ECO ANIMAL HEALTH GROUP PLC
20th July 2012
ECO Animal Health Group plc
(AIM: EAH)
Results for the year ended 31 March 2012
HIGHLIGHTS
First Aivlosin® marketing authorisation for US received after year end, further
approvals expected
31.8 per cent increase in profit after tax to £2.6 million (2011: £2.0 million)
41.6 per cent uplift in diluted earnings per share to 4.19 pence (2011: 2.96 pence)
Rise to £6.5 million (2011: £6.4 million) in profit attributable to shareholders before
interest, tax, depreciation, amortisation, share based payments, impairment, foreign
exchange and minorities.
25 per cent increase in dividend to 3.75 pence per share (2011: 3.0 pence)
Net cash of £9.5 million at year end
Continuing strong Aivlosin® sales in key markets
New subsidiary formed in Mexico
Peter Lawrence, Executive Chairman of ECO Animal Health Group plc, commented:
“ECO Animal Health Group has delivered another strong set of results for the year
ended 31 March 2012 and the current year has started well. We are confident that the
long awaited marketing authorisations in the US and Canada will have a major positive
effect on the development of ECO, although it will be some months before the product
launches gain momentum. We do not expect a noticeable impact on our financial
performance until next year.
ECO is very well placed to further broaden its product ranges and its global reach will
ensure that it capitalises on opportunities as they arise in all the Company’s major
markets. The Company is set for an exciting future and looks forward to maximising
value for shareholders”
ECO ANIMAL HEALTH GROUP PLC
DIRECTORS AND ADVISORS
Directors
Peter Lawrence
Marc Loomes
Kevin Stockdale
Brett Clemo
Julia Trouse
David Danson
Julia Henderson
Chairman
Chief Executive
Finance Director
Executive Director
Executive Director
Non Executive Director
Non Executive Director
Secretary
Julia Trouse
Company Number
01818170
Registered office
Registered auditors
Registrars
Bankers
Nominated Adviser
and Broker
78 Coombe Road
New Malden
Surrey
KT3 4QS
Reeves & Co LLP
Third Floor
24 Chiswell Street
London
EC1Y 4YX
Share Registrars Limited
Suite E, First Floor
9 Lion and Lamb Yard
Farnham
Surrey
GU9 7LL
NatWest plc
Mitcham Branch
282 London Road
Mitcham
Surrey
CR4 2ZP
Cenkos Securities plc
6, 7, 8 Tokenhouse Yard
London
EC2R 7AS
ECO ANIMAL HEALTH GROUP PLC
CONTENTS
Chairman’s statement
Directors’ report
Independent auditors’ report
Consolidated income statement
Consolidated statement of comprehensive income
Consolidated statement of changes in equity
Company statement of changes in equity
Statements of financial position
Statements of cash flows
Page
1 - 3
4 - 9
10 - 11
12
13
14
15
16
17
Notes to the financial statements
18 - 62
ECO ANIMAL HEALTH GROUP PLC
CHAIRMANS STATEMENT
FOR THE YEAR ENDED 31 MARCH 2012
I am pleased to report that ECO Animal Health Group has delivered another
sound set of results for the year ended 31 March 2012. In the Interim Report
issued in December 2011, I advised that the second half had started well with a
significant increase in sales; I am pleased to report that this performance was
maintained for the balance of the year. The results for the year have been
achieved in a marketplace under considerable pressure from the ongoing global
the overall
economic difficulties and
consumption of meat protein continues to grow and the animal health industry
along with it.
is particularly encouraging
that
it
The most important event affecting the future performance of the Group occurred after the year end when,
in July 2012, the Center for Veterinary Medicine (CVM) of the US Food and Drug Administration (FDA)
granted ECO a marketing authorisation in the United States for Aivlosin® 625 mg/g water soluble granules
for swine. This long awaited decision follows an enormous amount of product development and regulatory
work by our staff for the US authorities and represents the culmination of a huge investment by the Group
over the past decade. The significance of this initial approval cannot be over stated as it allows ECO to
enter a market that is one third of the global market for its products, which until now was closed to the
Group.
FINANCIAL
Group turnover increased by close to 5 per cent to £28.3 million (2011: £27.1 million) while in US dollar
terms the increase was 7 per cent. The US dollar exchange rate against other major currencies has a
significant influence on ECO’s performance as a large portion of the Group’s sales and purchases are in
US dollars and the value of that currency influences the translation of our results into sterling. As a global
business, it is inevitable that we are impacted by currency movements and we take steps, where
appropriate, to hedge that risk. In the year under review, the US dollar weakened against sterling and the
Group hedged its exposure about half way through the period, albeit at some initial expense, but this has
subsequently proved to have been the correct course of action.
Profit after tax for the year increased by 31.8 per cent to over £2.6 million (2011: £2.0 million) and profit
before interest and non cash charges of tax, depreciation and amortisation, share based payments,
impairment, foreign exchange and minorities rose to £6.5 million (2011: £6.4 million). I believe that this
measure is a truer reflection of the state of the business than profit before tax, because we are required to
amortise or depreciate drug registration costs, rather than to assess them by the increase in their fair value.
The depreciation figure alone in our financial statements leads to an understatement of the actual value of
our marketing authorisations worldwide and therefore of the total return to shareholders. Further, the figure
for share based payments (which we are required to recognise in the income statement as a measure of
the non cash remuneration received by our employees in return for their efforts during the year) has a
significant impact on our reported profit. The method of calculating the amount charged to the income
statement is an inexact science and will vary from award to award, as market conditions change. This is
because the value of any award can be based on a variety of complex assumptions, variables and models,
which inevitably, are subject to review and will change as further data becomes available over time.
Diluted earnings per share advanced 41.6 per cent reaching 4.19 pence (2011: 2.96 pence) The Group
continues to benefit from enhanced tax allowances associated with the costs of developing its drugs. As a
result of this and the favourable resolution of tax enquiries relating to previous years, the Group continues
to accumulate tax losses, which have served to reduce the necessary level of deferred tax provision when
compared to prior years. As a result, the Group does not expect to have a liability in respect of UK
Corporation Tax for some years. Cash generated from operations during the year exceeded £6 million and
the Group was able to deliver net cash balance at the year end of £9.5 million, a slight increase on the
previous year.
1
ECO ANIMAL HEALTH GROUP PLC
CHAIRMANS STATEMENT
FOR THE YEAR ENDED 31 MARCH 2012
The Board is pleased to declare a dividend of 3.75 pence per share (2011: 3.00 pence) which is an
increase of 25 per cent and reflects our continued confidence in the business and the anticipated further
profit contribution from its product portfolio. This will be paid on 5 October 2012 to shareholders on the
register on 31 August 2012. Once again, we are offering shareholders a scrip alternative to the cash
dividend and remain grateful to the many shareholders who support us in this way and help to conserve
cash within the Company.
OPERATIONS
Overall ECO sales were ahead by nearly 5 per cent in the year to 31 March 2012 and the increase in the
second half of the year, over the equivalent period in 2011, was in excess of 11 per cent. This accelerating
trend is encouraging and was achieved in tough global markets, where pricing pressures intensified during
the year, reflecting the generally difficult environment. ECO responded rapidly to the changing market
dynamics by introducing pricing strategies to retain and, where possible grow, market shares.
We were particularly pleased to see a rise of 23 per cent in our turnover in Latin America, which delivered
an increase in earnings of over 40 per cent from this important and fast growing region. The growth was
driven principally by advances in Aivlosin® sales to Argentina and Venezuela, underpinned by continuing
substantial sales in Brazil. ECO set up a new subsidiary in Mexico which should generate increased sales
of Aivlosin® and other ECO products to the large and growing Mexican and Central American markets.
Further growth was driven by strong sales of Aivlosin® in China, India and Malaysia. Sales from our
Chinese subsidiary, Zhejiang ECO Biok Animal
Health Products Limited, also continued to
grow, rising a further 7 per cent during the year.
As this important business is currently focused
on pigs, the next significant strategic step is to
broaden its product offering by entering the
poultry sector in China for which the company
already holds a number of marketing
authorisations.. Aivlosin®’s excellent product
performance in India, Malaysia and Turkey and
its growing reputation, is leading to increased
penetration in these rapidly developing markets
for poultry.
Pheasant chicks
The difficulties within the Eurozone, coupled with the decline in the value of the Euro against sterling and
the US dollar, meant that the sterling value of turnover and earnings arising from within that area dropped
back slightly. Substantial investment and progress has since been made that will support future Aivlosin®
growth, including an adjustment in strategy with increased focus on key markets, employment of additional
sales support staff, the appointment of a new distributor in France and obtaining an important new approval
for Aivlosin® Water Soluble Granules for use in poultry in Turkey. The European markets remain important
to ECO, although their potential is not as significant as those territories with faster growing animal
production where in general our presence is strong.
We were also particularly encouraged by the growth in UK sales of over 30 per cent, reflecting the
continued success of our direct- to- market strategy with Aivlosin®.
2
ECO ANIMAL HEALTH GROUP PLC
CHAIRMANS STATEMENT
FOR THE YEAR ENDED 31 MARCH 2012
Although the initial signs of recovery in Japan were promising, following the natural disasters of March
2011, it is now apparent that the full impact of these cataclysmic events is taking longer to overcome than
previously thought. Many farmers were put out of business either through flooding, nuclear contamination
or logistical problems and the cumulative effect has caused our business there to suffer for much of the
year. Confidence in the economy and particularly in local agriculture was badly damaged, but following a
series of initiatives undertaken by our Ecopharma subsidiary, its sales have been showing signs of a firm
recovery since the year end.
Aivlosin®– North America
The last few months have been transformational in ECO’s development of Aivlosin®. North America is an
extremely important market for this product and access is dependent on obtaining the necessary regulatory
approvals, which is a very lengthy, costly and exacting process. In November 2011 the Veterinary Drugs
Directorate (VDD) of Health Canada granted a marketing authorisation for Aivlosin® 625 mg/g water soluble
granules for pigs for the treatment of ileitis, an enteric (gut) disease in pigs. The Health Canada approval
was the first in North America for Aivlosin®. Initial sales in Canada, which started in March 2012, have been
very encouraging and the feedback from veterinarians is positive.
In July 2012, after years of trials and preparatory work by ECO’s product development and regulatory
specialists in the UK and North America, the US Food and Drug Administration (FDA) also granted ECO a
marketing authorisation in the United States for Aivlosin® 625 mg/g water soluble granules for pigs for the
treatment of ileitis. The FDA’s approval is ECO’s first in the United States and marks a very important step
in the Group’s continuing development of Aivlosin® as a global veterinary product. ECO established a joint
venture sales and marketing company, Pharmgate Animal Health LLC, in the US in 2010 to prepare for the
launch of Aivlosin®.
These approvals will, in due course, be followed by further authorisations for other formulations and
indications.
PEOPLE
We now employ over 150
people in our 14 offices
around the world and we
are, as always, grateful to
our
hard
dedicated,
working team of highly
qualified specialists who
are making our Group a
leading force in the global
animal health markets.
OUTLOOK
We are confident that the long awaited marketing authorisations in the US and Canada will have a major
positive effect on the development of ECO, although it will be some months before the product launches
gain momentum. We do not expect a noticeable impact on our financial performance until next year. ECO
is very well placed to further broaden its product ranges and its global spread will ensure that it capitalises
on opportunities as they arise in all the Group’s major markets. The Group is set for an exciting future and
looks forward to maximising value for shareholders.
Peter Lawrence
Executive Chairman
19 July 2012
3
ECO ANIMAL HEALTH GROUP PLC
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 MARCH 2012
The directors present their report and financial statements for the year ended 31 March 2012.
Directors
The following directors have held office since 1 April 2011:
Peter Lawrence
Marc Loomes
Kevin Stockdale
Brett Clemo
Julia Trouse
David Danson
Julia Henderson
Principal activities
Chairman
Chief Executive
Finance Director
Executive Director
Executive Director
Non Executive Director
Non Executive Director
The principal activities of the Group in the year under review were those of manufacturers and
suppliers of animal health products.
Results and dividends
The consolidated income statement for the year is set out on page 12.
The profit for the year after tax was £2,626,926 (2011: £1,993,803). The directors have declared a
dividend of 3.75p per share (2011: 3.00p).
Substantial shareholdings
At 2 May 2012, the Company had been notified of the following holdings of 3 per cent or more of its
issued share capital.
P A Lawrence and family
Schroder Investment Management Limited
Prudential plc
Axa Investment Managers SA
Artemis
Appleby Trust (Jersey) Limited
Hargreave Hale & Co
Ordinary shares
11,208,536
10,849,114
7,845,158
3,979,022
3,621,983
2,603,290
2,350,000
Per cent
20.34
19.68
14.23
7.22
6.57
4.72
4.26
4
ECO ANIMAL HEALTH GROUP PLC
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2012
Group research and development activities
The Group is continually researching into and developing new products and markets. Details of
expenditure incurred and written off during the year are shown in the notes to the financial
statements. Following the recent approval of our first marketing authorisation for Aivlosin® in the
USA, the Group remains committed to obtaining further authorisations of its Aivlosin® products in the
USA and Canada and also other key territories such as Korea and Russia. Submissions have been
made to the relevant authorities and approvals are expected in the future, although the exact timing
remains outside the Group’s control.
Review of the business and future developments
A full review of the year, together with an indication of future developments, is given in the Chairman's
statement on pages 1 to 3.
Principal risks and uncertainties
The directors present below their review of the principal risks and uncertainties facing the business. If
any of the following risks materialise, the Group's business, financial condition, prospects and share
price could be materially and adversely affected. The directors consider the following risks along with
specific financial risks such as credit and currency risks, which are more fully outlined in note 32 to
the financial statements, are the most significant, but not necessarily the only ones associated with
the Group and its businesses.
Competition
The Group operates in competitive global markets and there are no assurances that the Group's
competitiveness will improve or that it will win any additional market share from any of its competitors
or maintain existing market shares. The Group reviews its pricing and takes action to control its cost
base to ensure that it remains as competitive as possible and protect its margins. Failure to do this
may result in materially lower margins and loss of market share.
Dependence on key customers and suppliers
The Group is dependent on a number of customers and distributors in each of the territories into
which it sells. The loss of one or more of its key customers could result in lower than expected sales
and have a significant impact on the scale of its operations. The Group seeks to minimise reliance on
key territories and individual customers and distributors.
The Group is also dependent on a small number of suppliers for some of its raw materials and
maintains business interruption insurance in respect of each of these. In the longer term the Group is
working towards a situation where it has dual sourcing on all key supplies.
Timing of product registrations
The Group uses only reputable subcontractors and experts as well as employing highly qualified staff
to ensure that applications for registrations are of the highest possible quality when submitted.
Nevertheless, the Group is subject to occasional delays for example due to backlogs at the licensing
authorities, which are completely outside of its control. These delays can result in the Company falling
short of its short term financial objectives but do not significantly affect its prospects over the longer
term.
5
ECO ANIMAL HEALTH GROUP PLC
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2012
Going concern
The directors believe that the Group is well placed to manage its business risks successfully despite
the uncertain economic outlook. The Group's forecasts and projections, taking account of reasonably
possible changes in trading performance, show that the Group should be able to operate within the
level of its current and expected banking facilities.
After making enquiries, the directors have a reasonable expectation that the Company and Group
have adequate resources to continue in operational existence for the foreseeable future. Accordingly,
they continue to adopt the going concern basis in preparing the financial statements.
Market value of freehold land and buildings
The Group's freehold land and buildings situated at 78 Coombe Road, New Malden, were
independently valued by an appropriately qualified person in April 2010. The market value of the
property at that date was £650,000. The property at Western Road was acquired at open market
value of £156,550 during the year and has not been subsequently revalued.
Key performance indicators
The key performance indicators ("KPIs") for the Group are those that communicate the financial
performance and strength of the Group as a whole to shareholders.
A summary of the KPIs is as follows:
Financial
Revenue
Gross profit
Gross margin %
Earnings due to shareholders before interest, tax
depreciation, amortisation, share-based payments,
foreign exchange differences and minorities.
2012
£
2011
£
28,322,177
10,817,951
38.20
27,078,262
10,712,925
39.56
6,519,723
6,370,109
Cash balances, net of borrowings
9,509,732
9,418,341
Non-financial
Health and safety – major accidents reported to the
board in the year
There are no other major non-financial KPIs.
Nil
Nil
6
ECO ANIMAL HEALTH GROUP PLC
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2012
Directors’ interests
Under the Group’s executive share option scheme the following directors have the right to acquire
Ordinary shares.
M D Loomes
J Trouse
K Stockdale
B Clemo
D Danson
J Henderson
2012
2011
2012
2011
2012
2011
2012
2011
2012
2011
2012
2011
Directors’ emoluments
27,640 at £1.085 100,000 at £1.47 150,000 at £1.50 50,000 at £1.61
583,750 at £1.085 100,000 at £0.85 100,000 at £1.47 150,000 at £1.50
7,640 at £1.085 70,000 at £1.47 75,000 at £1.50 20,000 at £1.61
206,100 at £1.085 50,000 at £0.85 70,000 at £1.47 75,000 at £1.50
20,000 at £1.61
27,640 at £1.085 70,000 at £1.47 75,000 at £1.50 20,000 at £1.61
50,000 at £1.085 50,000 at £0.85 70,000 at £1.47 75,000 at £1.50
20,000 at £1.61
27,640 at £1.085 40,000 at £1.47 75,000 at £1.50 35,000 at £1.35
50,000 at £1.61
60,000 at £1.085 50,000 at £0.85 40,000 at £1.47 75,000 at £1.50
35,000 at £1.35 50,000 at £1.61
30,000 at £0.85
30,000 at £0.85
35,000 at £1.35
35,000 at £1.35
The directors who served in the year received the following; emoluments, pension contributions,
share-based payments and benefits in kind.
P A Lawrence
M D Loomes
J Trouse
K Stockdale
B Clemo
D Danson
J Henderson
2012
£
1,131
304,766
118,075
126,769
176,482
15,447
23,658
----------------
766,328
----------------
2011
£
1,154
266,565
126,522
115,670
162,112
15,903
22,532
----------------
710,459
----------------
Directors' insurance
The Company maintains directors' and officers' liability insurance for the benefit of its directors which
remained in place at 31 March 2012 and throughout the preceding year.
7
ECO ANIMAL HEALTH GROUP PLC
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2012
Financial instruments
The Group's accounting policies for financial instruments and strategy for management of those
financial instruments are given in notes 2 and 32 to the financial statements respectively.
Employees
Applications for employment by disabled persons are given full and fair consideration. When existing
employees become disabled every effort is made to provide continuing employment wherever
possible.
Donations
Charitable donations- Charities Aid Foundation
2012
£
3,500
=======
2011
£
3,620
=======
Creditor payment policy
The Group agrees terms and conditions for its business transactions with its suppliers and payments
are made on these terms, subject to the terms and conditions being met by the suppliers. The Parent
Company has no supplies of goods. Trade payables for the Parent and its UK subsidiary at the year
end amounted to 108 days (2011: 114 days) of average supplies for the year.
Internal financial control
The board of directors is responsible for the Group's system of internal financial control. Internal
control systems are designed to meet the particular needs of the companies concerned and the risks
to which they are exposed. This provides reasonable, but not absolute, assurance against material
misstatement or loss. Strict financial and other controls are exercised by the Group over its subsidiary
companies by day to day supervision of the businesses by the directors.
Corporate governance
The Company’s shares are traded on the Alternative Investment Market of the London Stock
Exchange and the Company is therefore not required to report on compliance with the Combined
Code. The directors support the Combined Code and have complied with all the recommendations
which they feel are relevant to a business the size of ECO Animal Health Group plc.
Stockbrokers
Cenkos Securities plc are the Company's nominated advisor and stockbrokers. The closing share
price on 31 March 2012 was 207p per share (2011: 216p). During the year the average share price
was 214.5p (2011:187p).
Auditors
The auditors Reeves and Co LLP will be proposed for reappointment in accordance with the
provisions of section 489 of the Companies Act 2006.
8
ECO ANIMAL HEALTH GROUP PLC
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2012
Statement of directors' responsibilities
The directors are responsible for preparing the Annual Report and the financial statements in
accordance with applicable law and regulations.
Company law requires the directors to prepare financial statements for each financial year. Under that
law the directors have prepared the Group and Parent Company financial statements in accordance
with International Financial Reporting Standards (IFRSs) as adopted by the European Union. Under
company law the directors must not approve the financial statements unless they are satisfied that
they give a true and fair view of the state of affairs of the Group and the Company and of the profit or
loss of the Group for that period. In preparing these financial statements, the directors are required to:
select suitable accounting policies and then apply them consistently;
make judgements and accounting estimates that are reasonable and prudent;
state whether applicable IFRSs as adopted by the European Union have been followed,
subject to any material departures disclosed and explained in the financial statements;
prepare the financial statements on the going concern basis unless it is inappropriate to
presume that the Group will continue in business.
The directors are responsible for keeping adequate accounting records that are sufficient to show and
explain the Company's transactions and disclose with reasonable accuracy at any time the financial
position of the Company and the Group and enable them to ensure that the financial statements
comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the
Company and the Group and hence for taking reasonable steps for the prevention and detection of
fraud and other irregularities.
The directors are responsible for the maintenance and integrity of the Company's website. Legislation
in the United Kingdom governing the preparation and dissemination of financial statements may differ
from legislation in other jurisdictions.
Statement of disclosure to auditors
So far as each of the directors are aware;
(a)
there is no relevant audit information of which the Company's auditors are unaware, and
they have taken all the steps that they ought to have taken as directors in order to make
(b)
themselves aware of any relevant audit information and to establish that the Company's auditors are
aware of that information.
On behalf of the board
..............................
Peter Lawrence
Director
19 July 2012
9
ECO ANIMAL HEALTH GROUP PLC
INDEPENDENT AUDITORS’ REPORT
TO THE SHAREHOLDERS OF ECO ANIMAL HEALTH GROUP PLC
We have audited the financial statements (the “financial statements”) of ECO Animal Health Group plc
for the year ended 31 March 2012 which comprise the Consolidated income statement, the
Consolidated statement of comprehensive income, the Consolidated and company statements of
financial position, the Consolidated and company statements of changes in equity, the Consolidated
and company statements of cash flows and the related notes. The financial reporting framework that
has been applied in their preparation is applicable law and International Financial Reporting
Standards (IFRSs) as adopted by the European Union and, as regards the Parent Company financial
statements, as applied in accordance with the provisions of the Companies Act 2006.
This report, including the opinions, has been prepared for and only for the Company’s members as a
body in accordance with Chapter 3 of Part 16 of the Companies Act 2006 and for no other purpose.
We do not, in giving these opinions, accept or assume responsibility for any other purpose or to any
other person to whom this report is shown or into whose hands it may come save where expressly
agreed by our prior consent in writing.
Respective responsibilities of directors and auditors
As explained more fully in the Directors’ Responsibilities Statement set out on page 9, the directors
are responsible for the preparation of the financial statements and for being satisfied that they give a
true and fair view.
Our responsibility is to audit the financial statements in accordance with applicable law and
International Standards on Auditing (UK and Ireland). Those standards require us to comply with the
Auditing Practices Board’s Ethical Standards for Auditors.
Scope of the audit of the financial statements
An audit involves obtaining evidence about the amounts and disclosures in the financial statements
sufficient to give reasonable assurance that the financial statements are free from material
misstatement, whether caused by fraud or error. This includes an assessment of: whether the
accounting policies are appropriate to the Group’s and Parent Company’s circumstances and have
been consistently applied and adequately disclosed; the reasonableness of significant accounting
estimates made by the directors; and the overall position of the financial statements.
Opinion on financial statements
In our opinion:
the financial statements give a true and fair view of the state of the Group’s and of the Parent
Company’s affairs as at 31 March 2012 and of the Group’s profit and Group’s and Parent
Company’s cash flows for the year then ended;
the Group’s financial statements have been properly prepared in accordance with IFRSs
adopted by the European Union;
the Parent Company’s financial statements have been properly prepared in accordance with
IFRSs as adopted by the European Union and as applied in accordance with the provisions of
the Companies Act 2006; and
the financial statements have been prepared in accordance with the requirements of the
Companies Act 2006.
Opinion on other matters prescribed by the Companies Act 2006
In our opinion the information given in the Directors’ Report for the financial year for which the
financial statements are prepared is consistent with the financial statements.
10
ECO ANIMAL HEALTH GROUP PLC
INDEPENDENT AUDITORS’ REPORT (Continued)
TO THE SHAREHOLDERS OF ECO ANIMAL HEALTH GROUP PLC
Matters on which we are required to report by exception
We have nothing to report in respect of the following matters where the Companies Act 2006 requires
us to report to you if, in our opinion:
adequate accounting records have not been kept by the Parent Company, or returns
adequate for our audit have not yet been received from branches not visited by us; or
the Parent Company financial statements are not in agreement with the accounting records
and returns; or
certain disclosures of directors’ remuneration specified by law are not made; or
we have not received all of the information and explanations we require for our audit.
James O’Brien FCA
Senior Statutory Auditor
For and on behalf of;
Reeves and Co LLP
Statutory Auditors
Chartered Accountants
London
Date: 19 July 2012
The maintenance and integrity of the Group’s website is the responsibility of the directors; the work
carried out by the auditors does not involve consideration of these matters and, accordingly, the
auditors accept no responsibility for any changes that may have occurred to the financial statements
since they were initially presented on the website.
11
ECO ANIMAL HEALTH GROUP PLC
CONSOLIDATED INCOME STATEMENT
FOR THE YEAR ENDED 31 MARCH 2012
Revenue
Cost of sales
Gross profit
Other income
Administrative expenses
Profit from operating activities
Finance income
Finance costs
Net finance income/(expense)
Profit before income tax
Income tax credit/(charge)
Profit for the year
Profit attributable to:
Owners of the parent company
Minority interest
Profit for the year
Basic and diluted earnings per share
(pence)
Post tax earnings per share
Diluted earnings per share (pence)
Notes
2,3
4
5
6
6
8
24
7
2012
£
28,322,177
(17,504,226)
10,817,951
760,062
(9,373,175)
2011
£
27,078,262
(16,365,337)
10,712,925
178,961
(8,422,529)
2,204,838
2,469,357
130,931
(15,427)
115,504
2,320,342
306,584
2,626,926
2,217,627
409,299
2,626,926
2012
4.24
4.19
73,116
(250,857)
(177,741)
2,291,616
(297,813)
1,993,803
1,590,781
403,022
1,993,803
2011
3.07
2.96
The consolidated income statement has been prepared on the basis that all operations are continuing
operations.
12
ECO ANIMAL HEALTH GROUP PLC
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 MARCH 2012
Notes
2012
£
2011
£
Profit for the year
2,626,926
1,993,803
Other comprehensive income:
Foreign currency translation differences
Defined benefit plan actuarial (losses)/gains
Revaluation of investments
Transfer on disposal of investment
Revaluation of freehold property
Deferred tax on revaluations
Other comprehensive income for the year
21
200,872
(151,000)
(2,828)
(58,766)
-
14,782
3,060
203,229
14,000
61,594
-
52,000
(87,373)
243,450
Total comprehensive income for the year
2,629,986
2,237,253
Attributable to:
Owners of the parent company
Minority interest
24
2,140,405
489,581
2,629,986
1,754,161
483,092
2,237,253
All items listed in other comprehensive income have gone through reserves and are shown in the
consolidated statement of changes in equity.
The notes on pages 18 to 62 form part of these financial statements.
13
ECO ANIMAL HEALTH GROUP PLC
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 MARCH 2012
CONSOLIDATED
Attributable to the owners of the Parent
Share
Share
Treasury Revaluation
Other
Retained
Total
Minority
Capital
premium
Reserve
Reserve Reserves
Earnings
Interest
Total
Equity
Balance as at 31 March
2010
2,580,637
45,487,897
Account
£
£
Profit for the year
Other comprehensive
income:
Foreign currency differences
Actuarial losses on pension
scheme assets
Revaluation of investment
Revaluation of freehold
property
Deferred taxation
Total comprehensive
income for the year
Transactions with owners
recorded directly in equity
Contributions by and
distributions to owners
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Issue of shares in the year
29,121
781,203
-
-
-
-
-
-
29,121
781,203
2,609,758
46,269,100
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Share-based payments
Transfers on expiry of
options
Dividends relating to 2010
Transactions with owners
Balance as at 31 March
2011
Profit for the year
Other comprehensive
income:
Foreign currency differences
Actuarial losses on pension
scheme assets
Revaluation of investment
Transfer on disposal of
investment
Deferred taxation
Total comprehensive
income for the year
Transactions with owners
recorded directly in equity
Contributions by and
distributions to owners
Issue of shares in the year
146,202
4,587,817
Share-based payments
Transfers on expiry of
options
Dividends relating to 2011
Cancellation of share
premium account
Treasury reserve arising
from issue of jointly owned
shares
Transactions with owners
Balance as at 31 March
2012
-
-
-
(13,250,000)
-
-
-
-
-
146,202
(8,662,183)
(5,217,580)
-
(5,217,580)
£
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
£
£
£
£
£
£
519,319
1,141,591
4,569,844
54,299,288
1,400,296
55,699,584
1,590,781
1,590,781
403,022
1,993,803
123,159
123,159
80,070
203,229
14,000
-
-
-
14,000
61,594
52,000
(87,373)
-
-
-
-
14,000
61,594
52,000
(87,373)
1,727,940
1,754,161
483,092
2,237,253
-
-
810,324
303,504
-
-
-
810,324
303,504
-
(114,865)
114,865
-
-
(1,190,888)
(1,190,888)
(92,801)
(1,283,689)
188,639
(1,076,023)
(77,060)
(92,801)
(169,861)
545,540
1,330,230
5,221,761
55,976,389
1,790,587
57,766,976
2,217,627
2,217,627
409,299
2,626,926
120,590
120,590
80,282
200,872
(151,000)
(151,000)
-
-
(2,828)
(58,766)
14,782
-
-
-
-
(151,000)
(2,828)
(58,766)
14,782
2,187,217
2,140,405
489,581
2,629,986
-
-
-
-
-
-
-
-
303,504
-
-
-
-
-
-
-
-
290,890
-
-
-
61,594
52,000
(87,373)
26,221
-
-
-
-
-
-
-
-
(2,828)
(58,766)
14,782
(46,812)
-
-
-
-
-
-
-
-
-
4,734,019
290,890
-
-
-
4,734,019
290,890
-
(96,989)
96,989
-
-
(1,567,595)
(1,567,595)
(388,581)
(1,956,176)
3,250,000
10,000,000
-
-
-
-
-
(5,217,580)
-
(5,217,580)
3,443,901
8,529,394
(1,760,266)
(388,581)
(2,148,847)
2,755,960
37,606,917
(5,217,580)
498,728
4,774,131
15,938,372
56,356,528
1,891,587
58,248,115
14
ECO ANIMAL HEALTH GROUP PLC
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 MARCH 2012
COMPANY
Attributable to the owners of the Parent
Share
Capital
Share
Treasury Revaluation
Other
Retained
Total
premium
Reserve
Reserve Reserves
Earnings
Balance as at 31 March 2010
2,580,637
45,487,897
Account
£
£
Profit for the year
Other comprehensive income:
Actuarial losses on pension scheme
assets
Revaluation of investment
Revaluation of freehold property
Deferred taxation
Total comprehensive income for the
year
Transactions with owners recorded
directly in equity
Contributions by and distributions to
owners
-
-
-
-
-
-
-
-
-
-
-
-
Issue of shares in the year
29,121
781,203
Share-based payments
Transfer to retained earnings re
expired options
Dividends relating to 2010
Transactions with owners
-
-
-
-
-
-
29,121
781,203
Balance as at 31 March 2011
2,609,758
46,269,100
Profit for the year
Other comprehensive income:
Actuarial losses on pension scheme
assets
Revaluation of investment
Transfer on disposal of investment
Deferred taxation
Total comprehensive income for the
year
Transactions with owners recorded
directly in equity
Contributions by and distributions to
owners
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Issue of shares in the year
146,202
4,587,817
Share-based payments
Transfers on expiry of options
Dividends relating to 2011
Cancellation of share premium
account
Treasury reserve arising from issue of
jointly owned shares
-
-
-
-
-
-
-
-
(13,250,000)
£
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
£
£
£
£
250,457
1,141,591
4,902,393
54,362,975
-
-
61,594
52,000
(87,372)
26,222
-
-
-
-
-
-
-
-
-
-
-
-
303,504
1,353,391
1,353,391
14,000
14,000
-
-
-
61,594
52,000
(87,372)
1,367,391
1,393,613
-
-
810,324
303,504
(114,865)
114,865
-
-
(1,190,888)
(1,190,888)
188,639
(1,076,023)
(77,060)
276,679
1,330,230
5,193,761
55,679,528
-
-
-
(2,828)
(58,766)
14,782
(46,812)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
290,890
(96,989)
739,303
739,303
-
-
(151,000)
(151,000)
-
-
-
(2,828)
(58,766)
14,782
588,303
541,491
-
-
4,734,019
290,890
96,989
-
(1,567,595)
(1,567,595)
3,250,000
10,000,000
-
-
-
(5,217,580)
3,443,901
8,529,394
(1,760,266)
Transactions with owners
146,202
(8,662,183)
(5,217,580)
-
(5,217,580)
Balance as at 31 March 2012
2,755,960
37,606,917
(5,217,580)
229,867
4,774,131
14,311,458
54,460,753
15
ECO ANIMAL HEALTH GROUP PLC
STATEMENTS OF FINANCIAL POSITION (CO. NUMBER: 01818170)
AS AT 31 MARCH 2012
Group
2012
£
2011
£
Company
2012
£
2011
£
Notes
Non-current assets
Intangible assets
Property, plant and equipment
Investment property
Investments
Current assets
Inventories
Trade and other receivables
Income tax recoverable
Other taxes and social security
Cash and cash equivalents
Total current assets
Liabilities
Trade and other payables
Short -term borrowings
Income tax
Other taxes and social security
Dividends
Current liabilities
Net current assets
Total assets less current liabilities
Non current liabilities
Deferred tax
11
12
13
14
15
16
18
19
20
39,109,147 38,636,816
1,277,586
-
-
-
655,611
662,599
-
154,773
350,888 20,082,240 20,393,834
1,268,063
154,773
8,738
40,540,721 40,265,290 20,899,612 21,049,445
4,417,317
10,755,390
15,921
292,182
14,002,422
-
-
4,803,929
9,642,817 28,912,983 28,625,161
213,622
3,588
6,243,597
-
229,630
9,793,239
355,667
94,712
9,471,537
29,483,232 24,368,662 38,935,852 35,085,968
(6,705,991)
(4,492,690)
(58,084)
(157,572)
(31,122)
(5,795,322)
(53,196)
(77,529)
(76,699)
(32,369)
(734,166)
(4,492,690)
-
(44,143)
(31,122)
(226,588)
(53,196)
-
(54,628)
(32,369)
(11,445,459)
(6,035,115)
(5,302,121)
(366,781)
18,037,773 18,333,547 33,633,731 34,719,187
58,578,494 58,598,837 54,533,343 55,768,632
17
(330,379)
(831,861)
(72,590)
(89,104)
TOTAL ASSETS LESS TOTAL LIABILTIES
58,248,115 57,766,976 54,460,753 55,679,528
EQUITY
Issued share capital
Share premium account
Treasury reserve
Revaluation reserve
Other reserves
Retained earnings
Minority interests
TOTAL EQUITY
23
25
26
24
2,755,960
2,609,758
2,755,960
2,609,758
37,606,917 46,269,100 37,606,917 46,269,100
-
(5,217,580)
276,679
498,728
1,330,230
4,774,131
5,193,761
15,938,372
(5,217,580)
-
229,867
545,540
4,774,131
1,330,230
5,221,761 14,311,458
56,356,528 55,976,389 54,460,753 55,679,528
-
1,891,587
1,790,587
-
58,248,115 57,766,976 54,460,753 55,679,528
Approved by the Board and authorised for issue on 19 July 2012
Peter Lawrence Director
The notes on pages 18 to 62 form part of these financial statements.
16
ECO ANIMAL HEALTH GROUP PLC
STATEMENT OF CASHFLOWS
FOR THE YEAR ENDED 31 MARCH 2012
Cashflows from operating activities
Profit before income tax
Adjustment for:
Net finance costs/(income)
Depreciation
Amortisation of intangible assets
Pension payments
Pension operating costs
Share based payments
Profit on disposal of investment
Operating cash flows before movements
in working capital
Change in inventories
Change in receivables
Change in payables
Cash generated from operations
Finance costs
Income tax
Net cash from operating activities
Cash flows from investing activities
Disposal of investment
Acquisition of property, plant and equipment
Acquisition of investment property
Purchase of drug registrations
Finance income
Net cash used in investing activities
Cash flows from financing activities
Proceeds from issue of share capital
Dividends paid
Purchase of own shares
Net cash used in financing activities
Net (decrease)/increase in cash and cash
equivalents
Foreign exchange movements
Balance at 1 April 2011
Balance at 31 March 2012
Notes
12 & 13
11
21
21
22
Group
2012
£
Group
2011
£
Company
2012
£
Company
2011
£
2,320,342
2,291,616
732,074
1,352,597
(115,504)
98,219
3,593,365
(64,000)
3,000
290,890
(28,210)
6,098,102
386,612
(1,396,043)
991,542
6,080,213
(90,356)
140,185
6,130,042
177,741
88,543
3,239,948
(59,000)
2,000
303,504
-
6,044,352
893,380
(421,077)
2,158,550
8,675,205
(54,169)
(155,860)
8,465,176
(398,154)
21,932
-
(64,000)
3,000
290,890
(58,766)
526,976
-
(599,864)
497,093
424,205
(89,831)
219,119
553,493
(406,817)
20,859
-
(59,000)
2,000
303,504
-
1,213,143
-
772,301
146,407
2,131,851
(52,866)
(742)
2,078,243
12
13
11
308,766
(140,457)
(156,550)
(4,063,647)
126,931
(3,924,957)
-
(151,257)
-
(4,269,988)
73,116
(4,348,129)
308,766
(27,143)
(156,550)
-
483,985
609,058
-
(3,766)
-
-
459,683
455,917
4,390,913
(1,614,317)
(5,217,580)
(2,440,984)
305,995
(776,145)
-
(470,150)
4,390,913
(1,225,736)
(5,217,580)
(2,052,403)
305,995
(683,344)
-
(377,349)
(235,899)
327,290
9,418,341
9,509,732
3,646,897
(131,405)
5,902,849
9,418,341
(889,852)
-
6,190,401
5,300,549
2,156,811
-
4,033,590
6,190,401
18
17
ECO ANIMAL HEALTH GROUP PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2012
General information
1.
Eco Animal Health Group plc (“the company”) and its subsidiaries (together “the group”) manufacture
and supply animal health products globally.
The Company is traded on the AIM market of the London Stock Exchange and is incorporated and
domiciled in the UK. The address of its registered office is 78 Coombe Road, New Malden, Surrey,
KT3 4QS.
2.
Summary of significant accounting policies
Basis of preparation
2.1
The group has presented its annual report and accounts in accordance with International Financial
reporting Standards (IFRS), as adopted by the European Union, IFRIC interpretations and the
Companies Act 2006 applicable to companies reporting under IFRS.
The preparation of financial statements, in conformity with IFRS as adopted by the European Union,
requires the use of estimates and assumptions that affect the reported amounts of assets and
liabilities at the date of the financial statements and the reported amounts of revenue and expenses
during the reporting period. Although these estimates are based on management’s best knowledge of
the amount, event or actions, actual results ultimately may differ from those estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to
accounting estimates are recognised in the period in which the estimate is revised if the revision
affects only that period or in the period of the revision and future periods if the revision affects both
current and future periods.
The principal accounting policies of the group are set out below and have been applied consistently in
dealing with items which are considered material in relation to the Group’s financial statements.
Adoption of new and revised standards
2.2
At the date of authorisation of these financial statements, the following standards and interpretations
to existing standards are mandatory for the first time for the accounting period ended 31 March 2012.
IFRIC 19 (issued 2009)
IFRS 1 (amended
2010)
IFRS 3
IFRIC 14 (amended 2009)
IAS 24 (revised 2009)
IAS 34
IFRIC 13
"Extinguishing Financial Liabilities with
Equity Instruments"
"Limited Exemption from Comparative
IFRS Disclosures for first time Adoptors"
"Measurement of non-controlling interests"
"Prepayments of a Minimum Funding
Requirement"
"Related Party Disclosures"
"Significant events and transactions"
"Fair value of award credit"
Effective from
01 July 2010
01 July 2010
01 July 2010
01 January 2011
01 January 2011
01 January 2011
01 January 2011
18
ECO ANIMAL HEALTH GROUP PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
FOR THE YEAR ENDED 31 MARCH 2012
2.3 Adoption of new and revised standards (continued)
The adaption of these standards and interpretations has not had a significant impact on the Group. At
the date of the authorisation of these financial statements, the following standards and interpretations
were in issue but not yet effective.
Effective from
IFRS 1 (amended
2010)
IFRS 7 (amended
2010)
IAS12 (amended 2012)
IFRS 9 (issued 2009)
IFRS 10 (issued 2011)
IFRS 11 (issued 2011)
IFRS 12 (issued 2011)
IFRS 13 (issued 2011)
IAS 1 (issued 2011)
IAS 19
"Severe Hyperinflation and Removal of
Fixed Dates for First-time Adoptors"
01 July 2011
Financial Instruments: Disclosures"
01 July 2011
"Deferred Tax: Recovery of Underlying
Assets"
"Financial Instruments"
"Consolidated Financial Statements"
"Joint arrangements"
"Disclosure of Interests in Other Entities"
"Fair Value Measurement"
"Presentation of other items of
Comprehensive Income"
"Employee Benefits (Revised)"
01 January 2012
01 January 2013
01 January 2013
01 January 2013
01 January 2013
01 January 2013
01 July 2012
01 January 2013
A review of the impact of these standards, amendments and interpretations continues. At this stage
the directors do not believe that they will give rise to any significant financial impact.
The Group did not adopt any new or amended standards early during the year and does not plan to
early adopt any of the standards issued but not yet effective.
Basis of consolidation
2.4
The consolidated financial statements comprise the accounts of the Company and its subsidiaries
drawn up to 31 March 2012.
An entity is classed as a subsidiary of the Company when as a result of contractual arrangements the
Company has the power to govern its financial and operating policies so as to obtain benefits from its
activities.
The purchase method of accounting is used to account for the acquisition of subsidiaries by the
Group. The cost of an acquisition is measured, as the fair value of the assets given, equity
instruments issued and liabilities incurred or assumed at the date of exchange, plus costs directly
attributable to the acquisition. Identifiable assets acquired and contingent liabilities assumed in a
business combination are measured initially at their fair values at the acquisition date, irrespective of
the extent of any minority interest. The excess of the cost of acquisition over the fair value of the
Group’s share of the identifiable net assets acquired is recorded as goodwill. If the cost of acquisition
is less than the fair value the difference is recognised directly in the income statement.
Accounting policies have been changed where material to ensure consistency with the policies
adopted by the Group. Although the subsidiaries in Brazil and China have December year ends, the
Group uses management accounts to the end of March to prepare the Group accounts. Subsidiaries
are wholly consolidated from the date on which control is transferred to the Group. They are
deconsolidated from the date that control ceases.
Intercompany transactions, balances and unrealised gains on transactions between group companies
are eliminated on consolidation.
19
ECO ANIMAL HEALTH GROUP PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
FOR THE YEAR ENDED 31 MARCH 2012
Segment reporting
2.5
Operating segments are reported in a manner consistent with the internal reporting to the chief
operating decision-maker. The chief operating decision-maker who is responsible for allocating
resources and assessing performance of the operating segments has been identified as the Board.
2.6
(a)
Foreign currency translation
Functional and presentational currency
Items included in the financial statements of each of the Group’s entities are measured using the
currency of the primary economic environment in which the entity operates (“functional currency”).
The consolidated financial statements are presented in Pounds Sterling, which is the Company’s
functional and the Group’s presentational currency.
(b)
Transactions and balances
Monetary assets and liabilities denominated in foreign currencies are translated into Pounds Sterling
at the rates of exchange ruling at the date of the financial statements.
Foreign currency transactions are translated into the functional currency using the exchange rates
prevailing at the date of the transactions. Foreign exchange gains and losses resulting from the
settlement of such transactions and from the translation at period end exchange rates of monetary
assets and liabilities denominated in foreign currencies are recognised in the income statement.
Foreign exchange gains and losses that relate to borrowing and cash and cash equivalents are
presented in the income statement within finance income or finance costs.
(c)
Group companies
The results and financial position of all Group entities that have a functional currency different from
the presentation currency are translated into the presentation currency as follows;
assets and liabilities for each balance sheet presented are translated at the closing exchange
rate at the date of the balance sheet;
income and expenses for each income statement are translated at average exchange rates
unless this average is not a reasonable approximation of the cumulative effect of the rates
prevailing on the transaction dates, in which case the income and expenses are translated at
the rate on the dates of the transaction; and
all resulting exchange differences are recognised as a separate component of equity.
When a foreign operation is partially disposed or sold, exchange differences that were recognised in
equity are recognised in the income statement as part of the gain or loss on sale. Goodwill and fair
value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of
the foreign entity and translated at the closing exchange rate.
2.7
Financial instruments
Non-derivative financial assets
The Group initially recognises loans and receivables and deposits on the date that they are
originated. All other financial assets (including assets designated at fair value through profit or loss)
are recognised initially on the trade date at which the Group becomes a party to the contractual
provisions of the instrument.
20
ECO ANIMAL HEALTH GROUP PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
FOR THE YEAR ENDED 31 MARCH 2012
The Group derecognises a financial asset when the contractual rights to the cash flows from the asset
expire, or it transfers the rights to receive the contractual cash flows from the financial asset in a
transaction in which substantially all the risks and rewards of ownership of the financial asset are
transferred. Any interest in transferred financial assets that is created or retained by the Group is
recognised as a separate asset or liability.
Financial assets and liabilities are offset and the net amount presented in the statement of financial
position when, and only when, the Group has a legal right to offset the amounts and intends to settle
on a net basis or to realise the asset and settle the liability simultaneously.
The Group has the following non-derivative financial assets:
Loans and receivables
Loans and receivables are financial assets with fixed or determinable payments that are not quoted in
an active market. Such assets are recognised initially at fair value plus any directly attributable
transaction costs. Subsequent to initial recognition loans and receivables are measured at amortised
cost using the effective interest method, less any impairment losses.
Loans and receivables comprise trade and other receivables and cash and cash equivalents.
Cash and cash equivalents comprise cash balances and call deposits with original maturities of three
months or less. Bank overdrafts that are repayable on demand and form an integral part of the
Group’s cash management are included as a component of cash and cash equivalents for the
purpose of the statement of cash flows.
Non-derivative financial liabilities
All financial liabilities (including liabilities designated at fair value through profit or loss) are recognised
initially on the date at which the Group becomes a party to the contractual provisions of the
instrument.
The Group derecognises a financial liability when its contractual obligations are discharged or
cancelled or expire.
The Group has the following non-derivative financial liabilities: bank overdrafts and trade and other
payables.
Such financial liabilities are recognised initially at fair value plus any directly attributable transaction
costs. Subsequent to initial recognition these financial liabilities are measured at amortised cost using
the effective interest method.
Goodwill
2.8
Goodwill arising on the acquisition of an entity represents the excess of the costs of acquisition over
the Group’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities of
the entity recognised at the date of acquisition.
Goodwill is initially recognised as an asset at cost and is subsequently measured at cost less any
accumulated impairment losses. Goodwill is not subject to amortisation but is tested for impairment.
Negative goodwill arising on an acquisition is recognised directly in the income statement. On
disposal of a subsidiary or a jointly controlled entity, the attributable amount of goodwill is included in
the determination of the profit or loss recognised in the income statement on disposal. Goodwill
arising before the date of transition to IFRS, on 1 April 2004, has been retained at the previous UK
GAAP amounts, subject to being tested for impairment at that date. Goodwill written off to reserves
under UK GAAP prior to 1998 has not been reinstated and is not included in determining any
subsequent profit or loss on disposal.
21
ECO ANIMAL HEALTH GROUP PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
FOR THE YEAR ENDED 31 MARCH 2012
Other intangible assets
2.9
Drug registrations, patents and licences
The Group recognises internally generated or externally acquired intangible assets at cost and
subsequently recognises them at cost less accumulated amortisation and impairment losses.
Intangible assets acquired as part of a business combination are recognised at fair value.
Expenditure on drug registrations and licences is recognised as an internally generated or externally
acquired intangible asset only if all the following conditions are met:
an asset is created that can be identified
it is probable that the asset created will generate future economic benefits: and
the development cost of the asset can be measured reliably.
All drug registrations and licences are amortised on a straight-line basis over their useful economic
life of 10 years.
Distribution rights
Distribution rights are recognised at cost and amortised on a straight line basis over their estimated
useful economic life of 20 years. They are reviewed for impairment when any indication of potential
impairment exists.
Property, plant and equipment and depreciation
2.10
Plant and equipment are stated at cost less depreciation. Depreciation is provided at rates calculated
to write off the cost less estimated residual value of each asset over its expected useful life, as
follows;
Plant and machinery
20% on cost
Fixtures, fittings and equipment 20% on cost
25% on cost
Motor Vehicles
Freehold land and buildings are stated at valuation less depreciation. The property is professionally
valued by a qualified surveyor at least once every three years. Surpluses and deficits arising from the
periodic valuations are taken to the revaluation reserve in the statement of financial position and are
recognised in the statement of comprehensive income for the year. Depreciation is provided at a rate
calculated to write off the valuation less estimated residual value over the remaining useful life of the
building at a rate of 2 per cent per annum. Land is not depreciated.
Impairment of non-financial assets
2.11
The carrying amounts of the Group’s assets are reviewed at each year end, to determine whether
there is any indication of impairment. If any such indication exists, the asset’s recoverable amount is
estimated in order to determine the impairment loss if any. The recoverable amount is the higher of its
fair value and its value in use. For intangible assets with an indefinite useful life, an impairment test is
performed at each year end.
In assessing value in use, the expected future cash flows from the asset are discounted to their
present value using a pre-tax discount rate that reflects current market assessments of the time value
of money and the risks specific to the asset. An impairment loss is recognised in the income
statement whenever the carrying amount of an asset or its cash-generating unit exceeds its
recoverable amount.
A previously recognised impairment loss is reversed if the recoverable amount increases as a result
of a change in the estimates used to determine the recoverable amount, but not to an amount higher
than the carrying amount that would have been determined (net of depreciation) had no impairment
loss been recognised in prior years.
22
ECO ANIMAL HEALTH GROUP PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
FOR THE YEAR ENDED 31 MARCH 2012
Investment property
2.12
Investment property is property held either to earn rental income or for capital appreciation or for both,
but not for sale in the ordinary course of business, use in the production or supply of goods or
services or for administrative purposes. Investment property is measured at cost on initial recognition
and subsequently at its cost less any accumulated impairment and depreciation.
2.13
The Group leases certain property, plant and equipment.
Leasing
Assets obtained under finance leases, where the Group has substantially all the risks and rewards of
ownership are capitalised as property, plant and equipment and depreciated over the shorter of the
lease term and their useful lives. Obligations under such agreements are included in borrowings net
of the financial charge allocated to future periods. The financial element of the rental payment is
charged to the income statement so as to produce constant periodic rates of charge on the net
obligations outstanding in each period.
Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor
are classified as operating leases. Payments made under operating leases are charged to the income
statement on a straight-line basis over the period of the lease.
Inventories
2.14
Inventories are valued at the lower of cost and net realisable value. Cost is determined using the first-
in, first-out method. The cost of finished goods comprises raw materials, direct labour and other direct
costs. Net realisable value is the estimated selling price in the ordinary course of business.
Trade receivables
2.15
Trade receivables are measured at initial recognition at fair value and are subsequently measured at
amortised cost using the effective interest rate method. Appropriate allowance for estimated,
irrecoverable amounts are recognised in profit or loss when there is objective evidence that the asset
is impaired. The allowance recognised is measured as the difference between the asset’s carrying
amount and the present value of estimated future cash flows discounted at the effective interest rate
computed at initial recognition.
Investments
2.16
Non-current asset investments are stated at fair value, including transaction costs, less impairment.
They are recognised or derecognised on the date when the contract for acquisition or disposal
requires the delivery of that investment.
Investments in subsidiaries are stated at cost less impairment in the Parent Company’s statement of
financial position.
An impairment is recognised in profit or loss when there is objective evidence that the asset is
impaired and is measured on the difference between the investment’s carrying amount and the
present value of estimated future cash flows discounted at the effective interest rate adjusted for a
risk premium. Impairment losses are reversed in subsequent periods when an increase in the
investment’s recoverable amount can be related objectively to an event occurring after the impairment
was recognised, subject to the restriction that the carrying amount of the investment at the date the
impairment is reversed shall not exceed what the amortised costs would have been had the
impairment not been recognised.
Investments classified as available-for-sale are stated at fair value. Where securities are held for
trading purposes, gains and losses arising from changes in fair value are included in net profit or loss
for the period. For available-for-sale investments, gains and losses arising from changes in fair value
are recognised directly in equity, until the security is disposed of or is determined to be impaired, at
which time the cumulative gain or loss previously recognised in equity, determined using the weighted
average cost method, is included in the net profit or loss for the period.
23
ECO ANIMAL HEALTH GROUP PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
FOR THE YEAR ENDED 31 MARCH 2012
Interest in joint ventures
2.17
A joint venture is a contractual arrangement whereby the Group and other parties undertake an
economic activity that is subject to joint control; that is, when the strategic financial and operating
policy decisions relating to the activities require the unanimous consent of the parties sharing control.
The Group reports its interests in jointly controlled entities using proportionate consolidation. The
group’s share of the assets, liabilities, income, expenses and cash flows of jointly controlled entities
are combined with the equivalent items in the results on a line-by-line basis.
2.18 Cash and cash equivalents
Cash and cash equivalents include cash in hand, deposits held on call with banks, other short-term
highly liquid investments with original maturities of three months or less and bank overdrafts. Bank
overdrafts are shown within borrowings in current liabilities in the statement of financial position.
Financial liabilities and equity
2.19
Financial liabilities and equity instruments are classified according to the substance of the contractual
arrangements entered into. An equity instrument is any contract that evidences a residual interest in
the assets of the Group after deducting all of its liabilities.
2.20 Bank borrowings and loans
Interest-bearing bank loans and overdrafts are recorded as the proceeds received, net of direct issue
costs (which equate to fair value). Finance charges including premiums payable on settlement or
redemption and direct issue costs are accounted for on an accruals basis in profit or loss using the
effective interest rate method and are added to the carrying amount of the instrument to the extent
that they are not settled in the period in which they arise.
Trade payables
2.21
Trade payables are initially measured at fair value and are subsequently measured at amortised cost
using the effective interest rate method.
Provisions
2.22
Provisions are recognised when the Group has a present obligation as a result of a past event and it
is probable that the Group will be required to settle the obligation. Provisions are measured at the
directors’ best estimate of the expenditure required to settle the obligation outstanding at the year end
and are discounted to present value where the effect is material.
2.23 Revenue recognition
Revenue comprises the fair value of the consideration received or receivable for the sale of goods in
the ordinary course of the Group’s activities. Revenue is shown net of value added tax, returns,
rebates and discounts and after eliminating sales within the Group.
The Group recognises revenue on despatch of the goods (which the directors believe transfers
substantially all the risks and rewards of ownership to the buyer). No goods are despatched on a sale
or return basis. Distributors trade on their own account and not as agents.
The Group also receives interest, royalty income and management charges in respect of accounting
services supplied to certain ex-subsidiaries. The amounts are small and are recognised on an
accruals basis.
Pensions
2.24
Defined Contribution Scheme
The pension costs charged against operating profits represent the amount of the contributions
payable to the schemes in respect of the accounting period.
24
ECO ANIMAL HEALTH GROUP PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
FOR THE YEAR ENDED 31 MARCH 2012
Defined Benefit Scheme
The regular cost of providing retirement pensions and related benefits is charged to the income
statement over the employees’ service lives on the basis of a constant percentage of earnings. Any
difference between the charge to the income statement and the contributions paid to the scheme are
disclosed as an asset or liability in the statement of financial position in accordance with IAS 19.
Actuarial gains or losses are taken directly to equity in the statement of comprehensive income.
Share-based payments
2.25
The Group has applied the requirements of IFRS2 Share-based payments. In accordance with the
transitional provisions, IFRS2 has been applied to all grants of equity instruments after 7 November
2002 that were unvested at 1 January 2005.
The Group issues equity-settled share-based payments to certain employees in exchange for
services from those employees. Equity-settled share-based payments are measured at fair value
(excluding the effect of non market-based vesting conditions) at the date of grant. The fair value
determined at the grant of such equity-settled share-based payments is expensed on a straight-line
basis over the vesting period, based on the Group’s estimate of shares that will eventually vest and
adjusted for the effect of non market-based vesting conditions (with a corresponding movement in
equity).
The Group’s Employee Benefit Trust (“the Trust”) was set up on 6 October 2011 to administer the
Group’s Joint Share Ownership Plan (JSOP). The trust was funded by loans from the Group, with its
assets comprising shares in the Company. The Group recognised the assets and liabilities of the
Trust in its own accounts and the carrying value of the Company’s shares held by the Trust were
recorded as a deduction in total equity until such a time as the shares vest unconditionally to
employees.
Fair value, for both options and jointly owned shares is measured by use of the Black-Scholes model.
The expected life used in the model has been adjusted, based on management’s best estimate, for
the effects of non-transferability, exercise restrictions and behaviour considerations.
Further details of the inputs to the Black-Scholes model can be found in note 22 to the accounts.
Taxation
2.26
Tax expense for the period comprises current and deferred tax.
Current tax, including UK corporation tax and foreign tax is provided at amounts expected to be paid
(or recovered) using the tax rates and laws that have been enacted or substantially enacted by the
year end. Tax expenses are recognised in the income statement or statement of comprehensive
income according to the treatment of the transactions which give rise to them.
Deferred income tax is recognised, using the liability method, on temporary differences arising
between the tax basis of assets and liabilities and their carrying amount in the financial statements.
Deferred income tax is determined using tax rates (and laws) that have been enacted, or substantially
enacted, by the date of the statement of financial position and are expected to apply when the related
deferred tax asset is realised or deferred tax liability is settled.
Deferred tax assets are recognised only to the extent that it is probable that future taxable profits will
be available against which the temporary differences can be utilised.
25
ECO ANIMAL HEALTH GROUP PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
FOR THE YEAR ENDED 31 MARCH 2012
Equity
2.27
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new
shares or options are shown in equity as a deduction, net of tax, from the proceeds.
Amounts arising on the restructuring of equity and reserves to protect creditor interests are credited to
the capital redemption reserve.
The Treasury reserve arises when the Company issues equity share capital under its Joint Share
Ownership Plan, which is held in trust by ECO Animal Health Group plc Employee Benefit Trust. The
interests of this trust are consolidated into the Group’s financial statements and the relevant amount
treated as a reduction in equity. The expenses of the trust are included in the consolidated income
statement.
2.28 Dividend distribution
Final dividend distributions to the Company’s shareholders are recognised as liabilities in the financial
statements in the period in which they are approved by the Company’s shareholders. Interim
dividends are recognised when they are paid.
2.29 Critical accounting estimates and judgements
The Group makes estimates and assumptions concerning the future. The resulting accounting
estimates will, by definition, seldom equal the related actual results. The estimates and assumptions
that have a significant risk of causing a material adjustment to the carrying amounts of assets and
liabilities within the next financial year are:
(a) Estimated impairment value of intangible assets
The Group tests annually whether intangible assets with indefinite life have suffered any
impairment. Other intangible assets are reviewed for impairment when an indication of
potential impairment exists. Impairment provisions are recorded as applicable based on
directors’ estimates of recoverable values. Details of the impairment reviews performed can
be found in note 11 of the financial statements.
(b) Income taxes
The Group is subject to income taxes predominantly in the United Kingdom but also in other
jurisdictions.
Significant estimates are required in determining the provision for income taxes. There are
some transactions and calculations for which the ultimate tax determination is uncertain. The
Group recognises assets and liabilities based on estimates of the final agreed position. Where
the final tax outcome of these matters is different from the amounts that were initially
recorded, such differences will impact the income tax and deferred tax provisions in the
period in which such determination is made.
(c) Pension scheme
The Group maintains one defined benefit pension scheme which has been accounted for
according to the provisions of IAS19. Although the assumptions were determined by a
qualified actuary, any change in those assumptions may materially impact the financial
position and results of the Group. Details of the assumptions used can be found in note 21 of
the financial statements.
(d) Share-based payments
The charge to the Income Statement in respect of share-based payments has been externally
calculated using management’s best estimates of the amount of options expected to vest and
various other inputs to the Black-Scholes model, as disclosed in note 22. Any variation in
those assumptions may have a material impact on the Group’s future results and financial
position.
26
ECO ANIMAL HEALTH GROUP PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
FOR THE YEAR ENDED 31 MARCH 2012
Segment information
3.
Management has determined the operating segments based on the reports reviewed by the Board
that are used to make strategic decisions. The Board considers the business from a geographical
perspective. Geographically, management considers the performance in the UK and Europe, China,
Japan and the Indian subcontinent, Latin America and the rest of the world. The segment information
provided to the Board for the year ended 31 March 2012 is as follows;
Management considers Earnings before Interest, Tax, Depreciation and Amortisation (“EBITDA”),
adjusted for share-based payments.
China, Japan
and the
Indian
subcontinent
£
U.K.
£
Europe
£
Latin
America
£
Rest of
the world
£
Total
£
Year ended 31 March
2012
Total segmental
revenue
Inter-segment revenue
Revenue from external
customers
Sale of goods
Royalties
760,235 4,201,343
-
-
11,546,943
(2,421,888)
11,791,871 4,644,930 32,945,322
(4,623,145)
(2,196,659)
(4,598)
760,235 4,201,343
760,235 4,201,343
-
760,235 4,201,343
-
9,125,055
9,125,055
-
9,125,055
9,595,212 4,640,332 28,322,177
9,595,212 4,325,068 28,006,913
315,264
315,264
9,595,212 4,640,332 28,322,177
-
Adjusted EBITDA
Total assets
(846,287) 1,103,737
15,285,976 9,464,789
1,934,133
20,078,286
2,636,392 1,359,337
6,187,312
16,556,570 8,638,332 70,023,953
Year ended 31 March
2011
Total segmental
revenue
Inter-segment revenue
Revenue from external
customers
Sale of goods
Royalties
567,921 4,344,378
-
-
12,198,318
(2,218,332)
10,095,787 4,433,739 31,640,143
(4,561,881)
(2,343,549)
-
567,921 4,344,378
567,921 4,344,378
-
567,921 4,344,378
-
9,979,986
9,979,986
-
9,979,986
7,752,238 4,433,739 27,078,262
7,752,238 4,091,730 26,736,253
342,009
342,009
7,752,238 4,433,739 27,078,262
-
Adjusted EBITDA
Total assets
(935,268) 1,416,463
11,843,501 9,446,879
2,481,290
20,182,417
1,849,331 1,289,536
6,101,352
14,721,730 8,439,425 64,633,952
27
ECO ANIMAL HEALTH GROUP PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
FOR THE YEAR ENDED 31 MARCH 2012
Segment information (continued)
3.
Goodwill and other intangible assets are initially allocated to the geographical segments on the basis
of the proportion of sales achieved by each segment.
A reconciliation of adjusted EBITDA to profit before tax is provided as follows:
Adjusted EBITDA for reportable segments
Depreciation
Amortisation
Share-based payment charges
Finance income/(expense)
Profit before tax
2012
£
6,187,312
(98,219)
(3,593,365)
(290,890)
115,504
2,320,342
2011
£
6,101,352
(88,543)
(3,239,948)
(303,504)
(177,741)
2,291,616
Other income
4.
This includes an amount of £550,000 received in compensation for a claim against a former adviser
relating to tax losses not claimed within the statutory time limit.
28
ECO ANIMAL HEALTH GROUP PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
FOR THE YEAR ENDED 31 MARCH 2012
5.
Result from operating activities
Result from operating activities is stated after charging:
Cost of inventories recognised as an expense
Employee benefits expenses
Amortisation of intangible assets
Depreciation
Loss on foreign exchange transactions
Research and development
Operating lease rentals
Fees payable to the Company's auditor for the audit of the parent
Company and Group annual accounts
Fees payable for audit of the Company's subsidiaries pursuant to
legislation
Earnings due to shareholders before interest, tax, depreciation,
amortisation, share-based payments and foreign exchange
differences.
Profit from operating activities
Depreciation
Amortisation
Share-based payments
Foreign exchange differences
Minorities
2012
£
2011
£
17,504,226 16,365,337
2,879,736
3,239,948
88,543
268,757
29,245
146,221
2,967,640
3,593,365
98,219
332,411
37,561
178,625
18,000
18,000
27,000
27,000
2012
£
2011
£
2,204,838
98,219
3,593,365
290,890
2,469,357
88,543
3,239,948
303,504
6,187,312
332,411
6,101,352
268,757
6,519,723
(409,299)
6,370,109
(403,022)
6,110,424
5,967,087
29
ECO ANIMAL HEALTH GROUP PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
FOR THE YEAR ENDED 31 MARCH 2012
6.
Finance cost/income
Finance costs
Interest paid
Foreign exchange differences on bank loans and overdrafts
Finance income
On short term bank deposits
Net finance income/(expense)
2012
£
2011
£
(90,356)
74,929
(54,169)
(196,688)
130,931
115,504
73,116
(177,741)
Earnings per share
7.
The calculation of basic earnings per share is based on the post tax profit for the year divided by the
weighted average number of shares in issue during the year.
2012
2011
Earnings Weighted
average
number of
shares
Per share
amount
Earnings Weighted
average
number of
shares
Per share
amount
£'000
000
(pence)
£'000
000
(pence)
Earrnings attributable to
ordinary shareholders on
continuing operations after
tax
Dilutive effect of share
options
Fully diluted earnings per
share
2,218
52,333
4.24
1,590
51,873
3.07
-
553
(0.05)
-
1,860
(0.11)
2,218
52,886
4.19
1,590
53,733
2.96
Dilutive earnings per share takes into account the dilutive effect of share options. For the purposes of
calculating earnings per share, shares held by the Employee Benefit Trust as part of the Joint Share
Ownership Plan are excluded from the calculation of the weighted average number of shares. The
weighted average number of shares held by the Trust during the year was 1,233,950.
30
ECO ANIMAL HEALTH GROUP PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
FOR THE YEAR ENDED 31 MARCH 2012
8.
Taxation
Current tax year
Foreign corporation tax on profits for the year
Adjustment for prior years
Current tax
Deferred tax
Origination and reversal of temporary differences
Income tax(credit)/charge
Factors affecting the tax charge for the year
Profit on ordinary activities before taxation
Profit on ordinary activities before taxation multiplied by the applicable
rate of UK corporation tax of 26% (2011: 28%)
Effects of:
Non deductible expenses
Non chargeable credits
Enhanced allowance on research and development expenditure
Lower tax rate for Chinese subsidiary
Unused tax losses carried forward
Other tax adjustments
Income tax charge
Applicable tax rate per UK legislation
Effects of:
Non deductible expenses
Non chargeable credits
Enhanced allowance on research and development expenditure
Lower tax rate for Chinese subsidiary
Unused tax losses carried forward
Other tax adjustments
Effective tax rate
31
2012
£
2011
£
189,527
(9,411)
180,116
189,248
(14,205)
175,043
(486,700)
122,770
(306,584)
297,813
2,320,342 2,291,616
2012
£
2011
£
603,289
641,652
148,535
(453,659)
73,425
(113,993)
(742,797)
(116,428)
263,899
(9,423)
(306,584)
(153,062)
(153,561)
-
3,352
297,813
2012
%
26.00
6.40
(19.55)
(32.01)
(5.02)
11.37
(0.40)
(13.21)
2011
%
28.00
3.20
(4.97)
(6.68)
(6.70)
-
0.15
13.00
ECO ANIMAL HEALTH GROUP PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
FOR THE YEAR ENDED 31 MARCH 2012
9.
Profit for the financial year
Parent Company's profit for the financial year
739,303 1,353,391
10.
Dividends
2012
£
2011
£
Dividend for the period ended 31 March 2010 of 2.3p per ordinary
share
Dividend for the period ended 31 March 2011 of 3.0p per ordinary
share
2012
£
2011
£
- 1,190,888
1,567,595
-
1,567,595 1,190,888
The Board is declaring a dividend of 3.75 pence per share in respect of the year ended 31 March
2012. A scrip dividend alternative will be offered.
32
ECO ANIMAL HEALTH GROUP PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
FOR THE YEAR ENDED 31 MARCH 2012
11.
Intangible fixed assets
Group
Goodwill Distribution
rights
Total
Drug
registrations,
patents and
licence costs
Cost
At 1 April 2010
Additions
Foreign exchange movements
At 1 April 2011
Additions
At 31 March 2012
£
17,930,495
-
-
17,930,495
-
17,930,495
£
1,034,860
-
-
1,034,860
-
1,034,860
£
4,269,988
63,209
£
31,127,251 50,092,606
4,269,988
63,209
35,460,448 54,425,803
4,063,647
39,524,095 58,489,450
4,063,647
Amortisation
At 1 April 2010
Charge for the year
At 1 April 2011
Charge for the year
Foreign exchange movements
At 31 March 2012
Net Book Value
At 31 March 2012
-
-
-
-
-
-
315,726
55,318
12,233,313 12,549,039
3,239,948
3,184,630
371,044
51,743
-
422,787
15,417,943 15,788,987
3,593,365
(2,049)
18,957,516 19,380,303
3,541,622
(2,049)
17,930,495
612,073
20,566,579 39,109,147
At 31 March 2011
17,930,495
663,816
20,042,505 38,636,816
At 1 April 2010
17,930,495
719,134
18,893,938 37,543,567
The amortisation charge is included within administrative expenses on the income statement.
Distribution rights are amortised over their estimated useful life of 20 years and reviewed for
impairment when any indication of potential impairment exists. The remaining amortisation period at
the date of the financial statements was 11 years.
The carrying value of goodwill is attributable to the following cash generating units:
Entity
Eco Animal Health Limited (remaining 50%)
Zhejiang Eco Biok Animal Health Products Limited 1 April 2007
ECOpharma Inc. (remaining 80%)
Date of acquisition
1 October 2004
24 December 2009
£
17,358,621
94,257
477,617
-------------------------------------------------
17,930,495
===================
Goodwill acquired in a business combination is allocated at acquisition to the cash generating units
(CGU’s) that are expected to benefit from the business combination.
33
ECO ANIMAL HEALTH GROUP PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
FOR THE YEAR ENDED 31 MARCH 2012
11.
Intangible fixed assets (Continued)
The recoverable amounts of the CGU’s are determined from value in use calculations. The key
assumptions for the value in use calculations are those regarding discount rates, growth rates and the
estimated remaining useful life of the asset which is maintained at 30 years through ongoing
investment in the cash generating unit.
The Group prepares cash flow forecasts derived from the most recent financial budgets and
projections that are approved by management for the year ahead and then extrapolates them
assuming a 3% annual growth rate which is well below the current performance of the existing
business. The directors believe that the long term growth rate assumed does not exceed the average
long term growth rate for the relevant markets. The exception to this rule is ECOpharma Inc. In this
case the directors believe that a 5 percent growth rate in sales and margin for the second to fifth
years, followed by a 3 per cent growth rate thereafter is appropriate.
Management estimates discount rates using the pre-tax rates that reflect current market assessments
of the time value of money and the risks specific to the CGU’s. In the current year management
estimated the applicable rate to be 11%. Despite general economic conditions, management
considers that there is adequate headroom when comparing the net present value of the cash flows to
the carrying value of goodwill to conclude that no impairment is necessary this year. On current
assumptions the excess of recoverable amount over carrying value is over £35 million.
Management believes that the most significant assumption in the calculation of value in use is the
estimated growth rate. However, even if the growth rate were to be zero, the recoverable amount
would still be over £16 million more than the carrying value and no impairment would be necessary.
This assumes an earnings multiple of 10 on the current budgeted results in estimating fair value which
has been derived from historical data.
Drug registrations and licences are amortised over their estimated useful lives of 10 years, which is
the directors’ estimate of the time it would take to develop a new product allowing for the Group’s
patent protection and the exclusivity period which comes with certain registrations. Given the
economic climate the directors have conducted an impairment review in the current year by preparing
cash flow projections for the year ahead and extrapolating the results for the remaining life of the
registrations assuming zero growth and an 11% discount rate to establish value in use. On the current
assumptions the excess of the recoverable amount over carrying value is more than £18 million. The
calculations have also shown that on current budget figures a 5 year life is more than enough to justify
the current carrying value of these registrations. Moreover, fair value calculated as 10 times the
current cash generated by the registrations gives an even higher result, so management has again
concluded that no impairment is necessary.
34
ECO ANIMAL HEALTH GROUP PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
FOR THE YEAR ENDED 31 MARCH 2012
12.
Property, plant and equipment
Group
Cost or valuation
At 1 April 2010
Additions
Foreign exchange movements
At 1 April 2011
Additions
Foreign exchange movements
Land and
Buildings
(freehold)
Plant and
machinery
Fixtures,
fittings
and
equipment
Motor
Vehicles
Total
£
650,000
-
-
650,000
-
-
£
762,411
93,456
280,133
1,136,000
6,117
43,660
£
535,296
15,590
-
550,886
74,749
-
42,211
-
£
£
- 1,947,707
151,257
280,133
42,211 2,379,097
140,457
59,591
43,660
-
At 31 March 2012
650,000
1,185,777
625,635
101,802 2,563,214
Depreciation
At 1 April 2010
Charge for the year
Foreign exchange movements
Revaluation adjustment
At 1 April 2011
Charge for the year
Foreign exchange movements
At 31 March 2012
Net Book Value
At 31 March 2012
52,000
9,400
-
(52,000)
9,400
9,400
-
18,800
359,139
29,058
203,463
-
591,660
33,433
97,190
722,283
448,434
42,125
(151)
-
490,408
37,597
8
528,013
-
7,960
2,083
-
859,573
88,543
205,395
(52,000)
10,043 1,101,511
96,442
16,012
97,198
-
26,055 1,295,151
631,200
463,494
97,622
75,747 1,268,063
At 31 March 2011
640,600
544,340
60,478
32,168 1,277,586
At 1 April 2010
598,000
403,272
86,862
- 1,088,134
The freehold property at 78 Coombe Road, New Malden was valued on 28 April 2010 by Mr R Sworn
of Kelion Sworn Chartered Surveyors and Valuers, London, W1. The fair value in use of the freehold
property was determined at £650,000 by means of applying a 7.5% discount rate to the annual rental
value of the property as determined by local market conditions. The property will continue to be
valued on a regular basis
The value of non depreciable land included within Land and Buildings is £180,000.
35
ECO ANIMAL HEALTH GROUP PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
FOR THE YEAR ENDED 31 MARCH 2012
12.
Property, plant and equipment (continued)
The value of the freehold property would have been recorded at £328,743 (2011: £340,049) on a
historical cost basis giving rise to the current revaluation surplus of £229,867.This balance is not
distributable to shareholders.
Depreciation has been included in the administrative expenses line on the income statement.
Company
Cost or valuation
At 1 April 2010
Additions
At 31 March 2011
Additions
Land and
Buildings
(freehold)
£
650,000
-
650,000
-
Fixtures,
fittings
and
equipment
£
139,751
3,766
143,517
677
Motor
Vehicles
Total
£
-
-
-
26,466
£
789,751
3,766
793,517
27,143
At 31 March 2012
650,000
144,194
26,466
820,660
Depreciation
At 1 April 2010
Charge for the year
Revaluation adjustment
At 1 April 2011
Charge for the year
At 31 March 2012
Net Book Value
At 31 March 2012
52,000
9,400
(52,000)
9,400
9,400
18,800
117,047
11,459
-
128,506
9,084
137,590
-
-
-
-
1,671
1,671
169,047
20,859
(52,000)
137,906
20,155
158,061
631,200
6,604
24,795
662,599
At 31 March 2011
640,600
15,011
At 1 April 2010
598,000
22,704
-
-
655,611
620,704
The freehold property at 78 Coombe Road, New Malden was valued on 28 April 2010 by Mr R Sworn
of Kelion Sworn Chartered Surveyors and Valuers, London, W1. The fair value in use of the freehold
property was determined at £650,000 by means of applying a 7.5% discount rate to the annual rental
value of the property as determined by local market conditions. The property will continue to be
valued on a regular basis.
36
ECO ANIMAL HEALTH GROUP PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
FOR THE YEAR ENDED 31 MARCH 2012
12.
The value of non depreciable land included within Land and Buildings is £180,000.
Property, plant and equipment (continued)
The value of the freehold property would have been recorded at £328,743 (2011: £340,049) on a
historical cost basis giving rise to the current revaluation surplus of £229,867.This balance is not
distributable to shareholders.
Depreciation has been included in the administrative expenses line on the income statement.
13.
Investment property
Group and Company
Cost
Additions
At 31 March 2012
Depreciation
Charge for the year
At 31 March 2012
Net Book Value
At 31 March 2012
At 31 March 2011
Land and
Buildings
(freehold)
Total
£
£
156,550
156,550
156,550
156,550
1,777
1,777
1,777
1,777
154,773
154,773
-
-
The investment property was purchased at open market value during the year.
Depreciation has been included in the administrative expenses line on the income statement.
37
ECO ANIMAL HEALTH GROUP PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
FOR THE YEAR ENDED 31 MARCH 2012
Fixed asset investment
14.
Group
Cost or fair value
At 1 April 2010
Revaluation in the year
At 31 March 2011
Revaluation in the year
Disposals
At 31 March 2012
Net Book Value
At 31 March 2012
At 31 March 2011
At 1 April 2010
Available for
sale quoted
assets at fair
value
£
250,000
61,594
311,594
(2,828)
(308,766)
-
-
Unlisted
investments
Total
£
39,294
-
39,294
(30,556)
-
£
289,294
61,594
350,888
(33,384)
(308,766)
8,738
8,738
8,738
8,738
311,594
39,294
350,888
250,000
39,294
289,294
The available for sale asset (the holding in Anpario plc (formerly Kiotech International plc)) was sold
during the year.
38
ECO ANIMAL HEALTH GROUP PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
FOR THE YEAR ENDED 31 MARCH 2012
14.
Fixed asset investments (continued)
Company
Available for
sale quoted
assets at fair
value
Investments
in subsidiary
undertakings
at cost
Total
Cost or fair value
At 1 April 2010
Revaluation in the year
At 31 March 2011
Revaluation in the year
Disposals
At 31 March 2012
Impairment
At 1 April 2010, 2011 and 2012
Net Book Value
At 31 March 2012
At 31 March 2011
At 1 April 2010
£
250,000
61,594
311,594
(2,828)
(308,766)
-
-
-
-
£
£
21,273,502 21,523,502
61,594
21,273,502 21,585,096
(2,828)
(308,766)
21,273,502 21,273,502
-
-
1,191,262
1,191,262
20,082,240 20,082,240
311,594
20,082,240 20,393,834
250,000
20,082,240 20,332,240
The available for sale asset (the holding in Anpario plc (formerly Kiotech International plc)) was sold
during the year.
39
ECO ANIMAL HEALTH GROUP PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
FOR THE YEAR ENDED 31 MARCH 2012
14.
Fixed asset investments (continued)
The Company holds more than 20% of the share capital of the following companies:
Company
Subsidiary undertakings held by Company
Zhejiang ECO Biok Animal Health Products
Limited
Petlove Limited
Eco Animal Health Limited
Country of
registration or
incorporation
Class
Shares
held %
P. R. China
Great Britain
Great Britain
Ordinary
Ordinary
Ordinary
3
91
100
Subsidiary undertakings held by Group
ECO Animal Health Southern Africa (Pty) Limited South Africa
Zhejiang ECO Biok Animal Health Products
Limited
P. R. China
Ordinary
100
Ordinary
48
Shanghai ECO Biok Veterinary Drug Sale
Company Ltd. (via Zhejiang ECO Biok Animal
Products Ltd.)
ECO Animal Health do Brasil Comercio de
Produtos Veterinarios Ltda.
ECOpharma Inc.
ECO Animal Health USA Corp.
Interpet LLC
ECO Animal Health de Mexico
ECO Argentina S.A.
P. R. China
Ordinary
48
Brazil
Japan
U.S.A.
U.S.A.
Mexico
Argentina
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
100
100
100
100
100
100
The principal activity of these undertakings for the last relevant financial year was as follows:
ECO Animal Health Limited
ECO Animal Health Southern Africa (Pty) Limited
Petlove Limited
Zhejiang ECO Biok Animal Health Products Limited
Shanghai ECO Biok Veterinary Drug Sale Company
Ltd.
ECO Animal Health do Brasil Comercio de Produtos
Veterinarios Ltda
ECOpharma Inc.
ECO Animal Health USA Corp.
Interpet LLC
ECO Animal Health de Mexico
ECO Argentina S.A.
Principal activity
Distribution of animal drugs
Non-trading
Non-trading
Manufacture of animal drugs
Distribution of animal drugs
Distribution of animal drugs
Distribution of animal drugs
Non-trading
Non-trading
Distribution of animal drugs
Non-trading
40
ECO ANIMAL HEALTH GROUP PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
FOR THE YEAR ENDED 31 MARCH 2012
14.
Fixed asset investments (continued)
The aggregate amount of capital and reserves and the results of these undertakings for the last
relevant financial year were:
Profit/loss for
the year
Equity
Profit/loss for
the year
Equity
2012
2012
2011
2011
£
£
£
£
ECO Animal Health Limited
3,345,471
2,068,100 1,277,371
1,237,171
Zhejiang ECO Biok Animal Health Products Ltd
3,855,323
835,305 3,649,202
822,493
ECO Animal Health do Brasil Comercio de
Produtos Veterinarios Ltda
(129,901)
(197,683)
41,893
(45,195)
ECOpharma Inc
671,451
(98,253)
758,461
224,171
ECO Animal Health de Mexico
9,233
9,093
-
-
The equity and results of Shanghai ECO Biok Veterinary Drug Sale Company Ltd are included within
those disclosed for Zhejiang ECO Biok Animal Health Products Limited.
During the year ECO Animal Health (Europe) Limited was taken out of the group structure and
dissolved.
All of the subsidiaries listed above were included in the consolidation for the year.
Zhejiang ECO Animal Health Products Limited and ECO Animal Health do Brasil Comercio de
Produtos Veterinarios Ltda both have 31 December year ends. The Group receives management
accounts for the three months to 31 March for these subsidiaries for use in preparing the consolidated
financial statements. ECOpharma Inc has changed its year end to March with effect from 31 March
2012.
ECO Argentina S.A. which holds neither assets nor liabilities and which has not traded since its
formation has been excluded from consolidation.
The Group also holds (by means of its ownership of ECO Animal Health USA Corp.), a 50% joint
venture interest in Pharmgate LLC, which is resident in U.S.A. Pharmgate LLC will distribute the
group’s products in the U.S.A. once marketing authorisations are granted.
The Group has also entered into a new 50% joint venture, Pharmgate Animal Health Canada Inc, to
distribute its newly licensed products into Canada.
41
ECO ANIMAL HEALTH GROUP PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
FOR THE YEAR ENDED 31 MARCH 2012
14.
Fixed asset investments (continued)
The following amounts included in the group’s financial statements are related to its interest in these
joint ventures.
Pharmgate LLC
2012
£
31,803
(9,851)
-
-
(100,153)
2011
£
20,439
(4,751)
-
-
100,153
Pharmgate Animal
Health Canada Inc
2012
£
16,377
(14,705)
5,644
4,599
-
2011
£
-
-
-
-
-
Current assets
Current liabilities
Sales
Margins
Expenses
15.
Inventories
Group
2012
£
2011
£
Raw materials and consumables
Finished goods and goods for resale
At 31 March 2012
2,279,354
2,137,963
4,417,317
2,935,528
1,868,401
4,803,929
Company
2012
2011
£
-
-
-
£
-
-
-
The cost of inventories recognised as an expense and included in cost of sales in the period
amounted to £17,504,226 (2011: £16,635,337).
16.
Trade and other receivables
Trade receivables
Amounts owed by group undertakings
Other receivables
Prepayments and accrued income
Non current
Current
Group
2012
£
2011
£
Company
2012
£
2011
£
9,616,990
-
768,301
370,099
10,755,390
100,225
10,655,165
10,755,390
9,015,511
-
391,384
235,922
9,642,817
-
28,418,185
226,630
268,168
28,912,983
-
28,184,995
281,542
158,624
28,625,161
128,224
9,514,593
9,642,817
28,373,610
539,373
28,912,983
28,313,219
311,942
28,625,161
42
ECO ANIMAL HEALTH GROUP PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
FOR THE YEAR ENDED 31 MARCH 2012
16.
Trade and other receivables (continued)
As at 31 March 2012, trade receivables of £2,102,528 (2011: £1,324,362) due to the Group and £nil
(2011: £nil) due to the Company were past due but not impaired. These relate to long standing
distributors with whom we have agreed settlement terms and with whom there is no history of default.
The ageing analysis of these trade receivables is as follows:
Up to 3 months past due
3 to 6 months past due
Over 6 months past due
2012
£
1,731,377
286,649
84,502
2,102,528
Group
Company
2011
£
2012
£
2011
£
1,238,808
33,021
52,533
1,324,362
-
-
-
-
-
-
-
-
As at 31 March 2012, trade receivables of £32,379 were impaired and provided for. The impaired
receivables mainly relate to historic debt for which recovery is still being sought. The Group mitigates
its exposure to credit risk by extensive use of commercial credit reference agencies, close
management of its customers’ trading against terms offered and use of retention of title clauses
wherever possible. The ageing analysis of the impaired balances is as follows:
Current
Up to 3 months past due
3 to 6 months past due
Over 6 months past due
Group
2012
£
-
-
-
32,379
32,379
2011
£
1,379
27,622
26,478
68,869
124,348
Company
2012
£
-
-
-
-
-
2011
£
-
-
-
-
-
43
ECO ANIMAL HEALTH GROUP PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
FOR THE YEAR ENDED 31 MARCH 2012
16.
Trade and other receivables (continued)
Movement on the Group provision for impairment of trade receivables is as follows:
Group
Balance at 1 April
Recovered in the year
Written off in the year
Balance at 31 March
Group
2012
£
124,348
(75,605)
(16,364)
32,379
The directors are pleased to note that the active management of the Latin American accounts
provided for in 2009 as a result of the economic conditions at that time, has resulted in a positive
outcome in almost all cases and that the remaining general provision in respect of this region could be
released during the year.
The carrying amounts of trade and other receivables are denominated in the following currencies:
Pounds Sterling
Euros
U S Dollars
Chinese RMB
Brazilian Real
Japanese Yen
Other currencies
Group
2012
£
776,993
2,857,514
5,513,412
411,957
357,576
492,684
345,254
10,755,390
2011
£
633,540
2,806,327
4,070,628
544,793
606,322
757,984
223,223
9,642,817
Company
2012
£
28,780,350
-
132,633
-
-
-
-
28,912,983
2011
£
28,478,774
-
146,387
-
-
-
-
28,625,161
The carrying amounts of trade and other receivables are not significantly different to their fair values.
44
ECO ANIMAL HEALTH GROUP PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
FOR THE YEAR ENDED 31 MARCH 2012
17.
Deferred tax
Group
Deferred tax assets and liabilities are attributable to the following:
Drug registration expenditure
Freehold property
Plant and equipment
Investments
Tax losses carried forward
Liabilities
2012
£
2011
£
Net
2012
£
2011
£
(2,139,050)
(72,590)
(12,094)
-
1,893,355
(2,281,894)
(72,590)
(2,050)
(14,782)
1,539,455
(2,139,050)
(72,590)
(12,094)
-
1,893,355
(2,281,894)
(72,590)
(2,050)
(14,782)
1,539,455
Amount (payable) after more than one year
(330,379)
(831,861)
(330,379)
(831,861)
The movement on the deferred tax account can be summarised as follows:
Drug
registration
expenditure
£
Freehold
property
£
Property,
plant and
equipment
£
Investments
£
Total
£
At 31 March 2011
(742,439)
(72,590)
(2,050)
(14,782)
(831,861)
Credit/(charge) for the year through
income statement
Movement through the year through
revaluation reserve
496,744
-
-
-
(10,044)
-
486,700
-
14,782
14,782
At 31 March 2012
(245,695)
(72,590)
(12,094)
-
(330,379)
The tax losses carried forward are not expected to expire under current legislation.
Any future dividend received from the Chinese subsidiary Zhejiang ECO Biok Animal Health Products
Limited will be subject to a 10 per cent withholding tax. The deferred tax liability in respect of this has
not been recognised.
45
ECO ANIMAL HEALTH GROUP PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
FOR THE YEAR ENDED 31 MARCH 2012
17.
Deferred tax (continued)
Company
At 31 March 2011
Credit for the year through income statement
Movement through the year through revaluation reserve
Freehold
property
£
(72,590)
-
-
Property,
plant and
equipment
£
Investments
£
Total
£
(1,732)
1,732
-
(14,782)
-
14,782
(89,104)
1,732
14,782
At 31 March 2012
(72,590)
-
-
(72,590)
A credit of £1,732 (2011: credit of £1,536) was recognised in the Company’s income statement for the
year. A credit of £14,782 (2011: charge of £87,372) was recognised in the Company’s Revaluation
Reserve.
18.
Cash and cash equivalents
Cash and cash equivalents comprise cash and short term deposits held by the Group. The carrying
amount of these assets are not significantly different to their fair value.
Note
Group
2012
£
2011
£
Company
2012
£
2011
£
Cash and cash equivalents
Overdrafts
Net funds per cash flow
20
14,002,422 9,471,537
(53,196)
(4,492,690)
9,509,732 9,418,341
(4,492,690)
9,793,239 6,243,597
(53,196)
5,300,549 6,190,401
46
ECO ANIMAL HEALTH GROUP PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
FOR THE YEAR ENDED 31 MARCH 2012
19.
Trade and other payables
Group
2012
£
2011
£
Company
2012
£
2011
£
5,410,817 4,904,967
514,654
375,701
6,705,991 5,795,322
887,400
407,774
124,057
565,651
44,458
734,166
135,904
69,025
21,659
226,588
Trade payables
Other payables
Accruals and deferred income
20.
Borrowings
Included within payables on the statement of financial position are the following amounts at fair value
secured by a debenture on the assets of the group:
Group
2012
£
2011
£
Company
2012
£
2011
£
Short term borrowings
4,492,690
53,196
4,492,690
53,196
Currency analysis of short term borrowings
U S Dollars
Euros
Group
2012
£
2011
£
Company
2012
£
2011
£
4,072,226
420,464
-
53,196
4,072,226
420,464
-
53,196
4,492,690
53,196
4,492,690
53,196
The Group has no net overdraft facilities in place at the year end, although it has the facility to
overdraw in specific currencies within a positive total cash balance. The interest rate for all currency
overdrafts is 2.75 per cent over the relevant currency base rate.
47
ECO ANIMAL HEALTH GROUP PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
FOR THE YEAR ENDED 31 MARCH 2012
21.
Pension and other post-retirement benefit commitments
Defined Contribution pension Scheme
The Group operates defined contribution pension schemes for the benefit of certain directors and
senior employees. The assets of the schemes are held separately from the Group and independently
administered by insurance companies. The pension cost charge represents contributions payable to
the funds in the year and amounted to £316,853 (2011: £201,994).
Defined Benefit Pension Scheme
The Group operates a defined benefit scheme in the UK for ex-employees only. A full actuarial
valuation was carried out at 6 April 2009 and updated 31 March 2012 by a qualified independent
actuary. The major assumptions used by the actuary were:
Discount rate
Rate of increase in pension payment
Inflation assumption with a maximum of 5% p.a.
31 March
2012
4.6%
2.9%
2.9%
1 April
2011
5.5%
3.4%
3.4%
Mortality rates
Pre retirement mortality is based on the mortality table known as AMCOO for males and AFCOO for
females and 70% of the mortality indicated by this table has been taken, as in the previous year.
Post retirement mortality is based on the mortality table known as PCMAOO for males and PCFAOO
for females. Allowance has been made for the improvement in mortality experienced recently and
expected in the future by using 100% for males and 70% for females of the “Medium Cohort”
improvement table, subject to a minimum improvement rate of 1.4% p.a. for males and 1.1% p.a. for
females. To allow for the expected additional cost of purchasing annuities on retirement, only 60% of
the mortality indicated by these projections has been taken into the calculations.
Expectation of life at retirement age of 65 is 25.2 (2011: 25.1) years for males and 29.1 (2011: 29.0)
years for females. For members retiring in 20 years time, the expectation of life at age 65 would be
28.1 (2011: 28.0) years for males and 31.3 (2011: 31.2) years for females.
48
ECO ANIMAL HEALTH GROUP PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
FOR THE YEAR ENDED 31 MARCH 2012
21.
Pension and other post-retirement benefit commitments (continued)
Results
Assets at start of year
Defined benefit obligation at start of year
Net asset at 1 April
Current service cost, including risk benefits
Expected return on assets
Interest cost
(Loss)/gain on asset return
Experience (loss)/gain
(Loss)/gain on changes in assumptions
Statement of other comprehensive
income
Employer contributions gross
Expenses paid by trustees
Net asset at 31 March 2012
Actual assets at end of year
Actual defined benefit obligation at end of year
2012
£
2,684,000
(2,596,000)
£
2011
£
2,592,000
(2,575,000)
(3,000)
150,000
(139,000)
(26,000)
(5,000)
(120,000)
64,000
(7,000)
£
17,000
(2,000)
88,000
(3,000)
(2,000)
144,000
(138,000)
11,000
6,000
10,000
1,000
3,000
(151,000)
14,000
59,000
(6,000)
57,000
2,000
2,959,000
2,957,000
53,000
88,000
2,684,000
2,596,000
The pension fund assets are all held within a policy managed by an insurance company.
49
ECO ANIMAL HEALTH GROUP PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
FOR THE YEAR ENDED 31 MARCH 2012
21.
Pension and other post-retirement benefit commitments (continued)
Reconciliation of changes in the asset value during the year
Fair value of assets at 1 April
Expected return on assets
(Loss)/gain on asset return
Employer contributions (gross)
Death in service insurance premiums paid
Expenses paid by trustees
Increase/(decrease) in secured pensioners
value due to scheme experience
£
2012
£
2,684,000
150,000
(26,000)
64,000
(3,000)
(7,000)
£
2011
£
2,592,000
144,000
10,000
59,000
(2,000)
(6,000)
97,000
(113,000)
Fair value of assets at 31 March 2012
2,959,000
2,684,000
Reconciliation of changes in the liability value during the year
Defined benefit obligation at 1 April
Interest cost
Experience loss/(gain) on liabilities
Loss/(gain) on changes in assumptions
Increase/(decrease) in secured pensioners
value due to scheme experience
Defined benefit obligation at 31 March
2012
2,596,000
139,000
5,000
120,000
2,575,000
138,000
(1,000)
(3,000)
97,000
(113,000)
2,957,000
2,596,000
The expected contribution to be paid by the employer during the next accounting year is £59,000.
This includes a provision of £3,000 for death in service risk premium, (2011: £5,000).
Year ended 31 March
2012
2011
2010
2009
2008
Present value of defined benefit
obligation
Fair value of plan assets
Surplus/(deficit) in plan
Experience (loss)/gains on plan
liabilities
2,959,000 2,596,000 2,575,000 2,227,000 2,325,000
2,957,000 2,684,000 2,592,000 2,224,000 2,368,000
43,000
(3,000)
17,000
88,000
2,000
(5,000)
1,000
9,000
3,000
8,000
50
ECO ANIMAL HEALTH GROUP PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
FOR THE YEAR ENDED 31 MARCH 2012
22.
Share-based payments
The measurement requirements of IFRS2 have been implemented in respect of share options that
were granted after 7 November 2002. The expense recognised for share based payments made
during the year is shown in the following table:
2012
£
2011
£
Total expense arising from equity settled share-based transactions
290,890 303,504
The share based payment plans are described below:
Movements in issued share options and jointly owned shares during the year
The following table illustrates the number and weighted average exercise prices (WAEP) of and
movements in, share options and jointly owned shares during the period:
Options
2012
Jointly owned
shares
Options
2011
2012
2012
WAEP
£
-
1.23
1.87 2,603,290
2012
WAEP
£
- 3,307,390
985,000
2.00
2011
WAEP
£
1.14
1.48
-
-
-
1.03
1.39 2,603,290
-
1.11
-
-
(30,000)
(255,000)
2.00 4,007,390
- 1,905,390
1.39
1.09
1.23
1.12
Outstanding at 1 April
Granted during the period
Expired/cancelled during the
period
Exercised during the period
Outstanding at 31 March
Exercisable at 31 March
4,007,390
456,500
-
(1,206,040)
3,257,850
1,129,350
The maximum aggregate number of shares over which options may currently be granted cannot
exceed 10 per cent of the nominal share capital of the Company on the grant date. The options
outstanding at 31 March 2012 had a weighted average share price of £1.39 and a weighted average
contractual life of 5.2 years.
Eco Animal Health Group plc Executive Share Option Scheme
In accordance with the Executive Share Option Scheme, approved and unapproved share options are
granted to full time directors and employees who devote at least 25 hours per week to the
performance of duties or employment with the Company.
Details of options granted to directors can be found in the Directors Report and notes 29 (Directors
Emoluments) and 31 (Related Party Transactions).
The exercise price of the options is equal to the market price of the shares at the date of grant. The
options vest three years from the date of grant and if the option holder ceases to be a director or
employee of the Company due to injury, disability, redundancy or retirement on reaching pensionable
age or any other age at which they are bound to retire at in accordance with the terms of their contract
of employment, the option may be exercised within a period of six months after the option holders so
ceasing, although the Board may, at its discretion, extend this period by up to 36 months after the
date of cessation.
51
ECO ANIMAL HEALTH GROUP PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
FOR THE YEAR ENDED 31 MARCH 2012
22.
Share-based payments (continued)
If the option holder ceases employment for any other reason, the option may not be exercised unless
the Board permits. The approved and unapproved options will be forfeited where they remain
unexercised at the end of their respective contractual lives of ten and seven years.
An analysis of the expiry dates of the outstanding options is given below:
Date of grant
Unapproved Approved
(pence) Expiry date
Exercise
price
06 August 2003
25 October 2005
20 February 2006
10 August 2006
03 March 2008
03 March 2008
18 September 2008
18 September 2008
30 April 2009
30 April 2009
06 August 2009
06 August 2009
24 December 2009
24 December 2009
12 April 2010
20 May 2010
20 May 2010
13 September 2010
11 October 2011
11 October 2011
10,000
443,970
115,000
481,450
103,000
10,650
375,000
389,900
90,000
302,400
2,321,370
10,000
11,880
12,600
490,900
35,000
55,550
22,000
29,350
115,100
154,100
936,480
202.50 06 August 2013
340.00 25 October 2012
252.50 20 February 2016
238.00 10 August 2016
108.50 03 March 2018
108.50 03 March 2015
85.00 18 September 2018
85.00 18 September 2015
147.00 30 April 2019
147.00 30 April 2016
135.00 06 August 2019
135.00 06 August 2016
155.00 24 December 2019
155.00 24 December 2016
150.00 12 April 2017
140.00 20 May 2020
140.00 20 May 2017
161.00 13 September 2017
186.50 11 October 2021
186.50 11 October 2018
ECO Animal Health Group plc Joint Share Ownership Plan
In accordance with the newly established Joint Share Ownership Plan (JSOP), jointly owned shares
may be awarded to directors and employees of the company.
The shares are awarded at the market price on the day of the award and are held jointly by the
employee concerned and the ECO Animal Health Group plc Employee Benefit Trust. After a three
year vesting period, the shares may be sold at the option of the employee. The proceeds of sale are
split between the trust and the employee so that the Trust receives the original market value of the
shares sold plus a 5.9% per annum carry charge, with the employee receiving any excess over this
amount.
Because these are actual issued shares in the company rather than options there is no expiry date
associated with jointly owned shares. However, they will normally be forfeit if the employee ceases to
be an employee of the company for any reason other than death, injury, redundancy, retirement on or
after normal retirement age or disposal by the Group of the employing business entity.
The market price of the shares at 31 March 2012 was 207.5p with a range in the year of 185p to
245p.
52
ECO ANIMAL HEALTH GROUP PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
FOR THE YEAR ENDED 31 MARCH 2012
22.
Share-based payments (continued)
Inputs to the Valuation Model (for options and jointly owned shares)
The fair value of share options granted prior to 31 March 2007 were estimated at the time of grant
using trinomial pricing model, taking into account all the terms and conditions upon which the options
were granted. For options issued after 1 April 2007, the directors took the decision that a Black-
Scholes model would be more appropriate.
The following table lists the inputs to the Black-Scholes model which applies to both options and
jointly owned shares.
2012
2011
2010
2009
2008
Vesting period (years)
Option expiry (years)
Dividends expected on the shares
Risk free rate
Volatility of share price
Weighted average fair value of options
3
3
3
3
3
7-10 yrs 7-10 yrs 7-10 yrs 7-10 yrs 7-10 yrs
5.00%
5.00%
4.66%
2.40%
25%
40%
18.7p
32.6p
4.50%
2.00%
45%
37.78p
1.00%
2.00%
27%
41.0p
4.50%
4.19%
30%
16.8p
The risk free rate has been based on the yield from UK Government treasury coupons. The volatility
of the share price was estimated based on standard deviation calculations on the historic share price.
Under the terms of the Group’s Joint Share Ownership Plan (JSOP) on 6 October 2011, the Group
issued a part interest in 1,819,290 Ordinary shares of 5p each to the Executive Directors at a price of
194p per share as an effective modification to existing benefits under the Group’s Unapproved Share
Option Scheme.
As part of this transaction the Directors exercised 1,039,290 of vested options and agreed that a
further 780,000 of unvested options would be effectively capped at the 6 October 2011 market price
of 194p by means of a partial waiver of these options. The jointly owned shares and the capped
options are therefore treated as one instrument when looking at the overall limit on outstanding share
options and jointly owned shares.
On 21 October 2011, the Group issued a part interest in a further 784,000 Ordinary shares of 5p each
to the Executive Directors and certain other senior employees below board level as an alternative to
unapproved options. These shares were issued at a price of 214p per share and have a vesting
period of three years.
The fair value of the part interest in the jointly owned shares was calculated using a Black-Scholes
model with the same assumptions as those used for the options issued during the year. The weighted
average fair value of each jointly owned share issued during the year was 26.15 pence.
53
ECO ANIMAL HEALTH GROUP PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
FOR THE YEAR ENDED 31 MARCH 2012
23.
Share capital
Authorised
68,100,000 Ordinary shares of 5p each
10,790 Deferred ordinary shares of 10p each
32,334 Convertible preference shares of £1 each
2012
£
2011
£
3,405,000 3,405,000
1,079
32,334
3,438,413 3,438,413
1,079
32,334
Allotted, called up and fully paid
55,119,201 ( 2011: 52,195,172) Ordinary shares of 5p each
2,755,960 2,609,758
During the year a further 173,989 shares were issued at a premium of £334,406 as a result of the
take up of the scrip dividend option and 1,206,040 more shares were issued at a premium of
£1,182,451 as a result of the exercise of options by employees. In addition, 1,544,000 shares were
issued as a result of the Group’s new share ownership scheme at a premium of £3,070,960.
During the year the Company obtained a court order authorising the cancellation of £10,000,000 of
the total share premium. This amount was transferred to the credit of the Company’s retained
earnings in accordance with the resolution approved by the shareholders at the Annual General
Meeting on 2 September 2011. At the same time an amount of £3,250,000 was transferred from the
Share Premium Account to a non-distributable Special Reserve for the protection of creditors. This
transfer will be reversed when all creditors outstanding as at the date of the court order have been
paid or alternatively, when a further £3,250,000 has been credited to the Share Premium Account as
a result of the issue of equity.
24.
Minority interests
2012
£
2012
£
2011
£
2011
£
Balance at 1 April
Share of subsidiary's profit for the year
Share of foreign exchange gain on net
investment
1,790,587
1,400,296
409,299
80,282
403,022
80,070
Share of dividend paid by subsidiary
Balance at 31 March
489,581
(388,581)
1,891,587
483,092
(92,801)
1,790,587
54
ECO ANIMAL HEALTH GROUP PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
FOR THE YEAR ENDED 31 MARCH 2012
25.
Treasury share reserve
Balance at 1 April
Arising in the year
Balance at 31 March
2012
£
2011
£
-
5,217,580
5,217,580
-
-
-
Treasury share reserve includes £5,217,580 (2011: £nil), being the cost of 2,603,290 shares in the
Company held by the Group’s JSOP.
26.
Other reserves
Capital
redemption
reserve
£
105,829
-
-
105,829
-
-
Reserve
for
share-
Special
based
reserve
payment
Total
£
£
£
- 1,035,762 1,141,591
303,504
-
(114,865)
-
- 1,224,401 1,330,230
290,890
-
(96,989)
-
303,504
(114,865)
290,890
(96,989)
- 3,250,000
- 3,250,000
105,829 3,250,000 1,418,302 4,774,131
Group and Company
At 1 April 2010
Share-based payments
Transfer to retained earnings on expiry of options
At 31 March 2011
Share-based payments
Transfer to retained earnings on expiry of options
Transfer on reduction of share premium for
protection of creditors
At 31 March 2012
55
ECO ANIMAL HEALTH GROUP PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
FOR THE YEAR ENDED 31 MARCH 2012
26.
Other reserves (continued).
Included in the Group’s retained earnings are the following exchange movements which have been
taken directly to reserves on consolidation of the subsidiaries listed below:
At 1 April
2011
£
Movement
in the
year
£
At 31
March
2012
£
325,638
83,555
409,193
2,281
49,254
38
2,245
(629)
25,891
11,243
(131)
84
(52)
120,590
28,172
60,497
(93)
2,329
(681)
In respect of:
Zhejiang Eco Biok Animal Health Products Limited
Eco Animal Health do Brasil Comercio de Produtos
Veterinarios Ltda
ECOpharma Inc.
ECO Animal Health Southern Africa (pty) Ltd
Interpet LLC
Pharmgate LLC
Foreign currency differences attributable to owner
credited directly to reserves.
27.
Financial commitments
At 31 March 2012 the Group had minimum commitments under non-cancellable operating leases as
follows:
Expiry date:
Within one year
Between two and five years
In over five years
28.
Capital commitments
Land and Buildings
2011
£
2012
£
Motor vehicles
2011
£
2012
£
10,377
536,971
2,197,631
2,744,979
-
713,846
2,293,625
3,007,471
4,988
62,136
-
67,124
3,168
67,244
-
70,412
The group had no authorised capital commitments as at 31 March 2012 (2011: Nil).
56
ECO ANIMAL HEALTH GROUP PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
FOR THE YEAR ENDED 31 MARCH 2012
29.
Directors’ emoluments
Emoluments for qualifying services
Company pension contributions to money purchase schemes
Share-based payments
Benefits in kind
2012
£
2011
£
386,008 439,520
183,024
94,074
174,979 157,288
19,577
766,328 710,459
22,317
During the year the directors exercised 1,059,290 (2011: nil) share options realising a gain of
£968,243 (2011: £nil).
The number of directors for whom retirement benefits are accruing under money purchase pension
schemes amounted to 3 (2011: 3). No directors accrued benefits under defined benefit schemes for
this or the previous year.
The highest paid director received £304,766 (2011: £266,565) including share-based payments and
£120,854 (2011: £79,220) of pension contributions.
30.
Employees
Number of employees
The average number of employees (including directors) during the year was:
2012
Number
2011
Number
7
49
34
55
145
7
47
39
51
144
2012
£
2011
£
3,628,585 3,512,002
303,504
277,724
203,994
4,569,165 4,297,224
290,890
329,837
319,853
Directors
Production and development
Administration
Sales
Employment costs (including amounts capitalised)
Wages and salaries
Share-based payments
Social security costs
Other pension costs
57
ECO ANIMAL HEALTH GROUP PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
FOR THE YEAR ENDED 31 MARCH 2012
31.
Related party transactions
At the year end ECO Animal Health Group plc owed P A Lawrence, a director of ECO Animal health
Group plc and members of his family a balance amounting to £512,337 (2011: £62,886).
During the year, the Group provided management services to Anpario plc (formerly Kiotech
International plc), a company in which P A Lawrence is a Director and holds share options. Fees of
£26,000 (2011: £26,000) were charged.
During the year, the Group provided the services of two employees to C-Corp Limited, a company in
which P A Lawrence is a Director and shareholder. Fees of £48,970 (2011: £44,279) were charged.
During the year ECO Animal Health Limited made sales on an at arm’s length basis to the following
other companies. The sales and year end balances are given in the table below. Since all of these
companies are wholly owned by the Group, these transactions and balances have all been eliminated
on consolidation.
Subsidiary companies
Sales
£
Year end
receivables
2012
£
Sales
£
Year end
receivables
2011
£
Zhejiang Eco Biok Animal Health Products
Limited
Eco Animal Health do Brasil Comercio de
Produtos Veterinarios Ltda.
Ecopharma Inc.
ECO Animal Health de Mexico
ECO Animal Health USA Corp.
1,854,311
558,361
1,119,737
541,705
2,196,659
567,577
-
-
1,250,962
344,499
175,411
22,633
2,343,549
1,098,594
-
-
1,371,550
337,958
-
-
Interest and management charges from Parent to the other Group companies
During the year the Company made management charges on an arm’s length basis to ECO Animal
Health Limited amounting to £195,598 (2011: £187,222) and charged interest of £397,298 (2011:
£304,705) to the Company. Both of these charges were made through the inter-company account and
were eliminated on consolidation.
ECO Animal Health Limited also made management charges on an arm’s length basis to ECOpharma
Inc. amounting to £32,316 (2011: £85,828). The whole transaction was eliminated on consolidation.
ECO Animal Health Limited also paid £109,011 (2011: £100,153) of management charges to ECO
Animal Health USA Corp. which were that company’s share of the expenses incurred by Pharmgate
LLC prior to commencement of sales in the USA. This transaction was eliminated on consolidation.
During the year ECO Animal Health Limited paid no dividend (2011: £1,500,000) to ECO Animal
Health Group plc.
During the year Zhejiang ECO Biok Animal Health Products Limited paid dividends of £31,085 (2011:
£7,425) to ECO Animal Health Group plc and £373,356 (2011: £89,164) to ECO Animal Health
Limited. Both amounts were eliminated on consolidation.
58
ECO ANIMAL HEALTH GROUP PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
FOR THE YEAR ENDED 31 MARCH 2012
31.
Related party transactions (continued)
During the year P Lawrence and his family received dividends in the form of cash and shares to the
value of £333,185 (2011: £252,934), and the other directors and their families received dividends in
the form of cash and shares to the value of £895 (2011: £662).
During the year the Company acquired at open market value a freehold property from C-Corp Limited
of which P A Lawrence is a Director and Shareholder, for a total cost of £156,550 including 1% stamp
duty.
Joint Ventures
During the year ECO Animal Health Limited made sales on an arm’s length basis of £4,515 to ECO
Animal Health Canada LLC. This balance remained outstanding at the year end.
Key management compensation
The group regards the directors as its key management.
Salaries and short term benefits
Retirement benefits
Share-based payments
32.
Financial instruments
2012
£
2011
£
461,639 507,343
183,024
94,074
174,979 157,288
819,642 758,705
The Group uses financial instruments comprising borrowings, cash and liquid resources and various
items, such as trade receivables, trade payables etc. that arise directly from its operations. The main
purpose of these financial instruments is to raise finance for the Group’s operations. The directors are
responsible for the overall risk management.
The main risks arising from the Group’s use of financial instruments are interest rate risk, capital and
liquidity risk, credit risk and foreign currency risks and they are summarised below. The policies have
remained unchanged throughout the year.
Interest rate risk
The Group finances its operations through a mixture of retained earnings and bank borrowings. At the
year end the interest rate exposure of the Group arose on currency overdraft facilities of £4,492,690
(2011: £53,196), details of which are shown in the note below on capital and liquidity risk. IFRS7
requires the disclosure of a sensitivity analysis that details the effects on the Group’s profit or loss and
other equity of reasonably possible fluctuations in market rates. This sensitivity analysis has been
determined based on exposure at the year end date. If interest rates had been 1 per cent higher or
lower and all other variables were held constant the Group’s profit would have decreased/increased
by a maximum of £44,926.
59
ECO ANIMAL HEALTH GROUP PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
FOR THE YEAR ENDED 31 MARCH 2012
32.
Financial instruments (Continued)
Capital and liquidity risk
The Group manages its capital to ensure continuity as a going concern whilst maximising returns
through the optimisation of debt and equity. As part of this, the Board considers the cost and risk
associated with each class of capital. The capital structure of the Group consists of debt which
includes the borrowings disclosed in note 20, cash and cash equivalents in note 18 and equity
attributable to equity holders of the parent comprising issued capital, reserves and retained earnings
as disclosed in the Group’s statement of changes in equity.
Liquidity risk is managed by maintaining adequate reserves and banking facilities with continuous
monitoring of the latest developments by management.
At 31 March 2012 the Group was contractually obliged to make repayments as detailed below:
WITHIN ONE YEAR OR ON DEMAND
Bank overdrafts
Trade payables
Credit risk
2012
£
2011
£
53,196
4,492,690
5,410,817 4,904,967
9,903,507 4,958,163
Credit risk is that of financial loss as a result of default by a counterparty on its contractual obligations.
The Group’s exposure to credit risk arises principally in relation to trade receivables from customers
and on short term bank deposits. Customers’ creditworthiness is wherever possible checked against
independent rating databases and filing authorities or otherwise assessed on the basis of trade
knowledge and experience. Exposure and customer credit limits are continually monitored both on
specific debts and overall.
The credit risk in relation to short term bank deposits and derivatives is limited because the
counterparties are banks with good credit ratings.
Currency risk
The Group operates in overseas markets particularly through its subsidiaries in China, Brazil and
Japan and is subject to currency exposure on transactions undertaken during the year. The Group
does some hedging of receivables when the Board feels it is appropriate to do so and foreign
exchange differences on retranslation of foreign monetary items are taken to the income statement.
60
ECO ANIMAL HEALTH GROUP PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
FOR THE YEAR ENDED 31 MARCH 2012
32.
Financial instruments (Continued)
The table below shows the extent to which the Group companies have monetary assets and liabilities
in currencies other than in Sterling:
Foreign currency of Group operations
2012
US
Dollar Euros
Rand
Chinese
RMB
Japanese
Yen
Brazilian
Real
Other
Sterling equivalent (000's)
(1,930) 2,141
266
2,790
438
794
192
2011
Sterling equivalent (000's)
4,508 2,410
204
2,867
165
835
52
At 31 March 2012 the Group was mainly exposed to the U S Dollar, the Euro, the Chinese RMB and
the Brazilian Real. The following table details the effect of a 10 per cent movement in the exchange
rate of these currencies against sterling when applied to outstanding monetary items denominated in
foreign currency as at 31 March 2012. A positive number indicates the decrease in profit which would
arise from a 10 per cent weakening of the foreign currency concerned.
U S Dollar
Euro
Chinese RMB
Brazilian Real
2012
£'000
(175)
195
254
72
2011
£'000
410
219
261
76
61
ECO ANIMAL HEALTH GROUP PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
FOR THE YEAR ENDED 31 MARCH 2012
32.
Financial instruments (Continued)
Analysis of financial instruments by category
Group
2012
Investments
Trade and other receivables (excluding
prepayments)
Cash and cash equivalents
2011
Investments
Trade and other receivables (excluding
prepayments)
Cash and cash equivalents
Company
2012
Trade and other receivables (excluding
prepayments)
Cash and cash equivalents
2011
Investments
Trade and other receivables (excluding
prepayments)
Cash and cash equivalents
Loans and
receivables
£
Available
for sale
£
8,738
10,385,291
14,002,422
-
-
-
Total
£
8,738
10,385,291
14,002,422
Loans and
receivables
£
Available
for sale
£
Total
£
43,461
311,594
355,055
9,406,895
9,594,403
-
-
9,406,895
9,594,403
Loans and
receivables
£
Available
for sale
£
Total
£
28,644,815
9,793,239
-
-
28,644,815
9,793,239
Loans and
receivables
£
Available
for sale
£
Total
£
-
311,594
311,594
28,466,537
6,243,597
-
-
28,466,537
6,243,597
All financial liabilities in the Group’s and Company’s statements of financial position are classified as
held at amortised cost for both the current and previous year.
62
ECO ANIMAL HEALTH GROUP PLC
NOTICE OF MEETING
Animal Health Group plc
Notice is hereby given that the Annual General Meeting of ECO Animal Health Group plc will
be held at 78 Coombe Road, New Malden, Surrey KT3 4QS at 10 am on 27th September
2012 for the following purposes:
1. To receive and adopt the report of the directors and the Group Financial Statements
for the 12 months ended on 31 March 2012, together with the report of the auditors;
2. To re-elect Mr Peter Lawrence, the Director retiring by rotation who, being eligible,
offers himself for re-election:
3. To appoint the auditors, Reeves & Co LLP and to authorise the directors to
determine their remuneration;
To consider and if thought fit, to pass the following Resolutions as Special Resolutions:
4. That in substitution for the authority granted to the directors pursuant to a special
resolution passed at the Annual General Meeting of the Company held on 2nd
September 2011, the directors be generally and unconditionally authorised for the
purposes of Section 551 of the Companies Act 2006 (“the Act”) to exercise all the
powers of the Company to allot shares up to an aggregate of £649,040 provided that this
authority shall expire on 27th September 2013, or, if sooner, at the Company’s next
Annual General Meeting, save that the Company may, before such expiry, make an offer
or agreement which would or might require relevant securities to be allocated after such
expiry notwithstanding that the authority conferred by this resolution has expired. All
authorities previously conferred under Section 80 of the Companies Act 1985 are
revoked, but such revocation shall not have retrospective effect.
5. That the Company be and is hereby generally and unconditionally authorised for the
purposes of Section 701 of the Companies Act 2006 to make market purchases
(within the meaning of Section 701 of the Companies Act 2006) of Ordinary Shares
of 5 pence each in the capital of the Company provided that :
(a) the maximum number of Ordinary Shares which may be purchased is 551,192
(representing one per cent of the Company’s issued ordinary share capital as at the
date of this notice);
(b) the minimum price (exclusive of expenses) which may be paid for each ordinary
share is 10 pence;
(c) the maximum price (exclusive of expenses) which may be paid for each Ordinary
Share is an amount equal to 105 per cent of the average of the middle market
quotations of an ordinary share in the Company taken from the Daily Official List of
63
ECO ANIMAL HEALTH GROUP PLC
the London Stock Exchange plc for the five business days immediately preceding the
day on which the share is contracted to be purchased;
(d) this authority shall expire at the conclusion of the next Annual General Meeting of
the Company after the passing of this resolution or on 27th September 2013,
whichever is earlier, (unless previously renewed, varied, or revoked by the Company
in general meeting); and
(e) the Company may, before such expiry, enter into one or more contracts to
purchase Ordinary Shares under which such purchases may be completed or
executed wholly or partly after the expiry of this authority, and may make a purchase
of Ordinary Shares in pursuance of any such contract or contracts.
6. That pursuant to the passing of the resolution numbered 4 above, and in substitution
for the authority granted to the directors pursuant to a special resolution passed at
the Annual General Meeting of the Company held on 2nd September 2011, the
directors be empowered pursuant to Section 551 of the Companies Act 2006 to allot
equity securities (as defined in Section 560 of the Companies Act 2006) and sell
treasury shares for cash pursuant to the authority given pursuant to Resolution 4
above as if Section 561 of the Companies Act 2006 did not apply to any such
allotment or sale provided that the authority conferred by Resolution 4 above and by
this Resolution 6 shall expire on 27th September 2013 or, if sooner, at the
Company’s next Annual General Meeting (save that the Company may, before the
expiry of such authority, make offers or arrangements requiring relevant securities to
be allotted or sold prior to such expiry and the directors may allot relevant securities
or sell treasury shares in pursuance of such offers or arrangements as if the authority
conferred had not expired) and provided that the disapplication of Section 561 of the
Act effected by this Resolution 6 is limited to the allotment of equity securities and the
sale of treasury shares up to an aggregate nominal value of £275,596 being ten per
cent of the current issued share capital of the Company.
By Order of the Board
Julia Trouse - Secretary
New Malden 19 July 2012
64
ECO ANIMAL HEALTH GROUP PLC
Animal Health Group plc
FORM OF PROXY FOR USE AT THE ANNUAL GENERAL MEETING
I/We.......................................……………………………….of....................................................................
(Please complete in BLOCK CAPITALS)
being (a) Member(s) of the above named Company, owning
HEREBY APPOINT
shares;
................................................………………………………of....................................................................
failing whom the Chairman of the Meeting as my/our proxy to vote for me/us on my/our behalf on any
resolution proposed at the Annual General Meeting of the Company to be held on 27th September
2012 and in particular to vote on the resolutions to be proposed thereat in the manner indicated below
FOR
AGAINST
VOTE
WITHELD
RESOLUTIONS
1. To receive the directors’ report and financial statements for
the 12 months ended 31 March 2012.
2. To re-elect Mr Peter Lawrence, the Director retiring by
rotation who, being eligible, offers himself for re-election.
3.To appoint the auditors Reeves+Co LLP and to authorise the
directors to determine their remuneration.
4. To allow the Board to allot unissued shares up to an
aggregate nominal value of £649,040.
5. To authorise the Company to make market purchases up to
551,192 of its shares.
6. To allow the Board to issue equity securities for cash up to a
nominal value of £275,596.
(Please indicate with an “X” in the appropriate space how you wish your vote to be cast. If no specific
direction as to voting is given then proxy will vote or abstain at his discretion.)
Date:
...........................................
Signature: ..............................................................
NOTES:
1.
If you wish to appoint a proxy other than the Chairman of the meeting, please insert the name and
address of your proxy (who need not be a member of the Company).
3.
2. This form of proxy must be lodged at the Company’s Registered Office at 78 Coombe Road, New
Malden, Surrey KT3 4QS not less than 48 hours before the time appointed for the holding of the
meeting.
In the case of a corporation, this form of proxy must be executed under seal or under the hand of a duly
authorised officer of the corporation.
In the case of joint holders, the vote of the senior who tends a vote whether in person or by proxy shall
be accepted to the exclusion of votes of the other joint holders and or this purpose seniority will be
determined by the order in which the names stand in the Register of Members in respect of the joint
holdings.
4.
5. Any alterations to this form of proxy should be initialled.
65