TIDMANCR
RNS Number : 2795M
Animalcare Group PLC
12 October 2016
Animalcare Group plc
("Animalcare", the "Company" or the "Group")
Final Results
Animalcare Group plc (AIM: ANCR), a leading supplier of
veterinary medicines, announces results for the year ended 30(th)
June 2016. Animalcare has performed well this year particularly
during the second half of the year and has built a strong and
scalable platform continuing the Company's record of consistent
growth and maintaining a progressive dividend policy.
Animalcare is made up of three product groups: Licensed
Veterinary Medicines, Companion Animal Identification and Animal
Welfare Products.
Financial Highlights
-- Revenue up 8.6% to GBP14.7m (2015: GBP13.5m)
-- Underlying* operating profit up 2.6% to GBP3.2m (2015: GBP3.1m)
-- Underlying* basic earnings per share up 3.2% to 13.0p (2015: 12.6p)
-- Reported pre-tax profits up 2.5% to GBP3.09m (2015: GBP3.01m)
-- Strong, debt free balance sheet with net cash of GBP7.1m (2015: GBP5.8m)
-- Cash generated from operations GBP4.6m (2015: GBP4.5m)
-- Total recommended dividend up 6.6% to 6.5p (2015: 6.1p)
*underlying measures are before the effect of exceptional costs
and other items
Operational Highlights
-- Robust increase in sales of Licensed Veterinary Medicines, up
7.7% to GBP9.2m (2015: GBP8.6m)
-- Revenue increase in the Companion Animal Identification
Group, up 16.1% to GBP2.7m (2015: GBP2.3m) including an incremental
benefit of GBP0.3m following the law making it compulsory for dogs
to be microchipped in England, Scotland and Wales
-- Revenues from the Animal Welfare Products range increased 5.1% to GBP2.78m (2015: GBP2.65m)
-- Strong momentum in building value within our product
development pipeline with planned investment increasing by 100% to
GBP1.6m
Iain Menneer, Chief Executive Officer of Animalcare, said: "I am
pleased with the progress we have made this year. The Group is
currently in a strong position and generating significant cash
flows. We will use this to invest in the business and are now in a
good position to step up our investment in products and wider
opportunities to provide the long-term success of the business. We
are well placed as a Group to deliver further growth in the year to
come and committed to return shareholder value."
This announcement contains inside information for the purposes
of Article 7 of Regulation (EU) No 596/2014.
Animalcare Group plc Tel: 01904 487 687
Iain Menneer, Chief Executive Officer
Chris Brewster, Chief Financial
Officer
Panmure Gordon (Nominated Adviser
and Broker)
Freddy Crossley/Peter Steel Tel: 0207 886 2500
Walbrook PR Ltd Tel: 020 7933 8780 or animalcare@walbrookpr.com
Paul McManus Mob: 07980 541 893
Lianne Cawthorne Mob: 07584 391 303
About Animalcare
Animalcare is a leading veterinary sales and marketing company
based in York with 63 employees including a sales team of 22
selling to veterinary practices around the United Kingdom.
Animalcare has developed a range of generic veterinary medicines
and animal identification products primarily to companion animal
veterinary markets.
Animalcare operates in three product areas:
-- Licensed Veterinary Medicines
-- Companion Animal Identification
-- Animal Welfare Products
For more information see: www.animalcaregroup.co.uk
Chairman's Statement
Animalcare has performed well during the financial year,
particularly during the second half, with growth from all three
product groups: Licensed Veterinary Medicines, Companion Animal
Identification, and Animal Welfare Products. The core medicines
group achieved increased sales of c.8.0% during the year.
Financial Trading
Group revenue increased by 8.6% from GBP13.5m to GBP14.7m. This
was achieved principally by increasing sales of Licensed Veterinary
Medicines both in the UK and Export markets by over GBP650,000
combined. Incremental revenue of approximately GBP300,000 was also
recognised from the introduction of compulsory microchipping in
dogs during April which benefited the second half performance.
Basic EPS increased from 12.1p to 12.5p. Cash generation has
remained strong, with year end cash increasing from GBP5.8m to
GBP7.1m. This has been achieved during a period of significant
investment in product development to GBP1.6m together with
recruiting more colleagues in all areas of the business to help
drive future growth.
People
These good results are testament to the strength of our Senior
Management Team which continues to flourish under the able
leadership of our CEO Iain Menneer. We have further strengthened
our product development, marketing, sales and distribution teams in
order to continue to grow your business in the future.
Product Development
Our European partners have more than filled the gap we had in
our development pipeline during this financial year. This allowed
your Company to increase sales of its generic drugs whilst we
continued with our own development programme. The first products
from our renewed development pipeline have been licensed and
launched in the year and we expect further launches over the
following two years.
Dividend
Given the strong cash generation during the financial year your
Board proposes to increase the final dividend to 4.7 pence per
share. With 1.8 pence paid as the interim dividend this takes the
total for the year to 6.5 pence per share representing growth of
c.7%. from 6.1 pence last year. This is well covered by both
increased earnings and cash flow and still leaves sufficient cash
to invest in our future growth.
Prospects
Given the pipeline from both our in-house product development
and that of our European Partners, plus a much improved export
business, your Board looks forward to continuing your Company's
record of consistent growth. This is being delivered by a stronger,
more capable management team and committed and hard-working
colleagues. I would like to personally thank them all for their
dedication and hard work to the success of your business.
James Lambert
Non-Executive Chairman
Chief Executive's Review
Introduction
I am very pleased with the progress we have made this year. Our
revenues have continued to grow, +8.6% to GBP14.7m (2015:
GBP13.5m). Our export strategy is already making early gains from
'low hanging fruit' with more to follow once product registrations
have been made in the various territories we serve.
We have been in an investment phase for almost three years now.
As expected the products from that investment are now starting to
flow from the development pipeline and, at the same time, our core
business continues to perform well in a tough commercial
environment. Projects further back in the development pipeline are
also progressing well in accordance with plan.
Our shareholders can be assured that our plans are on track and
we are confident they we will continue to deliver.
Momentum in the period has been supported by further work to
ensure the business has a strong platform for growth.
Business Review
Growth has come from all areas of the business.
Licensed Veterinary Medicines
The Licensed Veterinary Medicines group continued to grow
strongly in the financial year increasing by 7.7% to over GBP9.2m
(2015: GBP8.6m). In general the new products we have launched over
the last five years continue to gain market share and grow
revenues, while the older products in the final phases of their
product life cycles are being eroded by commercial pressures and by
substitution. However, five new pharmaceutical products were
launched on distribution late in the prior year. With no new
products to launch in this period this allowed us to focus on
consolidating our market position for these products; the combined
revenues of these five products increased by 2.62% to GBP0.95m
(2015: GBP0.26m).
Companion Animal Identification
Compulsory microchipping of dogs became law in England, Scotland
and Wales in April 2016. Not only is it a legal requirement for all
dogs over the age of eight weeks to be microchipped it is also
mandatory for the dog's keeper's name and contact details to be
registered on a DEFRA approved database. We did not experience any
uplift in microchip sales or database registrations until April
when we had an unprecedented surge in both. Through careful
planning and the considerable efforts of our staff and suppliers we
managed to supply all our veterinary customers and ensure all
registrations were fulfilled in a timely manner, unlike several of
our competitors.
It is too soon after the disruption to the market caused by this
legislative change to conclude the long-term impact, but we believe
there will be a lasting reduction in realised prices and microchip
volumes. This was predicted and so plans are in the advanced stage
to evolve our business models and market offering.
Animal Welfare Products
The Animal Welfare Product group grew again in the period with
an increase of 5.1% to GBP2.8m (2015: GBP2.6m). Our Infusion
Accessories range grew by almost 10% as a result of sales and
marketing focus and withdrawal of a modest competitor during the
year. The Hygiene Products range grew too as a result of renewed
focus following the launch of a new range of hard surface cleaners
in the period which increased by 12% to GBP0.67m.
Export
Martin Gore joined Animalcare on 1(st) July 2015 in the role of
Head of Export Development to focus on growing our product
distribution in existing and new territories in Europe as this had
underperformed in the past due to lack of focus. A year on, this
has proved to be a great success not only growing revenues of
existing products in existing territories but also sales of
existing over-the-counter veterinary medicines products in new
territories. This has resulted in export sales growth of almost 23%
on the prior period. Martin has signed distribution agreements for
some of our veterinary licensed products in territories well beyond
Europe. Being regulated products there will be a modest delay until
first sales while local licences are secured.
People
Animalcare, like any organisation, is only as good as its
employees. Therefore we have worked hard over the last three years
during our investment phase to make sure we have the right people
in the right roles to deliver our plan. We are well through this
process to ensure we have the necessary roles covered and have made
further important progress during the period. Underpinning the
changes we have made to our team was the introduction of a Talent
Management Programme which is a framework to make sure we recruit,
develop, reward and engage all our employees as best we can.
In addition to recruitment in export sales, we have further
strengthened our product development and registration team with
appointments in both areas. To reflect the evolution of the UK
veterinary customers towards consolidated corporate customers and
buying groups we have strengthened our sales team yet further with
experienced key account specialists now on the team.
We have conducted a review of our supply chain and identified
key areas to improve supplier performance and demand planning.
Consequently we have started to build a specialist supply chain
team late in the period.
Product Development
Three years ago we overhauled our product development activities
and embarked on a number of new projects. These projects were
expected to take approximately three years to reach commercial
launch. It is therefore very satisfying to see the successful
registration of three products in the period, right on target.
Two years ago Animalcare took the decision to move the contract
manufacture of its largest product, Aqupharm I.V. Fluids, away from
a global manufacturer to one better suited in terms of flexibility,
cost, size and culture. This was the largest development and
regulatory project tackled to date. I am pleased to report that the
project went smoothly and was fully implemented in H2 FY16 with no
product supply disruption or impact on our customers.
The impact of the contract manufacturing move detailed above
meant the loss of UK distribution rights for a general anaesthetic,
Isocare. We embarked on a project to register our own product. The
product was successfully registered in H2 and has since been
launched to the market, again with no disruption, in Q1 FY17.
Both these products were solely UK licensed so we took the
opportunity to extend the product authorisations to several
European territories.
Another product successfully registered in H2 was Acecare, a
premedicant to complement our extensive anaesthetic and analgesic
range. It is the first generic acepromazine on the UK veterinary
market.
In all we submitted five licence applications during the period,
a record number for Animalcare. Furthermore, during the period we
prepared, entirely in-house, Animalcare's first dossier submission
to the veterinary regulatory authorities. Until now we have relied
to a varying degree on external consultancies. This is a measure of
the level of experience and quality of personnel that now work in
the technical and regulatory team.
The further strengthening of our product development and
registration function gives us greater capacity to uncover novel
and more complex product opportunities by expanding our network. We
have a growing database of such ideas. We are also attracting more
distribution opportunities from a wider pool of animal health
companies, most from outside the UK.
Brexit
The referendum result in June 2016 will inevitably have an
impact on our business, although the extent of this is, of course,
still unclear. The timing of the result allowed us to put plans in
place to incorporate the initial currency instability into our new
financial year and we will continue to monitor the situation and
take necessary and available action.
The encouraging early progress of our sales in territories
outside Europe will go some way to diversifying our markets in the
short-term. The launch of products will take one to two years to
materialise due to the various pharmaceutical regulatory
requirements in place.
Subsequent changes to the European pharmaceutical regulatory
framework are of course currently unknown but we will monitor this
closely and put plans in place to protect our business.
Summary and Outlook
I am confident that we have built a strong and scalable platform
in the business. We will continue to focus hard on our in-house
development pipeline and our efforts to source novel products. The
strong progress made on our distribution territory expansion will
be cemented and we will make further progress with regulatory
registrations through the year. We recognise that it is vital for
the future of the business that we identify the right products and
invest in novel products. Animalcare will continue to be active on
this key strategic front.
Whilst the animal health industry evolves with customer
consolidations and supplier M&A we have shown that we can
continue to grow organically through launching new products and
providing a superior service to our customers.
With the first products successfully through our development
pipeline we will start to see early revenue growth with more
significant impact in subsequent periods. More product
registrations are expected in the current period.
In summary, Animalcare is in good health, generating strong cash
flows to invest in the business and at such a rate that we are in a
position to step up our investment in products and wider
opportunities to provide the long-term success of the business.
Iain Menneer
Chief Executive Officer
Chief Financial Officer's review
Presentation of Results
We present our financial results on two bases. Underlying
results show the performance of the business before exceptional and
other items since the Directors believe this provides a clearer
understanding of business performance. IFRS results include these
items to give the statutory results.
Overview of Financial Results
The Group has delivered another year of strong top line growth
whilst we continue to invest in our business. Underlying operating
profit increased by 2.6% compared with previous year to GBP3.2m,
slightly ahead of recently revised market forecasts of GBP3.1m.
We have maintained sound financial discipline and our balance
sheet strength continues to build, reflecting the cash generative
nature of our operations. Group cash balances increased to GBP7.1m
as at 30(th) June 2016 providing the business with the funds we
need to continue the momentum of our product development pipeline
and support future growth.
Revenue
GBP'000 2016 2015 % change
-------------------------------- ------ ------ --------
Licensed Veterinary Medicines 9,238 8,579 7.7%
Companion Animal Identification 2,680 2,309 16.1%
Animal Welfare Products 2,783 2,648 5.1%
-------------------------------- ------ ------ --------
Total Revenue 14,701 13,536 8.6%
-------------------------------- ------ ------ --------
Revenue increased by 8.6% to GBP14.7m (2015: GBP13.5m) driven by
growth in the UK of 7.2% and outside the UK of 25.8%. As a result
export revenues contributed 8.2% (2015: 7.1%) of Group
revenues.
The Licensed Veterinary Medicines group, which represents 63% of
total revenue, continued its strong track record of growth, with
sales up 7.7% to GBP9.2m, primarily reflecting full year sales of
new products launched during FY15 which increased by GBP0.7m.
Like-for-like sales declined by 0.3% with growth in our export
business offsetting the prior year UK c.GBP0.2m non-recurring first
half benefit from sales of Buprecare in the UK as a result of
supply issues with a competitor.
Companion Animal Identification sales increased by 16.1%.
Legislation has been implemented making it compulsory to microchip
dogs in the UK from April 2016 resulting in an incremental sales
benefit of c.GBP0.3m. Price competition amongst suppliers has
adversely impacted gross margins as noted below.
Our Animal Welfare Products group grew by 5.1% driven by our
growing Infusion Accessories range, which represents around 56% of
the GBP2.8m sales.
The financial performance of each product group is reviewed in
more detail within the Business Review section of the Chief
Executive's Review.
Gross Profit
2016 2015 % change
----------------------- ----- ----- ---------
Gross Profit (GBP'000) 7,999 7,573 5.6%
----------------------- ----- ----- ---------
Gross Margin (%) 54.4% 56.0% (1.6ppts)
----------------------- ----- ----- ---------
The strong sales performance led to gross profit increasing by
5.6% on prior year to GBP8.0m however our gross margin decreased
from 56.0% to 54.4%. Microchip pricing was particularly competitive
throughout the majority of the financial year in the run up to
compulsory microchipping. Within our Licensed Veterinary Medicines
group, overall gross margin has remained consistent with prior
year.
We anticipate gross margins to improve across the business
during FY17 through a combination of favourable sales mix and cost
of goods initiatives.
Operating Results
GBP'000 2016 2015 % change
---------------------------- ----- ----- ---------
Underlying operating profit 3,190 3,110 2.6%
Exceptional and other items (173) (110)
---------------------------- ----- ----- ---------
Reported operating profit 3,017 3,000 0.6%
Operating margin % 20.5% 22.2% (1.7ppts)
Reported Profit after tax 2,634 2,534 4.0%
---------------------------- ----- ----- ---------
Basic Underlying EPS (p) 13.0 12.6 3.2%
Basic EPS (p) 12.5 12.1 3.3%
---------------------------- ----- ----- ---------
Underlying operating profit increased by 2.6% to GBP3.2m and our
operating margin reduced by 170 basis points to 20.5%, the latter
reflecting the continuing investment in our business, in particular
our people for which employee costs increased by GBP0.3m, to
position the business for future growth.
Exceptional and other items principally incorporate the
amortisation of acquired intangibles as detailed in note 4.
Our effective tax rate has reduced from 15.8% to 14.6% as a
result of the significant increase in product development
investment on which research and development tax credits are
claimed for qualifying expenditure.
Reflecting all of the above, reported profit after tax was up
4.0% to GBP2.6m (2015: GBP2.5m).
Basic underlying EPS improved by 3.2% to 13.0 pence (2015: 12.6
pence). Basic EPS, which incorporates non-underlying items, rose by
approximately the same amount to 12.5 pence (2015: 12.1 pence).
Dividends
The Board is proposing a final dividend in respect of the year
of 4.7 pence per share, giving a total dividend of 6.5 pence per
share for 2016 (2015: 6.1 pence per share). This final dividend is
subject to shareholder approval at the Annual General Meeting on
15(th) November 2016 and will be paid on 25(th) November 2016 to
shareholders on the register at the close of business on 21(st)
October 2016. The ordinary shares will become ex-dividend on 20(th)
October 2016.
The Board will continue to monitor the Group's cash position to
ensure an appropriate balance between investment for future growth
and dividend flow to deliver overall value for our
shareholders.
Cash Flow
The Group cash position grew by GBP1.3m to GBP7.1m as at 30(th)
June 2016, with the business continuing to generate strong levels
of operating cash. We maintain focus on robust working capital
management however expect a net investment within working capital
during FY17 to support growth.
The strong momentum in building value within our product
development pipeline continues, with planned investment
substantially increasing as shown in the chart, which can be viewed
using the link below:
http://www.rns-pdf.londonstockexchange.com/rns/2795M_-2016-10-11.pdf
Summary and Outlook
Whilst the decision by the people of the UK to leave the EU has
not as yet resulted in any current legal or regulatory change, it
is clear there are immediate secondary effects of this decision, in
particular political and economic uncertainty, as well as
significant exchange rate volatility. Nevertheless, as yet we have
not observed major disruption to our operating activities and our
strategic objectives remain at this present time unchanged - we
will continue to invest in our business for future growth. Sterling
weakness has impacted on our costs of goods, in particular our
pharmaceutical products imported from mainland Europe. The business
is taking steps to mitigate certain of this exposure and the growth
in our export business will provide some natural hedge. Our strong
balance sheet will help absorb the uncertainty in the macroeconomic
environment.
Overall the Group continues to make good progress in executing
its strategy to drive future growth, which is reflected in our
financial performance and level of investment in the business.
Chris Brewster
Chief Financial Officer
Consolidated Statement of profit and loss and Comprehensive
Income
Year ended 30 June 2016
Underlying
results Underlying
before results before
exceptional Exceptional exceptional Exceptional
and and and and
other items other items Total other items other items Total
2016 2016 2016 2015 2015 2015
Note GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------------------------------- ---- ------------ ------------ -------- --------------- ------------ --------
Revenue 5 14,701 - 14,701 13,536 - 13,536
Cost of sales (6,702) - (6,702) (5,963) - (5,963)
--------------------------------- ---- ------------ ------------ -------- --------------- ------------ --------
Gross profit 7,999 - 7,999 7,573 - 7,573
Distribution costs (255) - (255) (279) - (279)
Administrative expenses (4,398) (173) (4,571) (4,041) (110) (4,151)
Research & development
expenses (156) - (156) (143) - (143)
--------------------------------- ---- ------------ ------------ -------- --------------- ------------ --------
Operating profit/(loss) 4,6 3,190 (173) 3,017 3,110 (110) 3,000
Finance income 9 33 36 69 27 - 27
Finance expense 9 - - - - (17) (17)
--------------------------------- ---- ------------ ------------ -------- --------------- ------------ --------
Profit/(loss) before tax 4,6 3,223 (137) 3,086 3,137 (127) 3,010
Income tax (expense)/credit 10 (479) 27 (452) (502) 26 (476)
--------------------------------- ---- ------------ ------------ -------- --------------- ------------ --------
Total comprehensive income/(loss)
for the year 2,744 (110) 2,634 2,635 (101) 2,534
--------------------------------- ---- ------------ ------------ -------- --------------- ------------ --------
Earnings per share
Basic 12 13.0p 12.5p 12.6p 12.1p
Fully diluted 12 12.8p 12.3p 12.5p 12.0p
In order to aid understanding of underlying business
performance, the Directors have presented underlying results before
the effect of exceptional and other items. These exceptional and
other items are analysed in detail in note 4 to these financial
statements.
Total comprehensive income/(loss) for the year is attributable
to the equity holders of the parent.
The notes 1 to 26 form part of these financial statements.
Statements of Changes in Shareholders' Equity
Year ended 30 June 2016
Share Share Retained
capital premium account earnings Total
Group Note GBP'000 GBP'000 GBP'000 GBP'000
----------------------------------------- ---- -------- ---------------- --------- --------
Balance at 1(st) July 2014 4,192 6,391 8,870 19,453
Total comprehensive profit for the year - - 2,534 2,534
Transactions with owners of the Company,
recognised in equity:
Dividends paid 11 - - (1,217) (1,217)
Issue of share capital 23 12 70 - 82
Share-based payments 25 - - 139 139
----------------------------------------- ---- -------- ---------------- --------- --------
Balance at 1(st) July 2015 4,204 6,461 10,326 20,991
Total comprehensive profit for the year - - 2,634 2,634
Transactions with owners of the Company,
recognised in equity:
Dividends paid 11 - - (1,283) (1,283)
Issue of share capital 23 8 45 - 53
Share-based payments 25 - - 120 120
----------------------------------------- ---- -------- ---------------- --------- --------
Balance at 30(th) June 2016 4,212 6,506 11,797 22,515
----------------------------------------- ---- -------- ---------------- --------- --------
Share Share Retained
capital premium account earnings Total
Company Note GBP'000 GBP'000 GBP'000 GBP'000
----------------------------------------- ---- -------- ---------------- --------- --------
Balance at 1(st) July 2014 4,192 6,391 3,548 14,131
Total comprehensive profit for the
year - - (327) (327)
Transactions with owners of the Company,
recognised in equity:
Dividends paid 11 - - (1,217) (1,217)
Issue of share capital 23 12 70 - 82
Share-based payments 25 - - 74 74
----------------------------------------- ---- -------- ---------------- --------- --------
Balance at 1(st) July 2015 4,204 6,461 2,078 12,743
Total comprehensive loss for the year - - (399) (399)
Transactions with owners of the Company,
recognised in equity:
Dividends paid 11 - - (1,283) (1,283)
Issue of share capital 23 8 45 - 53
Share-based payments 25 - - 47 47
----------------------------------------- ---- -------- ---------------- --------- --------
Balance at 30(th) June 2016 4,212 6,506 443 11,161
----------------------------------------- ---- -------- ---------------- --------- --------
As permitted by section 408 of the Companies Act 2006, the
statement of comprehensive income of the parent Company is not
presented as part of these financial statements.
Balance Sheets
Year ended 30 June 2016
Group Company
2016 2015 2016 2015
Note GBP'000 GBP'000 GBP'000 GBP'000
----------------------------------------- ---- -------- -------- -------- --------
Non-current assets
Goodwill 13 12,711 12,711 - -
Other intangible assets 14 2,968 1,780 4 6
Property, plant and equipment 15 281 306 - -
Investments in subsidiary companies 16 - - 14,361 14,361
Deferred tax asset 22 - - 105 88
----------------------------------------- ---- -------- -------- -------- --------
15,960 14,797 14,470 14,455
----------------------------------------- ---- -------- -------- -------- --------
Current assets
Inventories 17 1,604 1,653 - -
Trade and other receivables 18 2,189 2,247 332 238
Cash and cash equivalents 18 7,118 5,777 1,576 1,576
----------------------------------------- ---- -------- -------- -------- --------
10,911 9,677 1,908 1,814
----------------------------------------- ---- -------- -------- -------- --------
Total assets 26,871 24,474 16,378 16,269
----------------------------------------- ---- -------- -------- -------- --------
Current liabilities
Trade and other payables 19 (3,027) (2,186) (5,217) (3,526)
Current tax liabilities (101) (212) - -
Deferred income 21 (220) (234) - -
----------------------------------------- ---- -------- -------- -------- --------
(3,348) (2,632) (5217) (3,526)
----------------------------------------- ---- -------- -------- -------- --------
Net current assets/(liabilities) 7,563 7,045 (3,309) (1,712)
----------------------------------------- ---- -------- -------- -------- --------
Non-current liabilities
Deferred income 21 (762) (724) - -
Deferred tax liabilities 22 (246) (127) - -
----------------------------------------- ---- -------- -------- -------- --------
(1,008) (851) - -
----------------------------------------- ---- -------- -------- -------- --------
Total liabilities (4,356) (3,483) (5217) (3,526)
----------------------------------------- ---- -------- -------- -------- --------
Net assets 22,515 20,991 11,161 12,743
----------------------------------------- ---- -------- -------- -------- --------
Capital and reserves
Called up share capital 23 4,212 4,204 4,212 4,204
Share premium account 6,506 6,461 6,506 6,461
Retained earnings 11,797 10,326 443 2,078
----------------------------------------- ---- -------- -------- -------- --------
Equity attributable to equity holders of
the parent 22,515 20,991 11,161 12,743
----------------------------------------- ---- -------- -------- -------- --------
Cash Flow Statements
Year ended 30 June 2016
Group Company
2016 2015 2016 2015
Note GBP'000 GBP'000 GBP'000 GBP'000
---------------------------------------------- ---- -------- -------- -------- --------
Comprehensive income/(loss) for the year
before tax 3,086 3,010 (507) (464)
Adjustments for:
Depreciation of property, plant and equipment 15 66 73 - -
Amortisation of intangible assets 14 369 359 2 1
Finance income 9 (33) (27) (11) (15)
Share-based payment expense 25 120 139 47 74
Net deferral/(release) of deferred income 21 24 (14) - -
---------------------------------------------- ---- -------- -------- -------- --------
Operating cash flows before movements in
working capital 3,632 3,540 (469) (404)
Decrease in inventories 49 767 - -
Decrease/(increase) in receivables 77 (392) (3) (6)
Increase in payables 822 608 1,691 1,798
---------------------------------------------- ---- -------- -------- -------- --------
Cash generated by operations 4,580 4,523 1,219 1,388
Income taxes (paid)/received (444) (631) - -
---------------------------------------------- ---- -------- -------- -------- --------
Net cash flow from operating activities 4,136 3,892 1,219 1,388
---------------------------------------------- ---- -------- -------- -------- --------
Investing activities:
Payments to acquire intangible assets 14 (1,604) (812) - (7)
Payments to acquire property, plant and
equipment 15 (41) (7) - -
Disposal of intangible assets 14 47 - - -
Interest received 33 27 11 15
---------------------------------------------- ---- -------- -------- -------- --------
Net cash (used in)/generated by investing
activities (1,565) (792) 11 8
---------------------------------------------- ---- -------- -------- -------- --------
Financing:
Receipts from issue of share capital 53 82 53 82
Equity dividends paid 11 (1,283) (1,217) (1,283) (1,217)
---------------------------------------------- ---- -------- -------- -------- --------
Net cash used in financing activities (1,230) (1,135) (1,230) (1,135)
---------------------------------------------- ---- -------- -------- -------- --------
Net increase/(decrease) in cash and cash
equivalents 1,341 1,965 - 261
Cash and cash equivalents at start of year 5,777 3,812 1,576 1,315
---------------------------------------------- ---- -------- -------- -------- --------
Cash and cash equivalents at end of year 7,118 5,777 1,576 1,576
---------------------------------------------- ---- -------- -------- -------- --------
Comprising:
Cash and cash equivalents 18 7,118 5,777 1,576 1,576
---------------------------------------------- ---- -------- -------- -------- --------
Notes to the Accounts
Year ended 30 June 2016
1. General Information
Animalcare Group plc ("the Company") is a company incorporated
in England and Wales under the Companies Act 2006 and is domiciled
in the United Kingdom. The Group comprises Animalcare Group plc and
its subsidiary, Animalcare Ltd. The nature of the Group's
operations and its principal activities are set out in note 5 and
within the Directors' Report.
New, revised or changes to existing accounting standards
The following standards and amendments have been published,
endorsed by the EU, with an effective date after the date of these
financial statements. Their adoption, where applicable, is not
expected to have a material effect on the financial statements of
the Group unless otherwise indicated.
International Financial Reporting Standards Applies to periods beginning after
IFRS 15 Revenue from Contracts with
Customers 1(st) January 2018
IFRS 9 Financial Instruments 1(st) January 2018
IFRS 16 Leases - this new standard
will result in previously recognised
operating leases, as disclosed in note
24, being treated on-balance sheet
similar to current finance lease accounting. 1(st) January 2019
2. Significant Accounting Policies
Basis of preparation
The Group and Company financial statements have been prepared
and approved by the Directors under the historical cost convention,
except for the revaluation of certain financial instruments, in
accordance with International Financial Reporting Standards
("IFRS") as adopted by the European Union ("adopted IFRSs") and the
Companies Act 2006 as applicable to companies reporting under IFRS.
They have also been prepared in accordance with the requirements of
the AIM Rules.
This announcement has been prepared based on accounting policies
which are consistent with those described in the Annual Report for
the year ended 30 June 2015. Whilst the financial information
included in this preliminary announcement has been computed in
accordance with IFRS as adopted by the European Union, this
announcement does not itself contain sufficient information to
comply with IFRS. The Company expects to publish full financial
statements before the end of October 2016.
The financial information set out above does not constitute the
Company's statutory accounts for the years ended 30 June 2016 or
2015 but is derived from the 2016 accounts. Statutory accounts for
2015 have been delivered to the Registrar of Companies and those
for 2016 will be delivered in due course. The Auditor has reported
on those accounts; the report was (i) unqualified, (ii) did not
include references to any matters to which the Auditor drew
attention by way of emphasis without qualifying the reports and
(iii) did not contain statements under section 498(2) or (3) of the
Companies Act 2006.
Going concern
An analysis of the factors likely to impact on the Group's
future business activities, performance and strategy are set out in
the Chief Executive's Review and Chief Financial Officer's
Review.
For the purposes of their assessment of the appropriateness of
the preparation of the Group's accounts on a going concern basis,
the Directors have considered the current cash position and
forecasts of future trading including working capital and
investment requirements.
During the year the Group met its day-to-day general corporate
and working capital requirements through existing cash resources.
At 30(th) June 2016 the Group had cash on hand of GBP7.1m (30(th)
June 2015: GBP5.8m).
Overall, the Directors believe the Group is well placed to
manage its business risks successfully. The Group's forecasts and
projections, taking account of reasonable possible changes in
trading performance, show that the Group should have sufficient
cash resources to meet its requirements for at least the next 12
months. Accordingly, the adoption of the going concern basis in
preparing the financial statements remains appropriate.
Basis of consolidation
The consolidated financial statements incorporate the financial
statements of the Company and the entity controlled by the Company
(its subsidiary) made up to 30(th) June each year. The Group
controls an entity when it is exposed to, or has rights to,
variable returns from its involvement with the entity and has the
ability to affect those returns through its power over the
entity.
The results of a subsidiary acquired or disposed of during the
year are included in the consolidated statement of comprehensive
income from the effective date of acquisition or up to the
effective date of disposal, as appropriate.
Where necessary, adjustments are made to the financial
statements of the subsidiary to bring the accounting policies used
into line with those used by the Group.
All intra-Group transactions, balances, income and expenses are
eliminated on consolidation.
Exceptional and other items
Exceptional items are material items of income or expense which,
because of their nature and the expected frequency of the events
giving rise to them, merit separate disclosure.
Other items relate to the amortisation of acquired intangible
assets and fair value movements on foreign exchange hedging
instruments.
The separate presentation of exceptional and other items enables
the users of the accounts to better understand the elements of
trading performance during the year and hence to better assess
trends in that performance.
Goodwill
Goodwill arising on consolidation represents the excess of the
cost of acquisition over the Group's interest in the fair value of
the identifiable assets and liabilities of a subsidiary, associate
or jointly controlled entity at the date of acquisition. Goodwill
is initially recognised as an asset at cost and is subsequently
measured at cost less any accumulated impairment losses. Goodwill
which is recognised as an asset is reviewed for impairment at least
annually. Any impairment is recognised immediately in comprehensive
income and is not subsequently reversed.
For the purpose of impairment testing, goodwill is allocated to
each of the Group's cash-generating units ("CGUs") expected to
benefit from the synergies of the combination. CGUs to which
goodwill has been allocated are tested for impairment annually, or
more frequently when there is an indication that the CGU may be
impaired. If the recoverable amount of the CGU is less than its
carrying amount, the impairment loss is allocated first to reduce
the carrying amount of any goodwill allocated to the unit and then
to the other assets of the CGU pro rata on the basis of the
carrying amount of each asset in the CGU. An impairment loss
recognised for goodwill is not reversed in a subsequent period.
On disposal of a subsidiary, associate or jointly controlled
entity, the attributable amount of goodwill is included in the
determination of the profit or loss on disposal.
Intangible assets
The Group recognises intangible assets at cost less accumulated
amortisation and impairment losses. Intangible assets arise both as
a result of applying IFRS 3 which requires the separate recognition
of intangible assets from goodwill on all business combinations
from 1(st) January 2004, and from the purchase of software (that is
separable from any associated hardware), and development machinery
and from research and development (see below).
Intangible assets are amortised on a straight-line basis over
their useful economic lives as follows:
Customer relationships 10 years
Brands 15 years
Software Estimated useful life, normally 2-4
years
New product development costs & Estimated economic life, normally
marketing authorisations 5-7 years
Research and development costs
Expenditure on research activities, undertaken with the prospect
of gaining new scientific or technical knowledge and understanding,
is recognised as an expense in the year in which it is
incurred.
An internally generated intangible asset arising from the
Group's new product development is recognised only if all of the
following conditions are met:
-- an asset is created that can be identified (such as a new pharmaceutical product);
-- it is probable that the asset created will generate future economic benefits; and
-- the development cost of the asset can be measured reliably.
Internally generated intangible assets are amortised on a
straight-line basis over their estimated economic lives. Where no
internally generated intangible asset can be recognised,
development expenditure is recognised as an expense in the year in
which it is incurred.
Revenue recognition
Revenue is measured at the fair value of the consideration
received or receivable and represents amounts receivable for goods
and services provided in the normal course of business, net of
discounts, VAT and other sales related taxes.
Revenue from the sale of goods is recognised when the risks and
rewards of ownership are transferred which is generally when goods
are delivered.
Income received in relation to long-term service contracts is
deferred and subsequently recognised over the life of the relevant
contracts. Further details are contained in note 21.
Leasing
Leases are classified as finance leases whenever the terms of
the lease transfer substantially all the risks and rewards of
ownership to the lessee. All other leases are classified as
operating leases.
The Group as lessee
Rentals payable under operating leases are charged to income on
a straight-line basis over the term of the relevant lease.
Employee benefits - Pensions
The Group operates a stakeholder pension scheme available to all
eligible employees. Payments to this scheme are charged as an
expense as they fall due.
Investments in subsidiaries
Investments in Group companies are stated at cost less
provisions for impairment losses.
Foreign currencies
In preparing the financial statements of the individual
companies, transactions in currencies other than the entity's
functional currency (foreign currencies) are recorded at the rates
of exchange prevailing on the dates of the transactions. At each
balance sheet date, monetary assets and liabilities that are
denominated in foreign currencies are retranslated at the rates
prevailing on the balance sheet date. Non-monetary items carried at
fair value that are denominated in foreign currencies are
translated at the rates prevailing at the date when the fair value
was determined. Non-monetary items that are measured in terms of
historical cost in a foreign currency are not retranslated.
Exchange differences arising on the settlement of monetary
items, and on the retranslation of monetary items, are included in
comprehensive income for the year.
Segment reporting
An operating segment is a component of the Group that engages in
business activities from which it may earn revenues and incur
expenses, including revenues and expenses that relate to
transaction with any of the Group's other components. An operating
segment's operating results are reviewed regularly by the Board to
make decisions about resources to be allocated to the segment and
assess its performance, and for which discrete financial
information is available.
Inventories
Inventories are stated at the lower of cost and net realisable
value. Cost comprises direct materials and where applicable, direct
labour costs and those overheads that have been incurred in
bringing the inventories to their present location and condition.
Cost is calculated using the first-in, first-out principle. Net
realisable value represents the estimated selling price less all
estimated costs of completion and costs to be incurred in
marketing, selling and distribution.
Dividends
Dividends paid are recognised within the statement of changes in
equity only when an obligation to pay the dividend arises prior to
the year end.
Share-based payments
The Group issues equity-settled share-based payments to certain
employees. Equity-settled share-based payments are measured at fair
value (excluding the effect of non market-based vesting conditions)
at the date of grant. The fair value determined at the grant date
of such equity-settled share-based payments is expensed on a
straight-line basis over the vesting period, based on the Group's
estimate of shares that will eventually vest and adjusted for the
effect of non market-based vesting conditions (with a corresponding
movement in equity).
Fair value is measured by use of the Black-Scholes model. The
expected life used in the model has been adjusted, based on
management's best estimate, for the effects of non-transferability,
exercise restrictions, and behavioural considerations.
The fair value of the shares issued under the new Long Term
Incentive Plan were valued on a discounted cash flow basis in
conjunction with a third party valuation specialist.
Taxation
The tax expense represents the sum of the tax currently payable
and deferred tax.
The tax currently payable is based on taxable profit for the
year. Taxable profit differs from net profit as reported in the
statement of comprehensive income because it excludes items of
income or expense that are taxable or deductible in other years and
it further excludes items that are never taxable or deductible. The
Group's liability for current tax is calculated using tax rates
that have been enacted or substantively enacted by the balance
sheet date.
Deferred tax is the tax expected to be payable or recoverable on
differences between the carrying amounts of assets and liabilities
in the financial statements and the corresponding tax bases used in
the computation of taxable profit, and is accounted for using the
balance sheet liability method. Deferred tax liabilities are
generally recognised for all taxable temporary differences and
deferred tax assets are recognised to the extent that it is
probable that taxable profits will be available against which
deductible temporary differences can be utilised. Such assets and
liabilities are not recognised if the temporary difference arises
from the initial recognition of goodwill or from the initial
recognition (other than in a business combination) of other assets
and liabilities in a transaction that affects neither the tax
profit nor the accounting profit.
The carrying amount of deferred tax assets is reviewed at each
balance sheet date and reduced to the extent that it is no longer
probable that sufficient taxable profits will be available to allow
all or part of the asset to be recovered.
Deferred tax is calculated at the tax rates that are expected to
apply in the period when the liability is settled or the asset is
realised. Deferred tax is charged or credited in the statement of
comprehensive income, except when it relates to items charged or
credited directly to equity, in which case the deferred tax is also
dealt with in equity.
Deferred tax assets and liabilities are offset when there is a
legally enforceable right to set off current tax assets against
current tax liabilities and when they relate to income taxes levied
by the same taxation authority and the Group intends to settle its
current tax assets and liabilities on a net basis.
Property, plant and equipment
Land and buildings and other assets held for use in the
production or supply of goods and services or for administrative
purposes, fixtures and equipment are stated at cost less
accumulated depreciation and any recognised impairment loss.
Other than for land, which is not depreciated, depreciation is
charged so as to write off the cost of assets, less their estimated
residual value, over their estimated useful lives, as follows:
Straight-line
Leasehold improvements 10 years
Plant and equipment 4-7 years
Office furniture and equipment 3-5 years
The gain or loss arising on the disposal or retirement of an
asset is determined as the difference between the net sales
proceeds and the carrying amount of the asset and is recognised in
the statement of comprehensive income as incurred.
Provisions
Provisions are recognised when the Group has a present
obligation as a result of a past event, and it is probable that the
Group will be required to settle that obligation. Provisions are
measured at the Directors' best estimate of the expenditure
required to settle the obligation outstanding at the balance sheet
date, and are discounted to present value where the effect is
material.
Impairment of tangible and intangible assets excluding
goodwill
At each balance sheet date, the Group reviews the carrying
amounts of its tangible and intangible assets to determine whether
there is any indication that those assets have suffered an
impairment loss. If any such indication exists, the recoverable
amount of the asset is estimated in order to determine the extent
of the impairment loss (if any). Where the asset does not generate
cash flows that are independent from other assets, the Group
estimates the recoverable amount of the cash-generating unit (CGU)
to which the asset belongs. An intangible asset with an indefinite
useful life is tested for impairment annually and whenever there is
an indication that the asset may be impaired.
Recoverable amount is the higher of fair value less costs to
sell and value in use. In assessing value in use, the estimated
future cash flows are discounted to their present value using a
pre-tax discount rate that reflects current market assessments of
the time value of money and the risks specific to the asset for
which the estimates of future cash flows have not been
adjusted.
If the recoverable amount of an asset (CGU) is estimated to be
less than its carrying amount, the carrying amount of the asset
(CGU) is reduced to its recoverable amount. An impairment loss is
recognised as an expense immediately.
Where an impairment loss subsequently reverses, the carrying
amount of the asset (CGU) is increased to the revised estimate of
its recoverable amount, but so that the increased carrying amount
does not exceed the carrying amount that would have been determined
had no impairment loss been recognised for the asset (CGU) in prior
years. A reversal of an impairment loss is recognised as income
immediately.
Financial instruments
Financial assets and financial liabilities are recognised in the
Group's balance sheet when the Group becomes a party to the
contractual provisions of the instrument.
Trade receivables
Trade receivables are measured at initial recognition at fair
value, and are subsequently measured at amortised cost using the
effective interest rate method. Appropriate allowances for
estimated irrecoverable amounts are recognised in comprehensive
income when there is objective evidence that the asset is impaired.
The allowance recognised is measured as the difference between the
asset's carrying amount and the present value of estimated future
cash flows discounted at the effective interest rate computed at
initial recognition.
Cash and cash equivalents
Cash and cash equivalents comprise cash on hand, deposits
repayable on demand, and other short-term highly liquid investments
that are readily convertible to a known amount of cash and are
subject to an insignificant risk of changes in value.
Financial liabilities and equity
Financial liabilities and equity instruments are classified
according to the substance of the contractual arrangements entered
into. An equity instrument is any contract that evidences a
residual interest in the assets of the Group after deducting all of
its liabilities.
Trade payables
Trade payables are initially measured at fair value, and are
subsequently measured at amortised cost, using the effective
interest rate method.
Finance income and expense
Finance income comprises interest receivable on funds invested
and foreign exchange gains on hedging instruments that are
recognised in the income statement (see note 9). Finance expenses
comprise foreign exchange losses on hedging instruments that are
recognised in the income statement (see note 9).
Derivative financial instruments
The Group uses derivative financial instruments to manage its
exposure to foreign exchange risk. Derivatives are initially
recognised at fair value and the gain or loss recognised on
remeasurement to fair value recognised in profit or loss.
3. Critical Accounting Judgements and Key Sources of Estimation
Uncertainty
Critical judgements in applying the Group's accounting
policies
In the process of applying the Group's accounting policies,
which are described in note 2, management has made the following
judgements that have the most significant effect on the amounts
recognised in the financial statements (apart from those involving
estimations, which are dealt with below).
Capitalised new product development expenditure
It is the Group's policy, where the relevant criteria of IAS 38
"Intangible Assets" are met, to capitalise new product development
expenditure and to amortise this expenditure over the estimated
economic life of the asset (product). Judgement is required when
assessing the technical and commercial feasibility of new product
development projects including whether regulatory approval will
ultimately be achieved.
Capitalised software expenditure
The Group has historically capitalised software projects and
developments. Expenditure on a bespoke web based system, designed
to facilitate online ordering of its products and services, is
currently capitalised in the Group's financial statements as the
Directors have adjudged it to meet the relevant criteria.
The rate of depreciation on capitalised software is set so as to
reflect the pattern of usage and the level of pace of change within
the global information technology market.
Key sources of estimation uncertainty
Impairment of non-current assets
Determining whether a non-current asset is impaired requires an
estimation of the "value in use" and/or the "fair value less costs
to sell" of the cash-generating units ("CGUs") to which the
non-current asset has been allocated. The value in use calculation
requires an estimate of the future cash flows expected to arise
from the CGU and a suitable discount rate in order to calculate
present value. The key assumptions for these value in use
calculations are those regarding discount rates, growth rates and
expected changes to selling prices and direct costs. The Directors
estimate discount rates using pre-tax rates that reflect current
market assessments of the time value of money and the risks
specific to the individual CGU. In the current year the Directors
estimated the applicable rate to be 9.4% (2015: 13.2%). The
Directors' sensitivity analysis indicates significant headroom to
the carrying value of the CGU when taking into account a reasonably
possible change in any one of the key assumptions used in the value
in use calculations.
The Group prepares cash flow forecasts derived from the most
recent financial budgets and projections approved by management for
the next five years, thereafter assuming an estimated growth rate
of 1.8% (2015: 2%). The growth rates for the five year period are
based on current performance of the existing product portfolio and
the estimated contribution from the Group's new product development
pipeline. The Directors believe that the long-term growth rate does
not exceed the average long-term growth rate for the UK
economy.
Impairment of slow-moving and obsolete inventory
The Group performs regular stock holding reviews, in conjunction
with sales and market information, to help determine any
slow-moving or obsolete lines. Where identified, adequate provision
is made in the financial statements for writing down or writing off
the value of such lines in order to reflect the realisable value of
its stock.
4. Exceptional and Other Items
2016 2015
Note GBP'000 GBP'000
------------------------------------------------- ---- -------- --------
Amortisation of acquired intangible assets 14 118 119
Supplier legal dispute - dividend received - (9)
Strategic review 55 -
Interest rate swap refund - (18)
Fair value movements on foreign currency hedging 9 (36) 35
------------------------------------------------- ---- -------- --------
Total exceptional and other items 137 127
------------------------------------------------- ---- -------- --------
The amortisation charge totalling GBP119,000 (2015: GBP119,000)
relates to brand and customer relationship intangible assets
recognised on the acquisition of Animalcare Ltd in January
2008.
5. Revenue and Operating Segments
IFRS 8 requires operating segments to be identified on the basis
of internal reports about components of the Group that are
regularly reviewed by the Chief Operating Decision Maker to
allocate resources and assess performance. The Chief Operating
Decision Maker is considered to be the Board of Directors of
Animalcare Group plc. Performance assessment is primarily based on
underlying operating profit and cash generation.
The Group solely comprises one reportable segment, being
Animalcare.
Animalcare Animalcare
2016 2015
Note GBP'000 GBP'000
---------------------------- ---- ---------- ----------
Revenue 14,701 13,536
---------------------------- ---- ---------- ----------
Gross profit 7,999 7,573
---------------------------- ---- ---------- ----------
Underlying operating profit 3,190 3,110
Other Items 4 (119) (119)
Exceptional items 4 (54) 9
---------------------------- ---- ---------- ----------
Operating profit 3,017 3,000
Finance income 9 69 27
Finance expense 9 - (17)
---------------------------- ---- ---------- ----------
Profit before tax 3,086 3,010
---------------------------- ---- ---------- ----------
Animalcare Animalcare
2016 2015
Note GBP'000 GBP'000
---------------------------------------- ----- ---------- ----------
Products and Services
Licensed Veterinary Medicines 9,238 8,579
Companion Animal Identification 2,680 2,309
Animal Welfare 2,783 2,648
---------------------------------------- ----- ---------- ----------
14,701 13,536
---------------------------------------- ----- ---------- ----------
Other information
---------------------------------------- ----- ---------- ----------
Intangible asset additions 14 1,604 812
---------------------------------------- ----- ---------- ----------
Property, plant and equipment additions 15 41 7
---------------------------------------- ----- ---------- ----------
Depreciation and amortisation 14,15 435 432
---------------------------------------- ----- ---------- ----------
Consolidated assets 26,871 24,474
---------------------------------------- ----- ---------- ----------
Consolidated liabilities (4,356) (3,483)
---------------------------------------- ----- ---------- ----------
Consolidated net assets 22,515 20,991
---------------------------------------- ----- ---------- ----------
2016 2015
GBP'000 GBP'000
---------------------------- -------- --------
Key customers
Number 3 3
---------------------------- -------- --------
Percentage of total revenue 81% 82%
---------------------------- -------- --------
Key customers, all within the Animalcare segment, represent the
three largest UK veterinary wholesalers as described in the Our
Business section page 7. Individual customer revenues represent
33%/28%/21% (2015: 33%/28%/22%) of total revenue.
2016 2015
GBP'000 GBP'000
------------------------- -------- --------
Geographical market
United Kingdom 13,490 12,573
Europe and Rest of World 1,211 963
------------------------- -------- --------
14,701 13,536
------------------------- -------- --------
All the Group assets are wholly located in the United Kingdom
and accordingly no geographical analysis of assets and liabilities
is presented.
An analysis of total Group revenue is as follows:
2016 2015
GBP'000 GBP'000
----------------------------------- -------- --------
Revenue from sale of goods 13,609 12,590
Revenue from provision of services 1,092 946
----------------------------------- -------- --------
14,701 13,536
Finance income 33 27
----------------------------------- -------- --------
14,734 13,563
----------------------------------- -------- --------
6. Total Comprehensive Income for the Year
2016 2015
GBP'000 GBP'000
---------------------------------------------------------------------------- -------- --------
Total comprehensive income for the year has been arrived at after charging:
Cost of inventories recognised as expense 6,515 5,831
Depreciation of tangible assets 66 73
Amortisation of intangible assets 369 359
Research and development 156 143
Operating lease rentals 211 199
Foreign exchange losses 43 1
Increase in provision for inventories 9 23
---------------------------------------------------------------------------- -------- --------
The above items are those charged to total comprehensive income
only. Full details on items charged/(credited) to exceptional and
other items are contained in note 4.
The analysis of remuneration paid to the Company's auditor is as
follows:
2016 2015
GBP'000 GBP'000
--------------------------------------------------------------------- -------- --------
Fees payable to the Company's auditor for the audit of the Company's
annual accounts 13 13
The audit of the Company's subsidiaries pursuant to legislation 21 20
--------------------------------------------------------------------- -------- --------
Total audit fees 34 33
--------------------------------------------------------------------- -------- --------
Tax services 11 11
Other services - 16
Total non-audit fees 11 27
--------------------------------------------------------------------- -------- --------
Total auditors' remuneration 45 60
--------------------------------------------------------------------- -------- --------
7. Directors' Remuneration and Interests
Emoluments
The various elements of remuneration received by each Director
were as follows:
Company
pension
Salary Bonus contributions Benefits Total
Year ended 30(th) June 2016 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------------------------- -------- -------- -------------- -------- --------
J S Lambert* 35 - - - 35
Lord Downshire* 23 - - 3 26
R B Harding* 23 - - - 23
Dr I D Menneer 143 18 17 7 186
C J Brewster 102 17 12 6 137
---------------------------- -------- -------- -------------- -------- --------
Total 326 35 29 16 406
---------------------------- -------- -------- -------------- -------- --------
Year ended 30(th) June 2015
---------------------------- --- ---
J S Lambert* 34 - - - 34
Lord Downshire* 23 - - 1 24
R B Harding* 23 - - - 23
Dr I D Menneer 140 16 17 8 181
C J Brewster 102 11 12 6 131
---------------------------- --- ---
Total 322 27 29 15 393
---------------------------- --- ---
* Indicates Non-Executive Directors.
Mr George Gunn was appointed to the Board as a Non-Executive
Director on 9(th) February 2015 and subsequently resigned on 2(nd)
June 2015. Mr Gunn received no remuneration during this period.
All Company pension contributions relate to defined contribution
pension schemes. Benefits consist of company car and private
medical insurance.
Share options
The Directors had the following beneficial options:
I D Menneer
Scheme EMI EMI EMI Unapproved SAYE Unapproved SAYE Total
---------------------- -------- ------- --------- ---------- ------- ---------- --------- -------
Exercise Price GBP1.675 GBP1.30 GBP1.325 GBP1.40 GBP1.03 GBP1.415 GBP1.05
14(th) 2(nd) 20(th) 21(st) 22(nd) 20(th) 28(th)
October August November February May June November
Date of Grant 2011 2012 2012 2013 2013 2013 2014
---------------------- -------- ------- --------- ---------- ------- ---------- --------- -------
Outstanding at 30(th)
June 2015 and 30(th)
June 2016 60,000 60,000 50,000 90,000 4,377 90,000 5,142 359,519
---------------------- -------- ------- --------- ---------- ------- ---------- --------- -------
C J Brewster
Scheme EMI EMI SAYE EMI SAYE Total
-------------------------------- ------- ------- ------- -------- --------- -------
Exercise Price GBP1.30 GBP1.30 GBP1.03 GBP1.415 GBP1.05
22(nd) 2(nd) 22(nd) 20(th) 28(th)
June August May June November
Date of Grant 2012 2012 2013 2013 2014
-------------------------------- ------- ------- ------- -------- --------- -------
Outstanding at 30(th) June 2015
and 30(th) June 2016 30,000 30,000 8,754 40,000 8,571 117,325
-------------------------------- ------- ------- ------- -------- --------- -------
During FY15, 3,358 shares were allotted to Dr Menneer following
exercise under the Animalcare Group Save As You Earn scheme. The
exercise price was equal to market value at that time hence no gain
or loss arose.
The Directors' interests in the shares of the Company as at
30(th) June are set out below:
2016 2015
--------------- ---------- ----------
Ordinary Ordinary
shares of shares of
20p 20p
--------------- ---------- ----------
J S Lambert 1,313,691 1,413,691
Lord Downshire 1,109,583 1,109,583
I D Menneer 17,739 17,739
C J Brewster 4,079 4,079
--------------- ---------- ----------
In addition to the above, Lord Downshire had a non-beneficial
interest in 310,446 shares.
Long Term Incentive Plan (LTIP)
The Animalcare Group plc LTIP was introduced in June 2014 to
provide an effective mechanism for senior executives to participate
in the Company's equity at a meaningful level, aligning their
interests with those of shareholders. The Directors' interests in
the LTIP, which was implemented via a subscription for growth
shares in the capital of Animalcare Ltd, the subsidiary of the
Company, are as follows:
-- Iain Menneer - 31,955 A Ordinary Shares of GBP1.00 each ("A
Shares") for a total cash subscription of GBP31,955, representing
5.2% of Animalcare Ltd's issued share capital; and
-- Chris Brewster - 19,173 A Shares, representing 3% of
Animalcare Ltd's issued share capital and 11,800 B Ordinary Shares
of GBP1.00 each ("B Shares"), representing a further 2% of
Animalcare Ltd's issued share capital, for a total cash
subscription of GBP30,973.
The total cash subscriptions were, based on independent
valuation, considered to be equal to fair value at the time of
acquisition.
Dr Menneer and Mr Brewster have the right to sell their A Shares
to the Company at any time after 27(th) June 2017 in exchange for
Ordinary Shares of 20 pence each in the Company ("Ordinary
Shares"). Their rights to sell the A Shares are subject to, amongst
other provisions, the Company having a market capitalisation in
excess of GBP39.0m ("the Hurdle") at the time of sale. The Hurdle
was determined by Animalcare's Remuneration Committee and broadly
represented a 20% premium to the Company's market capitalisation on
27(th) June 2014. Each holder of A Shares would, on a sale of his
entire holding to the Company, be entitled to receive Ordinary
Shares representing a percentage of the increase in the Company's
market capitalisation above the Hurdle; being 5% for Dr Menneer and
3% for Mr Brewster. The A Shares do not have a right to receive a
dividend, except for any amounts distributed on the winding up of
the Company or on an asset sale.
The B Shares are not entitled to participate in any increase in
the value of the Company above the Hurdle but can be exchanged for
Ordinary Shares of an equal value at any time after 27(th) June
2017. The B Shares have a right to an annual dividend (on a
non-fixed coupon basis), calculated by applying a rate of LIBOR +
2% to the nominal value of the B Shares.
Further details of the Plan, including the Hurdle, anti-dilution
and other provisions, are set out in Animalcare Ltd's articles of
association, which is available within the Investors section
(constitutional documents) of the Company's website at
http://www.animalcaregroup.co.uk.
8. Staff Costs
2016 2015
--------------------------------------------------------------------- ---- ----
Number of employees
The average monthly number of employees (including Directors) during
the year was:
Production and distribution 4 4
Selling and administration 59 56
--------------------------------------------------------------------- ---- ----
63 60
--------------------------------------------------------------------- ---- ----
2016 2015
GBP'000 GBP'000
---------------------- -------- --------
Related costs
Wages and salaries 2,195 2,024
Social security costs 224 187
Other pension costs 139 78
---------------------- -------- --------
2,558 2,289
---------------------- -------- --------
9. Finance Costs and Finance Income
2016 2015
GBP'000 GBP'000
-------------------------------------------- -------- --------
Fair value losses on financial instruments* - 35
Interest rate swap refund - (18)
-------------------------------------------- -------- --------
Finance costs - 17
-------------------------------------------- -------- --------
Other net finance income:
Fair value gains on financial instruments (36) -
-------------------------------------------- -------- --------
Interest income on bank deposits (33) (27)
-------------------------------------------- -------- --------
Finance income (69) (27)
-------------------------------------------- -------- --------
Net finance income (69) (10)
-------------------------------------------- -------- --------
* Finance gains and losses arising from derivatives held at fair
value through profit and loss relate to fair value movements on the
Group's foreign exchange hedges. These gains and losses are
included within "other items" on the face of the statement of
comprehensive income.
10. Income Tax Expense
2016 2015
Note GBP'000 GBP'000
---------------------------------------------------------------- ---- -------- --------
The income tax expense comprises:
Current tax expense 481 601
Adjustment in the current year in relation to prior years (148) (143)
---------------------------------------------------------------- ---- -------- --------
333 458
The deferred tax (credit)/expense comprises:
Origination and reversal of temporary differences 22 121 (99)
Adjustment in the current year in relation to prior years 22 (2) 117
---------------------------------------------------------------- ---- -------- --------
119 18
---------------------------------------------------------------- ---- -------- --------
Total tax expense for the year 452 476
---------------------------------------------------------------- ---- -------- --------
The total tax charge can be reconciled to the accounting profit
as follows:
Total comprehensive income for the year 2,634 2,534
Total tax expense 452 476
Profit before tax 3,086 3,010
Income tax calculated at 20.0% (2015: 20.75%) 617 625
---------------------------------------------------------------- ---- -------- --------
Effect of expenses not deductible 41 42
Effect of share-based deductions (6) (88)
Innovation related tax credits (65) (77)
Depreciation in excess of capital allowances 15 -
Effect of adjustments in respect of prior years (150) (26)
---------------------------------------------------------------- ---- -------- --------
452 476
---------------------------------------------------------------- ---- -------- --------
The tax credit of GBP27,000 (2015: GBP26,000) shown within
"exceptional and other items" on the face of the statement of
comprehensive income, which forms part of the overall tax charge of
GBP452,000 (2015: GBP476,000) relates to the items analysed in note
4.
The prior year current tax credits in respect of both 2016 and
2015 primarily relate to research and development tax credits. The
prior year deferred tax charge in 2015 of GBP117,000 relates to the
first time recognition of deferred tax in relation to capitalised
development costs.
The Government has announced that it intends to reduce the rate
of corporation tax to 17% with effect from 1(st) April 2020. This
change in rates was not substantively enacted at the balance sheet
date and therefore has not been reflected in the tax rates used for
deferred tax purposes. The Finance Act 2015 (No 2) was
substantively enacted on 26(th) October 2015 which will reduce the
rate of corporation tax to 19% with effect from 1(st) April 2017
and 18% from 1(st) April 2020. This will reduce the Group's future
current tax charge accordingly. Deferred tax balances at 30(th)
June 2016 have been calculated based on these rates.
11. Dividends
2016 2015
GBP'000 GBP'000
------------------------------------------------------ -------- --------
Ordinary final dividend paid in respect of prior year 904 839
Ordinary interim dividend paid 379 378
------------------------------------------------------ -------- --------
1,283 1,217
------------------------------------------------------ -------- --------
The final dividend paid during the year ended 30(th) June 2016
was 4.3 pence per share (2015: 4.0 pence per share). The interim
dividend paid during the year ended 30(th) June 2016 was 1.8 pence
per share (2015: 1.8 pence per share).
The proposed final dividend of 4.7 pence per share, which is
subject to approval of shareholders at the Annual General Meeting,
results in a total dividend for the year of 6.5 pence per share.
The proposed dividend has not been included as a liability as at
30(th) June 2016, in accordance with IAS 10 "Events After the
Balance Sheet Date".
12. Earnings per Share
Basic earnings per share amounts are calculated by dividing the
total comprehensive income for the year attributable to ordinary
equity holders of the Company by the weighted average number of
fully paid Ordinary Shares outstanding during the year.
The following income and share data was used in the basic
earnings per share computations:
Underlying
earnings
Underlying before
earnings before exceptional
exceptional and
and other Total Total
other items items earnings earnings
2016 2015 2016 2015
GBP'000 GBP'000 GBP'000 GBP'000
------------------------------------------- ---------------- ------------ --------- ---------
Total comprehensive income attributable to
equity holders of the Company 2,744 2,635 2,634 2,534
------------------------------------------- ---------------- ------------ --------- ---------
2016 2015 2016 2015
No. No. No. No.
---------------------------------------- ---------- ---------- ---------- ----------
Basic weighted average number of shares 21,043,846 20,982,367 21,043,846 20,982,367
Dilutive potential Ordinary Shares 319,863 123,127 319,863 123,127
---------------------------------------- ---------- ---------- ---------- ----------
21,363,079 21,105,494 21,363,079 21,105,494
---------------------------------------- ---------- ---------- ---------- ----------
Earnings per share:
Basic 13.0p 12.6p 12.5p 12.1p
Fully diluted 12.8p 12.5p 12.3p 12.0p
13. Goodwill
Group
GBP'000
--------------------------------------------------------- --------
Cost
At 1(st) July 2014, 1(st) July 2015 and 30(th) June 2016 12,711
--------------------------------------------------------- --------
Accumulated impairment losses
At 1(st) July 2014, 1(st) July 2015 and 30(th) June 2016 -
--------------------------------------------------------- --------
Net book value
At 30(th) June 2016 and 30(th) June 2015 12,711
--------------------------------------------------------- --------
The carrying amount of Group goodwill is allocated to the
Group's sole cash-generating unit ("CGU"), being the Animalcare
segment.
The recoverable amount of goodwill is determined from value in
use calculations.
The Group prepares cash flow forecasts derived from the most
recent financial budgets and projections approved by management for
the next five years and thereafter assuming an estimated long-term
annual growth rate of 1.8% (2015: 2.0%).
The financial budgets and projections are based on past
experience and actual operating results. The growth rates for the
five year period are based on current performance of the existing
product portfolio and the estimated contribution from the Group's
new product development pipeline. The Directors believe that the
long-term growth rate does not exceed the average long-term growth
rate for the UK economy, the principal geographic area in which
Animalcare operates.
The Directors estimate the discount rates using the post-tax
rates that reflect the current market assessments of the time value
of money and the risks specific to the cash-generating unit. In the
current year the Directors estimated the applicable pre-tax rate to
be 9.4% (2015: 13.2%).
The Directors modelled a range of different scenarios by
applying sensitivities to both the cash flow assumptions and the
discount rate. Based on this sensitivity analysis there is
significant headroom between the value in use calculation and the
carrying value of the CGU.
14. Other Intangible Assets
Acquired New product
Acquired customer development Capitalised
brands relationships costs software Total
Group GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
-------------------- -------- -------------- ------------ ----------- --------
Cost
At 1(st) July 2014 524 837 1,647 165 3,173
Additions - - 768 44 812
Disposals - - - (31) (31)
-------------------- -------- -------------- ------------ ----------- --------
At 30(th) June 2015 524 837 2,415 178 3,954
Additions - - 1,563 41 1,604
Disposals - - (47) - (47)
-------------------- -------- -------------- ------------ ----------- --------
At 30(th) June 2016 524 837 3,931 219 5,511
-------------------- -------- -------------- ------------ ----------- --------
Amortisation
At 1(st) July 2014 227 545 990 84 1,846
Charge for the year 35 84 195 45 359
Disposals - - - (31) (31)
-------------------- -------- -------------- ------------ ----------- --------
At 30(th) June 2015 262 629 1,185 98 2,174
Charge for the year 35 83 196 55 369
-------------------- -------- -------------- ------------ ----------- --------
At 30(th) June 2016 297 712 1,381 153 2,543
-------------------- -------- -------------- ------------ ----------- --------
Carrying value
At 30(th) June 2016 227 125 2,550 66 2,968
-------------------- -------- -------------- ------------ ----------- --------
At 30(th) June 2015 262 208 1,230 80 1,780
-------------------- -------- -------------- ------------ ----------- --------
Veterinary medicine product development costs are amortised over
four to seven years. GBP2.4m of the total GBP3.9m cost is currently
not being amortised. Acquired brands are amortised over 15 years
and acquired customer relationships are amortised over ten years.
The amortisation period for capitalised software, which principally
relates to the bespoke Anibase pet database, is four years.
Capitalised
software Total
Company GBP'000 GBP'000
---------------------------------------- ----------- --------
Cost
At 1(st) July 2015 and 30(th) June 2016 7 7
---------------------------------------- ----------- --------
Amortisation
At 1(st) July 2014 - -
Charge for the year 1 1
---------------------------------------- ----------- --------
At 30(th) June 2015 1 1
Charge for the year 2 2
---------------------------------------- ----------- --------
At 30(th) June 2016 3 3
---------------------------------------- ----------- --------
Carrying value
At 30(th) June 2016 4 4
---------------------------------------- ----------- --------
At 30(th) June 2015 6 6
---------------------------------------- ----------- --------
15. Property, Plant and Equipment
Office
furniture
Leasehold Plant and and
improvements equipment equipment Total
Group GBP'000 GBP'000 GBP'000 GBP'000
-------------------- ------------- ---------- ---------- --------
Cost
At 1(st) July 2014 184 134 268 586
Additions - 2 5 7
Disposals - (17) (129) (146)
-------------------- ------------- ---------- ---------- --------
At 1(st) July 2015 184 119 144 447
Additions - 32 9 41
-------------------- ------------- ---------- ---------- --------
At 30(th) June 2016 184 151 153 488
-------------------- ------------- ---------- ---------- --------
Depreciation
At 1(st) July 2014 22 56 136 214
Charge for the year 19 18 36 73
Disposals - (17) (129) (146)
-------------------- ------------- ---------- ---------- --------
At 1(st) July 2015 41 57 43 141
Charge for the year 18 31 17 66
-------------------- ------------- ---------- ---------- --------
At 30(th) June 2016 59 88 60 207
-------------------- ------------- ---------- ---------- --------
Net book value
At 30(th) June 2016 125 63 93 281
-------------------- ------------- ---------- ---------- --------
At 30(th) June 2015 143 62 101 306
-------------------- ------------- ---------- ---------- --------
16. Investments in Subsidiaries
Subsidiary undertakings
Company
2016 2015
GBP'000 GBP'000
---------------------------------------------- -------- --------
Cost and net book value
---------------------------------------------- -------- --------
At 1(st) July 2014, 2015 and 30(th) June 2016 14,361 14,361
---------------------------------------------- -------- --------
The sole subsidiary undertaking of the Company is detailed
below.
Country of
registration
or Shares held
incorporation Class %
--------------- --------------- --------- -----------
Animalcare Ltd England Ordinary 90*
* In substance 100% ownership, see note 7 for further
details.
The principal activity of this undertaking for the last
financial year was the sale of companion animal products and
related services.
17. Inventories
Group
2016 2015
GBP'000 GBP'000
------------------------------------ -------- --------
Finished goods and goods for resale 1,604 1,653
------------------------------------ -------- --------
In the Directors' opinion, the replacement cost of inventories
is not materially different from their balance sheet value.
18. Other Financial Assets
Trade and other receivables
Group Company
2016 2015 2016 2015
GBP'000 GBP'000 GBP'000 GBP'000
------------------------------------- -------- -------- -------- --------
Trade receivables 1,782 1,924 - -
Amounts receivable from subsidiaries - - - -
Corporation tax - Group relief - - 308 217
Other receivables 7 6 7 6
Derivative financial instruments 18 - - -
Prepayments and accrued income 382 317 17 15
------------------------------------- -------- -------- -------- --------
2,189 2,247 332 238
------------------------------------- -------- -------- -------- --------
The Directors consider that the carrying amount of trade and
other receivables approximates to their fair value.
Movement in allowance for doubtful debts
Group Company
2016 2015 2016 2015
GBP'000 GBP'000 GBP'000 GBP'000
----------------------------- -------- -------- -------- --------
Balance at 1(st) July 15 15 - -
Impairment losses recognised (1) - - -
----------------------------- -------- -------- -------- --------
Balance at 30(th) June 14 15 - -
----------------------------- -------- -------- -------- --------
Ageing of past due but not impaired receivables
Group
2016 2015
GBP'000 GBP'000
-------------------- -------- --------
1-30 days past due 4 -
31-90 days past due - 1
91 days and more - -
-------------------- -------- --------
4 1
-------------------- -------- --------
Cash and cash equivalents
Group Company
2016 2015 2016 2015
GBP'000 GBP'000 GBP'000 GBP'000
-------------------------- -------- -------- -------- --------
Cash and cash equivalents 7,118 5,777 1,576 1,576
-------------------------- -------- -------- -------- --------
Cash and cash equivalents comprise cash and short-term bank
deposits with an original maturity of three months or less.
Credit risk
The Company's principal financial assets are bank balances and
cash, and trade and other receivables. The Company's credit risk is
primarily attributable to its trade receivables. The amounts
presented in the balance sheet are net of allowances for doubtful
receivables. An allowance for impairment is made where there is an
identified loss event which, based on previous experience, is
evidence of a reduction in the recoverability of the cash flows.
The allowance for doubtful debts represents the difference between
the carrying value of the specific trade receivables and the
present value of the expected recoverable amount. The average
credit period on sales of goods is 33 days (2015: 31 days). No
interest has been charged on overdue receivables.
19. Other Financial Liabilities
Group Company
2016 2015 2016 2015
GBP'000 GBP'000 GBP'000 GBP'000
----------------------------------------------- -------- -------- -------- --------
Trade payables 1,513 936 97 73
Amounts payable to subsidiaries - - 4,991 3,385
Other taxes and social security costs 448 450 56 46
Other creditors 468 386 20 18
Derivative financial instruments (see note 20) - 18 - -
Accruals 598 396 53 4
----------------------------------------------- -------- -------- -------- --------
3,027 2,186 5,217 3,526
----------------------------------------------- -------- -------- -------- --------
The Directors consider that the carrying amount of trade and
other payables approximates to their fair value.
20. Financial Instruments
Capital and liquidity risk management
At 30(th) June the Group was contractually obliged to make
repayments of principal and payments of interest as detailed
below:
Within one
year or on More than
demand 1-2 years 3-5 years 5 years Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------- ----------- --------- --------- --------- --------
2016
Trade and other payables 3,027 - - - 3,027
------------------------- ----------- --------- --------- --------- --------
2015
Trade and other payables 2,186 - - - 2,186
------------------------- ----------- --------- --------- --------- --------
Categories and fair value of financial instruments carrying
value
2016 2015
GBP'000 GBP'000
------------------------------------------------------------------ -------- --------
Financial assets
Trade and other receivables (including cash and cash equivalents) 8,925 7,707
------------------------------------------------------------------ -------- --------
Financial liabilities
Trade and other payables (3,027) (2,186)
------------------------------------------------------------------ -------- --------
The fair values of the Group's financial assets and liabilities
are not materially different from their carrying values.
Foreign currency risk management
The Group undertakes transactions denominated in foreign
currencies which gives rise to the risks associated with currency
exchange rate fluctuations. Exposures are managed by a combination
of matching foreign currency income and expenditure, maintaining
foreign currency deposits and the use of forward contracts. The
carrying value of the Group's foreign currency assets and
liabilities at the reporting date was:
Assets Liabilities
2016 2015 2016 2015
GBP'000 GBP'000 GBP'000 GBP'000
---------- -------- -------- -------- --------
Euro 276 446 109 153
---------- -------- -------- -------- --------
US dollar 4 264 96 -
---------- -------- -------- -------- --------
Foreign currency sensitivity analysis
At 30(th) June 2016 the Group is mainly exposed to the Euro and
the US dollar. The following table details the effect of a 10%
increase and decrease in the exchange rate of these currencies
against sterling when applied to outstanding monetary items
denominated in foreign currency as at 30(th) June 2016. A positive
number indicates that an increase in profit would arise from a 10%
change in value of sterling against these currencies, a negative
number indicates that a decrease would arise.
Strengthening Weakening
GBP'000 GBP'000
---------- ------------- ---------
Euro (15) 18
---------- ------------- ---------
US dollar 8 (10)
---------- ------------- ---------
Interest rate sensitivity analysis
This sensitivity analysis was not performed as the Group had no
exposure to interest rates for either derivatives or non-derivative
instruments at the balance sheet date.
Forward foreign exchange contracts
The Group had two (2015: three) open foreign exchange contracts
at 30(th) June 2016. The values are shown below:
2016 2015
GBP'000 GBP'000
---------------- -------- --------
Principal value 200 338
---------------- -------- --------
Fair value 18 (18)
---------------- -------- --------
Capital management
In line with the disclosure requirements of IAS 1, "Presentation
of Financial Statements", the Company regards its capital as being
the issued share capital together with its banking facilities, used
to manage short-term working capital requirements. Note 23 to the
financial statements provides details regarding the Company's share
capital and movements in the period. There were no breaches of any
requirements with regard to any relevant conditions imposed by the
Company's Articles of Association during the periods under
review.
21. Deferred Income
Deferred income arises from certain services sold by the Group's
subsidiary Animalcare Ltd. In return for a single up-front payment,
Animalcare Ltd commits to a fixed term contract to provide certain
database, pet reunification and other support services to
customers. There is no contractual restriction on the amount of
times the customer makes use of the service. At the commencement of
the contract it is not possible to determine how many times the
customer will make use of the services, nor does historical
evidence provide indications of any future pattern of use. As such,
income is recognised evenly over the term of the contract,
currently eight years.
Movements in the Group's deferred income liabilities during the
current and prior reporting period are as follows:
2016 2015
GBP'000 GBP'000
------------------------------------------------- -------- --------
Balance at the beginning of the period 958 972
Income deferred to future periods 263 241
Release of income deferred from previous periods (239) (255)
------------------------------------------------- -------- --------
Balance at end of the period 982 958
------------------------------------------------- -------- --------
The deferred income liabilities fall due as follows:
2016 2015
GBP'000 GBP'000
---------------- -------- --------
Within one year 220 234
After one year 762 724
---------------- -------- --------
982 958
---------------- -------- --------
Income recognised during the year is set out below:
2016 2015
GBP'000 GBP'000
------------------------------------------------- -------- --------
Income received 282 227
Income deferred to future periods (263) (241)
Release of income deferred from previous periods 239 255
------------------------------------------------- -------- --------
Income recognised in the year 258 241
------------------------------------------------- -------- --------
22. Deferred Tax
Group
The following are the major components of the deferred tax
liabilities/(assets) recognised by the Group, and the movements
thereon, during the current and prior reporting period:
Property, plant Share-based Intangible
and equipment payments Other fixed assets Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------------------------- --------------- ----------- -------- ------------- --------
Balance at 1(st) July 2014 41 (43) (7) 118 109
Charge/(credit) to income (4) (111) (1) 134 18
---------------------------- --------------- ----------- -------- ------------- --------
Balance at 30(th) June 2015 37 (154) (8) 252 127
Charge/(credit) to income (1) (22) - 142 119
---------------------------- --------------- ----------- -------- ------------- --------
Balance at 30(th) June 2016 36 (176) (8) 394 246
---------------------------- --------------- ----------- -------- ------------- --------
Deferred tax balances have been calculated at an effective rate
of 18%, being the substantively enacted rate at 30(th) June
2016.
Company
The following are the major components of the deferred tax
assets recognised by the Company, and the movements thereon, during
the current and prior reporting period:
Accelerated Share-based
tax depreciation payments Other Total
GBP'000 GBP'000 GBP'000 GBP'000
---------------------------- ----------------- ----------- -------- --------
Balance at 1(st) July 2014 (12) (25) (2) (39)
Charge/(credit) to income 3 (52) - (49)
---------------------------- ----------------- ----------- -------- --------
Balance at 30(th) June 2015 (9) (77) (2) (88)
Charge/(credit) to income 2 (19) - (17)
---------------------------- ----------------- ----------- -------- --------
At 30(th) June 2016 (7) (96) (2) (105)
---------------------------- ----------------- ----------- -------- --------
Deferred tax balances have been calculated at an effective rate
of 18%, being the substantively enacted rate at 30(th) June
2016.
23. Share Capital
2016 2015
No. No.
--------------------------------------------------------------- ---------- ----------
Allotted, called up and fully paid Ordinary Shares of 20p each 21,059,636 21,019,636
--------------------------------------------------------------- ---------- ----------
2016 2015
GBP'000 GBP'000
--------------------------------------------------------------- -------- --------
Allotted, called up and fully paid Ordinary Shares of 20p each 4,212 4,204
--------------------------------------------------------------- -------- --------
During the year GBP8,000 (2015: GBP11,886) of Ordinary Shares
were issued for proceeds of GBP52,525 (2015: GBP81,814) resulting
in a share premium of GBP44,525 (2015: GBP69,928).
24. Operating Lease Arrangements
The Group as lessee
2016 2015
GBP'000 GBP'000
---------------------------------------------------------------------- -------- --------
Lease payments under operating leases recognised as an expense in the
year 211 199
---------------------------------------------------------------------- -------- --------
At the balance sheet date, the Group had outstanding commitments
for future minimum lease payments under non-cancellable operating
leases, which fall due as follows:
2016 2015
GBP'000 GBP'000
--------------------------------------- -------- --------
Within one year 187 168
In the second to fifth years inclusive 240 298
After five years 45 78
--------------------------------------- -------- --------
472 544
--------------------------------------- -------- --------
Operating lease payments principally represent rentals payable
by the Group for its office and warehouse properties and motor
vehicles.
25. Share-based Payments
During the year the Group operated the Animalcare Group plc
Executive Share Option Scheme, the Save As You Earn (SAYE) Share
Option Scheme and the new Long Term Incentive Plan as described
below:
Animalcare Group plc Executive Share Option Scheme
Under this scheme, options may be granted to certain executives
and senior employees of the Group to subscribe for new shares in
the Company at a fixed price equal to the market value at the time
of grant. The options are exercisable three years after the date of
grant. Once vested, options must be exercised within six years of
the date of grant. The exercise of these options is not subject to
any performance criteria.
SAYE Option Scheme
This scheme is open to all UK employees to encourage share
ownership. Share options are granted at an option price fixed at a
20% discount to the market value at the start of the savings
period. The SAYE options vest and are exercisable three years after
the date of grant and must ordinarily be exercised within six
months of the completion of the relevant savings period.
Details of the movement in all share option schemes during the
year are as follows:
EMI SAYE Unapproved
Price Price Price
Options GBP Options GBP Options GBP
----------------------------------- -------- ----- -------- ------ ------- -----
Outstanding at beginning of year 495,000 1.446 206,102 1.041 180,000 1.408
Granted during the year 110,000 2.157 - - - -
Lapsed during the year (15,000) 2.175 (13,640) 1.029 - -
Exercised during the year (40,000) 1.313 - - - -
----------------------------------- -------- ----- -------- ------ ------- -----
Open at 30(th) June 2016 550,000 1.578 200,491 1.0422 180,000 1.408
----------------------------------- -------- ----- -------- ------ ------- -----
Exercisable at the end of the year 325,000 1.400 - - 180,000 1.408
----------------------------------- -------- ----- -------- ------ ------- -----
The weighted average inputs into the Black-Scholes model at the
time of grant were as follows:
EMI SAYE Unapproved
Scheme Scheme Scheme
-------------------------------- --------- --------- ----------
Weighted average share price 162p 130p 141p
Weighted average exercise price 162p 104p 141p
Expected volatility 51% 50% 56%
Expected life 3.0 years 3.1 years 3.0 years
-------------------------------- --------- --------- ----------
Risk-free rate 0.5% 0.5% 0.5%
-------------------------------- --------- --------- ----------
Expected volatility was determined by calculating the historical
volatility of the Group's share price over the previous three
years. The expected lives used in the model were estimated based on
management's best estimate for the effects of non-transferability,
exercise restrictions, and behavioural considerations.
The aggregate estimated fair value of the options granted during
the year was GBPnil (2015: GBPnil).
The Group recognised a total charge in respect of share based
payments of GBP120,000 (2015: GBP139,000) within administrative
expenses. The respective Company charges were GBP47,000 (2015:
GBP74,000).
Long Term Incentive Plan
The Animalcare Group plc LTIP was introduced in June 2014 to
provide an effective mechanism for senior executives to participate
in the Company's equity at a meaningful level, aligning their
interests with those of shareholders. The Directors' interests in
the LTIP, which was implemented via a subscription for growth
shares in the capital of Animalcare Ltd, a subsidiary of the
Company, are as follows:
-- Iain Menneer - 31,955 A Ordinary Shares of GBP1.00 each ("A
Shares") for a total cash subscription of GBP31,955, representing
5.2% of Animalcare Ltd's issued share capital; and
-- Chris Brewster - 19,173 A Shares, representing 3% of
Animalcare Ltd's issued share capital and 11,800 B Ordinary Shares
of GBP1.00 each ("B Shares"), representing a further 2% of
Animalcare Ltd's issued share capital, for a total cash
subscription of GBP30,973.
Further details of the Plan are provided in note 7.
The charge for the year to the income statement in respect of
the Plan is GBPnil (2015: GBPnil).
26. Related Party Transactions
Trading transactions
During the year ended 30(th) June, the following trading
transactions took place between the Company and its subsidiary
listed in note 16.
Animalcare
Ltd Total
2016 GBP'000 GBP'000
-------------------------- ---------- --------
Management charges levied 240 240
-------------------------- ---------- --------
Animalcare
Ltd Total
2015 GBP'000 GBP'000
Management charges levied 240 240
-------------------------- ---------- --------
Remuneration of key management personnel
The remuneration of the Directors, who are the key management
personnel of the Group, is set out in aggregate for each of the
categories specified in IAS 24 "Related Party Disclosures". Further
information about the remuneration of Directors is provided in note
7.
The Directors' interests in the shares of the Company are
contained in note 7.
27. Annual Report
The Group's Annual Report and Financial Statements for the year
ended 30(th) June 2016 were approved on 11(th) October 2016 and are
expected to be posted to shareholders, along with the Group's
Notice of Annual General Meeting ("AGM") and related form of proxy,
on 24(th) October 2016. The AGM will be held at 11.30am on 15(th)
November 2016 at the Company's registered offices, 10 Great North
Way, York Business Park, Nether Poppleton, York, YO26 6RB.
Further copies will be available to download on the Company's
website at: www.animalcaregroup.co.uk and will also be available
from the Company's registered office address, as above.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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