Apiam Animal Health Limited Appendix 4E
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 2022
Previous period:
For the year ended 30 June 2021
Apiam Animal Health Limited Appendix 4E
2
RESULTS FOR ANNOUNCEMENT TO THE MARKET
Statutory Results Summary
CHANGES FROM PERIOD ENDED 30 JUNE
2022 2021
%
$m
$m
Revenue from ordinary activities
up
25
To
157.2
from
126.2
Net profit attributable to members
Profit from ordinary activities after tax attributable to
members
down
down
8
8
To
To
4.6
from
4.6 From
5.0
5.0
Underlying EBIT (Incl. non-controlling interests)
up
13
to
10.1
From
8.9
Underlying EBIT (Earnings Before Interest and Tax) is considered by Management to be a useful indicator
of business profitability and excludes one-off corporate costs as well as integration 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
2022 Interim Dividend
Amount per
security
cents
Franked
amount per
security
Cents
1.2 cents
1.2 cents
2022 Final Dividend (declared after balance date but not yet paid) 0.4 cents
0.4 cents
Record date for determining entitlements to the dividend:
23 September 2022
Date dividend payable:
21 October 2022
Apiam Animal Health Limited Appendix 4E
3
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 30 September 2022.
Shareholders who elect to participate in the DRP for the 2022 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 3 October 2022 and 7 October 2022 (‘Pricing Period’). The timetable in respect
of the 2022 final dividend and DRP is as follows:
Event / Action
Record Date
Date*
23 September 2022
Election Date: Last date for shareholders to make an election to
participate in the DRP
5.00 pm (Melbourne time)
on 30 September 2022
Pricing Period Commencement Date
Last Day of Pricing Period
Announcement of DRP issue price
Dividend Payment Date / Issue of DRP shares
*All dates are subject to change
3 October 2022
7 October 2022
10 October 2022
21 October 2022
Details of the DRP can be downloaded from www.apiam.com.au. In order to participate in the DRP for
the 2022 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 30 September 2022. An online
election can be made by visiting www.boardroomlimited.com.au.
Net Tangible Asset per Security
Net Tangible assets per share
Return to shareholders
2022
-$0.11
2021
-$0.11
Dividends of $3,275,143 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.
Apiam Animal Health Limited Appendix 4E
4
Entities over which control has been gained or lost during the period:
Refer to Note 32 and 33 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 3 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 2022
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.
2022
Apiam Animal Health
ANNUAL
REPORT
Apiam Animal Health Limited
Financial statements for the year ended 30 June 2022
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
1
2
5
9
23
33
35
36
37
38
39
77
78
82
Apiam Animal Health Limited
Financial statements for the year ended 30 June 2022
2
Chairman’s Message
Dear Shareholder,
On behalf of the Board of Directors I am pleased to present the Annual Report for the year ended
30 June 2022 (FY22). This financial year was a milestone year for Apiam as we implemented our
Accelerated Growth strategy targeting pro-forma revenue of more than $300 million by FY24.
The Accelerated Growth strategy we have mapped out takes Apiam on a transformational path,
not only in terms of growing our revenue base but also in building a business of significant scale
and financial resilience; a business capable of generating strong, reliable free cash flows that will
deliver intrinsic value to all Apiam shareholders.
A key plank of this strategy is to transition Apiam’s business mix to deriving a very large share of
its revenues from the dairy & mixed animal (companion and equine) segment. Driving growth in
our dairy & mixed animal segment has many benefits for the Company. This segment provides a
highly resilient revenue and income stream and reduces our exposure to the cyclicity of the
intensive animal agricultural industries.
Further, the dairy & mixed animal segments are experiencing the most significant growth
opportunities we have seen within the veterinary industry in many decades, driven by changing
demographics and spending habits in the regional and peri-urban areas in which we operate.
Even in this first year of our journey, this change is already very evident, with our dairy & mixed
animal segment now contributing approximately 74% of our pro-forma revenues1 compared to
about 60% this time a year ago.
Strong progress in FY22
In line with our Accelerated Growth plan, Apiam executed eleven targeted acquisitions during the
financial year. These acquisitions were of high-quality businesses with strong track records of
financial performance, all within the dairy & mixed animal segment. They have increased the
breadth of our business adding 14 new clinic locations in attractive regional areas as well as
deepened our expertise in a number of mixed animal segments, particularly equine.
1 Includes contribution from The Victorian Equine Group and The Vet Practice which were announced during FY22 but settled 1 July 2022
Apiam Animal Health Limited
Financial statements for the year ended 30 June 2022
3
In May, Apiam successfully undertook an equity raising of $20.25 million via an Accelerated Non-
Renounceable Entitlement Offer to drive the next phase of our growth. This equity raise was well
supported by many new and existing shareholders. In conjunction, we also negotiated a $20
million extension to our acquisition debt facility. The support that we received to deliver these
capital initiatives, during a period of market and macro-economic volatility, demonstrates the
quality and resilience of Apiam’s business model and the repositioning of Apiam as a company
on an accelerated growth path.
Pleasingly, the dairy & mixed animal segment delivered strong FY22 results – across revenue,
earnings and cash flow metrics.
The beef feedlot and pig segments which are more cyclical segments, continued to be affected
by industry challenges. Over FY22, management responded flexibly and innovatively,
implementing a greater focus on the provision of services such as higher value consultancy
offerings. While this has slightly reduced revenues from these business segments in FY22 it has
resulted in positive like-for-like gross profit growth over the period.
Our staff are truly our most important asset, and the key driver of the results we deliver. They also
play a key role in our future growth. As such, we continue to maintain a strong focus on retaining
and attracting talent. Apiam has made great strides in the past few years, implementing market-
leading People and Culture practices and ensuring we are amongst the best veterinary employers
in the country.
We have also made strong progress in all Environmental, Social and Governance areas in FY22,
completing our corporate sustainability plan. Our initiatives in this area are centred around three
key pillars, that align with our purpose - To Enrich the lives of Animals, People and Communities.
The Board of Apiam have declared a 0.4 cents final dividend, which, together with the interim
dividend, represents a payout ratio of reported NPAT of 50% for the year.
As a Board we continually assess the best use of capital in the context of our growth ambitions.
As the Company trends towards its target to deliver pro-forma revenue of $300m by FY24,
earnings margins and free cash flow are also expected to increase very considerably. This
compelling opportunity is expected to deliver substantial intrinsic value to shareholders. The
Board therefore intend to invest all capital during this rapid growth period towards funding the
accelerated acquisition strategy rather than returning funds to shareholders via dividends.
Outlook for FY23
Looking to the year ahead. Apiam will continue to execute its Accelerated Growth strategy with
our acquisition pipeline being a key driver of this strategy in FY23, supported by a strong organic
growth contribution.
Generating further earnings leverage, including from the recent acquisitions we have made, is a
top priority for the Company. We are closely monitoring the efficiency of operating investment and
believe that in the year ahead new acquisitions can be more quickly integrated into the broader
Apiam business and achieve improved earnings at a faster rate.
Apiam Animal Health Limited
Financial statements for the year ended 30 June 2022
3
Overall, we remain confident that our Accelerated Growth strategy, and the transformational
impact this will have on our business mix will deliver intrinsic value, strong earnings growth and
cash generation for shareholders in FY23 and beyond.
On behalf of the Board of Directors, I would like to thank the entire Apiam team of more than 950
staff for their hard work and dedication in achieving the results of FY22. We also thank our
shareholders for their support to deliver on our Accelerated Growth strategy.
Yours sincerely,
Professor Andrew Vizard
Apiam Animal Health Limited
Financial Statements for the year ended 30 June 2022
5
Managing Director’s Message
Dear Shareholder,
Early in FY22, Apiam implemented an Accelerated Growth strategy with a target to increase pro-
forma revenue to more than $300 million by the end of FY24, while also delivering greater
earnings growth and resilient cashflows. This was a key driver of our strategic decisions, and we
made significant progress towards our goals.
Over the year we announced eleven acquisitions and implemented organic growth initiatives,
such as product innovation opportunities as well as early stage ramp up of three new greenfield
sites in fast growth regional hubs.
Our acquisition program has also significantly increased our clinic presence in areas such as
South East Queensland and within the equine market, providing further avenues for strategic
growth in future periods.
Reported revenue for FY22 increased 24.6% to $157.2 million, driven by excellent growth in our
dairy & mixed animal segment. Like-for-like revenue (excluding the impact of acquisitions)
increased 2.2%, with the dairy & mixed animal performance offset by challenging industry
conditions in the pigs and beef feedlot sectors. Further detail regarding segment performance is
provided in the section below.
As in prior periods, our gross profit continued to increase at a faster rate than revenues, with
gross margins of 62.0% in FY22 (FY21: 56.3%). Importantly improved gross profit was delivered
across all of our business segments.
Underlying EBITDA2 in FY22 grew 20.3% to $18.3 million (FY21: $15.2 million) a strong result
despite the increased operating expenses we incurred during the year in areas such as business
support, recruitment and new greenfield clinics. Apiam now has the operating infrastructure in
place to integrate and more efficiently support the pace of our acquisition program as we move
into FY23.
2 Before one-off acquisition, integration and corporate costs
Apiam Animal Health Limited
Financial Statements for the year ended 30 June 2022
6
Net Profit After Tax (underlying) increased 15.0% to $6.7 million while reported NPAT fell 7.9%
due largely to the impact of a one-off $1.4 million stamp duty charge payable on acquisitions in
Queensland in the first half of FY22.
Accelerated growth strategy on-track
I am pleased to confirm that our Accelerated Growth strategy plans to increase pro-forma
revenues to more than $300 million by the end of FY24 is on-track. We ended the year with pro-
forma revenue, that is revenue adjusted for the full contribution from the acquisitions announced
during the year, of $178.3 million3 , a significant uplift on FY21 revenue levels. This sets us up
well as we commence this new financial year.
We see the key driver of our Accelerated Growth strategy being our high-quality acquisition
pipeline over the next two years, supported by organic business growth and the opening of new
greenfield clinics. Together the acquisitions announced in FY22 have added $39.8 million of pro-
forma annual revenue to Apiam.
One new greenfield clinic was opened in early FY22, and two new greenfield clinics in the last
quarter of FY21. While greenfield clinics generally have a negative earnings impact in the first 1-
2 years of opening, Apiam has refined its new greenfield clinic model in the second half of FY22
to better align the cost base of new clinics to the scale up of customer demand. We expect to see
the two clinics opened in late FY21 reach break-even during the first half of FY23.
In order to support our Accelerated Growth strategy, we also undertook a successful equity raising
in May 2022, raising $20.25 million (before costs) from new and existing shareholders. In addition,
we increased our acquisition finance facility by $20 million, made possible by our strong balance
sheet and resilient cash flow position.
Dairy & mixed animal segment delivering excellent growth
Apiam’s acquisition program is focussed on expansion within the fast-growing dairy & mixed
animal segment. Following the significant acquisition activity over FY22, this segment now
accounts for approximately 74% of Apiam’s revenue (on a pro-forma basis2). It is a segment that
is characterised by low cyclicality and resilient revenues with strong margins.
In FY22, Apiam’s dairy & mixed animal revenue grew by 45.1% on a reported basis and 9.0%4
on a like-for-like basis (removing the impact of acquisitions). Key drivers of this growth included
the success of Apiam’s Best Mates and ProDairy subscription programs, the capture of additional
market share in various regional locations as well as strong underlying industry conditions with
animal numbers continuing to grow in rural and regional Australia.
3 Includes contribution from The Victorian Equine Group and The Vet Practice which were announced during FY22 but settled 1 July 2022
4 Excludes contribution from acquisitions , Ear Tag business (divested during FY22) and one clinic consolidated during period
Apiam Animal Health Limited
Financial Statements for the year ended 30 June 2022
7
Gross margins improved strongly and underlying EBITDA generated from the dairy & mixed
animal segment increased 44.5% (before corporate cost allocation and one-off expenses).
Apiam’s intensive animal segments – beef feedlot and pigs – continued to be impacted by
challenging industry conditions with revenue falling 6.5% in FY22. Despite this revenue impact,
Management made targeted changes in the business mix such as a greater focus on higher value
consultancy services. These initiatives delivered gross profit improvement in the segment of
1.5%.
Sustainability & culture
Apiam completed its first corporate sustainability report during FY22. This focussed on defining
our Company purpose around three central pillars – To Enrich the lives of Animals, People and
Communities and setting out our ESG goals around these pillars.
A key aspect of the Animal pillar has been the launch our Antimicrobial Stewardship Strategy
which is on track to occur during FY23. We have already introduced three new vaccines, helping
to promote sustainable disease prevention programs. We have invested in research into
enhanced biosecurity programs and have trialled and adopted technologies to enhance early
disease surveillance.
A diverse, safe and well workforce underpins the People pillar of the plan and we have achieved
major milestones including the introduction of our work, health and safety program called Bee
Well, Bee Safe. Milestones met in FY22 included the program launch which aims to drive a culture
of safety and wellness. We also added 61 mental health first aid officers, an additional paid leave
day to support personal wellbeing and the development of a Diversity and Inclusion Hub.
Operating an environmentally sustainable business is also important to Apiam and the
Communities within which we live and work. Our Sustainability initiatives in this area have seen
us complete installation of a solar-based Virtual Energy Network pilot across key sites, introduce
a waste management program for office waste as well as a recycling program for redundant
clothing.
Other developments
In March 2022, Apiam was awarded a grant of $700,000 through the Victorian State Government
Regional Jobs Fund to build a new viral vaccine laboratory in Bendigo. This laboratory has been
designed to target emerging viral pathogens and will address demand from the domestic
agricultural industry for locally produced animal vaccines. New pathogens continue to emerge,
and as we have witnessed with Japanese Encephalitis virus, this can have consequences for
agricultural industries.
Completion of the overall laboratory project is expected by 2025, with construction being
undertaken in a phased approach.
Apiam Animal Health Limited
Financial Statements for the year ended 30 June 2022
8
We also continue to work with our US–based distribution partner, Aurora Pharmaceutical Inc. on
the early-stage market launch of Xtend21® (based on Zoono Microbe Shield technology) in the
US market. We expect further progress and early sales momentum in the coming year.
Looking ahead
In the year ahead, Apiam’s Accelerated Growth strategy will see the Company continue to focus
on executing high value, strategic acquisitions as well as driving organic growth within the
business whilst working towards Apiam’s FY24 pro-forma revenue target of $300 million.
We expect to open several new greenfield clinics under a refined cost model, where the negative
earnings impact in the first year is reduced. The areas that have been identified as suitable for
new greenfield clinics have unique growth characteristics and strong revenue and earnings
projections within a three-year period.
Full utilisation of the business infrastructure now in place to support the greater scale of the
business is expected to deliver increasing efficiencies from newly acquired businesses. Our focus
now, in conjunction with delivering transformative business growth, is to also deliver greater
earnings and free cash flow for shareholders as we head into FY23.
Yours sincerely,
Dr Chris Richards
Managing Director
Apiam Animal Health Limited
Financial Statements for the year ended 30 June 2022
9
Directors’ Report
The Directors present their report on the consolidated entity consisting of Apiam Animal Health
Limited (Apiam) and the entities it controlled at the end of, or during, the year ended 30 June
2022.
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
Dr Jan Tennent
Non-Executive Director
Apiam Animal Health Limited
Financial Statements for the year ended 30 June 2022
10
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.
held
directorships
An experienced company director, he has
previously
in ASX
companies, statutory bodies and research
including Animal Health
organisations
Australia,
for
body
coordinating Australia’s animal health system;
Primesafe, the statutory authority responsible
for regulating the production of safe meat in
Victoria; and the Australian Wool Corporation.
responsible
the
Dr Chris Richards is the Managing Director of
ASX listed Apiam Animal Health Ltd, as well as
the Australian subsidiary entities and
joint
venture companies, which provide veterinary
services
rural
communities.
to Australian
regional and
Chris is responsible for the strategic direction of
Apiam, which has seen the develop, grow,
acquire and integrate production and companion
animal veterinary clinics, veterinary wholesale,
laboratory and genetics services
logistics,
businesses since 1998 into the Apiam of today
Chris is also a Director of registered charity, Fur
Life Foundation Ltd, which raises funds to
support people in rural, regional, and remote
communities
He is currently Chair of the Vizard Foundation
and Executive Secretary for the Hermon Slade
Foundation and the Australia & Pacific Science
Foundation.
Interests in Shares and Options
Interests in Shares and Options
284,591 shares
38,850,000 shares
358,251 performance rights
Apiam Animal Health Limited
Financial Statements for the year ended 30 June 2022
11
Mr Michael van Blommestein
Mr Richard John Dennis
Independent Non-Executive Director
Independent Non-Executive Director
GAICD
BComm, LLB
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.
Michael is an experienced director in the
animal health sector. He 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 for 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 several
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.
the
Rick is a member of Australian Super’s
Queensland Advisory Board, a member of the
Advisory Boards of EWM Group and HLB
Chessboard, and an external member of the
Audit & Risk Committee of Racing
Queensland. Rick is non-executive Chair
ASX-listed AF Legal Group Limited and a
ASX-listed
director
non-executive
Motorcycle Holdings Limited, Cettire Limited
and Step One Clothing Limited.
of
Interests in Shares and Options
Interests in Shares and Options
111,268 shares
12,000 shares
Apiam Animal Health Limited
Financial Statements for the year ended 30 June 2022
12
Dr Jan Tennent
Independent Non-Executive Director
PhD, BSc (Hons), GCertMgt, GAICD, FTSE
FASM,
Jan is a Fellow of the Australian Academy of
Technology and Engineering and the Australian
Society for Microbiology and, a Principal Fellow
at The University of Melbourne.
She is an internationally recognised researcher
with specialist knowledge of antimicrobial
resistance mechanisms and the discovery and
commercialisation of vaccines. Jan has held
senior roles at CSIRO, the CRC for Vaccine
Technology, CSL, and Pfizer Animal Health
(now Zoetis) where she was the Director of
Business Development and Global Alliances in
the APAC region.
Her most recent executive role was as CEO of
Biomedical Research Victoria (2012-2019). Jan
is also a non-executive director of Agriculture
Victoria Services Pty Ltd, Phytogene Pty Ltd,
AusBiotech Limited and eviDent Foundation
Limited.
Interests in Shares and Options
71,691 shares
Company Secretary
Eryl Baron
Company Secretary
AGIA
Eryl has 20 years’ experience working in the corporate sector as a Company Secretary in a
number of industries. She is the appointed Company Secretary to a portfolio of ASX- listed
companies across a range of industries.
Eryl is an Associate member of the Governance Institute of Australia. She is experienced in
company secretarial and governance management of listed and unlisted companies.
Apiam Animal Health Limited
Financial Statements for the year ended 30 June 2022
13
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
Andrew Vizard
Chris Richards
Michael van
Blommestein
Richard Dennis
Jan Tennent
A
14
14
14
14
14
B
14
14
14
14
14
A
5
-
-
5
5
B
5
-
-
5
5
A
3
-
3
-
3
B
3
-
3
-
3
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
Jan Tennent
Members of the Remuneration & Nomination Committee during the period were:
Michael van Blommestein (Chair)
Andrew Vizard
Jan Tennent
Apiam Animal Health Limited
Financial Statements for the year ended 30 June 2022
14
PRINCIPAL ACTIVITIES
The Group operates in the segment of provision of veterinary products and services to production,
companion and equine animals. Apiam services 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
REVIEW OF OPERATIONS
FY22 results
Apiam embarked on its Accelerated Growth strategy in early FY22, with a target to grow the
Company’s pro-forma revenues to more than $300 million by the end of FY24 and deliver greater
earnings leverage across the business.
In FY22, Apiam progressed this strategy executing 11 acquisitions5, pursuing organic growth
initiatives and ramping up operations of three early-stage greenfield clinics.
Revenue in FY22 increased 24.6% to $157.2 million driven by excellent growth in Apiam’s dairy
and mixed animal segment (+45.1% vs FY21 on a reported basis and +9.0% on a like-for-like
basis). This segment was the focus of Apiam’s acquisition program over the year, and on a pro-
forma6 basis delivered 74% of the Group’s revenues in FY22 (vs 60% in FY21).
This strategic change in Apiam’s business mix over the past twelve months is driving important
business transformation benefits and has resulted in more resilient and less cyclical revenue
streams as well as attractive earnings margins. Gross profit margins continued to increase in
5 Including The Vet Practice and Victorian Equine Group (announced during FY22 but settled on 1 July 2022).
6 Including a full 12-month contribution from all eleven acquisitions executed in FY22 (including The Vet Practice and Victorian
Equine Group).
Apiam Animal Health Limited
Financial Statements for the year ended 30 June 2022
15
FY22, increasing to 62.0% up from 56.3% in the prior comparable period (PCP). Overall gross
profit growth was 37.0% in FY22.
The beef feedlot and pig segments continued to be impacted by industry challenges with revenue
in FY22 declining 6.5%. This was, however, an improvement from FY21 where revenues fell in
these segments by 11.4%, following the low-point in the beef feedlot industry cycle. The outbreak
of Japanese Encephalitis has been a further challenge within the pig segment in FY22.
Importantly despite revenue challenges, gross profit for the pig and beef feedlot segments
improved 1.5% vs PCP as Apiam management continued to focus on the provision of higher value
consultancy services across this customer base.
Underlying EBITDA in FY22 increased 20.3%, a strong result despite the increased operating
expense investment required to execute Apiam’s Accelerated Growth strategy. Increased
operating investment over FY22 was required to support the integration of the eleven acquisitions
executed and this saw the addition of personnel in the Company’s business support network
(people & culture, IT and WHS). Following this investment, Apiam now has the infrastructure in
place to efficiently integrate the planned acquisitions that will take place over FY23-FY24 as well
as integrate them into the Company at a faster rate.
The opening of three new greenfield clinics over the past 18 months as well as Apiam’s veterinary
recruitment strategy (focussed on experienced vets) also added to operating expense growth.
Additional COVID-19 lockdown costs were also incurred in the first half of FY22 given additional
staff were required to assist vets given animal owners were not permitted in-clinic.
Underlying NPAT increased 15.0% in FY22 to $6.7 million, while reported NPAT of $4.6 million
was impacted by a significant uplift in one-off expenses during the period (mostly the result of a
$1.4 million stamp duty charges payable on Apiam’s Queensland acquisitions in the first half of
the financial year).
Apiam Animal Health Limited
Financial Statements for the year ended 30 June 2022
16
Apiam FY22 Financial Results Summary – Underlying Basis
FY22
P&L underlying
Total Revenue
Gross Profit
Operating expenses
Underlying EBITDA
Underlying NPAT
Amortisation (customer relationships) post tax
One-off expenses post tax
Reported NPAT
Gross Margin (%)
Underlying EBITDA margin (%)
Underlying EBITDA margin (pre greenfield impact)
157.2
97.4
(79.2)
18.3
6.7
(0.6)
(1.4)
4.6
62.0%
11.6%
12.3%
Apiam FY22 Financial Results Summary – Reported Basis
P&L stat
Total revenue
Gross profit
Operating expenses
One-off expenses
EBITDA
Amortisation ROU assets
Depreciation & amortisation
EBIT
Interest
Tax
Other (including minorities)
NPAT attributable to members
One-off expenses breakdown
One-off expenses
Stamp duty QLD acquisitions
Advisory & acquisition costs
Other
TOTAL
FY21
126.2
71.1
(55.9)
15.2
5.8
(0.3)
(0.5)
5.0
56.3%
12.0%
12.5%
FY21
126.2
71.1
(55.9)
(0.7)
14.5
(2.5)
(3.9)
8.1
(1.2)
(2.0)
0.2
5.0
Variance
%
31.0
26.3
(23.2)
3.1
0.9
(0.5)
(0.9)
(0.4)
24.6%
37.0%
41.6%
20.3%
15.0%
142.5%
178.6%
(7.9)%
Variance
%
31.0
26.3
(23.2)
(1.3)
1.8
(0.8)
(1.1)
(0.1)
(0.4)
0.1
0.0
(0.4)
24.6%
37.0%
41.6%
178.6%
12.5%
31.5%
29.2%
(1.5)%
33.6%
(4.5)%
15.8%
(7.9)%
%
-
78.3%
(51.2)%
178.6%
FY22
FY21
Variance
(1.4)
(0.3)
(0.3)
(2.0)
0.0
(0.2)
(0.5)
(0.7)
(1.4)
(0.1)
0.3
(1.3)
FY22
157.2
97.4
(79.2)
(2.0)
16.3
(3.3)
(5.0)
7.9
(1.6)
(1.9)
0.2
4.6
Apiam Animal Health Limited
Financial Statements for the year ended 30 June 2022
17
Accelerated Growth strategy
Apiam embarked on an Accelerated Growth strategy in early FY22. Changes in demographics
and lifestyles post initial COVID lockdowns are continuing to drive strong growth in animal
numbers in regional and peri-urban locations, and this presents a significant opportunity for
Apiam.
The three main drivers of Apiam’s Accelerated Growth strategy over FY22 were the execution of
Apiam’s extensive acquisition pipeline, organic growth initiatives across all business segments as
well as the opening of new greenfield clinics.
In FY22, Apiam completed the acquisition of nine businesses and executed acquisition
agreements to complete a further two acquisitions on 1 July 2022. This acquisition program
increased Apiam’s presence in important fast-growth regions of Queensland as well as across
the equine veterinary services market, and is detailed in the table below:
Business acquired
State
Veterinary speciality Acquisition date
Scenic Rim Veterinary
Service
(2 clinics)
Golden Plains Group
Bannockburn
QLD
VIC
Equine & companion
animal
30 July 2021
Companion animal &
livestock
1 Aug 2021
Harbour City Vet Surgery
QLD
Companion animal
2 Sep 2021
Smythesdale Animal
Hospital
VIC
Companion animal &
livestock
1 Oct 2021
Horsham Veterinary
Hospital
VIC
Companion animal
1 Dec 2021
Agnes Banks Equine Clinic NSW
Equine
1 Dec 2021
Fraser Coast Veterinary
Services
North Hill Veterinary Clinic
(Armidale)
QLD
NSW
Companion animal,
equine & cattle
1 Dec 2021
Companion animal &
livestock
1 Dec 2021
Romsey Veterinary Surgery VIC
Companion, equine
1 June 2022
Victorian Equine Group
VIC
Equine
1 July 2022
The Vet Practice
VIC
Companion
1 July 2022
Apiam Animal Health Limited
Financial Statements for the year ended 30 June 2022
18
Together the acquisitions listed above added $39.8 million to FY22 pro-forma revenue ($178.3
million7).
Organic growth initiatives in FY22 were centred around capturing additional market share in
existing clinic locations as well as the rollout of the Company’s specialised programs (such as
Best Mates and ProDairy) over its growing animal footprint.
Three greenfield clinics were also in the early stages of ramp-up during FY22 which had a
negative earnings impact on Apiam’s performance (approximately $981K at the EBITDA level).
Apiam refined its greenfield clinic strategies in the second half of FY22 and moving forward expect
to reduce the first year earnings impacts of new clinics.
Balance sheet & capital position
Apiam’s net debt as at 30 June 2022 was $41.0 million, compared to $37.2 million as at the end
of FY21. Cash consideration for the nine acquisitions settled during FY22 was $28.2 million
(noting Victorian Equine Group and The Vet Practice were settled 1 July 2022).
In order to fund this acquisition consideration as well as the broader Accelerated Growth strategy,
Apiam conducted a successful $20.25 million (before costs) equity capital raising in May 2022.
The Company has also extended its acquisition finance facility by $20 million and now has current
headroom of $44.4 million (after completion of the Victorian Equine Group and The Vet Practice
acquisitions on 1 July 2022). Apiam’s balance sheet positions the Company to pursue the
additional growth opportunities it has identified in the year ahead.
Apiam’s operating leverage ratio at the end of FY22 was 1.9x, well within the Company’s covenant
requirement of 3.5x.
Cash flow
Apiam’s operating cash flow increased 9.9% in FY22 vs PCP, with operating cash conversion to
underlying EBITDA (before AASB 16 adjustments) of 117%, tracking above Management’s long
term target of 100%.
Investing and financing cash flows in FY22 are reflective of the Accelerated Growth strategy –
namely the extensive acquisition program as well as the $20.25 million equity capital raising
undertaken during the period.
7 Including a full 12-month contribution from all eleven acquisitions executed in FY22 (including The Vet Practice and Victorian Equine Group).
Apiam Animal Health Limited
Financial Statements for the year ended 30 June 2022
19
Statutory cashflows $m
Net cash provided by operating activities
Acquisition of subsidiary, net of cash
Net Purchases of property, plant and equipment
Net Purchases of Intangible assets
Other
Net cash used in investing activities
Net changes in financing
Dividends paid to shareholders
Repayment of lease liabilities
Proceeds from share issue
Other
Net cash inflow from financing activities
Net change in cash and cash equivalents
FY22
15.0
(28.2)
(4.2)
(0.1)
0.0
(32.5)
4.8
(2.4)
(3.5)
19.2
0.0
18.1
0.7
FY21
13.7
(11.7)
(4.6)
(0.2)
0.0
(16.6)
1.6
(1.9)
(2.9)
5.7
0.1
2.6
(0.4)
Dividend
The Board of Apiam have declared a 0.4 cents per share final dividend, which, together with the
interim dividend, represents a payout ratio of reported NPAT of 50% for FY22.
Apiam’s Board continually assess the best use of capital in the context of the Company’s growth
plans. As the Company trends towards its target to deliver pro-forma revenue of $300 million by
FY24, earnings margins and free cash flow are expected to increase considerably. This
compelling opportunity is expected to deliver substantial intrinsic value to shareholders. The
Board therefore intends to invest all capital, during this rapid growth period, towards funding the
Accelerated Growth strategy.
Outlook
Significant growth in the year ahead is expected to occur via acquisition opportunities, supported
by organic growth in the underlying business. Additional greenfield sites are also expected to be
opened during FY23.
The business infrastructure and operating expense investment that occurred in FY22 leaves
Apiam well positioned to efficiently integrate new acquisitions as well as drive additional earnings
leverage from the many business acquisitions that occurred during the year.
Delivering greater improvements in operating earnings margins and driving greater uplift in free
cash flow remains a key Company goal for the year ahead.
Apiam Animal Health Limited
Financial Statements for the year ended 30 June 2022
20
DIVIDENDS
An interim dividend of $1,659,507 at 1.2c per share and was paid in April 2022. The Apiam Board
of Directors have declared the Company’s final dividend of 0.4c per share fully franked on the 29
August 2022. The final dividend of $660,320 will be paid on the 21 October 2022.
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
The Apiam Board of Directors declared the Company’s final dividend of 0.4c per share fully
franked on 29 August 2022. The final dividend of $660,320 will be paid on the 21 October 2022.
The Group acquired nine veterinary businesses during FY22 and entered into agreements for the
acquisition of two further veterinary businesses post reporting date. Further details of these
acquisitions are disclosed in Note 38 of the Financial Statements.
Apart from these events, 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 capacity and capability required
to prosper in the expanding global animal health industry.
KEY RISKS AND BUSINESS CHALLENGES
Apiam Animal Health operates, in part, in the Production Animal industry and in particular the
pig, feedlot cattle and dairy cattle sectors. Any downturn or disruption in these sectors, particularly
if it results in substantial reductions in livestock numbers or production volume, will adversely
impact the Company.
Any recurring or prolonged disruption to the supply of the key products that Apiam Animal Health
sells, particularly vaccines, may have an adverse effect on the financial performance of the
Company.
Apiam Animal Health Limited
Financial Statements for the year ended 30 June 2022
21
No single client or buying group accounts for more than 10% of Apiam Animal Health’s FY22
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 Group is not subject to any particular or significant environmental regulation under laws of
the Commonwealth or of a State or Territory. 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 did not issue ordinary shares as a result of the exercise
of options.
DEEDS OF ACCESS, INDEMNITY AND INSURANCE FOR DIRECTORS AND
OFFICERS
Access
The Company has entered into deeds of access, indemnity and insurance with each Director
which contain rights of access to certain books and records of the Company.
Indemnification
Under the constitution of the Company, the Company is required to indemnify all Directors and
officers, past and present, against all liabilities allowed under law. Under the deed of access,
indemnity and insurance, the Company indemnifies parties against all liabilities to another person
that may arise from their position as an officer of the Company or its subsidiaries to the extent
permitted by law. The deed stipulates that the Company will meet the full amount of any such
liabilities, including reasonable legal costs and expenses.
Apiam Animal Health Limited
Financial Statements for the year ended 30 June 2022
22
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 2022
23
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)
Jan Tennent
Director (Independent Non-executive)
(II) EXECUTIVES
Matthew White
Chief Financial Officer
Brian Scutt
Chief Operating Officer
The Remuneration Report is set out under the following main headings:
Principles used to determine the nature and amount of remuneration;
Details of remuneration;
Service agreements;
Share-based remuneration;
Bonuses included in remuneration;
Non-executive director remuneration; and
Other information.
Apiam Animal Health Limited
Financial Statements for the year ended 30 June 2022
24
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 marketplace 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 and Nomination Committee (the 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 Committee has met
three times in the FY22 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 key talent 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;
long term incentives; and
short term incentives, being bonuses.
The 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. The company’s key financial metrics are as follows:
Item
2022
2021
2020
2019
2018
EPS (cents)
3.42c
4.18c
3.63c
3.01c
3.21c
Dividends
(cents per
share)
Net profit
before tax
($’000)
Share price
($)
2.4c
2.4c
1.6c
1.6c
1.6c
$6,470
$6,971
$5,956
$4,569
$4,831
$0.685
$0.96
$0.46
$0.52
$0.75
Apiam Animal Health Limited
Financial Statements for the year ended 30 June 2022
25
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:
Short term employee benefits
Salary
and fees (i)
$
Cash Bonus
$
Accrued
annual leave
$
Non-monetary
benefits
$
Post-employment
benefits
Superannuation
$
Long-term
benefits
(Accrued long
service leave)
$
Share-based
Payment
Performance
Rights (ii)
$
Directors
Andrew Vizard
Chairman Independent
Richard Dennis
Independent
Chris Richards
Managing Director
Michael van Blommestein
Independent
Jan Tennent
Independent
Employees
Matthew White
Chief Financial Officer
Brian Scutt
Chief Operating Officer
2022 Total
2021 Total
Year
2022
2021
2022
2021
2022
2021
2022
2021
2022
2021
2022
2021
2022
2021
2022
2021
120,000
120,000
70,000
70,000
367,929
360,860
54,545
54,795
60,000
60,000
276,267
231,934
237,626
233,096
-
-
-
-
63,332
-
-
-
-
-
33,250
-
27,849
-
1,186,367
124,431
1,130,685
-
-
-
-
-
-
-
-
-
3,757
26,860
19,783
11,394
-
-
-
-
18,129
3,652
6,711
23,460
28,597
53,972
-
-
-
-
-
-
-
-
19,783
11,394
-
-
-
-
23,568
21,694
5,455
5,205
-
-
23,568
21,694
22,801
21,108
75,392
69,701
Total
$
120,000
120,000
70,000
70,000
504,931
455,243
60,000
60,000
60,000
60,000
-
-
-
-
24,769
19,655
14,775
15,738
55,637
389,967
281,543
310,423
293,692
1,515,321
60,926
1,340,478
Performance
based
percentage of
remuneration
%
0%
0%
0%
0%
16%
6%
0%
0%
0%
0%
15%
7%
14%
5%
12%
5%
-
-
-
-
-
-
-
-
10,469
8,902
16,093
25,533
-
-
-
-
13,984
4,608
661
290
25,114
13,800
(i)
(ii)
Salary and fees include salaries and allowances.
Share based payment performance rights are long term incentive performance plans which will lapse if they are not vested within three years of grant date. For rights issued in FY21 the
performance rights will vest annually over three years upon the Company achieving a minimum of 12% share price growth per year. For rights issued in FY22 the rights will vest at the end of the
three year performance period upon the Company achieving a minimum Total Shareholder Return of 45%. The amount recognised for the Managing Director, Chief Financial Officer and Chief
Operating Officer is the proportion expensed in that year based on the Monte Carlo valuation model.
Apiam Animal Health Limited
Financial Statements for the year ended 30 June 2022
26
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
Matthew White
Brian Scutt
Fixed remuneration
At risk – STI
At risk – LTI
84%
85%
86%
13%
9%
9%
3%
6%
5%
Service agreements
c
Remuneration and other terms of employment for the Executive Director and other key
management personnel are formalised in a Service Agreement. The major provisions of the
agreements relating to remuneration are set out below:
Base salary
$369,135
$285,000
$238,706
Term of agreement
Twelve month fixed term
No fixed term
No fixed term
Notice period
Twelve (12) months
Six (6) months
Three (3) months
Name
Chris Richards
Matthew White
Brian Scutt
Bonus provisions
Chris Richards:
Matthew White:
Brian Scutt:
Nil
Nil
Nil
Bonuses included in remuneration
d
Details of the short-term incentive cash bonuses awarded as remuneration to each key
management personnel, the percentage of the available bonus that was paid and payable in the
financial year, and the percentage that was forfeited because the person did not meet the service
and performance criteria is set out below.
Included in
remuneration ($)
Percentage vested
during the year
Percentage forfeited
during the year
Executive Directors
Chris Richards
Other Key Management Personnel
Matthew White
Brian Scutt
$63,332
35%
$33,250
$27,849
35%
35%
65%
65%
65%
Long Term Incentive Plan
e
Remuneration of key management personnel includes performance rights which are offered as
part of long term incentive plans. The long term incentive plans run for periods of three years. For
the rights issued in FY20 and FY21 the performance measures are assessed annually and are
based on the share price growth of the company and subject to continued employment.
The annual share price growth requirement is set out below for each financial year during the
performance period.
Apiam Animal Health Limited
Financial Statements for the year ended 30 June 2022
27
Share Price Growth
% of Performance Rights that may vest
Less than 12%
Above 12% but less than 31%
Nil – Tranche lapses and Performance
Rights cancelled
Between 50% and 100%, as determined on a
pro-rata, straight line basis
At or above 31%
100% allocation of Tranche
Share Price Growth shall be measured by comparing the Baseline Share Price against the
Closing Share Price in each year of the Performance Period. The baseline share price will be
calculated by assessing the volume weighted average price (VWAP) of shares for the 30 calendar
days following the lodgement of the annual report in the prior financial year. The closing share
price shall be calculated by assessing the VWAP of shares for the 30 calendar days following the
lodgement of the annual report for the current financial year of the performance period.
TSR shall be measured by comparing the Baseline Share
For the rights issued in FY22 the performance measures are assessed at the end of the three
year period and are based on the Total Shareholder Return (TSR) of the company and subject to
continued employment.
The TSR requirement is set out below for the three year performance period.
TSR shall be measured by comparing the Baseline Share Price against the Closing Share Price
during the Performance Period. The calculation used will be the Closing Share Price, minus the
Baseline Share Price, plus Dividends received, divided by the Baseline Share Price.
The Baseline Share Price is $0.9572 (calculated by assessing the volume weighted average price
(VWAP) of Apiam shares for the 20 trading days following the lodgement of the FY2021 annual
report).
The Closing Share Price shall be calculated by assessing the VWAP of Apiam shares for the 20
trading days following the lodgement of the annual report at the end of the Performance Period,
FY2024.
Performance will be assessed as follows:
Absolute TSR
Below 45%
45-95%
95%
Percentage of Performance Rights to vest
Nil
Straight line between 50% and 100%
100%
Apiam Animal Health Limited
Financial Statements for the year ended 30 June 2022
28
Performance Rights Granted:
The following performance rights are allocated equally over a three-year period. The performance rights for each financial year during the performance period
will vest subject to meeting the share price growth rate and the employee remaining in continuous employment through to the annual vesting date of 31 October.
Each tranche of performance rights which have not vested will expire if the applicable performance measures are not met during the performance period.
Name
Grant
Perform-
FY2020
Fair Value
Fair Value
FY2021
Fair Value
Fair Value
FY2022
Fair Value
Fair Value
FY2023
Fair Value
Fair Value
Expiry
Date
ance
Tranche
per Right
Tranche
per Right
Tranche
per Right
Tranche
per right
date to
Rights
granted
Chris Richards
28/11/19
248,144
82,714
$16,411
$0.1984
82,715
$22,338
$0.2701
82,715
$23,873
$0.2886
Matthew White
19/03/20
106,326
35,442
$ 4,021
$0.1135
35,442
$ 8,831
$0.2492
35,442
$ 9,099
$0.2567
-
-
-
-
-
-
exercise
vested
shares
31 Oct 23
31 Oct 23
Matthew White
06/04/21
67,303
Brian Scutt
23/10/20
97,510
-
-
-
-
-
-
22,434
$14,700
$0.6553
22,434
$ 8,410
$0.3749
22,435
$ 8,305
$0.3702
31 Oct 24
32,503
$15,193
$0.4674
32,503
$10,359
$0.3187
32,504
$10,612
$0.3265
31 Oct 24
The following performance rights were issued in FY22 and the performance measures are assessed at the end of the three-year period and are based on the
Total Shareholder Return (TSR) of the company and subject to continued employment. The Performance Rights which have not vested will expire if the
applicable Performance Measures are not met during the Performance Period.
Name
Grant
Perform-
FY2024
Fair Value
Fair Value
Expiry date
Date
ance
Tranche
per Right
to exercise
Rights
granted
vested
shares
Chris Richards
25/11/21
192,821
192,821
$23,106
$0.1198
31 Oct 25
Matthew White
09/12/21
99,248
99,248
$11,110
$0.1119
31 Oct 25
Brian Scutt
09/12/21
83,126
83,126
$ 9,304
$0.1119
31 Oct 25
The company has chosen share price growth as the performance measure as it believes the fundamental driver for executive remuneration should be long term
financial performance that generates value for Apiam shareholders.
Apiam Animal Health Limited
Financial Statements for the year ended 30 June 2022
29
Non-Executive Director remuneration
f
Clause 13.1(a) of the Company’s Constitution (Constitution) provides the limit for the aggregated
remuneration of non-executive directors which is currently set at $750,000. The Directors of the
Company are entitled to apportion and distribute this aggregate Non-Executive Directors’
remuneration as they determine.
The Non-Executive Directors of the Company received the following fees (which total $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
g
Options held by key management personnel
There were no options to acquire shares in the Company held during the 2022 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 2022 held by each of the
Groups key management personnel, including their related parties, is set out below.
Personnel
Balance at
1/07/2021
Granted as
remuneration
Chris Richards
31,400,000
Andrew Vizard
Richard Dennis
Michael van
Blommestein
Jan Tennent
Matthew White
Brian Scutt
Total
229,366
22,395
108,360
57,780
123,745
613,224
32,554,870
-
-
-
-
-
-
-
-
Received
on
exercise
-
-
-
-
-
-
32,503
32,503
Other
changes
Held as at
30/06/2022
7,450,000
38,850,000
55,225
(10,395)
284,591
12,000
2,908
111,268
13,911
21,676
857,866
8,391,191
71,691
145,421
1,503,593
40,978,564
None of the shares included in the table above are held nominally by key management personnel
Apiam Animal Health Limited
Financial Statements for the year ended 30 June 2022
30
Performance rights held by key management personnel:
The number of performance rights held at 30 June 2022 by each of the Group’s key
management personnel, including their related parties, is set out below.
Personnel
Chris Richards
Matthew White
Brian Scutt
Total
Balance at
1/07/2021
Granted as
remuneration
Vested &
Exercised
165,430
138,187
97,510
401,127
192,821
99,248
83,126
375,195
-
-
(32,503)
(32,503)
Forfeited/
lapsed
during year
Held as at
30/06/2022
Vested & not
exercised
-
-
-
-
358,251
237,435
148,133
743,819
82,715
57,876
-
140,591
Loans to key management personnel
The Group did not enter into any loans with key management personnel during the 2022 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. Rental payments in FY22 amounted to $360,193 (2021:
$364,514).
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 $133,752 (2021:
$139,725).
The Group leases an artificial insemination facility in Victoria from entities associated with Chris
Richards. Lease payments made amounted to $113,481 (2021: $116,462).
All related party rentals are based on commercial rates and the terms of the lease are standard
commercial terms.
End of audited Remuneration Report.
Apiam Animal Health Limited
Financial Statements for the year ended 30 June 2022
31
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.
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 28 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 33 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
Apiam Animal Health Limited
Financial Statements for the year ended 30 June 2022
32
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
29 August 2022
33
Grant Thornton Audit Pty Ltd
Level 22 Tower 5
Collins Square
727 Collins Street
Melbourne VIC 3008
GPO Box 4736
Melbourne VIC 3001
T +61 3 8320 2222
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 2022, I declare that, to the best of my knowledge and
belief, there have been:
a no contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to
the audit; and
b no contraventions of any applicable code of professional conduct in relation to the audit.
Grant Thornton Audit Pty Ltd
Chartered Accountants
C S Gangemi
Partner – Audit & Assurance
Melbourne, 29 August 2022
www.grantthornton.com.au
ACN-130 913 594
Grant Thornton Audit Pty Ltd ACN 130 913 594 a subsidiary or related entity of Grant Thornton Australia Limited ABN 41 127 556 389 ACN 127 556 389.
‘Grant Thornton’ refers to the brand under which the Grant Thornton member firms provide assurance, tax and advisory services to their clients and/or
refers to one or more member firms, as the context requires. Grant Thornton Australia Limited 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 ACN 127 556 389 and its Australian subsidiaries and related entities. Liability limited by a scheme approved under Professional Standards
Legislation.
#7974370v1w
Apiam Animal Health Limited
Financial Statements for the year ended 30 June 2022
34
Apiam Animal Health Limited
Financial Statements
For the year ended 30 June 2022
Apiam Animal Health Limited
Financial Statements for the year ended 30 June 2022
35
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND
OTHER COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2022
Revenue
Other income
Expenses
Changes in inventory
Cost of materials and consumables used
Employee benefit expenses
Acquisition expenses
Property expenses
Freight, vehicle and transport expenses
Depreciation and amortisation expense
Other operating expenses
Share of profit from equity accounted investments
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
Note
7
28
14,15
8
9
25
2022
$’000
157,057
167
1,740
(62,501)
(61,960)
(1,802)
(2,371)
(2,843)
(8,359)
(11,179)
91
(1,570)
2021
$’000
126,181
23
(1,624)
(54,296)
(43,262)
(167)
(1,684)
(2,135)
(6,426)
(8,542)
79
(1,176)
6,470
6,971
(1,931)
4,539
(2,021)
4,950
4,539
4,950
4,639
(100)
5,036
(86)
Total comprehensive income/ (loss) for the period
4,539
4,950
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
26
26
3.42
3.36
4.18
4.13
The above consolidated 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 2022
36
CONSOLIDATED STATEMENT
OF FINANCIAL POSITION
As at 30 June 2022
Note
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
Lease liabilities
Other current liabilities
Current tax liabilities
Borrowings
Employee benefit obligations
Total current liabilities
Non-current liabilities
Borrowings
Lease liabilities
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
Corporate re-organisation reserve
Non-controlling interest acquisition reserve
Share based payment reserve
Foreign currency translation reserve
Retained earnings
Non-controlling interest
Total equity
10
11
12
13
15
14
17
18
16
22
19
20
21
20
16
21
17
23
24
24
24
24
25
2022
$’000
2,845
13,623
17,781
1,628
35,877
126,831
31,640
271
4,426
163,168
199,045
10,968
3,558
500
1,859
2,914
8,972
2021
$’000
2,150
13,525
16,041
1,577
33,293
95,299
24,979
220
3,487
123,985
157,278
9,748
2,911
192
1,494
2,818
7,211
28,771
24,374
39,165
17,753
657
3,510
505
61,590
90,361
108,684
127,249
(26,692)
(6,615)
871
(19)
13,756
108,550
134
108,684
34,887
14,426
338
2,020
416
52,087
76,461
80,817
101,010
(26,692)
(6,615)
595
(79)
11,596
79,815
1,002
80,817
The above consolidated statement of financial position should be read in conjunction with the accompanying notes
Apiam Animal Health Limited
Financial statements for the year ended 30 June 2022
37
STATEMENT OF CHANGES IN EQUITY
For the year ended 30 June 2022
Note
23
23
23
23
23
23
23
23
23
23
23
Balance at 1 July 2020
Issue of new share capital
Share placement
Transaction costs on issue of new share capital
Issue of shares to vendors of business acquired
Issue of shares on achievement of earnout for prior year
acquisition
Employee share plan
Foreign currency translation adjustment
Dividends paid
Transactions with owners
Profit / (Loss) for the period
Total comprehensive income for the period
Balance at 30 June 2021
Issue of new share capital
Share placement
Transaction costs on issue of new share capital, net of
tax
Issue of shares to vendors of business acquired
Employee share plan, transfer on exercise of rights
Employee share plan, share based payments
Foreign currency translation adjustment
Purchase of non-controlling interest
Dividends paid
Transactions with owners
Profit / (Loss) for the period
Total comprehensive income for the period
Balance at 30 June 2022
Share
capital
Corporate re-
organisation
reserve
$’000
91,107
853
6,000
(300)
2,535
815
-
-
-
9,903
-
-
101,010
919
20,247
(748)
5,333
488
-
-
-
-
26,239
-
-
127,249
$’000
(26,692)
-
-
-
-
-
-
-
-
-
-
-
(26,692)
-
-
-
-
-
-
-
-
-
-
-
-
(26,692)
Non-
controlling
interest
acquisition
reserve
$’000
(6,615)
-
-
-
-
-
-
-
-
-
-
-
(6,615)
-
-
-
-
-
-
-
-
-
-
-
-
(6,615)
The above statement should be read in conjunction with the accompanying notes
Share
based
payment
reserve
Foreign
Currency
Translation
Reserve
Retained
earnings
Total
attributable to
owners of
parent
Non-
controlling
interest
$’000
223
-
-
-
-
-
372
-
-
372
-
-
595
-
-
-
-
(488)
764
-
-
-
276
-
-
871
$’000
(20)
-
-
-
-
-
-
(59)
-
(59)
-
-
(79)
-
-
-
-
-
-
60
-
-
60
-
-
(19)
$’000
9,410
-
-
-
-
-
-
-
(2,850)
(2,850)
5,036
5,036
11,596
-
-
-
-
-
-
-
795
(3,274)
(2,479)
4,639
4,639
13,756
$’000
67,413
853
6,000
(300)
2,535
815
372
(59)
(2,850)
7,366
5,036
5,036
79,815
919
20,247
(748)
5,333
-
764
60
795
(3,274)
24,096
4,639
4,639
108,550
Total
equity
$’000
68,437
917
6,000
(300)
2,535
815
372
(59)
(2,850)
7,430
4,950
4,950
80,817
946
20,247
$’000
1,024
64
-
-
-
-
-
-
-
64
(86)
(86)
1,002
27
-
-
(748)
-
-
-
-
(795)
-
(768)
(100)
(100)
134
5,333
-
764
60
-
(3,274)
23,328
4,539
4,539
108,684
Apiam Animal Health Limited
Financial statements for the year ended 30 June 2022
CONSOLIDATED STATEMENT OF CASH FLOWS
For the year ended 30 June 2022
Note
27
14
15
15
32
Cash flows from operating activities
Receipts from customers (inclusive of GST)
Payments to suppliers and employees (inclusive of GST)
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
Proceeds from disposals of intangible assets
Dividends received
Acquisition of subsidiaries, net of cash acquired
Payment of earnout for prior year acquisitions
Net cash (outflow)/inflow from investing activities
Cash flows from financing activities
Proceeds from borrowings
Repayment of borrowings
Lease payments
Proceeds from issue of share capital
Capital contribution of non-controlling interest
Transaction costs on issue of share capital
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
10
The above consolidated statement of cash flows should be read in conjunction with the accompanying notes
2022
$'000
174,352
(153,820)
20,532
(1,570)
(1,802)
(2,122)
15,038
(4,322)
(542)
167
422
40
(28,248)
-
(32,483)
31,497
(26,696)
(3,511)
20,247
28
(1,069)
(2,356)
18,140
695
2,150
2,845
38
2021
$'000
137,284
(120,431)
16,853
(1,153)
(167)
(1,844)
13,689
(4,737)
(244)
99
-
-
(8,629)
(3,110)
(16,621)
10,657
(9,011)
(2,894)
6,000
65
(300)
(1,944)
2,573
(359)
2,509
2,150
Apiam Animal Health Limited
Financial statements for the year ended 30 June 2022
39
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 animals, companion animals and equine. The Group is vertically integrated with strategic
sourcing of products, custom manufacture of vaccines, in-house laboratory services and on farm delivery with its own
logistics service.
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 Limited 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 Piper
Lane, East Bendigo, Victoria 3550.
The consolidated financial statements for the year ended 30 June 2022 were approved and authorised for issue by the
Board of Directors on 29 August 2022.
3
Changes in accounting policies
New Accounting Standards and Interpretations adopted during the year
The amended accounting standards and interpretations issued by the Australian Accounting Standards Board during the
year that were mandatory were adopted. None of these amendments or interpretations materially affected any of the
amounts recognised or disclosures in the current or prior year.
Accounting Standards issued but not yet effective and not been adopted
early by the Group
At the date of authorisation of these financial statements, several new, but not effective Standards and amendments to
existing Standards, and Interpretations have been published by the AASB. None of these Standards or amendments to
existing Standards have been adopted early by the Group.
Management anticipates that all relevant pronouncements will be adopted for the first period beginning on or after the
effective date of the pronouncement.
4 Restatement of prior period intangibles provisionally accounted
A restatement of prior period intangibles was made during the year ended 30 June 2022 after further information was
received to determine the fair value of assets acquired in business combinations from the prior financial year. The entities
acquired where a restatement was required were Crosvet Pty Ltd, Knox Veterinary Clinic, Clermont Veterinary Surgery and
Samford Valley Veterinary Hospital.
Apiam Animal Health Limited
Financial statements for the year ended 30 June 2022
40
30 June 2021
Statement of financial position (extract)
Previous
amount $'000
Adjustment
$'000
Restated amount
$'000
Trade and other receivables
Goodwill
Trademarks and trade names
Customer relationships
Property, plant and equipment
Accumulated amortisation of customer relationships
Deferred tax liabilities
Total equity
13,543
88,624
1,773
3,995
24,536
(1,296)
(1,328)
80,863
(18)
(2,086)
304
2,069
443
(66)
(692)
(46)
13,525
86,538
2,077
6,064
24,979
(1,362)
(2,020)
80,817
30 June 2021
Statement of profit or loss and other
comprehensive income (extract)
Previous
amount $'000
Adjustment
$'000
Restated amount
$'000
Depreciation and amortisation of non-financial assets
(6,337)
Profit before income tax
Income tax expense
Total comprehensive income
7,036
(2,040)
4,996
(65)
(65)
19
(46)
(6,402)
6,971
(2,021)
4,950
5 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 2022.
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 2022
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 2022
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 segments are aggregated for reporting purposes on the basis that each 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 arises mainly from the sale of veterinary products and services.
To determine whether to recognise revenue, the Group follows a 5-step process:
1. Identifying the contract with a customer
2. Identifying the performance obligations
3. Determining the transaction price
4. Allocating the transaction price to the performance obligations
5. Recognising revenue when/as performance obligation(s) are satisfied
When the Group enters into transactions involving its products and services, the total transaction price for a contract is
allocated amongst the various performance obligations. Revenue is recognised either at a point in time or over time, when
the Group satisfies performance obligations by transferring the promised goods or services to its customers.
Sale of veterinary products and services
Revenue from the sale of veterinary products is recognised when the Group transfers control of the goods to the customer
and/or as contractual performance obligations are satisfied. Revenue from the sale of veterinary services is recognised as
the services are provided.
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 8.
Intangible assets
Goodwill
Goodwill represents the future economic benefits arising from a business combination that are not individually identified and
separately recognised. See Note 5.3 for information on how goodwill is initially determined. Goodwill is carried at cost less
accumulated impairment losses. Refer to Note 5.12 for a description of impairment testing procedures.
Apiam Animal Health Limited
Financial statements for the year ended 30 June 2022
43
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 and have been determined to range between five and ten years.
Trademarks & Trade Names
Trademarks & Trade Names represents the future economic benefits arising from within a business combination that have
been identified and separately recognised. Trademarks & Trade Names are carried at cost less accumulated impairment
losses. The useful life is reviewed at each reporting date and each has been determined to have an indefinite useful life.
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 of
between two and five years.
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 5.11). 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
For any new contracts entered into, the Group considers whether a contract is, or contains a lease. A lease is defined as ‘a
contract, or part of a contract, that conveys the right to use an asset (the underlying asset) for a period of time in exchange
for consideration’. To apply this definition the Group assesses whether the contract meets three key evaluations which are
whether:
the contract contains an identified asset, which is either explicitly identified in the contract or implicitly specified by being
identified at the time the asset is made available to the Group
the Group has the right to obtain substantially all of the economic benefits from use of the identified asset throughout
the period of use, considering its rights within the defined scope of the contract
Apiam Animal Health Limited
Financial statements for the year ended 30 June 2022
44
the Group has the right to direct the use of the identified asset throughout the period of use. The Group assess whether
it has the right to direct ‘how and for what purpose’ the asset is used throughout the period of use.
Measurement and recognition of leases as a lessee
At lease commencement date, the Group recognises a right-of-use asset and a lease liability on the balance sheet. The
right-of-use asset is measured at cost, which is made up of the initial measurement of the lease liability, any initial direct
costs incurred by the Group, an estimate of any costs to dismantle and remove the asset at the end of the lease, and any
lease payments made in advance of the lease commencement date (net of any incentives received).
The Group depreciates the right-of-use assets on a straight-line basis from the lease commencement date to the earlier of
the end of the useful life of the right-of-use asset or the end of the lease term. The Group also assesses the right-of-use
asset for impairment when such indicators exist. At the commencement date, the Group measures the lease liability at the
present value of the lease payments unpaid at that date, discounted using the interest rate implicit in the lease if that rate is
readily available or the Group’s incremental borrowing rate.
Lease payments included in the measurement of the lease liability are made up of fixed payments (including in substance
fixed), variable payments based on an index or rate, amounts expected to be payable under a residual value guarantee and
payments arising from options reasonably certain to be exercised.
Subsequent to initial measurement, the liability will be reduced for payments made and increased for interest. It is
remeasured to reflect any reassessment or modification, or if there are changes in in-substance fixed payments.
When the lease liability is remeasured, the corresponding adjustment is reflected in the right-of-use asset, or profit and loss
if the right-of-use asset is already reduced to zero.
The Group has elected to account for short-term leases and leases of low-value assets using the practical expedients.
Instead of recognising a right-of-use asset and lease liability, the payments in relation to these are recognised as an expense
in profit or loss on a straight-line basis over the lease term.
On the statement of financial position, right-of-use assets have been included in property, plant and equipment and lease
liabilities have been recognised as current and non-current.
Apiam Animal Health Limited
Financial statements for the year ended 30 June 2022
45
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 (CGUs) or a group of CGUs). As a result, some assets are tested individually for impairment
and some are tested at CGU or a group of CGUs level. Goodwill is allocated to those CGUs or a group of CGUs 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.
CGUs or a Group of CGUs to which goodwill or indefinite life intangible assets has been allocated are tested for impairment
annually or more frequently if events or changes in circumstances indicate that they might be impaired. All other assets 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 assets, CGUs or a group of CGUs 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 CGU or group of CGUs 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 CGU or group of CGUs and reflect
management’s assessment of respective risk profiles, such as market and asset-specific risk factors.
Impairment losses for CGUs or group of CGUs reduce first the carrying amount of any goodwill allocated to that CGU or
group of CGUs. Any remaining impairment loss is charged pro rata to the other assets in the CGU or group of CGUs. 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 CGUs or group of CGUs 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. 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 initial measurement of financial assets
Except for those trade receivables that do not contain a significant financing component and are measured at the transaction
price in accordance with AASB 15, all financial assets are initially measured at fair value adjusted for transaction costs
(where applicable). Financial assets other than those designated and effective as hedging instruments are classified into
the following categories:
amortised cost
fair value through profit and loss (FVTPL)
fair value through other comprehensive income (FVOCI)
The classification is determined by both:
the entity’s business model for managing the financial asset
the contractual cash flow characteristics of the financial asset
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.
Apiam Animal Health Limited
Financial statements for the year ended 30 June 2022
46
Subsequent measurement of financial assets
Financial assets at amortised cost
Financial assets are measured at amortised cost if the assets meet the following conditions (and are not designated as
FVTPL):
they are held within a business model whose objective is to hold the financial assets and collect its contractual cash
flows
the contractual terms of the financial assets give rise to cash flows that are solely payments of principal and interest
on the principal amount outstanding
After initial recognition, these are measured at amortised cost using the effective interest method. Discounting is omitted
where the effect of discounting is immaterial. The Group’s cash and cash equivalents, trade and most other receivables fall
into this category of financial instruments.
Financial assets at fair value through profit or loss (FVTPL)
Financial assets that are held within a different business model other than ‘hold to collect’ or ‘hold to collect and sell’ are
categorised at fair value through profit and loss. Further, irrespective of business model financial assets whose contractual
cash flows are not solely payments of principal and interest are accounted for at FVTPL. All derivative financial instruments
fall into this category, except for those designated and effective as hedging instruments, for which the hedge accounting
requirements apply.
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.
Impairment of financial assets
AASB 9’s impairment requirements use forward-looking information to recognise expected credit losses – the ‘expected
credit loss (ECL) model’. Instruments within the scope of the requirements included loans and other debt-type financial
assets measured at amortised cost and FVOCI, trade receivables, contract assets recognised and measured under AASB
15 and loan commitments and some financial guarantee contracts (for the issuer) that are not measured at fair value through
profit or loss.
Recognition of credit losses is no longer dependent on the Group first identifying a credit loss event. Instead the Group
considers a broader range of information when assessing credit risk and measuring expected credit losses, including past
events, current conditions, reasonable and supportable forecasts that affect the expected collectability of the future cash
flows of the instrument. In applying this forward-looking approach, a distinction is made between:
• financial instruments that have not deteriorated significantly in credit quality since initial recognition or that have low credit
risk (‘Stage 1’) and
• financial instruments that have deteriorated significantly in credit quality since initial recognition and whose credit risk is
not low (‘Stage 2’).
‘Stage 3’ would cover financial assets that have objective evidence of impairment at the reporting date.
‘12-month expected credit losses’ are recognised for the first category while ‘lifetime expected credit losses’ are recognised
for the second category.
Measurement of the expected credit losses is determined by a probability-weighted estimate of credit losses over the
expected life of the financial instrument.
Apiam Animal Health Limited
Financial statements for the year ended 30 June 2022
47
Trade and other receivables and contract assets
The Group makes use of a simplified approach in accounting for trade and other receivables as well as contract assets and
records the loss allowance as lifetime expected credit losses. These are the expected shortfalls in contractual cash flows,
considering the potential for default at any point during the life of the financial instrument. In calculating, the Group uses its
historical experience, external indicators and forward-looking information to calculate the expected credit losses using a
provision matrix. The Group assess impairment of trade receivables on a collective basis as they possess shared credit risk
characteristics they have been grouped based on the days past due. Refer to Note 34.3 for a detailed analysis of how the
impairment requirements of AASB 9 are applied.
Classification and measurement of financial liabilities
The Group’s financial liabilities include borrowings, trade and other payables and derivative financial instruments.
Financial liabilities are initially measured at fair value, and, where applicable, adjusted for transaction costs unless the Group
designated a financial liability at fair value through profit or loss.
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.
Income taxes
Tax expense recognised in profit or loss comprises the sum of deferred tax and current tax not recognised in other
comprehensive income or directly in equity.
Current income tax assets and/or liabilities comprise those obligations to, or claims from, the Australian Taxation Office
(ATO) and other fiscal authorities relating to the current or prior reporting periods that are unpaid at the reporting date.
Current tax is payable on taxable profit, which differs from profit or loss in the financial statements. Calculation of current
tax is based on tax rates and tax laws that have been enacted or substantively enacted by the end of the reporting period.
Deferred income taxes are calculated using the liability method on temporary differences between the carrying amounts of
assets and liabilities and their tax bases. However, deferred tax is not provided on the initial recognition of goodwill or on
the initial recognition of an asset or liability unless the related transaction is a business combination or affects tax or
accounting profit. Deferred tax on temporary differences associated with investments in subsidiaries and joint ventures is
not provided if reversal of these temporary differences can be controlled by the Group and it is probable that reversal will
not occur in the foreseeable future.
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.
Apiam Animal Health Limited
Financial statements for the year ended 30 June 2022
48
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.
The Group is not tax consolidated.
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
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 Group.
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.
Share based payments reserve
Recognises share-based payments accrued in employee incentive share plan.
Foreign currency translation reserve
Exchange differences relating to the translation of the Group’s controlled entities from their functional currencies into
Australian dollars are brought to account directly to the foreign currency translation reserve.
Apiam Animal Health Limited
Financial statements for the year ended 30 June 2022
49
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 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). The share-based payment expense is recorded proportionately from grant date over the vesting period.
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.
Apiam Animal Health Limited
Financial statements for the year ended 30 June 2022
50
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.
Identification of CGUs and allocation of goodwill to CGUs or Groups of CGUs
CGUs are identified by determining the smallest identifiable group of assets that generate largely independent cash
inflows from other assets or groups of assets. Identifying those largely independent cash inflows requires significant
judgement in assessing the Group’s sources of revenue and how assets are utilised in generating those revenues.
Goodwill is required to be allocated to the CGUs or groups of CGUs that are expected to benefit from the synergies of the
combination acquired where goodwill cannot be allocated to individual CGUs on a reasonable and consistent basis.
Significant judgement is required to assess which CGUs or groups of CGUs benefit from the synergies and thus
determine how the goodwill is allocated.
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 makes determination with regard to the allocation of groups of cash generating units
for the purpose of impairment testing. 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 5.12).
Useful lives of property, plant and equipment and definite life intangible assets
Management reviews its estimate of the useful lives of property, plant and equipment and definite life intangible assets at
each reporting date, based on the expected utility of the assets. Uncertainties in these estimates may relate to technical
obsolescence or some other event.
Customer relationships
Apiam Animal Health Limited
Financial statements for the year ended 30 June 2022
51
Management estimates core customer revenue, customer attrition rates and revenue growth rates when valuing customer
relationship intangible assets.
Identification of the core customer share of revenue requires management to estimate the percentage of recurring
revenue that can be attributed to the customer relationship as opposed to other factors such as convenience of the
location of the clinic. Estimation uncertainty exists in regard to the core revenue resulting from the calculated percentage
of recurring customers.
Management estimates the attrition rate for customers through assessment of the historical attrition rates of the acquired
customers. The estimates of attrition rates are uncertain to the extent that they may not reflect the historical attrition rates.
Management estimates the forecast revenue growth rate for acquired businesses by assessing historical performance of
the acquired business and there is uncertainty that the future growth rates of the customer base do not reflect the
estimate.
Management reviews the carrying value of customer relationships at reporting date, considering the revenue growth and
customer turnover/attrition 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 5.3). Particularly, the fair value of contingent consideration is dependent on the outcome of many variables that
affect future profitability.
Leases – determination of the appropriate discount rate to measure lease liabilities
The Group enters into leases with third-party landlords and as a consequence the rate implicit in the relevant lease is not
readily determinable. Therefore, the Group uses its incremental borrowing rate as the discount rate for determining its
lease liabilities at the lease commencement date. The incremental borrowing rate is the rate of interest that the Group
would have to pay to borrow over similar terms which requires estimations when no observable rates are available.
Leases - Lease term
The lease term is a significant component in the measurement of both the right-of-use asset and lease liability. Judgement
is exercised in determining whether there is reasonable certainty that an option to extend the lease or purchase the
underlying asset will be exercised, or an option to terminate the lease will not be exercised, when ascertaining the periods
to be included in the lease term. In determining the lease term, all facts and circumstances that create an economical
incentive to exercise an extension option, or not to exercise a termination option, are considered at the lease
commencement date. Factors considered may include the importance of the asset to the Group’s operations; comparison
of terms and conditions to prevailing market rates; incurrence of significant penalties; existence of significant leasehold
improvements; and the costs and disruption to replace the asset. The Group reassesses whether it is reasonably certain
to exercise an extension option, or not exercise a termination option, if there is a significant event or significant change in
circumstances.
Apiam Animal Health Limited
Financial statements for the year ended 30 June 2022
52
6
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 segments are aggregated for reporting purposes on the basis that each segment has sales consisting predominantly
of S4 products (prescription based pharmaceuticals), over the counter products and veterinary service revenue and that
these products and services exhibit similar economic characteristics across each segment. Corporate overheads that
cannot be allocated to a specific segment are disclosed separately.
The revenues and profit generated by the Group’s operating segments are summarised as follows:
Segment information
Revenue from external customers
Segment operating costs
Segment adjusted operating profit before tax
Total reporting segment operating profit
Other income
Corporate overheads
Acquisition and integration costs
Restructure costs
Finance costs
Share of profit from equity accounted
investments
Net profit before tax
Income tax
Net profit after tax
7
Revenue
Sales revenue
Goods transferred at a point in time
Services transferred over time
Total revenue
2022
$'000
2021
$'000
157,057
(145,527)
11,530
126,181
(116,080)
10,101
11,530
167
(1,807)
(1,802)
(139)
(1,570)
91
6,470
(1,931)
4,539
2022
$'000
90,411
66,646
157,057
10,101
23
(1,770)
(167)
(119)
(1,176)
79
6,971
(2,021)
4,950
2021
$'000
84,859
41,322
126,181
Apiam Animal Health Limited
Financial statements for the year ended 30 June 2022
8
Expenses
Profit before income tax includes the following specific expenses:
Depreciation
Leased buildings(i)
Leasehold improvements
Plant and equipment
Motor vehicles
Biological assets
Amortisation of intangibles
Total depreciation and amortisation
(i) Right of use assets
Finance costs
Interest expense on borrowings
Interest expense on lease liabilities
Share-based payments expense
Rental expense
53
2021
$’000
2,528
258
1,946
825
24
845
6,426
813
363
1,176
335
97
2022
$’000
3,323
446
2,133
882
-
1,575
8,359
1,168
402
1,570
765
130
9
Income tax expense
The major components of tax expense and the reconciliation of the expected tax expense based on the domestic effective
tax rate of the Group at 30% (2021: 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% (2021 - 30%)
Adjustments for non-deductible expenses:
Sundry items
Income tax expense
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 17 provides information on deferred tax assets and liabilities.
2022
$’000
2021
$’000
6,470
1,941
(7)
1,934
1,934
(3)
1,931
2,717
(786)
1,931
6,971
2,091
(119)
1,972
1,972
49
2,021
2,439
(418)
2,021
Apiam Animal Health Limited
Financial statements for the year ended 30 June 2022
10 Cash and cash equivalents
Cash at bank and in hand
Cash and cash equivalents
11 Trade and other receivables
Trade receivables, gross
Less: allowance for expected credit losses
Other receivables
Rebates receivable
54
2021
$'000
2,150
2,150
2021
$'000
12,678
(327)
206
968
13,525
2022
$'000
2,845
2,845
2022
$'000
12,951
(503)
58
1,117
13,623
All amounts are short-term. The net carrying value of trade receivables is considered a reasonable approximation of fair
value. An allowance for expected credit losses has been recognised using a provision matrix based on historical credit loss
rates. Refer to Note 34.3 Credit risk analysis.
Balance at 1 July
Acquired through business combinations
Impairment loss
Balance 30 June
12
Inventories
Stock on hand, at cost
Less provision for obsolescence
Stock in transit, at cost
13 Other current assets
Prepayments
Security deposits
2022
$'000
327
169
7
2021
$'000
334
-
(7)
503
327
2022
$'000
17,691
(142)
232
17,781
2022
$'000
1,313
315
1,628
2021
$'000
15,664
(43)
420
16,041
2021
$'000
1,411
166
1,577
Apiam Animal Health Limited
Financial statements for the year ended 30 June 2022
55
14
Property, plant and equipment
Details of the Group’s property, plant and equipment and their carrying amount are as follows:
Leased
Buildings
(i)
Leasehold
improve-
ments
Plant and
equipment
Motor
vehicles
(ii)
Assets
under
construction
Total
$’000
$’000
$’000
$’000
$’000
$’000
20,139
(4,707)
15,432
15,432
1,995
5,024
At 30 June 2021
At cost
Accumulated depreciation
Net book value
Year ended 30 June 2022
Opening net book value
Additions
Additions through business
combinations
Depreciation charge
Closing net book value
At 30 June 2022
Cost
Accumulated depreciation
Net book amount
i) Right of use Assets
ii)
Includes leased and owned motor vehicles
2,498
(542)
1,956
12,753
6,494
36
41,920
(7,281)
(4,411)
-
(16,941)
5,472
2,083
36
24,979
1,956
1,000
5,472
2,392
29
1,594
2,083
687
481
36
24,979
243
6,317
-
-
7,128
(6,784)
(3,323)
(446)
(2,133)
(882)
19,128
2,539
7,325
2,369
279
31,640
26,773
(7,645)
3,527
(988)
16,665
7,510
279
54,754
(9,340)
(5,141)
-
(23,114)
19,128
2,539
7,325
2,369
279
31,640
Apiam Animal Health Limited
Financial statements for the year ended 30 June 2022
15 Intangible assets
Goodwill
(i)
$'000
Customer
Relation-
ships (i)
$’000
Trademarks
& Trade
Names (i)
$’000
Capitalised
develop-
ment costs
$'000
At 30 June 2021
Cost
Accumulated amortization and impairment
Carrying amount at 30 June 2021
At July 1 2021
Opening net book value
Additions
Additions through business combinations
Disposals
Amortisation
Closing net book value
At 30 June 2022
Cost
Accumulated amortization and impairment
Net book value
86,538
-
86,538
86,538
-
27,042
-
113,580
6,064
(1,362)
4,702
4,702
-
5,532
(991)
9,243
113,580
-
113,580
11,596
(2,353)
9,243
2,077
-
2,077
2,077
-
414
-
2,491
2,491
-
2,491
i) Opening balances have changed due to a restatement of a prior period. Refer to Note 4.
56
Total
$'000
97,621
(2,322)
95,299
95,299
541
32,988
(422)
(1,575)
126,831
2,942
(960)
1,982
1,982
541
-
(422)
(584)
1,517
2,993
(1,476)
1,517
130,660
(3,829)
126,831
Impairment testing
The Group recognises three operating segments consisting of Dairy & mixed, Feedlot and Pig segments for which goodwill
is applied. Goodwill is allocated to the group of cash generating units (CGU) in the Dairy and mixed operating segment, and
to the individual CGUs in the Feedlot and Pig operating segments for the purpose of impairment testing. The allocation is
made to those CGUs or groups of CGUs that are expected to benefit from the business combination in which the goodwill
arose. The CGU’s or groups of CGU’s are identified at the lowest level at which goodwill is monitored for internal
management purposes, which is also the operating segment level. Goodwill impairment testing has been completed for
each CGU or groups of CGU’s. Refer to 15.4 for the goodwill allocated to each CGU or groups of CGU’s.
The recoverable amounts of the cash-generating units were determined based on value-in-use calculations, covering a
detailed one year forecast with annual growth rates applied over a five year term, 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 or group of CGUs is determined by applying the following key assumptions:
Annual sales growth Pig segment %
Annual Sales growth Feedlot Segment %
Annual Sales growth Dairy & mixed %
Annual operating expenses growth rate %
Long-term growth rate %
Post-tax discount rate %
2022
3.00%
2021
3.00%
5.00% to 7.50% 5.00% to 7.50%
5.00%
2.00%
2.50%
9.33%
5.00%
2.00%
2.50%
10.00%
Goodwill allocation across CGUs or groups of CGUs
113,580
86,538
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.
2022
$’000
2021
$’000
Apiam Animal Health Limited
Financial statements for the year ended 30 June 2022
57
Growth rates
The annual sales growth rate as per the table in 15.1, annual operating expense growth rate of 2% and the long-term
growth rate of 2.50% reflect the average growth rates for the industry.
Discount rates
The post-tax discount rate of 10.00% reflects appropriate adjustments relating to market risk and other risk factors. The
discount rate is applied to each CGU or Group of CGU’s because they share common risks.
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 groups of 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 CGUs or Groups of CGUs which is also reflective of the level of operating segment being Pig,
Feedlot, Dairy and mixed.
The following is a summary of the CGUs or Groups of CGUs to which goodwill is allocated.
Balance 1 July 2021
Acquisitions
30 June 2022
Feedlot
Dairy and mixed
$’000
13,330
-
13,330
$’000
64,531
27,042
91,573
Pig
$’000
8,677
Total
$’000
86,538
-
27,042
8,677
113,580
Apiam Animal Health Limited
Financial statements for the year ended 30 June 2022
58
16
Leasing
Lease liabilities are presented in the statement of financial position as follows:
Lease liabilities (current)
Lease liabilities (non-current)
2022
$’000
2021
$’000
3,558
2,911
17,753
14,426
21,311
17,337
The Group has leases for its warehouses, clinics, offices, motor vehicles and equipment. With the exception of short-term
leases and leases of low-value assets, each lease is reflected in the balance sheet as a right-of-use asset and a lease
liability.
The lease liabilities are secured by the related underlying assets. Future minimum lease payments at 30 June 2022 were
as follows:
Minimum lease
payments due
Within
one year
One to
two years
$’000
$’000
Two to
three
years
$’000
Three
to four
years
$’000
Four to
five
years
$’000
After
five
years
$’000
Total
$’000
30 June 2022
Lease payments
Finance charges
3,993
(435)
3,805
(353)
3,775
3,270
(274)
(196)
2,576
(135)
5,459
(174)
22,878
(1,567)
Net present values
3,558
3,452
3,501
3,074
2,441
5,285
21,311
Lease payments not recognised as a liability
The group has elected not to recognise a lease liability for short term leases (leases with an expected term of 12 months
or less) or for leases of low value assets. Payments made under such leases are expensed on a straight-line basis. In
addition, certain variable lease payments are not permitted to be recognised as lease liabilities and are expensed as
incurred.
The expense relating to payments not included in the measurement of the lease liability is as follows:
Short term leases
Leases of low value assets
2022
$’000
64
65
129
2021
$’000
42
55
97
Apiam Animal Health Limited
Financial statements for the year ended 30 June 2022
59
17 Deferred tax assets and liabilities
Deferred taxes arising from temporary differences and unused tax losses can be summarised as follows:
The balance of deferred tax assets comprises temporary differences attributable to:
Current assets
Trade and other receivables
Inventories
Current liabilities
Provisions
Other
Unused tax losses
Right of use assets
Depreciation
Listing and acquisition costs
Equity raising costs
The balance of deferred tax liabilities comprises temporary differences attributable
to:
Intangible assets
Customer relationships
Trademarks and trade names
2022
$'000
2021
$'000
151
237
110
109
2,977
2,267
2,393
110
(2,326)
572
312
4,426
1,440
123
(745)
111
72
3,487
2022
$'000
2,763
747
2021
$'000
1,397
623
3,510
2,020
All deferred tax assets (including tax losses and other tax credits) have been recognised in the statement of financial
position.
Tax losses
$'000
Provis-
ions
$'000
Trade
receiv-
ables
$'000
Listing &
acquis-
ition costs
$'000
Equity
raising
costs
$'000
Invento
ry
$'000
Right of
use
assets
$’000
Deprec-
iation
$’000
Total
$'000
At 1 July 2020
1,022
1,896
164
-
-
237
-
-
3,319
(Charged)/credited:
to P&L
at 30 June 2021
(Charged)/credited:
to P&L
At 30 June 2022
418
1,440
371
2,267
953
710
2,393
2,977
(54)
110
41
151
111
111
461
572
72
72
(128)
109
123
123
(745)
(745)
168
3,487
240
312
128
237
(13)
110
(1,581)
939
(2,326)
4,426
All deferred tax liabilities have been recognised in the statement of financial position.
At 1 July 2020
(Charged)/credited to P&L
at 30 June 2021
(Charged)/credited to P&L
At 30 June 2022
Customer
relationships
$'000
904
493
1,397
1,366
2,763
Trademarks
& Trade
Names
$’000
532
91
623
124
747
Total
$'000
1,436
584
2,020
1,490
3,510
Apiam Animal Health Limited
Financial statements for the year ended 30 June 2022
18 Trade and other payables
Trade payables
Sundry payables and accrued expenses
60
2021
$'000
6,246
3,502
9,748
2022
$'000
5,737
5,231
10,968
All amounts are short-term. The carrying values of trade payables and other payables are considered to be a reasonable
approximation of fair value.
19 Current tax liabilities
Current tax payable
20 Borrowings
Current:
Bank loans (a)
less capitalized costs
Total current borrowings
Non-current
bank loans (a)
Total non-current borrowings
Refer to Note 35 for information on financial instruments.
Secured liabilities and assets pledged as security
The total secured liabilities (current and non-current) are as follows:
Bank loans
Less capitalised borrowing costs
Assets pledged as security
2022
$'000
1,859
2022
$'000
2,932
(18)
2,914
2021
$'000
1,494
2021
$'000
2,838
(20)
2,818
39,165
39,165
34,887
34,887
2022
$’000
42,097
(18)
42,079
2021
$’000
37,725
(20)
37,705
(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 of a ratio of 45% (ratio of net debt to net debt & equity): and
Maximum operating leverage ratio of 3.0 times (ratio of net debt to EBITDA) or a ratio 3.5 times for any twelve
month period following an acquisition, or series of acquisitions, for which aggregate consideration exceeds AUD
$10,000,000:
The Group complied with all bank covenants during the period.
Apiam Animal Health Limited
Financial statements for the year ended 30 June 2022
Financing arrangements
Unrestricted access 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
Unused at reporting date
Bank - term loan facilities
Bank - master asset finance agreement for equipment finance
Bank - overdraft facility
Bank - credit card facility
21 Employee benefit obligations
Leave obligations current
Leave obligations non-current
Employee benefits
61
2021
$'000
63,700
3,500
1,000
300
68,500
37,725
1,631
39,356
25,975
1,869
1,000
300
29,144
2021
$'000
7,211
338
7,549
2022
$'000
83,700
4,500
1,000
300
89,500
42,097
1,803
43,900
41,603
2,697
1,000
300
45,600
2022
$'000
8,972
657
9,629
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 $8,972 (2021: $7,211) 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.
22 Other current liabilities
Contingent consideration for acquisitions
Net payable to vendors on acquisition
Contract liability
Make good provision
.
2022
$'000
190
144
19
147
500
2021
$'000
-
13
16
163
192
Apiam Animal Health Limited
Financial statements for the year ended 30 June 2022
62
23 Equity
23.1 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
· shares issued on achievement of earnout for
prior year acquisition
· issued under dividend reinvestment plan
· share placement
· transaction costs on issue of new share capital
· employee shares issued
· shares held in employee share trust(a)
Shares issued and fully paid
Total shares authorised at the end of the period
2022
Shares
2021
Shares
2022
$'000
2021
$’000
129,896,893
116,597,135
101,010
91,107
5,976,370
3,383,552
5,333
2,535
-
1,249,470
0
815
1,021,307
28,924,553
-
569,700
-
166,388,823
166,388,823
1,295,340
7,500,000
-
179,933
(308,537)
129,896,893
129,896,893
919
20,247
(748)
488
-
127,249
127,249
906
6,000
(300)
102
(155)
101,010
101,010
Each share has the same right to receive dividend and the repayment of capital and represents one vote at the shareholders’
meeting of Apiam.
a) Shares held in the employee share trust at 30 June 2021. The number of shares held in the employee share trust at 30
June 2022 was 2,538,904.
24 Reserves
Details of reserves are as follows:
Balance at 1 July 2020
Employee share plan incentive
Foreign currency translation
Balance at 30 June 2021
Employee share plan incentive
Foreign currency translation
Balance at 30 June 2022
25 Non-controlling interests
Issued capital
Current year earnings
Retained profits carried forward
Total non-controlling interests
Corporate
reorganisation
reserve
$’000
(26,692)
-
-
(26,692)
-
-
(26,692)
Non-
controlling
interest
acquisition
reserve
$’000
(6,615)
-
-
(6,615)
-
-
(6,615)
Share
based
payment
reserve
Foreign
Currency
Translation
reserve
$’000
223
372
-
595
276
-
871
$’000
(21)
-
(58)
(79)
-
60
(19)
Total
$’000
(33,105)
372
(58)
(32,791)
276
60
(32,455)
2021
2022
$’000
$’000
141
909
(100) (86)
179
93
134
1,002
Apiam Animal Health Limited
Financial statements for the year ended 30 June 2022
63
26 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 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 performance rights
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 (1.2 cents a share)
fully franked interim dividend (1.2 cents a share)
2022
Number
135,811,154
2,330,783
138,141,937
2021
Number
120,501,108
1,570,642
122,071,750
2022
$'000
1,616
1,658
3,274
2021
$'000
1,399
1,451
2,850
In addition and since the end of the financial year, Directors have declared a fully franked final dividend of 0.4c per
ordinary share to be paid on 21 October 2022 (2021: 1.2c)
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
2022
$'000
11,179
(856)
1,859
12,182
2021
$'000
9,500
(679)
1,494
10,315
Apiam Animal Health Limited
Financial statements for the year ended 30 June 2022
64
27 Reconciliation of cash flows from operating activities
depreciation and amortisation expense
doubtful debt expense
obsolete stock provision
amortisation of borrowing costs
profit on sale of fixed assets
share benefits expense
share of profit in equity accounted investments
a) 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:
·
·
·
·
·
·
·
·
Net changes in working capital:
·
·
·
·
·
·
·
·
·
·
·
·
decrease/(increase) in trade and other receivables
decrease/(increase) in tax receivable
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 employee benefit obligations
increase/(decrease) in other liabilities
increase/(decrease) in other current liabilities
increase/(decrease) in foreign currency translation reserve
Net cash received in operating activities
28
Employee remuneration
Employee benefits expense
Expenses recognised for employee benefits are analysed below:
Employee benefits – expense
Wages and salaries expense
Bonus expense
Share-based payment expense
Superannuation expense
Employee benefits expense
2022
$’000
4,539
8,359
97
100
22
(167)
764
(91)
1,347
-
(668)
(16)
(171)
295
273
(293)
562
89
(64)
61
15,038
2022
$’000
56,325
196
765
4,674
61,960
2021
$’000
4,950
6,426
125
277
22
(23)
319
(79)
(1,519)
225
1,894
(469)
(3)
741
81
(108)
988
115
(212)
(61)
13,689
2021
$’000
39,746
43
335
3,138
43,262
Share-based employee remuneration
As at 30 June 2022, the Group maintained two share-based payment schemes for employee remuneration, the Future
Leaders Long Term Incentive Plan and the Senior Executive Long Term Incentive Plan. Performance rights under these
Plans will vest if certain conditions are met. Participants have to achieve performance targets and have to be employed
until the end of the agreed vesting period. Upon vesting, each participant will be issued with ordinary shares as defined in
the Incentive Plan. The fair value of rights offered for the Future Leaders Long Term Incentive Plan is based on the share
price at grant date. The fair value of rights offered for the Senior Executive Long Term Incentive Plan is determined using
the Monte Carlo valuation model that takes into account factors specific to the performance conditions, such as the grant
date, share price at grant date, vesting period, risk free rate, volatility and dividend yield. The performance rights will be
issued at nil exercise price upon vesting.
Apiam Animal Health Limited
Financial statements for the year ended 30 June 2022
65
The number of performance rights held by employees of the Group at 30 June 2022 is set out below:
Type
Performance rights
Balance at
1/07/2021
2,060,665
Granted
1,095,005
Vested and
Exercised
(540,819)
Forfeited
(85,550)
Held as at
30/06/2022
2,529,301
29 Auditor remuneration
Audit services – Grant Thornton Audit Pty Ltd
Remuneration for audit or review of financial statements
Other services – Grant Thornton
taxation services
due diligence services
Total other services remuneration
Total auditor’s remuneration
2022
$
2021
$
235,394
190,294
13,400
118,900
132,300
367,694
3,148
56,000
59,148
249,442
30 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.
The Group provided short term finance to its joint venture entity, South West Equine in the 2021 financial year. The amount
owing is $Nil (2021: $79,285) this year.
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
accrued annual leave entitlements
non-monetary benefits
Total short-term employee benefits
Long- term employee benefits:
Accrued long service leave entitlements
Share based payments expense
Total long-term employee benefits
Post-employment benefits:
superannuation
Total post-employment benefits
Total remuneration
2022
$
2021
$
1,310,798
1,130,685
28,597
19,783
53,972
11,394
1,359,178
1,196,051
25,114
55,637
80,751
75,392
75,392
13,800
60,926
74,726
69,701
69,701
1,515,321
1,340,478
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. Rental payments made amounted to $360,193 (2021: $364,514).
Apiam Animal Health Limited
Financial statements for the year ended 30 June 2022
66
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 $133,752 (2021: $139,725).
The Group leases an artificial insemination facility in Victoria from entities associated with Chris Richards. Lease payments
made amounted to $113,481 (2021: $116,462).
All related party rentals are based on commercial rates and the terms of the lease are standard commercial terms.
31 Contingent liabilities
In the Directors’ view, there are no contingent assets or liabilities that will have a material effect on the Group.
32 Business combination
The Group applies the acquisition method in accounting for business combinations.
During the reporting period the Group acquired 100% of the business assets of the veterinary clinics listed below. The
number of fully paid shares issued and fair value per share is included.
Veterinary Business
Acquisition Date
No. of Shares
Fair value per
Scenic Rim Veterinary Service (SRVS)
Golden Plains Animal Hospital (GPAH)
30 July 2021
1 August 2021
Harbour City Veterinary Surgery (HCVS)
2 September 2021
Smythesdale Animal Hospital (SAH)
Horsham Veterinary Hospital (HVH)
Fraser Coast Veterinary Services (FCVS)
Romsey Veterinary Surgery (RVS)
1 October 2021
1 December 2021
1 December 2021
1 June 2022
issued
1,678,495
-
883,653
-
422,030
892,193
1,165,320
share
$0.935
n/a
$0.98
n/a
$0.90
$0.90
$0.75
During the reporting period the Group acquired 100% of the issued share capital and voting rights of the entities listed below.
The number of fully paid shares issued and fair value per share is included.
Entity
Acquisition Date
No. of Shares
Fair value
Agnes Banks Equine Clinic Pty Limited (ABEC)
1 December 2021
North Hill Veterinary Clinic (NHVC)
1 December 2021
issued
764,737
169,942
per share
$0.90
$0.90
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.
Apiam Animal Health Limited
Financial statements for the year ended 30 June 2022
67
Fair value of consideration transferred
Amounts settled in cash
Amount settled by issue of shares at fair value
Contingent consideration
Payable to vendors
Total fair value of consideration transferred
Recognised amounts of identifiable net assets
Cash and equivalents
Trade and other receivables
Inventories
Other assets
Total current assets
Trademarks and trade names
Customer relationships
Property, plant & equipment
Deferred tax assets
Total non-current assets
Trade and other payables
Other current liabilities
Current tax liabilities
Employee benefit obligations
Lease liabilities
Total current liabilities
Lease liabilities
Employee benefit obligations
Deferred tax liabilities
Total non-current liabilities
Identifiable net assets
Goodwill on acquisition
Net cash outflow on acquisition
SRVS
GPAH
$’000
$’000
HCVS
$’000
SAH
$’000
HVH
$’000
FCVS
$’000
ABEC
NHVC
$’000
$’000
RVS
$’000
Total
$’000
13,794
1,569
-
-
15,363
1,143
-
-
-
1,143
1,799
866
-
-
2,665
928
-
-
-
928
1,635
380
-
-
2,015
1,952
803
-
-
2,755
3,864
688
190
-
4,742
537
153
-
(2)
688
2,647
874
-
146
3,667
28,299
5,333
-
334
33,966
-
635
330
7
972
226
3,015
1,487
62
4,790
217
11
-
174
167
569
679
32
973
1,684
3,509
11,854
13,794
-
4
113
-
117
-
209
819
29
1,057
43
-
-
96
70
209
654
-
62
716
-
19
51
-
70
-
404
141
62
607
58
27
-
204
36
325
-
4
121
125
249
894
1,143
227
2,438
1,799
-
10
70
-
80
-
220
309
4
533
3
-
-
14
43
60
177
-
66
243
310
618
928
-
30
104
-
134
-
359
203
44
606
2
-
-
117
101
220
-
28
108
136
384
1,631
1,635
-
31
162
6
199
-
314
1,201
50
1,565
87
-
-
123
110
320
963
45
94
1,102
342
2,413
1,952
17
686
165
16
884
187
363
2,143
125
2,818
356
-
49
415
192
1,012
1,203
40
165
1,408
1,282
3,460
3,847
34
35
61
1
131
-
146
169
30
345
137
-
43
94
59
333
26
5
44
75
68
620
503
-
92
116
5
213
51
1,542
1,172
35
2,800
-
501
657
41
1,199
413
5,531
7,129
447
13,520
-
-
-
123
55
178
528
4
150
682
903
38
92
1,360
833
3,226
4,230
158
1,783
6,171
552
3,115
2,647
6,923
27,043
28,248
Apiam Animal Health Limited
Financial statements for the year ended 30 June 2022
68
Consideration transferred
Acquisition related costs amounting to $1,802,165 are not included as part of the consideration transferred and have been
recognised as an expense in the consolidated statement of profit of loss, as acquisition expenses. Acquisition related
costs were made up of state government transfer duties, due diligence audit fees, legal, accounting and other
miscellaneous expenses.
Identifiable net assets
Each of these business combinations have initially been accounted for on a provisional basis as at 30 June 2022, except
for SRVS and GPAH acquisitions which have been finalised. The measurement period for provisional accounting ends on
either the earlier of 12 months from the date of acquisition or when the acquirer receives all the information possible to
determine the fair value.
The fair value of the trade and other receivables acquired as part of the business combinations amounted to $1,542,000
with a gross contractual amount of $1,711,000. As at the acquisition date, the Group’s best estimate of the contractual
cash flows not expected to be collected amounted to $169,000.
The contingent consideration is a future potential payment to be made if certain profit targets are achieved by the business
in the twelve month period following the date of acquisition. The likelihood of targets being achieved has been assessed at
95% as at the reporting date.
There were no contingent liabilities assumed from the acquisitions and no separate transactions.
Goodwill
The goodwill that arose on the combinations can be attributed to the synergies expected to be derived from the
combination including implementation of the Groups programs, software systems, support networks, supply and
employment contracts. Goodwill has been provisionally allocated to CGUs at 30 June 2022 and is attributable to the Dairy
& mixed segment. The goodwill that arose from this business combination is not expected to be deductible for tax
purposes.
Contribution to the Group results
For each acquisition, the period between the beginning of the reporting period and the date of acquisition was not business
as usual due to the acquisition, making it impractical to determine revenue and profit or loss generated in the period. The
period from acquisition to the end of the reporting period remains impractical to report business as usual for each acquisition
due to various integration activities impacting results within the first year of operations and the introduction of ongoing
charges for shared services within the group.
33 Interests in subsidiaries
Composition of the Group
Set out below details of the subsidiaries held directly by the Group:
Name of the Subsidiary
Chris Richards & Associates Pty Ltd
Country Vet Wholesaling Pty Ltd
Apiam Logistics Services Pty Ltd
Apiam Management Pty Ltd
Southern Cross Feedlot Services Pty Ltd
Westvet Wholesale Pty Ltd
Portec Veterinary Services Pty Ltd
Pork Storks Australia Pty Ltd
McAuliffe Moore & Perry Pty Ltd
Country of
incorporation
and principal
place of
business
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Principal activity
Veterinary services
Wholesale supply
Transport
Payroll
Veterinary services
Wholesale supply
Veterinary services
Genetics
Veterinary services
Group proportion of
ownership interests
2022
100%
100%
100%
100%
100%
100%
100%
100%
100%
2021
100%
100%
100%
100%
100%
100%
49%
100%
100%
Apiam Animal Health Limited
Financial statements for the year ended 30 June 2022
Warrnambool Veterinary Clinic Pty Ltd
Scottsdale Veterinary Services Pty Ltd
Smithton Veterinary Service Pty Ltd
AAH Clinics NSW & QLD Pty Ltd
AAH - Bell Vet Services Pty Ltd
CVH Gippsland Pty Ltd
CVH Southern Riverina Pty Ltd
AAH Veterinary Services Pty Ltd
CVH iVet Pty Ltd
Tasvet Wholesale Pty Ltd
Quirindi Feedlot Services Pty Ltd
Quirindi Veterinary Clinic Pty Ltd
Quipolly Equine Centre Pty Ltd
AAH Veterinary Clinics Pty Ltd
Gympie & District Veterinary Services Pty Ltd
Apiam Solutions LLC
Fur Life Foundation Ltd
South Yarra Pharma Pty Ltd
Animal Consulting Enterprises Pty Ltd
The Trustee for Grampians Animal Health
Unit Trust
CrosVet Pty Ltd
Agnes Banks Equine Clinic Pty Limited
North Hill Veterinary Clinic Pty Ltd
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
USA
Australia
Australia
Australia
Veterinary services
Veterinary services
Veterinary services
Veterinary services
Veterinary services
Veterinary services
Veterinary services
Veterinary services
Dormant
Dormant
Veterinary services
Veterinary services
Veterinary services
Veterinary Services
Veterinary Services
Distribution
Charity
Veterinary Services
Manufacturing
Australia
Veterinary Services
Australia
Australia
Australia
Veterinary Services
Veterinary Services
Veterinary Services
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
80%
100%
51%
100%
100%
100%
100%
100%
100%
100%
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.
34
Financial instrument risk
Risk management objectives and policies
69
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
80%
100%
51%
100%
100%
100%
100%
100%
0%
0%
The Group is exposed to various risks in relation to financial instruments. 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 2022, 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%
(2021: +/- 1%). These changes are considered to be reasonably possible based on observation of current market conditions.
Apiam Animal Health Limited
Financial statements for the year ended 30 June 2022
70
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.
Profit for the year
Equity
$’000
+1%
399
373
$’000
-1%
(399)
(373)
$’000
+1%
399
373
$’000
-1%
(399)
373
30-Jun-22
30-Jun-21
Credit risk analysis
Credit risk is the risk that a counterparty fails to discharge an obligation to the Group. The Group is exposed to credit risk
from financial assets including cash and cash equivalents held at banks, trade and other 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:
Cash and cash equivalents
Trade and other receivables
2022
$’000
2,845
13,623
16,468
2021
$’000
2,150
13,525
15,675
The credit risk is managed on a group basis based on the Group’s credit risk management policies and procedures.
The credit risk in respect of cash balances held with banks and deposits with banks are managed via only banking with
major reputable financial institutions.
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.
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.
Trade receivables are written off (ie. derecognised) when there is no reasonable expectation of recovery.
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 made an allowance for expected credit losses (see Note 11) based on past due amounts and
prior trading history. 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
2022
$’000
2,035
646
1,070
3,751
2021
$’000
1,365
475
997
2,837
Apiam Animal Health Limited
Financial statements for the year ended 30 June 2022
71
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.
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 2022, the Group’s non-derivative financial liabilities have contractual maturities (including interest payments
where applicable) as summarised below:
30 June 2022
Bank borrowings
Trade and other payables
Total
Current
Within 6
months
$’000
6 - 12
months 1 - 4 years
$’000
$’000
2,914
10,968
13,882
-
-
-
39,165
-
39,165
This compares to the maturity of the Group’s non-derivative financial liabilities in the previous reporting periods as follows:
30 June 2021
Bank borrowings
Trade and other payables
Total
Current
Within 6
months
$’000
6 - 12
months
$’000
1 - 4 years
$’000
2,818
9,748
-
-
12,566
-
34,887
-
34,887
The above amounts reflect the contractual undiscounted cash flows, which may differ to the carrying values of the
liabilities at the reporting date.
Apiam Animal Health Limited
Financial statements for the year ended 30 June 2022
72
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 2022 and 30 June 2021:
30 June 2022
Financial liabilities
Contingent consideration
Total liabilities
Net fair value
30 June 2021
Financial liabilities
Contingent consideration
Total liabilities
Net fair value
Level 1
$'000
Level 2
$'000
Level 3
$'000
-
-
-
-
-
-
190
190
190
Level 1
$'000
Level 2
$'000
Level 3
$'000
-
-
-
-
-
-
-
-
-
Total
$'000
190
190
190
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 and Risk Management 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 is considered to be face value
as the payments become due within the next six (6) months.
Apiam Animal Health Limited
Financial statements for the year ended 30 June 2022
73
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
95%
-
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
Contingent consideration / (contingent consideration paid) for acquisitions
Balance at 30 June
2022
$’000
-
190
190
2021
$’000
3,925
(3,925)
-
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
45% (ratio of net debt to net debt and 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
2022
$'000
108,684
2,845
111,529
108,684
42,079
150,763
74%
2021
$'000
80,817
2,150
82,967
80,817
37,705
118,522
70%
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 2022
74
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
Share based payment reserve
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
The Parent Entity has entered into a deed of cross guarantee. Refer Note 39 for details.
The Parent Entity had no contingent liabilities at 30 June 2022 (2021: $nil).
2022
$’000
2021
$’000
2,287
153,941
5,097
45,257
108,684
126,928
871
(19,115)
108,684
1,234
120,612
4,025
39,795
80,817
100,553
595
(20,331)
80,817
4,348
91
4,439
4,287
79
4,366
38 Post-reporting date events
The Apiam Board of Directors have declared the Company’s final dividend of 0.4c per share fully franked on the 29
August 2022. The final dividend of $660,320 will be paid on the 21 October 2022.
On 1 July 2022 the Group acquired the business assets of Victorian Equine Group, a major provider of equine services
including surgical, diagnostics, reproduction and hospitalisation located in Bendigo, Victoria. The consideration consisted of
an initial cash payment of $6,687,202 and 3,827,019 fully paid shares issued at a fair value of $0.65 per share. Contingent
consideration up to a maximum amount of $1,200,000 made up of 70% cash and 30% fully paid shares is payable if certain
profit targets are achieved by the business in FY2022. The prima facie value of net assets acquired is $502,169 and the
prima facie goodwill is $9,812,595. The prima facie balance sheet is not yet fair valued and is subject to change. The
goodwill that arose on the combination can be attributed to the synergies expected to be derived from the combination
including implementation of the Groups programs, software systems, support networks, supply and employment contracts.
Separately identifiable intangible assets (customer relationships / trade names) are expected and have not yet been fair
valued.
On 1 July 2022, the Group acquired 100% of the issued share capital and voting rights of The Vet Practice Pty Ltd, a full
service companion animal clinic located in Whittlesea, Victoria. The consideration consisted of a cash payment of
$6,718,819 and 1,697,573 fully paid shares issued at a fair value of $0.65 per share. The prima facie value of net assets
acquired is $551,034 and the prima facie goodwill is $7,271,207. The prima facie balance sheet is not yet fair valued and is
subject to change. The goodwill that arose on the combination can be attributed to the synergies expected to be derived
from the combination including implementation of the Groups programs, software systems, support networks, supply and
employment contracts. Separately identifiable intangible assets (customer relationships / trade names) are expected and
have not yet been fair valued.
The acquisitions of these veterinary businesses expands Apiam’s presence in regional Victoria. At this time the acquisitions
have not been finalised and the goodwill cannot be quantified.
Apiam Animal Health Limited
Financial statements for the year ended 30 June 2022
75
39 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
Apiam Logistics Services 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 Clinics NSW & QLD 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. No entities were added or removed during the financial year.
Set out below is a consolidated statement of profit or loss and other comprehensive income of the parties to the Deed.
Statement of Profit or Loss and Other Comprehensive Income for the year ended 30 June 2022
Continuing operations
Revenue
Other income
Expenses
Changes in inventory
Cost of materials
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
Share of profit from equity accounted investments
Profit/(loss) before income tax
Income tax (expense)/benefit
Profit from continuing operations
Profit for the year
2022
$'000
112,416
139
1,594
(42,635)
(48,018)
(1,802)
(1,753)
(2,424)
(6,256)
(5,919)
(1,476)
91
2021
$'000
89,636
23
(1,751)
(34,528)
(32,303)
(167)
(1,239)
(2,474)
(4,661)
(6,709)
(1,064)
79
3,957
4,842
(1,180)
2,777
(1,360)
3,482
2,777
3,482
Apiam Animal Health Limited
Financial statements for the year ended 30 June 2022
Set out below is a consolidated statement of financial position of the parties to the Deed.
Statement of Financial Position
as at 30 June 2022
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
Lease liabilities
Provisions
Total current liabilities
Non-current liabilities
Borrowings
Lease liabilities
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
- share based payment reserve
- non-controlling interest acquisition reserve
- retained earnings
Total Equity
76
2021
$’000
1,317
11,229
11,822
1,228
25,596
91,144
18,877
216
2,491
112,728
2022
$’000
2,328
11,351
13,415
1,629
28,723
123,731
24,674
268
3,261
151,934
180,657
138,324
9,262
485
1,675
2,914
3,530
6,800
8,390
13
959
2,838
1,050
5,760
24,666
19,010
39,165
14,041
390
1,832
55,428
80,094
34,887
12,908
106
-
47,901
66,911
100,563
71,413
125,584
(26,692)
871
(6,481)
7,281
100,563
99,401
(26,692)
595
(5,615)
3,724
71,413
Apiam Animal Health Limited
Financial statements for the year ended 30 June 2022
77
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 2022 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.
c There are reasonable grounds to believe that the members of the extended closed group
identified in Note 39 will be able to meet any obligations or liabilities to which they are, or
may become, subject by virtue of the deed of cross guarantee described in Note 39.
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 2022.
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
29 August 2022
78
Grant Thornton Audit Pty Ltd
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727 Collins Street
Melbourne VIC 3008
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Melbourne VIC 3001
T +61 3 8320 2222
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 2022, the
consolidated statement of profit or loss and other comprehensive income, consolidated statement of
changes in equity and consolidated statement of cash flows for the year then ended, and notes to the
consolidated financial statements, including a summary of significant accounting policies, and the Directors’
declaration.
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations Act
2001, including:
a giving a true and fair view of the Group’s financial position as at 30 June 2022 and of its performance
for the year ended on that date; and
b complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those
standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Report section
of our report. We are independent of the Group in accordance with the 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 (including Independence
Standards) (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.
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79
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
How our audit addressed the key audit matter
Intangible Assets – Note 15
At 30 June 2022, the carrying value of goodwill,
customer relationships, and trademarks & trade names
is $113.6 million, $9.2 million and $2.5 million,
respectively and is allocated to three cash-generating
units (CGUs) or group of CGUs (CGU group).
In accordance with AASB 136 Impairment of Assets, the
Group is required to assess if there are any impairment
indicators. And in respect to goodwill, assess if the
carrying value of each CGU and CGU group is in
excess of the recoverable value.
This area is a key audit matter due to the high
management judgement and estimation required to
determine the recoverable value of the CGUs and CGU
Group.
Our procedures included, amongst others:
• Assessing management's determination of the
CGUs based on the nature of the business and the
economic environment in which the unit operates;
• Assessing management’s allocation of goodwill
resulting from acquisitions amongst the CGUs/CGU
group;
• Assessing whether management has the requisite
expertise to prepare the impairment model;
• Reviewing impairment models for compliance with
AASB 136 Impairment of Assets;
• Verifying the mathematical accuracy and
methodology appropriateness of the underlying
value in use calculations;
• Evaluating the cash flow projections and assessing
management’s ability to forecast by comparing
actual results to historical forecasts;
• Assessing key judgements and assumptions and
performing sensitivity analysis of the inputs in the
value-in-use model;
• Assessing customer relationships for indicators of
impairment;
• Utilising an auditor’s expert to assess the
reasonableness of the certain key inputs and
assumptions used in the model;
• Reviewing management’s assessment of the
estimated useful life of intangible assets; and
• Evaluating the disclosures in the financial
statements for appropriateness and consistency
with accounting standards.
Grant Thornton Australia Limited
Business Combinations – Note 32
During the year ending 30 June 2022, the Group
acquired 100% of the business assets of seven entities
and the Group acquired 100% of issued share capital
and voting rights of two entities.
In addition, there were acquisitions completed in the
year ending 30 June 2021, which were provisionally
accounted for and finalised in the year ending 30 June
2022.
Acquisitions are to be recognised under AASB 3
Business combinations, and separately identifiable
intangible assets are to be separated from the value of
goodwill and recognised as intangible assets.
This area is a key audit matter due to the high level of
management judgement and estimation required to
determine the fair value of net assets acquired and if
there are separately identifiable intangible assets, the
value of the identified intangible assets to be separated
from goodwill and recognised.
80
Our procedures included, amongst others:
Acquisitions provisional accounting and finalised at 30
June 2022:
• Reviewing management's calculation for finalising
the provisional accounting and determining whether
any adjustments made during the measurement
period have been appropriately accounted for; and
• Obtaining the valuation of separately identifiable
intangible assets completed by management’s
expert and verifying the adjustments are
appropriately reflected in the financial statements.
New acquisitions for the year ending 30 June 2022:
• Assessing whether the transaction has been
appropriately accounted for under AASB 3 Business
Combinations;
• Obtaining and reviewing management's calculation
for the acquisition, tracing inputs to supporting
documentation and assessing whether any goodwill
arising as a result of the acquisition has been
appropriately recognised in the financial statements;
• Considering if there are any identifiable intangible
assets such as customer relationships that are to be
separated from goodwill and recognised as an
intangible asset;
• Obtaining the valuations completed by
management’s expert and verifying the intangible
assets are appropriately separated from goodwill;
• Obtaining management's memorandum for
identifying cash-generating units, impairment testing
and allocation of acquired entities, and applying
professional scepticism and assessing for
reasonableness;
• Reviewing material balances from the completion
accounts for each acquisition and testing samples
to source documentation to verify accuracy of
amounts recorded at acquisition date; and
• Assessing the adequacy of disclosures within the
financial statements.
Information other than the financial report and auditor’s report thereon
The Directors are responsible for the other information. The other information comprises the information included
in the Group’s annual report for the year ended 30 June 2022, but does not include the financial report and our
auditor’s report thereon.
Our opinion on the financial report does not cover the other information and we do not express any form of
assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information and, in doing
so, consider whether the other information is materially inconsistent with the financial report or our knowledge
obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this other
information, we are required to report that fact. We have nothing to report in this regard.
Grant Thornton Australia Limited
81
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_2020.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 23 to 30 of the Directors’ report for the year
ended 30 June 2022.
In our opinion, the Remuneration Report of Apiam Animal Health Limited, for the year ended 30 June 2022
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
C S Gangemi
Partner – Audit & Assurance
Melbourne, 29 August 2022
Grant Thornton Australia Limited
Apiam Animal Health Limited
Financial statements for the year ended 30 June 2022
82
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 5 August 2022 (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, 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
CJOEA FAMILY COMPANY PTY LTD
Ordinary Shares
38,850,000
22.27%
PETSTOCK INVESTMENTS PTY LTD
Ordinary Shares
20,000,000
REGAL FUNDS MANAGEMENT PTY
LIMITED AND ITS ASSOCIATES
Ordinary Shares
15,803,149
16.5%
9.35%
Apiam Animal Health Limited
Financial statements for the year ended 30 June 2022
83
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 2 September 2022 and quoted on ASX
Fully paid ordinary shares restricted until 30 November 2022 and quoted on ASX
Fully paid ordinary shares restricted until 2 December 2022 and quoted on ASX
Fully paid ordinary shares restricted until 7 April 2023 and quoted on ASX
Fully paid ordinary shares restricted until 27 May 2023 and quoted on ASX
Fully paid ordinary shares restricted until 1 June 2023 and quoted on ASX
Fully paid ordinary shares restricted until 1 July 2023 and quoted on ASX
Fully paid ordinary shares restricted until 30 July 2023 and quoted on ASX
Fully paid ordinary shares restricted until 2 September 2023 and quoted on ASX
Fully paid ordinary shares restricted until 2 December 2023 and quoted on ASX
Fully paid ordinary shares restricted until 1 June 2024 and quoted on ASX
Fully paid ordinary shares restricted until 1 July 2024 and quoted on ASX
Total Ordinary Shares on issue
Performance Rights
Voting rights of equity securities
Number of
holders
162,098,829
441,828
1,103,753
1,124,453
161,043
252,348
757,292
2,762,298
839,247
441,825
1,124,449
582,660
2,762,294
174,452,319
2,462,022
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 1,839 holders of a total of 174,452,319 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 2022
84
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
344
549
270
541
135
206,550
1,368,458
2,039,228
16,390,947
154,447,136
Totals
1,839
174,452,319
Distribution of performance rights holders
Holdings Ranges
Holders
Total Units
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 – 999,999,999
Totals
0
0
4
22
7
33
0
0
28,163
1,122,470
1,311,389
2,462,022
%
0.12
0.78
1.17
9.40
88.53
100.00
%
0.00
0.00
1.14
45.59
53.26
100.00
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 ($0.695) is as follows:
Total Shares
174,352,319
UMP Shares
UMP Holders
% of issued
shares held by
UMP holders
85,741
213
4.91%
Apiam Animal Health Limited
Financial statements for the year ended 30 June 2022
85
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
37,459,465
21.47%
PETSTOCK INVESTMENTS PTY LTD
CITICORP NOMINEES PTY LIMITED
CS THIRD NOMINEES PTY LIMITED
UBS NOMINEES PTY LTD
21,240,500
12.18%
9,073,381
5.20%
7,329,687
4.20%
6,276,846
3.60%
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
3,518,117
2.02%
SCOLEXIA COMMODITY PTY LTD
2,755,777
1.58%
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
2,527,083
1.45%
CERTANE CT PTY LTD
2,520,238
1.44%
COBASH PTY LIMITED
1,872,006
1.07%
MR ROGER CHARLES CARMODY & MRS MARIS MOORE
CARMODY
HAMILTON ANIMAL HEALTH PTY LTD
MR BRIAN SCUTT
FOUR POST INVESTMENTS PTY LTD
MRS RACHEL LOUISE O'MEARA
SIMON JAMES ROBINSON
MICHAEL JAMES WHITEFORD
SARAH LEONNIE JALIM
MRS KATE JUDITH MALIN
SONJASWRIGHT PTY LIMITED
Total number of shares of Top 20 Holders
Total Remaining Holders Balance
1,771,791
1.02%
1,564,270
0.90%
1,464,319
0.84%
1,386,700
0.79%
1,377,888
0.79%
1,275,673
0.73%
1,275,673
0.73%
1,275,673
0.73%
1,229,161
0.70%
1,211,846
0.69%
108,406,094
62.14%
174,452,319 100.00%
Apiam Animal Health Limited
Financial statements for the year ended 30 June 2022
86
Company Secretary
The Company’s secretary is Eryl Baron.
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: (02) 9290 9600
Stock Exchange Listing
The Company’s ordinary shares are quoted on the Australian Securities Exchange (ASX issuer
code: AHX).
Escrow
2,353,490 Ordinary Shares ae subject to Voluntary Escrow. The number of securities and end
dates of escrow period are shown above.
Unquoted equity securities
The number of each class of unquoted equity securities on issue, and the number of their holders,
are as follows:
Class of restricted
securities
Number of unquoted Equity
Securities
Number of holders
Performance Rights
2,462,022
33
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.
CORPORATE
DIRECTORY
DIRECTORS
Professor Andrew Vizard
Dr Christopher Richards
Mr Michael van Blommestein
Mr Richard Dennis
Professor Jan Tennent
Chairman
Managing Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
COMPANY SECRETARY
Eryl Baron
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
Collins Square, Tower 5
727 Collins Street
Melbourne VIC 3008
BANKERS
National Australia Bank
395 Bourke Street
Melbourne VIC 3000
SHARE REGISTRY
Boardroom Registry Pty Ltd
Level 12, 225 George Street
Sydney NSW 2000
T 1300 737 760
E enquiries@boardroomlimited.com.au
STOCK EXCHANGE
LISTING
Australian Securities Exchange
Level 4, North Tower, Rialto
525 Collins Street
Melbourne VIC 3000
ASX CODE
AHX
WEBSITE
apiam.com.au
ANNUAL REPORT 2022
A P I A M . C O M . A U