Animalcare Grp Share Price (ANCR)

Animalcare has just gained EU regulatory approval for a potentially very lucrative drug (Daxocox) and has also concluded a distribution agreement with one of the world’s largest animal healthcare companies. Over 2020, it not only functioned fairly normally but it also reduced its net debt by £4.2m.

For a listed company that seems to be in the right place at the right time, Animalcare is keeping a very low profile. I just hope that it’s not being lined up for a takeover on the cheap.

Whether or not it’s the Terry Smith effect I'm unsure but Animalcare appears to be garnering more investor attention. In Smith’s 2021 letter to Fundsmith's shareholders, he noted that he believed that COVID accelerated several existing trends. And one point related to companion animals.

“Pets — which have become more important in isolation and when their owners are at home more”.

Only time will tell if increased pet ownership proves to be a fad or a trend. Nevertheless, Animalcare has shown itself to be a resilient performer during the lockdowns and has global exposure.

Just took a look at how identibase is viewed on Trustpilot. You appear to be quite right. There are many disgruntled customers and it's rated as poor. I noticed there was mention of "Technical issues which has caused a short term backlog". That appears to relate to a new website. But, in fairness to the company, it seems to have gone out of its way to address any failings. Examining its responses and it's providing answers to virtually all the questions that are being posed. It's not sending out a blanket reply. As an investor, I would rather it get on and confront its problems and that's what it seems to be doing. For sure, if this is a systemic issue that cannot be dealt with, then that's far more serious. But the problems they appear to have are at least being addressed.

As for issues raised in the audit for the year ended 31st December 2019. From what I can understand, a "Material uncertainty" was highlighted by the auditors post-period. That related to the company having to seek a waiver from its lenders should COVID-19 seriously hit its operations. But, as we can see from its recently released interim report, its trading position proved robust for the first half of 2020 and net debt only marginally increased to £18.1 million at 30th June 2020 (£17.8 million at 1st January 2020). According to the company, "As at 30 June 2020, all covenant requirements were met with significant headroom across all three measures". And, of course, it has resumed paying dividends. In my view, it does not give the impression of going bust.

Identibase website failure, lots of disgruntled vets, animal charities, individuals. Has it defaulted on its credit facilities yet, audit didn’t paint a good picture

Of course, it may not feed into Animalcare’s bottom line but I think that it’s, at least, worth considering. Rightmove produced a report on the UK housing market in June 2020. Amongst other things, the report sought to establish what buyers and renters were looking for from their next home: “Change to what they now want in their next home”. Access to or a bigger garden came out in front with some 63% of buyers and 59% of renters putting this as their prime consideration. In addition, some 22% of buyers and 29% of renters placed living in a pet-friendly home as their primary concern. Based upon this, I would suggest that pet ownership in the UK is likely to climb and so with it will the demand for veterinary products. The lockdown may have created similar trends in many other countries.

Incidentally, the demand for canine pets appears to have increased dramatically. And that has taken prices for these animals much higher. So presumably, owners will be looking at spending considerable amounts on vet bills. Having said that, with the prospect of mass unemployment, taking care of oneself may trump taking care of a pet. I still continue to hold the stock.