Annual Report
2017 CORPORATE
DIRECTORY
DIRECTORS
Professor Andrew Vizard
Dr Christopher Richards
Mr Michael van Blommestein
Mr Richard Dennis
Mr Charles Sitch
COMPANY SECRETARY
Sophie Karzis
REGISTERED OFFICE
27-33 Piper Lane
East Bendigo VIC 3550
T 03 5445 5999
F 03 5445 5914
E investorrelations@apiam.com.au
AUDITORS
Grant Thornton Australia
The Rialto, Level 30
525 Collins Street
Melbourne VIC 3000
BANKERS
National Australian Bank
Level 1, 55 Mitchell Street
Bendigo VIC 3550
Chairman
Managing Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
SHARE REGISTRY
Boardroom Registry Pty Ltd
Level 12, 225 George Street
Sydney NSW 2000
T 1300 737 760
F 02 9279 0664
E enquiries@boardroomlimited.com.au
STOCK EXCHANGE LISTING
Australian Securities Exchange
Level 4, North Tower, Rialto
525 Collins Street
Melbourne VIC 3000
ASX CODE
AHX
WEBSITE
apiam.com.au
Contents
Chairman’s Message
Managing Director’s Message
Director’s Report
Remuneration Report
Auditor’s Independence Declaration
Consolidated Statement of comprehensive income
Consolidated statement of financial position
Consolidated statement of changes in equity
Consolidated statement of cash flows
Notes to the financial statements
Directors’ Declaration
Independent Audit Report
Additional Information
03
05
08
20
29
30
31
32
33
34
73
74
77
Apiam Animal Health Limited
Financial statements for the year ended 30 June 2017
3
Chairman’s Message
Dear shareholder,
I am pleased to present the second annual report for Apiam Animal Health Limited since its listing
on the ASX in December 2015.
The 2017 financial year has been busy and productive for Apiam as we have worked to execute
on the first phase of our three-year strategic plan, integrate acquired businesses and deliver
growth for our shareholders.
During the year, and in-line with our planned acquisition strategy communicated at the time of our
IPO, Apiam announced two strategically significant acquisitions - Quirindi Veterinary Group in
September 2016 and AllStock in January 2017. Both businesses have performed extremely well
under Apiam’s ownership to date and importantly provide a specialty product offering which we
can leverage across our customer base.
In May 2017 we provided shareholders full year revenue and earnings guidance for the 2017
financial year, with revenue expected to be in the range of $96.0-$98.0 million and underlying
EBITDA to be in the range of $7.2-$8.5 million. I am pleased to report that our results for the
2017 financial year were within this guidance, with revenue of $98.0 million and underlying
EBITDA of $8.3 million.
Apiam’s revenue performance in 2017 was a reflection of a strong rebound in revenue in the
second half of the financial year, particularly following the industry challenges we experienced in
the first quarter. In particular, Apiam’s pig, companion animal, genetic services and equine
businesses made very strong contributions to the Company’s revenue over the period, as did the
acquisitions.
Importantly, Apiam also delivered gross margin expansion in the 2017 financial year as a result of
a strong performance in higher margin services, particularly in the companion animal business.
The delivery of procurement synergies also contributed to gross margin expansion, highlighting
the impact that synergy benefits from our business integration program can deliver.
An important focus for Apiam this past year has been executing the first phase of the Company’s
three-year strategic plan, to build the foundations for future business growth. Expanding the
business platform, particularly in the areas of IT systems and resources has however driven an
increase in the Company’s operating cost base. We consider this increased investment
supportive of our long term growth strategies, and believe Apiam’s infrastructure platform is now
at a level required to deliver the next stage of business growth.
Apiam’s Board of Directors have declared a final dividend of 0.8 cents per share, fully franked.
Total dividends per share in respect of the 2017 financial year are 1.6 cents per share,
representing a 42.6% dividend payout ratio based on Apiam’s FY2017 operating Net Profit After
Tax (excluding non-operating income associated with the reversal of a contingent liability on the
balance sheet during the period). A Dividend Reinvestment Plan (DRP) will be implemented to
allow shareholders to reinvest their dividends in Apiam’s future growth. The DRP will be in
operation for the FY2017 final dividend, and shareholders will need to make an election if they
wish to participate by 28 September 2017. Further details around the proposed Dividend
Reinvestment Plan will be mailed to shareholders separately over the coming week.
Apiam Animal Health Limited
Financial statements for the year ended 30 June 2017
4
As we look to the year ahead, I believe Apiam is well placed to deliver value for our shareholders.
We expect the second phase of our strategic plan will deliver further synergies and cost
efficiencies. We are confident that the industry outlook for the production and companion animal
segments remains strong, as does Apiam’s competitive position in the rural and regional
veterinary services sector.
Finally, I would like to take this opportunity to thank all of Apiam’s employees for their hard work
over the past 12 months as well as our shareholders for your continued support.
Yours sincerely,
Professor Andrew Vizard
Apiam Animal Health Limited
Financial statements for the year ended 30 June 2017
5
Managing Director’s Message
Dear shareholder,
Apiam has made significant progress over the 2017 financial year in a number of areas. The first
phase of our strategic roadmap, to build the foundations of the enlarged Apiam business, is now
largely complete. Additionally, our acquisition strategy and business development initiatives were
executed successfully over the period and growth in revenues and earnings were achieved,
despite challenging industry conditions in the first quarter. I would now like to discuss each of
these areas in further detail.
Financial performance
Apiam’s revenue for the 12 months to 30 June 2017 (FY2017) was $98.0 million, with revenue of
$51.9 million achieved in the second half (H2 2017). This reflects H2 2017 revenue growth of
17.1% compared to the prior comparable period (H2 2016) and this half year growth comparison
is provided in the absence of a full 12 month result in FY2016 (given Apiam’s listing date of 15th
December 2015).
Revenue growth excluding acquisitions (Quirindi and AllStock) in H2 2017 increased 1.0%
compared to H2 2016 despite the challenging dairy and beef feedlot industry conditions we
experienced in the first quarter of the financial year. This was driven by strong growth across
Apiam’s companion, equine and genetics services businesses. Apiam’s pig revenues also grew
as a result of new customers and product lines, particularly in Q4 2017. The Company’s
revenues from the beef feedlot sector were affected by cattle supply issues experienced by
smaller feedlot operators in South Eastern Australia. Apiam’s larger corporate feedlot business
has continued to perform well and in line with our expectations.
Apiam reported gross profit of $47.3 million for FY2017, representing an expansion in the
Company’s gross profit margin to 48.2%, driven by a change in business mix as well as the
realization of procurement synergies.
Net Profit After Tax for FY2017 was $5.0 million in FY2017, which included $1.3 million of non-
operating income associated with the reversal of a contingent liability on the balance sheet. This
translates to EPS of 5.00 cents per share.
Building the foundations
Apiam, on listing, brought together some of the largest rural veterinary practices from around the
country. The first phase of Apiam’s three year strategic roadmap was to ensure the necessary
focus and investment in “building the foundations” of the enlarged business. I am pleased to
report this phase is now nearing completion.
One of the most significant investments has been our Enterprise Resource Planning (ERP)
system and Practice Management System, at a total project cost of approximately $1.4 million.
The ERP system, which went live in May 2017, is essential to support Apiam’s scale and to
deliver operating efficiencies as the business continues to grow. The Practice Management
Apiam Animal Health Limited
Financial statements for the year ended 30 June 2017
6
System will be rolled out during FY2018, following employment trials at several of our veterinary
clinics.
Over FY2017 we have also made a significant investment in the resources required to build the
foundations in important areas such as work place policies, training, culture and branding.
Additional veterinarians, key account managers and administration support were appointed to
support the Company’s next stage of growth.
The second phase of our strategic roadmap, to “gain efficiencies” will be the focus in FY2018,
and I expect synergies and efficiencies to be realized as the final stage of system integration is
rolled out over FY2018.
Acquisition strategy
Growth via acquisitions remains an important part of Apiam’s strategy. Our focus is on
complimentary businesses that leverage our cost base and infrastructure, provide a new
geographic exposure or introduce a new or specialised product offering to our client base.
During FY2017, we acquired two businesses that met with our strategic objectives and that
represented financially attractive opportunities for Apiam shareholders.
We acquired Quirindi Veterinary Group (QVG) in September 2016 for $11.6 million. QVG is NSW
based with three business divisions, the largest being provision of veterinary services to
commercial beef production systems throughout Australia. The acquisition of QVG has significant
strengthened Apiam’s position in the beef feedlot industry and increased our footprint in rural
NSW from which to leverage our broader product offering. Since acquisition, QVG has performed
strongly and has made an important contribution to our revenue and earnings performance.
Apiam also acquired AllStock (NSW) Pty Ltd for $1.75 million in January 2017. AllStock provides
embryo transfer and artificial insemination services to the sheep and goat industries and also has
commercial operations in livestock identification services. This business has performed extremely
well under Apiam’s ownership.
As we look ahead to 2018, acquisitions remain a fundamental part of the Company’s strategy to
leverage
identified additional
complimentary bolt-on acquisitions which may be executed on subject to satisfactory financial
return criteria.
infrastructure. Management have
the enlarged company
Business development initiatives
There have been several business development initiatives that have delivered growth over
FY2017 and that remain important priorities as we move into the new financial year.
Firstly, our rural and regional expansion strategy has seen us expand our services into locations
where strong market demand exists. In the second half of FY2017, this strategy saw us open up
a satellite clinic in Nathalia (Northern Victoria) as well as enter into the South West Equine
Veterinary Group Joint Venture. Both these initiatives have been efficient investments, leveraging
nearby infrastructure and cost centres. Based on the success of this strategy, we expect to
announce a number of new greenfield and satellite clinics in FY2018.
Another successful business development initiative relates to a greater focus on Apiam providing
higher level services into the companion and mixed animal veterinary services segment. During
FY2017, Apiam has invested in new technologies and specialized veterinary training to capitalize
on the opportunities this market segment presents. We expect it to deliver growth in FY2018.
Supply chain also represents an area where Apiam believes future business growth can be
captured. A variety of initiatives are currently being explored including further supply chain
integration and an increase in the development of Apiam’s private label range, particularly higher
margin products.
Apiam Animal Health Limited
Financial statements for the year ended 30 June 2017
7
Outlook
I am excited by the outlook for Apiam in FY2018 and believe we have many commercially
attractive opportunities in front of us. Management have identified several business development
initiatives to drive additional revenue streams, and our cost base is now at level required to
support future business growth without requiring significant additional investment in back end
support.
Fundamentally, Australia’s regional production and companion animal industries offer strong
growth opportunities. Apiam is uniquely positioned to capitalize on this opportunity given its
integrated business model, geographic footprint and complete product offering.
I would like to take this opportunity to thank our employees, fellow Board members and
shareholders for their support over the past twelve months. I look forward to updating you of our
continued progress in the months ahead.
Yours Sincerely,
Dr Chris Richards
Managing Director
Apiam Animal Health Limited
Financial statements for the year ended 30 June 2017
8
Directors’ Report
The Directors present their report on the consolidated entity consisting of Apiam Animal Health
Limited (Apiam) and the entities it controlled at the end of, or during, the year ended 30 June
2017.
DIRECTORS
The names and details of the Company’s directors in office during the financial year and until the
date of this report are as follows.
Professor Andrew Vizard
Non-Executive Chairman
Dr. Christopher Richards
Managing Director
Mr. Michael van Blommestein
Non-Executive Director
Mr Richard John Dennis
Non-Executive Director
Mr Charles Sitch
Non-Executive Director
All of the Directors have been in office for the entire period.
Apiam Animal Health Limited
Financial statements for the year ended 30 June 2017
INFORMATION ON DIRECTORS
9
Professor Andrew Vizard
Dr. Christopher Richards
Independent Non-Executive Chairman
Managing Director
BVSc(Hons), MVPM, FAICD
BSc, BVSc
of Veterinary
consultancy. An
Professor Vizard is a Principal Fellow at the
Faculty
and Agricultural
Sciences, University of Melbourne and
previously Associate Professor of Veterinary
Epidemiology and Director of The Mackinnon
Project, a recognised leader in sheep and beef
veterinary
experienced
company director, he has previously held
directorships in Animal Health Australia, the
body responsible for coordinating Australia’s
animal health system, Primesafe, the statutory
authority
the
production of safe meat in Victoria and the
Australian Wool Corporation. In the previous 3
years, Professor Vizard was a non-executive
director of the Ridley Corporation Limited.
responsible
regulating
for
Chris founded Chris Richards & Associates in
1998 as a pig specific veterinary clinic based
in Bendigo, servicing clients
throughout
Australia. Chris has been responsible for the
strategic direction of the former Chris Richards
Group, which has seen the development,
acquisition and integration of other production
animal veterinary clinics, veterinary wholesale,
logistics and genetic services businesses over
the last 18 years resulting in the formation of
Apiam. Chris is currently a member of APL’s
Biosecurity Strategic Review Panel and is a
member of the Pork CRC Research and
Development Committee.
Interests in Shares and Options
Interests in Shares and Options
95,294 shares
27,339,804 shares
Apiam Animal Health Limited
Financial statements for the year ended 30 June 2017
10
Mr. Michael van Blommestein
Mr Richard John Dennis
Independent Non-Executive Director
Independent Non-Executive Director
GAICD
BComm, LLB, CA, MAICD
Michael was a Vice President and Country
Manager of Australia and New Zealand for
Zoetis and managed the spin-off of Zoetis from
Pfizer Australia. An experienced director in the
animal health sector, Michael presided over
Animal Medicines Australia, the peak industry
body for five years and was a member of the
board for nearly a decade. Michael played an
integral role in leading and overseeing the
transition of Animal Health Alliance into Animal
Medicines Australia and has also served on
the board of Animal Health Association Japan.
Rick has held a number of senior roles over 35
years with Ernst & Young and was the
Managing Partner of EY’s Queensland
practice on two occasions from 2001-2007 and
from 2014-2015. Rick also held a number of
executive management roles at EY, including
the roles of Deputy COO and CFO for the
Asia-Pacific
he was
practice where
responsible for overseeing the financial and
operational integration of EY’s Australian and
Asian member firms. Rick is also a member of
Australian Super’s Queensland Advisory
Board and a member of the advisory board to
EWM Group. He is also a non-executive
director of Springfield Land Corporation Pty
Ltd, Vesta Living Communities Ltd, Gold Coast
Private Health Network and the following
public companies: Omni Market Tide Limited
and Motorcycle Holdings Limited.
Interests in Shares and Options
Interests in Shares and Options
97,240 shares
30,000 shares
Apiam Animal Health Limited
Financial statements for the year ended 30 June 2017
11
Mr Charles Sitch
Non-Executive Director
BComm, LLB, MBA, GAICD
Charles is currently a director of ASX listed
Spark New Zealand Ltd and a member of their
audit risk and finance committee. Previously
Charles spent 24 years at McKinsey and
Company New York, London and Melbourne.
He was a senior director, primarily working
with CEOs and Boards on strategy and
operations turnarounds before retiring in 2010.
In 2002, Charles was awarded the President’s
Medal for services to the Royal Agricultural
Society of Victoria. Charles has previously
held listed public company directorships in
(NZX Listed) and
Pacific Edge Limited
Bellamy’s Australia Limited
(resigned 28
February 2017).
Interests in Shares and Options
150,000 shares
Company Secretary
Ms Ella McDougall
BHSc, BA, BLLP, GIA(Cert)
Ella was General Counsel and Company Secretary of Apiam from incorporation on 25 March
2015 through to 17 February 2017 when she resigned.
Sophie Karzis
B. Juris, LLB
Ms. Karzis was appointed Company Secretary on the 17 February 2017 and is a practicing
lawyer with over 15 years’ experience as a corporate and commercial lawyer, and company
secretary and general counsel for a number of private and public companies. Sophie is the
principal of Corporate Counsel, a corporate law practice with a focus on equity capital markets,
mergers and acquisitions, corporate governance for ASX-listed entities, as well as the more
general aspects of corporate and commercial law. Sophie is the company secretary of a number
of ASX-listed and unlisted entities, and is a member of the Law Institute of Victoria as well as the
Governance Institute of Australia.
Apiam Animal Health Limited
Financial statements for the year ended 30 June 2017
MEETINGS OF DIRECTORS
12
The number of meetings of the Company’s Board of Directors and of each Board committee held
during the year and the number of meetings attended by each Director or their alternate were as
follows:
Directors
Board Meetings
Audit and Risk Management
Committee
Remuneration Committee
A
Andrew Vizard
16
Chris Richards
16
Michael van
Blommestein
16
Richard Dennis
16
Charles Sitch
16
B
16
16
14
15
14
A
6
-
-
6
6
B
6
-
-
6
6
A
5
-
5
-
5
B
5
-
5
-
4
Column A denotes the number of meetings the Director was entitled to attend and column B
denotes the number of meetings the Director attended.
COMMITTEE MEMBERSHIP
As at the date of this report, the Company has an Audit & Risk Management Committee and a
Remuneration & Nomination Committee of the Board of Directors
Members of the Audit & Risk Management Committee during the period were:
Richard Dennis (Chair)
Andrew Vizard
Charles Sitch
Members of the Remuneration & Nomination Committee during the period were:
Michael van Blommestein (Chair)
Andrew Vizard
Charles Sitch
Apiam Animal Health Limited
Financial statements for the year ended 30 June 2017
PRINCIPAL ACTIVITIES
13
The Group operates in the segment of provision of veterinary products and services to production
and companion animals. Apiam’s strategy is to service production animals throughout their life
cycle, including the provision of:
systems to assist in herd health programs;
production advice;
consulting services and products to assist in the prevention of animal diseases;
technologies to manage compliance with legislative requirements on pharmaceutical use;
advice and services in respect of animal welfare compliance;
retail animal health product sales;
on-farm delivery of products via its own logistics capability;
third party auditing services of industry quality assurance programs;
technology development for animal health management;
ancillary services such as sales and/or delivery of genetics and associated products; and
on-farm and on-line training programs for clients.
OPERATING AND FINANCIAL REVIEW
Revenue for the 12 months to 30 June 2017 was $98.0m, with revenue for the second half (H2
FY2017) of $51.9m, improving 17.1% on H2 FY2016, the prior comparable period (pcp). In spite
of challenging industry conditions in the dairy and feedlot industries, revenue in H2 FY2017
increased 1.0% compared to H2 FY 2016 (excluding the impact of the Quirindi Veterinary Group
(QVG) and AllStock acquisitions.
Key drivers of Apiam’s revenue results were a strong performance from Apiam’s companion
animal, genetics services and equine businesses. Apiam’s pig revenues also grew as a result of
new customers and product lines, particularly in Q4 FY2017. The Company’s beef feedlot
revenues were affected by cattle supply issues experienced by smaller feedlot customers in
South Eastern Australia. Apiam’s larger corporate feedlot business has continued to perform in
line with company expectations.
Revenue (excluding acquisitions) in H2 FY2017 increased 6.4% against H1 FY 2017, supported
by a strong finish to the year across all business units.
Apiam acquired QVG, a leading beef feedlot focused veterinary practice in September 2016 (10-
month contribution to FY2017) which has performed in line with expectations. AllStock, was
acquired in January 2017 (6-month contribution to FY2017). AllStock have performed strongly
since acquisition, delivering both revenue and earnings growth. Additional details are discussed
in the Acquisitions section below.
Apiam reported gross profit of $47.3m for FY17, representing an expansion in the group’s gross
profit margin from 46.8% in FY2016 to 48.2% in FY2017. This margin uplift was driven by
changes in the Company’s business mix as well as the realisation of procurement synergies.
Apiam’s reported net profit after tax (NPAT) for FY2017 was $5.0m (which included $1.3m of
non-operating income associated with the reversal of a contingent liability on the balance sheet).
The following tables are presented to assist in the interpretation of the underlying performance of
the Company during the FY2017 period. In the absence of a full 12 month FY2016 result, we
have also included a half year analysis over the periods H2 2016 (the first full 6 month trading
Apiam Animal Health Limited
Financial statements for the year ended 30 June 2017
14
period since Apiam’s listing in December 2015), H1 2017 and H2 2017. This information is
additional and provided using non-IFRS information and terminology.
Apiam FY17 Consolidated Financial Results
$M
Total Revenue
Gross Profit
Expenses
Employment Costs
Other expenses
Total Operating Expenses
Underlying EBITDA2
Integration / ERP expenses
Acquisition/Advisory expenses
Reversal of contingent consideration
EBITDA
Depreciation & Amortization
EBIT
Interest
Net Profit/(loss) before tax
Tax
Net Profit/(loss) after tax
Gross Margin (%)
FY17A
98.0
47.3
FY161
54.1
25.3
Variance
43.9
21.9
%
81.1%
86.6%
(27.0)
(11.9)
(38.9)
8.3
(0.7)
(0.2)
1.3
8.6
(1.4)
7.2
(0.9)
6.3
(1.3)
5.0
48.2%
8.5%
(14.2)
(5.3)
(19.5)
5.8
(0.5)
(3.3)
0.0
2.1
(0.6)
1.5
(0.4)
1.1
(1.0)
0.1
46.8%
10.8%
90.8%
123.4%
99.7%
42.8%
(12.8)
(6.6)
(19.4)
2.5
(0.3)
3.0
1.3
6.5
(0.8)
5.7
(0.5)
5.2
(0.3)
5.0
Underlying EBITDA margin (%)
Notes:
1 FY16A results reflect a partial year comprising contributions from Chris Richards Group (and 3 clinics in which the
group had a majority equity interest) from 1 November 2015 and the contribution from 9 other clinics acquired from 10
December 2015
2 Underlying EBITDA excludes one-off integration, ERP & acquisition expenses as well as $1.3m of income associated
with the reversal of Contingent Liability on the balance sheet (contingent acquisition consideration no longer payable)
Apiam Animal Health Limited
Financial statements for the year ended 30 June 2017
Apiam FY17 Half Year Analysis
15
H1
17A
46.1
22.6
H2
16A
44.3
21.1
%
12.6%
9.1%
H2 17A
51.9
24.7
$M
Total Revenue
Gross Profit
Expenses
- employment costs
- general expenses
Operating expenses
Underlying EBITDA1
- Gross margin
- Underlying EBITDA margin
Notes:
1 Underlying EBITDA excludes one-off integration, ERP & acquisition expenses as well as $1.3m of income
11.8
4.3
16.1
5.0
47.7%
11.4%
13.2
5.4
18.6
4.0
49.0%
8.7%
13.8
6.5
20.3
4.3
47.5%
8.4%
4.6%
20.9%
9.3%
8.4%
%
17.1%
16.9%
17.0%
51.9%
26.3%
(13.3)%
associated with the reversal of Contingent Liability on the balance sheet (contingent acquisition consideration no
longer payable)
Strategic plan & business development
In FY2017, Apiam has been focussed on executing the first phase of its three-year strategic plan
– “building the foundations”. This has centred around successfully integrating acquired
businesses and building a platform that can deliver future growth for shareholders.
The “building the foundations” phase is now largely complete. Significantly, Apiam’s Enterprise
Resource Planning (ERP) system went live on 1 May 2017 and was delivered on-time and on-
budget. This was an essential investment for Apiam enabling the company to have an integrated
system to track its sales, financial information, stock and human resources data. Capturing of
real-time monitoring and forecasting data will also enable the business to drive more efficient
work practices and more effectively and quickly respond to customer trends and opportunities.
The roll-out of Apiam’s Practice Management System is one of the last planned foundation
investments and will occur across FY2018.
As previously advised, additional veterinarians, key account managers and administration
support staff required to support Apiam’s next stage of growth were mostly hired in the first half of
FY2017. Significant work has also been undertaken in FY2017 in important foundational areas
such as work place policies, culture and branding.
Apiam’s focus in FY2018 is to move to the second phase of its strategic plan – “gaining
efficiencies”. Operating efficiencies will commence to be delivered throughout FY2018 and into
FY2019, particularly as Apiam’s Practice Management System investment is completed.
Several initiatives to drive additional revenue streams in FY2018 have also been implemented.
Specifically, these business development initiatives are:
Rural & regional expansion strategy: Strategic expansion of services in locations where
strong market demand exists. The opening of our satellite clinic in Nathalia (northern VIC) in
April 2017 and our subsequent South West Equine Veterinary Group JV are our first
examples of this strategy. These are efficient investments requiring limited capital
expenditure and which leverage nearby infrastructure and cost centres. Apiam expects to
open a number of new greenfield and satellite clinics in FY2018;
A growth focus on the underserviced rural companion and mixed animal markets to capture
revenue in an underserviced segment in rural and regional Australia; and
Supply chain initiatives: Further integration of supply chain as well expansion into
development of a private label range and higher margin products.
Apiam Animal Health Limited
Financial statements for the year ended 30 June 2017
Acquisitions
Apiam announced two acquisitions during FY2017.
16
Apiam acquired NSW based Quirindi Veterinary Group (QVG) on 1 September 2016 for
consideration of $11.57m. QVG has three key business divisions – (i) provision of veterinary
services to large beef production systems throughout Australia; (ii) provision of equine
reproduction services at its custom built centre in Quipolly; and (iii) a livestock and companion
veterinary practice in Quirindi. The acquisition of QVG strengthened Apiam’s position in the beef
feedlot industry and established a presence in rural NSW from which to leverage the Company’s
product offering. Since acquisition, QVG has performed strongly and is important for Apiam’s
strategy in the beef feedlot sector going forward.
Apiam also acquired AllStock (NSW) Pty Ltd for $1.75m on 5 January 2017. AllStock provides
embryo transfer and artificial insemination services to the sheep and goat industries. AllStock
also has commercial operations in livestock identification systems, to enhance traceability in the
event of food safety and disease outbreaks. This acquisition has established Apiam as Australia’s
leader in large scale sheep and goat herd expansion and genetic upgrade programs. AllStock
has performed exceptionally well since acquisition, with revenue uplift occurring in the first six
months of Apiam’s ownership.
Growth via acquisition remains an important part of Apiam’s business strategy. The Company’s
focus is to make strategic acquisitions to further leverage its cost base and infrastructure and to
deliver services and product offering to an enlarged client base.
Expenses
Apiam has brought together some of the largest rural veterinary practices from around the
country. In FY2017, Apiam has made a significant investment in “building the foundations” of the
enlarged business with the capacity to deliver organic growth, additional strategic acquisitions,
synergies and operating efficiencies for shareholders in the coming years.
Investment in key foundational areas in FY2017 were across the following areas:
$1.95m in new employees: Veterinarians to drive growth, three additional key account
managers as well as strengthening administration support (HR, Finance, IT, Marketing and
People & Culture);
$1.70m in other operating expenses: Business development strategy, marketing, brand
development, people and culture; and
$0.80m in IT systems: Implementation of an integrated Enterprise Resource Planning (ERP)
system of which $0.40m was expensed and $0.40m was capitalised (to be amortised over
its useful life, in accordance with accounting standards).
An additional $1.8m of operating expenses (employment & other) were incurred in FY2017 as a
result of the QVG and AllStock acquisitions.
Apiam believes its operating infrastructure is nearing a level required to sustain the expected next
stage of the Company’s growth and expect to deliver additional cost efficiencies as the final stage
of system integration is rolled out over FY2018.
Apiam’s Practice Management System (PMS) “VetLink” is being implemented in FY2018
following extensive development work by clinic personnel across several vet clinics over the past
year. It is expected that approximately $0.25m of this investment will be capitalised and
amortised over its useful life (in accordance with accounting standards) and that approximately
$0.35m will be expensed.
One-off expenses incurred in FY2017 were $0.5m related to a number of integration projects and
acquisitions.
Apiam Animal Health Limited
Financial statements for the year ended 30 June 2017
Balance sheet
17
As at 30 June 2017, Apiam reported cash on hand of $1.0m and borrowings of $25.7m.
Borrowings increased from $16.0m as at 30 June 2016, largely due to the acquisition of QVG
during the period. In June 2017, Apiam negotiated new covenants related to its borrowing facility
provided by banking partner, NAB. The amended covenants better align Apiam’s working capital
requirements with its strategic plan, providing greater flexibility where required.
Inventory growth has been in-line with the growth of Apiam’s business operations. Inventory
levels as at 30 June 2017 were $11.5m, compared to $10.2m as at 30 June 2016. Apiam
normally experiences a seasonal increase in inventory around December which has decreased,
in addition to the company having a focus on inventory controls and management.
The increase in June 30 FY2017 inventories of $1.3m compared to June 30 FY2016 is due to the
centralisation of inventory procurement and the additional inventory required as a result of the
QVG acquisition.
Cash flow
Apiam’s operating cash flow has improved in the second half of FY2017, particularly due to
focussed efforts to reduce inventory. The QVG and AllStock acquisitions have been significant
drivers of net investing and net financing cash flows over the period.
$M
FY2017 A FY2016 A1
Net cash used in operating activities
Acquisition of subsidiary, net of cash
Purchases of property, plant and equipment
Restructure of group entities, net of cash
Other
Net cash used in investing activities
Proceeds from issue
Net changes in financing
Net cash inflow from financing activities
1.7
(8.4)
(1.6)
0.0
(0.1)
(10.0)
0.0
7.2
7.2
(1.2)
(24.1)
(0.3)
(0.6)
(0.1)
(25.1)
23.0
5.4
28.4
Net change in cash and cash equivalents
Notes:
1 FY16A results reflect a partial year comprising contributions from Chris Richards Group (and 3 clinics in which the
group had a majority equity interest) from 1 November 2015 and the contribution from 9 other clinics acquired from 10
December 2015
2 This information is additional and provided using non-IFRS information and terminology.
(1.1)
2.1
Capital management
Apiam’s Board of Directors have declared a final dividend of 0.8 cents per share, fully franked
and payable on 27 October 2017. This represents a total dividend of 1.6 cents per share for
FY2017, equivalent to a 42.6% pay-out ratio based on Apiam’s FY17 operating NPAT (which
excludes $1.3m of income associated with the reversal of Contingent Liability on the balance
sheet).
Apiam will implement a Dividend Reinvestment Plan (DRP), allowing eligible shareholders to
reinvest their dividend into Apiam shares, and participate in the Company’s future growth. The
DRP will be in operation for the FY2017 final dividend. The key terms of the proposed Dividend
Reinvestment Plan will be sent to shareholders in the coming week.
Apiam Animal Health Limited
Financial statements for the year ended 30 June 2017
18
Outlook
Apiam is well placed to deliver revenue and earnings growth in FY2018. We expect the second
phase of our strategic plan to deliver further synergies and efficiency benefits for our
shareholders.
The key underlying industry drivers for the production animal sector are positive for FY2018 and
the rural companion animal sector continues to grow, with increased demand for better service
offerings.
Apiam’s revenues in FY2018 year to date are in line with Company expectations and have not
been affected by the industry challenges that were experienced during Q1 FY2017.
DIVIDENDS
The maiden interim dividend of $809,424 is 0.8 cps and was paid in April 2017. The Apiam Board
of Directors have declared the Company’s final dividend of 0.8c per share fully franked on the 25
August 2017. The final dividend of $809,424 will be paid on the 27 October 2017.
SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS
In the opinion of the Directors there were no significant changes in the state of affairs of the
consolidated entity during the financial period, except as otherwise noted in this Report.
SIGNIFICANT EVENTS SUBSEQUENT TO THE END OF THE FINANCIAL
YEAR
There are no other matters or circumstances that have arisen since the end of the year that have
significantly affected or may significantly affect either:
the entity’s operations in future financial years
the results of those operations in future financial years; or
the entity’s state of affairs in future financial years.
LIKELY DEVELOPMENTS, BUSINESS STRATEGIES AND PROSPECTS
The Company’s strategy is to build on the solid foundation it has established as an integrated
animal health business servicing the rural production and companion animal sectors, and ensure
we can meet the needs of a market which is experiencing strong growth.
The Company expects to continue to invest through acquisition, new greenfield sites,
partnerships and further recruitment of leading expertise to ensure we have the capability
required to prosper in the expanding global animal health industry.
KEY RISKS AND BUSINESS CHALLENGES
Apiam Animal Health operates in the Production Animal industry and in particular the pig, feedlot
cattle and dairy cattle sectors. Any downturn or disruption in these sectors, particularly if it results
in substantial reductions in livestock numbers or production volume, will adversely impact the
Company.
Any recurring or prolonged disruption to the supply of the key products that Apiam Animal Health
sells, particularly vaccines for pigs, may have an adverse effect on the financial performance of
the Company.
No single client or buying group is expected to account for more than 10% of Apiam Animal
Health’s FY16 pro-forma forecast revenue. However, if there is consolidation within Apiam
Animal Health’s client base, this may lead to a concentration of the Company’s client exposure
Apiam Animal Health Limited
Financial statements for the year ended 30 June 2017
19
risk and may adversely affect the margins that the Company is able to generate on the sale of its
products and services to these client groups.
Apiam Animal Health’s business model depends substantially on its senior management team
and key personnel to oversee the day-to-day operations and strategic management of the
Company. There is a risk that operating and financial performance of the Company would be
adversely affected by the loss of one or more key persons.
ENVIRONMENTAL REGULATION
The Managing Director reports to the Board on any environmental and regulatory issues at each
Directors meeting, if required. There are no matters that the Board considers need to be reported
in this report.
GREENHOUSE GAS AND ENERGY DATA REPORTING REQUIREMENTS
The Group is not subject to the reporting requirements of either the Energy Efficiency
Opportunities Act 2006 or the National Greenhouse and Energy Reporting Act 2007.
UNISSUED SHARES UNDER OPTION
There were no unissued ordinary shares of Apiam under option at the date of this report.
Shares issued during or since the end of the year as a result of exercise of options
During or since the end of the financial year, the Company has not issued any ordinary shares as
a result of the exercise of options.
DEEDS OF ACCESS, INDEMNITY AND INSURANCE FOR DIRECTORS AND
OFFICERS
Access
The Company has entered into deeds of access, indemnity and insurance with each Director
which contain rights of access to certain books and records of the Company.
Indemnification
Under the constitution of the Company, the Company is required to indemnify all Directors and
officers, past and present, against all liabilities allowed under law. Under the deed of access,
indemnity and insurance, the Company indemnifies parties against all liabilities to another person
that may arise from their position as an officer of the Company or its subsidiaries to the extent
permitted by law. The deed stipulates that the Company will meet the full amount of any such
liabilities, including reasonable legal costs and expenses.
Insurance
Under the constitution of the Company, the Company may arrange and maintain directors’ and
officers’ insurance for its Directors to the extent permitted by law and under the deed of access,
indemnity and insurance, the Company must maintain insurance cover for each Director for the
duration of the access period.
Rounding of amounts
Apiam Animal Health is a type of Company referred to in ASIC Class Order 98/100 and therefore
the amounts contained in this report and in the financial report have been rounded to the nearest
$1,000 (where rounding is applicable), or in certain cases, to the nearest dollar under the option
permitted in the class order.
Apiam Animal Health Limited
Financial statements for the year ended 30 June 2017
20
Remuneration Report
REMUNERATION REPORT (AUDITED)
This remuneration report outlines the director and executive remuneration arrangements of the
Company and the Group in accordance with the requirements of the Corporations Act 2001 and
its Regulations. For the purposes of this report, key management personnel (KMP) of the Group
are defined as those persons having authority and responsibility for planning, directing, and
controlling major activities of the Company and the Group, directly or indirectly, including any
director (whether executive or otherwise) of the parent.
For the purposes of this report, the term “executive” encompasses the senior executives and
general managers of the Group.
Details of Key Management Personnel
(I) DIRECTORS
Andrew Vizard
Chairman (Independent Non-executive)
Chris Richards
Managing Director (Executive)
Michael van Blommestein
Director (Independent Non-executive)
Richard Dennis
Director (Independent Non-executive)
Charles Sitch
Director (Independent Non-executive)
(II) EXECUTIVES
Corne Loots
General Manager Veterinary Services
Matthew White
Chief Financial Officer
The Remuneration Report is set out under the following main headings:
a Principles used to determine the nature and amount of remuneration;
b Details of remuneration;
c Service agreements;
d Share-based remuneration;
e Bonuses included in remuneration;
f Non-executive director remuneration; and
g Other information.
Apiam Animal Health Limited
Financial statements for the year ended 30 June 2017
21
a
Principles used to determine the nature and amount of remuneration
The principles of the Group’s executive strategy and supporting incentive programs and
frameworks are:
to align rewards to business outcomes that deliver value to shareholders;
to drive a high performance culture by setting challenging objectives and rewarding
high performing individuals; and
to ensure remuneration is competitive in the relevant employment market place to
support the attraction, motivation and retention of executive talent.
The Group has structured a remuneration
complementary to the reward strategy of the Group.
framework
that
is market competitive and
The Remuneration Committee operates in accordance with its charter as approved by the Board
and is responsible for reviewing and recommending compensation arrangements for the
Directors and the Executive Team. The remuneration has met 5 times in the FY17 reporting
period.
The Committee has approved the engagement of Korn Ferry Hay Group to undertake bench-
marking for the executive team. The Committee has also approved the engagement of Grant
Thornton Australia Limited and HRAscent to formulate an equity management plan for principal
and senior vets which was approved in FY17 and will be implemented in FY18.
The remuneration structure that has been adopted by the Group consists of the following
components:
fixed remuneration being annual salary; and
short term incentives, being bonuses.
However, the Remuneration Committee is considering long term incentives (LTI) to be
implemented in the future. The Remuneration Committee assesses the appropriateness of the
nature and amount of remuneration on a periodic basis by reference to recent employment
market conditions with the overall objective of ensuring maximum stakeholder benefit from the
retention of a high quality Board and Executive Team.
Item
EPS (cents)
Dividends (cents per share)
Net profit before tax ($’000)
Share price ($)
2017
5.00c
0.8c
$6,315
$0.70
2016
0.08c
-
$1,068
$1.49
Apiam Animal Health Limited
Financial statements for the year ended 30 June 2017
22
Details of remuneration
b
Details of the nature and amount of each element of the remuneration of each Key Management Personnel (KMP) of Apiam are shown in the table
below:
Directors
Andrew Vizard
Chairman Independent (ii)
Richard Dennis
Independent (ii)
Ella McDougall
Director (iv)
Chris Richards
Managing Director (i)
Charles Sitch
Independent (ii)
Michael van Blommestein
Independent (ii)
Matthew White
Director (iv)
Employees
Corne Loots
General Manager Vet, Services (vii)
Matthew White
Chief Financial Officer (iv)
Julie Tippett (ix)
Chief Operating Officer (iii)
Ella McDougall (ix)
General Counsel/Cpy Sec (iv)
2017 Total
2016 Total
Year
2017
2016
2017
2016
2017
2016
2017
2016
2017
2016
2017
2016
2017
2016
2017
2016
2017
2016
2017
2016
2017
2016
2017
2016
Short term employee benefits
Salary
and fees (v)
$
Cash bonus
$
Non-monetary
benefits
$
Post-employment
benefits
Superannuation
$
Long-term
benefits
Long service
leave (vi)
$
Share-based
payments
Shares
(viii)
$
Total
$
120,000
80,000
70,000
46,667
-
-
350,072
221,051
54,795
36,530
54,795
36,530
-
-
212,519
139,772
190,000
136,449
-
145,161
-
101,389
1,052,181
-
-
-
-
-
-
-
-
-
-
-
-
-
-
50,000
-
95,000
-
-
-
-
-
943,549
145,000
-
-
-
-
-
-
12,027
19,941
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
19,791
10,868
5,205
3,470
5,205
3,470
-
-
23,961
12,848
27,075
12,929
-
-
-
-
-
-
-
6,718
4,241
-
-
-
-
-
-
285
74
274
75
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
50,000
-
30,000
-
120,000
80,000
70,000
46,667
-
-
388,608
256,101
60,000
40,000
60,000
40,000
-
-
236,765
252,694
217,349
274,453
-
3,117
13,790
(17,793)
200,000
344,275
-
-
12,027
23,058
-
9,204
81,237
66,579
-
1,458
7,277
-
-
100,000
212,051
-
1,152,722
(11,945)
380,000
1,546,241
Performance
based
percentage of
remuneration
%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
20%
0%
35%
0%
0%
0%
0%
0%
9%
(i) Appointed director 25 March 2015 and received no remuneration for acting as a director or employee of the company for the period 25 March 2015 to 31 October 2015. On 1 November 2015 Chris became
Managing Director of the company and his remuneration received for FY16 relates to the period 1 November 2015 to 30 June 2016.
(ii) Appointed director 5 November 2015. Remuneration received for FY16 relates to the period 5 November 2015 to 30 June 2016.
(iii) Remuneration received for FY16 relates to the period 1 November 2015 to 30 June 2016.
(iv) Appointed director 28 August 2015, resigned 5 November 2015. No remuneration was received for acting as a director. Remuneration received relates to KMP role for the period 1 November 2015 to 30 June
2016 and KMP role from 1 July 2016 to 17 Feb 2017. Resigned on 17 February 2017.
(v) Salary and fees includes fixed cash and annual leave accruals.
(vi) Long term benefits include long service leave accruals
(vii) Cash bonus is a sign on bonus. (viii) As part of the listing on the Australian Securities Exchange, shares were issued to certain eligible employees in Australia for nil consideration as part of their reward for
service to the Company.
(ix) Julie Tippett not considered a KMP in 2017
Apiam Animal Health Limited
Financial statements for the year ended 30 June 2017
23
The relative proportions of remuneration that are linked to performance and those that are fixed
are as follows:
Name
Executive Directors
Chris Richards
Other Key Management Personnel
Corne Loots
Matthew White
Fixed remuneration
At risk – STI
100%
83%
83%
-
17%
17%
Service agreements
c
Remuneration and other terms of employment for the Executive Directors and other key
management personnel are formalised in a Service Agreement. The major provisions of the
agreements relating to remuneration are set out below:
Name
Chris Richards
Corne Loots
Matthew White
Base salary *
$388,608
$212,519
$190,000
Term of agreement
5 years from listing
No fixed term
No fixed term
Notice period
Twelve (12) months
Six (6) months
Six (6) months
* Base salary for Chris Richards is inclusive of superannuation guarantee payments. For all other key management
personnel, base salary does not include superannuation guarantee payments.
Bonus provisions
Chris Richards:
Nil
Corne Loots:
Eligible for an annual bonus of up to 20% of base salary from 1 December 2016.
Sign on bonus of $50,000 payable after twelve months service completed on 1 December 2016.
Matthew White
Eligible for an annual bonus of up to 20% of base salary from 1 July 2016.
Eligible for a bonus of up to 50% of base salary for the period ended 30 June 2016.
Share-based remuneration
d
As part of the listing on the Australian Securities Exchange, shares were issued to certain eligible
employees in Australia for nil consideration as part of listing success milestones and as reward
for service to the Company. The $1.00 fair value per share to the company is included as an
expense in the profit and loss statement. The total remuneration in shares for each key
management person is included as part of their remuneration in Part b of this Remuneration
Report under Share-based payments.
Bonuses included in remuneration
e
Details of the short-term incentive cash bonuses awarded as remuneration to each key
management personnel, the percentage of the available bonus that was paid and payable in the
financial year, and the percentage that was forfeited because the person did not meet the service
and performance criteria is set out below. The sign on bonus to Corne Loots was paid upon
completion of twelve months service on 1 December 2016 and the listing bonus to Matt White
was paid in August 2016.
Apiam Animal Health Limited
Financial Statements for the year ended 30 June 2017
24
Included in
remuneration ($)
Percentage vested
during the year
Percentage forfeited
during the year
Executive Directors
Chris Richards
Other Key Management Personnel
Corne Loots
Matthew White
-
-
-
-
-
-
100%
100%
100%
Non-Executive Director remuneration
f
Clause 13.1(a) of the Company’s Constitution (Constitution) provides the limit for the aggregated
remuneration of non-executive directors which is currently set at $750,000. The Directors of the
Company are entitled to apportion and distribute this aggregate Non-Executive Directors’
remuneration as they determine.
The Non-Executive Directors of the Company received the following fees (which total $300,000):
Chairman (One): $120,000 per annum;
Directors (Three): $60,000 per annum, each; and
Chair of the Audit and Risk Management Committee $10,000 (in addition to the
directors fees), such amounts being inclusive of any superannuation payments.
The ASX Listing Rules and Constitution allows the Company to increase the aggregate amount
of remuneration payable to Non-Executive Directors of the Company pursuant to Shareholder
approval at a general meeting.
Other information
g
Options held by key management personnel
There were no options to acquire shares in the Company held during the 2017 reporting period
by key management personnel of the Group; including their related parties.
Shares held by key management personnel
The number of ordinary shares held in the Company at 30 June 2017 held by each of the Group’s
key management personnel, including their related parties, is set out below:
Personnel
Chris Richards
Andrew Vizard
Charles Sitch
Richard Dennis
Michael van
Blommestein
Corne Loots
Matthew White
Balance at
1/07/2016
26,852,304
30,000
150,000
50,000
100,000
86,689
80,000
27,648,993
Granted as
remuneration
-
-
-
-
-
-
-
-
Received on
exercise Other changes
487,500
65,294
-
(20,000)
-
-
-
-
-
-
-
-
(2,760)
-
31,218
361,252
Held as at
30/06/2017
27,339,804
95,294
150,000
30,000
97,240
86,689
111,218
28,010,245
None of the shares included in the table above are held nominally by key management
personnel.
Apiam Animal Health Limited
Financial Statements for the year ended 30 June 2017
Loans to key management personnel
25
The Group did not enter into any loans with key management personnel during the 2017 year.
The number of key management personnel included in the Group aggregate at year end is Nil.
The Group does not have an allowance account for receivables relating to outstanding loans and
has not recognised any expense for impaired receivables during reporting period.
Other transactions with key management personnel
The Group rents premises at Piper Lane, Bendigo East, Victoria. The premises are owned by an
entity associated with Chris Richards. Rent payments made amounted to $242,400 (2016:
$160,000).
The Group rents premises at Rubicon Street, Smithton, Tasmania. The premises are owned by
an entity associated with Chris Richards. Rent payments made amounted to $124,116 (2016:
$73,515).
The Group leases it artificial insemination facility in Victoria from entities associated with Chris
Richards. Lease payments made amounted to $69,939 (2016: $43,147).
All related party rentals are based on commercial rates and the terms of the lease are standard
commercial terms.
The Group has entered into an intellectual property licence with iVet Pty Ltd, a company
controlled by Chris Richards, to use the iVet intellectual property. The Group will pay iVet Pty Ltd
a royalty of 10% of net sales revenue received by the Group for the use of the intellectual
property licence. The agreement is for an initial term of 10 years. The group has the option to
purchase the iVet technology by giving notice to iVet Pty Ltd at any time during the initial 5 years
of the term. No payments were made during the financial year (2016: Nil).
The Group obtains air travel services for business purposes from an entity associated with Chris
Richards. The fares paid are based on commercial fares. Payments made amounted to $64,179
(2016: $121,257).
End of audited Remuneration Report.
Environmental legislation
Apiam operations are not subject to any particular or significant environmental regulation under a
law of the Commonwealth or of a State or Territory in Australia.
Indemnities given to, and insurance premiums paid for, auditors and officers
Insurance of officers
During the year, Apiam paid a premium to insure officers of the Group. The officers of the Group
covered by the insurance policy include all Directors. The liabilities insured are legal costs that
may be incurred in defending civil or criminal proceedings that may be brought against the
officers in their capacity as officers of the Group, and any other payments arising from liabilities
incurred by the officers in connection with such proceedings, other than where such liabilities
arise out of conduct involving a wilful breach of duty by the officers or the improper use by the
officers of their position or of information to gain advantage for themselves or someone else to
cause detriment to the Group.
Apiam Animal Health Limited
Financial Statements for the year ended 30 June 2017
26
Details of the amount of the premium paid in respect of insurance policies are not disclosed as
such disclosure is prohibited under the terms of the contract.
The Group has not otherwise, during or since the end of the financial year, except to the extent
permitted by law, indemnified or agreed to indemnify any current or former officer of the Group
against a liability incurred as such by an officer.
Indemnity of auditors
The Group has not, during or since the end of the financial year, indemnified or agreed to
indemnify its auditors, Grant Thornton Audit Pty Ltd, or any related entity against a liability
incurred by the auditor. During the financial year, the Group has not paid a premium in respect of
a contract to insure the auditor of the Group or any related entity.
Non-audit services
During the year, the Company’s auditors performed certain other services in addition to their
statutory audit duties.
The Board has considered the non-audit services provided during the year by the auditor and, in
accordance with written advice provided by resolution of the Audit and Risk Management
Committee, is satisfied that the provision of those non-audit services during the year is
compatible with, and did not compromise, the auditor independence requirements of the
Corporations Act 2001 for the following reasons:
all non-audit services were subject to the corporate governance procedures adopted by the
Company and have been reviewed by the Audit and Risk Management Committee to ensure
they do not impact upon the impartiality and objectivity of the auditor; and
the non-audit services do not undermine the general principles relating to auditor
independence as set out in APES 110 Code of Ethics for Professional Accountants, as they
did not involve reviewing or auditing the auditor’s own work, acting in a management or
decision-making capacity for the Company, acting as an advocate for the Company or jointly
sharing risks and rewards.
Details of the amounts paid to the auditors of the Company and its related practices for audit and
non-audit services provided during the year are set out in Note 27 to the financial statements.
A copy of the Auditor’s Independence Declaration as required under s307C of the Corporations
Act 2001 is included on page 29 of this financial report and forms part of this Directors’ Report.
Proceedings on behalf of the Company
No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to
bring proceedings on behalf of the Company, or to intervene in any proceedings to which the
Company is a party, for the purpose of taking responsibility on behalf of the Company for all or
part of those proceedings.
Rounding of amounts
Apiam is a type of Company referred to in ASIC Corporations (Rounding in Financial/Directors’
Reports) Instrument 2016/191 and therefore the amounts contained in this report and in the
financial report have been rounded to the nearest $1,000 (where rounding is applicable), or in
certain cases, to the nearest dollar under the option permitted in the Instrument.
Apiam Animal Health Limited
Financial Statements for the year ended 30 June 2017
27
Signed in accordance with a resolution of the Directors:
Dr Christopher Irwin Richards
Managing Director
Melbourne
25 August 2017
Apiam Animal Health Limited
Financial Statements for the year ended 30 June 2017
28
Apiam Animal Health Limited
Financial Statements
For the year ended 30 June 2017
The Rialto, Level 30
525 Collins St
Melbourne Victoria 3000
Correspondence to:
GPO Box 4736
Melbourne Victoria 3001
T +61 3 8320 2222
F +61 3 8320 2200
E info.vic@au.gt.com
W www.grantthornton.com.au
AUDITOR’S INDEPENDENCE DECLARATION
TO THE DIRECTORS OF APIAM ANIMAL HEALTH LIMITED
In accordance with the requirements of section 307C of the Corporations Act 2001, as lead auditor
for the audit of Apiam Animal Health Limited for the year ended 30 June 2017, I declare that, to the
best of my knowledge and belief, there have been:
a
no contraventions of the auditor independence requirements of the Corporations Act 2001 in
relation to the audit; and
b
no contraventions of any applicable code of professional conduct in relation to the audit.
GRANT THORNTON AUDIT PTY LTD
Chartered Accountants
A C Pitts
Partner - Audit & Assurance
Melbourne, 25 August 2017
Grant Thornton Audit Pty Ltd ACN 130 913 594
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Apiam Animal Health Limited
Financial statements for the year ended 30 June 2017
30
STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE
INCOME
FOR THE YEAR ENDED 30 JUNE 2017
Revenue
Other income
Expenses
Changes in inventory
Cost of materials
Costs of consumables and services
Employee benefit expenses
Listing and acquisition expenses
Property expenses
Freight, vehicle and transport expenses
Depreciation of property, plant and equipment
Other operating expenses
Other finance costs
Finance costs
Profit/(loss) before income tax
Income tax (expense)/benefit
Profit from continuing operations
Profit for the year
Profit attributable to:
Owners of Apiam Animal Health Limited
Non-controlling interests
Total comprehensive income/ (loss) for the period
Profit attributable to:
Owners of Apiam Animal Health Limited
Non-controlling interests
Note
6
2017
$’000
2016
$’000
97,991
1,250
54,097
-
1,282
(52,007)
(1,095)
(27,105)
(739)
(2,623)
(1,292)
(1,395)
(7,034)
1,703
(30,470)
(472)
(15,377)
(2,026)
(1,410)
(1,456)
(614)
(2,466)
(14)
(904)
(7)
(434)
6,315
1,068
(1,265)
(975)
5,050
93
5,050
93
5,027
23
50
43
5,050
93
5,027
23
50
43
5,050
93
26
13
7
7
8
23
23
Earnings per share for profit attributable to the ordinary equity holders
of the company:
Basic earnings per share
Diluted earnings per share
Note
24
Cents
Cents
5.00
5.00
0.08
0.08
The above statement of profit or loss should be read in conjunction with the accompanying notes
Apiam Animal Health Limited
Financial statements for the year ended 30 June 2017
31
STATEMENT OF FINANCIAL
POSITION
As at 30 June 2017
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Other current assets
Total current assets
Non-current assets
Intangible assets
Property, plant and equipment
Investments
Deferred tax assets
Total non-current assets
Total assets
Current liabilities
Trade and other payables
Other current liabilities
Current tax liabilities
Borrowings
Employee benefit obligations
Total current liabilities
Non-current liabilities
Borrowings
Employee benefit obligations
Total non-current liabilities
Total liabilities
Net assets
Equity
Note
2017
$’000
2016
$’000
9
10
11
12
14
13
15
16
20
17
18
19
18
19
968
2,117
14,075
13,254
11,477
10,181
746
376
27,266
25,928
57,249
44,702
6,400
4,496
50
-
3,438
2,960
67,137
52,158
94,403
78,086
9,015
9,491
-
1,250
776
1,366
4,102
4,148
3,748
3,453
17,641
19,708
21,608
11,864
672
243
22,280
12,107
39,921
31,815
54,482
46,271
Equity attributable to owners of the parent
- share capital - equity raising costs
- corporate reorganisation reserve
- non-controlling interest acquisition reserve
- retained earnings/ accumulated losses
non-controlling interest
Total equity
Note: This statement should be read in conjunction with the notes to the financial statements.
21.1
22
22
83,066
79,070
(26,692)
(26,666)
(6,615)
(6,615)
4,081
(137)
53,840
45,652
23
642
619
54,482
46,271
Apiam Animal Health Limited
Financial statements for the year ended 30 June 2017
32
STATEMENT OF CHANGES IN EQUITY
For the year ended 30 June 2017
Balance at 1 July 2015
Issue of convertible notes
Conversion of convertible notes
Employee share-based payments
Restructure and transfer of Chris Richards entities into
Apiam
Issue of shares to vendors of business acquired
Issue of new share capital
Transaction costs relating to issue of share capital
Income tax benefit relating to transaction costs
Transactions with owners
Profit / (Loss) for the period
Other comprehensive income
Total comprehensive income for the period
Note
21
21
21
21
21/31
21
21
21
23
Balance at 30 June 2016
Restructure and transfer of Chris Richards entities into
Apiam
Issue of shares to vendors of business acquired
Dividends paid
22
21
Transactions with owners
Profit / (Loss) for the period
Other comprehensive income
Total comprehensive income for the period
Share
capital
Convertible
notes
Corporate re-
organisation
reserve
$’000
-
-
285
1,360
$’000
140
145
(285)
-
$’000
-
-
-
-
Non-
controlling
interest
acquisition
reserve
$’000
Retained
earnings
Total
attributable to
owners of
parent
Non-
controlling
interest
Total
equity
$’000
- (187)
-
-
-
-
-
-
$’000
(47)
145
-
1,360
$’000
$’000
- (47)
- 145
- -
- 1,360
30,633
25,904
23,000
(3,017)
905
-
-
-
-
-
(26,666)
-
-
-
-
(6,615)
-
-
-
-
-
-
-
-
3,967
19,289
23,000
(3,017)
905
- 3,967
576 19,865
- 23,000
- (3,017)
905
-
79,070
(140)
(26,666)
(6,615)
-
45,649
576 46,225
-
-
-
-
50
50
50
-
50
43 93
-
43 93
79,070
-
(26,666)
(6,615)
(137)
45,652
619 46,271
-
-
(26)
-
-
3,996
-
3,996
-
-
-
-
-
-
-
-
-
-
-
(26)
-
-
-
-
-
-
-
-
-
-
(809)
(809)
5,027
-
5,027
4,081
(26)
3,996
(809)
3,161
5,027
-
5,027
-
-
-
-
23
-
23
(26)
3,996
(809)
3,161
5,050
-
5,050
53,840
642
54,482
Balance at 30 June 2017
Note: This statement should be read in conjunction with the notes to the financial statements.
83,066
-
(26,692)
(6,615)
Note
32
32
Apiam Animal Health Limited
Financial statements for the year ended 30 June 2017
STATEMENT OF CASH FLOWS
For the year ended 30 June 2017
Cash flows from operating activities
Receipts from customers
Payments to suppliers and employees
Interest paid
Transaction costs relating to restructure of group entities
Transaction costs relating to acquisition of subsidiary
Income taxes paid
Net cash (outflow)/inflow from operating activities
Cash flows from investing activities
Payments for property, plant and equipment
Purchase of intangible assets
Restructure of group entities, net of cash
Payment for Acquisition of subsidiary, net of cash acquired
Payment for acquisition of associate
Net cash (outflow)/inflow from investing activities
Cash flows from financing activities
Proceeds from issues of shares and other equity securities
Proceeds from issues of convertible notes
Proceeds from borrowings
Loans made to director related entity
Share issue transaction costs
Repayment of borrowings
Borrowing transaction costs
Repayment lease liabilities
Repayment from director related entity
Dividends paid to company shareholders
Net cash (outflow)/inflow from financing activities
Net (decrease)/increase in cash and cash equivalents
Cash and cash equivalents at the beginning of the year
Cash and cash equivalents at end of the year
9
Note: This statement should be read in conjunction with the notes to the financial statements.
33
2016
$'000
59,010
(56,992)
2,018
(434)
(640)
(934)
(1,247)
(1,237)
(295)
(80)
(615)
(24,068)
(25,058)
23,000
145
21,797
(1,229)
(3,017)
(13,281)
(68)
(317)
1,362
-
28,392
2,097
20
2,117
2017
$'000
106,969
(102,290)
4,679
(918)
-
(236)
(1,855)
1,670
(1,563)
-
-
(8,379)
(50)
(9,992)
-
-
22,921
-
-
(14,535)
-
(404)
-
(809)
7,173
(1,149)
2,117
968
Apiam Animal Health Limited
Financial statements for the year ended 30 June 2017
34
Notes to the Consolidated Financial Statements
1 Nature of operations
Apiam Animal Health Limited and subsidiaries’ (‘the Group’) principal activities include the provision of veterinary products
and services to production and companion animals. Apiam’s strategy is to service production animals throughout their life
cycle, including the provision of:
-
-
-
-
-
-
-
-
-
-
-
systems to assist in herd health programs;
production advice;
consulting services and products to assist in the prevention of animal diseases;
technologies to manage compliance with legislative requirements on pharmaceutical use;
advice and services in respect of animal welfare compliance;
retail animal health product sales;
on-farm delivery of products via its own logistics capability;
third party auditing services of industry quality assurance programs;
technology development for animal health management;
ancillary services such as sales and/or delivery of genetics and associated products; and
on-farm and on-line training programs for clients.
There have been no significant changes in the nature of these activities during the year.
2 General information and statement of compliance
The consolidated general purpose financial statements of the Group have been prepared in accordance with the
requirements of the Corporations Act 2001, Australian Accounting Standards and other authoritative pronouncements of
the Australian Accounting Standards Board (AASB). Compliance with Australian Accounting Standards results in full
compliance with the International Financial Reporting Standards (IFRS) as issued by the International Accounting
Standards Board (IASB). Apiam Animal Health Ltd is a for-profit entity for the purpose of preparing the financial
statements.
Apiam Animal Health Limited is the Group’s Ultimate Parent Company. Apiam Animal Health Limited is a Public
Company incorporated and domiciled in Australia. The address of its registered office and principal place of business is
27-33 Pipers Lane, East Bendigo, Victoria 3550.
The consolidated financial statements for the year ended 30 June 2017 were approved and authorised for issue by the
Board of Directors on 25 August 2017.
Comparative information
The Company was incorporated on 25 March 2015. The comparative information relates to the period 1 July 2015 to 30
June 2016.
Apiam Animal Health Limited
Financial statements for the year ended 30 June 2017
35
3 Changes in accounting policies
3.1
New and revised standards that are effective for these financial statements
A number of new and revised standards became effective for the first time to annual periods beginning on or after 1
January 2017. Information on the more significant standard(s) is presented below. The adoption of these new and
revised standards has not had a material impact on the Group as they are largely of the nature of clarification of existing
requirements.
3.2
Accounting Standards issued but not yet effective and not been adopted
early by the Group
3.2.1 Revised pronouncement: AASB 9 Financial Instruments (December 2014)
Superseded pronouncement - AASB 139 Financial Instruments: Recognition and Measurement, Effective date - 1
January 2018.
Nature of change
AASB 9 introduces new requirements for the classification and measurement of financial assets and liabilities and
includes a forward-looking ‘expected loss’ impairment model and a substantially-changed approach to hedge accounting.
These requirements improve and simplify the approach for classification and measurement of financial assets compared
with the requirements of AASB 139. The main changes are:
a Financial assets that are debt instruments will be classified based on: (i) the objective of the entity’s business model
for managing the financial assets; and (ii) the characteristics of the contractual cash flows.
b Allows an irrevocable election on initial recognition to present gains and losses on investments in equity instruments
that are not held for trading in other comprehensive income (instead of in profit or loss). Dividends in respect of these
investments that are a return on investment can be recognised in profit or loss and there is no impairment or recycling
on disposal of the instrument.
Introduces a ‘fair value through other comprehensive income’ measurement category for particular simple debt
instruments.
c
d Financial assets can be designated and measured at fair value through profit or loss at initial recognition if doing so
eliminates or significantly reduces a measurement or recognition inconsistency that would arise from measuring
assets or liabilities, or recognising the gains and losses on them, on different bases.
e Where the fair value option is used for financial liabilities the change in fair value is to be accounted for as follows:
the change attributable to changes in credit risk are presented in Other Comprehensive Income (OCI)
the remaining change is presented in profit or loss
If this approach creates or enlarges an accounting mismatch in the profit or loss, the effect of the changes in credit risk
are also presented in profit or loss.
Otherwise, the following requirements have generally been carried forward unchanged from AASB 139 into AASB 9:
classification and measurement of financial liabilities; and
derecognition requirements for financial assets and liabilities
AASB 9 requirements regarding hedge accounting represent a substantial overhaul of hedge accounting that enable
entities to better reflect their risk management activities in the financial statements.
Furthermore, AASB 9 introduces a new impairment model based on expected credit losses. This model makes use
of more forward-looking information and applies to all financial instruments that are subject to impairment accounting.
Likely impact on initial application
The entity is yet to undertake a detailed assessment of the impact of AASB 9. However, based on the entity’s preliminary
assessment, the Standard is not expected to have a material impact on the transactions and balances recognised in the
financial statements when it is first adopted for the year ending 30 June 2019.
3.2.3 Revised pronouncement : AASB 15 Revenue from Contracts with Customers
Superseded pronouncement - AASB 118 Revenue
replaces AASB 118 Revenue, AASB 111 Construction Contracts and some revenue-related Interpretations:
Nature of change
establishes a new revenue recognition model
provides new and more detailed guidance on specific topics (e.g. multiple element arrangements, variable pricing,
changes the basis for deciding whether revenue is to be recognised over time or at a point in time
rights of return, warranties and licensing)
expands and improves disclosures about revenue
Likely impact on initial application
The entity is yet to undertake a detailed assessment of the impact of AASB 15. However, based on the entity’s
preliminary assessment, the Standard is not expected to have a material impact on the transactions and balances
recognised in the financial statements when it is first adopted for the year ending 30 June 2019.
Apiam Animal Health Limited
Financial statements for the year ended 30 June 2017
36
3.2.3 Revised pronouncement : AASB 16 Leases
Superseded pronouncement - AASB 117 Leases, Effective date - 1 January 2019
Nature of change
replaces AASB 117 Leases and some lease-related Interpretations
requires all leases to be accounted for ‘on-balance sheet’ by lessees, other than short-term and low value asset
leases
provides new guidance on the application of the definition of lease and on sale and lease back accounting
largely retains the existing lessor accounting requirements in AASB 117
requires new and different disclosures about leases
Likely impact on initial application
The entity is yet to undertake a detailed assessment of the impact of AASB 16. However, based upon the entity’s
preliminary assessment, the likely impact on the first time adoption of the Standard for the year ending 30 June 2020
includes:
there will be a significant increase in lease assets and financial liabilities recognised on the balance sheet,
the reported equity will reduce as the carrying amount of lease assets will reduce more quickly than the carrying
amount of lease liabilities,
EBIT in the statement of profit or loss and other comprehensive income will be higher as the implicit interest in lease
payments for former off balance sheet leases will be presented as part of finance costs rather than being included in
operating expenses,
Operating cash outflows will be lower and financing cash flows will be higher in the statement of cash flows as
principal repayments on all lease liabilities will now be included in financing activities rather than operating activities.
Interest can also be included within financing activities.
4
4.0
Summary of accounting policies
Overall considerations
The consolidated financial statements have been prepared using the significant accounting policies and measurement
bases summarised below.
4.1
Basis of consolidation
The Group financial statements consolidate those of the Parent Company and all of its subsidiaries as of 30 June 2017.
The parent controls a subsidiary if it is exposed, or has rights, to variable returns from its involvement with the subsidiary
and has the ability to affect those returns through its power over the subsidiary. All subsidiaries have a reporting date of
30 June.
All transactions and balances between Group companies are eliminated on consolidation, including unrealised gains and
losses on transactions between Group companies. Where unrealised losses on intra-group asset sales are reversed on
consolidation, the underlying asset is also tested for impairment from a group perspective. Amounts reported in the
financial statements of subsidiaries have been adjusted where necessary to ensure consistency with the accounting
policies adopted by the Group.
Profit or loss and other comprehensive income of subsidiaries acquired or disposed of during the year are recognised
from the effective date of acquisition, or up to the effective date of disposal, as applicable.
Non-controlling interests, presented as part of equity, represent the portion of a subsidiary’s profit or loss and net assets
that is not held by the Group. The Group attributes total comprehensive income or loss of subsidiaries between the
owners of the parent and the non-controlling interests based on their respective ownership interests.
4.2
Business combination
The Group applies the acquisition method in accounting for business combinations. The consideration transferred by the
Group to obtain control of a subsidiary is calculated as the sum of the acquisition-date fair values of assets transferred,
liabilities incurred and the equity interests issued by the Group, which includes the fair value of any asset or liability
arising from a contingent consideration arrangement. Acquisition costs are expensed as incurred.
Apiam Animal Health Limited
Financial statements for the year ended 30 June 2017
37
The Group recognises identifiable assets acquired and liabilities assumed in a business combination regardless of
whether they have been previously recognised in the acquiree’s financial statements prior to the acquisition. Assets
acquired and liabilities assumed are generally measured at their acquisition-date fair values.
Goodwill is stated after separate recognition of identifiable intangible assets. It is calculated as the excess of the sum of:
(a) fair value of consideration transferred, (b) the recognised amount of any non-controlling interest in the acquire, and (c)
acquisition-date fair value of any existing equity interest in the acquiree, over the acquisition-date fair values of identifiable
net assets. If the fair values of identifiable net assets exceed the sum calculated above, the excess amount (ie gain on a
bargain purchase) is recognised in profit or loss immediately.
Business combinations are initially accounted for on a provisional basis. The acquirer retrospectively adjusts the
provisional amounts recognised and also recognises additional assets or liabilities during the measurement period, based
on new information obtained about the facts and circumstances that existed at acquisition date. The measurement period
ends on either the earlier of (i) 12 months from the date of acquisition or (ii) when the acquirer receives all the information
possible to determine fair value.
Business combinations under common control are accounted for in the accounts prospectively from the date the group
obtains the ownership interest.
Assets and liabilities are recognised upon consolidation at their existing carrying amount in the financial statements of the
Acquiree. Any difference between the fair value of the consideration paid and the book value / carrying amount at which
the assets and liabilities are recorded is recognised directly in the Corporate re-organisation reserve in equity.
4.3
Foreign currency translation
Functional and presentation currency
The consolidated financial statements are presented in Australian Dollars ($AUD), which is also the functional currency of
the Parent Company.
Foreign currency transactions and balances
Foreign currency transactions are translated into the functional currency of the respective Group entity, using the
exchange rates prevailing at the dates of the transactions (spot exchange rate). Foreign exchange gains and losses
resulting from the settlement of such transactions and from the re-measurement of monetary items at year end exchange
rates are recognised in profit or loss.
Non-monetary items are not retranslated at year-end and are measured at historical cost (translated using the exchange
rates at the date of the transaction), except for non-monetary items measured at fair value which are translated using the
exchange rates at the date when fair value was determined.
4.4
Segment reporting
Apiam identifies its operating segments based on the species to which the Group provide veterinary services and supply
animal health products. The Group’s three (3) operating segments are:
• Dairy and Mixed;
• Feedlots;
• Pigs;
The operating segments are aggregated for reporting purposes on the basis that each business segment has sales
consisting predominantly of S4 products, over the counter products and service revenue and that these products and
services exhibit similar economic characteristics across each business.
Apiam Animal Health Limited
Financial statements for the year ended 30 June 2017
38
4.5
Revenue
Revenue is recognised when it is probable that the economic benefit will flow to the consolidated entity and the revenue
can be reliably measured. Revenue is measured at the fair value of the consideration received or receivable. Revenue
from veterinary services is recognised in accounting period in which the services are provided. Revenue from the sale of
goods is recognised when the risk and rewards have transferred to the customer which is generally upon receipt of the
goods.
Interest and dividend income
Interest income and expenses are reported on an accrual basis using the effective interest method. Dividends, other than
those from investments in associates, are recognised at the time the right to receive payment is established.
4.6
Operating expenses
Operating expenses are recognised in profit or loss upon utilisation of the service or at the date of their origin.
Expenditure for warranties is recognised and charged against the associated provision when the related revenue is
recognised.
4.7
Borrowing costs
Borrowing costs directly attributable to the acquisition, construction or production of a qualifying asset are capitalised
during the period of time that is necessary to complete and prepare the asset for its intended use or sale. Other
borrowing costs are expensed in the period in which they are incurred and reported in finance costs Note 7.
4.8
Intangible assets
Goodwill
Goodwill represents the future economic benefits arising from a business combination that are not individually identified
and separately recognised. See Note 4.2 for information on how goodwill is initially determined. Goodwill is carried at
cost less accumulated impairment losses. Refer to Note 4.11 for a description of impairment testing procedures.
Capitalised development costs
Capitalised development costs are measured at cost less accumulated amortisation and accumulated impairment losses.
Amortisation is recognised on a straight-line basis over its useful life of 10 years from the date of use.
4.9
Property, plant and equipment
Leasehold improvements, plant and equipment and motor vehicles
Leasehold improvements, plant and equipment and motor vehicles are initially recognised at acquisition cost or
manufacturing cost, including any costs directly attributable to bringing the assets to the location and condition necessary
for it to be capable of operating in the manner intended by the Group’s management. Plant and equipment and motor
vehicles also include property held under finance lease (see Note 4.10). Leasehold improvements, plant and equipment
and motor vehicles are subsequently measured using the cost model, cost less subsequent depreciation and impairment
losses.
Depreciation is recognised on a straight-line basis to write down the cost less estimated residual value of buildings, IT
equipment and other equipment. The following useful lives are applied:
Leasehold improvements: 10 - 33%
Plant & equipment: 10 – 33%
Motor vehicles: 25%
In the case of leasehold property, expected useful lives are determined by reference to comparable owned assets or over
the term of the lease, if shorter.
Material residual value estimates and estimates of useful life are updated as required, but at least annually.
Apiam Animal Health Limited
Financial statements for the year ended 30 June 2017
39
Gains or losses arising on the disposal of property, plant and equipment are determined as the difference between the
disposal proceeds and the carrying amount of the assets and are recognised in profit or loss within other income or other
expenses.
4.10
Leased assets
Finance leases
The economic ownership of a leased asset is transferred to the lessee if the lessee bears substantially all the risks and
rewards of ownership of the leased asset. Where the Group is a lessee in this type of arrangement, the related asset is
recognised at the inception of the lease at the fair value of the leased asset or, if lower, the present value of the lease
payments plus incidental payments, if any. A corresponding amount is recognised as a finance lease liability. Leases of
land and buildings are classified separately and are split into a land and a building element, in accordance with the
relative fair values of the leasehold interests at the date the asset is recognised initially.
See Note 4.9 for the depreciation methods and useful lives for assets held under finance lease. The corresponding
finance lease liability is reduced by lease payments net of finance charges. The interest element of lease payments
represents a constant proportion of the outstanding capital balance and is charged to profit or loss, as finance costs over
the period of the lease.
Operating leases
All other leases are treated as operating leases. Where the Group is a lessee, payments on operating lease agreements
are recognised as an expense on a straight-line basis over the lease term. Associated costs, such as maintenance and
insurance, are expensed as incurred.
4.11
Impairment testing of goodwill, other intangible assets and property, plant
and equipment
For impairment assessment purposes, assets are grouped at the lowest levels for which there are largely independent
cash inflows (cash-generating units). As a result, some assets are tested individually for impairment and some are tested
at cash-generating unit level. Goodwill is allocated to those cash-generating units that are expected to benefit from
synergies of the related business combination and represent the lowest level within the Group at which management
monitors goodwill.
Cash-generating units to which goodwill has been allocated are tested for impairment at least annually. All other
individual assets or cash-generating units are tested for impairment whenever events or changes in circumstances
indicate that the carrying amount may not be recoverable.
An impairment loss is recognised for the amount by which the asset’s or cash-generating unit’s carrying amount exceeds
its recoverable amount, which is the higher of fair value less costs to sell and value-in-use. To determine the value-in-
use, management estimates expected future cash flows from each cash-generating unit and determines a suitable
interest rate in order to calculate the present value of those cash flows. The data used for impairment testing procedures
are directly linked to the Group’s latest approved budget, adjusted as necessary to exclude the effects of future
reorganisations and asset enhancements. Discount factors are determined individually for each cash-generating unit and
reflect management’s assessment of respective risk profiles, such as market and asset-specific risks factors.
Impairment losses for cash-generating units reduce first the carrying amount of any goodwill allocated to that cash-
generating unit. Any remaining impairment loss is charged pro rata to the other assets in the cash-generating unit. With
the exception of goodwill, all assets are subsequently reassessed for indications that an impairment loss previously
recognised may no longer exist. An impairment charge is reversed if the cash-generating unit’s recoverable amount
exceeds its carrying amount.
Apiam Animal Health Limited
Financial statements for the year ended 30 June 2017
40
4.12
Financial instruments
Recognition, initial measurement and derecognition
Financial assets and financial liabilities are recognised when the Group becomes a party to the contractual provisions of
the financial instrument, and are measured initially at fair value adjusted by transactions costs, except for those carried at
fair value through profit or loss, which are measured initially at fair value. Subsequent measurement of financial assets
and financial liabilities are described below.
Financial assets are derecognised when the contractual rights to the cash flows from the financial asset expire, or when
the financial asset and all substantial risks and rewards are transferred. A financial liability is derecognised when it is
extinguished, discharged, cancelled or expires.
Classification and subsequent measurement of financial assets
For the purpose of subsequent measurement, financial assets other than those designated and effective as hedging
instruments are classified into the following categories upon initial recognition:
Loans and receivables
Financial assets at Fair Value Through Profit or Loss (FVTPL)
Available-For-Sale (AFS) financial assets
All financial assets except for those at FVTPL are subject to review for impairment at least at each reporting date to
identify whether there is any objective evidence that a financial asset or a group of financial assets is impaired. Different
criteria to determine impairment are applied for each category of financial assets, which are described below.
All income and expenses relating to financial assets that are recognised in profit or loss are presented within finance
costs, finance income or other financial items, except for impairment of trade receivables which is presented within other
expenses.
Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an
active market. After initial recognition, these are measured at amortised cost using the effective interest method, less
provision for impairment. Discounting is omitted where the effect of discounting is immaterial. The Group’s trade and
most other receivables fall into this category of financial instruments.
Individually significant receivables are considered for impairment when they are past due or when other objective
evidence is received that a specific counterparty will default. Receivables that are not considered to be individually
impaired are reviewed for impairment in groups, which are determined by reference to the industry and region of a
counterparty and other shared credit risk characteristics. The impairment loss estimate is then based on recent historical
counterparty default rates for each identified group.
Financial assets at FVTPL
Financial assets at FVTPL include financial assets that are either classified as held for trading or that meet certain
conditions and are designated at FVTPL upon initial recognition. All derivative financial instruments fall into this category,
except for those designated and effective as hedging instruments, for which the hedge accounting requirements apply
(see below).
Assets in this category are measured at fair value with gains or losses recognised in profit or loss. The fair values of
financial assets in this category are determined by reference to active market transactions or using a valuation technique
where no active market exists.
Apiam Animal Health Limited
Financial statements for the year ended 30 June 2017
41
AFS financial assets
AFS financial assets are non-derivative financial assets that are either designated to this category or do not qualify for
inclusion in any of the other categories of financial assets.
All other AFS financial assets are measured at fair value. Gains and losses are recognised in other comprehensive
income and reported within the AFS reserve within equity, except for impairment losses and foreign exchange differences
on monetary assets, which are recognised in profit or loss. When the asset is disposed of or is determined to be impaired
the cumulative gain or loss recognised in other comprehensive income is reclassified from the equity reserve to profit or
loss and presented as a reclassification adjustment within other comprehensive income. Interest calculated using the
effective interest method and dividends are recognised in profit or loss within ‘finance income’ (see Note 4.5).
Reversals of impairment losses for AFS debt securities are recognised in profit or loss if the reversal can be objectively
related to an event occurring after the impairment loss was recognised. For AFS equity investments impairment reversals
are not recognised in profit loss and any subsequent increase in fair value is recognised in other comprehensive income.
Classification and subsequent measurement of financial liabilities
The Group’s financial liabilities include borrowings, trade and other payables and derivative financial instruments.
Financial liabilities are measured subsequently at amortised cost using the effective interest method, except for financial
liabilities held for trading or designated at FVTPL, that are carried subsequently at fair value with gains or losses
recognised in profit or loss. All derivative financial instruments that are not designated and effective as hedging
instruments are accounted for at FVTPL.
All interest-related charges and, if applicable, changes in an instrument’s fair value that are reported in profit or loss are
included within finance costs or finance income.
4.13
Inventories
Inventories are stated at the lower of cost and net realisable value. Costs are assigned on the basis of weighted average
cost. Net realisable value is the estimated selling price in the ordinary course of business less any applicable selling
expenses.
4.14
Income taxes
Tax expense recognised in profit or loss comprises the sum of deferred tax and current tax not recognised in other
comprehensive income or directly in equity.
Current income tax assets and/or liabilities comprise those obligations to, or claims from, the Australian Taxation Office
(ATO) and other fiscal authorities relating to the current or prior reporting periods that are unpaid at the reporting date.
Current tax is payable on taxable profit, which differs from profit or loss in the financial statements. Calculation of current
tax is based on tax rates and tax laws that have been enacted or substantively enacted by the end of the reporting period.
Deferred income taxes are calculated using the liability method on temporary differences between the carrying amounts
of assets and liabilities and their tax bases. However, deferred tax is not provided on the initial recognition of goodwill or
on the initial recognition of an asset or liability unless the related transaction is a business combination or affects tax or
accounting profit. Deferred tax on temporary differences associated with investments in subsidiaries and joint ventures is
not provided if reversal of these temporary differences can be controlled by the Group and it is probable that reversal will
not occur in the foreseeable future.
Apiam Animal Health Limited
Financial statements for the year ended 30 June 2017
42
Deferred tax assets and liabilities are calculated, without discounting, at tax rates that are expected to apply to their
respective period of realisation, provided they are enacted or substantively enacted by the end of the reporting period.
Deferred tax assets are recognised to the extent that it is probable that they will be able to be utilised against future
taxable income, based on the Group’s forecast of future operating results which is adjusted for significant non-taxable
income and expenses and specific limits to the use of any unused tax loss or credit. Deferred tax liabilities are always
provided for in full.
Deferred tax assets and liabilities are offset only when the Group has a right and intention to set off current tax assets and
liabilities from the same taxation authority.
Changes in deferred tax assets or liabilities are recognised as a component of tax income or expense in profit or loss,
except where they relate to items that are recognised in other comprehensive income (such as the revaluation of land) or
directly in equity, in which case the related deferred tax is also recognised in other comprehensive income or equity,
respectively.
4.15
Cash and cash equivalents
Cash and cash equivalents comprise cash on hand and demand deposits, together with other short-term, highly liquid
investments that are readily convertible into known amounts of cash and which are subject to an insignificant risk of
changes in value.
4.16
Equity, reserves and dividend payments
Share capital
Share capital represents the fair value of shares that have been issued. Any transaction costs associated with the issuing
of shares are deducted from share capital, net of any related income tax benefits.
Corporate re-organisation reserve
The Corporate re-organisation reserve represents the difference between the fair value of the consideration paid and the
fair value of assets and liabilities acquired in a business combination whereby the business acquired was under common
control at the date of acquisition.
Non-controlling interest acquisition reserve
The group treats transactions with non-controlling interests that do not result in a loss of control as transactions with
equity owners of the group. A change in ownership interest results in an adjustment between the carrying amounts of the
controlling and non-controlling interests to reflect their relative interests in the subsidiary. Any difference between the
amount of the adjustment to non-controlling interests and any consideration paid or received is recognised in a separate
reserve within equity attributable to owners.
Non-controlling interest
Represents the portion of the net assets of subsidiary’s that are not 100% owned by the Company.
Retained earnings
Retained earnings include all current and prior period retained profits.
Dividend distributions payable to equity shareholders are included in other liabilities when the dividends have been
approved in a general meeting prior to the reporting date.
All transactions with owners of the parent are recorded separately within equity.
Apiam Animal Health Limited
Financial statements for the year ended 30 June 2017
43
4.17
Employee benefits
Short-term employee benefits
Short-term employee benefits are benefits, other than termination benefits, that are expected to be settled wholly within
twelve (12) months after the end of the period in which the employees render the related service. Examples of such
benefits include wages and salaries, non-monetary benefits and accumulating sick leave. Short-term employee benefits
are measured at the undiscounted amounts expected to be paid when the liabilities are settled.
Other long-term employee benefits
The Group’s liabilities for annual leave and long service leave are included in other long term benefits as they are not
expected to be settled wholly within twelve (12) months after the end of the period in which the employees render the
related service. They are measured at the present value of the expected future payments to be made to employees. The
expected future payments incorporate anticipated future wage and salary levels, experience of employee departures and
periods of service, and are discounted at rates determined by reference to market yields at the end of the reporting period
on high quality corporate bonds that have maturity dates that approximate the timing of the estimated future cash
outflows. Any re-measurements arising from experience adjustments and changes in assumptions are recognised in
profit or loss in the periods in which the changes occur.
The Group presents employee benefit obligations as current liabilities in the statement of financial position if the Group
does not have an unconditional right to defer settlement for at least twelve (12) months after the reporting period,
irrespective of when the actual settlement is expected to take place.
Post-employment benefit plans
The Group provides post-employment benefits through various defined contribution and defined benefit plans.
4.18
Share-based employee remuneration
The Group operates equity-settled share-based remuneration plans for its employees. None of the Group’s plans feature
any options for a cash settlement.
All goods and services received in exchange for the grant of any share-based payment are measured at their fair values.
Where employees are rewarded using share-based payments, the fair values of employees’ services are determined
indirectly by reference to the fair value of the equity instruments granted. This fair value is appraised at the grant date
and excludes the impact of non-market vesting conditions (for example profitability and sales growth targets and
performance conditions).
4.19
Provisions, contingent liabilities and contingent assets
Provisions for product warranties, legal disputes, onerous contracts or other claims are recognised when the Group has a
present legal or constructive obligation as a result of a past event, it is probable that an outflow of economic resources will
be required from the Group and amounts can be estimated reliably. Timing or amount of the outflow may still be
uncertain.
Restructuring provisions are recognised only if a detailed formal plan for the restructuring has been developed and
implemented, or management has at least announced the plan’s main features to those affected by it. Provisions are not
recognised for future operating losses.
Provisions are measured at the estimated expenditure required to settle the present obligation, based on the most reliable
evidence available at the reporting date, including the risks and uncertainties associated with the present obligation.
Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined
by considering the class of obligations. Provisions are discounted to their present values, where the time value of money
is material.
Apiam Animal Health Limited
Financial statements for the year ended 30 June 2017
44
Any reimbursement that the Group can be virtually certain to collect from a third party with respect to the obligation is
recognised as a separate asset. However, this asset may not exceed the amount of the related provision.
No liability is recognised if an outflow of economic resources as a result of present obligation is not probable. Such
situations are disclosed as contingent liabilities, unless the outflow of resources is remote in which case no liability is
recognised.
4.20
Goods and Services Tax (GST)
Revenues, expenses and assets are recognised net of the amount of GST, except where the amount of GST incurred is
not recoverable from the Tax Office. In these circumstances the GST is recognised as part of the cost of acquisition of
the asset or as part of an item of the expense. Receivables and payables in the statement of financial position are shown
inclusive of GST.
Cash flows are presented in the statement of cash flows on a gross basis, except for the GST components of investing
and financing activities, which are disclosed as operating cash flows.
4.21
Rounding of amounts
The Parent Entity has applied the relief available to it under ASIC Corporations (Rounding in Financial/Directors’ Reports)
Instruments 2016/191 and accordingly, amounts in the financial statements and directors’ report have been rounded off to
the nearest $1,000, or in certain cases, the nearest dollar.
4.22
Significant management judgement in applying accounting policies
When preparing the financial statements, management undertakes a number of judgements, estimates and assumptions
about the recognition and measurement of assets, liabilities, income and expenses.
Significant management judgement
The following are significant management judgements in applying the accounting policies of the Group that have the most
significant effect on the financial statements.
Recognition of deferred tax assets
The extent to which deferred tax assets can be recognised is based on an assessment of the probability of the Group’s
future taxable income against which the deferred tax assets can be utilised. In addition, significant judgement is required
in assessing the impact of any legal or economic limits or uncertainties in various tax jurisdictions (see Note 4.14).
Estimation uncertainty
Information about estimates and assumptions that have the most significant effect on recognition and measurement of
assets, liabilities, income and expenses is provided below. Actual results may be substantially different.
Impairment
In assessing impairment, management estimates the recoverable amount of each asset or cash-generating unit based on
expected future cash flows and uses an interest rate to discount them. Estimation uncertainty relates to assumptions
about future operating results and the determination of a suitable discount rate (see Note 4.11).
Useful lives of depreciable assets
Management reviews its estimate of the useful lives of depreciable assets at each reporting date, based on the expected
utility of the assets. Uncertainties in these estimates relate to technical obsolescence that may change the utility of
certain software and IT equipment.
Apiam Animal Health Limited
Financial statements for the year ended 30 June 2017
45
Trade receivables
Management estimates the recoverable amount of any outstanding trade receivable balances at reporting date and
recognises an allowance for impairment if required.
Inventories
Management estimates the net realisable values of inventories, taking into account the most reliable evidence available at
each reporting date. The future realisation of these inventories may be affected by future technology or other market-
driven changes that may reduce future selling prices.
Business combinations
Management uses valuation techniques in determining the fair values of the various elements of a business combination
(see Note 4.2). Particularly, the fair value of contingent consideration is dependent on the outcome of many variables
that affect future profitability (see Note 20).
5 Segment reporting
Identification of reportable operating segments
In the previous reporting period, Apiam monitored its business on a consolidated basis and no separate segments were
reported on as the Group was in the process of developing its financial reporting systems.
Management now identifies its operating segments based on the species to which the Group provide veterinary services
and supply animal health products. The Group’s three (3) operating segments are:
• Dairy and Mixed;
• Feedlots;
• Pigs;
Each of these operating segments is managed separately as each species group requires specific veterinary expertise
resources and marketing approach. These operating segments are monitored and strategic decisions are made on the
basis of adjusted segment operating results.
The operating segments are aggregated for reporting purposes on the basis that each business segment has sales
consisting predominantly of S4 products (prescription based pharmaceuticals), over the counter products and veterinary
service revenue and that these products and services exhibit similar economic characteristics across each segment.
Corporate overheads that cannot be allocated to a specific segment are disclosed separately.
The revenues and profit generated by the Group’s operating segments are summarised as follows:
Segment information
Revenue from external customers
Segment operating costs
Segment adjusted operating profit before tax
Total reporting segment operating profit
Other income
Corporate overheads
Acquisition costs
Integration costs
Finance costs
Net profit before tax
Income tax
Net profit after tax
2017
$'000
97,991
90,587
7,404
7,404
1,250
(712)
(236)
(503)
(888)
6,315
(1,265)
5,050
Apiam Animal Health Limited
Financial statements for the year ended 30 June 2017
46
6 Revenue
Sales revenue
Sale of goods
Rendering of services
Total revenue
7 Expenses
Profit before income tax includes the following specific expenses:
Depreciation
Leasehold improvements
Plant and equipment
Motor vehicles
Total depreciation
Finance costs
Interest expenses for borrowings at amortised cost:
Other borrowings at amortised cost
Interest expenses for finance lease arrangements
Other financial items – amortisation of borrowing costs
Share-based payments expense
Rental expense relating to operating leases
2017
$'000
2016
$'000
63,960
34,031
41,822
12,275
97,991
54,097
2017
$’000
15
833
547
1,395
820
84
904
14
918
-
1,616
2016
$’000
6
321
287
614
413
21
434
7
441
1,360
876
8
Income tax expense
The major components of tax expense and the reconciliation of the expected tax expense based on the domestic
effective tax rate of Apiam at 30% (2016: 30%) and the reported tax expense in profit or loss are as follows:
Profit from continuing operations before income tax expense
Tax at the Australian tax rate of 30% (2016 - 30%)
Adjustments for non-deductible expenses:
Reversal of contingent consideration
Share based payment
Stamp duty on acquisitions
Sundry items
Income tax expense
Adjustment for current tax in prior periods
Total current tax expense
Tax expense comprises
Current tax expense/(benefit)
Deferred tax expense/(benefit)
Tax expense/(benefit)
Note 15 provides information on deferred tax assets and liabilities.
2017
$’000
6,315
1,895
(375)
-
-
8
(367)
1,527
(262)
1,265
1,743
(478)
1,265
2016
$’000
1,068
320
-
408
243
4
655
975
975
823
(1,798)
975
Apiam Animal Health Limited
Financial statements for the year ended 30 June 2017
9 Cash and cash equivalents
Cash at bank and in hand
Cash and cash equivalents
10 Trade and other receivables
Trade receivables, gross
Less: provision for impairment of receivables
Other receivables
Rebates receivable
47
2016
$'000
2,117
2,117
2016
$'000
12,462
(137)
168
761
13,254
2017
$'000
968
968
2017
$'000
13,276
(460)
95
1,164
14,075
All amounts are short-term. The net carrying value of trade receivables is considered a reasonable approximation of fair
value.
All of the Group’s trade and other receivables have been reviewed for indicators of impairment. Certain trade receivables
were found to be impaired and an allowance for credit losses of $323 (2016: $137) has been recorded accordingly within
other expenses.
Balance at 1 July
Impairment loss
Balance 30 June
11 Inventories
Stock on hand, at cost
Less provision for obsolescence
Stock in transit, at cost
12 Other current assets
Prepayments
Security deposits
2017
$'000
137
323
460
2016
$'000
137
137
2017
$'000
11,874
(397)
-
2016
$'000
9,828
(100)
453
11,477
10,181
2017
$'000
686
60
746
2016
$'000
311
65
376
Apiam Animal Health Limited
Financial statements for the year ended 30 June 2017
48
13 Property, plant and equipment
Details of the Group’s property, plant and equipment and their carrying amount are as follows:
Non-current
Year ended 30 June 2016
Additions
Acquired through business combinations
Depreciation charge
Closing net book value
At 30 June 2016
Cost or fair value
Accumulated depreciation
Net book amount
Year ended 30 June 2017
Opening net book value
Acquired through business combinations
Additions
Depreciation charge for year
Closing net book value
At 30 June 2017
Cost or fair value
Accumulated depreciation
Net book amount
Leasehold
improvements
Plant &
equipment
Motor
vehicles
$’000
$’000
$’000
Assets
under
construction
$’000
Total
$’000
54
98
(6)
146
248
2,651
(321)
2,578
150
1,909
(287)
1,772
-
-
-
452
4,658
(614)
4,496
152
(6)
146
2,899
(321)
2,578
2,059
(287)
1,772
-
-
-
5,110
(614)
4,496
146
-
4
(15)
135
2,578
201
1,414
(833)
3,360
1,772
227
1,122
(547)
2,574
-
331
331
4,496
428
2,871
(1,395)
6,400
156
(21)
135
4,920
(1,560)
3,360
3,508
(934)
2,574
331
-
331
8,915
(2,515)
6,400
Leased assets
Furniture, fittings and equipment includes the following amounts where the group is a lessee under a finance lease
Leased equipment
Cost
accumulated depreciation
Net book amount
Refer to Note 30 for capital commitments relating to vehicle leases.
14 Intangible assets
At 30 June 2016
Cost
Accumulated amortization and impairment
Carrying amount at 30 June 2016
At 1 July 2016
Opening net book value
Acquisition of subsidiary
Closing net book value
At 30 June 2017
Cost
Accumulated amortization and impairment
Carrying amount at 30 June 2017
2017
$'000
1,941
(226)
1,715
2016
$'000
904
(10)
894
Capitalized
development
costs
$'000
Goodwill
$'000
44,622
-
44,622
44,622
12,547
57,169
57,169
-
57,169
80
-
80
80
-
80
80
-
80
Total
$'000
44,702
-
44,702
44,702
12,547
57,249
57,249
-
57,249
Apiam Animal Health Limited
Financial statements for the year ended 30 June 2017
49
14.1
Impairment testing
Goodwill is allocated to cash generating units (CGU) for the purpose of impairment testing. The allocation is made to
those cash generating units that are expected to benefit from the business combination in which the goodwill arose. The
units are identified at the lowest level at which goodwill is monitored for internal management purposes, which is also the
segment level.
The recoverable amounts of the cash-generating units were determined based on value-in-use calculations, covering a
detailed five (5) year forecast, followed by an extrapolation of expected cash flows for the units’ remaining useful lives
using the growth rates determined by management. The present value of the expected cash flows of each CGU is
determined by applying the following key assumptions:
Annual sales growth %
Annual operating expenses growth rate %
Long-term growth rate %
Post-tax discount rate %
Goodwill allocation at 30 June across twelve (12) individual veterinary clinic
entities
2017
5.00%
2.00%
2.50%
11.91%
2016
5.00%
2.00%
2.50%
11.88%
2017
$’000
2016
$’000
57,169
44,622
The Directors and management have considered and assessed reasonably possible changes for key assumptions and
have not identified any instances that could cause the carrying amount for any of the segments to exceed its recoverable
amount.
14.2
Growth rates
The growth rates reflect the long-term average growth rates for the industry.
Discount rates
14.3
The discount rates reflect appropriate adjustments relating to market risk and specific risk factors of each unit.
14.4
Cash flow assumptions
Management’s key assumptions include stable profit margins, based on experience in this market. The Group’s
management believes that this is the best available input for forecasting this mature market. Cash flow projections reflect
stable profit margins achieved immediately before the budget period. Efficiency improvements have been taken into
account and prices and wages reflect publicly available forecasts of inflation for the industry.
Apart from the considerations described in determining the value-in-use of the cash-generating units described above,
management is not currently aware of any other probable changes that would necessitate changes in its key estimates.
Goodwill is managed at the CGU level which is also reflective of the level of operating segment being Pig, Feedlot, Dairy
and mixed. The Group did not have separate CGUs at 30 June 2016.
Apiam Animal Health Limited
Financial statements for the year ended 30 June 2017
50
A CGU summary of the goodwill allocation is presented below.
Balance 1 July
Acquisitions
30 June 2017
Feedlot
Dairy and mixed
Pig (a)
Total
$’000
$’000
$’000
$’000
40,339
10,807
51,146
4,283
1,740
6,023
-
-
-
44,622
12,547
57,169
(a) Pig CGU does not have any goodwill subscribed to it as on acquisition of the businesses associated with this CGU the
difference between the fair value and consideration paid and fair value of assets and liabilities were booked to the
Corporate Reorganisation Reserve as the businesses were under common control.
15 Deferred tax assets and liabilities
Deferred taxes arising from temporary differences and unused tax losses can be summarised as follows:
The balance comprises temporary differences attributable to:
Current assets
Trade and other receivables
Inventories
Current liabilities
Provisions
Borrowing costs
Other
Unused tax losses
Equity raising costs
Listing and acquisition costs
2017
$'000
2016
$'000
233
119
41
30
1,389
(14)
1,291
(18)
1,031
543
137
3,438
721
724
171
2,960
All deferred tax assets (including tax losses and other tax credits) have been recognised in the statement of financial
position.
Tax
losses Provisions
$'000
$'000
-
31
Borrowing
costs
$'000
-
Trade
receivables
$'000
-
Listing &
acquisition
costs
$'000
-
Equity
raising
costs
$'000
-
Inventory
$'000
-
Total
$'000
31
690
160
(18)
41
171
724
30
1,798
1,131
1,291
-
(18)
-
41
-
171
-
724
-
30
8
90
4
-
169
(34)
(181)
89
23
-
-
-
113
1,131
2,960
-
366
At 1 July 2015
(Charged)/credited:
to P&L
Recognized in
business
combination
at 30 June 2016
(Charged)/credited:
to P&L
acquisition of
a subsidiary
-
721
310
-
At 30 June 2017
1,031
1,389
(14)
233
137
543
119
3,438
Apiam Animal Health Limited
Financial statements for the year ended 30 June 2017
16 Trade and other payables
Trade payables
Sundry payables and accrued expenses
Other payables
51
2016
$'000
6,185
3,218
88
9,491
2017
$'000
5,674
2,870
471
9,015
All amounts are short-term. The carrying values of trade payables and other payables are considered to be a reasonable
approximation of fair value.
17 Current tax liabilities
Current tax payable
18 Borrowings
Current:
Bank loans (a)
less capitalized costs
lease liability (b)
less deferred interest charges
Total current borrowings
Non-current
bank loans (a)
less capitalised costs
lease liability (b)
less deferred interest charges
Total non-current borrowings
Refer to Note 40 for information on financial instruments.
Secured liabilities and assets pledged as security
The total secured liabilities (current and non-current) are as follows:
Bank loans
Less capitalised borrowing costs
Lease liability
Less deferred interest charges
Assets pledged as security
2016
$’000
776
2016
$’000
1,366
2017
$'000
2016
$'000
3,630
(14)
523
(37)
4,102
20,700
(34)
994
(52)
21,608
3,919
(13)
257
(15)
4,148
11,650
(48)
271
(9)
11,864
2017
$’000
24,330
(48)
1,517
(89)
25,710
2016
$’000
15,569
(61)
528
(24)
16,012
(a) Bank loans are secured by first ranking general security agreements in relation to the current and future assets of
Apiam and each wholly-owned subsidiary.
(b) The lease liabilities are effectively secured over the assets to which the lease relates.
Apiam Animal Health Limited
Financial statements for the year ended 30 June 2017
52
Banking covenants
The key financial covenants applicable to bank facilities are:
- Maximum gearing ratio remained unchanged with a ratio of 35% (ratio of debt to equity):
- Maximum operating leverage ratio changed from of 2.5 times to 3.5 times (ratio of gross debt to EBITDA): and
- Minimum interest cover remained unchanged with a ratio of 5.0 times (ratio of EBIT to gross interest expense).
The Group complied with all bank covenants during the period.
Financing arrangements
Unrestricted assess was available at the reporting date to the following lines of credit:
Total facilities
Bank - term loan facilities
Bank - master asset finance agreement for equipment finance
Bank - overdraft facility
Bank - credit card facility
Used at reporting date
Bank - term loan facilities
Bank - master asset finance agreement for equipment finance
Bank - overdraft facility
Bank - credit card facility
Unused at reporting date
Bank - term loan facilities
Bank - master asset finance agreement for equipment finance
Bank - overdraft facility
Bank - credit card facility
19 Employee benefit obligations
Leave obligations current
Leave obligations non-current
Employee benefits
2017
$'000
30,700
2,000
1,000
300
34,000
24,282
1,428
2016
$'000
33,000
1,000
1,000
300
35,300
15,569
146
25,710
15,715
6,355
572
1,000
300
8,227
2017
$'000
3,748
672
4,420
17,431
854
1,000
300
19,585
2016
$'000
3,453
243
3,696
The provision for employee benefits relates to the group’s liability for long service leave and annual leave.
Amounts not expected to be settled within the next 12 months
The current portion of this liability includes all of the accrued annual leave, the unconditional entitlements to long service
leave where employees have completed the required period of service and also those where employees are entitled to
pro-rata payments in certain circumstances. The entire amount of the provision of $3,748 (2016: $3,453) is presented as
current, since the group does not have an unconditional right to defer settlement for any of these obligations. However,
based upon experience, the group does not expect all employees to take the full amount of accrued leave or require
payment within the next twelve months. The group does not expect $3,620 (2016: $2,072) of this liability to be taken or
paid within the next 12 months.
20 Other current liabilities
Opening Balance
Reversal of contingent consideration
2017
$'000
1,250
(1,250)
-
2016
$'000
-
1,250
1,250
This relates to contingent consideration on businesses acquired during the year. Refer to Note 32.1 for further details.
Apiam Animal Health Limited
Financial statements for the year ended 30 June 2017
53
21 Equity
21.1
Share capital
The share capital of Apiam consists only of fully paid ordinary shares; the shares do not have a par value. All shares are
equally eligible to receive dividends and the repayment of capital and represent one vote at the shareholders’ meeting of
Apiam.
shares issued on restructure of Chris
Shares issued and fully paid
· beginning of the period
Richards Group of Companies
shares purchased from Chris Richards
shares issued in accordance with prospectus
dated 17 Nov 2015
shares issued upon conversion of convertible
notes
employee shares issued
shares issued as consideration for business
acquisitions
2017
Shares
2016
Shares
2017
$'000
2016
$’000
98,475,574
-
-
-
-
-
1
43,827,303
(17,000,000)
40,000,000
2,690,000
1,360,000
79,070
-
-
-
-
-
-
28,939
(17,000)
40,000
285
1,360
2,702,373
27,598,270
3,996
27,598
equity raising costs net of income tax benefit
Shares issued and fully paid
-
-
101,177,947
98,475,574
Total shares authorised at the end of the period
101,177,947
98,475,574
-
83,066
83,066
(2,112)
79,070
79,070
(a) Shares were issued during 2016 relating to share-based payments (see Note 26.2 for details on the Group’s share-
based employee remuneration).
Each share has the same right to receive dividend and the repayment of capital and represents one vote at the
shareholders’ meeting of Apiam.
21.2
Convertible notes
In the previous period, the Group entered into convertible note agreements, principally with the vendors of business
combinations acquired to raise $285,000 towards the costs of the IPO. These notes converted into 2,690,000 ordinary
shares on completion of the IPO.
Convertible notes issued and fully paid:
·beginning of the year
issue of convertible notes
issue of convertible notes
Total convertible notes at 30 June
conversion to ordinary shares
2017
No.
2016
No.
2017
$’000
2016
$’000
-
-
-
-
-
1,400,000
1,250,000
40,000
(2,690,000)
-
-
-
-
-
-
140,000
125,000
20,000
(285,000)
-
Apiam Animal Health Limited
Financial statements for the year ended 30 June 2017
54
22 Reserves
Details of reserves are as follows:
Balance at 1 July 2015
Restructure and transfer of Chris Richards entities into the Group
Premium on issue of shares to non-controlling interests of Chris
Richards entities transferred into the Group
Balance at 1 July 2016
Corporate
reorganisation
reserve
$’000
-
(26,666)
Non-
controlling
Interest
acquisition
reserve
$’000
Total
$’000
-
-
-
(26,666)
-
(6,615)
(6,615)
(26,666)
(6,615)
(33,281)
Restructure and transfer of Chris Richards entities into the Group
Premium on issue of shares to non-controlling interests of Chris
Richards entities transferred into the Group
Balance at 30 June 2017
(26)
-
(26)
-
-
-
(26,692)
(6,615)
(33,307)
23 Non-controlling interests
Issued capital
Current year earnings
Retained profits carried forward
Total non-controlling interests
24 Earnings per share and dividends
24.1
Earnings per share
2017
$’000
576
23
43
642
2016
$’000
576
43
-
619
Both the basic and diluted earnings per share have been calculated using the profit attributable to shareholders of the
Parent Company as the numerator (i.e. no adjustments to profit were necessary in 2017 or 2016).
The reconciliation of the weighted average number of shares for the purposes of diluted earnings per share to the
weighted average number of ordinary shares used in the calculation of basic earnings per share is as follows:
weighted average number of shares used in basic earnings per share
weighted average number of shares used in diluted earnings per share
Shares deemed to be issued for no consideration in respect of share based payments
2017
Number
2016
Number
100,589,539
59,447,120
100,589,539
59,447,120
-
1,360,000
24.2
Dividends
During the year, maiden interim dividends were declared of 0.8c per ordinary share, and paid in April 2017.
Apiam Animal Health Limited
Financial statements for the year ended 30 June 2017
55
24.3
Franking credits
The amount of the franking credits available for
subsequent:
Balance at the end of the reporting period
franking debits that will arise from the payment of dividends
recognised as a liability at the end of the reporting period
franking credits that will arise from the payment of the
amount of provision for income tax
25 Reconciliation of cash flows from operating activities
(a) Reconciliation of cash flows from operating activities
Cash flows from operating activities
Profit / (Loss) for the period
Adjustments for:
· depreciation expense
· doubtful debt expense
· obsolete stock provision
· amortisation of borrowing expenses
· gains on derecognition of contingent consideration payable
· share benefits expense
Net changes in working capital:
· (increase) change in trade and other receivables
· (increase) change in inventories
· Decrease/(increase) change in other assets
· Decrease/(Increase) change in deferred tax asset
· change in trade and other payables
· change in income tax payable
· change in provisions
Net cash used in operating activities
2017
$'000
2016
$'000
6046
(347)
4,304
451
1,366
6,150
5,670
2017
$’000
5,050
1,395
61
296
14
(1,250)
-
(168)
(1,442)
(53)
(365)
(1,230)
(1,062)
424
1,670
2016
$’000
93
614
137
100
7
-
1,360
(1,381)
(2,016)
69
(878)
586
-
72
(1,237)
(b) Non cash financing transactions
During the financial year, the Group acquired vehicles to the value $1,309 (2016: $157 via finance leases. These
transactions are not reflected in the Statement of Cash Flows.
26 Employee remuneration
26.1
Employee benefits expense
Expenses recognised for employee benefits are analysed below:
Employee benefits – expense
Wages and salaries
Bonuses
Share-based payments
Superannuation
Employee benefits expense
2017
$’000
24,680
396
30
1,999
27,105
2016
$’000
12,639
330
1,360
1,048
15,377
26.2
Share-based employee remuneration
In 2017 no shares were issued to any employees are part of their remuneration. In FY2016, as part of Apiam’s initial
public float 1,360,000 shares were issued to eligible employees in Australia nominated by the Company. These employee
shares were issued for nil consideration. The fair value of the shares issued was $1.00. In 2017 nil (2016: $1,360) of
employee remuneration expense (all of which related to equity-settled share-based payment transactions) have been
included in profit or loss and credited to share capital. In 2017, $30 shares were accrued and to be issued.
Apiam Animal Health Limited
Financial statements for the year ended 30 June 2017
56
27 Auditor remuneration
Audit services – Grant Thornton
Remuneration for audit or review of financial statements
investigating accountant
Other services – Grant Thornton
other
Total other services remuneration
taxation services
Total auditor’s remuneration
28 Related party transactions
2017
$'000
2016
$'000
196,838
186,125
-
78,656
86,521
165,177
362,015
300,000
18,255
25,010
343,265
529,390
The Group’s related parties include key management, post-employment benefit plans for the Group’s employees and
others as described below.
Unless otherwise stated, none of the transactions incorporate special terms and conditions and no guarantees were given
or received. Outstanding balances are usually settled in cash.
28.1
Transactions with key management personnel
Key management of the Group are the executive members of Apiam’s Board of Directors and members of the Executive
Team. Key management personnel remuneration includes the following expenses:
Short-term employee benefits:
salaries including bonuses and non-monetary benefits
bonuses
non-monetary benefits
Total short-term employee benefits
Long- term employee benefits:
long service leave
Total long-term employee benefits
Post-employment benefits:
superannuation
Total post-employment benefits
Share-based payments
Total remuneration
Loans to key management personnel
2017
$'000
2016
$'000
1,156,737
943,549
-
145,000
12,027
23,058
1,168,764
1,111,607
7,307 (11,945)
7,307
(11,945)
90,469
90,469
66,579
66,579
-
380,000
1,266,410
1,546,241
In the comparative period, the Group entered into a loan facility agreement with Chris Richards, under which the Group
agreed to lend up to $1.5million. The loan is at an interest rate equal to the Term Debt Facility interest payable by the
Group plus 2% per annum. The table below provides aggregate information relating to Group’s loans to key management
personnel during the year:
Balance at the start of the year
Loans advanced
Interest paid and payable for the year
Repayments made
Balance at the end of the year
2017
$'000
-
-
-
-
-
2016
$'000
133,000
1,229,000
15,000
(1,377,000)
-
Apiam Animal Health Limited
Financial statements for the year ended 30 June 2017
57
The number of key management personnel included in the Group aggregate at year end is Nil. The Group does not have
an allowance account for receivables relating to outstanding loans and has not recognised any expense for impaired
receivables during reporting period.
Other transactions with key management personnel
The Group rents premises at Piper Lane, Bendigo East, Victoria. The premises are owned by an entity associated with
Chris Richards. Rent payments made amounted to $242 (2016: $160).
The Group rents premises at Rubicon Street, Smithton, Tasmania. The premises are owned by an entity associated with
Chris Richards. Rent payments made amounted to $124 (2016: $73).
The Group leases it artificial insemination facility in Victoria from entities associated with Chris Richards. Lease payments
made amounted to $70 (2016: $43).
All related party rentals are based on commercial rates and the terms of the lease are standard commercial terms.
The Group has entered into an intellectual property licence with iVet Pty Ltd, a company controlled by Chris Richards, to
use the iVet intellectual property. The Group will pay iVet Pty Ltd a royalty of 10% of net sales revenue received by the
Group for the use of the intellectual property licence. The agreement is for an initial term of 10 years. The group has the
option to purchase the iVet technology by giving notice to iVet Pty Ltd at any time during the initial 5 years of the term. No
payments were made during the financial year (2016: Nil).
The Group obtains business air travel services from an entity associated with Chris Richards. The fares paid are based
on commercial fares. Payments made amounted to $64 (2016: $121).
29 Contingent liabilities
In the Directors’ view, there are no contingent assets or liabilities that will have a material effect on the Group.
30 Capital commitments
2017
$'000
115
115
The group has entered into the purchase of new vehicles after the reporting date, which haven't been
delivered yet.
Property, plant and equipment
2016
$'000
218
218
31 Business restructure
The business did not carry out any restructure in the year ended 30 June 2017.
In the prior year as part of listing between 1 November 2015 and 9 December 2015, as part of the Group’s reorganisation
and restructure of entities under common control, ownership of the following companies was transferred to Apiam Animal
Health Ltd in exchange for cash and shares:
Chris Richards & Associates Pty Ltd
Country Vet Wholesaling Pty ltd
Farm Gate Logistics (Qld) Pty Ltd
Apiam Management Pty Ltd
Southern Cross Feedlot Services Pty Ltd
-
-
-
-
-
- Westvet Wholesale Pty Ltd
-
-
Portec Veterinary Services Pty ltd
Pork Storks Australia Pty Ltd
% gained
100
100
100
100
100
100
49
100
Apiam Animal Health Limited
Financial statements for the year ended 30 June 2017
Details of the business restructure are as follows:
Fair value of consideration transferred
Settled as follows:
Amount settled in cash
Amount settled by issue of shares at fair value
Amount owing at balance date
Contingent consideration subject to performance criteria
Recognised amounts of identifiable net assets
Property, plant and equipment
Deferred tax assets
Total non-current assets
Inventories
Trade and other receivables
Cash and cash equivalents
Other current assets
Total current assets
Borrowings
Provisions
Total non-current liabilities
Borrowings
Provisions
Current tax liabilities
Trade and other payables
Total current liabilities
Identifiable net assets
Reserves arising upon reconstruction
Represented by:
Corporate re-organisation reserve
Non-controlling interest acquisition reserve
Non-controlling interest
Consideration transferred settled in cash
Cash and cash equivalents acquired
Net cash outflow on acquisition
Acquisition costs charged to expenses
Net cash inflow relating to the acquisition
31. 1 Consideration transferred
58
$’000
34,386
2,915
30,633
88
750
1,916
451
2,367
5,381
11,417
2,299
323
19,420
(563)
(61)
(624)
(5,944)
(1,082)
(378)
(12,078)
(19,482)
1,681
32,705
26,666
6,615
(576)
(2,914)
2,299
615
(640)
(25)
Acquisition-related costs amounting to $640,000 are not included as part of consideration transferred and have been
recognised as an expense in the consolidated statement of profit or loss and other comprehensive income, as part of
listing and acquisition costs expenses.
31.2 Identifiable net assets
The fair values of the identifiable intangible assets were finalised in the year ended 30 June 2017.
31.3 Contingent consideration subject to performance criteria
The contingent consideration amounting to $1,250,000 (Note 20) relating to the acquisition of a subsidiary has been
recorded at fair value. The consideration is contingent on achieving certain pre-determined earnings was not met and the
reversal was taken up as Other income.
Apiam Animal Health Limited
Financial statements for the year ended 30 June 2017
59
32 Business combination
On 5 September 2016, the Group acquired 100% of the issued share capital and voting rights of the following companies:
Quirindi Feedlot Services Pty Ltd,
Quirindi Veterinary Clinic Pty Ltd and
Quipolly Equine Centre Pty Ltd
In addition, on 6 January 2017, the business assets were acquired from:
AllStock (NSW) Pty Ltd
The following detailed table highlights the fair value of the identifiable assets acquired and liabilities assumed as at the
date of acquisition for each of the business combinations undertaken in the period. The acquisitions will enable to Group
to continue to enhance the services provided to clients by acquiring proprietary technology to improve clinic efficiencies,
data analysis systems for feedlot cattle and specialised assets for reproduction services. The fair value of the 2,263,299
fully paid shares issued as part of the consideration paid was based on the 15 day volume weighted average price prior to
the announcement which equated to $1.5335 per shares were issued for the purchase of the Quirindi Group of
companies. The fair value of 439,074 shares issued at $1.1957 which was based on the 20 day volume weighted
average share price were issued in relation to the acquisition of the AllStock assets.
Apiam Animal Health Limited
Financial statements for the year ended 30 June 2017
Fair value of consideration transferred
Amounts settled in cash
Amount settled by issue of shares at fair value
Total fair value of consideration transferred
Recognised amounts of identifiable net assets
Property plant and equipment
Deferred tax assets
Total non-current assets
Inventories
Trade and other receivables
Other current assets
Total current assets
Borrowings
Provisions
Total non-current liabilities
Provisions
Borrowings
Current tax liabilities
Trade and other payables
Total current liabilities
Identifiable net assets
Goodwill on acquisition
Net cash outflow on acquisition
60
Total
$’000
8,379
3,996
12,375
439
113
552
149
714
335
1,198
173
173
126
393
473
757
1,749
Quirindi
AllStock
$’000
$’000
7,154
3,471
10,625
1,225
525
1,750
100
15
115
77
172
20
269
31
31
19
-
-
22
41
339
98
437
72
542
315
929
142
142
107
393
473
735
1,708
(484)
11,109
7,154
312
1,438
1,225
(172)
12,547
8,379
Apiam Animal Health Limited
Financial statements for the year ended 30 June 2017
61
32.1
Consideration transferred
Acquisition-related costs amounting to $236,000 are not included as part of consideration transferred and have been
recognised as an expense in the consolidated statement of profit or loss and other comprehensive income, as part of
listing and acquisition costs expenses.
32.2
Identifiable net assets
The fair values of the identifiable intangible assets have been determined provisionally at 30 June 2017. The Group is
currently obtaining the information necessary to appropriately consider the identification and fair value of identifiable
intangible assets.
32.3
Goodwill
The goodwill that arose on the combination can be attributed to the value of the businesses to the Group in addition to the
net tangible assets acquired, synergies expected to be derived from the combination and the value of each of the
veterinary businesses which cannot be recognised as an intangible asset. The goodwill that arose from this business
combination is not expected to be deductible for tax purposes.
33 Interests in subsidiaries
33.1
Composition of the Group
Set out below details of the subsidiaries held directly by the Group:
Name of the Subsidiary
Chris Richards & Associates Pty Ltd
Country Vet Wholesaling Pty Ltd
Farm Gate Logistics (Qld) Pty Ltd
Apiam Management Pty Ltd
Southern Cross Feedlot Services Pty Ltd
Westvet Wholesale Pty Ltd
Portec Veterinary Services Pty Ltd
Pork Storks Australia Pty Ltd
McAuliffe Moore & Perry Pty Ltd
Warrnambool Veterinary Clinic Pty Ltd
Scottsdale Veterinary Services Pty Ltd
Smithton Veterinary Service Pty Ltd
AAH - Dubbo Vet Hospital Pty Ltd
AAH - Bell Vet Services Pty Ltd
CVH Gippsland Pty Ltd
CVH Southern Riverina Pty Ltd
CVH Border Pty Ltd
CVH iVet Pty Ltd
Tasvet Wholesale Pty Ltd
Quirindi Feedlot Services Pty Ltd
Quirindi Veterinary Clinic Pty Ltd
Quipolly Equine Centre Pty Ltd
Country of
incorporation
and principal
place of
business
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Principal activity
Veterinary services
Wholesale supply
Transport
Payroll
Veterinary services
Wholesale supply
Veterinary services
Genetics
Veterinary services
Veterinary services
Veterinary services
Veterinary services
Veterinary services
Veterinary services
Veterinary services
Veterinary services
Veterinary services
Dormant
Dormant
Veterinary services
Veterinary services
Veterinary services
Group proportion of
ownership interests
2017
100%
100%
100%
100%
100%
100%
49%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
2016
100%
100%
100%
100%
100%
100%
49%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
0%
0%
0%
Apiam Animal Health Limited
Financial statements for the year ended 30 June 2017
62
Significant judgements and assumptions
The Group holds 49% of the ordinary shares and voting rights in Portec Veterinary Services Pty Ltd (‘Portec’).
One (1) other investor holds 51% in order to ensure compliance with statutory laws applicable in Western Australia where
Portec Veterinary Services Pty Ltd (Portec) conducts its operations. Management has assessed its involvement in Portec
in accordance with AASB 10’s revised control definition and guidance. It has concluded that it has outright control. In
making its judgement, management considered the Group’s voting rights, the relative size and dispersion of the voting
rights held by the other shareholder and the extent of participation by the shareholder in general meetings. Experience
demonstrates that the other shareholder participates such that they do not prevent the Group from having the practical
ability to direct the relevant activities of Portec unilaterally.
33.2
Losing control over a subsidiary during the reporting period
There was no loss of control over a subsidiary during the reporting period.
33.3
Interests in unconsolidated structured entities
The Group has no interests in unconsolidated structured entities.
34 Leases
34.1
Finance leases as lessee
The Group’s main motor vehicles and certain items of plant and equipment are held under finance lease arrangements.
As of 30 June 2017, the net carrying amount of the motor vehicles held under finance lease arrangements (included as
part of motor vehicles) is $1,715 (2016:$564); and the net carrying amount of the plant and equipment held under finance
lease arrangements (included as part of plant and equipment) is $64 (2016: $73) (see Note 13).
The Group’s finance lease liabilities, which are secured by the related assets held under finance leases, are classified as
follows:
Current:
finance lease liabilities
2017
$’000
486
Non-current:
Future minimum finance lease payments at the end of each reporting period under review were as follows:
finance lease liabilities
942
2016
$’000
242
262
30 June 2017
Lease payments
Finance charges
Net present values
30 June 2016
Lease payments
Finance charges
Net present values
Minimum lease payments due
Within 1
year
$’000
1-5 years After 5 years
$’000
$’000
Total
$’000
523
(37)
486
257
(15)
242
994
(52)
942
271
(9)
262
-
-
-
-
-
-
1,517
(89)
1,428
528
(24)
504
Apiam Animal Health Limited
Financial statements for the year ended 30 June 2017
63
34.2
Operating leases as lessee
Non-cancellable operating leases
Within one year
later than one year but less than five years
later than five years
2017
$’000
1,633
4,476
2,170
8,279
2016
$’000
1,438
4,409
2,062
7,909
The group leases various offices, warehouses and retail stores under non-cancellable operating leases expiring within
one to ten years. The leases have varying terms, escalation clauses and renewal rights. On renewal, the terms of the
leases are renegotiated. The group also has a 5 year agreement for the provision of the IT ERP system for the financials
as previously communicated.
35 Financial instrument risk
35.1
Risk management objectives and policies
The Group is exposed to various risks in relation to financial instruments. The Group’s financial assets and liabilities by
category are summarised in Note 40.1. The main types of risks are market risk, credit risk and liquidity risk.
The Group’s risk management is coordinated at its headquarters, in close cooperation with the Board of Directors, and
focuses on actively securing the Group’s short to medium-term cash flows by minimising the exposure to financial
markets. Long-term financial investments are managed to generate lasting returns.
The Group does not actively engage in the trading of financial assets for speculative purposes nor does it write options.
The most significant financial risks to which the Group is exposed are described below.
35.2
Market risk analysis
The Group is exposed to market risk through its use of financial instruments and specifically to interest rate risk, which
result from both its operating and investing activities.
Interest rate sensitivity
The Group’s policy is to minimise interest rate cash flow risk exposures on long-term financing. At 30 June 2017, the
Group is exposed to changes in market interest rates through bank borrowings at variable interest rates.
The following table illustrates the sensitivity of profit and equity to a reasonably possible change in interest rates of +/- 1%
(2016: +/- 1%). These changes are considered to be reasonably possible based on observation of current market
conditions. The calculations are based on a change in the average market interest rate for each period, and the financial
instruments held at each reporting date that are sensitive to changes in interest rates. All other variables are held
constant.
30-Jun-17
30-Jun-16
Profit for the year
Equity
$’000
+1%
242
$’000
-1%
(242)
$’000
+1%
242
$’000
-1%
(242)
80
(80)
80
(80)
Apiam Animal Health Limited
Financial statements for the year ended 30 June 2017
64
35.3
Credit risk analysis
Credit risk is the risk that a counterparty fails to discharge an obligation to the Group. The Group is exposed to this risk
for various financial instruments, for example by trade receivables. The Group’s maximum exposure to credit risk is
limited to the carrying amount of financial assets recognised at the reporting date, as summarised below:
Classes of financial assets
Carrying amounts:
Cash and cash equivalents
trade and other receivables
2017
$’000
2016
$’000
968
14,075
2,117
13,254
15,043
15,371
The Group continuously monitors defaults of customers and other counterparties, identified either individually or by group
and incorporates this information into its credit risk controls. Where available at reasonable cost, external credit ratings
and/or reports on customers and other counterparties are obtained and used. The Group’s policy is to deal only with
creditworthy counterparties.
The Group’s management considers that all of the above financial assets that are not impaired or past due for each of the
30 June reporting dates under review are of good credit quality.
At 30 June, the Group has certain trade receivables that have not been settled by the contractual due date but are not
considered to be impaired. The amounts at 30 June analysed by the length of time past due, are:
Past due under 30 days
Past due 30 days to under 60 days
Past due 60 days and over
Total
2017
$’000
1,893
489
1,680
4,062
2016
$’000
1,594
633
831
3,058
In respect of trade and other receivables, the Group is not exposed to any significant credit risk exposure to any single
counterparty or any group of counterparties having similar characteristics. Trade receivables consist of a large number of
customers in various industries and geographical areas. Based on historical information about customer default rates
management consider the credit quality of trade receivables that are not past due or impaired to be good.
The credit risk for cash and cash equivalents is considered negligible, since the counterparties are reputable banks with
high quality external credit ratings
35.4
Liquidity risk analysis
Liquidity risk is the risk that the Group might be unable to meet its obligations. The Group manages its liquidity needs by
monitoring scheduled debt servicing payments for long-term financial liabilities as well as forecast cash inflows and
outflows due in day-to-day business. The data used for analysing these cash flows is consistent with that used in the
contractual maturity analysis below. Liquidity needs are monitored in various time bands, on a day-to-day and week-to-
week basis, as well as on the basis of a rolling 30-day projection. Long-term liquidity needs for a 180-day and a 360-day
lookout period are identified monthly. Net cash requirements are compared to available borrowing facilities in order to
determine headroom or any shortfalls. This analysis shows that available borrowing facilities are expected to be sufficient
over the lookout period.
The Group’s objective is to maintain cash and marketable securities to meet its liquidity requirements for 30-day periods
at a minimum. This objective was met for the reporting periods. Funding for long-term liquidity needs is additionally
secured by an adequate amount of committed credit facilities and the ability to sell long-term financial assets.
Apiam Animal Health Limited
Financial statements for the year ended 30 June 2017
65
The Group considers expected cash flows from financial assets in assessing and managing liquidity risk, in particular its
cash resources and trade receivables. The Group’s existing cash resources and trade receivables significantly exceed
the current cash outflow requirements. Cash flows from trade and other receivables are all contractually due within one
(1) month.
As at 30 June 2017, the Group’s non-derivative financial liabilities have contractual maturities (including interest payments
where applicable) as summarised below:
30 June 2017
Other bank borrowings
Finance lease obligations
Trade and other payables
Total
Current
Within 6
months
$’000
6 - 12
months 1 - 4 years
$’000
$’000
3,616
-
20,666
248
238
942
9,015
-
-
12,879
238
21,608
This compares to the maturity of the Group’s non-derivative financial liabilities in the previous reporting periods as follows:
30 June 2016
Other bank borrowings
Finance lease obligations
Trade and other payables
Total
Current
Within 6
months
$’000
6 - 12
months
$’000
1 - 4 years
$’000
3,919
121
9,491
13,531
-
121
-
121
11,650
262
-
11,912
The above amounts reflect the contractual undiscounted cash flows, which may differ to the carrying values of the
liabilities at the reporting date.
36 Fair value measurement
36.1
Fair value measurement of financial instruments
Financial assets and financial liabilities measured at fair value in the statement of financial position are grouped into three
(3) levels of a fair value hierarchy. The three (3) levels are defined based on the observability of significant inputs to the
measurement, as follows:
Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities
Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either
directly or indirectly
Level 3: unobservable inputs for the asset or liability
The following table shows the levels within the hierarchy of financial assets and liabilities measured at fair value on a
recurring basis at 30 June 2017 and 30 June 2016:
Apiam Animal Health Limited
Financial statements for the year ended 30 June 2017
66
30 June 2017
Financial liabilities
Contingent consideration
Total liabilities
Net fair value
30 June 2016
Financial liabilities
Contingent consideration
Total liabilities
Net fair value
Level 1
$'000
Level 2
$'000
Level 3
$'000
Total
$'000
-
-
-
-
-
-
-
-
-
Level 1
$'000
Level 2
$'000
Level 3
$'000
-
-
-
-
-
-
1,250
1,250
1,250
-
-
-
Total
$'000
1,250
1,250
1,250
Measurement of fair value of financial instruments
The Group’s finance team performs valuations of financial items for financial reporting purposes, including Level 3 fair
values, in consultation with third party valuation specialists for complex valuations. Valuation techniques are selected
based on the characteristics of each instrument, with the overall objective of maximising the use of market-based
information. The finance team reports directly to the Chief Financial Officer (CFO) and to the Audit Committee. Valuation
processes and fair value changes are discussed among the Audit Committee and the valuation team at least every year,
in line with the Group’s reporting dates.
The valuation techniques used for instruments categorised in Level 3 are described below:
Contingent consideration (Level 3)
The fair value of contingent consideration related to the acquisition of business combinations (see Note 31.3) is
considered to be face value as the payments become due within the next six (6) months.
The following table provides information about the sensitivity of the fair value measurement to changes in the most
significant inputs:
Significant unobservable input
Estimate of the input
Sensitivity of the fair value measurement to input
Probability of meeting target
100%
-
Level 3 Fair value measurements
The reconciliation of the carrying amounts of financial instruments classified
within Level 3 is as follows:
Contingent consideration
Balance at 1 July 2016
Reversal of contingent consideration
Payable business combination
Balance at 30 June 2017
2017
$’000
1,250
(1,250)
-
-
2016
$’000
-
-
1,250
1,250
Apiam Animal Health Limited
Financial statements for the year ended 30 June 2017
67
37 Capital management policies and procedures
The Group’s capital management objectives are:
to ensure the Group’s ability to continue as a going concern, and
to provide an adequate return to shareholders;
by pricing products and services commensurately with the level of risk.
The Group monitors capital on the basis of the carrying amount of equity less cash and cash equivalents as presented on
the face of the statement of financial position. The Group’s goal in capital management is to maintain a maximum gearing
ratio of 35% (ratio of debt to equity). This is in line with the Group’s covenants resulting from the banking facilities it has
taken out from in December 2015.
Management assesses the Group’s capital requirements in order to maintain an efficient overall financing structure while
avoiding excessive leverage. This takes into account the subordination levels of the Group’s various classes of debt.
The Group manages the capital structure and makes adjustments to it in the light of changes in economic conditions and
the risk characteristics of the underlying assets. In order to maintain or adjust the capital structure, the Group may adjust
the amount of dividends paid to shareholders, return capital to shareholders, issue new shares, or sell assets to reduce
debt.
The amounts managed as capital by the Group for the reporting periods under review are summarised as follows:
Total equity
Cash and cash equivalents
Capital
Total equity
Borrowings
Overall financing
Capital-to-overall financing ratio
2017
$'000
54,482
968
2016
$'000
46,271
2,117
55,450
48,388
54,482
25,710
46,271
16,012
80,192
62,283
69%
78%
The Group has honoured its covenant obligations, including maintaining capital ratios, since the banking loans were taken
out in December 2015.
Apiam Animal Health Limited
Financial statements for the year ended 30 June 2017
68
38 Parent entity information
Information relating to Apiam Animal Health Limited (‘the Parent Entity’):
Statement of financial position
Current assets
Total assets
Current liabilities
Total liabilities
Net assets
Issued capital
Retained earnings / (Accumulated losses)
Total equity
Statement of profit or loss and other comprehensive income
Profit for the year
Other comprehensive income
Total comprehensive income
2017
$’000
2016
$’000
1,113
106,758
4,103
26,711
80,047
786
94,116
7,375
18,951
75,165
83,065
(3,018)
79,070
(3,905)
80,048
1,018
75,165
(3,718)
1,018
(3,718)
The Parent Entity has capital commitments of $115 to purchase motor vehicles (2016: $218). Refer Note 30 for further
details of the commitment.
The Parent Entity has entered into a deed of cross guarantee. Refer Note 41 for details.
The Parent Entity had no contingent liabilities at 30 June 2017 (2016: $Nil).
39 Post-reporting date events
The Apiam Board of Directors have declared the Company’s final dividend of 0.8c per share fully franked on the 25
August 2017. The final dividend of $809,424 will be paid on the 27 October 2017.
Apiam Animal Health Limited
Financial statements for the year ended 30 June 2017
69
40 Financial assets and liabilities
40.1
Categories of financial assets and liabilities
Note 4.12 provides a description of each category of financial assets and financial liabilities and the related accounting
policies.
A description of the Group’s financial instrument risks, including risk management objectives and policies is given in Note
35.
The methods used to measure financial assets and liabilities reported at fair value are described in Note 36.1.
The carrying amounts of financial assets and financial liabilities in each category are as follows:
30-Jun-17
Financial assets
cash and cash equivalents
Trade and other receivables
Financial liabilities
Non-current borrowings
Current borrowings
Trade and other payables
Current tax liabilities
30-Jun-16
Financial assets
cash and cash equivalents
Trade and other receivables
Financial liabilities
Non-current borrowings
Current borrowings
Trade and other payables
Current tax liabilities
Contingent consideration
notes
9
10
18
18
16
17
Note
9
10
18
18
16
17
20
Financial
assets at
amortised cost
$'000
968
14,075
15,043
Other liabilities
at amortised
cost
21,608
4,102
9,015
776
35,501
Financial
assets at
amortised cost
$'000
2,117
13,254
15,371
Other liabilities
at amortised
cost
11,864
4,148
9,491
1,366
1,250
28,119
Total
$'000
968
14,075
15,043
21,608
4,102
9,015
776
35,501
Total
$'000
2,117
13,254
15,371
11,864
4,148
9,491
1,366
1,250
28,119
Borrowings
40.2
Borrowings include the following financial liabilities:
Financial liabilities
Carrying amount at amortised cost:
other bank borrowings (Note 18)
finance lease liabilities (Note 34)
All borrowings are denominated in $AUD.
Borrowings at amortised cost
2017
$’000
3,616
486
4,102
Current
2016
$’000
3,906
242
4,148
2017
$’000
20,666
942
21,608
Non-current
2016
$’000
11,602
262
11,864
Apiam Animal Health Limited
Financial statements for the year ended 30 June 2017
70
Other bank borrowings are secured by first ranking general security agreements in relation to the current and future
assets of Apiam Animal Health Limited and each wholly owned subsidiary. Current interest rates are variable and
average 3.6% (2016 5.4%). The carrying amount of the other bank borrowings is considered to be a reasonable
approximation of the fair value.
40.3
Other financial instruments
The carrying amount of the following financial assets and liabilities is considered a reasonable approximation of fair value:
trade and other receivables
cash and cash equivalents; and
trade and other payables
41 Deed of cross guarantee
The following entities are party to a deed of cross guarantee under which each company guarantees the debts of the
others:
Chris Richards & Associates Pty Ltd
Country Vet Wholesaling Pty Ltd
Farm Gate Logistics (Qld) Pty Ltd
Apiam Management Pty Ltd
Southern Cross Feedlot Services Pty Ltd
Westvet Wholesale Pty Ltd
Pork Storks Australia Pty Ltd
McAuliffe Moore & Perry Pty Ltd
Warrnambool Veterinary Clinic Pty Ltd
Scottsdale Veterinary Services Pty Ltd
Smithton Veterinary Service Pty Ltd
AAH - Dubbo Vet Hospital Pty Ltd
AAH - Bell Vet Services Pty Ltd
CVH Gippsland Pty Ltd
CVH Southern Riverina Pty Ltd
CVH Border Pty Ltd
Tasvet Wholesale Pty Ltd
By entering into the deed, the wholly-owned entities have been relieved of the requirement to prepare financial
statements and a directors’ report under Class Order 98/1418 (as amended) issued by the Australian Securities and
Investments Commission.
Set out below is a consolidated statement of profit or loss and other comprehensive income of the parties to the Deed.
Apiam Animal Health Limited
Financial statements for the year ended 30 June 2017
71
Statement of Profit or Loss and Other Comprehensive Income for the year ended 30 June 2017
Continuing operations
Revenue
Other income
Expenses
Changes in inventory
Cost of materials
Costs of consumables and services
Employee benefit expenses
Listing and acquisition expenses
Property expenses
Freight, vehicle and transport expenses
Depreciation of property, plant and equipment
Other operating expenses
Finance costs
Other financial items
2017
$'000
2016
$'000
85,128
51,724
1,232
-
1,282
1,725
(42,732)
(28,713)
(502)
(456)
(25,802)
(15,110)
(739)
(2,026)
(2,434)
(1,410)
(1,662)
(1,407)
(1,417)
(593)
(6,033)
(2,345)
(895)
(434)
(14)
(7)
Profit/(loss) before income tax
5,412
948
Income tax (expense)/benefit
Profit from continuing operations
(Loss)/profit from discontinued operation
Profit for the year
(972)
(968)
4,440
(20)
-
4,440
(20)
Apiam Animal Health Limited
Financial statements for the year ended 30 June 2017
72
Set out below is a consolidated statement of financial position of the parties to the Deed.
Statement of Financial Position
As at 30 June 2017
Assets
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Other current assets
Total current assets
Non-current assets
Intangible assets
Property, plant and equipment
Investments
Deferred tax assets
Total non-current assets
Total assets
Current liabilities
Trade and other payables
Amounts payable to vendors for business acquisitions
Current tax liabilities
Borrowings
Provisions
Total current liabilities
Non-current liabilities
Borrowings
Provisions
Total non-current liabilities
Total liabilities
Net assets
Equity
Equity attributable to owners of the parent
- share capital
- corporate reorganization reserve
- non-controlling interest acquisition reserve
- retained earnings
2017
$’000
2016
$’000
835
14,128
11,356
737
27,056
46,958
6,000
11,620
3,339
67,917
2,009
12,770
10,167
371
25,317
45,501
4,479
-
2,967
52,947
94,973
78,264
9,255
-
725
4,203
3,500
17,683
21,608
631
22,239
39,922
9,410
1,250
1,357
4,147
3,453
19,617
11,864
266
12,130
31,747
55,051
46,517
83,004
(25,642)
(6,615)
4,304
55,051
79,070
(25,642)
(6,615)
(296)
46,517
Apiam Animal Health Limited
Financial statements for the year ended 30 June 2017
73
Directors’ Declaration
1
In the opinion of the Directors of Apiam Animal Health Limited:
a The consolidated financial statements and notes of Apiam Animal Health Limited are in
accordance with the Corporations Act 2001, including
i Giving a true and fair view of its financial position as at 30 June 2017 and of its
performance for the financial year ended on that date; and
ii Complying with Australian Accounting Standards (including the Australian
Accounting Interpretations) and the Corporations Regulations 2001; and
b There are reasonable grounds to believe that Apiam Animal Health Limited will be able to
pay its debts as and when they become due and payable.
2 The Directors have been given the declarations required by Section 295A of the Corporations
Act 2001 from the Managing Director and Chief Financial Officer for the financial year ended
30 June 2017.
3 Note 2 confirms that the consolidated financial statements also comply with International
Financial Reporting Standards.
Signed in accordance with a resolution of the Directors:
Dr Christopher Irwin Richards
Managing Director
Melbourne
25 August 2017
The Rialto, Level 30
525 Collins St
Melbourne Victoria 3000
Correspondence to:
GPO Box 4736
Melbourne Victoria 3001
T +61 3 8320 2222
F +61 3 8320 2200
E info.vic@au.gt.com
W www.grantthornton.com.au
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF APIAM ANIMAL HEALTH LIMITED
Report on the audit of the financial report
Opinion
We have audited the financial report of Apiam Animal Health Limited (the Company) and its subsidiaries
(the Group), which comprises the consolidated statement of financial position as at 30 June 2017, the
consolidated statement of profit or loss and other comprehensive income, consolidated statement of
changes in equity and consolidated statement of cash flows for the year then ended, and notes to the
consolidated financial statements, including a summary of significant accounting policies, and the
directors’ declaration.
In our opinion, the accompanying financial report of the Group, is in accordance with the Corporations
Act 2001, including:
a Giving a true and fair view of the Group’s financial position as at 30 June 2017 and of its
performance for the year ended on that date; and
b Complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for Opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial
Report section of our report. We are independent of the Group in accordance with the independence
requirements of the Corporations Act 2001 and the ethical requirements of the Accounting Professional
and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (the Code) that
are relevant to our audit of the financial report in Australia. We have also fulfilled our other ethical
responsibilities in accordance with the Code.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our opinion.
Grant Thornton Audit Pty Ltd ACN 130 913 594
a subsidiary or related entity of Grant Thornton Australia Ltd ABN 41 127 556 389
‘Grant Thornton’ refers to the brand under which the Grant Thornton member firms provide assurance, tax and advisory services to their clients and/or refers to one or more member firms, as the context
requires. Grant Thornton Australia Ltd is a member firm of Grant Thornton International Ltd (GTIL). GTIL and the member firms are not a worldwide partnership. GTIL and each member firm is a separate legal
entity. Services are delivered by the member firms. GTIL does not provide services to clients. GTIL and its member firms are not agents of, and do not obligate one another and are not liable for one another’s
acts or omissions. In the Australian context only, the use of the term ‘Grant Thornton’ may refer to Grant Thornton Australia Limited ABN 41 127 556 389 and its Australian subsidiaries and related entities.
GTIL is not an Australian related entity to Grant Thornton Australia Limited.
Liability limited by a scheme approved under Professional Standards Legislation.
Key Audit Matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our
audit of the financial report of the current period. These matters were addressed in the context of our
audit of the financial report as a whole, and in forming our opinion thereon, and we do not provide a
separate opinion on these matters.
Key audit matter
Goodwill
Note 14
At 30 June 2017 the carrying value of Goodwill
was $57m relating to three separate cash-
generating units (“CGUs”).
In accordance with AASB 136 Impairment of
Assets, the Group is required to assess at least
annually if the carrying value of each CGU is in
excess of the recoverable value.
This area is a key audit matter due to the high
level of management judgement and estimation
required to determine the recoverable value of
the CGUs.
How our audit addressed the key audit
matter
Our procedures included, amongst others:
Reviewing the impairment model for
compliance with AASB 136;
Assessing management’s determination of
the Group’s CGUs based on the nature of
the business and the economic environment
in which the units operate;
Analysing the internal reporting of the Group
to assess how earnings streams are
monitored and reported by management;
Evaluating management’s future cash flow
forecasts to obtain an understanding of the
process by which they were developed;
Assessing management’s expertise in
preparing the impairment model;
Testing the underlying calculations for
mathematical accuracy and agreeing them to
the latest Board approved budgets;
Assessing management’s key assumptions
for reasonableness by comparing long term
growth rates to historical results and
economic and industry forecasts;
Agreeing discount rates to the cost of capital
for the Group;
Utilising an auditors expert to assess the
reasonableness of key assumptions used in
the model;
Performing sensitivity analysis on significant
assumptions, including the discount rate and
terminal growth assumptions; and
Reviewing the appropriateness of the related
disclosures within the financial statements.
Information Other than the Financial Report and Auditor’s Report Thereon
The Directors are responsible for the other information. The other information comprises the information
included in the Group’s annual report for the year ended 30 June 2017, but does not include the
financial report and our auditor’s report thereon.
Our opinion on the financial report does not cover the other information and we do not express any form
of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information and,
in doing so, consider whether the other information is materially inconsistent with the financial report or
our knowledge obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this other
information; we are required to report that fact. We have nothing to report in this regard.
Responsibilities of the Directors’ for the Financial Report
The Directors of the Company are responsible for the preparation of the financial report that gives a true
and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and
for such internal control as the Directors determine is necessary to enable the preparation of the
financial report that gives a true and fair view and is free from material misstatement, whether due to
fraud or error.
In preparing the financial report, the Directors are responsible for assessing the Group to continue as a
going concern, disclosing, as applicable, matters related to going concern and using the going concern
basis of accounting unless the Directors either intend to liquidate the Group or to cease operations, or
have no realistic alternative but to do so.
Auditor’s Responsibilities for the Audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free
from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes
our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit
conducted in accordance with the Australian Auditing Standards will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material if,
individually or in the aggregate, they could reasonably be expected to influence the economic decisions
of users taken on the basis of this financial report.
A further description of our responsibilities for the audit of the financial report is located at the Auditing
and Assurance Standards Board website at: http://www.auasb.gov.au/auditors_responsibilities/ar1.pdf.
This description forms part of our auditor’s report.
Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in the directors’ report for the year ended 30 June
2017.
In our opinion, the Remuneration Report of Apiam Animal Health Limited, for the year ended 30 June
2017, complies with section 300A of the Corporations Act 2001.
Responsibilities
The Directors of the Company are responsible for the preparation and presentation of the Remuneration
Report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express
an opinion on the Remuneration Report, based on our audit conducted in accordance with Australian
Auditing Standards.
GRANT THORNTON AUDIT PTY LTD
Chartered Accountants
A C Pitts
Partner - Audit & Assurance
Melbourne, 25 August 2017
Apiam Animal Health Limited
Financial statements for the year ended 30 June 2017
77
ASX Additional Information
Additional Securities Exchange Information
In accordance with ASX Listing Rule 4.10, the Company provides the following information to
shareholders not elsewhere disclosed in this Annual Report. The information provided is current
as at 11 August 2017.
Corporate Governance Statement
The Company’s Directors and management are committed to conducting the Group’s business in
an ethical manner and in accordance with the highest standards of corporate governance. The
Company has adopted and substantially complies with the ASX Corporate Governance Principles
and Recommendations (Third Edition) (Recommendations) to the extent appropriate to the size
and nature of the Group’s operations.
The Company has prepared a statement which sets out the corporate governance practices that
were
in operation
throughout
the
financial year
for
the Company,
identifies any
Recommendations that have not been followed, and provides reasons for not following such
Recommendations (Corporate Governance Statement).
In accordance with ASX Listing Rules 4.10.3 and 4.7.4, the Corporate Governance Statement will
be available for review on Apiam’s website (www.apiam.com.au), and will be lodged together with
an Appendix 4G with ASX at the same time that this Annual Report is lodged with ASX.
The Appendix 4G will particularise each Recommendation that needs to be reported against by
Apiam, and will provide shareholders with information as to where relevant governance
disclosures can be found.
The Company’s corporate governance policies and charters are all available on Apiam’s website
(www.apiam.com.au).
Substantial holders
As at the 11 August 2017, the names of the substantial holders of the Company and the number
of equity securities in which those substantial holders and their associates have a relevant
interest, as disclosed in substantial holding notices given to the Company, are as follows:
Holder of Equity Securities
CJOEA Family Company Pty Ltd
Class of Equity
Securities
Number of
Equity
Securities
held
% of total
issued
securities
Ordinary Shares
27,339,804
27.02
Regal Funds Management Pty Limited
Ordinary Shares
8,931,118
5.11
Apiam Animal Health Limited
Financial statements for the year ended 30 June 2017
78
Number of holders
As at the 11 August 2017, the number of holders in each class of equity securities:
Class of Equity Securities
Fully paid ordinary shares
Fully paid ordinary shares restricted until 1 September 2017 and quoted on
ASX
Fully paid ordinary shares restricted until 8 December 2017 and quoted on
ASX
Fully paid ordinary shares restricted until 5 January 2018 and quoted on
ASX
Fully paid ordinary shares restricted until 1 September 2018 and quoted on
ASX
Fully paid ordinary shares restricted until 5 January 2019 and quoted on
ASX
Number of
shares
71,310,708
1,131,652
27,164,866
219,537
1,131,647
219,537
TOTAL ORDINARY SHARES ON ISSUE
101,177,947
Voting rights of equity securities
The only class of equity securities on issue in the Company which carries voting rights is ordinary
shares.
As at the 11 August 2017, there were 1,138 holders of a total of 71,310,708 ordinary shares of
the Company.
At a general meeting of The Company, every holder of ordinary shares present in person or by
proxy, attorney or representative has one vote on a show of hands and on a poll, one vote for
each ordinary share held. On a poll, every member (or his or her proxy, attorney or
representative) is entitled to vote for each fully paid share held and in respect of each partly paid
share, is entitled to a fraction of a vote equivalent to the proportion which the amount paid up (not
credited) on that partly paid share bears to the total amounts paid and payable (excluding
amounts credited) on that share. Amounts paid in advance of a call are ignored when calculating
the proportion.
Apiam Animal Health Limited
Financial statements for the year ended 30 June 2017
79
Distribution of holders of equity securities
The distribution of holders of equity securities on issue in the Company as at the 11 August 2017
is as follows:
%
0.111
1.285
3.170
15.605
79.828
100
%
-
0.864
0.864
2.593
Distribution of ordinary shareholders
Holdings Ranges
Holders
Total Units
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 – 999,999,999
132
299
266
360
81
78,978
916,639
2,260,761
11,128,155
56,926,175
Totals
1,138
71,310,708
Distribution of ordinary shares escrowed until 1 September 2017
Holdings Ranges
Holders
Total Units
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 – 999,999,999
Totals
-
3
1
2
2
8
-
9,783
9,782
29,345
1,082,742
95.678
1,131,652
100
Distribution of ordinary shares escrowed until 8 December 2017
Holdings Ranges
Holders
Total Units
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 – 999,999,999
Totals
-
-
-
2
38
40
-
-
-
136,425
27,028,441
27,164,866
%
-
-
-
0.502
99.498
100
Apiam Animal Health Limited
Financial statements for the year ended 30 June 2017
80
%
-
-
-
40
60
100
%
-
0.864
0.864
2.593
Distribution of ordinary shares escrowed until 5 January 2018
Holdings Ranges
Holders
Total Units
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 – 999,999,999
Totals
-
-
-
1
1
2
-
-
-
87,815
131,722
219,537
Distribution of ordinary shares escrowed until 1 September 2018
Holdings Ranges
Holders
Total Units
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 – 999,999,999
Totals
-
3
1
2
2
8
-
9,780
9,781
29,345
1,082,741
95.678
1,131,647
100
Distribution of ordinary shares escrowed until 5 January 2019
Holdings Ranges
Holders
Total Units
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 – 999,999,999
Totals
-
-
-
1
1
2
-
-
-
87,815
131,722
219,537
%
-
-
-
40
60
100
Less than marketable parcels of ordinary shares (UMP Shares)
The number of holders of less than a marketable parcel of ordinary shares based on the closing
market price at the 11 August 2017 is as follows:
Total Shares
71,310,708
UMP Shares
21,593
UMP Holders
70
% of issued shares
held by UMP
holders
0.03028
Apiam Animal Health Limited
Financial statements for the year ended 30 June 2017
81
Twenty largest shareholders
The Company only has one class of quoted securities, being ordinary shares. The names of the
20 largest holders of ordinary shares, and the number of ordinary shares and percentage of
capital held by each holder is as follows:
Holder Name
Balance as at
11 August 2017
%
CJOEA Family Company Pty Ltd
26,852,304 26.540%
Merrill Lynch (Australia) Nominees Pty Limited
J P Morgan Nominees Australia Limited
National Nominees Limited
BNP Paribas Noms Pty Ltd
UBS Nominees Pty Ltd
Cobash Pty Limited
HSBC Custody Nominees (Australia) Limited
Mrs Kate Judith Malin
Yarrabrook pty Ltd
6,760,560
6.682%
4,976,617
4.919%
3,834,158
3.790%
3,791,703
3.748%
2,547,150
2.517%
2,152,297
2.127%
1,821,868
1.801%
1,624,700
1.606%
1,386,700
1.371%
BT Portfolio Services Limited
1,333,650
1.318%
Four Post Investments Pty Ltd
1,200,000
1.186%
Mr Roger Charles Carmody & Mrs Maris Moore Carmody
Sonjaswright Pty Limited
Mr Craig James Dwyer
Kim Nairn
Mr Kevin Francis Sullivan & Mrs Jane Maree Sullivan
Tocamac Pty Ltd
Cindy Jane Pty Ltd
Mr Coleen Stewart
Total number of shares of Top 20 Holders
Total Remaining Holders Balance
1,104,321
1.091%
1,099,044
1.086%
1,066,439
1.054%
1,010,000
0.998%
986,700
0.975%
933,753
0.923%
872,568
0.862%
845,000
0.835%
66,199,532
65.429
34,978,415
34.571
Apiam Animal Health Limited
Financial statements for the year ended 30 June 2017
82
Company Secretary
The Company’s secretary is Ms Sophie Karzis.
Registered Office
The address and telephone number of the Company’s registered office is:
27- 33 Piper Lane
East Bendigo VIC 3550
Telephone: +61 (0)3 5445 5999
Share Registry
The address and telephone number of the Company’s share registry, Boardroom Pty Limited,
are:
Street Address:
Boardroom Pty Limited
Level 12, 225 George Street
Sydney New South Wales 2000
Telephone: 1300 737 760
Stock Exchange Listing
The Company’s ordinary shares are quoted on the Australian Securities Exchange (ASX issuer
code: AHX).
Escrow
Class of restricted
securities
Type of restriction
Number of securities End date of escrow
period
Ordinary shares
Voluntary escrow
1,131,652
1 September 2017
Ordinary shares
Voluntary escrow
27,164,866
8 December 2017
Ordinary shares
Voluntary escrow
219,537
5 January 2018
Ordinary shares
Voluntary escrow
1,131,647
1 September 2018
Ordinary shares
Voluntary escrow
219,537
5 January 2019
Unquoted equity securities
The Company has no unquoted equity securities on issue.
Apiam Animal Health Limited
Financial statements for the year ended 30 June 2017
83
Other Information
The Company is not currently conducting an on-market buy-back.
There are no issues of securities approved for the purposes of item 7 of section 611 of the
Corporations Act which have not yet been completed.
No securities were purchased on-market during the reporting period under or for the purposes of
an employee incentive scheme or to satisfy the entitlements of the holders of options or other
rights to acquire securities granted under an employee incentive scheme.
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