REG - Animalcare Group PLC - Final Results <Origin Href="QuoteRef">ANCR.L</Origin> - Part 2
12/10/2016 07:06
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estimated irrecoverable amounts are
recognised in comprehensive income 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.
Cash and cash equivalents
Cash and cash equivalents comprise cash on hand, deposits repayable on demand,
and other short-term highly liquid investments that are readily convertible to
a known amount of cash and are subject to an insignificant risk of changes in
value.
Financial liabilities and equity
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.
Trade payables
Trade payables are initially measured at fair value, and are subsequently
measured at amortised cost, using the effective interest rate method.
Finance income and expense
Finance income comprises interest receivable on funds invested and foreign
exchange gains on hedging instruments that are recognised in the income
statement (see note 9). Finance expenses comprise foreign exchange losses on
hedging instruments that are recognised in the income statement (see note 9).
Derivative financial instruments
The Group uses derivative financial instruments to manage its exposure to
foreign exchange risk. Derivatives are initially recognised at fair value and
the gain or loss recognised on remeasurement to fair value recognised in
profit or loss.
3. Critical Accounting Judgements and Key Sources of Estimation Uncertainty
Critical judgements in applying the Group's accounting policies
In the process of applying the Group's accounting policies, which are
described in note 2, management has made the following judgements that have
the most significant effect on the amounts recognised in the financial
statements (apart from those involving estimations, which are dealt with
below).
Capitalised new product development expenditure
It is the Group's policy, where the relevant criteria of IAS 38 "Intangible
Assets" are met, to capitalise new product development expenditure and to
amortise this expenditure over the estimated economic life of the asset
(product). Judgement is required when assessing the technical and commercial
feasibility of new product development projects including whether regulatory
approval will ultimately be achieved.
Capitalised software expenditure
The Group has historically capitalised software projects and developments.
Expenditure on a bespoke web based system, designed to facilitate online
ordering of its products and services, is currently capitalised in the Group's
financial statements as the Directors have adjudged it to meet the relevant
criteria.
The rate of depreciation on capitalised software is set so as to reflect the
pattern of usage and the level of pace of change within the global information
technology market.
Key sources of estimation uncertainty
Impairment of non-current assets
Determining whether a non-current asset is impaired requires an estimation of
the "value in use" and/or the "fair value less costs to sell" of the
cash-generating units ("CGUs") to which the non-current asset has been
allocated. The value in use calculation requires an estimate of the future
cash flows expected to arise from the CGU and a suitable discount rate in
order to calculate present value. The key assumptions for these value in use
calculations are those regarding discount rates, growth rates and expected
changes to selling prices and direct costs. The Directors estimate discount
rates using pre-tax rates that reflect current market assessments of the time
value of money and the risks specific to the individual CGU. In the current
year the Directors estimated the applicable rate to be 9.4% (2015: 13.2%). The
Directors' sensitivity analysis indicates significant headroom to the carrying
value of the CGU when taking into account a reasonably possible change in any
one of the key assumptions used in the value in use calculations.
The Group prepares cash flow forecasts derived from the most recent financial
budgets and projections approved by management for the next five years,
thereafter assuming an estimated growth rate of 1.8% (2015: 2%). The growth
rates for the five year period are based on current performance of the
existing product portfolio and the estimated contribution from the Group's new
product development pipeline. The Directors believe that the long-term growth
rate does not exceed the average long-term growth rate for the UK economy.
Impairment of slow-moving and obsolete inventory
The Group performs regular stock holding reviews, in conjunction with sales
and market information, to help determine any slow-moving or obsolete lines.
Where identified, adequate provision is made in the financial statements for
writing down or writing off the value of such lines in order to reflect the
realisable value of its stock.
4. Exceptional and Other Items
Note 2016£'000 2015£'000
Amortisation of acquired intangible assets 14 118 119
Supplier legal dispute - dividend received - (9)
Strategic review 55 -
Interest rate swap refund - (18)
Fair value movements on foreign currency hedging 9 (36) 35
Total exceptional and other items 137 127
The amortisation charge totalling £119,000 (2015: £119,000) relates to brand
and customer relationship intangible assets recognised on the acquisition of
Animalcare Ltd in January 2008.
5. Revenue and Operating Segments
IFRS 8 requires operating segments to be identified on the basis of internal
reports about components of the Group that are regularly reviewed by the Chief
Operating Decision Maker to allocate resources and assess performance. The
Chief Operating Decision Maker is considered to be the Board of Directors of
Animalcare Group plc. Performance assessment is primarily based on underlying
operating profit and cash generation.
The Group solely comprises one reportable segment, being Animalcare.
Note Animalcare2016£'000 Animalcare2015£'000
Revenue 14,701 13,536
Gross profit 7,999 7,573
Underlying operating profit 3,190 3,110
Other Items 4 (119) (119)
Exceptional items 4 (54) 9
Operating profit 3,017 3,000
Finance income 9 69 27
Finance expense 9 - (17)
Profit before tax 3,086 3,010
Note Animalcare2016£'000 Animalcare2015£'000
Products and Services
Licensed Veterinary Medicines 9,238 8,579
Companion Animal Identification 2,680 2,309
Animal Welfare 2,783 2,648
14,701 13,536
Other information
Intangible asset additions 14 1,604 812
Property, plant and equipment additions 15 41 7
Depreciation and amortisation 14,15 435 432
Consolidated assets 26,871 24,474
Consolidated liabilities (4,356) (3,483)
Consolidated net assets 22,515 20,991
2016£'000 2015£'000
Key customers
Number 3 3
Percentage of total revenue 81% 82%
Key customers, all within the Animalcare segment, represent the three largest
UK veterinary wholesalers as described in the Our Business section page 7.
Individual customer revenues represent 33%/28%/21% (2015: 33%/28%/22%) of
total revenue.
2016£'000 2015£'000
Geographical market
United Kingdom 13,490 12,573
Europe and Rest of World 1,211 963
14,701 13,536
All the Group assets are wholly located in the United Kingdom and accordingly
no geographical analysis of assets and liabilities is presented.
An analysis of total Group revenue is as follows:
2016£'000 2015£'000
Revenue from sale of goods 13,609 12,590
Revenue from provision of services 1,092 946
14,701 13,536
Finance income 33 27
14,734 13,563
6. Total Comprehensive Income for the Year
2016£'000 2015£'000
Total comprehensive income for the year has been arrived at after charging:
Cost of inventories recognised as expense 6,515 5,831
Depreciation of tangible assets 66 73
Amortisation of intangible assets 369 359
Research and development 156 143
Operating lease rentals 211 199
Foreign exchange losses 43 1
Increase in provision for inventories 9 23
The above items are those charged to total comprehensive income only. Full
details on items charged/(credited) to exceptional and other items are
contained in note 4.
The analysis of remuneration paid to the Company's auditor is as follows:
2016£'000 2015£'000
Fees payable to the Company's auditor for the audit of the Company's annual accounts 13 13
The audit of the Company's subsidiaries pursuant to legislation 21 20
Total audit fees 34 33
Tax services 11 11
Other services - 16
Total non-audit fees 11 27
Total auditors' remuneration 45 60
7. Directors' Remuneration and Interests
Emoluments
The various elements of remuneration received by each Director were as
follows:
Year ended 30th June 2016 Salary£'000 Bonus£'000 Company pensioncontributions£'000 Benefits£'000 Total£'000
J S Lambert* 35 - - - 35
Lord Downshire* 23 - - 3 26
R B Harding* 23 - - - 23
Dr I D Menneer 143 18 17 7 186
C J Brewster 102 17 12 6 137
Total 326 35 29 16 406
Year ended 30th June 2015
J S Lambert* 34 - - - 34
Lord Downshire* 23 - - 1 24
R B Harding* 23 - - - 23
Dr I D Menneer 140 16 17 8 181
C J Brewster 102 11 12 6 131
Total 322 27 29 15 393
* Indicates Non-Executive Directors.
Mr George Gunn was appointed to the Board as a Non-Executive Director on 9th
February 2015 and subsequently resigned on 2nd June 2015. Mr Gunn received no
remuneration during this period.
All Company pension contributions relate to defined contribution pension
schemes. Benefits consist of company car and private medical insurance.
Share options
The Directors had the following beneficial options:
I D Menneer
Scheme EMI EMI EMI Unapproved SAYE Unapproved SAYE Total
Exercise Price £1.675 £1.30 £1.325 £1.40 £1.03 £1.415 £1.05
Date of Grant 14thOctober 2011 2ndAugust 2012 20thNovember 2012 21stFebruary 2013 22ndMay 2013 20th June 2013 28thNovember 2014
Outstanding at 30th June 2015 and 30th June 2016 60,000 60,000 50,000 90,000 4,377 90,000 5,142 359,519
C J Brewster
Scheme EMI EMI SAYE EMI SAYE Total
Exercise Price £1.30 £1.30 £1.03 £1.415 £1.05
Date of Grant 22ndJune 2012 2ndAugust 2012 22ndMay 2013 20thJune 2013 28thNovember 2014
Outstanding at 30th June 2015 30,000 30,000 8,754 40,000 8,571 117,325
and 30th June 2016
During FY15, 3,358 shares were allotted to Dr Menneer following exercise under
the Animalcare Group Save As You Earn scheme. The exercise price was equal to
market value at that time hence no gain or loss arose.
The Directors' interests in the shares of the Company as at 30th June are set
out below:
2016 2015
Ordinary shares of 20p Ordinary shares of 20p
J S Lambert 1,313,691 1,413,691
Lord Downshire 1,109,583 1,109,583
I D Menneer 17,739 17,739
C J Brewster 4,079 4,079
In addition to the above, Lord Downshire had a non-beneficial interest in
310,446 shares.
Long Term Incentive Plan (LTIP)
The Animalcare Group plc LTIP was introduced in June 2014 to provide an
effective mechanism for senior executives to participate in the Company's
equity at a meaningful level, aligning their interests with those of
shareholders. The Directors' interests in the LTIP, which was implemented via
a subscription for growth shares in the capital of Animalcare Ltd, the
subsidiary of the Company, are as follows:
· Iain Menneer - 31,955 A Ordinary Shares of £1.00 each ("A Shares")
for a total cash subscription of £31,955, representing 5.2% of Animalcare
Ltd's issued share capital; and
· Chris Brewster - 19,173 A Shares, representing 3% of Animalcare
Ltd's issued share capital and 11,800 B Ordinary Shares of £1.00 each ("B
Shares"), representing a further 2% of Animalcare Ltd's issued share capital,
for a total cash subscription of £30,973.
The total cash subscriptions were, based on independent valuation, considered
to be equal to fair value at the time of acquisition.
Dr Menneer and Mr Brewster have the right to sell their A Shares to the
Company at any time after 27th June 2017 in exchange for Ordinary Shares of 20
pence each in the Company ("Ordinary Shares"). Their rights to sell the A
Shares are subject to, amongst other provisions, the Company having a market
capitalisation in excess of £39.0m ("the Hurdle") at the time of sale. The
Hurdle was determined by Animalcare's Remuneration Committee and broadly
represented a 20% premium to the Company's market capitalisation on 27th June
2014. Each holder of A Shares would, on a sale of his entire holding to the
Company, be entitled to receive Ordinary Shares representing a percentage of
the increase in the Company's market capitalisation above the Hurdle; being 5%
for Dr Menneer and 3% for Mr Brewster. The A Shares do not have a right to
receive a dividend, except for any amounts distributed on the winding up of
the Company or on an asset sale.
The B Shares are not entitled to participate in any increase in the value of
the Company above the Hurdle but can be exchanged for Ordinary Shares of an
equal value at any time after 27th June 2017. The B Shares have a right to an
annual dividend (on a non-fixed coupon basis), calculated by applying a rate
of LIBOR + 2% to the nominal value of the B Shares.
Further details of the Plan, including the Hurdle, anti-dilution and other
provisions, are set out in Animalcare Ltd's articles of association, which is
available within the Investors section (constitutional documents) of the
Company's website at http://www.animalcaregroup.co.uk.
8. Staff Costs
2016 2015
Number of employees
The average monthly number of employees (including Directors) during the year was:
Production and distribution 4 4
Selling and administration 59 56
63 60
2016£'000 2015£'000
Related costs
Wages and salaries 2,195 2,024
Social security costs 224 187
Other pension costs 139 78
2,558 2,289
9. Finance Costs and Finance Income
2016£'000 2015£'000
Fair value losses on financial instruments* - 35
Interest rate swap refund - (18)
Finance costs - 17
Other net finance income:
Fair value gains on financial instruments (36) -
Interest income on bank deposits (33) (27)
Finance income (69) (27)
Net finance income (69) (10)
* Finance gains and losses arising from derivatives held at fair value through
profit and loss relate to fair value movements on the Group's foreign exchange
hedges. These gains and losses are included within "other items" on the face
of the statement of comprehensive income.
10. Income Tax Expense
Note 2016£'000 2015£'000
The income tax expense comprises:
Current tax expense 481 601
Adjustment in the current year in relation to prior years (148) (143)
333 458
The deferred tax (credit)/expense comprises:
Origination and reversal of temporary differences 22 121 (99)
Adjustment in the current year in relation to prior years 22 (2) 117
119 18
Total tax expense for the year 452 476
The total tax charge can be reconciled to the accounting profit as follows:
Total comprehensive income for the year 2,634 2,534
Total tax expense 452 476
Profit before tax 3,086 3,010
Income tax calculated at 20.0% (2015: 20.75%) 617 625
Effect of expenses not deductible 41 42
Effect of share-based deductions (6) (88)
Innovation related tax credits (65) (77)
Depreciation in excess of capital allowances 15 -
Effect of adjustments in respect of prior years (150) (26)
452 476
The tax credit of £27,000 (2015: £26,000) shown within "exceptional and other
items" on the face of the statement of comprehensive income, which forms part
of the overall tax charge of £452,000 (2015: £476,000) relates to the items
analysed in note 4.
The prior year current tax credits in respect of both 2016 and 2015 primarily
relate to research and development tax credits. The prior year deferred tax
charge in 2015 of £117,000 relates to the first time recognition of deferred
tax in relation to capitalised development costs.
The Government has announced that it intends to reduce the rate of corporation
tax to 17% with effect from 1st April 2020. This change in rates was not
substantively enacted at the balance sheet date and therefore has not been
reflected in the tax rates used for deferred tax purposes. The Finance Act
2015 (No 2) was substantively enacted on 26th October 2015 which will reduce
the rate of corporation tax to 19% with effect from 1st April 2017 and 18%
from 1st April 2020. This will reduce the Group's future current tax charge
accordingly. Deferred tax balances at 30th June 2016 have been calculated
based on these rates.
11. Dividends
2016£'000 2015£'000
Ordinary final dividend paid in respect of prior year 904 839
Ordinary interim dividend paid 379 378
1,283 1,217
The final dividend paid during the year ended 30th June 2016 was 4.3 pence per
share (2015: 4.0 pence per share). The interim dividend paid during the year
ended 30th June 2016 was 1.8 pence per share (2015: 1.8 pence per share).
The proposed final dividend of 4.7 pence per share, which is subject to
approval of shareholders at the Annual General Meeting, results in a total
dividend for the year of 6.5 pence per share. The proposed dividend has not
been included as a liability as at 30th June 2016, in accordance with IAS 10
"Events After the Balance Sheet Date".
12. Earnings per Share
Basic earnings per share amounts are calculated by dividing the total
comprehensive income for the year attributable to ordinary equity holders of
the Company by the weighted average number of fully paid Ordinary Shares
outstanding during the year.
The following income and share data was used in the basic earnings per share
computations:
Underlyingearnings beforeexceptional andother items2016£'000 Underlyingearnings beforeexceptional andother items2015£'000 Totalearnings2016£'000 Totalearnings2015£'000
Total comprehensive income attributable to equity holders of the Company 2,744 2,635 2,634 2,534
2016No. 2015No. 2016No. 2015No.
Basic weighted average number of shares 21,043,846 20,982,367 21,043,846 20,982,367
Dilutive potential Ordinary Shares 319,863 123,127 319,863 123,127
21,363,079 21,105,494 21,363,079 21,105,494
Earnings per share:
Basic 13.0p 12.6p 12.5p 12.1p
Fully diluted 12.8p 12.5p 12.3p 12.0p
13. Goodwill
Group£'000
Cost
At 1st July 2014, 1st July 2015 and 30th June 2016 12,711
Accumulated impairment losses
At 1st July 2014, 1st July 2015 and 30th June 2016 -
Net book value
At30th June 2016 and 30th June 2015 12,711
The carrying amount of Group goodwill is allocated to the Group's sole
cash-generating unit ("CGU"), being the Animalcare segment.
The recoverable amount of goodwill is determined from value in use
calculations.
The Group prepares cash flow forecasts derived from the most recent financial
budgets and projections approved by management for the next five years and
thereafter assuming an estimated long-term annual growth rate of 1.8% (2015:
2.0%).
The financial budgets and projections are based on past experience and actual
operating results. The growth rates for the five year period are based on
current performance of the existing product portfolio and the estimated
contribution from the Group's new product development pipeline. The Directors
believe that the long-term growth rate does not exceed the average long-term
growth rate for the UK economy, the principal geographic area in which
Animalcare operates.
The Directors estimate the discount rates using the post-tax rates that
reflect the current market assessments of the time value of money and the
risks specific to the cash-generating unit. In the current year the Directors
estimated the applicable pre-tax rate to be 9.4% (2015: 13.2%).
The Directors modelled a range of different scenarios by applying
sensitivities to both the cash flow assumptions and the discount rate. Based
on this sensitivity analysis there is significant headroom between the value
in use calculation and the carrying value of the CGU.
14. Other Intangible Assets
Group Acquired brands£'000 Acquiredcustomerrelationships£'000 New productdevelopmentcosts£'000 Capitalisedsoftware£'000 Total£'000
Cost
At 1st July 2014 524 837 1,647 165 3,173
Additions - - 768 44 812
Disposals - - - (31) (31)
At 30th June 2015 524 837 2,415 178 3,954
Additions - - 1,563 41 1,604
Disposals - - (47) - (47)
At 30th June 2016 524 837 3,931 219 5,511
Amortisation
At 1st July 2014 227 545 990 84 1,846
Charge for the year 35 84 195 45 359
Disposals - - - (31) (31)
At 30th June 2015 262 629 1,185 98 2,174
Charge for the year 35 83 196 55 369
At 30th June 2016 297 712 1,381 153 2,543
Carrying value
At 30th June 2016 227 125 2,550 66 2,968
At 30th June 2015 262 208 1,230 80 1,780
Veterinary medicine product development costs are amortised over four to seven
years. £2.4m of the total £3.9m cost is currently not being amortised.
Acquired brands are amortised over 15 years and acquired customer
relationships are amortised over ten years. The amortisation period for
capitalised software, which principally relates to the bespoke Anibase pet
database, is four years.
Company Capitalisedsoftware£'000 Total£'000
Cost
At 1st July 2015 and 30th June 2016 7 7
Amortisation
At 1st July 2014 - -
Charge for the year 1 1
At 30th June 2015 1 1
Charge for the year 2 2
At 30th June 2016 3 3
Carrying value
At 30th June 2016 4 4
At 30th June 2015 6 6
15. Property, Plant and Equipment
Group Leaseholdimprovements£'000 Plant andequipment£'000 Officefurniture andequipment£'000 Total£'000
Cost
At 1st July 2014 184 134 268 586
Additions - 2 5 7
Disposals - (17) (129) (146)
At 1st July 2015 184 119 144 447
Additions - 32 9 41
At 30th June 2016 184 151 153 488
Depreciation
At 1st July 2014 22 56 136 214
Charge for the year 19 18 36 73
Disposals - (17) (129) (146)
At 1st July 2015 41 57 43 141
Charge for the year 18 31 17 66
At 30th June 2016 59 88 60 207
Net book value
At 30th June 2016 125 63 93 281
At 30th June 2015 143 62 101 306
16. Investments in Subsidiaries
Subsidiary undertakings
Company
2016£'000 2015£'000
Cost and net book value
At 1st July 2014, 2015 and 30th June 2016 14,361 14,361
The sole subsidiary undertaking of the Company is detailed below.
Country ofregistration orincorporation Class Shares held%
Animalcare Ltd England Ordinary 90*
* In substance 100% ownership, see note 7 for further details.
The principal activity of this undertaking for the last financial year was the
sale of companion animal products and related services.
17. Inventories
Group
2016£'000 2015£'000
Finished goods and goods for resale 1,604 1,653
In the Directors' opinion, the replacement cost of inventories is not
materially different from their balance sheet value.
18. Other Financial Assets
Trade and other receivables
Group Company
2016£'000 2015£'000 2016£'000 2015£'000
Trade receivables 1,782 1,924 - -
Amounts receivable from subsidiaries - - - -
Corporation tax - Group relief - - 308 217
Other receivables 7 6 7 6
Derivative financial instruments 18 - - -
Prepayments and accrued income 382 317 17 15
2,189 2,247 332 238
The Directors consider that the carrying amount of trade and other receivables
approximates to their fair value.
Movement in allowance for doubtful debts
Group Company
2016£'000 2015£'000 2016£'000 2015£'000
Balance at 1st July 15 15 - -
Impairment losses recognised (1) - - -
Balance at 30th June 14 15 - -
Ageing of past due but not impaired receivables
Group
2016£'000 2015£'000
1-30 days past due 4 -
31-90 days past due - 1
91 days and more - -
4 1
Cash and cash equivalents
Group Company
2016£'000 2015£'000 2016£'000 2015£'000
Cash and cash equivalents 7,118 5,777 1,576 1,576
Cash and cash equivalents comprise cash and short-term bank deposits with an
original maturity of three months or less.
Credit risk
The Company's principal financial assets are bank balances and cash, and trade
and other receivables. The Company's credit risk is primarily attributable to
its trade receivables. The amounts presented in the balance sheet are net of
allowances for doubtful receivables. An allowance for impairment is made where
there is an identified loss event which, based on previous experience, is
evidence of a reduction in the recoverability of the cash flows. The allowance
for doubtful debts represents the difference between the carrying value of the
specific trade receivables and the present value of the expected recoverable
amount.
The average credit period on sales of goods is 33 days (2015: 31
days). No interest has been charged on overdue receivables.
19. Other Financial Liabilities
Group Company
2016£'000 2015£'000 2016£'000 2015£'000
Trade payables 1,513 936 97 73
Amounts payable to subsidiaries - - 4,991 3,385
Other taxes and social security costs 448 450 56 46
Other creditors 468 386 20 18
Derivative financial instruments (see note 20) - 18 - -
Accruals 598 396 53 4
3,027 2,186 5,217 3,526
The Directors consider that the carrying amount of trade and other payables
approximates to their fair value.
20. Financial Instruments
Capital and liquidity risk management
At 30th June the Group was contractually obliged to make repayments of
principal and payments of interest as detailed below:
Within one year or on demand£'000 1-2 years£'000 3-5 years£'000 More than5 years£'000 Total£'000
2016
Trade and other payables 3,027 - - - 3,027
2015
Trade and other payables 2,186 - - - 2,186
Categories and fair value of financial instruments carrying value
2016£'000 2015£'000
Financial assets
Trade and other receivables (including cash and cash equivalents) 8,925 7,707
Financial liabilities
Trade and other payables (3,027) (2,186)
The fair values of the Group's financial assets and liabilities are not
materially different from their carrying values.
Foreign currency risk management
The Group undertakes transactions denominated in foreign currencies which
gives rise to the risks associated with currency exchange rate fluctuations.
Exposures are managed by a combination of matching foreign currency income and
expenditure, maintaining foreign currency deposits and the use of forward
contracts. The carrying value of the Group's foreign currency assets and
liabilities at the reporting date was:
Assets Liabilities
2016£'000 2015£'000 2016£'000 2015£'000
Euro 276 446 109 153
US dollar 4 264 96 -
Foreign currency sensitivity analysis
At 30th June 2016 the Group is mainly exposed to the Euro and the US dollar.
The following table details the effect of a 10% increase and decrease in the
exchange rate of these currencies against sterling when applied to outstanding
monetary items denominated in foreign currency as at 30th June 2016. A
positive number indicates that an increase in profit would arise from a 10%
change in value of sterling against these currencies, a negative number
indicates that a decrease would arise.
Strengthening£'000 Weakening£'000
Euro (15) 18
US dollar 8 (10)
Interest rate sensitivity analysis
This sensitivity analysis was not performed as the Group had no exposure to
interest rates for either derivatives or non-derivative instruments at the
balance sheet date.
Forward foreign exchange contracts
The Group had two (2015: three) open foreign exchange contracts at 30th June
2016. The values are shown below:
2016£'000 2015£'000
Principal value 200 338
Fair value 18 (18)
Capital management
In line with the disclosure requirements of IAS 1, "Presentation of Financial
Statements", the Company regards its capital as being the issued share capital
together with its banking facilities, used to manage short-term working
capital requirements. Note 23 to the financial statements provides details
regarding the Company's share capital and movements in the period. There were
no breaches of any requirements with regard to any relevant conditions imposed
by the Company's Articles of Association during the periods under review.
21. Deferred Income
Deferred income arises from certain services sold by the Group's subsidiary
Animalcare Ltd. In return for a single up-front payment, Animalcare Ltd
commits to a fixed term contract to provide certain database, pet
reunification and other support services to customers. There is no contractual
restriction on the amount of times the customer makes use of the service. At
the commencement of the contract it is not possible to determine how many
times the customer will make use of the services, nor does historical evidence
provide indications of any future pattern of use. As such, income is
recognised evenly over the term of the contract, currently eight years.
Movements in the Group's deferred income liabilities during the current and
prior reporting period are as follows:
2016£'000 2015£'000
Balance at the beginning of the period 958 972
Income deferred to future periods 263 241
Release of income deferred from previous periods (239) (255)
Balance at end of the period 982 958
The deferred income liabilities fall due as follows:
2016£'000 2015£'000
Within one year 220 234
After one year 762 724
982 958
Income recognised during the year is set out below:
2016£'000 2015£'000
Income received 282 227
Income deferred to future periods (263) (241)
Release of income deferred from previous periods 239 255
Income recognised in the year 258 241
22. Deferred Tax
Group
The following are the major components of the deferred tax
liabilities/(assets) recognised by the Group, and the movements thereon,
during the current and prior reporting period:
Property, plant and equipment£'000 Share-basedpayments£'000 Other£'000 Intangible fixed assets£'000 Total£'000
Balance at 1st July 2014 41 (43) (7) 118 109
Charge/(credit) to income (4) (111) (1) 134 18
Balance at 30th June 2015 37 (154) (8) 252 127
Charge/(credit) to income (1) (22) - 142 119
Balance at 30th June 2016 36 (176) (8) 394 246
Deferred tax balances have been calculated at an effective rate of 18%, being
the substantively enacted rate at 30th June 2016.
Company
The following are the major components of the deferred tax assets recognised
by the Company, and the movements thereon, during the current and prior
reporting period:
Acceleratedtax depreciation£'000 Share-basedpayments£'000 Other£'000 Total£'000
Balance at 1st July 2014 (12) (25) (2) (39)
Charge/(credit) to income 3 (52) - (49)
Balance at 30th June 2015 (9) (77) (2) (88)
Charge/(credit) to income 2 (19) - (17)
At 30th June 2016 (7) (96) (2) (105)
Deferred tax balances have been calculated at an effective rate of 18%, being
the substantively enacted rate at 30th June 2016.
23. Share Capital
2016No. 2015No.
Allotted, called up and fully paid Ordinary Shares of 20p each 21,059,636 21,019,636
2016£'000 2015£'000
Allotted, called up and fully paid Ordinary Shares of 20p each 4,212 4,204
During the year £8,000 (2015: £11,886) of Ordinary Shares were issued for
proceeds of £52,525 (2015: £81,814) resulting in a share premium of £44,525
(2015: £69,928).
24. Operating Lease Arrangements
The Group as lessee
2016£'000 2015£'000
Lease payments under operating leases recognised as an expense in the year 211 199
At the balance sheet date, the Group had outstanding commitments for future
minimum lease payments under non-cancellable operating leases, which fall due
as follows:
2016£'000 2015£'000
Within one year 187 168
In the second to fifth years inclusive 240 298
After five years 45 78
472 544
Operating lease payments principally represent rentals payable by the Group
for its office and warehouse properties and motor vehicles.
25. Share-based Payments
During the year the Group operated the Animalcare Group plc Executive Share
Option Scheme, the Save As You Earn (SAYE) Share Option Scheme and the new
Long Term Incentive Plan as described below:
Animalcare Group plc Executive Share Option Scheme
Under this scheme, options may be granted to certain executives and senior
employees of the Group to subscribe for new shares in the Company at a fixed
price equal to the market value at the time of grant. The options are
exercisable three years after the date of grant. Once vested, options must be
exercised within six years of the date of grant. The exercise of these options
is not subject to any performance criteria.
SAYE Option Scheme
This scheme is open to all UK employees to encourage share ownership. Share
options are granted at an option price fixed at a 20% discount to the market
value at the start of the savings period. The SAYE options vest and are
exercisable three years after the date of grant and must ordinarily be
exercised within six months of the completion of the relevant savings period.
Details of the movement in all share option schemes during the year are as
follows:
EMI SAYE Unapproved
Options Price£ Options Price£ Options Price£
Outstanding at beginning of year 495,000 1.446 206,102 1.041 180,000 1.408
Granted during the year 110,000 2.157 - - - -
Lapsed during the year (15,000) 2.175 (13,640) 1.029 - -
Exercised during the year (40,000) 1.313 - - - -
Open at 30th June 2016 550,000 1.578 200,491 1.0422 180,000 1.408
Exercisable at the end of the year 325,000 1.400 - - 180,000 1.408
The weighted average inputs into the Black-Scholes model at the time of grant
were as follows:
EMIScheme SAYEScheme UnapprovedScheme
Weighted average share price 162p 130p 141p
Weighted average exercise price 162p 104p 141p
Expected volatility 51% 50% 56%
Expected life 3.0 years 3.1 years 3.0 years
Risk-free rate 0.5% 0.5% 0.5%
Expected volatility was determined by calculating the historical volatility of
the Group's share price over the previous three years. The expected lives used
in the model were estimated based on management's best estimate for the
effects of non-transferability, exercise restrictions, and behavioural
considerations.
The aggregate estimated fair value of the options granted during the year was
£nil (2015: £nil).
The Group recognised a total charge in respect of share based payments of
£120,000 (2015: £139,000) within administrative expenses. The respective
Company charges were £47,000 (2015: £74,000).
Long Term Incentive Plan
The Animalcare Group plc LTIP was introduced in June 2014 to provide an
effective mechanism for senior executives to participate in the Company's
equity at a meaningful level, aligning their interests with those of
shareholders. The Directors' interests in the LTIP, which was implemented via
a subscription for growth shares in the capital of Animalcare Ltd, a
subsidiary of the Company, are as follows:
· Iain Menneer - 31,955 A Ordinary Shares of £1.00 each ("A Shares")
for a total cash subscription of £31,955, representing 5.2% of Animalcare
Ltd's issued share capital; and
· Chris Brewster - 19,173 A Shares, representing 3% of Animalcare Ltd's
issued share capital and 11,800 B Ordinary Shares of £1.00 each ("B Shares"),
representing a further 2% of Animalcare Ltd's issued share capital, for a
total cash subscription of £30,973.
Further details of the Plan are provided in note 7.
The charge for the year to the income statement in respect of the Plan is £nil
(2015: £nil).
26. Related Party Transactions
Trading transactions
During the year ended 30th June, the following trading transactions took place
between the Company and its subsidiary listed in note 16.
2016 Animalcare Ltd£'000 Total£'000
Management charges levied 240 240
2015 Animalcare Ltd£'000 Total£'000
Management charges levied 240 240
Remuneration of key management personnel
The remuneration of the Directors, who are the key management personnel of the
Group, is set out in aggregate for each of the categories specified in IAS 24
"Related Party Disclosures". Further information about the remuneration of
Directors is provided in note 7.
The Directors' interests in the shares of the Company are contained in note
7.
27. Annual Report
The Group's Annual Report and Financial Statements for the year ended 30th
June 2016 were approved on 11th October 2016 and are expected to be posted to
shareholders, along with the Group's Notice of Annual General Meeting ("AGM")
and related form of proxy, on 24th October 2016. The AGM will be held at
11.30am on 15th November 2016 at the Company's registered offices, 10 Great
North Way, York Business Park, Nether Poppleton, York, YO26 6RB.
Further copies will be available to download on the Company's website at:
www.animalcaregroup.co.uk and will also be available from the Company's
registered office address, as above.
This information is provided by RNS
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