2005 Annual report - Virbac

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2005 Annual Report 2 A message from the Chairman Recovery expected and achieved The Virbac Group saw a 6% rise in sales, 4.9% pro forma at constant exchange rates, in line with growth in a global market driven by the recovery of the food producing animal segment, and with the companion animal segment continuing at very satisfactory levels. All major regions played a part in increasing sales, once again in line with global market trends. One of the most striking achievements during the year was the almost 2% rise in gross margin, the combined result of efforts made in a series of fields over a number of years; focusing on higher margin products, scaling back low margin business activities, improving industrial competitiveness and purchasing. Combined with tight controls on operating expenses, which rose slightly slower than sales, this improvement in the gross margin impacted the recurring operating profit which rose by close to two percent, from 8.4% to 10.3%. Net profit grew at a slightly slower pace as a result of the impairment of two Group intangible assets, added to the latest extraordinary charges in the US in the first half, whereas in the previous year extraordinary charges in the US, although higher, had been largely offset by the disposal of non-core assets. Another key item on the financial front, the high level of cash flow, combined with good inventory management and sustained investment levels, resulted in significant debt reduction cutting the net debt to equity ratio to 10%. Consistency and rigour in strategy implementation From a strategic perspective, Virbac’s growth model was strengthened in 2005. The diligent management of the pipeline of new research and development projects launched over the past few years is starting to bear fruit. Visibility on product launches in 2006 and subsequent years has improved. In addition to the strength in sales that has always been a mark of Virbac’s teams, they should enable the company to generate organic growth of on average close to 5% per annum. Some more exciting, though also more risky, projects together with some
3 Éric Marée Chairman of the Executive board of Virbac acquisitions should help boost this growth rate. A series of initiatives undertaken over the past two years to control costs and optimise their impact are continuing; the lean manufacturing project in French plants, which will subsequently be expanded to other sites, the systematic rolling out of the purchasing project, the project to optimise marketing and sales effectiveness in Europe, the gradual rollout to the whole Group of IT systems making it possible to improve the management of the company’s major processes. The most recent strategic initiative, announced at the very end of 2005, namely our proposal to buy the 40% of Virbac Corp. not held by the Group, obviously designed to definitively protect us from the risks associated with being listed on the US stock market, but also to avoid the costs, prohibitive for a small company, and above all to enable the implementation of a global strategy in all the company’s key functions. 2006, a transitional year for global expansion 2006 is expected to be a transitional year for the Group’s expansion. We expect the above-mentioned bid in the US to be accepted, but also the completion of the acquisition of the Glaxo veterinary business in India, a deal that will propel Virbac to leadership position in a market that is expected to grow significantly over the coming years and decades. Two deals affecting the Group’s medium-term growth, which we hope to speed up in America and in Asia. Independently of these planned acquisitions, we expect growth in 2006 to match, if not slightly exceed, that in 2005 and operating profitability in line with that in 2005 as a percentage of sales, since we intend to invest the expected operating gains in increasing R&D budgets, in particular in the US, to propel future growth.
Page 1 and 2: 2005 Annual report Passionate about
Page 3 and 4: Bringing our expertise and care to
Page 5: 1 Contents A message from the Chair
Page 9 and 10: 5 Breakdown of shareholders in term
Page 11 and 12: 7 In 2005, 30% of sales were genera
Page 13 and 14: 9 Cash flow (in € million) 39.9 2
Page 15 and 16: 11 • A new freeze-dryer with a ca
Page 17 and 18: 13 Finance and stock market Share p
Page 20 and 21: 2005 Annual Report 16 Innovation Mo
Page 22 and 23: 2005 Annual Report 18 The customer
Page 24 and 25: 20 2005 Annual Report The Virbac-Pa
Page 26 and 27: 2005 Annual Report 22 Industrial co
Page 28 and 29: 2005 Annual Report 24 Human resourc
Page 30: 2005 Annual Report 26
Page 33 and 34: 29 Management report 2005 Virbac sa
Page 35 and 36: 31 ❖ Equine Equine products close
Page 37 and 38: 33 ❖ In Portugal 2005 sales at Vi
Page 39 and 40: 35 Acquisitions and disposals Virba
Page 41 and 42: 37 Consolidated balance sheet and f
Page 43 and 44: 39 A resolution will be submitted f
Page 45 and 46: 41 - Member of the Management board
Page 47 and 48: 43 ◆ Investors and analysts are w
Page 49 and 50: 45 ◆ checking air emissions, ◆
Page 51 and 52: 47 Virbac in France Workforce Virba
Page 53 and 54: 49 Report of the Chairwoman of the
Page 55 and 56: 51 financial information, execution
Page 57 and 58:
53 This organisation, put in place
Page 59 and 60:
55 the recognition of transactions
Page 61 and 62:
57 The Industrial operations depart
Page 63 and 64:
59 Consolidated financial statement
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Page 67 and 68:
Page 69 and 70:
65 Translation of financial stateme
Page 71 and 72:
67 Inventories and work-in-progress
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69 In the case of exchange rate hed
Page 75 and 76:
71 Notes to the consolidated financ
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73 Property, plant and equipment by
Page 79 and 80:
75 Note B7 - Deferred income tax As
Page 81 and 82:
77 Note B12 - Employee benefits (
Page 83 and 84:
79 Note R1 - Sales Sales breakdown
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81 Note R6 - Breakdown of net incom
Page 87 and 88:
83 Note A4 - Composition of Virbac
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85 Note A10 - Consolidation scope a
Page 91 and 92:
87 Transition to IFRS Consolidated
Page 93 and 94:
89 Transition to IFRS LIABILITIES A
Page 95 and 96:
91 Transition to IFRS Breakdown of
Page 97 and 98:
93 Supervisory board report The Exe
Page 99 and 100:
95 As required by law, details of t
Page 101 and 102:
97 ❖ to record the finalisation o
Page 103 and 104:
99 Index Page 5 ◆ Shareholder str
Page 105:
Virbac 13 ème rue LID - BP 27 0651
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2005 Annual report - Virbac

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