Apiam Animal Health Limited
ASX: AHX
APPENDIX 4E
PRELIMINARY FINAL REPORT
COMPANY DETAILS
Name of entity:
Apiam Animal Health Limited
ACN:
604 961 024
Reporting period:
For the year ended 30 June 2018
Previous period:
For the year ended 30 June 2017
RESULTS FOR ANNOUNCEMENT TO THE MARKET
Statutory Results Summary
CHANGES FROM PERIOD ENDED 30 JUNE
Revenue from ordinary activities
up
%
9
Net profit attributable to members
Profit from ordinary activities after tax attributable to
members
down
33
down
33
2018 2017
$m
$m
106.6
from
98.0
3.3
from
3.3 From
4.9
4.9
to
to
to
Underlying EBITDA (Incl. non-controlling interests)
Up
17
to
9.8
From
8.3
Underlying EBITDA (Earnings Before Interest Tax Depreciation and Amortisation) is Management’s
preferred measurement of business profitability and excludes one-off corporate restructuring costs as
well as integration, IT system and acquisition expenses.
Further commentary on the annual results can be found in the ‘Operating and Financial Review’ section
within the Directors’ report of the attached Annual Financial Report.
Dividends
2018 Interim Dividend
Amount per
security
cents
Franked
amount per
security
Cents
0.8 cents
0.8 cents
2018 Final Dividend (declared after balance date but not yet paid) 0.8 cents
0.8 cents
Record date for determining entitlements to the dividend:
20 September 2018
Date dividend payable:
26 October 2018
Dividend reinvestment plans
The Company initiated a Dividend Reinvest Plan (DRP) on the 25 August 2017 which provides
shareholders with the opportunity to utilise all or part of their dividends to purchase shares in the
Company. Shareholders electing to participate must nominate by 27 September 2018.
Shareholders who elect to participate in the DRP for the 2018 final dividend will be issued shares at a
DRP issue price which will be the average of the daily market price of Apiam’s shares over the period
of five trading days between 28 September 2018 and 4 October 2018 (‘Pricing Period’). The timetable
in respect of the 2018 final dividend and DRP is as follows:
Event / Action
Record Date
Date*
20 September 2018
Election Date: Last date for shareholders to make an election to participate in
the DRP
5.00 pm (Melbourne time) on
27 September 2018
Pricing Period Commencement Date
28 September 2018
Last Day of Pricing Period
Announcement of DRP issue price
Dividend Payment Date / Issue of DRP shares
*All dates are subject to change
4 October 2018
5 October 2018
26 October 2018
Details of the DRP can be downloaded from www.apiam.com.au. In order to participate in the DRP for
the 2018 final dividend, shareholders should ensure that their DRP Election Form is received, or an
online election is made, by no later than 5.00 pm (Melbourne time) on 27 September 2018. An online
election can be made by visiting www.boardroom.com.au.
Net Tangible Asset per Security
Net Tangible assets per share
Return to shareholders
2018
-$0.06
2017
-$0.04
Dividends of $1,627,151 were paid during the period; no share buy backs were conducted during the
year.
Basis of Preparation
This report is based on the consolidated financial statements which have been audited by Grant
Thornton Audit Pty Ltd. The audit report is included within the Company’s Annual Report which
accompanies this Appendix 4E.
Entities over which control has been gained or lost during the period:
Refer to Notes 31 and 32 of the attached Financial Statements for details of entities over which control
has been gained. There were no entities over which control was lost.
Associates and Joint Venture Entities
The Company has no associate companies and 2 joint venture entities.
Other information required by Listing Rule 4.3A
Other information requiring disclosure to comply with Listing Rule 4.3A is contained in the 30 June 2018
Annual Report (which includes the Directors’ Report) which accompanies this Appendix 4E.
Accounting Standards
This Report has been compiled using Australian Accounting Standards and International Financial
Reporting Standards.
ANNUAL
Report 2
8
1
0
corporate
directory
DIRECTORS
Professor Andrew Vizard
Dr Christopher Richards
Mr Michael van Blommestein
Mr Richard Dennis
Mr Charles Sitch
Professor Jan Tennent
Chairman
Managing Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
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
STOCK EXCHANGE LISTING
Australian Securities Exchange
Level 4, North Tower, Rialto
525 Collins Street
Melbourne VIC 3000
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
ASX CODE
AHX
WEBSITE
apiam.com.au
annual report 2018 apiam.com.au Apiam Animal Health Limited
Financial statements for the year ended 30 June 2018
Contents
Chairman’s Message
Managing Director’s Message
Director’s Report
Remuneration Report
Auditor’s Independence Declaration
Consolidated Statement of Profit or Loss and Other Comprehensive
Income
Consolidated Statement of Financial Position
Statement of Changes in Equity
Consolidated Statement of Cash Flows
Notes to the Consolidated Financial Statements
Directors’ Declaration
Independent Audit Report
Additional Information
3
04
07
11
25
32
34
35
36
37
38
75
76
79
Apiam Animal Health Limited
Financial statements for the year ended 30 June 2018
4
Chairman’s Message
Dear Shareholder,
In our third year since forming, Apiam achieved a number of significant milestones and completed
important acquisitions and business development initiatives that are expected to deliver
sustainable growth in earnings and shareholder returns.
The solid revenue growth - both in absolute terms and on a like-for-like basis, the improved
underlying earnings margin and the strong cash flow generation that Apiam experienced in 2018
are important indicators that our strategic plan is delivering results. We can expect further
financial benefits from our strategic plan as Management roll-out the third phase in the year
ahead.
Apiam’s significant investment in establishing an extensive corporate operating infrastructure is
now starting to generate returns. Early stage cost efficiencies are being realised across the Group,
and this has resulted in Apiam reporting strong underlying earnings growth over the past year.
The final, but critical, piece of our expanded operating infrastructure, our Practice Management
System, is currently being rolled out. Full implementation of this system will be a very important
milestone for Apiam, and is expected to result in additional revenues and cost improvements at
an individual clinic, region and segment level, with meaningful financial benefits expected to flow
through in the 2019 financial year.
Our cash flow generation has also been strong during the past twelve months, with cash flows
from operations funding most of our business re-investment, particularly our acquisitions and
capital expenditure program. We expect that Apiam’s cash flow generation will continue to be
strong in the year ahead, allowing continued investment in growth opportunities and shareholder
returns.
Business development & strategy
Improving Apiam’s business balance and diversification of revenue sources has been a key
business goal since we listed in late 2015. Since then, Apiam has successfully transitioned from
an intensive agricultural-focused practice to a diversified regional and rural practice, with leading
expertise across the production and companion animal sectors. Our strategic acquisition
program, which this year saw us acquire three complementary veterinary businesses in Victoria
and South-East Queensland, has been an important driver of business diversification, with each
Apiam Animal Health Limited
Financial statements for the year ended 30 June 2018
5
business bringing new geographic exposures or increased veterinary expertise in a mix of animal
species. We continue to identify and assess acquisition opportunities using a very disciplined
process, and expect to make further acquisitions during the coming year.
Our joint venture with PETstock, targeting fast growth and under-serviced companion animal
locations, will also improve business balance and offers our shareholders a capital efficient
method of entering new and attractive companion animal markets.
As the animal numbers under Apiam’s management continue to grow, the opportunities for high-
value product distribution across our animal network also grows. Our recently announced
exclusive distribution agreement with Plumbline Life Sciences is an early example, and we believe
it represents a significant opportunity for Apiam to be at the forefront of product innovation within
the farming sector, particularly as the industry looks to more sustainable practices and to reduce
the use of antimicrobials. We will be assessing new and innovative product opportunities in the
year ahead and believe product distribution offers Apiam shareholders strong gross margin
opportunities.
Board renewal
In November 2017, Charles Sitch announced his intention to resign from the Board of Apiam at
the 2018 Annual General Meeting. On behalf of the Board, Management, employees and
shareholders of Apiam, I thank Charles for his significant contribution to Apiam’s journey from a
newly listed company to the larger, more established and diversified group that we are today.
As part of this Board renewal process, an extensive search was conducted to appoint a new Non-
Executive Director and on 1 August 2018, we were very pleased to announce the appointment of
Professor Jan Tennent to the Apiam Board. Professor Tennent has extensive experience and is
an internationally-recognised specialist in antibiotic resistance mechanisms and in the
development and commercialisation of vaccines. Professor Tennent’s expertise will be extremely
valuable to Apiam as we expand our product range in new and innovative areas and we look
forward to working with her in the year ahead.
Dividend
Due to the strength of Apiam’s cash flow performance, the Board have declared a fully-franked
final dividend of 0.8 cents per share, bringing the full year dividend to 1.6 cents per share. Our
Dividend Reinvestment Plan will also continue to allow shareholders to reinvest their dividend in
the Company’s future growth.
Finally, I thank all my fellow Board members and the entire Apiam team for their dedication and
hard work over the past year. I also thank Apiam’s shareholders for their continued support.
Apiam Animal Health Limited
Financial statements for the year ended 30 June 2018
6
The Board and Management look forward to building on the achievements and foundations put
in place during the past two years and as a team we will be focused on delivering growth in
shareholder value as we embark on a new financial year.
Yours sincerely,
Professor Andrew Vizard
Apiam Animal Health Limited
Financial statements for the year ended 30 June 2018
7
Managing Director’s Message
Dear Shareholder,
Apiam continued to progress and grow its regional and rural services model during FY2018.
Over the financial year, we added six new regional clinics to our network. Apiam now has 43
clinics located throughout Australia, employing more than 150 veterinarians. O ur corporate
operating infrastructure will be complete following the roll out of our Practice Management System
and is already generating early stage operating cost efficiencies across the Group.
Our strategic roadmap has put Apiam in a strong position to further leverage our performance
and deliver additional growth as we move into the 2019 financial year.
FY2018 financial performance
Apiam’s revenue for the 12 months to 30 June 2018 was $106.6 million, an 8.8% increase
compared to the previous financial year. Revenue growth excluding the impact of acquisitions
was 4.0%, with each animal division recording underlying revenue growth despite some industry
challenges being experienced, particularly within the pig and beef feedlot segments. Apiam’s
ongoing organic growth, in the face of these industry challenges, further demonstrates the
robustness and diversity of our business model, which has operations across a number of
geographic locations and provides a variety of services to a range of animal species in both the
production and companion animal sectors.
Apiam has delivered growth in its gross margins as well as in its underlying EBITDA and its EBIT
margins over the period. The 17.3% growth in underlying EBITDA (excluding one-off costs and
income) was a result of the combination of Apiam’s investment in its corporate operating
infrastructure delivering efficiencies during the period and improved revenue.
Apiam reported increased depreciation & amortisation expense in FY2018 to $2.4 million
(FY2017: $1.6 million), in-line with the capital investments in our fixed asset base for our enlarged
group. These capital investments in assets, such as vehicles and IT infrastructure, bring us near
to completion of replacement of legacy assets acquired as part of the initial clinic acquisitions that
occurred at the time of Apiam’s listing. Total one-off expenses also increased in FY2018 to $1.6
million (FY2017: $1.0 million), mostly as a result of non-recurring corporate restructuring costs to
drive growth opportunities, such as appointing dedicated business managers in both Dairy and
Apiam Animal Health Limited
Financial statements for the year ended 30 June 2018
Mixed Clinics and the Pig and Feedlot segments. These dedicated business managers are
8
focused on maximizing the benefits from our recent investments across the enlarged business
and will deliver on a number of exciting growth initiatives, as well as ensuring further efficiency
improvements.
Underlying Net Profit After Tax (NPAT) in FY2018 was $4.4 million (before one-off costs),
representing a small increase from the prior comparable year (FY2017: $4.3 million). This result
was affected by the increased depreciation and amortisation charge outlined above. Reported
NPAT was $3.3 million in FY2018, 11.2% lower than operating NPAT achieved in FY2017
(FY2017: $3.7 million, excluding $1.2 million of non-operating income). This disappointing result
is mainly attributed to the impact of the increased depreciation and amortisation charge, as well
as the increased one-off expenses incurred in FY2018. In FY2019, Management will be focused
on delivering growth in reported NPAT that better reflects the growth at the revenue, gross profit
and EBITDA levels.
Strategic update
We successfully executed most of our planned business development initiatives and acquisition
strategies in FY2018, and believe this strategic progress will generate significant value for the
Group moving forward.
In February 2018, Apiam announced that it had entered into a Joint Venture alliance agreement
with PETstock, a leading specialist petcare provider. Under the agreement, Apiam and PETstock
will open a number of new veterinary clinics to be co-located at various PETstock retail outlets.
The co-located clinics will be jointly owned, with Apiam as an 80% shareholder and PETstock as
a 20% shareholder. The first co-located clinic, the General Practice, Emergency and Referral
Centre at PETstock’s superstore in Bendigo (Epsom), opened in March 2018, and has
outperformed early stage revenue expectations, achieving around double the amount of revenue
forecast for its first quarter of operations. A second co-located clinic opened at PETstock Golden
Square in mid-August 2018, with additional clinics to be rolled out in targeted regional and rural
locations throughout FY2019.
During the last 12 months we have made some important announcements relating to expansion
of our product distribution, which presents a valuable growth opportunity for Apiam. In July 2018,
we announced that the Company had entered into an exclusive distribution agreement with
Plumbline Life Sciences to licence its patented immunotherapy technology products. The first
product, Life Tide SW5, is already approved in Australia & New Zealand for use in sows to
increase the number of pigs weaned and we will initially be conducting a limited market release
across our client base next quarter. Trials have also shown many other benefits, including
increased milk yield and fertility in cows, and improvements in pre-weaning mortality in pigs from
treated sows. Apiam will also be applying to broaden the current product registration to apply to
progeny pigs and will seek registration of a new technology, PLS-B3000 for use in dairy cows in
Australia and New Zealand. Given the size of Apiam’s client base within these species, the
Apiam Animal Health Limited
Financial statements for the year ended 30 June 2018
9
distribution of an innovative product such as Life Tide SW5 represents a significant market
opportunity for Apiam.
In addition, we have also recently set up a distribution company in the USA with a joint venture
partner, Swine Veterinary Centre (SVC), who is also one of our key shareholders. SVC are
one of the most well known swine veterinary groups in the world, servicing a significant
percentage of the USA market as well as consulting in a number of other countries.
The partnership between Apiam and SVC will initially see products currently distributed by
Apiam in Australia, including some of our private label products, being distributed in the USA,
with products expected to start flowing into the market in the second quarter of FY2019.
Overall, we expect product distribution will contribute more significantly to our profitability in
FY2019 and beyond.
Acquisitions
As in previous years, acquisitions have also continued to form a core part of our growth strategy
in FY2018. Our focus with acquisitions is to bolt-on complementary businesses that leverage our
cost base and infrastructure, and at the same time, provide a new geographic exposure or
introduce a new specialized offering to our client base. Over the financial year we acquired three
veterinary businesses, comprised of five different clinic locations. We identified these three
acquisitions as meeting our strategic objectives and representing financially attractive
opportunities for Apiam shareholders. Details of these acquisitions are provided below.
Apiam acquired the Terang and Mortlake Veterinary Clinic (TMVC) in November 2017 for a total
consideration of $1.6m. TMVC operates as two rural vet practices in Western Victoria with a
strong dairy practice offering, as well as an active presence across beef, equine and companion
animals. This acquisition was attractive because it strengthened Apiam’s presence in an important
and productive beef and dairy region. Since acquisition, this clinic has performed very well and
delivered strong revenue growth as part of our south west Victorian region.
In March 2018, Apiam acquired Passionate Vetcare a regional veterinary clinic based in the north
west of Bendigo, Victoria for total consideration of $0.75m. Passionate Vetcare is predominantly
a companion animal veterinary practice, with some exposure to pigs and mixed animals. This
acquisition was strategically important to support the opening of Apiam’s Bendigo General
Practice, Emergency & Referral Centre, servicing the Central Victorian region.
Apiam also completed the acquisition of the south east Queensland based Gympie and District
Veterinary Services (GDVS) for $4.9m in June 2018. GDVS is a diversified practice servicing
agricultural & companion animals and was comprised of two clinics in a fast-growth and
underserviced region of rural Queensland. Following the acquisition, GDVS now operates on a
regional basis with Apiam’s two existing Queensland dairy and mixed animal clinics as part of an
expanding footprint in the region. There are significant synergy opportunities that Apiam can
Apiam Animal Health Limited
Financial statements for the year ended 30 June 2018
10
achieve by operating its Regional Operating model in this key production and mixed animal region
of Queensland.
Outlook
Apiam’s business model is uniquely positioned to capture underlying industry growth, in the
attractive regional and rural production and companion animal industries.
In FY2019, we will be continuing to focus on delivering growth across all of Apiam’s business
divisions. In particular, we will be focused on three key business drivers to maximize performance
being: i) improving operations, process & capacity, ii) increasing animal numbers and iii)
continued expansion of our services and product range. Improvements and efficiencies achieved
in any of these key business drivers can be leveraged across our entire network.
Our strong acquisition program is expected to continue, seeking acquisition opportunities that
have clear synergistic value. The business development initiatives I have outlined will also be
rolled-out over FY2019 and are expected to drive additional revenue streams.
Successful execution of this strategy will result in improving shareholder value by maintaining
high cash conversion to fund growth, improving our return on capital and delivering growth to the
reported NPAT line.
I thank our investors for their support, as well as our talented and dedicated team for their work
on executing our strategy.
Yours Sincerely,
Dr Chris Richards
Managing Director
Apiam Animal Health Limited
Financial statements for the year ended 30 June 2018
11
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
Directors’ Report
2018.
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
Professor Jan Tennent
Non-Executive Director (appointed 1 August 2018)
Apiam Animal Health Limited
Financial statements for the year ended 30 June 2018
12
INFORMATION ON DIRECTORS
Professor Andrew Vizard
Dr Christopher Richards
Independent Non-Executive Chairman
Managing Director
BVSc(Hons), MVPM, FAICD
BSc, BVSc, MAICD
Professor Vizard is a Principal Fellow at the
Faculty of Veterinary 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 consultancy. An 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
formation.
Chris has been Managing Director of Apiam
Animal Health since
Since
establishing a pig veterinary services business
in 1998, Chris has been responsible for the
strategic direction of the company including the
development, acquisition and integration of
other veterinary clinics, veterinary wholesale,
logistics and genetic services businesses that
form the integrated company that Apiam is
today. Chris is a Director of Apiam Animal
Health and its subsidiary and joint venture
companies.
Interests in Shares and Options
Interests in Shares and Options
107,196 shares
27,926,077 shares
Apiam Animal Health Limited
Financial statements for the year ended 30 June 2018
13
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 held a number of senior roles over 35
years with Ernst & Young (EY) and was the
Managing Partner of EYs Queensland
practice on two occasions from 2001-2007
and from 2014-15. Rick also held a number
of executive management roles at EY,
including Deputy COO and CFO for the Asia-
Pacific practice where he was responsible for
financial and operational
overseeing
integration of EYs Australian and Asian
member firms. Rick is a member of Australian
Super’s Queensland Advisory Board, a
member of the Advisory Board of EWM Group
and a member of the Audit & Risk Committee
of Racing Queensland. He is also a non-
executive director of ASX-listed Motorcycle
Holdings Limited.
the
Interests in Shares and Options
Interests in Shares and Options
98,212 shares
20,300 shares
Apiam Animal Health Limited
Financial statements for the year ended 30 June 2018
14
Mr Charles Sitch
Non-Executive Director
BComm, LLB, MBA, GAICD
Professor Jan Tennent
(appointed 1 August 2018)
Non-Executive Director
GCertMgt, GAICD, PHD, BSc (Hons)
Charles is currently a director of 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 Pacific Edge
Limited (NZX Listed) and Bellamy’s Australia
Limited.
the
Jan
and
for Microbiology.
Jan is an alumnus of Monash and Deakin
universities, was appointed in 2017 as a
Collaborative Professor at the University of
Osaka, is a Principal Fellow at the University of
Melbourne and a Fellow of the Australian
Society
is an
internationally-recognised
researcher with
specialist knowledge of antibiotic resistance
mechanisms
and
commercialisation of vaccines (biologicals) to
prevent infectious diseases through stimulation
is
of protective
currently the CEO of Bio21 Australia Limited
(t/a Biomedical Research Victoria), a non-
executive director of AusBiotech Limited and
David J. Curnow Pty Ltd and a member of the
Industry Advisory Board of the Medicines
Manufacturing
Innovation Centre, Monash
University. Jan is also the founder and principal
of ConnectBio consultancy.
immune responses. She
discovery
Interests in Shares and Options
Interests in Shares and Options
152,995 shares
0 shares
Company Secretary
Sophie Karzis
B. Juris, LLB
Ms. Karzis was appointed Company Secretary on the 17 February 2017 and is a practising 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 General
Manager 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 2018
15
MEETINGS OF DIRECTORS
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 & Risk Management
Committee
Remuneration & Nomination
Committee
A
Andrew Vizard
14
Chris Richards
14
Michael van
Blommestein
14
Richard Dennis
14
Charles Sitch
14
B
14
14
12
13
12
A
4
-
-
4
4
B
4
-
-
4
4
A
3
-
3
-
3
B
3
-
3
-
2
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 2018
16
PRINCIPAL ACTIVITIES
The Group operates in the segment of provision of veterinary products and services to production
and companion animals. Apiam services 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;
on-farm and on-line training programs for clients; and
OPERATING AND FINANCIAL REVIEW
Revenue for FY2018 was $106.6m, improving 8.8% on FY2017, the prior comparable period
(pcp). Revenue growth in FY2018 (excluding the impact of acquisitions) was 4.0% compared to
the pcp, with all animal divisions also recording revenue growth on an ex-acquisition basis.
Similar to the trends seen in the first half of FY2018, Apiam’s pig revenues continued to benefit
from new service and training initiatives as well as new customers and products, despite
challenging pig industry conditions. Apiam’s dairy & mixed animal businesses performed well,
supported by growth in animal numbers, strong industry fundamentals in many of Apiam’s rural
and regional operating areas as well as new business development initiatives such as the
opening of the General Practice, Emergency & Referral Centre at PETstock’s Epsom (Bendigo)
store, under the Apiam PETstock JV agreement.
Despite Apiam’s beef feedlot revenues being affected by a reduction in animal numbers in Q2
FY2018, animal numbers improved in H2 FY2018, with industry conditions varying by region.
Strong increases in beef feedlot numbers occurred as a result of the drought in central and
northern NSW and SE Queensland in conjunction with a softening in feeder steer prices. This
resulted in FY2018 beef feedlot revenue delivering growth on FY2017 levels.
Underlying EBITDA growth (excluding one-off costs and income1) increased 17.3% to $9.8m in
FY2018 (FY2017: $8.3m), as Apiam’s investment in its operating cost base delivered early
1 Excluding one-off integration, corporate restructure, ERP & acquisition expenses as well as $1.3m of non-operating income
associated with the reversal of a contingent liability on the balance sheet in FY2017 (contingent acquisition consideration no
longer payable)
Apiam Animal Health Limited
Financial statements for the year ended 30 June 2018
17
stage efficiencies over the period. While total operating expenses increased 7.3% in FY2018
versus pcp, the majority of this increase related to the impact of acquisitions made over the
period.
On an ex-acquisition basis, Apiam’s operating expenses were broadly in-line with the pcp
despite the group revenue growth delivered.
Apiam incurred increased depreciation & amortisation expense in FY2018 of $2.4m vs $1.6m in
FY2017, a direct result of the growth in its fixed asset base that has occurred over the past two
years as it has built the foundations of the enlarged company. Significant capital investment
over FY2018 was made in the upgrade of the Company’s vehicle fleet, IT infrastructure at the
clinic level as well as the set-up of the General Practice, Emergency & Referral Centre at
Epsom. In addition, the final stage of the investment in IT systems continued with the roll out of
the Practice Management System.
During FY2018, Apiam also incurred $600,000 in one-off costs as a result of a recent
restructure in its business operations to drive growth opportunities in both Dairy and Mixed
clinics (D&M) and Intensive Animals (Pigs and Feedlot) and Ancillary Services (IAAS).
Dedicated business managers are now in place for both of these business units with a focus on
leveraging Apiam’s products and services across the enlarged animal footprint. Other one-off
expenses incurred during FY2018 related to one-off costs associated with acquisitions,
integration and the expensed component of the IT systems investment.
Underlying Net Profit After Tax (NPAT), before the impact of one-off costs was $4.4m in
FY2018, representing a small increase to underlying NPAT in FY2017 of $4.3m, despite the
increased depreciation & amortisation expense over the period. NPAT in FY2018 of $3.3m, was
11.2% lower than NPAT in FY2017 of $3.7m (on an operating basis), reflecting the impact of the
increased one-off expenses incurred throughout FY2018.
Apiam Animal Health Limited
Financial statements for the year ended 30 June 2018
18
The following tables are presented to assist in the interpretation of the underlying performance
of Apiam during FY2018. This information is additional and provided using non-IFRS information
and terminology.
Apiam FY2018 Financial Results - Reported
Total Revenue
Gross Profit
Operating expenses
Underlying EBITDA 1
One-off expenses
EBITDA
Depreciation & Amortisation 2
EBIT
Interest
Tax
NPAT (operating)
Other income3
NPAT (reported)
Gross Margin (%)
Underlying EBITDA margin (%)
Notes:
1 Underlying EBITDA excludes reversal of contingent consideration (recorded as other income in FY17) & one-off acquisition,
Variance
8.6
4.3
(2.9)
1.4
(0.7)
0.8
(0.8)
(0.1)
(0.0)
(0.3)
(0.4)
(1.2)
(1.6)
FY18
106.6
51.6
(41.8)
9.8
(1.6)
8.2
(2.4)
5.7
(0.9)
(1.5)
3.3
0.0
3.3
48.4%
9.2%
FY17
98.0
47.3
(38.9)
8.3
(1.0)
7.4
(1.6)
5.8
(0.9)
(1.2)
3.7
1.2
4.9
48.2%
8.5%
%
8.8%
9.1%
7.3%
17.3%
68.0%
10.7%
54.1%
(1.2)%
1.1%
27.6%
(11.2)%
nm
(33.2)%
integration & restructuring expenses
2 Restatement of FY17A amortisation due to $3.2M reclassification of intangibles associated with QVG acquisition
3 Non-operating other income of $1.25m in FY2017 is associated with the reversal of a Contingent Liability on the balance
sheet (contingent acquisition consideration no longer payable)
Apiam FY2018 Financial Results - Underlying
Total Revenue
Gross Profit
Employment expenses
Operating expenses
Underlying EBITDA 1
Depreciation & amortisation 2
Underlying EBIT 1
Interest & tax
Underlying NPAT 1
Integration / ERP expense
Acquisition / Advisory expense
Restructure costs
Notes:
1
FY18
106.6
51.6
(29.4)
(12.4)
9.8
(2.4)
7.3
(2.9)
4.4
(0.6)
(0.4)
(0.6)
FY17
98.0
47.3
(27.0)
(11.9)
8.3
(1.6)
6.7
(2.4)
4.3
(0.7)
(0.2)
0.0
Variance
8.6
4.3
(2.4)
(0.4)
1.4
(0.8)
0.6
(0.5)
0.1
%
8.8%
9.1%
8.9%
3.7%
17.3%
54.1%
8.7%
22.5%
1.0%
0.1
(0.1)
(0.6)
(12.0)%
55.5%
nm
Underlying earnings exclude one-off acquisition, integration & restructuring expenses (tax effected where applicable at
NPAT level) & reversal of contingent acquisition consideration recorded in FY17 of $1.25M
Restatement of FY17A amortisation due to $3.2M reclassification of intangibles associated with QVG acquisition
2
Apiam Animal Health Limited
Financial statements for the year ended 30 June 2018
19
Business development
Apiam has made significant progress in executing business development initiatives over
FY2018.
In February 2018, Apiam announced that it had executed a Joint Venture alliance agreement
with PETstock, a leading specialist petcare provider. Under the agreement, Apiam and
PETstock will open a number of new veterinary clinics to be co-located at various PETstock
retail outlets, in regional and rural Australia. The co-located clinics will be jointly owned, with
Apiam as an 80% shareholder and PETstock as a 20% shareholder. The first co-located clinic,
the General Practice, Emergency & Referral Centre at PETstock’s superstore in Bendigo
(Epsom), opened in March 2018, and has outperformed early stage revenue expectations,
achieving around double the amount of revenue forecast for its first quarter of operations. A
second co-located clinic opened at PETstock Golden Square in mid August 2018, with
additional clinics to be rolled out in targeted regional and rural locations throughout FY2019.
Apiam also announced in July 2018 that it has entered into an exclusive distribution agreement
with Plumbline Life Sciences (Plumbline), a Korean novel DNA therapy company. Under the
terms of the distribution agreement, Plumbline will licence a number of its patented
immunotherapy technology products to Apiam, for exclusive distribution in the pig and diary
industries in Australia and New Zealand. The agreement also provides Apiam with first right of
refusal to market Plumbline’s companion animal cancer therapy products in Australia and New
Zealand and current and future pig products in the USA and Canada. Plumbline’s Life Tide SW5
product, for which Apiam will have exclusive distribution rights, is already approved for market
use in Australia & New Zealand in sows to increase number of pigs weaned. Apiam will be
undertaking the required work to expand this product registration to encompass progeny pigs
and also register a new technology, PLS-B3000 for dairy cattle, for which it will be reimbursed
registration costs by Plumbline. Apiam is expecting to commence an initial limited market
release of Life Tide SW5 across its pig client base in Q2 FY2019.
The Plumbline distribution agreement has been structured attractively for Apiam with no
milestone payments and only a modest upfront payment, particularly when compared to other
similar pharmaceutical industry product commercialisation arrangements. It represents an
important and valuable opportunity for Apiam given the significant number of pig and dairy
animal numbers the Company has under management, as well as the improved production
performance that the product has demonstrated in research and trials.
Acquisitions
Growth via acquisition remains an important part of Apiam’s business strategy, and the
Company continued to progress its acquisition program over FY2018 with three company
acquisitions, comprised of five clinics in total.
Apiam Animal Health Limited
Financial statements for the year ended 30 June 2018
20
Apiam acquired the Terang and Mortlake Veterinary Clinic (TMVC) in November 2017 for a total
consideration of $1.6m. TMVC operates as two rural vet practices in Western Victorian with a
strong dairy practice offering, as well as an active presence across beef, equine and companion
animals. This acquisition has strengthened Apiam’s presence in a very important and successful
beef and dairy location.
In March 2018, the Company also acquired Passionate Vetcare a regional veterinary clinic
based in the North West of Bendigo, Victoria for total consideration of $0.75m. Passionate
Vetcare is predominantly a companion animal veterinary practice, with some exposure to pigs
and mixed animals. This acquisition was strategically important to support the opening of
Apiam’s Bendigo Emergency & Referral Centre.
Apiam also completed the acquisition of South East Queensland based, Gympie & District
Veterinary Services (GDVS) for $4.9m in June 2018. GDVS is a diversified practice servicing
agricultural & companion animals and was comprised of two clinics in fast growth and
underserviced regional and rural areas of Queensland. Following the acquisition, GDVS now
operates on a regional basis with Apiam’s two existing QLD Dairy and Mixed Animal clinics as
part of an expanding footprint in the region. There are significant synergy opportunities that
Apiam can achieve by operating with a greater presence in this key production and mixed
animal region and by delivering additional organic growth through cross-selling of Apiam’s
existing veterinary and genetic services expertise across a larger customer base. It will also
enable Apiam to develop smaller satellite clinics that leverage off the regional model in order to
capture revenues in underserviced peripheral regions of Queensland.
In-line with Apiam’s prior acquisitions, these acquisitions were funded with 30% scrip
consideration and 70% cash consideration (via a combination of cashflow and Apiam’s
Acquisition Facility).
Balance sheet
Apiam continued to invest in property, plant and equipment throughout FY2018 with the
replacement of older fleet vehicles, upgrade of IT infrastructure in clinics and other capital
investment associated with growth initiatives. As a result PP&E increased by $3.0m to $9.4m as
at 30 June 2018 (30 June 2017: $6.4m).
As at 30 June 2018, Apiam had net borrowings of $25.8m up from $24.7m at 30 June 2017.
This modest increase in borrowings of $1.1m is reflective of Apiam’s strong operating cash flow
performance over FY2018, particularly in light of the capital investment requirements outlined
above as well as the cash component associated with the acquisitions completed during the
period (totalling $4.7m).
During the year, Apiam also negotiated a $15m increase to its acquisition facility (to a total of
$25m) and new covenants related to its borrowing facility provided by banking partner, NAB.
The amended facility and covenants better align with Apiam’s growth strategy and provide the
Apiam Animal Health Limited
Financial statements for the year ended 30 June 2018
21
Company greater flexibility. As at 30 June 2018 Apiam’s operating leverage ratio was 2.8x, well
within the current facility covenant of 4.0x. This is an improvement on Apiam’s operating
leverage ratio as at 31 December 2017 of 2.9x.
Cash flow
Apiam’s operating cash flow was $9.2m in FY2018, significantly higher than FY2017 operating
cash flow of $1.7m. This increase in the Company’s cash flow performance was a result of the
strong growth in FY2018 EBITDA as well as improved working capital management process
over the period.
Cash conversion to underlying EBITDA for FY2018 was 136% compared to 65% in the pcp.
Management expect cash conversion to align closely with underlying EBITDA moving forward.
Apiam FY2018 Cash Flow summary
$M
Net cash received in operating activities
Acquisition of subsidiary, net of cash
Purchases of property, plant and equipment
Restructure of group entities, net of cash
Purchases of intangible assets
Net cash used in investing activities
Net changes in financing
Dividends paid to shareholders
Net cash inflow from financing activities
Net change in cash and cash equivalents
FY2018
9.2
(4.7)
(4.5)
0.0
(0.4)
(9.5)
1.8
(1.0)
0.8
0.5
FY2017
1.7
(8.4)
(1.6)
0.0
0.0
(10.0)
8.0
(0.8)
7.2
(1.1)
Notes: This information is additional and provided using non-IFRS information and terminology
Dividend
The Apiam Board of Directors have declared a final dividend of 0.8 cents per share (CPS),
100% fully franked, bringing total dividends paid in respect of FY2018 to 1.6 cps. The final
dividend will be paid on 26 October 2018. This represents a 50.4% payout ratio of NPAT.
Apiam’s Dividend Reinvestment Plan will be maintained to allow shareholders to reinvest their
dividends in Apiam’s future growth.
Outlook
Apiam is well placed to deliver revenue and earnings growth in FY2019. Management expect
the operating cost base leverage that has occurred in FY2018 to continue, delivering further
efficiencies as the Company continues to grow its scale of operations. Leveraging key business
drivers across Apiam’s growing animal footprint will also be a strategic focus for management in
FY2019.
Apiam Animal Health Limited
Financial statements for the year ended 30 June 2018
22
New revenue streams will also deliver growth for the Company with business development
initiatives, such as in the area of product distribution, and the expansion of the Apiam /
PETstock JV in attractive regional and rural areas, to be undertaken in FY2019.
Strategic acquisitions will continue to be assessed and executed where synergistic value for
Apiam shareholders is identified.
DIVIDENDS
An interim dividend of $817,728 is 0.8 cps and was paid in April 2018. The Apiam Board of
Directors have declared the Company’s final dividend of 0.8c per share fully franked on the 27
August 2018. The final dividend of $837,551 will be paid on the 26 October 2018.
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
Apart from the final dividend declared, 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.
Apiam Animal Health Limited
Financial statements for the year ended 30 June 2018
23
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 FY19 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 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 the financial year, the Company issued 18,667 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
Apiam Animal Health Limited
Financial statements for the year ended 30 June 2018
24
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.
The company has agreed to indemnify its auditors, Grant Thornton Audit Pty Ltd, to the extent
permitted by law, against any claim by a third party arising from the Company’s breach of its
agreement. The indemnity requires the Company to meet the full amount of any such liabilities
including a reasonable amount of legal costs.
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.
Apiam Animal Health Limited
Financial statements for the year ended 30 June 2018
25
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
Corné 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 2018
26
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 framework that is market competitive and
complementary to the reward strategy of the Group.
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 committee has met 3 times in the FY18 reporting
period.
The Committee engaged the services of Korn Ferry Hay Group to undertake bench-marking for
the executive team remuneration in FY17. The Committee has also engaged Grant Thornton
Australia Limited and HRAscent to formulate an equity management plan for principal and senior
vets which was approved in FY17 and 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)
2018
3.21c
1.6c
2017
5.00c
0.8c
$4,831
$6,315
Share price ($)
$0.75
$0.70
Apiam Animal Health Limited
Financial statements for the year ended 30 June 2018
27
b
Details of remuneration
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
Richard Dennis
Independent
Chris Richards
Managing Director
Charles Sitch
Independent
Michael van Blommestein
Independent
Employees
Corné Loots
General Manager Vet Services
Matthew White
Chief Financial Officer
2018 Total
2017 Total
Short term employee benefits
Year
2018
2017
2018
2017
2018
2017
2018
2017
2018
2017
2018
2017
2018
2017
2018
2017
Salary
and fees (i)
$
120,000
120,000
70,000
70,000
350,072
350,072
54,795
54,795
54,795
54,795
212,519
212,519
223,484
190,000
1,085,665
1,052,181
Cash bonus
$
Non-monetary
benefits
$
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
13,419
12,027
-
-
-
-
-
-
-
13,419
12,027
(i) Salary and fees includes salaries and allowances.
(ii) Long term benefits include long service leave entitlement accruals.
Post-employment
benefits
Superannuation
$
Long-term
benefits
Long service
leave (ii)
$
Share-based
payments
Shares
$
-
-
-
-
27,125
19,791
5,205
5,205
5,205
5,205
20,013
23,961
21,231
27,075
78,779
81,237
-
-
-
-
5,854
6,718
-
-
-
-
905
285
923
274
7,682
7,277
Performance
based
percentage of
remuneration
%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
Total
$
120,000
120,000
70,000
70,000
396,470
388,608
60,000
60,000
60,000
60,000
233,437
236,765
245,638
217,349
1,185,545
1,152,722
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Apiam Animal Health Limited
Financial statements for the year ended 30 June 2018
28
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
Corné Loots
Matthew White
Fixed remuneration
At risk – STI
100%
100%
100%
-
-
-
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
Corné Loots
Matthew White
Base salary
$350,072
$212,519
$225,000
Term of agreement
5 years from listing
No fixed term
No fixed term
Notice period
Twelve (12) months
Six (6) months
Six (6) months
Bonus provisions
Chris Richards:
Corné Loots:
Nil
Nil
Matthew White
Nil
Bonuses included in remuneration
d
Details of the short-term incentive cash bonuses awarded as remuneration to each key
management personnel, the percentage of the available bonus that was paid and payable in the
financial year, and the percentage that was forfeited because the person did not meet the service
and performance criteria is set out below.
Included in
remuneration ($)
Percentage vested
during the year
Percentage forfeited
during the year
Executive Directors
Chris Richards
Other Key Management Personnel
Corné Loots
Matthew White
-
-
-
-
-
-
-
-
-
Non-Executive Director remuneration
e
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.
Apiam Animal Health Limited
Financial Statements for the year ended 30 June 2018
29
The Non-Executive Directors of the Company received the following fees (which total $310,000):
• 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
f
Options held by key management personnel
There were no options to acquire shares in the Company held during the 2018 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 2018 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
Corné Loots
Matthew White
Balance at
1/07/2017
27,339,804
95,294
150,000
30,000
97,240
86,689
111,218
27,910,245
Granted as
remuneration
-
-
-
-
-
-
-
-
Received on
exercise Other changes
586,273
-
-
-
-
-
-
-
-
11,902
2,995
(9,700)
972
19,108
4,097
615,647
Held as at
30/06/2018
27,926,077
107,196
152,995
20,300
98,212
105,797
115,315
28,525,892
None of the shares included in the table above are held nominally by key management personnel.
Loans to key management personnel
The Group did not enter into any loans with key management personnel during the 2018 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. During FY18 the warehouse facility was extended and
rental payments made amounted to $310,800 (2017: $242,400).
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 $132,961 (2017:
$124,116).
The Group leases it artificial insemination facility in Victoria from entities associated with Chris
Richards. Lease payments made amounted to $105,000 (2017: $69,939).
Apiam Animal Health Limited
Financial Statements for the year ended 30 June 2018
30
The Group leases premises at Hoskin Street, Quarry Hill, Victoria from entities associated with
Chris Richards. Lease payments made amounted to $11,887 (2017: Nil).
The Group leases premises at Midland Highway, Epsom, Victoria from entities associated with
Chris Richards. Lease payments made amounted to $12,164 (2017: Nil).
All related party rentals are based on commercial rates and the terms of the lease are standard
commercial terms.
The group has taken up an option during FY2018 to purchase the iVet technology from iVet Pty
Ltd, a company controlled by Chris Richards. The Group had previously entered into an
intellectual property licence with iVet Pty Ltd to use the iVet intellectual property. The Group were
to 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 was for an initial term of 10 years. Payment by the
group to take up the option to purchase iVet Pty Ltd in FY2018 was the sum of $93,157 (2017:
Nil).
The Group obtained air travel services for business purposes from an entity associated with Chris
Richards in the prior year. The fares paid were based on commercial fares. Payments made
during 2018 amounted to $Nil (2017: $64,179).
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.
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.
Non-audit services
During the year, the Company’s auditors performed certain other services in addition to their
statutory audit duties.
Apiam Animal Health Limited
Financial Statements for the year ended 30 June 2018
31
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 32 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.
Signed in accordance with a resolution of the Directors:
Dr Christopher Irwin Richards
Managing Director
Melbourne
27 August 2018
32
Collins Square, Tower 1
727 Collins Street
Docklands VIC 3008
Correspondence to:
GPO Box 4736
Melbourne VIC 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 2018, I declare that, to the best of my knowledge and belief, there have
been:
a
b
no contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and
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, 27 August 2018
Grant Thornton Audit Pty Ltd ACN 130 913 594
a subsidiary or related entity of Grant Thornton Australia Ltd ABN 41 127 556 389
www.grantthornton.com.au
‘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.
Apiam Animal Health Limited
Financial Statements for the year ended 30 June 2018
33
Apiam Animal Health Limited
Financial Statements
For the year ended 30 June 2018
Apiam Animal Health Limited
Financial statements for the year ended 30 June 2018
34
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND
OTHER COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2018
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
13,14
Other operating expenses
Share of profit from equity accounted investments
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
7
7
8
23
23
Note
2018
$’000
2017
$’000
6
106,597
97,991
21
1,250
26
(208)
(54,828)
(1,012)
(30,121)
(499)
(2,998)
(1,532)
(2,432)
(7,251)
23
(15)
(914)
1,282
(52,007)
(1,095)
(27,105)
(739)
(2,623)
(1,292)
(1,574)
(7,034)
-
(14)
(904)
4,831
6,136
(1,545)
3,286
(1,211)
4,925
3,286
4,925
3,278
8
3,286
3,278
8
3,286
4,902
23
4,925
4,902
23
4,925
Earnings per share for profit attributable to the
ordinary equity holders of the company:
Note
Cents
Cents
Basic earnings per share
Diluted earnings per share
24
3.21
3.21
5.00
5.00
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 2018
CONSOLIDATED STATEMENT
OF FINANCIAL POSITION
As at 30 June 2018
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
Deferred tax liabilities
Other liabilities
Total non-current liabilities
Total liabilities
Net assets
Equity
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
35
2017
$’000
968
14,075
11,477
746
27,266
58,037
6,400
50
3,438
67,925
2018
$’000
1,436
14,744
11,256
851
28,287
64,515
9,418
75
3,109
77,117
105,404
95,191
12,269
400
594
3,930
4,253
21,446
9,015
-
776
4,102
3,748
17,641
23,336
21,608
810
867
220
672
913
-
25,233
23,193
46,679
40,834
58,725
54,357
85,775
83,066
(26,692)
(26,692)
(6,615)
5,607
58,075
650
(6,615)
3,956
53,715
642
58,725
54,357
Note
9
10
11
12
14
13
15
16
20
17
18
19
18
19
21
22
22
23
The above statement should be read in conjunction with the accompanying notes
Apiam Animal Health Limited
Financial statements for the year ended 30 June 2018
36
STATEMENT OF CHANGES IN EQUITY
For the year ended 30 June 2018
Balance at 1 July 2016
Note
$’000
$’000
$’000
79,070 (26,666)
(6,615)
$’000
(137)
$’000
$’000
$’000
45,652
619
46,271
Share
capital
Corporate re-
organisation
reserve
Non-
controlling
interest
acquisition
reserve
Retained
earnings
Total
attributable to
owners of
parent
Non-
controlling
interest
Total
equity
Restructure and transfer of Chris Richards entities into
Apiam
-
Issue of shares to vendors of business acquired
21
3,996
Dividends paid
Transactions with owners
Profit / (Loss) for the period
Total comprehensive income for the period
Balance at 30 June 2017
Issue of shares to vendors of business acquired
Issue of new share capital
Dividends paid
Transactions with owners
Profit / (Loss) for the period
Other comprehensive income
Total comprehensive income for the period
Balance at 30 June 2018
-
3,996
-
-
(26)
-
(26)
-
-
-
-
-
-
-
-
-
-
(26)
3,996
(809)
(809)
(809)
4,902
3,161
4,902
4,902
4,902
21
21
83,066 (26,692)
-
2,041
(6,615)
-
668
-
2,709
-
-
-
-
-
-
-
-
-
85,775
(26,692)
(6,615)
3,956
-
-
(1,627)
(1,627)
3,278
-
3,278
5,607
53,715
2,041
668
(1,627)
1,082
3,278
-
3,278
58,075
-
-
-
-
23
23
642
-
-
-
-
8
-
8
650
(26)
3,996
(809)
3,161
4,925
4,925
54,357
2,041
668
(1,627)
1,082
3,286
-
3,286
58,725
Note: This statement should be read in conjunction with the notes to the financial statements.
Apiam Animal Health Limited
Financial statements for the year ended 30 June 2018
CONSOLIDATED STATEMENT OF CASH FLOWS
For the year ended 30 June 2018
Cash flows from operating activities
Receipts from customers
Payments to suppliers and employees
Interest paid
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
Proceeds from disposals of property, plant & equipment
Acquisition of subsidiaries, net of cash acquired
Payment for acquisition of associate
Net cash (outflow)/inflow from investing activities
Cash flows from financing activities
Proceeds from borrowings
Repayment of borrowings
Repayment lease liabilities
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
Note
31
9
2018
$'000
117,715
(105,161)
12,554
(914)
(499)
(1,924)
9,217
(4,545)
(354)
21
(4,659)
-
(9,537)
25,796
(23,346)
(674)
(988)
788
468
968
1,436
Note: This statement should be read in conjunction with the notes to the financial statements
37
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 2018
38
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 services 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;
on-farm and on-line training programs for clients; and
veterinary services for companion animals
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 2018 were approved and authorised for issue by the
Board of Directors on 27 August 2018.
3
Changes in accounting policies
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 July
2018. 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.
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.
Apiam Animal Health Limited
Financial statements for the year ended 30 June 2018
39
Introduces a ‘fair value through other comprehensive income’ measurement category for particular simple debt
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.
c
instruments.
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:
•
•
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.
classification and measurement of financial liabilities; and
derecognition requirements for financial assets and liabilities
Likely impact on initial application
The entity has undertaken a detailed assessment of the impact of AASB 9. Based on the entity’s 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.
3.2.2 Revised pronouncement: AASB 15 Revenue from Contracts with Customers
Superseded pronouncement - AASB 118 Revenue
Nature of change
•
•
•
•
•
replaces AASB 118 Revenue, AASB 111 Construction Contracts and some revenue-related Interpretations:
establishes a new revenue recognition model
changes the basis for deciding whether revenue is to be recognised over time or at a point in time
provides new and more detailed guidance on specific topics (e.g. multiple element arrangements, variable
pricing, rights of return, warranties and licensing)
expands and improves disclosures about revenue
Likely impact on initial application
The entity has undertaken a detailed assessment of the impact of AASB 15. Based on the entity’s assessment, the Standard
will not 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 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,
• 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.
Apiam Animal Health Limited
Financial statements for the year ended 30 June 2018
40
Adjustment made to prior period intangibles provisionally accounted
Apiam acquired Quirindi Feedlot Service’s (QFS) in the financial year ended 30 June 2017. The acquisition was provisionally
accounted for in that period. Subsequent to the acquisition, it was noted that there were customer relationships within QFS
and that a portion of goodwill recognised upon acquisition must be reclassified and recognised as an intangible asset which
is amortised over the useful life of the asset. This resulted in a restatement of each of the affected financial statement line
items for prior periods as follows:
30 June 2017
Statement of financial position
(extract)
Previous
amount $'000
Adjustment
$'000
Restated amount
$'000
Goodwill
Customer relationships
Accumulated amortisation of customer
relationships
Deferred tax liabilities
Total equity
57,169
-
-
-
54,482
(2,256)
3,223
(179)
913
(125)
54,913
3,223
(179)
913
54,357
Statement of profit or loss and other
comprehensive income (extract)
Depreciation and amortisation of non-
financial assets
Profit before income tax
Income tax expense
Total comprehensive income
Previous
amount
$'000
(1,395)
6,315
(1,265)
5,050
30 June 2017
Adjustment
$'000
Restated amount
$'000
(179)
(179)
54
(125)
(1,574)
6,136
(1,211)
4,925
4
Summary of accounting policies
Overall considerations
The consolidated financial statements have been prepared using the significant accounting policies and measurement
bases summarised below.
Basis of consolidation
The Group financial statements consolidate those of the Parent Company and all of its subsidiaries as of 30 June 2018.
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.
Apiam Animal Health Limited
Financial statements for the year ended 30 June 2018
41
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.
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.
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 acquiree, 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.
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.
Apiam Animal Health Limited
Financial statements for the year ended 30 June 2018
42
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.
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.
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.
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.
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.
Customer Relationships
Customer Relationships represents the future economic benefits arising from existing customers within a business
combination that have been individually identified and separately recognised. Customer relationships are amortised over
the anticipated life of the relationship.
Capitalised development costs
Capitalised development costs represent costs that are directly attributable to the development of the Group’s IT
infrastructure and intellectual property. Capitalised development costs are measured at cost less accumulated amortisation
and accumulated impairment losses. Amortisation is recognised on a straight-line basis over its expected useful life.
Apiam Animal Health Limited
Financial statements for the year ended 30 June 2018
43
Property, plant and equipment
Leasehold improvements, plant and equipment, motor vehicles and assets under construction
Leasehold improvements, plant and equipment, motor vehicles and assets under construction 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: 20 - 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.
Assets under construction commence depreciation once the asset is put into service.
Material residual value estimates and estimates of useful life are updated as required, but at least annually.
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.
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.
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
Apiam Animal Health Limited
Financial statements for the year ended 30 June 2018
44
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, customer relationships 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.
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
Apiam Animal Health Limited
Financial statements for the year ended 30 June 2018
45
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.
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.
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.
Apiam Animal Health Limited
Financial statements for the year ended 30 June 2018
Income taxes
46
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.
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.
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.
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
Apiam Animal Health Limited
Financial statements for the year ended 30 June 2018
47
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.
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.
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).
Apiam Animal Health Limited
Financial statements for the year ended 30 June 2018
48
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.
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.
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.
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.
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).
Apiam Animal Health Limited
Financial statements for the year ended 30 June 2018
49
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.
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.
Customer relationships
Management reviews its estimate of the carrying value of customer relationships at reporting date and recognises an
allowance for impairment if required.
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
Management identifies 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.
Apiam Animal Health Limited
Financial statements for the year ended 30 June 2018
50
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
Restructure costs
Finance costs
Share of profit from equity accounted investments
Net profit before tax
Income tax
Net profit after tax
6
Revenue
Sales revenue
Sale of goods
Rendering of services
Total revenue
Expenses
7
Profit before income tax includes the following specific expenses:
Depreciation
Leasehold improvements
Plant and equipment
Motor vehicles
Amortisation of intangibles
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
2018
2017
$'000
106,597
(98,486)
8,111
$'000
97,991
(90,766)
7,225
8,111
21
(1,304)
(368)
(131)
(607)
(914)
23
4,831
(1,545)
3,286
2018
$'000
7,225
1,250
(712)
(236)
(503)
-
(888)
-
6,136
(1,211)
4,925
2017
$'000
70,558
36,039
63,960
34,031
106,597
97,991
2018
$’000
47
1,249
921
215
2,432
847
67
914
15
929
40
1,842
2017
$’000
15
833
547
179
1,574
820
84
904
14
918
-
1,616
Apiam Animal Health Limited
Financial statements for the year ended 30 June 2018
8
Income tax expense
51
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% (2017: 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% (2017 - 30%)
Adjustments for non-deductible expenses:
Reversal of contingent consideration
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.
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
Tax receivable
Rebates receivable
2018
$’000
4,831
1,449
-
12
1,461
1,461
84
1,545
1,216
329
1,545
2018
$'000
1,436
1,436
2018
$'000
13,137
(400)
47
523
1,437
14,744
2017
$’000
6,136
1,841
(375)
8
1,474
1,474
(263)
1,211
1,690
(479)
1,211
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 $(60) (2017: $323) has been recorded accordingly within
other expenses.
Balance at 1 July
Impairment loss
Balance 30 June
2018
$'000
460
(60)
400
2017
$'000
137
323
460
Apiam Animal Health Limited
Financial statements for the year ended 30 June 2018
11
Inventories
Stock on hand, at cost
Less provision for obsolescence
Stock in transit, at cost
12 Other current assets
Prepayments
Security deposits
52
2017
$'000
11,874
(397)
-
11,477
2017
$'000
686
60
746
2018
$'000
11,586
(655)
325
11,256
2018
$'000
784
67
851
13
Property, plant and equipment
Details of the Group’s property, plant and equipment and their carrying amount are as follows:
Leasehold
improvements
Plant & equipment
Motor
vehicles
Assets
under
construction
Total
$’000
$’000
$’000
$’000
$’000
Year ended 30 June 2017
Opening net book value
Acquired through business combinations
146
-
2,578
201
1,772
227
-
-
Additions
Depreciation charge for year
Closing net book value
At 30 June 2017
Cost or fair value
Accumulated depreciation
4
(15)
135
1,414
(833)
3,360
1,122
(547)
2,574
331
-
331
156
(21)
4,920
(1,560)
3,508
(934)
331
-
8,915
(2,515)
Net book amount
135
3,360
2,574
331
6,400
Year ended 30 June 2018
Opening net book value
Acquired through business combinations
Additions
Depreciation charge for year
Closing net book value
At 30 June 2018
Cost or fair value
Accumulated depreciation
Net book amount
135
-
342
(47)
430
498
(68)
430
3,360
688
2,867
(1,182)
5,733
8,475
(2,742)
5,733
2,574
16
1,062
(921)
2,731
4,586
(1,855)
2,731
331
-
260
(67)
524
591
(67)
524
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.
2018
$'000
2,606
(722)
1,884
6,400
704
4,531
(2,217)
9,418
14,150
(4,732)
9,418
2017
$'000
1,941
(226)
1,715
4,496
428
2,871
(1,395)
6,400
Apiam Animal Health Limited
Financial statements for the year ended 30 June 2018
14 Intangible assets
53
Customer
Relation-
ships
$’000
Capitalised
develop-
ment costs
$'000
Goodwill
$'000
54,913
-
54,913
54,913
-
6,339
-
61,252
61,252
-
61,252
3,223
(179)
3,044
3,044
-
-
(215)
2,829
3,223
(394)
2,829
80
-
80
80
354
-
-
434
434
-
434
Total
$'000
58,216
(179)
58,037
58,037
354
6,339
(215)
64,515
64,909
(394)
64,515
At 30 June 2017
Cost
Accumulated amortization and impairment
Carrying amount at 30 June 2017
At July 1 2017
Opening net book value
Additions
Acquisition of subsidiary
Amortisation
Closing net book value
At 30 June 2018
Cost
Accumulated amortization and impairment
Net book value
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 %
2018
5.00%
2.00%
2.50%
10.60%
2018
$’000
2017
5.00%
2.00%
2.50%
11.91%
2017
$’000
Goodwill allocation at 30 June across fifteen (15) individual veterinary clinic
entities
61,251
54,913
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.
Growth rates
The growth rates reflect the long-term average growth rates for the industry.
Apiam Animal Health Limited
Financial statements for the year ended 30 June 2018
Discount rates
54
The discount rates reflect appropriate adjustments relating to market risk and specific risk factors of each unit.
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.
A CGU summary of the goodwill allocation is presented below.
Balance 1 July
Acquisitions
30 June 2018
Feedlot
Dairy and mixed
$’000
12,788
-
12,788
$’000
42,125
6,339
48,464
Pig (a)
$’000
-
-
-
Total
$’000
54,913
6,339
61,252
(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
2018
$'000
198
196
1,520
(9)
751
362
91
3,109
2017
$'000
233
119
1,389
(14)
1,031
543
137
3,438
All deferred tax assets (including tax losses and other tax credits) have been recognised in the statement of financial
position.
Apiam Animal Health Limited
Financial statements for the year ended 30 June 2018
55
Tax
losses
$'000
721
310
-
1,031
(280)
-
751
At 1 July 2016
(Charged)/credited:
to P&L
Recognized in
business
combination
at 30 June 2017
(Charged)/credited:
to P&L
acquisition of a
subsidiary
At 30 June 2018
Provisions
$'000
1,291
Borrowing
costs
$'000
(18)
Trade
receivables
$'000
41
Listing &
acquisition
costs
$'000
171
Equity
raising
costs
$'000
724
Inventory
$'000
30
Total
$'000
2,960
8
4
169
(34)
(181)
89
366
90
1,389
-
(14)
68
63
1,520
5
-
(9)
23
233
(35)
-
198
-
-
-
137
543
119
113
3,438
(46)
(181)
77
(392)
-
91
-
362
-
63
196
3,109
16 Trade and other payables
Trade payables
Sundry payables and accrued expenses
Other payables
2018
$'000
9,249
2,566
454
12,269
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 capitalized costs
lease liability (b)
less deferred interest charges
Total non-current borrowings
Refer to Note 39 for information on financial instruments.
2018
$'000
594
2017
$'000
776
2018
$'000
2017
$'000
3,198
(20)
815
(63)
3,930
22,260
(43)
1,171
(52)
23,336
3,630
(14)
523
(37)
4,102
20,700
(34)
994
(52)
21,608
Apiam Animal Health Limited
Financial statements for the year ended 30 June 2018
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
56
2017
$’000
24,330
(48)
1,517
(89)
25,710
2018
$’000
25,458
(63)
1,986
(115)
27,266
Assets pledged as security
(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.
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 3.5 times to 4.0 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
2018
$'000
45,700
3,500
1,000
300
50,500
25,396
1,870
-
-
27,266
20,304
1,630
1,000
300
23,234
2017
$'000
30,700
2,000
1,000
300
34,000
24,282
1,428
-
-
25,710
6,355
572
1,000
300
8,227
Apiam Animal Health Limited
Financial statements for the year ended 30 June 2018
19 Employee benefit obligations
Leave obligations current
Leave obligations non-current
Employee benefits
57
2017
$'000
3,748
672
4,420
2018
$'000
4,253
810
5,063
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 $4,253 (2017: $3,748) 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 $2,502 (2017: $3,620) of this liability to be taken or paid within the next 12
months.
20 Other current liabilities
Opening Balance
Contingent consideration for acquisition
Reversal of contingent consideration
2018
$'000
--
400
-
400
2017
$'000
1,250
-
(1,250)
-
This relates to contingent consideration on businesses acquired during the year. Refer to Note 31 for further details.
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 and fully paid
· beginning of the period
· shares issued as consideration for business
acquisitions
· issued under dividend reinvestment plan
· employee shares issued
Shares issued and fully paid
2018
Shares
2017
Shares
2018
$'000
2017
$’000
101,177,947
98,475,574
83,066
79,070
2,683,462
2,702,373
2,041
3,996
792,434
40,000
-
-
104,693,843
101,177,947
638
30
85,775
85,775
-
-
83,066
83,066
Total shares authorised at the end of the period
104,693,843
101,177,947
Each share has the same right to receive dividend and the repayment of capital and represents one vote at the shareholders’
meeting of Apiam.
Apiam Animal Health Limited
Financial statements for the year ended 30 June 2018
22 Reserves
Details of reserves are as follows:
Balance at 1 July 2016
Restructure and transfer of Chris Richards entities into the Group
Balance at 1 July 2017
58
Total
$’000
(33,281)
(26)
(33,307)
Corporate
reorganisation
reserve
$’000
(26,666)
(26)
(26,692)
Non-
controlling
Interest
acquisition
reserve
$’000
(6,615)
-
(6,615)
Balance at 30 June 2018
(26,692)
(6,615)
(33,307)
23 Non-controlling interests
Issued capital
Current year earnings
Retained profits carried forward
Total non-controlling interests
2018
$’000
576
8
66
650
2017
$’000
576
23
43
642
24 Earnings per share and dividends
Earnings per share
Both the basic and diluted earnings per share have been calculated using the profit attributable to shareholders of the Parent
Company as the numerator.
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
Dividends
During the year, the following dividends were declared and paid.
fully franked final dividend (0.8 cents a share)
fully franked interim dividend (0.8 cents a share)
2018
Number
2017
Number
102,122,567
100,589,539
102,122,567
100,589,539
2018
$'000
809
818
1,627
2017
$'000
-
809
809
In addition and since the end of the financial year, Directors have declared a fully franked final dividend of 0.8c per
ordinary share to be paid on 26 October 2018 (2017: 0.8c)
Apiam Animal Health Limited
Financial statements for the year ended 30 June 2018
59
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 and amortisation expense
· doubtful debt expense
· obsolete stock provision
· amortisation of borrowing expenses
· share benefits expense
· profit on sale of fixed assets
· share of profit in equity accounted investments
· gains on derecognition of contingent consideration payable
Net changes in working capital:
· decrease/(increase) in trade and other receivables
· decrease/(increase) in inventories
· decrease/(increase) in other assets
· decrease/(increase) in deferred tax asset
· increase/(decrease) in trade and other payables
· increase/(decrease) in income tax payable
· increase/(decrease) in deferred tax liability
· increase/(decrease) in provisions
Net cash received in operating activities
2018
$'000
2017
$'000
7,069
6,046
(359)
594
(347)
451
7,304
6,150
2018
$’000
3,286
2,432
3
258
15
70
(21)
(23)
-
(108)
302
(101)
392
2,777
(202)
(46)
183
9,217
2017
$’000
4,925
1,574
61
296
14
-
-
-
(1,250)
(168)
(1,442)
(53)
(365)
(1,230)
(1,062)
(54)
424
1,670
(b) Non cash financing transactions
During the financial year, the Group acquired vehicles to the value $998 (2017: $1,309) via finance leases. These
transactions are not reflected in the Statement of Cash Flows.
26 Employee remuneration
Employee benefits expense
Expenses recognised for employee benefits are analysed below:
Employee benefits – expense
Wages and salaries expense
Bonus expense/(reversal)
Share-based payment expense
Superannuation expense
Employee benefits expense
2018
$’000
27,907
(85)
40
2,259
30,121
2017
$’000
24,680
396
30
1,999
27,105
Apiam Animal Health Limited
Financial statements for the year ended 30 June 2018
Share-based employee remuneration
60
In 2018, 40,000 shares at a fair value of $0.75 cents per share were issued to the Trustee of the Company’s Employee
Share Trust, in anticipation of future allocations of Shares to participants under the Company’s Equity Incentive Plan.
27 Auditor remuneration
Audit services – Grant Thornton Audit Pty Ltd
Remuneration for audit or review of financial statements
193,289
196,838
2018
$
2017
$
Other services – Grant Thornton
•
• other
taxation services
Total other services remuneration
Total auditor’s remuneration
38,755
64,575
103,330
296,619
78,656
86,521
165,177
362,015
28 Related party transactions
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.
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
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
Total remuneration
2018
$
2017
$
1,085,665
1,052,181
13,419
12,027
1,099,084
1,064,208
5,854
5,854
78,779
78,779
7,277
7,277
81,237
81,237
1,183,717
1,152,722
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. During FY18 the warehouse facility was extended and rental payments made amounted to $310,800 (2017:
$242,400).
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 $132,961 (2017: $124,116).
The Group leases it artificial insemination facility in Victoria from entities associated with Chris Richards. Lease payments
made amounted to $105,000 (2017: $69,939).
Apiam Animal Health Limited
Financial statements for the year ended 30 June 2018
61
The Group leases premises at Hoskin Street, Quarry Hill, Victoria from entities associated with Chris Richards. Lease
payments made amounted to $11,887 (2017: Nil).
The Group leases premises at Midland Highway, Epsom, Victoria from entities associated with Chris Richards. Lease
payments made amounted to $12,164 (2017: Nil).
All related party rentals are based on commercial rates and the terms of the lease are standard commercial terms.
The group has taken up an option during FY2018 to purchase the iVet technology from iVet Pty Ltd, a company controlled
by Chris Richards. The Group had previously entered into an intellectual property licence with iVet Pty Ltd to use the iVet
intellectual property. The Group were to 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 was for an initial term of 10 years. Payment by the group to take
up the option to purchase iVet Pty Ltd in FY2018 was the sum of $93,157 (2017: Nil).
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
Property, plant and equipment
2018
$'000
39
39
2017
$'000
115
115
The group has entered into the purchase of new vehicles after the reporting date, which haven't been
delivered yet.
Apiam Animal Health Limited
Financial statements for the year ended 30 June 2018
62
31 Business combination
On 1 November 2017 the Group acquired the business assets of Terang and Mortlake Veterinary Clinic (TMVC).
On 16 March 2018, the Group acquired the business assets of Passionate Vetcare (PVC).
In addition, on 1 June 2018, the Group acquired 100% of the issued share capital and voting rights of Gympie & District
Veterinary Services (GDVS).
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 acquisition of these clinics enables the
Company to grow its existing presence in Victoria’s Central and Western districts, as well as South East Queensland. On
the acquisition of TMCV assets, 584,013 fully paid shares were issued at a fair value of $0.8219 per share. On the acquisition
of PVC assets, 258,205 fully paid shares were issued at a fair value of $0.8180 per share. On the acquisition of GDVS,
1,841,244 shares were issued at a fair value of $0.7332 per share.
Fair value of consideration transferred
Amounts settled in cash
Amount settled by issue of shares at fair value
Payable to vendors
Total fair value of consideration transferred
Recognised amounts of identifiable net assets
Property plant and equipment
Deferred tax assets
Financial assets
Total non-current assets
Cash and equivalents
Inventories
Trade and other receivables
Other current assets
Total current assets
Provisions
Total non-current liabilities
Provisions
Current tax liabilities
Trade and other payables
Total current liabilities
Identifiable net assets
Goodwill on acquisition
Net cash outflow on acquisition
TMVC
$’000
1,145
480
-
1,625
173
47
-
220
-
134
322
-
456
92
92
65
-
178
243
341
1,284
1,145
PVC
$’000
494
211
54
759
80
16
-
96
-
76
35
-
111
3
3
50
-
-
50
154
605
494
GDVS
$’000
3,178
1,350
400
4,928
452
-
3
455
158
129
206
3
496
209
209
-
20
244
264
478
4,450
3,020
Total
$’000
4,817
2,041
454
7,312
705
63
3
771
158
339
563
3
1,063
304
304
115
20
422
557
973
6,339
4,659
Apiam Animal Health Limited
Financial statements for the year ended 30 June 2017
63
Consideration transferred
Acquisition-related costs amounting to $368,000 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.
Identifiable net assets
The fair values of the identifiable intangible assets have been determined provisionally at 30 June 2018. The Group
is currently obtaining the information necessary to appropriately consider the identification and fair value of
identifiable intangible assets.
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.
32 Interests in subsidiaries
Composition of the Group
Set out below details of the subsidiaries held directly by the Group:
Name of the Subsidiary
Country of
incorporation
and principal
place of
business
Principal activity
Chris Richards & Associates Pty Ltd
Australia
Veterinary services
Country Vet Wholesaling Pty Ltd
Farm Gate Logistics (Qld) Pty Ltd
Apiam Management Pty Ltd
Australia
Australia
Australia
Wholesale supply
Transport
Payroll
Southern Cross Feedlot Services Pty Ltd
Australia
Veterinary services
Westvet Wholesale Pty Ltd
Australia
Wholesale supply
Portec Veterinary Services Pty Ltd
Australia
Veterinary services
Pork Storks Australia Pty Ltd
McAuliffe Moore & Perry Pty Ltd
Warrnambool Veterinary Clinic Pty Ltd
Australia
Australia
Australia
Genetics
Veterinary services
Veterinary services
Scottsdale Veterinary Services Pty Ltd
Australia
Veterinary services
Smithton Veterinary Service Pty Ltd
Australia
Veterinary services
AAH - Dubbo Vet Hospital Pty Ltd
Australia
Veterinary services
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
Australia
Veterinary services
Australia
Veterinary services
Australia
Veterinary services
Australia
Veterinary services
Australia
Australia
Dormant
Dormant
Quirindi Feedlot Services Pty Ltd
Australia
Veterinary services
Quirindi Veterinary Clinic Pty Ltd
Australia
Veterinary services
Quipolly Equine Centre Pty Ltd
AAH Veterinary Clinics Pty Ltd
Gympie & District Veterinary Services Pty
Ltd
Australia
Veterinary services
Australia
Veterinary Services
Australia
Veterinary Services
Group proportion of
ownership interests
2018
100%
100%
100%
100%
100%
100%
49%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
80%
100%
2017
100%
100%
100%
100%
100%
100%
49%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
0%
0%
Apiam Animal Health Limited
Financial statements for the year ended 30 June 2018
64
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.
Losing control over a subsidiary during the reporting period
There was no loss of control over a subsidiary during the reporting period.
Interests in unconsolidated structured entities
The Group has no interests in unconsolidated structured entities.
33
Leases
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 2018, the net carrying amount of the motor vehicles held under finance lease arrangements (included as part of
motor vehicles) is $1,884 (2017; $1,715); and the net carrying amount of the plant and equipment held under finance lease
arrangements (included as part of plant and equipment) is $26 (2017: $64) (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
Non-current:
finance lease liabilities
2018
$’000
752
1,119
2017
$’000
486
942
Future minimum finance lease payments at the end of each reporting period under review were as follows:
30 June 2018
Lease payments
Finance charges
Net present values
30 June 2017
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
815
(63)
752
523
(37)
486
1,171
(52)
1,119
994
(52)
942
-
-
-
-
-
1,986
(115)
1,871
1,517
(89)
1,428
Apiam Animal Health Limited
Financial statements for the year ended 30 June 2018
65
Operating leases as lessee
Non-cancellable operating leases
Within one year
later than one year but less than five years
later than five years
2018
$’000
2,255
5,582
3,385
11,222
2017
$’000
1,633
4,476
2,170
8,279
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.
34
Financial instrument risk
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 39.1. 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.
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 2018, 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%
(2017: +/- 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-18
30-Jun-17
Profit for the year
$’000
+1%
290
$’000
-1%
(290)
Equity
$’000
+1%
290
$’000
-1%
(290)
242
(242)
242
(242)
Apiam Animal Health Limited
Financial statements for the year ended 30 June 2018
66
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
2018
$’000
2017
$’000
1,436
968
14,744
14,075
16,180
15,043
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
2018
$’000
2,440
530
1,476
4,446
2017
$’000
1,893
489
1,680
4,062
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
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 2018
67
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 2018, the Group’s non-derivative financial liabilities have contractual maturities (including interest payments
where applicable) as summarised below:
30 June 2018
Bank borrowings
Finance lease obligations
Trade and other payables
Total
Current
Within 6
months
$’000
6 - 12
months 1 - 4 years
$’000
$’000
3,198
342
12,269
15,809
-
473
-
473
22,260
1,171
-
23,431
This compares to the maturity of the Group’s non-derivative financial liabilities in the previous reporting periods as follows:
30 June 2017
Bank borrowings
Finance lease obligations
Trade and other payables
Total
Current
Within 6
months
$’000
6 - 12
months
$’000
1 - 4 years
$’000
3,616
248
9,015
-
20,666
238
-
942
-
12,879
238
21,608
The above amounts reflect the contractual undiscounted cash flows, which may differ to the carrying values of the
liabilities at the reporting date.
35
Fair value measurement
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 2018 and 30 June 2017:
30 June 2018
Financial liabilities
Contingent consideration
Total liabilities
Net fair value
Level 1
$'000
Level 2
$'000
Level 3
$'000
Total
$'000
-
-
-
-
-
-
400
400
400
400
400
400
Apiam Animal Health Limited
Financial statements for the year ended 30 June 2018
68
30 June 2017
Financial liabilities
Contingent consideration
Total liabilities
Net fair value
Level 1
$'000
Level 2
$'000
Level 3
$'000
Total
$'000
-
-
-
-
-
-
-
-
-
-
-
-
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 2017
Reversal of contingent consideration
Payable business combination
Balance at 30 June 2018
2018
$’000
-
-
400
400
2017
$’000
1,250
(1,250)
-
-
Apiam Animal Health Limited
Financial statements for the year ended 30 June 2018
69
36 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 gearing ratio below
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 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
2018
$'000
58,725
2017
$'000
54,357
1,436
968
60,161
58,725
27,266
55,325
54,357
25,710
85,991
80,067
70%
69%
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 2018
70
37 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
2018
$’000
2017
$’000
1,044
1,113
112,079
106,758
5,222
28,576
83,503
85,775
(2,272)
83,503
1,540
23
1,563
4,103
26,711
80,047
83,065
(3,017)
80,048
1,018
-
1,018
The Parent Entity has capital commitments of $38,589 to purchase motor vehicles (2017: $114,689). Refer Note 30 for
further details of the commitment.
The Parent Entity has entered into a deed of cross guarantee. Refer Note 40 for details.
The Parent Entity had no contingent liabilities at 30 June 2018 (2017: $Nil).
38 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 27
August 2018. The final dividend of $837,551 will be paid on the 26 October 2018.
Apiam Animal Health Limited
Financial statements for the year ended 30 June 2018
71
39
Financial assets and liabilities
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
34.
The methods used to measure financial assets and liabilities reported at fair value are described in Note 35.1.
The carrying amounts of financial assets and financial liabilities in each category are as follows:
30-Jun-18
Financial assets
cash and cash equivalents
Trade and other receivables
Financial liabilities
Non-current borrowings
Current borrowings
Trade and other payables
Other current liabilities
Other liabilities
Current tax liabilities
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
notes
9
10
18
18
16
20
17
Note
9
10
18
18
16
17
Financial
assets at
amortised cost
$'000
1,436
14,744
16,180
Other liabilities
at amortised
cost
23,336
3,930
12,269
400
220
594
40,749
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
Total
$'000
1,436
14,744
16,180
23,336
3,930
12,269
400
220
594
40,749
Total
$'000
968
14,075
15,043
21,608
4,102
9,015
776
35,501
Borrowings
Borrowings include the following financial liabilities:
Financial liabilities
Carrying amount at amortised cost:
• bank borrowings (Note 18)
•
finance lease liabilities (Note 33)
All borrowings are denominated in $AUD.
2018
$’000
3,178
752
3,930
Current
2017
$’000
3,616
486
4,102
Non-current
2017
$’000
20,666
942
21,608
2018
$’000
22,217
1,119
23,336
Apiam Animal Health Limited
Financial statements for the year ended 30 June 2018
72
Borrowings at amortised cost
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 3.7%
(2017 3.6%). The carrying amount of the other bank borrowings is considered to be a reasonable approximation of the fair
value.
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
40 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 2018
73
Statement of Profit or Loss and Other Comprehensive Income for the year ended 30 June 2018
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
Share of profit from equity accounted investments
Profit/(loss) before income tax
Income tax (expense)/benefit
Profit from continuing operations
Profit for the year
2018
$'000
2017
$'000
91,916
85,128
-
1,232
(208)
1,282
(44,775)
(42,732)
(711)
(502)
(28,009)
(25,802)
(181)
(739)
(2,848)
(2,434)
(1,592)
(1,662)
(1,985)
(1,417)
(6,552)
(6,033)
(929)
(895)
(15)
(14)
23
4,134
5,412
(1,356)
(972)
2,778
4,440
2,778
4,440
Apiam Animal Health Limited
Financial statements for the year ended 30 June 2018
Set out below is a consolidated statement of financial position of the parties to the Deed.
Statement of Financial Position
As at 30 June 2018
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
Deferred tax liabilities
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
74
2017
$’000
835
14,128
11,356
737
27,056
46,958
6,000
11,620
3,339
67,917
2018
$’000
677
16,566
11,020
763
29,026
61,987
7,943
73
3,008
73,011
102,037
94,973
14,605
454
471
3,859
3,785
23,174
23,337
756
18
24,111
47,285
9,255
-
725
4,203
3,500
17,683
21,608
631
-
22,239
39,922
54,752
55,051
84,912
(26,692)
(5,968)
2,500
54,752
83,004
(25,642)
(6,615)
4,304
55,051
Apiam Animal Health Limited
Financial statements for the year ended 30 June 2018
75
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 2018 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 2018.
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
27 August 2018
76
Collins Square, Tower 1
727 Collins Street
Docklands VIC 3008
Correspondence to:
GPO Box 4736
Melbourne VIC 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 2018 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:
giving a true and fair view of the Group’s financial position as at 30 June 2018 and of its financial performance for the year
then ended; and
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 auditor 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
www.grantthornton.com.au
‘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.
77
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
Intangible Assets – Note 14
At 30 June 2018 the carrying value of goodwill and intangible
assets is $61M and $3.2M respectively, relating to three
separate cash-generating units (“CGU’s”).
In accordance with AASB 136 Impairment of Assets, the
Group is required to assess if there are any indicators of
impairment in addition to at least annually, determine 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 CGU’s.
How our audit addressed the key audit matter
Our procedures included, amongst others:
• Reviewing the impairment model for compliance with
AASB 136;
• Assessing managements 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 managements future cash flow forecasts to
obtain an understanding of the process by which they
were developed;
• Assessing management expertise in preparing the
impairment model;
• Testing the underlying calculations for mathematical
accuracy and agreeing them to the latest Board approved
budgets;
• Assessing managements 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 (Grant Thornton Corporate
Finance Specialist) 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;
• Assessed for indicators of impairment relating to the
customer relationships; 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 financial report for the year ended 30 June 2018, 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.
78
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’s ability 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 pages 25 to 30 of the Directors’ report for the year ended 30 June
2018.
In our opinion, the Remuneration Report of Apiam Animal Health Limited, for the year ended 30 June 2018, 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, 27 August 2018
Apiam Animal Health Limited
Financial statements for the year ended 30 June 2018
79
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 13 August 2018 (Reporting Date).
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 (http://www.apiam.com.au/corporate-governance/) 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
(http://www.apiam.com.au/corporate-governance/).
Substantial holders
As at the Reporting Date, 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
Class of
Equity
Securities
Number of
Equity
Securities held
% of total
issued
securities
Christopher Richards
Regal Funds Management Pty
Limited
Australian Super Pty Ltd
Ordinary
Shares
Ordinary
Shares
Ordinary
Shares
27,926,077
26.67%
11,466,811
11.15%
8,876,086
8.44%
Apiam Animal Health Limited
Financial statements for the year ended 30 June 2018
80
Number of holders
As at the Reporting Date, 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 2018 and quoted
on ASX
Fully paid ordinary shares restricted until 1 November 2018 and quoted
on ASX
Fully paid ordinary shares restricted until 5 January 2019 and quoted on
ASX
Fully paid ordinary shares restricted until 19 March 2019 and quoted on
ASX
Fully paid ordinary shares restricted until 8 June 2019 and quoted on
ASX
Fully paid ordinary shares restricted until 1 November 2019 and quoted
on ASX
Fully paid ordinary shares restricted until 19 March 2020 and quoted on
ASX
Fully paid ordinary shares restricted until 8 June 2020 and quoted on
ASX
Number of
holders
100,659,197
1,131,647
292,008
219,537
129,103
920,622
292,005
129,102
920,622
TOTAL ORDINARY SHARES ON ISSUE
104,693,843
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 Reporting Date, there were 1,202 holders of a total of 100,659,197 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 2018
81
Distribution of holders of equity securities
The distribution of holders of equity securities on issue in the Company as at the Reporting Date
is as follows:
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
147
326
246
383
90
81,854
941,574
2,037,438
11,303,353
86,294,978
Totals
1,192
100,659,197
Distribution of holders of escrowed shares
%
0.08
0.94
2.02
11.23
85.73
100
Holders of shares
restricted until 1
Sep 2018
Holders of
shares
restricted until 1
Nov 2018
Holders of
shares
restricted until 5
Jan 2019
Holders of
shares
restricted until
19 Mar 2019
1 to 1,000
1,001 to 5,000
5,001 to 10,000
10,001 to 100,000
100,001 and over
Totals
0
3
1
2
2
0
0
0
3
1
0
0
0
1
1
0
0
0
0
1
8
Holders of shares
restricted until 8
Jun 2019
4
Holders of
shares
restricted until 1
Nov 2019
2
Holders of
shares
restricted until
19 Mar 2020
1
Holders of
shares
restricted until
8 Jun 2020
1 to 1,000
1,001 to 5,000
5,001 to 10,000
10,001 to 100,000
100,001 and over
Totals
0
0
0
0
3
3
0
0
0
3
1
4
0
0
0
0
1
1
0
0
0
0
3
3
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 Reporting Date is as follows:
Total Shares
UMP Shares
UMP Holders
% of issued shares
held by UMP holders
100,659,197
47,021
112
0.04671
Apiam Animal Health Limited
Financial statements for the year ended 30 June 2018
82
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
Reporting
Date
%
CJOEA FAMILY COMPANY PTY LTD
27,388,621
27.21
J P MORGAN NOMINEES AUSTRALIA LIMITED
8,679,125
8.62
MERRILL LYNCH (AUSTRALIA) NOMINEES PTY LIMITED
8,067,081
8.01
COBASH PTY LIMITED
3,872,006
3.85
UBS NOMINEES PTY LTD
2,802,569
2.78
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
2,174,818
2.16
FOUR POST INVESTMENTS PTY LTD
MR NEIL LEIGHTON & MRS HELEN LEIGHTON
MR ROGER CHARLES CARMODY & MRS MARIS MOORE
CARMODY
MRS KATE JUDITH MALIN
SONJASWRIGHT PTY LIMITED
MR KEVIN FRANCIS SULLIVAN & MRS JANE MAREE SULLIVAN
TOCAMAC PTY LTD
CINDY JANE PTY LTD
1,386,700
1.38
1,354,131
1.35
1,333,650
1.32
1,224,700
1.22
1,211,846
1.20
1,010,000
1.00
986,700
0.98
947,746
0.94
MR COLEEN STEWART
872,568
0.87
BNP PARIBAS NOMS PTY LTD
K F J SULLIVAN PTY LIMITED
MR CRAIG JAMES DWYER
CHARLIEWILL PTY LTD
YARRABROOK PTY LTD
Total number of shares of Top 20 Holders
Total Remaining Holders Balance
862,425
0.86
845,000
0.84
844,321
0.84
830,003
0.82
734,753
0.73
67,428,763
64.41
37,265,080
35.59
Apiam Animal Health Limited
Financial statements for the year ended 30 June 2018
83
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
1,131,647
1 September 2018
Ordinary shares
Voluntary escrow
292,008
1 November 2018
Ordinary shares
Voluntary escrow
219,537
5 January 2019
Ordinary shares
Voluntary escrow
129,103
19 March 2019
Ordinary shares
Voluntary escrow
920,622
8 June 2019
Ordinary shares
Voluntary escrow
292,005
1 November 2019
Ordinary shares
Voluntary escrow
129,102
19 March 2020
Ordinary shares
Voluntary escrow
920,622
8 June 2020
Unquoted equity securities
The Company has no unquoted equity securities on issue
Apiam Animal Health Limited
Financial statements for the year ended 30 June 2018
84
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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