Final Results
29 July 2009
ECO Animal Health Group plc
(AIM:EAH)
Preliminary Results for the year ended 31 March 2009
HIGHLIGHTS
· Profit attributable to shareholders before interest, tax, depreciation, amortisation, share based payments and
exceptional items increased 66.9 per cent to £3.74 million (2008: £2.24 million)
· Turnover up 17.4 per cent at £19.34 million (2008: £16.48 million)
· Positive contribution from currency movements
· Total dividend of 7.15 pence per share (2008: 7.15 pence)
· £3 million of cash generated from operating activities during year
· Aivlosin®, ECO's patented macrolide antibiotic, now accounts for over half ECO's total sales
· Sales in China, a key market, rose 60 per cent over level of previous year
· Further important drug registrations granted for Aivlosin® and Ecomectin® with more expected in current year
Peter Lawrence, Executive Chairman of ECO Animal Health Group plc, commented:
"The current financial year has started strongly. We remain cautiously optimistic about the likely trading outturn in
view of the generally difficult global economic environment and the currency translation effect of the dollar/sterling
exchange rate. The exact timing of the granting of marketing authorisations is, as always, difficult to determine but
ECO nevertheless expects to benefit from additional marketing authorisations to be granted in the year. These factors
give us increasing confidence in the exciting future of the ECO veterinary pharmaceutical business and its ability to
generate attractive returns for investors"
Contacts:
ECO Animal Health Group plc
Peter Lawrence 020 8336 6190
Spiro Financial
Anthony Spiro 020 8336 6196
Cenkos Securities plc (Nominated Adviser)
Stephen Keys 020 7397 8926
Elizabeth Bowman 020 7397 8928
ECO Animal Health Group plc is a leader in the development, registration and marketing of pharmaceutical products for
animals. Our products for these global growth markets promote well-being. Our financial goals are achieved through the
careful and responsible application of science to generate value for our shareholders.
Company Registration No. 1818170 (England and Wales)
ECO ANIMAL HEALTH GROUP PLC
ANNUAL REPORT
FOR THE YEAR ENDED 31 MARCH 2009
ECO ANIMAL HEALTH GROUP PLC
DIRECTORS AND ADVISERS
Directors Mr Peter Lawrence
Mr Marc Loomes
Mrs Julia Trouse
Mr Kevin Stockdale
Mr David Danson (appointed 18
September 2008)
Secretary Mrs Julia Trouse
Company number 1818170
Registered office 78 Coombe Road
New Malden
Surrey
KT3 4QS
Registered auditors FW Stephens
Third Floor
24 Chiswell Street
London
EC1Y 4YX
Registrars Share Registrars Limited
Suite E, First Floor
9 Lion and Lamb Yard
Farnham
Surrey
GU9 7LL
Bankers NatWest plc
Mitcham Branch
282 London Road
Mitcham
Surrey
CR4 2ZP
Nominated Advisor and Cenkos Securities plc
Broker 6,7,8 Tokenhouse Yard
London
EC2R 7AS
ECO ANIMAL HEALTH GROUP PLC
CHAIRMAN'S STATEMENT
FOR THE YEAR ENDED 31 MARCH 2009
I am pleased to report encouraging results after another year of
solid progress. The global economic climate marked by commodity
price volatility, currency crises and a worldwide lack of credit
has made business even more challenging than normal. However,
the outlook for agriculture and animal health in particular,
remains positive despite these hopefully short-term
difficulties.
In September 2008, we announced the sale of Aquarium Products,
our United States based pet products operation. The
consideration comprised a cash payment followed by an earn out
based on a rising percentage of net sales over the next five
years. The Board of ECO believes that this arrangement will
achieve the best and fairest price for the business. This sale
concludes our strategy of disposing of non-core businesses and
leaves us totally focused on our fast growing animal health and
veterinary pharmaceuticals operations.
Financial
Group turnover in the year to 31 March 2009 increased by 17.4
per cent from the level of the previous year to £19.34 million
(2008: £16.48 million). Profit attributable to shareholders
before interest, tax, depreciation, amortisation, share based
payments and exceptional items rose close to 67 per cent to
£3.74 million (2008: £2.24 million).
International Accounting Standard 21 requires companies to
revalue all foreign currency trade receivables at the
appropriate year end exchange rate, which in the case of our
principal trading currency, the US dollar, was $1.42 to the
pound sterling. This calculation has given rise to a substantial
exchange gain in the accounts but it should be understood that
the gain is notional and does not represent any change in our
cash position. Currently the US dollar is trading at over $1.60
to the pound; if this rate remains until the end of the current
financial year then all last year's currency gain may be eliminated.
Our tight cash management and conservative approach to the
business, with particular emphasis on the credit terms given to
our distributors around the world, generated some £3 million
of cash from operating activities during the year and has helped
to finance our continuing and important drug registration
program.
The Board is recommending an unchanged final dividend of 5.45
pence per share making a total for the year of 7.15 pence per
share (2008: 7.15 pence per share). Shareholder approval will be
sought at the Annual General Meeting on 24 September 2009 to pay
the final dividend on 9 November 2009 to shareholders on the
register on 30 September 2009.
We will again offer shareholders a scrip alternative to the cash
dividend and are grateful to those who have supported us in this
way. Since introducing the scrip alternative in 2008, the
company has conserved over £1.6 million of cash, which has been
reinvested in the business. This is very positive for the
business and it is pleasing to note that shareholders who have
taken up the scrip have also generally benefited from an overall
improvement in the value of these shares.
The Board is considering paying an annual dividend to
shareholders in the future, which in view of the administration
costs may be more appropriate for a company of our size.
Over the past six years, shareholders funds have increased from
just under £19 million to almost £50 million, which reflects our
significant investment in drug registrations and our commitment
to generating value for shareholders.
Investors
The past year has been a very difficult time for investors with
stock markets around twenty per cent below the level of twelve
months ago. ECO has not escaped the storm but it is encouraging
that our share price is significantly higher than when I
reported a year ago. The AIM market continues to be a
disappointment, as market makers remain nervous and reluctant to
hold stock for trading, thereby allowing small transactions to
have a disproportionate impact on the share price. It is usually
the case when emerging from depressed market levels that
investors seek out well-priced stocks in smaller companies; we
hope this pattern will be repeated.
In February 2009, our new website www.ecoanimalhealthgroupplc.com
was launched and shareholders are invited to visit it. The site
includes corporate and investor information, including the share
price, as well as news and links to product and technical
aspects of the business, which investors may find interesting
and informative.
Operations - ECO Animal Health
Overall, ECO's margins have continued to improve, driven by
sales mix and cost base improvements. Aivlosin® now accounts
for more than half of our global sales. Management is also
implementing aggressive and on-going cost of goods reduction
and supply chain management programmes, which are starting to
deliver real financial benefits.
Sales in local currency from our subsidiary in China, Zhejiang
ECO Biok Animal Health Products Limited (ECO Biok) were more
than 60 per cent ahead from the level of the previous year and
once again exceeded our expectations. The value of exports
manufactured at ECO Biok's factory also continue to increase.
China remains the largest market opportunity for our products
and we are currently examining the feasibility of other joint
venture and cooperative projects in that country.
Aivlosin®
Considerable progress has been made during the last twelve
months with the Aivlosin® clinical programme in Europe.
Aivlosin® is ECO's patented macrolide antibiotic. In June 2008,
ECO was granted a marketing authorisation from the European
Commission for Aivlosin® granules for oral solution for poultry.
This authorisation allows Aivlosin® to be marketed in Europe for
the treatment and prevention of mycoplasmal respiratory disease
in poultry, a segment estimated to be worth over £10 million
per annum at manufacturer level.
In March 2009, ECO announced that it had received a positive
opinion from the Committee for Medicinal Products for Veterinary
Use of the European Medicines Agency for the use of Aivlosin®
granules for oral solution for medicated drinking water for
pigs. This will allow Aivlosin® to be marketed throughout Europe
for the treatment and prevention of ileitis (porcine
proliferative enteropathy) which is an important enteric
(intestinal) disease. It is estimated that this market segment
is worth in the region of £18 million per annum at manufacturer
level. The Aivlosin® granules dissolve readily in drinking water
thus enabling the rapid, accurate and simultaneous treatment of
large numbers of pigs that are more likely to drink than to
eat. It is the rapid absorption of Aivlosin® which results in a
swift resolution of the disease and a fast return to productive
health that makes it profitable for farmers to use when
compared with older generation treatments.
ECO has targeted a significant share of the pig and poultry
markets and has decided to sell directly in the two major EU
poultry producing markets, France and the UK. Several new
national distributors, selected for their local market
knowledge, have now been appointed in other EU territories
following the restructuring of our distribution arrangements
with Intervet Schering Plough. In order to strengthen and
accelerate our marketing position in Europe, we have appointed
two additional staff, one based in Holland and the other in the
UK.
In Japan, there were two significant developments in the
marketing of Aivlosin®, which will provide further opportunities
for sales and profit growth. In January 2009, ECO was granted a
further indication to its marketing authorisation for Aivlosin®
Premix for pigs from the Japanese Ministry of Agriculture,
Forestry and Fisheries. This new Aivlosin® marketing
authorisation, for the treatment of ileitis, complements the
existing indication for mycoplasmal respiratory disease.
The other development was the appointment of ASKA Pharmaceutical
Company Ltd, a major Japanese animal health and pharmaceutical
business, as our new distributor for Aivlosin® in that country.
ASKA has a well-established distribution network and replaces
Takeda Schering Plough with whom we worked for some years.
ECO has a minority shareholding in ECO PHARMA Inc, a
profitable Japanese distribution company, and has recently
entered into discussions with the majority shareholders about
the potential sale to ECO of their stakes. Any progress will be
reported in due course.
In the US we remain confident that the granting of approvals for
Aivlosin® will start in 2010 and we are already working on
launch and distribution plans for this very important market.
Ecomectin®
In Europe, Ecomectin®, our branded range of endectocide
antiparasitic formulations, achieved total sales more than 10
per cent ahead of the previous year. Growth was driven by new
marketing authorisations, which included a pig premix and a
horse paste. Ecomectin® Pig Premix, which addresses a market
worth about £8 million at manufacturer level, provides a simple
solution to the problem of accurately treating a large number of
pigs simultaneously. Sales of Ecomectin® Horse Paste have also
continued to grow as it is being launched into a number of new
territories in the EU. The treatment of internal parasites in
horses is the largest equine veterinary market segment in
Europe, with an estimated value in the region of £25 million.
In Japan, Ecoheart, which is a palatable Ecomectin® chewable
tablet for dogs for the treatment and prevention of canine
heartworm, has increased its market share in a competitive
market, which as in all countries, has been affected by the
economic recession. Canine heartworm is potentially fatal,
requiring a monthly preventative treatment and, as a disease
which is growing in importance as it spreads, has prompted us to
submit registration dossiers to a number of countries in
anticipation of the increased incidence of this disease.
Developments
We have begun research into further potential uses
of Aivlosin® in production animals other than pigs
and poultry. We are optimistic that the results of
this research will, over time, offer ECO the
opportunity to access new global markets. Work is
also progressing on the formulation and development
of pet medications of potential major importance
and we believe that these will make significant
profit contributions when the development and
registration programmes are successfully completed.
In 2006, ECO and the University of Cambridge entered into a
collaborative research agreement to investigate new potential
indications for Aivlosin®, which is currently only licensed for
respiratory and enteric bacterial diseases in pigs and poultry.
During earlier studies funded by ECO, results indicated that
Aivlosin® appeared to prevent the replication of certain common
viruses including influenza in laboratory test systems, without
damaging cell cultures.
These potentially important findings formed the basis of patent
filings and in addition, ECO and Cambridge Enterprise, the
University's commercialisation office, signed licensing
agreements to jointly exploit these discoveries. Researchers in
The Virology Division of the Department of Pathology at the
University of Cambridge have very recently been awarded a grant
of £500,000 by the UK Medical Research Council to continue their
work to investigate the inhibition of influenza viruses by
macrolide antibiotics. This work is still at an early stage but,
if successful, could have far reaching and very exciting
commercial implications for ECO.
People
We currently employ over one hundred people around the world;
their specialist knowledge covers many fields including
veterinary medicine, pharmaceutical development, regulatory,
affairs, sales and marketing. The commitment of all our
people is the reason that Eco has made so much progress and
built a strong platform for growth. In early 2009 we
consolidated our drug development departments into our north London
head office; this move has improved communication and efficiency.
Outlook
The current financial year has started strongly.We remain cautiously
optimistic about the likely trading outturn in view of the
generally difficult global economic environment and the currency
translation effect of the dollar/sterling exchange rate. Eco
expects to benefit from additional marketing authorisations to
be granted in the year. These factors give us increasing
confidence in the exciting future of the ECO veterinary
pharmaceutical business and its ability to generate attractive
returns for investors.
Peter Lawrence
Chairman 28 July 2009
ECO ANIMAL HEALTH GROUP PLC
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 MARCH 2009
The directors present their report and financial statements for the
year ended 31 March 2009.
Directors
The following directors have held office since 1 April 2008:
Mr Peter Lawrence
Mr Marc Loomes
Mrs Julia Trouse
Mr Kevin Stockdale
Mr David Danson (appointed 18 September 2008)
Principal activities and review of the business
The principal activities of the group in the year under review were
those of manufacturers and suppliers of speciality chemicals,
animal feed and animal health products.
A full review of the year, together with an indication of future
developments, is given in the chairman's statement on pages 1 to 4.
Results and dividends
The consolidated income statement for the year is set out on pages
10 to 11.
A final dividend of 5.45p per Ordinary share was paid on 7 November
2008 (2007: 5.45p per Ordinary share) and an interim dividend of
1.7p per Ordinary share was paid on 19 May 2009 for the six months
ended 30 September 2008 (2007: 1.70p per Ordinary share).
Substantial shareholdings
At 31 May 2009, the company had been notified of the following
holdings of 3% or more of its issued share capital.
Ordinary
5p shares %
Schroder Investment Management Limited 10,937,168 23.45
P A Lawrence and family 10,774,835 23.11
Prudential Plc 6,700,000 14.37
Artemis Investment Management Limited 3,180,911 6.82
Axa Framlington Investment Managers UK Limited 3,052,479 6.55
D Salmon & family 2,383,848 5.11
Hargreave Hale Limited 2,350,000 5.04
Vanguard International Explorer Fund 1,446,693 3.10
Directors' interests
Under the group's executive share option scheme the following
directors have the right to acquire Ordinary shares.
M D Loomes 2009: 583,750 at £1.085, 100,000 at £0.85,
100,000 at £1.47
2008: 583,750 at £1.085
J Trouse 2009: 206,100 at £1.085, 50,000 at £0.85, 70,000
at £1.47
2008: 206,100 at £1.085
K Stockdale 2009: 50,000 at £1.085, 50,000 at £0.85. 70,000
at £1.47
2008: 50,000 at £1.085
D Danson 2009: 30,000 at £0.85
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 accounts.
2009 2008
£ £
During the year the group made the following payments:
Charitable donations 100 3,200
_______ _______
Creditors payment policy
The company 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 suppliers.
Trade creditors at the year end amounted to 67 days (2008: 80 days)
of average supplies for the year against terms agreed with our
suppliers.
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 are implementing many of
the recommendations which 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 price per share on 31 March 2009 was 160p
per share (2008: 109p). During the year the company's average share
price was 113.59p.
Auditors
The auditors, FW Stephens, will be proposed for reappointment in
accordance with section 489 of the Companies Act 2006.
Directors' responsibilities
The directors are responsible for preparing the financial
statements in accordance with applicable law and International
Financial Reporting Standards ("IFRS") as adopted by the European
Union.
Company law requires the directors to prepare financial statements
for each financial year which give a true and fair view of the
state of affairs of the company and of the group and of the profit
or loss of the group for that period. In preparing those financial
statements, the directors are required to:
-select suitable accounting policies and then apply them
consistently;
-make judgements and estimates that are reasonable and prudent;
-state whether applicable accounting standards 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 proper accounting records
which 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 1985
and Article 4 of the IAS regulations. 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.
Statement of disclosure to auditor
(a) so far as the directors are aware, there is no relevant audit
information of which the group's auditors are unaware, and
(b) they have taken all the steps that they ought to have taken as
directors in order to make themselves aware of any relevant audit
information and to establish that the group's auditors are aware of
that information.
On behalf of the board
..............................
Mr Peter Lawrence
Director
.........................
ECO ANIMAL HEALTH GROUP PLC
INDEPENDENT AUDITORS' REPORT
TO THE SHAREHOLDERS OF ECO ANIMAL HEALTH GROUP PLC
We have audited the group and parent company financial
statements of Eco Animal Health Group plc for the year ended 31
March 2009, which comprise of the consolidated income
statement, consolidated statement of changes in equity, the
consolidated and company balance sheets, the consolidated
cashflow statement and related notes. These financial
statements have been prepared under the historical cost
convention and the accounting policies set out therein.
This report is made solely to the company's members, as a body,
in accordance with Section 235 of the Companies Act 1985. Our
audit work has been undertaken so that we might state to the
company's members those matters we are required to state to
them in an auditor's report and for no other purpose. To the
fullest extent permitted by law, we do not accept or assume
responsibility to anyone other than the company and the
company's members, as a body for our audit work, for this
report, or for the opinion we have formed.
Respective responsibilities of directors and auditors
As described in the Statement of Directors' Responsibilities on
page 7 the company's directors are responsible for the
preparation of the financial statements in accordance with
applicable law and International Financial reporting Standards
("IFRS") as adopted by the European Union.
Our responsibility is to audit the financial statements in
accordance with the relevant legal and regulatory requirements
and International Standards on Auditing (UK and Ireland).
We report to you our opinion as to whether the financial
statements give a true and fair view and are properly prepared
in accordance with the Companies Act 1985, and whether, in
addition, the group financial statements have been properly
prepared in accordance with Article 4 of the IAS regulations.We
also report to you whether in our opinion the information in
the directors' report and Chairman's statement are consistent
with the financial statements, if the company has not kept
proper accounting records, if we have not received all the
information and explanations we require for our audit, or if
information specified by law regarding directors' remuneration
and transactions with the company is not disclosed.
We read the directors' report and the Chairman's statement and
consider the implications for our report if we become aware of
any apparent misstatements within it.
Basis of audit opinion
We conducted our audit in accordance with International
Standards on Auditing (UK and Ireland) issued by the Auditing
Practices Board. An audit includes examination, on a test
basis, of evidence relevant to the amounts and disclosures in
the financial statements. It also includes an assessment of the
significant estimates and judgements made by the directors in
the preparation of the financial statements, and of whether the
accounting policies are appropriate to the group's and the
company's circumstances, consistently applied and adequately
disclosed.
We planned and performed our audit so as to obtain all the
information and explanations which we considered necessary in
order to provide us with sufficient evidence to give reasonable
assurance that the financial statements are free from material
misstatement, whether caused by fraud or other irregularity or
error. In forming our opinion we also evaluated the overall
adequacy of the presentation of information in the financial
statements.
Opinion
In our opinion:
- the group financial statements give a true and fair view in
accordance with IFRS as adopted by the European Union of the
state of the company's and the group's affairs as at 31 March
2009 and of the group's profit for the year then ended and
have been properly prepared in accordance with the Companies
Act 1985; and as regards the group financial statements,
Article 4 of the IAS Regulations, and
- the information given in the directors' report and chairman's
statement is consistent with the financial statements.
FW Stephens ......................
Chartered Accountants
Registered Auditor Third Floor
24 Chiswell Street
London
EC1Y 4YX
ECO ANIMAL HEALTH GROUP PLC
CONSOLIDATED INCOME STATEMENT
FOR THE YEAR ENDED 31 MARCH 2009
2009
2008
Notes £
£
Revenue 2
Continuing operations 18,897,645 14,748,776
Acquisitions - 1,732,325
Discontinued operations 447,269 -
_______ 19,344,914 _______
16,481,101
Cost of sales 3 (11,570,899)
(10,802,988)
_______
_______
Gross profit 7,774,015
5,678,113
Administrative expenses 3 (6,819,884)
(6,151,158)
Other operating income 3 186,177
152,387
_______
_______
Operating profit/(loss) 4
Continuing operations 1,420,972 (777,657)
Acquisitions - 456,999
Discontinued operations (280,664) 1,140,308 -
(320,658)
_______ _______
(Loss) on sale of division 5 (676,024)
(315,115)
_______
_______
Profit/(loss) on ordinary 464,284
(635,773)
activities before interest
Other interest receivable 178,187
40,258
and similar income
Interest payable and similar 6 (138,504)
(414,668)
charges _______
_______
Profit/(loss) on ordinary 503,967
(1,010,183)
activities before taxation
Tax on profit/(loss) on ordinary 8 181,148
313,767
activities _______
_______
Profit/(loss) on ordinary 685,115
(696,416)
activities after taxation _______
_______
_______
_______
ATTRIBUTABLE TO:
Equity holders of the parent 447,081
(783,973)
Minority interests 238,034
87,557
_______
_______
Profit/(loss) for the year 685,115
(696,416)
_______
_______
_______
_______
ECO ANIMAL HEALTH GROUP PLC
CONSOLIDATED INCOME STATEMENT(CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2009
2009 2008
EARNINGS PER SHARE 11 Basic Diluted Basic Diluted
Continuing operations 3.06 3.06 (2.36) (2.36)
Discontinued operations (2.08) (2.08) - -
_______ _______ _______ _______
_______ _______ _______ _______
0.98 0.98 (2.36) (2.36)
_______ _______ _______ _______
_______ _______ _______ _______
ECO ANIMAL HEALTH GROUP PLC
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 MARCH 2009
Share
Group Share Premium Revaluation Other
Retained Total
Capital Account Reserve Reserves
Earnings 2009
£ £ £ £
£ £
Balance as at 1 April 2008 2,256,252 37,095,354 253,347 805,621
8,685,865 49,096,439
Profit for the year - - - -
447,081 447,081
Dividends - - - -
(3,268,742) (3,268,742)
Arising from issue of shares
in the year 63,868 1,191,850 - -
- 1,255,718
Foreign currency translation
differences - - - -
348,150 348,150
Actuarial losses on pension
scheme assets - - - -
(99,100) (99,100)
Share based payments - - - 132,685
- 132,685
Write back of depreciation - - (2,890) -
- (2,890)
________ ________ ________ ________
________ ________
2,320,120 38,287,204 250,457 938,306
6,113,254 47,909,341
________ ________ ________ ________
________ ________
________ ________ ________ ________
________ ________
Total Minority
Total
2009 Interest
Equity
£ £
£
Balance as at 1 April 2008 49,096,439 646,638
49,743,077
Profit for the year 447,081 238,034
685,115
Dividends (3,268,742) -
(3,268,742)
Arising from issue of shares 1,255,718 -
1,255,718
in the year
Foreign currency translation 348,150 213,604
561,754
differences
Actuarial losses on pension (99,100) -
(99,100)
scheme assets
Share based payments 132,685 -
132,685
Write back of depreciation (2,890) -
(2,890)
____________ ____________
____________
47,909,341 1,098,276
49,007,617
____________ ____________
____________
____________ ____________
____________
ECO ANIMAL HEALTH GROUP PLC
BALANCE SHEETS
AS AT 31 MARCH 2009
Group Company
2009 2008 2009
2008
Notes £ £ £
£
Non-current assets
Intangible assets 12 35,729,507 34,798,363 -
-
Property, plant and 13 1,157,977 1,348,663 641,257
656,460
equipment
Investments 14 285,926 280,550 20,332,240
20,986,556
_________ _________ _________
_________
37,173,410 36,427,576 20,973,497
21,643,016
_________ _________ _________
_________
Current assets
Inventories 15 4,921,413 3,825,724 -
-
Trade and other receivables 16 8,353,700 8,354,376 20,285,979
20,432,139
Deferred tax asset 17 228,127 228,127 -
-
Other taxes and social 24,059 150,703 -
143,665
security
Cash and cash equivalents 18 3,717,430 6,143,189 2,243,997
5,122,408
_________ _________ _________
_________
17,244,729 18,702,119 22,529,976
25,698,212
Current liabilities
Trade and other payables 19 (3,531,798) (3,523,613) (140,744)
(237,332)
Short term borrowings (908,500) (79,043) (194,160)
(79,043)
Current portion of long term - (557,862) -
(557,862)
borrowings
Corporation tax (9,837) (357,755) -
(294,858)
Other taxes and social (149,118) (82,783) (57,147)
(59,137)
security
Dividends (808,269) (599,608) (808,269)
(599,608)
_________ _________ _________
_________
Net current assets 11,837,207 13,501,455 21,329,656
23,870,372
_________ _________ _________
_________
Total assets less current 49,010,617 49,929,031 42,303,153
45,513,388
liabilities
Non-current liabilities
Long term borrowings 20 - (185,954) -
(185,954)
Long term provisions 21 (3,000) - (3,000)
-
_________ _________ _________
_________
49,007,617 49,743,077 42,300,153
45,327,434
_________ _________ _________
_________
_________ _________ _________
_________
Equity
Called up share capital 23 2,320,120 2,256,252 2,320,120
2,256,252
Share premium account 24 38,287,204 37,095,354 38,287,204
37,095,354
Revaluation reserve 24 250,457 253,347 250,457
253,347
Other reserves 24 938,306 805,621 938,306
805,621
Retained earnings 24 6,113,254 8,685,865 504,066
4,916,860
_________ _________ _________
_________
26 47,909,341 49,096,439 42,300,153
45,327,434
Minority interests 25 1,098,276 646,638 -
-
_________ _________ _________
_________
49,007,617 49,743,077 42,300,153
45,327,434
_________ _________ _________
_________
_________ _________ _________
_________
Approved by the Board and authorised for issue on
..............................
Mr Peter Lawrence
Director
ECO ANIMAL HEALTH GROUP PLC
CONSOLIDATED CASH FLOW STATEMENT
FOR THE YEAR ENDED 31 MARCH 2009
2009 2008
Note £ £
Profit/(loss) from operations 1,140,308 (320,658)
Adjustment for:
Depreciation of plant and equipment 176,795 217,735
Amortisation of intangible assets 2,526,060 2,168,558
Actuarial pension losses (99,100) (80,400)
Increase/(decrease) in pension provision 3,000 (110,500)
Share based payments 132,685 257,390
Foreign exchange differences 604,668 (443,671)
__________ __________
Operating cash flow before movement
in working capital 4,484,416 1,688,454
(Increase) in inventories (1,650,016) (97,090)
Decrease in receivables 330,271 525,734
Increase/(decrease) in payables 109,387 (2,291,786)
__________ __________
Cash generated from/(absorbed by) operations 3,274,058 (174,688)
Interest paid (138,504) (414,668)
Taxation (166,770) (1,864)
__________ __________
Net cash inflow/(outflow) from 2,968,784 (591,220)
operating activities __________ __________
Cash flows from investing activities
Acquired with subsidiary - 276,414
Proceeds from sale of a division 291,109 -
Purchase of property, plant and equipment (53,275) (141,914)
Purchase of investments (5,376) -
Purchase of goodwill (214,482) -
Cost of acquiring drug registrations (3,871,984) (4,551,891)
Interest received 178,187 40,258
__________ __________
Net cash (used in) investing activities (3,675,821)
(4,377,133)
__________ __________
Cash flows from financing activities
Issue of shares 1,255,718 16,425,384
Repayment of bank borrowings (185,954) (444,144)
Dividends paid (3,060,081) (2,368,712)
__________ __________
(1,990,317) 13,612,528
__________ __________
Net (decrease)/increase in 33,34 (2,697,354) 8,644,175
cash and cash equivalents
Cash and cash equivalents at the 5,506,284 (3,137,891)
start of the period __________ __________
Cash and cash equivalents at the end 2,808,930 5,506,284
of the period __________ __________
__________ __________
The cash outflow from operating activities includes an amount of
£120,513 in respect of the discontinued activity of Interpet
Llc. There were no cashflows arising from investing or financing
activities prior to the date of disposal.
ECO ANIMAL HEALTH GROUP PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2009
1 Accounting policies
1.1 Basis of preparation
The group has presented its annual report and accounts in
accordance with International Financial Reporting Standards
(IFRS), as endorsed by the European Union.
The preparation of financial statements in conformity with
generally accepted accounting principals 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
reported 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 a 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.
1.2 Basis of consolidation
The consolidated financial statements comprise the accounts of
the company and its subsidiaries drawn up to 31 March 2009.
Profit or losses on intra-group transactions are eliminated in
full on consolidation.
1.3 Revenue
Revenue represents amounts receivable for goods and services
net of VAT and trade discounts.
1.4 Goodwill
Goodwill arising on consolidation is included in the balance
sheet of the accounts as an asset at cost less impairment
according to International Financial Reporting Standards.
For the purpose of impairment testing, goodwill is allocated
to each of the company's cash-generating units expected to
benefit from the synergies of the combination. Cash-generating
units to which goodwill has been allocated are tested
annually, or more frequently where there is an indication that
the unit may be impaired. If the recoverable amount of the
cash-generating unit is less than the carrying amount of the
unit, the impairment loss is allocated first to reduce the
carrying amount of any goodwill allocated to the unit and then
to other assets of the unit pro-rata on the basis of the
carrying amount of each asset in the unit. An impairment loss
recognised for goodwill is not reversed.
1.5 Intangible non-current assets
Drug registrations are included at cost and amortised on a
straight line basis over their estimated useful economic life
of 10 years.
1.6 Research and development
Research expenditure is written off to the income statement in
the year in which it is incurred. Development expenditure is
written off in the same way unless the directors are satisfied
as to the technical, commercial and financial viability of
individual projects. In this situation, the expenditure is
deferred and amortised over the period during which the
company is expected to benefit.
1.7 Property, plant and equipment and depreciation
Non-current assets 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:
Freehold property 2% on valuation
Long leasehold property on valuation over the remaining term of the lease
Plant and machinery 20% on cost
Alterations to premises 10% on cost
Fixtures, fittings & 20% on cost
equipment
Motor Vehicles 25% on cost
1.8 Leasing
Rentals payable under operating leases are charged against
income on a straight-line basis over the lease term.
1.9 Investments
Fixed asset investments are stated at cost less provisions
for diminution in value.
1.10 Inventories
Inventories are valued at the lower of cost and net
realisable value, after making allowance for obsolete and
slow moving items.
1.11 Contributions to pension schemes
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.
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 balance sheet
in accordance with IAS 19.
1.12 Deferred taxation
Full provision is made for deferred tax assets and
liabilities arising from all timing differences between the
recognition of gains and losses in the financial statements
and recognition in the tax computation.
A net deferred tax asset is recognised only if it can be
regarded as more likely than not that there will be suitable
taxable profits from which the future reversal of the
underlying timing differences can be deducted.
Deferred tax assets and liabilities are calculated at the tax
rates expected to be effective at the time the timing
differences are expected to reverse.
Deferred tax assets and liabilities are not discounted.
1.13 Foreign currency translation
Transactions in foreign currencies are translated at the
exchange rate ruling at the date of the transaction. Monetary
assets and liabilities in foreign currencies are translated
at the rates of exchange ruling at the balance sheet date.
The financial statements of foreign subsidiaries are
translated at the rates of exchange ruling at the balance
sheet date. The exchange differences arising from the
retranslation of the opening net reserves in subsidiaries are
taken directly to reserves. Where exchange differences result
from the translation of foreign currency borrowings raised to
acquire foreign assets, they are taken to reserves and offset
against the differences arising from the translation of those
assets. All other exchange differences are dealt with through
the income statement.
1.14 Financial Instruments
Income and expenditure arising on financial instruments is
recognised on the accruals basis, and credited or charged to
the income statement in the financial period to which it
relates.
1.15 Share-based payments
For equity-settled share-based payment transactions the
group, in accordance with IFRS2 measures their value, and
the corresponding increase in equity, indirectly, by
reference to the fair value of the equity instruments
granted. The fair value of those equity instruments shall be
measured at grant date, using the Black Scholes method. The
expense is apportioned over the vesting period of the
financial instrument and is based on the number which are
expected to vest and the fair value of those financial
instruments at the date of grant. If the equity instruments
granted vest immediately, the expense is recognised in full.
2 Revenue
The total revenue of the group for the year has been derived
from its principal activity.
Segmental analysis by geographical area
The analysis by geographical area of the group's revenue,
profit/(loss) before taxation is set out as below:
Revenue
2009 2008
£ £
Geographical segment
United Kingdom 517,119 402,654
Europe 4,913,035 3,442,975
Rest of the World 13,914,760 12,635,472
__________ __________
19,344,914 16,481,101
__________ __________
__________ __________
Profit/(loss) before taxation
2009 2008
£ £
Geographical segment
United Kingdom 34,607 (21,022)
Europe 328,795 (179,757)
Rest of the World 140,568 (809,404)
__________ __________
503,970 (1,010,183)
__________ __________
__________ __________
It has not been possible to disclose the group's assets and
liabilities by geographical area as they are held centrally.
The group's revenue included a figure of £447,269 in respect
of the discontinued activity of Interpet LLC, and its profit
before taxation included a loss of £280,664 arising from that
activity.
3 Cost of sales and net operating expenses
2009 2008
Continuing Discontinued Total Continuing
Acquisitions Total
£ £ £ £
£ £
Cost of sales 11,206,606 364,293 11,570,899 9,706,351
1,096,637 10,802,988
Administrative expenses 6,455,175 364,709 6,819,884 5,702,163
448,995 6,151,158
Other operating income (185,108) (1,069) (186,177) (127,470)
(24,917) (152,387)
___________ ___________ ___________ ___________
___________ ___________
17,476,673 727,933 18,204,606 15,281,044
1,520,715 16,801,759
___________ ___________ ___________ ___________
___________ ___________
4 Operating profit/(loss)
2009 2008
Operating profit /(loss) is stated after £ £
charging/(crediting):
Depreciation - tangible assets 179,685 217,736
Amortisation of intangible assets 2,526,060 2,168,558
(Gain)/loss on foreign exchange (595,249) 23,036
transactions
Auditors remuneration
- audit services 38,500 43,000
- non audit services 14,750 11,343
R & D expenditure 3,238 31,041
Operating lease rentals 110,127 100,358
_________ _________
5 Loss on sale of a division
The company disposed of the trading assets and trade of
Interpet LLC on 1 October 2008.
The assets disposed of and the consideration received are
detailed below:
£'000
Property, plant and equipment 68
Inventories 554
Trade and other receivables 57
Trade and other payables (56)
Loss on disposal (72)
_______
551
_______
Settled by:
Cash 291
Expected earnout, based on future sales 260
_______
551
_______
In addition, goodwill of £586,000 has been written off as
well as £18,000 of legal expenses.
The comparative figure of £315,115 relates to an adjustment
to the proceeds relating to the disposal of Agil trading
division in November 2006.
6 Interest payable 2009 2008
£ £
On bank loans and overdrafts 138,504 408,631
Other interest - 6,037
_______ _______
138,504 414,668
_______ _______
7 Equity Settled Share Based Payments
The measurement requirements of IFRS2 have been implemented in
respect of share-options that were granted after 7th November 2002.
The expense recognised for share based payments made during the year
is shown in the following table;
2009 2008
£ £
Total expense arising from equity-
settled share-based transactions 132,685 257,390
The share-based payment plan is described below.
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.
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 he
is bound to retire in accordance with the terms of his 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.
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.
The fair value of share options granted is estimated at the date of
grant using the Black -Scholes pricing model, taking into account
all the terms and conditions upon which the options were granted.
Movements in Issued Share Options during the Year
The following table illustrates the number and weighted average
exercise prices (WAEP) of, and movements in, share options during
the period:
2009
2008
2009 WAEP
2008 WAEP
Outstanding at the beginning of the period 3,371,565 1.51
2,852,165 2.41
Granted during the period 455,000 0.85
2,527,260 1.19
Expired /cancelled during the period (15,000) 0.92
(2,008,360) 2.37
Outstanding at the period end 3,811,565 1.44
3,371,565 1.51
Exercisable at the end of the period 667,205 2.45
555,325 2.38
The maximum aggregate number of shares over which options may
currently be granted cannot exceed 10% of the nominal share capital
of the company on the grant date.
The options outstanding at 31 March 2009 had a weighted average
share price of £1.44, and a weighted average remaining contractual
life of 5.9 years.
Inputs to the Valuation Model
The fair value of share options granted prior to 31st March 2007
were estimated at the time of grant using a trinomial pricing model,
taking into account all the terms and conditions upon which the
options were granted. For options granted after 1st April 2007 the
directors took the decision that a Black-Scholes model would be more
appropriate.
The following table lists the inputs to the respective models:
2009 2008
2007
Expected dividend yield 4.50% 5.00%
5.00%
Expected volatility 30.00% 25.00%
25.00%
Contractual life of the options 7-10 years 7-10 years 7-10
years
Weighted average risk free interest rate 4.19% 4.66%
4.66%
Weighted average fair value £0.168 £0.171
£0.42
The expected volatility was estimated by reference to the historical
volatility of the company's share price. The risk free rate of
return is estimated as the yield on zero coupon UK government bonds
of a term consistent with the contractual life of the options
granted.
8 Taxation 2009 2008
£ £
Domestic current year tax
Adjustment for prior years (181,148) (270,922)
_______ _______
Current tax (credit) (181,148) (270,922)
Deferred tax
Origination and reversal of timing differences - (42,845)
_______ _______
(181,148) (313,767)
_______ _______
_______ _______
Factors affecting the tax (credit) for the year
Profit/(loss) on ordinary activities before taxation 503,967(1,010,183)
_______ _______
_______ _______
Profit/(loss) on ordinary activities before 41,111 (303,055)
taxation multiplied by standard rate of UK _______ _______
corporation tax of 28% (2008: 30%)
Effects of:
Non deductible expenses 219,989 118,801
Depreciation add back 20,960 25,025
Capital allowances (16,301) (14,569)
Relief for enhanced expenditure (399,073) (459,790)
Other tax adjustments (147,834) 362,666
_______ _______
Current tax (credit) (181,148) (270,922)
_______ _______
_______ _______
Deferred tax unprovided for in the financial statements is set
out below. All amounts have been provided for according to the
provisions of IAS12.
Unprovided deferred tax for gains rolled over into new assets
is £51,252 (2008: £51,252).
9 Loss for the financial year
As permitted by section 230 of the Companies Act 1985, the
holding company's income statement has not been included in
these financial statements. The loss for the financial year is
as follows:
2009 2008
£ £
Holding company's (loss) for the financialyear (1,029,548)(1,751,076)
_______ _______
_______ _______
10 Dividends paid and proposed
2009 2008
£ £
Final dividend for the period ended 31 March - 1,847,481
2007 of 5.45p per ordinary share
Interim dividend for the period ending 31 - 588,179
March 2008 of 1.7p per ordinary share
Final dividend for the period ended 31 March 2,479,901 -
2008 of 5.45p per ordinary share
Interim dividend for the period ending 31 788,841 -
March 2009 of 1.7p per ordinary share
_________ _________
3,268,742 2,435,660
_________ _________
_________ _________
11 Earnings per share
Basic earnings per share is calculated upon the result of the
continuing activities for the financial year shown in the
income statement divided by the weighted average number of
shares in issue during the year.
Diluted earnings per share takes into account the dilutive
effect of share options.
2009 2008
Weighted Weighted
average Per average Per
number of share number of share
Earnings shares amount Earnings shares amount
£'000 '000 (pence) £'000 '000 (pence)
Basic earnings per share
Earnings 1,404 45,818 3.06 (784) 33,199 (2.36)
attributable
to ordinary
shareholders
on continuing
operations
Dilutive - - - - 24 -
effect of
securities
options on
continuing
operations
_______ _______ _______ _______ _______ _______
1,404 45,818 3.06 (784) 33,223 (2.36)
_______ _______ _______ _______ _______ _______
_______ _______ _______ _______ _______ _______
12 Intangible non-current assets
Group
Goodwill Development Total
Costs
£ £ £
Cost
At 1 April 2008 20,352,311 23,616,613 43,968,924
Additions 214,482 3,871,984 4,086,466
Disposals (674,644) (765,850) (1,440,494)
___________ ___________ ___________
At 31 March 2009 19,892,149 26,722,747 46,614,896
___________ ___________ ___________
Amortisation
As at 1 April 2008 1,554,324 7,616,237 9,170,561
Amortisation on disposals (88,296) (722,936) (811,232)
Charge for the year - 2,526,060 2,526,060
___________ ___________ ___________
At 31 March 2009 1,466,028 9,419,361 10,885,389
___________ ___________ ___________
Net book value
At 31 March 2009 18,426,121 17,303,386 35,729,507
___________ ___________ ___________
___________ ___________ ___________
At 31 March 2008 18,797,987 16,000,376 34,798,363
___________ ___________ ___________
___________ ___________ ___________
An impairment review has indicated that goodwill is not impaired.
13 Property, plant and equipment
Group
Freehold Plant and Fixtures, Total
property machinery fittings &
equipment
£ £ £ £
Cost or valuation
At 1 April 2008 650,000 989,193 570,570 2,209,763
Additions - 18,393 34,882 53,275
Disposals - (304,324) (85,717) (390,041)
________ ________ ________ ________
At 31 March 2009 650,000 703,262 519,735 1,872,997
________ ________ ________ ________
Depreciation
At 1 April 2008 26,000 426,072 409,028 861,100
Charge for the year 13,000 109,835 56,850 179,685
On disposals - (258,067) (67,698) (325,765)
________ ________ ________ ________
At 31 March 2009 39,000 277,840 398,180 715,020
________ ________ ________ ________
Net book value
At 31 March 2009 611,000 425,422 121,555 1,157,977
________ ________ ________ ________
________ ________ ________ ________
At 31 March 2008 624,000 563,121 161,542 1,348,663
________ ________ ________ ________
________ ________ ________ ________
The freehold property was valued on 21 June 2007 by
Mr R. L. Sworn of Kelion Sworn, Chartered Surveyors
and Valuers, London W1. The freehold property was
valued at £650,000 with value in use. The property
will continue to be revalued on a regular basis.
The value of the freehold property would have been
recorded at £360,453 on a historical cost basis. The
current revaluation surplus is £250,457
Property, plant and equipment (continued)
Company
Freehold Fixtures, Total
property fittings &
equipment
£ £ £
Cost or valuation
At 1 April 2008 650,000 131,452 781,452
Additions - 6,675 6,675
______ ______ ______
At 31 March 2009 650,000 138,127 788,127
______ ______ ______
Depreciation
At 1 April 2008 26,000 98,992 124,992
Charge for the year 13,000 8,878 21,878
______ ______ ______
At 31 March 2009 39,000 107,870 146,870
______ ______ ______
Net book value
At 31 March 2009 611,000 30,257 641,257
______ ______ ______
______ ______ ______
At 31 March 2008 624,000 32,460 656,460
______ ______ ______
______ ______ ______
14 Non-current asset investments
Group
Unlisted
investments
£
Cost or valuation
At 1 April 2008 280,550
Additions 5,376
_______
At 31 March 2009 285,926
Company
Unlisted
investments
£
Cost or valuation
At 1 April 2008 & at 31 March 2009 21,523,502
_______
Provisions for diminution in value
At 1 April 2008 536,946
Charge for the year 654,316
_______
At 31 March 2009 1,191,262
_______
Net book value
At 31 March 2009 20,332,240
_______
_______
At 31 March 2008 20,986,556
_______
_______
Holdings of more than 20%
The company holds more than 20% of the share capital of the following
companies:
Company Country of
registration or Shares held
incorporation
Class %
Subsidiary undertakings
Eco Animal Health Limited Great Britian Ordinary 100
Eco Animal Health (Europe) Limited B.V.I. Ordinary 100
Eco Group Limited B.V.I. Ordinary 100
Eco Animal Health Southern Africa South Africa Ordinary 100
(Pty) Limited
Petlove Limited Great Britain Ordinary 91
Zhejiang Eco Biok Animal Health P. R. of China Ordinary 51
Products Limited
Eco Animal Health do Brasil Brazil Ordinary 100
Comercio de Produtos
Veterinarios Ltda
The principal activity of these undertakings for the last relevant
financial year was as follows:
Principal activity
Eco Animal Health Limited Manufacture of animal drugs
Eco Animal Health (Europe) Holding company for Eco Animal
Limited Health Limited
Eco Group Limited Holding company for Eco Animal
Health (Europe) Limited
Eco Animal Health Southern Africa Non trading
(Pty) Limited
Petlove Limited Non trading
Zhejiang Eco Biok Animal Health Manufacture of animal drugs
Products Limited
Eco Animal Health do Brasil Distribution of animal drugs
Comercio de Produtos
Veterinarios Ltda
15 Inventories
Group Company
2009 2008 2009
2008
£ £ £
£
Raw materials and consumables 2,985,385 2,864,305 -
-
Finished goods and goods for resale 1,936,028 961,419 -
-
_______ _______ _______
_______
4,921,413 3,825,724 -
-
_______ _______ _______
_______
_______ _______ _______
_______
16 Trade and other receivables
Group Company
2009 2008 2009
2008
£ £ £
£
Trade receivables 7,839,283 8,096,018 67,542
-
Amounts owed by group undertakings - - 19,931,139
20,358,332
Other receivables 347,276 139,155 274,902
59,978
Prepayments and accrued income 167,141 119,203 12,396
13,829
_______ _______ _______
_______
8,353,700 8,354,376 20,285,979
20,432,139
_______ _______ _______
_______
_______ _______ _______
_______
17 Deferred tax
Group Company
2009 2008 2009
2008
£ £ £
£
Balance at 1 April 2008 228,127 185,282 -
-
Movement in the year - 42,845 -
-
_______ _______ _______
_______
Balance at 31 March 2009 228,127 228,127 -
-
_______ _______ _______
_______
_______ _______ _______
_______
The deferred tax balance is a result of timing differences
between the Company's research and development expenditure
between the years 2002 and 2005 and the enhanced tax relief
thereon which is given over a period of ten years. No movement
occurred in the year because accumulated tax losses have
delayed the tax benefit of this expenditure.
18 Cash and cash equivalents
Cash and cash equivalents comprise cash and short term
deposits held by the group companies. The carrying amount of
these assets approximate to their fair value.
19 Current liabilities: Trade and other payables
Group Company
2009 2008 2009
2008
£ £ £
£
Trade payables 2,641,150 2,801,960 28,862
53,158
Other payables 508,109 379,916 24,233
70,046
Accruals and deferred income 382,539 341,737 87,649
114,128
_______ _______ _______
_______
3,531,798 3,523,613 140,744
237,332
_______ _______ _______
_______
_______ _______ _______
_______
20 Non-current liabilities
Group Company
2009 2008 2009
2008
£ £ £
#
Bank loans - 185,954 -
185,954
_______ _______ _______
_______
_______ _______ _______
_______
Analysis of loans
Wholly repayable within five years - 185,954 -
185,954
_______ _______ _______
_______
_______ _______ _______
_______
Loan maturity analysis
In more than one year but - 185,954 -
185,954
not more than two years _______ _______ _______
_______
_______ _______ _______
_______
Included within creditors are the following amounts secured by
a debenture on the assets of the group:
Bank loans and overdrafts 908,500 822,859 194,160
822,859
_______ _______ _______
_______
_______ _______ _______
_______
21 Long term provisions
Pension obligations Group Group Company
Company
2009 2008 2009
2008
Balance at 1 April 2008 - 110,500 -
110,500
Contributions paid to pension schemes - (110,500) -
(110,500)
Liability arising in the year 3,000 - 3,000
-
_______ _______ _______
_______
Balance at 31 March 2009 3,000 - 3,000
-
_______ _______ _______
_______
_______ _______ _______
_______
22 Pension costs
Defined Contribution Pension Scheme
The group operates a defined contribution pension scheme for
the benefit of certain directors and senior employees. The
assets of the defined contribution scheme are held separately
from the group and independently administered by an insurance
company. The pension cost charge represents contributions
payable to the fund in the year and amounted to £35,006 (2008:
£30,124).
Defined Benefit Pension Scheme
The group operates a defined benefit scheme in the UK. A full
actuarial valuation was carried out at 6 April 2003 and updated
to 31 March 2009 by a qualified independent actuary. The major
assumptions used by the actuary were:
At At
31 31
March March
2009 2008
Discount rate 6.6% 6.2%
Rate of increase in pensions in payment 2.7% 3.1%
Inflation assumption 2.7% 3.4%
The assets in the scheme and the expected rate of return were:
Long Value Long Value
term at term at
rate of 31 rate of 31
return March return March
expected 2009 expected 2008
at 31 at 31
March March
2009 £'000s 2008 £'000s
Deposit administration contract 6.00% 458 6.00% 533
Annuities 6.60% 1,766 6.20% 1,835
_______ _______
Total market value of assets 2,224 2,368
Present value of scheme liabilities (2,227) (2,325)
_______ _______
(Deficit)/surplus in scheme (3) 43
Related deferred tax (liability) - (13)
_______ _______
(3) 30
_______ _______
_______ _______
Analysis of amount recognised in statement of total recognised
gains and losses .
Actual return less expected return on (164) (261)
pension scheme assets
As % of scheme assets 7.4% 11%
Experience gains and losses arising on 3 8
the scheme liabilities
As % of present value of scheme 0.1% 1.5%
liabilities
Changes in assumptions 49 233
underlying the present value
of the scheme liabilities
As % of present value of scheme 2.2% 10%
liabilities
_______ _______
Actuarial (loss) recognised in (112) (20)
statement of total recognised gains _______ _______
and losses _______ _______
As % of present value of scheme 5.0% 0.86%
liabilities _______ _______
Analysis of amount charged to £'000s £'000s
operating profit
Current service cost 5 6
_______ _______
_______ _______
Analysis of the amount credited to other finance costs/income
Expected return on pension scheme assets 144 130
Interest on pension scheme liabilities (140) (126)
_______ _______
4 4
_______ _______
_______ _______
Movement in deficit during the year
Surplus/(deficit) in scheme at 43 (158)
beginning of year
Movement in year:
Current service costs (5) (6)
Contributions 64 266
Gain/(loss) on 5 (33)
settlements/curtailments
Net returns on assets 4 4
Actuarial (losses) (112) (20)
Expenses paid by scheme (2) (10)
_______ _______
(Deficit)/surplus in scheme at end of (3) 43
the year _______ _______
_______ _______
23 Share capital 2009 2008
£ £
Authorised
68,100,000 Ordinary shares of 5p each 3,405,000 3,405,000
10,790 Deferred ordinary shares of 10p each 1,079 1,079
32,334 Convertible preference shares of £1 each 32,334 32,334
_________ _________
3,438,413 3,438,413
_________ _________
_________ _________
Allotted, called up and fully paid
46,402,400 Ordinary shares of 5p each (2008: 2,320,120 2,256,252
45,125,040) _________ _________
_________ _________
During the year 1,277,364 ordinary shares of 5p were issued at
a premium of £1,191,850 as a result of the take up of the
scrip dividend option.
24 Statement of movements on reserves
Group
Share Revaluation Other
Retained
premium reserve reserves
earnings
account (see below)
£ £ £
£
Balance at 1 April 2008 37,095,354 253,347 805,621
8,685,865
Profit for the year - - -
447,081
Foreign currency - - -
348,150
translation differences
Premium on shares issued 1,191,850 - -
-
during the year
Dividends paid - - -
(3,268,742)
Depreciation written back - (2,890) -
-
Movement during the year - - 132,685
-
Actuarial losses on - - -
(99,100)
pension scheme __________ __________ __________
__________
Balance at 31 March 2009 38,287,204 250,457 938,306
6,113,254
__________ __________ __________
__________
__________ __________ __________
__________
Other reserves
Capital redemption reserve
Balance at 1 April 2008 & at 31 March 2009 105,829
Share option reserve
Balance at 1 April 2008 699,792
Other reserve movement 132,685
__________
Balance at 31 March 2009 832,477
__________
__________
ECO ANIMAL HEALTH GROUP PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2009
Company
Share Revaluation
Other Retained
premium reserve
reserves earnings
account (see
below)
£ £
£ £
Balance at 1 April 2008 37,095,354 253,347
805,621 4,916,860
Loss for the year - -
- (1,029,548)
Foreign currency translation differences - -
- (15,404)
Premium on shares issued during the year 1,191,850 -
- -
Dividends paid - -
- (3,268,742)
Depreciation written back - (2,890)
- -
Movement during the year - -
132,685 -
Actuarial gains or losses on pension - -
- (99,100)
scheme assets __________ __________
__________ __________
Balance at 31 March 2009 38,287,204 250,457
938,306 504,066
__________ __________
__________ __________
Other reserves
Capital redemption reserve
Balance at 1 April 2008 & at 31 March 2009
105,829
__________
__________
Reserves provided for by the Articles of Association
Balance at 1 April 2008
699,792
Other reserve movement
132,685
__________
Balance at 31 March 2009
832,477
__________
__________
25 Minority interests
2009 2008
£ £
Balance at 1 April 2008
646,638 2,475
Arising on consolidation of subsidiary
- 511,901
Share of subsidiary's profit for the year
238,034 87,557
Share of foreign exchange gain on net investment
213,604 44,705
__________ __________
Balance at 31 March 2009
1,098,276 646,638
__________ __________
__________ __________
26 Reconciliation of movements in total equity 2009 2008
Group £ £
Profit/(Loss) for the financial year 447,081 (783,973)
Dividends (3,268,742) (2,435,660)
__________ __________
(2,821,661) (3,219,633)
Other recognised gains and losses 249,050 (568,776)
Proceeds from issue of shares 1,255,718 16,425,384
Cost of share options granted 132,685 257,390
Write back of depreciation (2,890) (2,890)
__________ __________
Net (depletion in)/addition to shareholders' funds (1,187,098) 12,891,475
Opening total equity 49,096,439 36,204,964
__________ __________
Closing total equity 47,909,341 49,096,439
__________ __________
__________ __________
2009 2008
Company £ £
Loss for the financial year (1,029,548) (1,751,076)
Dividends (3,268,742) (2,435,660)
__________ __________
(4,298,290) (4,186,736)
Other recognised gains and losses (114,504) 15,913
Proceeds from issue of shares 1,255,718 16,425,384
Cost of share options granted 132,685 257,390
Write back of depreciation (2,890) (2,890)
__________ __________
Net (depletion in)/addition to shareholders' funds (3,027,281) 12,509,061
Opening total equity 45,327,434 32,818,373
__________ __________
Closing total equity 42,300,153 45,327,434
__________ __________
__________ __________
27 Contingent liabilities
Group
There were no contingent liabilities at 31 March 2009 or 31 March 2008.
28 Financial commitments
At 31 March 2009 the group had annual commitments under non-
cancellable operating leases as follows:
Land and buildings Other
2009 2008 2009 2008
£ £ £ £
Expiry date:
Within one year 3,947 20,491 7,502 1,639
Between two and five years 147,862 105,845 20,790 34,219
In over five years 45,920 25,698 - -
_______ _______ _______ _______
197,729 152,034 28,292 35,858
_______ _______ _______ _______
_______ _______ _______ _______
29 Capital commitments
The group had no authorised capital commitments as at 31 March
2009 (2008: Nil).
30 Directors' emoluments 2009 2008
£ £
Emoluments for qualifying services 299,532 237,220
Company pension contributions to money 3,434 1,675
purchase schemes _______ _______
302,966 238,895
_______ _______
_______ _______
The number of directors for whom retirement benefits are
accruing under money purchase pension schemes amounted to 1
(2008- 1).
Non-executive directors' fees arising from the services of P A
Lawrence to Baronsmead VCT plc, Baronsmead AIM VCT plc, Noble
AIM VCT plc, Higher Nature Limited and Kiotech International
plc amounted to £82,163 (2008: £85,202) and were paid to the
company.
31 Employees
Number of employees
The average monthly number of employees (including directors)
during the year was:
2009 2008
Number Number
Directors 5 4
Production and development 44 29
Administration and distribution 32 33
Sales 37 29
_______ _______
118 95
_______ _______
_______ _______
Employment costs 2009 2008
£ £
Wages and salaries 3,151,345 1,564,325
Social security costs 261,818 132,460
Other pension costs 90,385 76,631
_______ _______
3,503,548 1,773,416
_______ _______
_______ _______
32 Related party transactions
Group and company
At the balance sheet date, 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 £23,176
(2008:£69,199). This amount represents dividends reinvested
into the company.
During the year the group provided management services to
Kiotech International plc, a company in which P A Lawrence is
a director and holds share options. Fees charged were of
£39,992 (2008: £37,500).
During the year the group provided the services of a
representative to C-Corp Limited, a company in which P A
Lawrence is a director and shareholder. No fees were charged
during the year (2008: nil).
During the year the Group made sales to Zhejiang Eco Biok
Animal Health Products Limited on an arm's length basis to the
value of £1,095,193 (2008: £632,158). At the end of the year
there was an inter-company balance owing from this company of
£668,276 (2008: £481,063).
The group also made sales on an arm's length basis to Eco
Animal Health do Brasil Comercio de Productos Veterinarios
Ltda to the value of £1,028,948 (2008: nil). At the end of the
year there was an inter-company balance of £683,963 (2008:
nil).
Since both companies are subsidiaries of Eco Animal Health
Group plc these transactions and balances have been eliminated
on consolidation.
33 Analysis of net funds 1 April Cash flow 31 March
2008 2009
£ £ £
Net cash:
Cash at bank and in hand 6,143,189 (2,425,759) 3,717,430
Bank overdrafts (636,905) (271,595) (908,500)
_________ _________ _________
5,506,284 (2,697,354) 2,808,930
_________ _________ _________
Debts falling due after one year (185,954) 185,954 -
_________ _________ _________
Net funds 5,320,330 (2,511,400) 2,808,930
_________ _________ _________
_________ _________ _________
34 Reconciliation of net cash flow to movement 2009 2008
in net debt
£ £
(Decrease)/increase in cash in the year (2,697,354) 8,644,175
Cash outflow from decrease in debt 185,954 444,144
_________ _________
Movement in net funds in the year (2,511,400) 9,088,319
Opening net funds/(debt) 5,320,330 (3,767,989)
_________ _________
Closing net funds 2,808,930 5,320,330
_________ _________
_________ _________
35 Financial Instruments
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 main risks arising from the group's financial statements are
interest rate risk, liquidity risk and foreign currency risk. The
board review and agree policies for managing each of these risks
and they are summarised below. The policies have remained
unchanged since 1 April 2002.
It is and has been throughout the year under review, the group
policy that no trading in financial instruments shall be
undertaken.
Short term debtors and creditors
Short term debtors and creditors have been excluded from all the
following disclosures, other than the currency risk disclosure.
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 overdraft facilities of £908,500
(2008: £79,043), which includes a 9.9 million South African Rand
overdraft bearing an interest rate which is the aggregate of (a)
1.5% per annum and (b) the rate at which the bank is offered
deposits in South African Rand by the leading banks in the London
Interbank Market two business days before the start of each
repayment period.
Liquidity of risk
The group ensures short-term flexibility through the use of the
overdraft facilities. The board does not at present consider that
it is necessary to adopt a detailed borrowings policy as there are
sufficient funds available within the current facilities. The
maturity of liabilities is shown on note 20. The committed undrawn
borrowing facilities of the group were £1,000,000 (2008;
£250,000).
Currency risk
The group operates in overseas markets particularly through its
subsidiaries in China and Brazil and is subject to currency
exposure on transactions undertaken during the year. The group
does not hedge any transactions, and foreign exchange differences
on retranslation of foreign assets and liabilities are taken to
the income statement.
The table below shows the extent to which the group companies have
monetary assets and liabilities in currencies other than in
sterling:
US South
Dollar Euro African Other
Rand
Functional currency of group operations £'000 £'000 £'000 £'000
2009
Sterling equivalent 3,357 1,640 (530) 1,767
2008
Sterling equivalent 5,286 1,767 (350) 565
Financial assets and liabilities
The company has no financial assets other than debtors and cash at
the bank. Any group bank overdrafts are repayable on demand and
are included in the balance sheet as a creditor due in less than
one year. The balance sheet values of financial assets and
liabilities are not materially different to their fair values.