Investor Update April 2020

Managing Director’s Message

Dear Apiam shareholders,

I thought it was an important time to provide a business update given the turbulence and challenges for many businesses and stock markets in recent times as we all adapt to a rapidly changing environment due to the global outbreak of COVID-19.

I would like to reassure shareholders that Apiam has delivered a very solid trading performance in the three months to 31 March 2020 (Q3 FY2020), and is on track to meet its guidance to deliver EBIT growth in the current second half of the 2020 financial year (vs H1 FY2020).

Revenue (unaudited) for Q3 2020 was $31.2m, 16.2% higher than Q3 2019.March YTD 2020 revenue of $87.4m was up 5.4% on the prior corresponding period. Gross Profit (unaudited) for Q3 2020 was $17.3m, up 29.5% on Q3 2019. March YTD 2020 gross profit of $47.5m rose 13.5% compared to a year earlier.

In particular, Q3 FY2020 was supported by a strong performance in March with growth being achieved across all of Apiam’s animal segments despite the broader global challenges. Underlying industry conditions in many of our regional areas improved due to recent rainfall and the benefits of Apiam’s growth-focused strategy and implementation of new business initiatives also made important contributions –particularly Zoono disinfectant product sales into the pig and poultry industry, the ProDairy consultancy program and our Best Mates program within the companion animal segment.

In relation to COVID-19, I can reassure you we are monitoring the situation closely and are keeping abreast of all developments in major markets. As an animal healthcare business, hygiene and health safety are a fundamental part of our business and Apiam’s highly trained veterinary practitioners and support teams are very experienced in managing the risk of infectious agents.

Nonetheless, we are preparing for future challenges that may evolve and carefully navigating new technologies and ways of doing business that put the safety of our customers, staff and the community at the forefront of what we do. I am proud of our team for quickly adapting to using new technology and initiatives aimed at protecting business and service continuity, such as TeleHealth for remote consultations where possible. This is a difficult time for many. To date, Apiam has been able to remain a resilient business that offers an essential and important health service to its customer’s animal base. We are in good shape financially and operationally and we believe we are well placed to weather the COVID-19 storm. Below, in this newsletter, you’ll find more detail on some of the initiatives I’ve outlined briefly above. Please do not hesitate to contact me via email at if you have any further questions about Apiam’s business. Regards,
Dr. Chris Richards
Managing Director

Strong demand for Apiam’s Zoono disinfectant products

In November 2019 Apiam executed an agreement with Zoono Animal Health for the exclusive distribution of ASX-listed Zoono Group’s proprietary sanisitiser and protectant technology for use in livestock facilities in Australia and for US-based swine customers. Apiam has recently extended its distribution footprint with an expansion of its US rights from swine to other livestock, poultry and the veterinary industry, in addition to new territories of Canada, New Zealand, Philippines and Vietnam, where it is working with existing distribution channels to bring the products to market.

Zoono produce an alternative to chemicals which both disinfects and provides ongoing mechanical activity for up to 30 days. The innovative technology has demonstrated effectiveness against a range of common bacteria and viruses including H1N1 influenza (prevalent in swine) and feline coronavirus. Recent tests in the United Kingdom have also shown effectiveness against this COVID-19 surrogate, which has led to Australia’s Therapeutic Goods Administration (TGA) approving Z-71 Microbe Shield as an effective disinfectant for hard surfaces against COVID-19. Both laboratory studies by Wageningen University & Research at Lelystad in The Netherlands and field trials in China have demonstrated high effectiveness of Z-71 Microbe Shield against African Swine Fever virus. Recent trials by Apiam in the USA under commercial conditions has demonstrated effectiveness in preventing porcine epidemic diarrhea (PED) outbreaks caused by the PED virus, a coronavirus, that causes high mortality in young pigs. These trials have been undertaken on several farms, where PED is endemic, and to date have not had any PED outbreaks across more than 10 nursery sites.

Interest in Z-71 Microbe Shield from the Philippines and Vietnam is strong given the large pig and poultry industries and current African Swine Fever (ASF) and highly pathogenic avian influenza (HPAI) outbreaks. Apiam stocks a range of Zoono disinfectant products including the Z-71 Microbe Shield Sanitiser and Protectant (which is applied to surfaces through fogging or spraying), and the Zoono body hand sanitiser which provides up to 24 hours protection against germs when applied to skin. In addition to the rapid uptake in the livestock and veterinary markets, in the current market environment both these products have experienced strong surges in customer enquiries for COVID-19 protection with orders taken for stock that will be delivered into April.

Apiam is also using its Zoono products as an important defense in its own business operations – whether it be out on customer farms in animal enclosures and office amenities, or in clinics to protect its customers, staff and the broader community.

Demand for Zoono products across Apiam’s customer base has increased significantly during Q3 FY2020 and management expect strong sales of Zoono products to continue into Q4 FY2020 and beyond.

Beyond the COVID-19 threat, Zoono products will continue to be an important defense against disease threats in agricultural industries, as part of biosecurity programs, in the prevention of diseases caused by endemic bacteria and viruses and in assisting in the prevention of infection by PEDv, African Swine Fever virus and other devastating pathogens in international markets.

Refer to the “In the Media” section for An article in the Weekly Times about Apiam’s Zoono disinfectant products.