Animalcare Group plc (ANCR) Earnings Call Transcript

Good afternoon, and welcome to the Animalcare Group plc Investor Presentation. [Operator Instructions] 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 I'd now like to hand you over to Jenny Winter, CEO. Good afternoon.

Hey. Good afternoon, everybody, and lovely to meet some of 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 pre-submitted or you may have today. So thanks a lot for joining us. So we're going to a quick intro for those of you don't know us terribly well. 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 my perspective and from our perspective, it doesn't matter how you look at '24. For us, it was a transformational year. And that's for 2 specific areas. So on the left-hand side of this slide, you can see from a perspective of strategic execution. The first 2 on here, they were planned over a number of years. And so 2024 really was the fruition of some strategies that were put in place in '21 -- '20 and '21. So firstly, just on Identicare. Those of you who have joined us before know that this is our microchipping business just in the U.K., the 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 5 years, wouldn't it be great if we could sell this for about GBP 30 million? And in reality, that's what happened last year. A bit earlier than we planned, but absolutely at the value. And that was a 17x multiple, which for us is really good. So it delivered GBP 25 million into the group. The second thing that came through in 2024 was we had a minority share in a Canadian biotech business. And during '23 and moving into '24, the majority shareholder wanted to sell out. And our equity, we agreed to sell out to the purchaser of the majority shareholders' 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. And actually, when we did the deal in 2024, we not only retained that license, but we enhanced it as well as getting 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 have 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. 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 3 further development projects, all of which, if they come through and launch successfully, they'll be over GBP 10 million. So it's a really important process. But I think the really visible icing on the cake was obviously our purchase of Randlab, the Australia and New Zealand veterinary business that specializes in equine products. And so we -- that actually completed on the 3rd of Jan, so it sort of came over the year-end. But that's a really exciting acquisition for us. And not only is it immediately accretive, but it gives us -- opens up all sorts of opportunities that we're going to 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, Daxocox and Plaqtiv, grew at 30% to 40%, which is a really, really positive growth rate. And we expect that to continue. And what that does and as the bigger brands at the top of our portfolio continue to grow, that compensates because we're always going to 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 3 segments that we operate in. And just as a reminder, those 3 segments are Companion Animals, Production Animals and Equine. And so last year, we had growth in all of those 3. And that's really important for us because it gives us that balance. It gives us the 3 legs to our stool. So that was good. We held the underlying EBITDA at GBP 11.6 million. And that was a good result because actually, 2024 was also a year of investment for us. 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 teams. So we're pleased with GBP 11.6 million, and we're pleased that the investment is starting to come through because you see it in things like the growth of Daxocox and Plaqtiv. And even though we did the Randlab deal, we've come out at the other side with a really strong balance sheet. We've got GBP 20 million available to continue to drive that growth through M&A and acquisition. So for us, really exciting year, a bit of a busy year, but we saw some great results coming through. Regarding Randlab, 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 seeing Randlab continuing to perform in the way that we've expected. And actually, if I look at it qualitatively, I think 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 and some opportunities in New South Wales. And there's more opportunities for export using Randlab Australia as the base. So excited to see what comes with that, but as I say, early performance is absolutely on track. Moving on to the right-hand side of that summary and our portfolio. 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 see 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 good. The other important thing is that out of the top 10, 9 of the products are growing. Only one is in decline. And the growth in some of those -- the products near the top, 11, 17 and 9, 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 and a lot of the value. So a couple to pick out. If you look at #5, that's Daxocox, and you can see the march of Daxocox through towards the top of the portfolio. Number 9 is Plaqtiv, and you can see that's a 27% growth, continuing to drive up through and become an even more important product. I guess next year, you'll see some Randlab products in the top 10. The other important thing to note is that a good example of what is always going to happen in a business like this at #8. 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 -- this year, we've launched a new product for the treatment of ear infection. And so that will gradually, we hope, take up some of the business that we're losing from #8. 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. So you can 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 avoiding that sort of price competition. So that's the top 10. The other important thing for us that we look at are these 2 axes. Firstly, what do we own? And that means we own the regulatory marketing 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. 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 to 70-30, and we're 30% novel. And with the growth of Daxocox and Plaqtiv, that will continue to increase. And that's really important because that, I think, is the sort of lifeblood of the business moving forward. Okay. So really good progress on those 2 parameters. And so on Slide 8, this is just really a summary of where we are at the end of 2024 in terms of where we've got to and our ability to maximize any growth opportunities that come our way. So I'm going to hand over to Chris now, who's going to talk specifically about the financials from 2024.

Hi. Good afternoon, everyone. So I'm just going to start on the summary slide, and obviously, I'll give some more details on certain of these KPIs as we go through the deck. Just to set the scene, I think the title there of the slide, I think, really kind of hits the nail on the head in terms of a strong performance at the time that Jenny has talked about of it was a busy year strategically with the disposals and the acquisition of Randlab as obviously most of the work was done 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. And Jenny commented on earlier about the -- holding the EBITDA. A lot of that holding is time, and it's been in the past, is when we've been investing in the particular talent base of our organization and also doing some work around the structure of operations. So as a backdrop, really pleased 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 is from volume growth, in particular, the brands that Jenny has talked about in the top 10. I'll come on to margin in a little bit more detail, but the story here is it's largely FX, and we're expecting that to improve when we go into '25. And as you can see, we had a really excellent year from a cash conversion perspective at 103%. 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 Randlab. There's a slide in the appendix on FX, but that had about GBP 1.6 million impact on revenue. And clearly, that flows down into the gross margin. If we take out FX, the movement is really modest. That's a combination of we've had some increase in cost of goods. We do put price increases through. As I said earlier, it was a 2% 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 feel we've managed really well. It's about GBP 1 million. If we break down that GBP 1 million, over half of that is in our people base, which I said is a crucial underpin to our platform and future growth, increase in marketing spend, which is really focused on driving 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 14% there. So all in all, we've done a really good job to manage that line. Just on 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 Randlab, you're looking at an effective tax rate of broadly 26%, which is where we were in '23. Moving on to -- so this gives you a bit more detail on where the growth is coming from across the 3 categories. I'll touch on '24, and then there's a couple of comments I'm going to 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. It had a very good second half of the year as expected. So supply disruption phasing, et cetera, all worked its way through. So this part of the business grew by about 3% at actual exchange rates. And again, there's some -- the constant exchange rates are in the bracket. Again, growth from the top brands. Jenny has mentioned those and also the dental range, which is the Orozyme, Plaqtiv brands that grew by 15%. Just to give you directionally, the market for dental is one of the faster-growing parts of the market. We've seen in the last 10 years that the market has been growing by 5% to 6%. Dentals are probably above that in high single digits, and our portfolio is growing in advance of that. So that's really pleasing. New products contributed GBP 1.4 million. 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 see those continue to grow during '25. On Production Animals, this had a really good year. As a reminder, about 90% of this part of the business is in Southern Europe and international partners. So it's -- there's not much in Northern Europe. The balance of the growth 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 GBP 0.5 million. That will normalize itself out next year. And then Equine, the story here is Danilon. So we had 10% growth overall. Danilon is by far our largest brand. It was the second-largest brand, as Jenny mentioned. And about 70% of the sales are in the U.K., and the U.K. had a very strong year with that brand. I said earlier, there's a couple of comments to make on '25. I think Production Animals is anchoring on the important contributor. This is our cash cow, I'd call that. The gross margins are very good for our Production Animals portfolio. It's quite small but niche and profitable. And in general, 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 GBP 17 million mark. We actually initiated a project during the year led by our Italian country manager, and we're looking at some growth opportunities here. So we -- the objective is to continue to grow this part of the business. It will be low single digit, but keep it growing because as you see, having all 3 parts of the business growing is really important to overall growth. On Equine, obviously, the most notable transition in this portfolio is the Randlab acquisition. On the earlier slide, we saw that this -- Randlab more than doubled that size of that portfolio. It also makes it more profitable because the Randlab margins are around 70% in their portfolio versus -- so that's higher than what we've got. So this should be growing very significantly this year and really adding to profit. We also talked to that on this slide about Danilon 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 Randlab products into Europe over the next kind of 2 to 3 years, subject to regulatory pathways. On cash flow, I mentioned earlier that we had a really strong year from an operating cash perspective. So you can see how that's made up on the table on the right-hand side, really driven by essentially 2 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&D. Just moving to the bridge. So I've circled the free cash generation there. So a really strong year. That was about GBP 2 million up on the prior year. Within that box, you can see there's about GBP 2.5 million of CapEx. That's largely as historically centered around R&D, and I'll come on to later what they're going to look like. But again, a really strong year from a free cash flow perspective. And what that meant with the -- you can see that there's some significant movements in M&A, but we ended the year, as Jenny said, with a very strong balance sheet, so around GBP 9 million of debt. And then on a pro forma basis with Randlab included, the leverage is about 0.7x, so below 1. And that's what -- and the GBP 20 million is giving us the capacity. So that's going -- levering up to 2 as an assumption. So that's where we get the GBP 20 million of capacity. On this capital allocation side, the left-hand slide is largely unchanged or isn't changed. So a couple of things to bring out here is that I've talked about our -- how we're managing our balance sheet and the discipline we've got. So we are prepared to leverage up to 2x if needed for the right deal. Obviously, we didn't with Randlab because of the really successful equity raise. And then on new product development, Jenny is going to give more details on how we're going to spend this. But we've talked, I think, for a while now about investing around 2% to 3% historically in R&D and the benchmark really to really grow your innovation pipeline is 5% 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 5 years. On the right-hand side, I just wanted to really highlight here how strong Animalcare has been in the past at delevering the balance sheet. And with Randlab, that deleverage profile will continue, probably get a bit stronger. And the reason we highlight is that the deleverage is really important to provide the capacity for another Randlab deal. So we're expecting to delever by about 0.5x per year. So we should be in net cash around 2027, subject to the M&A bolt-ons. And then at that time, hopefully, we'll be able to have the capacity to do another Randlab. So a very, very quick summary. As I said, really pleased with the year, strong set of results at a time of lots going on strategically. And then really, on the right-hand side, as you say, we've got a really strong balance sheet to execute further M&A and licensing deals going forward. So my summary, we're in a really, really good position from a financial perspective. I now hand back to Jenny.

Sorry, can you still hear me?

Yes. Got it now.

Yes, so I'm going to talk about building blocks for the future. And as Chris has said, the Companion Animal, Equine and Production Animals will continue to be a really important platform for us. And they're all growing, Equine more than the others. Randlab is a great opportunity. And where we really see our competitive strengths are on the relationships that we're building, the expertise that we're building in the commercial teams. And this will help for new product introductions. It will help for continuing to drive Daxocox and Plaqtiv. So we're really clear that that's just a very important part of our success. We're also strengthening partnerships and really getting -- for me, I think we're getting much better at understanding who to work with and how to make the most of those partnerships. 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 3 things that drive our growth strategy: making sure organic growth is at least at market level, and you heard from Chris that that's definitely the plan; inorganic growth, small over the next couple of years, and we keep talking about doing another Randlab in 3 years, slightly big one, not called Randlab, but doing something in 3 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. What I'm going to 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 Daxocox as an example, you can see here -- and you've seen earlier that the growth on Daxocox 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 Virbac 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 just ignoring that and then looking at the bars, which are our own markets, you can see that Spain is doing a great job. 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 U.K. are always a bit slower in uptake, but you can see them starting to build now. So that's our primary focus, to continue that 40% growth into the future. And actually, if we got all of the countries up to the level that Daxocox is in Spain, then we're pretty quickly on that way to the GBP 5 million to GBP 10 million that we state on the bottom right corner. So we're not just depending on that. We've done another few things around Daxocox to help build that franchise. The positioning of Daxocox is all around compliance 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 at the moment, this product is for chronic pain in osteoarthritis, and we've now submitted for approval in acute pain, so that expands the franchise. And then the other thing is, and I talked about Virbac, our partner previously, Virbac 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 Virbac. So this is an example of how we're focused on growing organically. So Daxocox clearly the biggest driver. Plaqtiv, we've got some opportunities that Chris mentioned. And so 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&A. And you've got used to us saying by now because I think we've all said it a few times that we won't do anything big in the short term, but we have got some bolt-on opportunities, a couple of million that would drive revenue and EBITDA or would bring products in on a license, which may be 18 months, 2 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 is probably put together 2 weeks ago. It will 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 we 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 confidentiality in place, and we're just walking through the detail. So you can see in our 3 areas that we're looking at for M&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. We're looking at brands that we could bring in that could launch in the next 18 months to 3 years. And so we've got 6 very active conversations, 4 of which are brands, 2 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 development is, of course, building on what we bought in terms of Randlab. And we always said there were 3 things that appeal to us about Randlab. The priority #1 was it's immediately accretive, great cash 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 Danilon, 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. Randlab are also doing their own product development focused on the Australia and New Zealand market. We're looking at those products to see whether we can also bring those into Europe. We're doing our own work with VHH antibodies, which I'll talk about in a minute. So one of the indications there is for horses. So we're working with the Randlab team to make sure that we could take those into Australia and 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 with some great people in the Randlab business. But also because Australia and New Zealand are really important acquire markets, having those as part of our company makes more attractive to people who want to partner because it means that we actually have sales and marketing resources in all of the big Equine markets. And Equine is very interlinked. It's the competition horses, the race horses. It's a very international kind of business. So I think that's really important. On the right-hand side, 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 2 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 Australia that we think would really work well putting them together with the Randlab business. So those 2 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 pre-submitted questions, there were quite a lot of conversations and questions about VHH antibodies. 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, 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 that everybody else has got. This is really making sure we invest our relatively limited resources in the right thing. And then in that middle 3 to 5 years. So we make a decision that's the point at which some spend starts. Usually, 3 to 5 years is 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 3 and 5 years until they're actually launchable. And 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. So in human, you do Phase I, II and III. In animal health, we generally just do one clinical study. So it shortens that 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 maybe 5 years' time and you think, oh, my God, you need to spend a significant amount of money, I would 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, you know that we did a deal with a Dutch company called Orthros. That's a license 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 still licensed from Orthros, 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 though controlled study. We know that they do what they're supposed to do. But they're really early stage. So there's probably 4 or 5 years to go still on these antibodies. Spend is 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 Orthros. But these are in effect. They're licensed to us. So those are really 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 GBP 50 million and GBP 100 million 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. So that's those ones. The next one along on our novel pain franchise. This is much more likely to get there. Famous last word, but more likely to get there. It's related to Daxocox. So we know a lot about these products. And these are in pain, and there'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. Daxocox expansion is here separate to the Virbac contract. So Virbac don't have a contract for all our countries. And we're just looking at the moment at North America and whether we can do something with Daxocox in North America. We'll know fairly quickly as to the FDA's view on it. And then the Randlab new product development. They have 4 products that they're developing. And I mentioned earlier, we're looking at those to see whether we can bring those to Europe. Those -- whilst they are on the right-hand side, they're relatively low cost. So they're not expensive development programs. So that's the way we think about it. That's where Orthros VHH 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 2 new products in ears and skin. We also should be -- well, we're launching the new strength of Daxocox. And we could, depending on regulatory time lines, start registering new indications. So we want to try and have new launches every year. It really helps to keep the portfolio fresh and compensate for things that undoubtedly will drop out. Just in terms of opportunity, it's somewhere -- if all of these come through, some would be at 5. Some would be at 10, 20, 30. If everything worked really well, it might be up to 100. So that's the way that we work with this portfolio. Okay. So that was really me coming to an end. Just to reiterate, 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 Equine 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. And our balance sheet and 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 hopefully, you get the feeling that Chris and I are going into -- or we've come in '25 with confidence. It's still there as we move towards the half year. And it's really exciting about the future. So that's the end of the formal presentation part, and we have time for Q&A.

[Operator Instructions] I'd like to remind you that recording of this presentation along with a copy of the slides and the published Q&A can be accessed via our Investor dashboard. As you can see, we 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.

Yes. I'm going to -- I've got 2 up in front of me that I'm going to address first. The first one I will address, which was, over the next 5 years, do you anticipate retiring to the south of France? Or are you hungry to keep building Animalcare? My Frenchies are calling. I won't go into the south of France, whatever, I'm sure. And actually, from my perspective, I think we've just got to the exciting point. 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 of France or retiring. So I'm very excited about the future. There was another relatively straightforward -- I'll give Chris all the difficult ones, but I'll answer the next one because it's easy. The China -- U.S. tariff question. So we have one product that we import from the U.S. It's about EUR 1 million in Germany, and that's the only exposure that we currently have identified, can identify. Now I always say that there might be some small excipient, but it will be small, buried in some products that we haven't yet found. But at the moment, we have very, very limited exposure to any tariff. Okay. So I'm just going to -- there's another question. Is the Chinese market an opportunity for the likes of Danilon, Orozyme, Plaqtiv and Daxocox? We currently don't have any marketing authorizations in China. That's a fairly strategic decision. It is very -- I was going to say difficult. It's not difficult doing business in China, and I come from a business that has lots of exposure in China, and there is -- there are some fantastic opportunities. We haven't exploited them at the moment simply because we want to make sure that if we do go into China, we go in 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. Okay. VHH antibody for horses move forward from here, expected time lines. I mean I think I did say I think it's probably 4 to 5 years still from launch. It will be a shorter regulatory profile because it's horses and 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 4 to 5 years. Chris, do you want to answer the AIM to main market question?

Yes. Okay. So yes, there was a question about moving the share listing from AIM to main market. 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. I'll pick up on the exposure to U.S.-China tariffs. Jenny has mentioned about the direct impact on there, which we feel is going to 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 where that's going to be. Where we stand now, I think the good news is that the -- so generally, a strengthening sterling is bad for us from a P&L translation perspective. 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. But the Australian dollar has weakened relative significantly against sterling. I think we assumed at the time of the deal a 1.95 and we're at 2.05. 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 will be at the half year 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 3 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 that kind of proportion being relatively similar or very similar to what the market has done. So if we look at the last 10 years, about 60% of growth in the animal health markets come from new products, whether it's innovations, new indications, et cetera. So if we class new products because typically you launch things like Daxocox, for example, that Jenny has told you and there's lots of things that we're doing with that in terms of territory expansions, et cetera, so we -- I think we'll be in line with that. But that will include Daxocox and Plaqtiv and new products, obviously, that either we're launching in '25, some of the ones that Jenny mentioned or later on. From an existing products in new markets, this is territory expansion. So we've got the partnership with Virbac for Daxocox outside the U.S. Obviously, Jenny has mentioned the U.S. potential there. So we'd estimate about half of that -- the remaining 40%, probably half will come from those existing products 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 2 to 3 years, obviously, we've said we're adding a capacity to do another Randlab, target of between GBP 5 million to GBP 10 million of additional revenue on top of organic growth there. So hopefully, that answers the question.