission of an application for regulatory approval.

• Marketing and regulatory approval granted - commercial revenue begins.

The application of the principles of IAS 38 to the above model is to treat expenditure on research and development as an expense until the likely commercial benefits that will flow from the project can be judged to be highly probable. This means that the technical feasibility (judged by reference to efficacy) must be certain, the economic feasibility (judged by reference to manufacturing methodology, market intelligence, overall programme cost) has to be highly probable and the likelihood of gaining regulatory approval must be judged to be highly probable. The Directors consider that capitalisation will generally commence once a project enters the full development phase.

In practice, work that is undertaken to build towards regulatory approval for a new treatment claim using Aivlosin®, vaccines or other technologies, or an approval for marketing new technologies of applications in a new geographical market can be viewed as starting at the full development phase and are likely to meet the capitalisation criteria whereas costs in relation to some of the Group's recently announced projects, on vaccine development, for example, are likely to meet the capitalisation requirements once they are approved internally to commence the full development phase, subject to careful consideration of residual technical feasibility/risk.

The Group's R&D team prepare a technical profile for new products in development, with timings for development activity reflecting the technical challenges that must be overcome in order to obtain a marketing authorisation for the relevant regulator. In turn the R&D team work with the Group's marketing team to develop a business case for a new product by considering a number of additional factors. These additional factors will include local intelligence on the appetite for new products gathered through the Group's global network of existing sales channels, third-party data on the size of potential markets for new products, and suitable pricing strategies in the context of potential competitor products.

Amortisation of capitalised expenditure is determined with reference to the point at which regulatory approval is given to the product to which the expenditure relates. For historic periods, the approach adopted has been to amalgamate the expenditure incurred on all projects relating to the same product since the last regulatory approval and then identify the next nearest regulatory approval given for that product in either the same or a subsequent half-year. Amortisation begins in the half-year following the receipt of regulatory approval. A full six months of amortisation is charged in the first half-year for which costs are amortised.

Where it is possible to allocate an individual capitalised cost to a single identifiable project the start date for amortisation is the half-year following the half-year period in which the project receives regulatory approval. Where regulatory approval has not been received for a project, the amortisation has not started.

Amortisation is provided at rates calculated to write off the cost less estimated residual value of each asset over its expected useful life, as follows:

Aivlosin® 5% on cost

Ecomectin® 10% on cost

Vaccines 5% on cost

Trade marks and patents 10% on cost

2.9 Property, plant and equipment and depreciation

Plant and equipment are stated at cost less depreciation. Depreciation is provided at rates calculated to write off the cost less estimated residual value of each asset over its expected useful life, as follows:

Plant and machinery 10%-20% on cost

Fixtures, fittings and equipment 10%-20% on cost

Motor vehicles 25% on cost

Leasehold improvement 18%-25% on cost

Freehold land and buildings valuations are measured as a level 3 recurring fair value measurement. The property is professionally valued by a qualified surveyor at least once every three years. Surpluses (which are not reversals of previous deficits) arising from the periodic valuations are taken to other comprehensive income, and deficits (which are not reversals of previous surpluses) are taken to the income statement within administrative expenses. Depreciation is provided at a rate calculated to expense the valuation less estimated residual value over the remaining useful life of the building at a rate of 2% per annum on a straight-line basis. Land is not depreciated.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

FOR THE YEAR ENDED 31 MARCH 2025

2.10 Impairment of non-financial assets

The carrying amounts of assets are reviewed at each year end to determine whether there is any indication of impairment. If any such indication exists, the asset's recoverable amount is estimated in order to determine the impairment loss if any. The recoverable amount is the higher of its fair value and its value in use. For intangible assets with an indefinite useful life or not available for use, an impairment test is performed at each year end.

In assessing value in use, the expected future cash flows from the asset are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset.

An impairment loss is recognised in the income statement whenever the carrying amount of an asset or its cash-generating unit exceeds its recoverable amount.

A previously recognised impairment loss for costs other than goodwill is reversed if the recoverable amount increases as a result of a change in the estimates used to determine the recoverable amount, but not to an amount higher than the carrying amount that would have been determined (net of depreciation) had no impairment loss been recognised in prior years and no reversal of impairment losses recognised on goodwill.

2.11 Investments in subsidiaries

An investment in a subsidiary is where the Group own a controlling interest in an entity. Investments in subsidiaries are stated at cost less impairment in the parent Company's statement of financial position.

Other non-current asset investments are stated at fair value. They are recognised or derecognised on the date when the contract for acquisition or disposal requires the delivery of that investment.

Investments are assessed for impairment at the end of each reporting period. An impairment is recognised in profit or loss when the recoverable amount of an asset is less than its carrying amount, with the value of any impairment being the difference between the recoverable amount and carrying amount.

Impairments can be reversed in subsequent periods where there is any indication that the impairment loss recognised in a prior period may no longer exist or have decreased.

During the year the Group established an Employee Share Ownership Trust (the 'ESOT'). The assets, liabilities and returns of the ESOT are consolidated within the results of the ESOT's sponsoring company, Eco Animal Health Group plc. 

During the year the ESOT acquired shares in Eco Animal Health Group plc. The shares held by the ESOT are treated as treasury shares in the accounts of Eco Animal Health Group plc.

2.12 Joint arrangements

A joint arrangement is a contractual arrangement whereby the Group and other parties undertake an economic activity that is subject to joint control; that is, when the strategic financial and operating policy decisions relating to the activities require the unanimous consent of the parties sharing control.

The Group classifies its interests in joint arrangements as either:

- Joint ventures: where the Group has rights to only the net assets of the joint arrangement; or

- Joint operations: where the Group has both the rights to assets and obligations for the liabilities of the joint arrangement.

In assessing the classification of interests in joint arrangements, the Group considers:

- The structure of the joint arrangement;

- The legal form of joint arrangements structured through a separate vehicle;

- The contractual terms of the joint arrangement agreement;

- Any other facts and circumstances (including any other contractual arrangements).

The Group has interests in joint operations. The Group recognises its share of the assets, liabilities, income, expenses and cash flows of joint operations combined with the equivalent items in the consolidated financial statements on a line-by-line basis.

2.13 Investments in associates

An associate is an entity in which an investor has significant influence but not control or joint control. Significant influence is defined as "the power to participate in the financial and operating policy decisions but not to control them".

The Group reports its interests in associates using the equity method of accounting. Under this method, an equity investment is initially recorded at cost (subject to initial fair value adjustment if acquired as part of the acquisition of a subsidiary) and is subsequently adjusted to reflect the Group's share of the net profit or loss of the associate. If the Group's share of losses of an associate equal or exceed its "interest in the associate", the Group discontinues recognising its share of further losses. If the associate subsequently reports profits, the investor resumes recognising its share of those profits only after its share of the profits equals the share of losses not recognised.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

FOR THE YEAR ENDED 31 MARCH 2025

2.14 Leasing

The Group assesses at contract inception whether a contract is, or contains, a lease. That is, if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.

The Group applies a single recognition and measurement approach for all leases under IFRS 16, except for short-term leases and leases of low-value assets.

Right-of-use assets

The Group recognises right-of-use assets at the commencement date of the lease, which is the date the underlying asset is available for use. Right-of-use assets are measured at cost, less any accumulated depreciation and impairment losses, and adjusted for any remeasurement of lease liabilities. The cost of right-of-use assets includes the amount of lease liabilities recognised, initial direct costs incurred, and lease payments made at or before the commencement date, less any lease incentives received. Right-of-use assets are depreciated on a straight-line basis over the lease term.

If ownership of the leased asset transfers to the Group at the end of the lease term or the cost reflects the exercise of a purchase option, depreciation is calculated using the estimated useful life of the asset.

The right-of-use assets are also subject to impairment. Refer to the accounting policies in section 2.10 for further details.

Lease liabilities

At the commencement date of the lease, the Group recognises lease liabilities measured at the present value of the lease payments to be made over the lease term. The lease liabilities include the present value of the following lease payments:

• fixed payments (including in-substance fixed payments), less any lease incentives receivable;

• variable lease payments that are based on an index or a rate, initially measured using the index or rate as at the commencement date;

• amounts expected to be payable by the Group under residual value guarantees;

• the exercise price of a purchase option if the Group is reasonably certain to exercise that option; and

• payments of penalties for terminating the lease, if the lease term reflects the Group exercising that option.

Lease payments to be made under reasonably certain extension options are also included in the measurement of the liability.

The lease payments are discounted using the interest rate implicit in the lease. If that rate cannot be readily determined, the lessee's incremental borrowing rate is used, being the rate that the individual lessee would have to pay to borrow the funds necessary to obtain an asset of similar value to the right-of-use asset in a similar economic environment with similar terms, security and conditions. In addition, the carrying amount of lease liabilities is remeasured if there is a modification, a change in the lease term, a change in the lease payments (for example, changes to future payments resulting from a change in an index or rate used to determine such lease payments) or a change in the assessment of an option to purchase the underlying asset.

The Group is exposed to potential future increases in variable lease payments based on an index or rate, which are not included in the lease liability until they take effect. When adjustments to lease payments based on an index or rate take effect, the lease liability is reassessed and adjusted against the right-of-use asset.

Lease payments are allocated between principal and finance cost. The finance cost is charged to profit or loss over the lease period to produce a constant periodic rate of interest on the remaining balance of the liability for each period.

Extension and termination options

Extension and termination options are included in a number of property and equipment leases across the Group. These are used to maximise operational flexibility in terms of managing the assets used in the Group's operations. The majority of extension and termination options held are exercisable only by the Group and not by the respective lessor.

The Group applies judgement in evaluating whether it is reasonably certain whether or not to exercise the option to renew or terminate the lease. That is, it considers all relevant factors that create an economic incentive for it to exercise either the renewal or termination. After the commencement date, the Group reassesses the lease term if there is a significant event or change in circumstances that is within its control and affects its ability to exercise or not to exercise the option to renew or to terminate.

Recognition exemptions

The Group applies the short-term lease recognition exemption to its short-term leases, being those leases that have a lease term of 12 months or less from the commencement date and do not contain a purchase option.

The Group also applies the recognition exemption to leases of which the underlying asset is of low value, comprising assets below the Group's capitalisation threshold. Lease payments on short-term leases and leases of low-value assets are recognised as an expense on a straight-line basis over the lease term.

Practical expedients

The Group applies a single discount rate to a portfolio of leases with reasonably similar characteristics.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

FOR THE YEAR ENDED 31 MARCH 2025

2.15 Inventories

Inventories are valued at the lower of cost and net realisable value. Cost is determined using the historical batch price of the principal raw materials and the weighted average cost for other ingredients and other product costs. The cost of finished goods comprises raw materials, packaging costs and sub-contracted manufacturing costs. Net realisable value is the estimated selling price in the ordinary course of business, less any costs which would be incurred in completing the goods ready for sale.

2.16 Trade receivables