A pivotal year is hailed by vet supply company

The pet drugs company reported a 50 per cent rise in underlying pre-tax profits for the year to June 30. Last night the group's shares closed up nearly 17 per cent, a rise of 16.5p to 116.5p.

The Ripon-based company, which will be based in York following completion of the 3.25m disposal of the agricultural business later this year, said annual pre-tax profits rose to 3m from 2m.

The results were boosted by a 16 per cent increase in revenues from the companion animal division, which supplies medicines to vets, to 9.7m.

Analyst Chris Glasper at Brewin Dolphin said the growth has been driven by a number of new product launches and a strong underlying performance from existing product lines.

Animalcare's chief executive Stephen Wildridge said new products have seen growth of 69 per cent year on year.

"As we've been in to see vets to explain our new products, they've said: 'Great, what else do you do?' So they are also buying our other licensed medicines."

Animalcare has seen a 21 per cent increase in sales of licensed medicines, nearly three times the eight per cent market growth.

New, innovative products are the lifeblood of Animalcare and last week the group launched two new products, Anivac and Florgane.

Anivac is a vaccine for Viral Haemorrhagic Disease (VHD) in pet rabbits. VHD, one of the biggest killers of rabbits in the UK and Europe, is a very serious infectious disease with high death rates.

Florgane is designed to treat respiratory disease in cattle, for example pneumonia in calves.

It is easier to syringe than rival treatments, especially at low temperatures, and leaves less marks at the injection site.

"It's a water based formulation that is quicker to draw into the syringe," said Mr Wildridge. "When you've got 50-60 calves to inject, it can cut a lot a lot of time off the process. Florgane means you can draw into the syringe in 10 seconds rather than 60 seconds."

Two more new products are due to be launched in January.

Animalcare will be almost debt free following the completion of the sale of its agricultural division to Tru-Test UK for 3.25m.

The sale of the agricultural division leaves the group free to focus on its fast growing pet drugs business.

Animalcare decided to sell the agricultural businesses as they are operating in a slow growing segment of the market and both need capital and resources to develop.

"We had to decide whether to invest in those businesses or invest in the Animalcare business," said Mr Wildridge. "It was a simple choice. Animalcare is growing a lot faster and it's got a strategy that's working."

Over 80 per cent of group profits now come from the Animalcare veterinary medicines and supplies business.

A particular success has been a new beef flavoured version of its generic heart drug Benazecare.

Analyst Chris Glasper at Brewin Dolphin said: "The shares have been very weak recently on technical factors rather than anything fundamental. The disposal of the low margin agricultural businesses leave the group in much better shape strategically with an ungeared balance sheet. The shares look extremely good value."

Deal proved 'win all round'

Animalcare sold its agricultural division for 3.25m last month.

The agricultural division, which consists of livestock tagging business Ritchey in Masham and Fearing International in Northampton, was sold to New Zealand firm Tru-Test.

Animalcare said the new buyer has given the company assurances that no jobs will be lost following the deal.

Tru-Test is keen to expand the agricultural business which employs 59 people at Ritchey in Masham and 14 at Fearing.

Animalcare's chief executive Stephen Wildridge said this deal was "a win all round".

"It gives Tru-Test a foothold in Europe and it's good for the businesses in Masham and Northampton," he said. "The buyer has guaranteed the jobs, which was one of the most important things for us."