2005 Annual report - Virbac

93
Supervisory board report
The Executive board presented to the Supervisory board, which approved them, the financial statements and management
report for the year ended 31 December 2005.
The Group’s consolidated sales increased by 6% to €372.4 million. At constant scope and exchange rates, the increase over
2004 would have been 4.9%. Operating profit from ordinary activities totalled €38.3 million (10.3% of sales), a significant
(29.1%) increase over 2004, due mainly to the improvement of nearly two points in the gross margin rate and to the fact that
operating costs rose at a slightly lower rate than sales. In addition, non-recurring expenses rose from €1.4 million in 2004 to
€6.2 million in 2005, composed mainly of the most recent non-recurring expenses of Virbac Corporation and impairment losses
in respect of the Group’s intangible assets.
The net profit of €19.8 million was 18.4% higher than in 2004.
Other financial developments included the continuing reduction in the Group’s ratio of net debt to shareholders’ equity, which
fell from 31% at the end of 2004 to 10% at the end of 2005. The Group thus has significant capacity to make major
acquisitions. Moreover, the purchase of Glaxo’s veterinary business in India is expected to take place in the first half of 2006. In
addition, the Group expects to launch a successful takeover bid to acquire all of the shares that it does not already own in its US
subsidiary Virbac Corporation.
As regards changes in the Group’s structure, in June 2005 Virbac SA acquired its main Greek distributor Zoforos, which, in six
months, generated €1.4 million of additional sales. In October 2005, the Group divested itself of the non-strategic assets of
MR Manufacturing and Packaging, an Australian company involved in the processing of human pharmaceutical products, which
posted sales of €3.7 million in 2005.
Also of note is the excellent performance of the share price, which closed at €39.8 at the end of 2005, representing a 52.5%
increase over the year in which the SBF 250 index increased by only 25.3%.
The General ordinary shareholders meeting will be asked to approve the payment of a dividend of €0.65 per share. In total, the
dividends per share paid for 2005 will be 18% higher than those for 2004.
The Supervisory board is currently composed of six members, of which three are independent. The Board met formally on six
occasions during the year, and on many other occasions for more informal work sessions. The Audit committee met three times
during the year and the Compensation committee met four times.
The Supervisory board once again expressed its complete confidence in the Executive board by renewing, on 16 December 2005,
its term of office for a further three years.
On 4 April 2006, Jeanine Dick, who had been Chairman of the Supervisory board since 1993, decided in her seventieth year to
hand over to Marie-Hélène Dick, who was already a member of the Board in her capacity as representative of Investec.
Marie-Hélène Dick was thus appointed Chairman and Jeanine Dick Vice-Chairman of the Supervisory board, the other members
remaining unchanged. We would like to thank Jeanine Dick for having, in her role as Chairman of the Board, promoted and
encouraged the Group’s development for more than 13 years.
Similarly, the Supervisory board would like to thank the members of the Executive board, Virbac’s managerial staff and all of its
employees worldwide for their continuing hard work, commitment and enthusiasm and the shareholders for their loyalty to the
Group.