REG - Animalcare Group PLC - Full Year Results <Origin Href="QuoteRef">ANCR.L</Origin> - Part 2
29/10/2014 12:03
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exceed the carrying amount
that would have been determined had no impairment loss been recognised for the
asset (CGU) in prior years. A reversal of an impairment loss is recognised as
income immediately.
Financial instruments
Financial assets and financial liabilities are recognised in the Group's
balance sheet when the Group becomes a party to the contractual provisions of
the instrument.
Trade receivables
Trade receivables are measured at initial recognition at fair value, and are
subsequently measured at amortised cost using the effective interest rate
method. Appropriate allowances for 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.
Investments
Investments in Group companies are stated at cost less provisions for
impairment losses.
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.
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 10.2% (2013: 11.9%).
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 2% (2013: 1.3%). 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 stockholding 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
Executive and management severance payments - 152
Amortisation of acquired intangible assets 14 119 119
Head office relocation - 121
Fair value movements on foreign currency hedging 9 38 (11)
Total exceptional and other items 157 381
Total exceptional and other items
157
381
During the previous financial year, Stephen Wildridge stepped down from the
position as Group CEO and remained in the Group until 31st October 2013 as
Director of Strategy and Business Development. The total compensation package
agreed on 11th January 2013 in relation to Stephen stepping down as CEO of
£71,000 was paid on 31st October 2013. In addition, an accelerated share based
payments charge of £39,000 was recognised to reflect Stephen's ability to
exercise early any outstanding share options at 31stOctober 2013. These
options, where Stephen chose to do so, were exercised during FY14. The balance
of £42,000 related to other management severance payments.
During March 2013, the Group relocated to its new premises. Associated
relocation costs principally comprised the costs of the new premises whilst
unoccupied together with an estimate of the one-off regulatory costs
associated with changing the address on our pharmaceutical licences. The
latter has been fully settled during FY14.
The amortisation charge totalling £119,000 (2013: £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 Chief Executive Officer
of Animalcare Group plc. Performance assessment is based on underlying
operating profit.
The Group solely comprises one reportable segment, being Companion Animal.
Note Companion Animal Companion Animal
2014 2013
£'000 £'000
Revenue 12,881 12,118
Gross Profit 7,142 6,781
Underlying Operating Profit 2,802 2,684
Other Items 4 (119) (119)
Exceptional items 4 - (273)
Operating Profit 2,683 2,292
Finance income 9 27 38
Finance expense 9 (38) -
Profit before tax 2,672 2,330
Products and Services
Licensed veterinary 7,883 7,200
Animal identification 2,418 2,244
Animal welfare 2,580 2,674
12,881 12,118
Other information
Intangible asset additions 14 199 129
Property, plant and equipment additions 15 32 379
Depreciation and amortisation 14, 15 479 351
Consolidated assets 22,525 21,486
Consolidated liabilities (3,072) (3,524)
Consolidated net assets 19,453 17,962
Consolidated net assets
19,453
17,962
Key customers
Number 3 3
Percentage of total revenue 82% 80%
3
3
Percentage of total revenue
82%
80%
Key customers, all within the Companion Animal segment, are those responsible
for 10% or more of segmental revenue.
Geographical market
United Kingdom 11,557 11,061
Europe and Rest of World 1,324 1,057
12,881 12,118
12,881
12,118
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:
Revenue from sale of goods 11,951 11,250
Revenue from provision of services 930 868
12,881 12,118
Finance income 27 27
12,908 12,145
12,908
12,145
6. Total Comprehensive Income for the Year
Total comprehensive income for the year has been arrived at after charging:
Cost of inventories recognised as expense 5,639 5,218
Depreciation of tangible assets 69 32
Amortisation of intangible assets 410 319
Research and development 260 207
Operating lease rentals 187 211
Foreign exchange losses 21 24
Increase in provision for receivables 9 6
Increase in provision for inventories 34 18
Increase in provision for inventories
34
18
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:
Fees payable to the Company's auditor for the audit of the Company's annual accounts 12 13
Fees payable to the Company's auditor for other services to the Group - -
The audit of the Company's subsidiaries pursuant to legislation 20 17
Total audit fees 32 30
Tax services 16 11
Other services 44 3
Total non-audit fees 60 14
Total auditors' remuneration 93 44
Total auditors' remuneration
93
44
7. Directors' Remuneration and Interests
Emoluments
The various elements of remuneration received by each Director were as
follows:
Year ended 30th June 2014 Salary Bonus Company pension Benefits Compensation for Total
£'000 £'000 contributions £'000 loss of office £'000
£'000 £'000
J S Lambert* 33 - - - - 33
Lord Downshire* 22 - - 2 - 24
R B Harding* 22 - - - - 22
S M Wildridge(resigned 31stOctober 2013) 30 34 - - 66 130
Dr I D Menneer 135 23 16 7 - 181
C J Brewster 102 16 11 1 - 130
Total 344 73 27 10 66 520
Year ended 30th June 2013
J S Lambert* 33 - - - - 33
Lord Downshire* 22 - - 2 - 24
R B Harding* 22 - - - - 22
S M Wildridge 128 - - - - 128
Dr I D Menneer 100 - 12 6 - 118
C J Brewster 92 8 11 1 - 112
Total 397 8 23 9 - 437
437
* Indicates Non-Executive Directors.
All Company pension contributions relate to defined contribution pension
schemes. Benefits consist of company car and private medical insurance. The
compensation for loss of office in relation to S M Wildridge was settled on
31st October 2013.
Share options
The Directors had the following beneficial options:
S M Wildridge
Scheme Unapproved EMI Unapproved EMI Total
Exercise Price £0.975 £1.675 £1.675 £1.30
Date of Grant 9th July 2009 14th October 2011 14th October 2011 2nd August 2012
Outstanding at 30th June 2013 100,000 71,600 28,400 100,000 300,000
Exercised during the year (100,000) - - (100,000) (200,000)
Lapsed during the year - (71,600) (28,400) - (100,000)
Outstanding at 30th June 2014 - - - - -
I D Menneer
Exercise Price £0.975 £1.34 £1.675 £1.30 £1.325 £1.40 £1.03 £1.415
Date of Grant 28th August 2009 4thOctober 2011 14thOctober 2011 2ndAugust 2012 20thNovember 2012 21stFebruary 2013 22ndMay 2013 20th June 2013
Outstanding at 30th June 2013 5,000 3,358 60,000 60,000 50,000 90,000 4,377 90,000 362,735
Exercised during the year (5,000) - - - - - - - (5,000)
Outstanding at 30th June 2014 - 3,358 60,000 60,000 50,000 90,000 4,377 90,000 357,735
Outstanding at 30th June 2014
-
3,358
60,000
60,000
50,000
90,000
4,377
90,000
357,735
C J Brewster
Exercise Price £1.30 £1.30 £1.03 £1.415
Date of Grant 22nd June 2012 2ndAugust 2012 22nd May 2013 20th June 2013
Outstanding at 30th June 2013 and 30th June 2014 30,000 30,000 8,754 40,000 108,754
Outstanding at 30th June 2013 and 30th June 2014
30,000
30,000
8,754
40,000
108,754
The Directors' interests in the shares of the Company as at 30th June are set
out below:
J S Lambert 1,413,691 1,413,691
Lord Downshire 1,109,583 1,109,583
I D Menneer 14,381 9,381
C J Brewster 4,079 4,079
I D Menneer
14,381
9,381
C J Brewster
4,079
4,079
In addition to the above, Lord Downshire had a non-beneficial interest in
310,446 shares.
S M Wildridge, who resigned as Director on 31st October 2013, had interests in
287,068 shares of the Company at 30th June 2014 (2013- 177,068 shares).
New Long Term Incentive Plan
As part of the Animalcare board's consideration of its overall growth
strategy, its Remuneration Committee has been reviewing the most effective
means of providing a mechanism for senior executives to participate in the
Company's equity at a meaningful level.
In this regard, on 20th June 2014, the Board approved the Company's new senior
executive Long Term Incentive Plan (the "Plan"). On 27th June 2014, Iain
Menneer, Chief Executive Officer, and Chris Brewster, Chief Financial Officer,
subscribed for growth shares in the capital of Animalcare Ltd, a subsidiary of
the Company, under the Plan 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.
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"). The rights of Dr Menneer and Mr
Brewster to sell their 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 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.
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 on the investor relations section of the Company's website
http://www.animalcaregroup.co.uk.
8. Staff Costs
Number of employees
The average monthly number of employees (including Directors) during the year was:
Production and distribution 4 4
Selling and administration 53 53
57 57
57
57
Related costs
Wages and salaries 1,820 1,810
Social security costs 166 191
Other pension costs 89 78
2,075 2,079
2,075
2,079
9. Finance Costs and Finance Income
Fair value losses on financial instruments* 38 -
Finance costs 38 -
Other net finance income:
Fair value gains on financial instruments* - (11)
Interest income on bank deposits (27) (27)
Finance income (27) (38)
Net finance costs/(income) 11 (38)
Net finance costs/(income)
11
(38)
* 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 2014 2013
£'000 £'000
The income tax expense comprises:
Current tax expense 690 632
Adjustment in the current year in relation to prior years (105) (175)
585 457
The deferred tax (credit)/expense comprises:
Origination and reversal of temporary differences 22 (70) (18)
Adjustment in the current year in relation to prior years 22 20 6
(50) (12)
Total tax expense for the year 535 445
The total tax charge can be reconciled to the accounting profit as follows:
Total comprehensive income for the year 2,137 1,885
Total tax expense 535 445
Profit before tax 2,672 2,330
Income tax calculated at 22.5% (2013 - 23.75%) 601 553
Effect of expenses not deductible 55 48
Effect of share-based deductions (13) 20
Change in UK tax rate (23) (7)
Effect of adjustments in respect of prior years (85) (169)
535 445
The tax credit of £35,000 (2013 : £90,000) shown within "exceptional and other
items" on the face of the statement of comprehensive income, which forms part
of the overall tax charge of £535,000 (2013 : £445,000) relates to the items
analysed in note 4.
The prior year current tax credits in respect of both 2014 and 2013 primarily
relate to research and development tax credits.
Reductions in the UK corporation tax rate to 21% (effective from 1st April
2014) and 20% (effective from 1stApril 2015) were substantively enacted on 2nd
July 2013. Deferred tax balances have been calculated at an effective rate of
20%, being the substantively enacted rate at 30th June 2014. The future rate
reductions will affect the Group's future current tax charges.
11. Dividends
Ordinary final dividend paid in respect of prior year 788 621
Ordinary interim dividend paid 315 311
1,103 932
1,103
932
The final dividend paid during the year ended 30th June 2014 was 3.8 pence per
share (2013 : 3.0 pence per share). The interim dividend paid during the year
ended 30th June 2014 was 1.5 pence per share (2013 : 1.5 pence per share).
The proposed final dividend was approved by the Board of Directors on 15th
October 2014 and is subject to approval of shareholders at the Annual General
Meeting. The proposed dividend has not been included as a liability as at 30th
June 2014, 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:
Total comprehensive income attributable to equity holdersof the Company 2,259 2,176 2,137 1,885
Total comprehensive income attributable to equity holdersof the Company
2,259
2,176
2,137
1,885
Basic weighted average number of shares 20,824,931 20,732,636 20,824,931 20,732,636
Dilutive potential ordinary shares 126,980 124,519 126,980 124,519
20,951,911 20,857,155 20,951,911 20,857,155
Earnings per share:
Basic 10.8p 10.5p 10.3p 9.1p
Fully diluted 10.8p 10.4p 10.2p 9.0p
Fully diluted
10.8p
10.4p
10.2p
9.0p
13. Goodwill
Cost
At 1st July 2012, 1st July 2013 and 30th June 2014 12,711
Accumulated impairment losses
At 1st July 2012, 1st July 2013 and 30th June 2014 -
Net book value
At 30th June 2014 and 30th June 2013 12,711
At 30th June 2014 and 30th June 2013
12,711
The carrying amount of Group goodwill is allocated to the Group's sole
cash-generating unit ("CGU"), being the Companion Animal 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 2.0% (2013:
1.3%).
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 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 10.2% (2013: 11.9%).
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 New product Capitalised Total
brands and development software £'000
customer costs £'000
relationships £'000
£'000
Cost
At 1st July 2012 1,361 1,389 95 2,845
Additions - 102 27 129
At 30th June 2013 1,361 1,491 122 2,974
Additions - 156 43 199
At 30th June 2014 1,361 1,647 165 3,173
Amortisation
At 1st July 2012 534 562 21 1,117
Charge for the year 119 175 25 319
At 30th June 2013 653 737 46 1,436
Charge for the year 119 253 38 410
At 30th June 2014 772 990 84 1,846
Carrying value
At 30th June 2014 589 657 81 1,327
At 30th June 2013 708 754 76 1,538
Veterinary medicine product development costs are amortised over four to seven
years, 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 online ordering
system, is four years.
15. Property, Plant And Equipment
Cost
At 1st July 2012 - 63 133 10 206
Additions 187 44 131 17 379
Disposals - - (1) (27) (28)
At 1st July 2013 187 107 263 - 557
Additions - 27 5 - 32
Disposals (3) - - - (3)
At 30th June 2014 184 134 268 - 586
Depreciation
At 1st July 2012 - 40 73 10 123
Charge for the year 3 2 27 - 32
Disposals - - - (10) (10)
At 1st July 2013 3 42 100 - 145
Charge for the year 19 14 36 - 69
At 30th June 2014 22 56 136 - 214
Net book value
At 30th June 2014 162 78 132 - 372
At 30th June 2013 184 65 163 - 412
At 30th June 2013
184
65
163
-
412
16. Investments in Subsidiaries
Subsidiary undertakings
Company
2014 2013
£'000 £'000
Cost and net book value
At 1st July 2012, 2013 and 30th June 2014 14,361 14,361
The principal subsidiary undertakings of the Company are summarised below. The
companies listed include all those which principally affected the earnings and
assets of the Group.
Animalcare Ltd England Ordinary 90
Naychem Limited England Ordinary 100
Naychem Limited
England
Ordinary
100
The principal activity of these undertakings for the last financial year was
as follows:
Animalcare Ltd Sale of companion animal products and services
Naychem Limited Non-trading
Naychem Limited
Non-trading
17. Inventories
Finished goods and goods for resale 2,420 1,418
2014
£'000
2013
£'000
Finished goods and goods for resale
2,420
1,418
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
Trade receivables 1,577 1,386 - -
Amounts receivable from subsidiaries - - - -
Corporation tax - Group relief - - 129 556
Other receivables 4 8 4 7
Derivative financial instruments (see - 11 - -
note 20)
Prepayments and accrued income 302 257 11 15
1,883 1,662 144 578
302
257
11
15
1,883
1,662
144
578
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
2014 2013 2014 2013
£'000 £'000 £'000 £'000
Balance at 1st July 6 - - -
Impairment losses recognised 9 6 - -
Balance at 30th June 15 6 - -
Ageing of past due but not impaired receivables
1-30 days past due 59 -
31-90 days past due - 4
91 days and more - 2
59 6
-
2
59
6
Cash and cash equivalents
Cash and cash equivalents 3,812 3,745 1,315 1,791
2013
£'000
2014
£'000
2013
£'000
Cash and cash equivalents
3,812
3,745
1,315
1,791
Cash and cash equivalents comprise cash and short-term bank deposits with an
original maturity of three months or less.
The carrying amount of these assets approximates to their fair value.
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 36 days (2013 : 32days). No
interest has been charged on overdue receivables.
19. Other Financial Liabilities
Trade payables 858 983 63 62
Amounts payable to subsidiaries - - 1,570 3,757
Other taxes and social security costs 226 369 40 39
Other creditors 299 288 15 18
Derivative financial instruments (see note 20) 28 - - -
Accruals 195 342 40 146
1,606 1,982 1,728 4,022
342
40
146
1,606
1,982
1,728
4,022
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 1-2 years 3-5 years More than Total
or on demand £'000 £'000 5 years £'000
£'000 £'000
2014
Trade and other payables 1,606 - - - 1,606
2013
Trade and other payables 1,982 - - - 1,982
Categories and Fair Value of Financial Instruments Carrying value
Financial assets
Trade and other receivables (including cash and cash equivalents) 5,393 5,139
Financial liabilities
Trade and other payables (1,606) (1,982)
Trade and other payables
(1,606)
(1,982)
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
exchange contracts. The carrying value of the Group's foreign currency assets
and liabilities at the reporting date was:
Euro 459 233 51 33
US Dollar 34 142 65 21
233
51
33
US Dollar
34
142
65
21
Foreign Currency Sensitivity Analysis
At 30th June 2014 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 2014. A
positive number indicates that an increase in profit would arise from a 10%
strengthening of Sterling against these currencies, a negative number
indicates that a decrease would arise.
Euro (37) 45
US Dollar 3 (3)
US Dollar
3
(3)
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 four (2013 - nine) open foreign exchange contracts at 30th June
2014. The values are shown below:
2014 2013
£'000 £'000
Principal value 752 285
Fair value (28) 11
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:
Balance at the beginning of the period 1,021 1,051
Income deferred to future periods 182 177
Release of income deferred from previous periods (231) (207)
Balance at end of the period 972 1,021
Balance at end of the period
972
1,021
The deferred income liabilities fall due as follows:
Within one year 242 231
After one year 730 790
972 1,021
972
1,021
Income recognised during the year is set out below:
Income received 195 190
Income deferred to future periods (182) (177)
Release of income deferred from previous periods 231 207
Income recognised in the year 244 220
Income recognised in the year
244
220
22. Deferred Tax Liabilities
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 Share based Other Intangible fixed assets Total
£'000 payments £'000 £'000 £'000
£'000
Balance at 1st July 2012 (14) (11) (2) 198 171
Charge/(credit) to income 41 (13) (5) (35) (12)
Balance at 30th June 2013 27 (24) (7) 163 159
Charge/(credit) to income 14 (19) - (45) (50)
Balance at 30th June 2014 41 (43) (7) 118 109
As set out in note 10 deferred tax balances have been calculated at an
effective rate of 20%, being the substantively enacted rate at 30th June
2014.
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:
Balance at 1st July 2012 (21) (8) (2) (31)
Charge/(credit) to income 4 (5) - (1)
Balance at 30th June 2013 (17) (13) (2) (32)
Charge/(credit) to income 5 (12) - (7)
At 30th June 2014 (12) (25) (2) (39)
At 30th June 2014
(12)
(25)
(2)
(39)
As set out in note 10 deferred tax balances have been calculated at an
effective rate of 20%, being the substantively enacted rate at 30th June
2014.
23. Share Capital
Allotted, called up and fully paid ordinary shares of 20p each 20,960,204 20,745,204
Allotted, called up and fully paid ordinary shares of 20p each
20,960,204
20,745,204
Allotted, called up and fully paid ordinary shares of 20p each 4,192 4,149
Allotted, called up and fully paid ordinary shares of 20p each
4,192
4,149
During the year £43,000 (2013 : £5,000) of ordinary shares were issued for
proceeds of £242,125 (2013 : £24,375) resulting in a share premium of £199,125
(2013 : £19,375).
24. Operating Lease Arrangements
The Group as lessee
Lease payments under operating leases recognised as an expense in the year 187 211
Lease payments under operating leases recognised as an expense in the year
187
211
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:
2014 2013
£'000 £'000
Within one year 162 165
In the second to fifth years inclusive 252 334
After five years 110 143
524 642
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:
Outstanding at beginning of year 676,600 1.392 138,845 1.084 308,400 1.292
Granted during the year 105,000 1.524 - - - -
Lapsed during the year (106,600) 1.575 (26,673) - (28,400) 1.618
Exercised during the year (115,000) 1.258 - - (100,000) 0.975
Open at 30th June 2014 560,000 1.413 112,172 1.084 180,000 1.408
Exercisable at the end of the year 5,000 0.975 - - - -
112,172
1.084
180,000
1.408
Exercisable at the end of the year
5,000
0.975
-
-
-
-
The weighted average inputs into the Black-Scholes model at the time of grant
were as follows:
Weighted average share price 135p 144p 121p
Weighted average exercise price 137p 115p 125p
Expected volatility 50% 54% 45%
Expected life 3.1 years 3.1 years 3.1 years
Risk-free rate 0.6% 0.5% 0.7%
Risk-free rate
0.6%
0.5%
0.7%
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 (2013: £nil).
The Group recognised total expenses of £152,000 (2013: £149,000), £152,000
(2013 : £110,000) within administrative expenses and £nil (2013: £39,000)
within exceptional and other items as disclosed in note 4.
New Long Term Incentive Plan
On 20th June 2014, the Board approved the Company's new senior executive Long
Term Incentive Plan (the "Plan"). On 27th June 2014, Iain Menneer, Chief
Executive Officer, and Chris Brewster, Chief Financial Officer, subscribed for
growth shares in the capital of Animalcare Ltd, a subsidiary of the Company,
under the Plan 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.
26. Related Party Transactions
Trading transactions
During the year ended 30th June, the following trading transactions took place
between the Company and its subsidiaries listed in note 16:
Management Charges levied 240 240
Management Charges levied
240
240
Management Charges levied 240 240
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 2014 were approved 14th October 2014 and are expected to be posted to
shareholders during the week commencing 27th October 2014. 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 head
office at 10 Great North Way, York Business Park, Nether Poppleton, York,
YO26. 6RB.
This information is provided by RNS
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