RNS Number : 8967Q
Eco Animal Health Group PLC
14 July 2025
14 July 2025
ECO Animal Health Group plc
("ECO" or the "Company")
Results for the year ended 31 March 2025
ECO Animal Health (AIM: EAH), a rapidly growing global animal health company with a portfolio of marketed veterinary products and a maturing proprietary R&D pipeline, announces its audited results for the year ended 31 March 2025.
HIGHLIGHTS
Financial
· Revenue in-line and adjusted EBITDA in-line with revised market expectations following strong second half to the year
· Group sales of £79.6m (2024: £89.4m)
o North America revenue growth of 16%, contributing a growing share of Group revenues
· Constant currency revenue £81.6m (2024: £89.4m)
· Gross margin increased to 45% (2024: 42%), due to disciplined cost control and pricing, and geographical mix favouring high margin markets
· Adjusted EBITDA of £7.3m (2024: £8.0m), in line with consensus
· Adjusted EBITDA margin improved to 9.2% (2024: 9.0%)
· Research and development expenditure increased to £8.6m (2024: £8.3m), as planned
· Profit before tax increased to £4.0m (2024: £3.0m), driven in part by disposals of non-core assets
· Earnings per share increased by 61% to 2.49p (2024: 1.55p)
· Net cash at the end of the period £25.0m (2024: £22.4m), reinforcing the Group's strong balance sheet with 40% of cash held outside China (2024: 36%)
· RCF facility (£10m) and overdraft (£5m) available and undrawn
Operational
· Aivlosin® demand continues to be robust in key markets, with particular growth in North America
· Regulatory dossier for mycoplasma poultry vaccine ECOVAXXIN® MS submitted to EMA, with further submissions expected in next 12 months
· Broader progress across R&D pipeline, with up to 9 products expected to receive US and EU approval in the next 5 - 6 years
Post-year end highlights
· Revenue in USA and China out performing budgets
· Gross margins strengthening
· South East Asia strong recovery with order book supporting outlook
· Continuing operational improvement including further ERP system roll-out across subsidiaries
· Launch of share buy-back to support future employee share incentives vesting
David Hallas, Chief Executive Officer of ECO Animal Health Group plc, commented: "We are pleased to report another robust financial year for ECO Animal Health, with favourable pricing, geographic mix and disciplined cost control driving an improvement in gross margin and continued cash generation. We've achieved this despite unusually challenging trading and market conditions, including lower disease incidence in some regions, currency headwinds and macroeconomic and political uncertainty."
"ECO is focused on advancing its R&D pipeline and the Company has continued to make targeted investment to position this as the engine of future growth. We are delighted to have submitted the dossier for Mycoplasma poultry vaccine ECOVAXXIN® MS, with further submissions expected in the next 12 months. This lays the foundations for multiple planned vaccine launches from 2026 onwards, which we believe will underpin the next phase of growth from our pipeline, and we look forward to updating the market on progress."
The information contained within this announcement is deemed by the Group to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014 ("MAR") as it forms part of United Kingdom domestic law by virtue of the European Union (Withdrawal) Act 2018. Upon the publication of this announcement via a Regulatory Information Service ("RIS"), this inside information is now considered to be in the public domain.
Forward-Looking Statements
This announcement contains certain forward-looking statements. The forward-looking statements reflect the knowledge and information available to the Company and Group during preparation and up to the publication of this announcement. By their very nature, these statements depend upon circumstances and relate to events that may occur in the future and thereby involving a degree of uncertainty. Therefore, nothing in this announcement should be construed as a profit forecast by the Company or Group.
Contacts
ECO Animal Health Group plc David Hallas (Chief Executive Officer) Christopher Wilks (Chief Financial Officer)
Singer Capital Markets (Nominated Adviser & Joint Broker) Philip Davies Sam Butcher
020 7496 3000
Investec (Joint Broker) Gary Clarence Lydia Zychowska
020 7597 5970
Equity Development Hannah Crowe Matt Evans
020 7065 2692
CHAIRMAN AND CHIEF EXECUTIVE OFFICER'S COMBINED STATEMENT
FOR THE YEAR ENDED 31 MARCH 2025
ECO strives to provide best in class, scientifically validated, ethical solutions to optimise the health, productivity and wellbeing of pigs and poultry.
Overview
We are pleased to update on another positive year for ECO, with continued investment in the Group's late-stage pipeline and further progress across our core commercial operations. This has been achieved despite challenging trading and market conditions, including lower disease incidence in some regions and currency headwinds.
We are particularly pleased to have advanced our regulatory and commercial readiness for our next generation of products. In particular, we were pleased to submit our first poultry vaccine Marketing Authorisation Application to the European Medicines Agency. This is an important milestone in our journey to advance our late-stage product pipeline to commercialisation, which we are targeting from 2026 and we believe will deliver significant long-term value to investors.
Strong product sales and robust profitability
Total revenues for the period were £79.6m (2024: £89.4m), reflecting a strong performance in the second half and momentum in key growth markets. Aivlosin®, the Group's patented antimicrobial used under veterinary prescription for respiratory and gastrointestinal disease in pigs and poultry, remains our flagship product and it has continued to grow in North America, Latin America and India. We secured new and renewed marketing authorisations in a number of geographies and saw a stabilisation of pork prices in major markets.
Sales of Aivlosin® were £72.9m (2024: £82.4m. Ecomectin® and all other non-core products contributed £6.7m (2024: £7.0m).
Gross margin was 45.1% (2024: 42.1%). Adjusted EBITDA was £7.3m (2024: £8.0m). The Group remained cash generative, maintaining a strong cash position across core regions.
The North America market grew by 18% at constant exchange rates, demonstrating another strong year of growth, and the strength of our market proposition in that region.
China had a subdued start but recovered with the six months to 31 March 2025 3% ahead of the prior year on a constant currency basis, benefitting from both strong disease demand and PRRSv eradication programmes.
South and South East Asia was down due to the loss of a major customer in Thailand. However we saw good growth in the nascent markets of Bangladesh, Philippines and Pakistan as we continue to expand our sales to new geographies.
Research and development pipeline and regulatory progress
We continued to make progress across our proprietary pipeline during the year, with R&D spend of £8.6m (2024: £8.3m), reflecting sustained investment in late-stage vaccine assets.
In March 2025, ECO submitted its first EU Marketing Authorisation Application to the European Medicines Agency for ECOVAXXIN® MS, a poultry vaccine targeting Mycoplasma synoviae. This represents a significant milestone for the Group, with commercial launch targeted for 2026. The submission complements our ongoing regulatory work in the US and Europe for ECOVAXXIN® MG, the sister vaccine against Mycoplasma gallisepticum.
We were pleased to host an R&D Day on March 13th 2025, where the leadership team presented a detailed update on the Group's innovation strategy and progress across the vaccine pipeline. Details can be found at: https://ecoanimalhealth.com/investors/reports-presentations/
Disposal of non-core assets
As part of our ongoing focus on core species and geographies, the Group completed the divestment of a number of non-core product lines. These included the equine product Ecomectin® Horsepaste, sold to ACME Drugs S.r.l. for €1.3m (£1.1m) in April 2024, as well as parasite treatment licences for sheep and cattle in Southern Africa, sold for a total of £0.5m in February 2025.
These disposals have allowed ECO to continue streamlining its focus and reinvesting proceeds into its R&D pipeline and share buyback programme to cover the potential vesting of employee share incentives.
People
On behalf of the Board, we would like to thank our global team for their continued dedication, professionalism and hard work during the year. Our people remain at the heart of ECO's success, and we were pleased to see a second year of improved results in our global engagement survey, reflecting the positive impact of new wellbeing, training and workplace initiatives.
We were also proud to again receive the highest Environment, Social and Governance (ESG) rating from Integrum ESG, a provider of independent ESG ratings. This underlines our commitment to continually improving our governance and prioritising social and environmental concerns in all aspects of the business.
During the period, we further strengthened the Group through targeted hires across science, development and commercial functions.
Governance and leadership transition
On 31 March 2025, Dr Andrew Jones retired as Chairman after six years in the role. We would like to thank Andrew for his leadership and his significant contributions to ECO's development and growth.
Following a planned succession process, we are pleased to confirm that Dr Joachim Hasenmaier has now assumed the role of Chairman. Joachim brings over two decades of international experience in animal health and has already made a strong contribution to the Board since joining in February 2024.
Dividend
ECO's current investment strategy is to reinvest to support its extensive and deep R&D pipeline, which the Board believes will deliver significant revenue and profit growth and long-term shareholder value. As such no dividend is recommended in respect of the year ended 31 March 2025.
Outlook
Aivlosin® continues to perform well in high-growth territories, and the Group remains well positioned to take market share in North America and Latin America. Trading continues to follow a seasonal pattern and remains second-half weighted. We are encouraged by improving market conditions in China.
The Group is focused on executing its commercial and R&D strategies, with multiple vaccine launches targeted from 2026. We look forward to updating shareholders as we continue to build a global leader in sustainable animal health.
As of the end of our financial year, the global macroeconomic environment was in a state of flux due to the evolving geopolitical and tariff landscape. This has had no material impact on our financial results. International trade tariffs in veterinary pharmaceuticals have been less affected than other sectors, at least at the time of writing. Post-year end we altered our pricing, which is expected to mitigate the current tariff impacts in North America. We remain vigilant to potential changes and continue to assess any implications on our pricing and global customer relationships. The Group will take appropriate action should the situation change and is actively exploring all possible solutions to mitigate any future disruption.
Dr Joachim Hasenmaier David Hallas,
Chairman Chief Executive Officer
REPORT OF THE CHIEF FINANCIAL OFFICER
FOR THE YEAR ENDED 31 MARCH 2025
Introduction
I am pleased to report a strong year with improving profits. Operationally the business' margins improved substantially and this translated into a significantly stronger cash balance at the end of the year.
The improving margins and resulting cashflow allowed strong progress to be made with the Group's new product developments and a significant milestone was reached during the year with the submission of the first vaccine for marketing approval.
The finance function led the implementation of a new ERP system during the year; the NetSuite project was delivered on time, within budget and without interruption to the normal routines in the business and financial reporting. Efficiencies have been delivered during this first year and more improvements are expected. This is something I am very proud of and demonstrates the Group's values in action.
Trading
Previous years have seen a pattern of stronger trading in the second half of the year. This is associated with disease prevalence in pigs during the northern hemisphere winter. This pattern of trading has continued in the year ended 31 March 2025 with the second half accounting for 58% (2024: 57%) of the annual revenue. The main contributors to the second half weight this year were China/Japan with a 64% H2 weight and North America also with a 60% H2 weight.
The geographical analysis of revenue corresponding to the Group's operating segments is as follows:
Revenue summary - actual exchange rates
Year ended 31 March
2025 (£'m)
2024 (£'m)
% change
China and Japan
22.9
24.7
(7%)
North America (USA and Canada)
21.4
18.5
16%
South and Southeast Asia
11.9
17.4
(32%)
Latin America
16.3
19.9
(18%)
Europe
4.9
6.5
(25%)
Rest of World and UK
2.2
2.4
(8%)
79.6
89.4
(11%)
Overall all markets showed revenue declines year on year except for North America which has continued to grow strongly. As noted in our interim report, the exchange rates in the first half proved to be a headwind; in the second half of our financial year the exchange rates were more consistent with the prior year. The geographical analysis of revenue on a constant currency basis is as follows:
Revenue summary - constant currency
Year ended 31 March
2025 (£'m)
2024 (£'m)
% change
China and Japan
23.6
24.7
(4%)
North America (USA and Canada)
21.9
18.5
18%
South and Southeast Asia
12.1
17.4
(30%)
Latin America
16.6
19.9
(17%)
Europe
5.1
6.5
(22%)
Rest of World and UK
2.3
2.4
(4%)
81.6
89.4
(9%)
China revenue on a constant currency basis declined by 8% (£1.6m) but this decline was compensated by strong trading in Japan, an increase of 19% (£0.5m) year on year. However, China showed signs of improved performance in the second half being 3% ahead of prior year for the 6 months to 31 March 2025 on a constant currency basis. China's second half performance was strong driven by disease demand for Aivlosin in swine production - porcine reproductive and respiratory disease syndrome virus ("PRRSv") control and eradication programmes. This demand has continued since the year end.
At £21.4m (constant currency £21.9m), North America again grew strongly exceeding its previous highest revenue of £18.5m in the year ended 31 March 2024. The strength in this market was also disease driven - PRRSv as well as enteric disease resulted in demand for Aivlosin reaching record levels.
South and South East Asia revenue declined 30% on a constant currency basis. This was principally due to the loss of a major customer in Thailand and a slowdown in India and Vietnam. However, the year saw good growth in the nascent markets of Bangladesh, Indonesia, Malaysia, Philippines and Pakistan as we seek to access new markets and re-enter markets where previous marketing authorisations had expired and been re-issued.
Latin America comprises Brazil and Mexico (where the Group operates through wholly owned subsidiaries) and a group of other countries in South America where trade is conducted through exclusive distribution arrangements. Brazil on a constant currency basis was broadly flat year on year. Mexico performed poorly during the year; excess stock levels in the distribution channels and generic price pressure created some difficulties. Colombia had a poor year resulting from some rearrangement of the distribution arrangements which have now been resolved. Argentina
at £2m represented a 39% increase in revenue.
The European market segment is dominated by sales into Spain - £1.5m (2024: £1.8m) and Poland - £1.3m (2024: £1.3m). Spain accepted the resumption of sales of Aivlosin® Pre-Mix formulation in the period, reversing a hiatus in sales of this product in the year ended 31 March 2024. Sales in the UK at £1.1m (2024: £0.9m) is consistent with prior year.
Gross margins were 45.1% in the year ended 31 March 2025 (2024: 42.1%). This improvement in gross margins arose despite the foreign exchange impact of Sterling compared with the US Dollar and the Chinese Yuan. As noted above, on a constant currency basis the revenues for the year are £81.6m; recalculating the gross margin based on constant currency revenue would provide a gross margin of 46.2%. As anticipated in our interim report for the six months ended 30 September 2024, there was a strong recovery in the gross margins in the second half of the financial year - this was driven by the second half weighting and geographical mix favouring high margin markets.
The Group hedges its largest currency exposures through a layering of four forward contracts covering the four successive financial quarters and a portion of the anticipated US Dollar generation. On a quarterly basis these forward contracts are supplemented by additional layers, thus providing an averaging effect to the US Dollar- Sterling exchange rate. The hedging policy provides protection to net profit, earnings per share and cash but has no effect on gross profit or gross margin because the gains and losses are accounted for in finance costs.
Administrative expenses, at £28.7m (2024: £29.4m), show a 2% improvement; personnel costs reduced by 10% as a consequence of lower financial performance related bonus accruals.
All R&D programmes progressed well during the year, and the milestone of dossier submission to the regulatory authorities for our first mycoplasma poultry vaccine was reached - ECOvaxxin® MS. The group expects further submissions in the next and following years supporting the targeted investment in innovative vaccine technology. The strong market potential and technical success supports the capitalisation of late stage R&D expenditure which showed no indications of impairment. At the current time the Group capitalises expenditure on ECOVaxxin® MG and ECOVaxxin® MS as well as a long acting Florfenicol based anti-infective, ECOFlor, for swine respiratory disease.
Total cash expenditure on R&D (inclusive of that amount capitalised) in the year was £8.6m (2024: £8.3m). The total expenditure on R&D can be analysed as follows:
Year ended 31 March
2025 (£'m)
2024 (£'m)
Research and development expenses - expensed in period
4.0
4.2
Development expenditure - capitalised in intangible assets
4.6
4.1
Total expenditure
8.6
8.3
Overall R&D expenditure in the year was 4% higher than the prior year, reflecting increased spending on clinical stage assets. Expenditure on late stage assets (capitalised items) was 53% of total expenditure compared with 49% in the prior year. This R&D programme continues to be funded from the Group's cashflow and is 11% of revenue (2024 - 9%) expenditure ensures that all programmes (late, mid and early stage) receive the required funding to advance them according to plan. The R&D programme was described in some detail during the Group's R&D day held in March 2025.
More details of this presentation, as well as a video recording of the meeting are available on the Group's website.
EBITDA is a key performance measure for the Group; the removal of amortisation, depreciation and other non-cash charges to profit provides a good indication of the underlying cash trading performance of the business. The charge for amortisation of intangible assets in the year was £1.2m (2024: £1.2m). The adjusted EBITDA, operating profit excluding exceptional items, share based payments, depreciation, amortisation and foreign exchange gains and losses, at £7.3m (2024: £8.0m) was slightly above market expectations and was achieved despite challenging trading conditions and higher R&D expense by tight overhead costs control and strongly improved gross margins. Furthermore, the adjusted EBITDA margin, excluding foreign exchange movements and expressed as a percentage of revenue in the period, was 9.2% in the year ended 31 March 2025 compared with 9.0% in the year ended 31 March 2024.
Profit before income tax was higher in the year ended 31 March 2025 at £4.0m (2024: £3.0m). An important contributor to this increase was the exceptional gain during the year.
The exceptional items were profits on disposal of the non-core product line Ecomectin horse paste to an Italian distributor and parasite treatment licences for Southern Africa.
The Group's effective tax rate was 34% for the year ended 31 March 2025 (2024: 32%). Factors causing the effective rate to be greater than the headline UK rate of 25% are the withholding tax suffered on intragroup dividends received from China and the Group's policy of not recognising a deferred tax asset in respect of losses in the Group's parent company. The 2 percentage-point increase to 34% from 32% in the prior year is due to the more-restrictive R&D tax credit arrangements now in effect in the UK.
Earnings per share (EPS) has improved from 1.55 pence in the year ended 31 March 2024 to 2.49 pence per share in the year ended 31 March 2025 and diluted EPS has improved strongly from 1.52 pence in the year ended 31 March 2024 to 2.43 pence per share in the year ended 31 March 2025, due to improved gross margins, good cost control, and the exceptional gain described earlier.
Operating cash inflow before movements in working capital was £7.6m (2024: £7.7m). Continuing close management of working capital - in particular inventories and receivables - has resulted in operating cash flow of £12.1m (2024: £10.5m). Jurisdiction of cash balances were as follows:
At 31 March
2025 (£'m)
2024 (£'m)
Held in UK
8.4
6.2
Held in non-China subsidiaries
1.6
1.9
Held in China 100% owned subsidiary
4.0
2.4
Held in China 51% owned subsidiary
11.0
11.9
25.0
22.4
The Group repatriates cash from China by annual dividend declaration; this is subject to withholding taxes of 5% and is paid according to the relevant shareholdings. On a day-to-day basis, the Board considers the cash held in the Group's joint venture subsidiary in China to be unavailable to the Group outside of China; accordingly, treasury management decisions and funds available for investment in R&D are based upon the cash balances outside of China.
During June 2024, two dividends totalling £2.8m (post withholding tax) were received from China. In addition, during June 2025, two dividends totalling £3.4m (post withholding tax) were received from China.
The Group's committed banking facilities remain at £15.0m, being a £5.0m overdraft facility and a £10m revolving credit facility. These facilities expire on
30 June 2026 and were undrawn as at 31 March 2025.
The Group's inventory balance reduced to £14.6m on 31 March 2025 from £17.0m on 31 March 2024. This reduction was principally in finished goods and reflected the strong end to the year in China and the USA. Overall inventory days the annual cost of sales were steady at 122 days against 120 days for the prior year.
Trade receivables decreased from £32.2m at 31 March 2024 to £28.5m on 31 March 2025 with average debtor days (expressed as an average of the annual revenue) steady at 131 days (prior year: 131 days).
Simplified presentation of the Group
In response to certain stakeholder requests to provide a simplified description of the Group's performance we present the following analysis. The ECO Group can be thought of in three components, the first, a core trading business which manufactures and sells its products worldwide through wholly owned subsidiaries or direct to market. This applies to all territories except China where ECO operates through a 51% owned subsidiary. Cash returns from this China subsidiary is by way of a dividend.
Accordingly, the second component to this analysis of the Group is an investment in a China business that pays the Group an annual dividend. The third component of this analysis is an R&D business which employs a team of people undertakes studies and trials through third parties and has developed a body of intellectual property with rich potential for high future returns.
With these three components in mind one can disaggregate the Group results using already disclosed information, as follows:
ECO Animal Health Group plc - Disaggregation analysis
ECO excluding ECO Biok (£'m)
ECO Biok* (£'m)
ECO R&D operation (£'m)
Consolidated group (£'m)
Revenue
60.1
19.5
79.6
Cost of sales
(31.4)
(12.3)
(43.7)
Gross profit
28.7
7.2
-
35.9
48%
37%
45%
Administrative expenses
(22.3)
(4.5)
(1.9)
(28.7)
Research & Development expenses
(4.0)
(4.0)
Other income
-
0.1
0.1
Exceptional items
1.0
1.0
Profit from operating activities
7.4
2.8
(5.9)
4.3
Net finance cost
(0.1)
(0.2)
-
(0.3)
Profit before income tax
7.3
2.6
(5.9)
4.0
Income tax credit/(charge)
(0.6)
(0.7)
0.1
(1.2)
Withholding tax on dividends
(0.1)
(0.1)
Profit for the year
6.6
1.9
(5.8)
2.7
ECO Animal Health Group plc - Disaggregation analysis continued
Profit:
ECO excluding ECO Biok (£'m)
ECO Biok* (£'m)
ECO R&D operation (£'m)
Consolidated group (£'m)
Profit from operating activities
7.4
2.8
(5.9)
4.3
Deprecation
0.3
0.6
0.9
Amortisation
1.6
0.3
1.9
Share based payments and foreign exchange differences
1.2
1.2
Exceptional items
(1.0)
(1.0)
Adjusted EBITDA
9.5
3.7
(5.9)
7.3
China dividend
Received by ECO group from China JV in year
1.1
(1.1)
0.0
Balance sheet
Intangible fixed assets
30.6
11.6
42.2
Tangible fixed assets
4.4
3.0
7.4
Deferred tax balance
0.0
0.2
0.2
Inventories
11.7
2.9
14.6
Receivables
23.4
5.1
28.5
Other current assets
1.9
1.9
Cash balance
14.0
11.0
25.0
Trade payables
(13.0)
(2.1)
(15.1)
Lease liabilities
(0.8)
(3.0)
(3.8)
Other payables
(5.4)
(0.7)
(6.1)
Net assets
66.8
16.4
11.6
94.8
Cash flow
Profit before tax
7.3
2.6
(5.9)
4.0
Non-cash items
2.6
1.0
3.6
Net working capital movements/ net finance cost and tax payments
4.0
(1.5)
2.5
Cashflow from operating activities
13.9
2.1
(5.9)
10.1
Cashflow from investing activities
0.1
(0.1)
(4.6)
(4.6)
Cashflow from financing activities
0.7
(2.6)
(2.0)
Foreign exchange movements
(0.9)
(0.4)
(1.3)
Net increase/(decrease) in cash
13.8
(1.0)
(10.5)
2.3
Opening cash
0.2
12.0
10.5
22.7
Closing cash
14.0
11.0
0.0
25.0
*The Group owns 51% of ECO Biok with 49% owned by a minority shareholder. Details of ECO Biok are disclosed in note 15.
By performing this analysis for prior years the following comparative performance for the core group can be set out as follows:
Year ended 31 March
Group excluding China and R&D
2022
2023
2024
2025
Revenue
55.4
61.2
67.8
60.1
Gross margin
46%
45%
43%
48%
Adjusted EBITDA
10.2
7.8
9.4
9.5
Adjusted EBITDA margin
18%
13%
14%
16%
Effective tax rate
31%
12%
24%
8%
Inventories
16.1
17.4
13.0
11.7
Receivables
19.7
22.9
27.6
23.9
Cash balance
8.2
6.8
10.4
14.0
Cash generated from Operations
10.8
7.2
10.3
14.0
Cash received from China JV dividend
2.3
1.9
2.9
1.1
R&D component
R&D cash expenditure (net of tax credits)
8.6
8.2
8.0
8.5
Effective R&D tax credit rate
12%
14%
15%
1%
China 51% Subsidiary
Revenue
26.8
24.1
21.6
19.5
Gross margin
36%
44%
38%
37%
Adjusted EBITDA
3.7
6.6
3.9
3.7
Adjusted EBITDA margin
14%
27%
18%
19%
Effective tax rate
37%
34%
36%
33%
Inventories
14.1
5.0
4.0
2.9
Receivables
6.3
3.9
4.5
5.1
Cash balance
6.1
14.9
11.9
11.0
As disclosed previously the dividend from the China 51% subsidiary in respect of the year ended 31 December 2024 has been received at a value of £2.6m. The dividend received in the financial year ended 31 March 2025 was comparatively lower than prior years and the subsequent year because it reflected the year in which the new factory in China was built.
In summary the Group can be described as a core trading business which has delivered consistent (and rising) profitability in the last three years approaching £10m, rising cash generation and cash balances and which receives a consistent annual dividend of £2m - £3m and from which a new product development programme is being funded.
Christopher Wilks
Chief Financial Officer
CONSOLIDATED INCOME STATEMENT
FOR THE YEAR ENDED 31 MARCH 2025
2025
2024
Notes
£000's
£000's
Revenue
3
79,596
89,422
Cost of sales
(43,682)
(51,739)
Gross profit
35,914
37,683
45.1%
42.1%
Administrative expenses
(28,727)
(29,394)
Research and development expenses
(3,988)
(4,169)
Other income
4
148
66
Exceptional items
5
954
(651)
Operating profit
4,301
3,535
Share of profit of associate
15
50
53
Finance income
6
110
150
Profit before financing and income tax
4,461
3,738
Finance costs
6
(452)
(764)
Profit before income tax
4,009
2,974
Income tax charge
8
(1,375)
(966)
Profit for the year
2,634
2,008
Profit attributable to:
Owners of the parent Company
1,686
1,048
Non-controlling interest
26
948
960
Profit for the year
2,634
2,008
Earnings per share (pence)
7
2.49
1.55
Diluted earnings per share (pence)
7
2.43
1.52
Adjusted EBITDA (Non-GAAP measure)
5
7,299
8,046
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 MARCH 2025
2025
2024
Notes
£000's
£000's
Profit for the year
2,634
2,008
Other comprehensive loss:
Items that may be reclassified to profit or loss:
Foreign currency translation differences
(368)
(1,828)
Items that will not be reclassified to profit or loss:
Remeasurement of defined benefit pension schemes
23
(14)
43
Other comprehensive loss for the year
(382)
(1,785)
Total comprehensive income for the year
2,252
223
Attributable to:
Owners of the parent Company
1,611
1
Non-controlling interest
26
641
222
2,252
223
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 MARCH 2025
Share Capital
Share Premium
Revaluation Reserve
Treasury Shares Reserve
Other Reserves
Foreign Exchange Reserve
Retained Earnings
Total
Non-controlling Interest
Total Equity
£000's
£000's
£000's
£000's
£000's
£000's
£000's
£000's
£000's
£000's
Balance at 31 March 2023
3,381
63,319
657
-
106
1,878
13,929
83,270
12,281
95,551
Profit for the year
-
-
-
-
-
-
1,048
1,048
960
2,008
Other comprehensive income:
Foreign currency differences
-
-
-
-
-
(1,090)
-
(1,090)
(738)
(1,828)
Actuarial gains on pension scheme assets
-
-
-
-
-
-
43
43
-
43
Total comprehensive income for the year
-
-
-
-
-
(1,090)
1,091
1
222
223
Transactions with owners:
Issue of shares in the year
6
-
-
-
-
-
-
6
-
6
Revaluation reserve
-
-
(386)
-
-
-
386
-
-
-
Share-based payments
-
-
-
-
-
-
413
413
-
413
Dividends
-
-
-
-
-
-
-
-
(2,813)
(2,813)
Transactions with owners
6
-
(386)
-
-
-
799
419
(2,813)
(2,394)
Balance at 31 March 2024
3,387
63,319
271
-
106
788
15,819
83,690
9,690
93,380
Profit for the year
-
-
-
-
-
-
1,686
1,686
948
2,634
Other comprehensive income:
Foreign currency differences
-
-
-
-
-
(41)
(20)
(61)
(307)
(368)
Actuarial gains on pension scheme assets
-
-
-
-
-
-
(14)
(14)
-
(14)
Total comprehensive income for the year
-
-
-
-
-
(41)
1,652
1,611
641
2,252
Transactions with owners:
Issue of shares in the year
1
-
-
-
-
-
-
1
-
1
Acquisition of shares by ESOT
-
-
-
(204)
-
-
-
(204)
-
(204)
Share-based payments
-
-
-
-
-
-
401
401
-
401
Dividends
-
-
-
-
-
-
-
-
(1,065)
(1,065)
Transactions with owners
1
-
-
(204)
-
-
401
198
(1,065)
(867)
Balance at 31 March 2025
3,388
63,319
271
(204)
106
747
17,872
85,499
9,266
94,765
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 MARCH 2025
Company
Share Capital
Share Premium
Revaluation Reserve
Treasury Shares Reserve
Other Reserves
Retained Earnings
Total
£000's
£000's
£000's
£000's
£000's
£000's
£000's
Balance at 31 March 2023
3,381
63,319
386
-
106
7,236
74,428
Loss for the year
-
-
-
-
-
(1,158)
(1,158)
Other comprehensive income:
Foreign currency differences
-
-
-
-
-
-
-
Deferred tax on revaluation of freehold property
-
-
-
-
-
-
-
Actuarial gains on pension scheme assets
-
-
-
-
-
43
43
Total comprehensive income for the year
-
-
-
-
-
(1,115)
(1,115)
Transactions with owners:
Issue of shares in the year
6
-
-
-
-
-
6
Revaluation reserve
-
-
(386)
-
-
386
-
Share-based payments
-
-
-
-
-
413
413
Transactions with owners
6
-
(386)
-
-
799
419
Balance at 31 March 2024
3,387
63,319
-
-
106
6,920
73,732
Loss for the year
-
-
-
-
-
(658)
(658)
Other comprehensive income:
Deferred tax on revaluation of freehold property
-
-
-
-
-
-
-
Foreign currency differences
-
-
-
-
-
-
-
Actuarial gains on pension scheme assets
-
-
-
-
-
(14)
(14)
Total comprehensive income for the year
-
-
-
-
-
(672)
(672)
Transactions with owners:
Issue of shares in the year
1
-
-
-
-
-
1
Acquisition of shares by ESOT
-
-
-
(204)
-
-
(204)
Share-based payments
-
-
-
-
-
401
401
Transactions with owners
1
-
-
(204)
-
401
198
Balance at 31 March 2025
3,388
63,319
-
(204)
106
6,649
73,258
STATEMENTS OF FINANCIAL POSITION (CO. NUMBER: 01818170)
AS AT 31 MARCH 2025
Group
Company
2025
2024
2025
2024
Notes
£000's
£000's
£000's
£000's
Non-current assets
Intangible assets
11
41,834
38,351
-
-
Property, plant and equipment
12
4,038
4,802
-
-
Right-of-use assets
14
3,399
3,672
20
59
Investments
15
316
268
21,690
21,451
Amounts due from subsidiary company
17
-
-
48,937
51,078
Deferred tax assets
18
1,074
1,437
-
-
Total non-current assets
50,661
48,530
70,647
72,588
Current assets
Inventories
16
14,553
16,955
-
-
Trade and other receivables
17
28,516
32,175
1,664
1,698
Income tax recoverable
13
1,143
2,687
-
-
Other taxes and social security
724
525
182
-
Cash and cash equivalents
19
25,006
22,374
1,515
363
Assets held for sale
-
18
-
-
Total current assets
69,942
74,735
3,361
2,061
TOTAL ASSETS
120,603
123,265
74,008
74,649
Current Liabilities
Trade and other payables
20
(15,071)
(17,353)
(673)
(804)
Provisions
22
(4,964)
(5,859)
-
-
Income tax payable
13
(801)
(687)
-
-
Other taxes and social security payable
(305)
(632)
-
-
Lease liabilities
21
(621)
(646)
(15)
(50)
Dividends
(50)
(50)
(50)
(50)
Total current liabilities
(21,812)
(25,227)
(738)
(904)
Net current assets
48,130
49,508
2,623
1,157
Total assets less current liabilities
98,791
98,038
73,270
73,745
Non-current liabilities
Deferred tax liabilities
18
(862)
(1,279)
(9)
-
Lease liabilities
21
(3,164)
(3,379)
(3)
(13)
TOTAL ASSETS LESS TOTAL LIABILITIES
94,765
93,380
73,258
73,732
EQUITY
Issued share capital
25
3,388
3,387
3,388
3,387
Share premium account
63,319
63,319
63,319
63,319
Revaluation reserve
27
271
271
-
-
Treasury shares reserve
27
(204)
-
(204)
-
Other reserves
27
106
106
106
106
Foreign exchange reserve
27
747
788
-
-
Retained earnings
17,872
15,819
6,649
6,920
Shareholders' funds
85,499
83,690
73,258
73,732
Non-controlling interests
26
9,266
9,690
-
-
TOTAL EQUITY
94,765
93,380
73,258
73,732
STATEMENTS OF CASH FLOWS
FOR THE YEAR ENDED 31 MARCH 2025
Group
Company
2025
2024
2025
2024
Notes
£000's
£000's
£000's
£000's
Cash flows from operating activities
Profit before income tax
4,009
2,974
(725)
(1,349)
Adjustment for:
Finance income
6
(110)
(150)
(1,124)
(1,708)
Finance cost
6
452
764
4
62
Foreign exchange (gain)/loss
5
720
572
(132)
204
Depreciation
12
984
958
-
20
Amortisation of right-of-use assets
14
681
683
32
33
Amortisation of intangible assets
11
1,166
1,154
-
-
Impairment of right-of-use assets
5
-
80
-
-
Share of associate's results
15
(50)
(53)
-
-
Share based payment charge
24
401
413
162
127
Exceptional items
5
(954)
306
-
(282)
Operating cash flows before movements in working capital
7,299
7,701
(1,783)
(2,894)
Decrease in inventory
2,088
4,741
-
-
Decrease/(increase) in receivables
4,156
(4,961)
1,995
(133)
(Decrease)/increase in payables
(1,339)
2,456
(211)
284
(Decrease)/increase in provision and pensions
(90)
554
(14)
43
Cash generated from/(used in) operations
12,114
10,491
(13)
(2,700)
Finance costs
6
(200)
(473)
-
(51)
Income tax
(1,466)
(601)
(9)
(23)
Net cash from/(used in) operations
10,448
9,417
(22)
(2,774)
Cash flows from investing activities
Acquisition of property, plant and equipment
12
(356)
(502)
-
-
Proceeds from sale of property, plant and equipment
-
1,058
-
1,058
Purchase of intangibles
11
(4,648)
(4,122)
-
-
Net cash flow from disposal and acquisition activities
5
288
-
-
-
Finance income
6
110
150
1,124
1,708
Dividends received
-
-
85
225
Net cash (used in)/from investing activities
(4,606)
(3,416)
1,209
2,991
Cash flows from financing activities
Proceeds from issue of share capital
1
6
1
6
Interest paid on lease liabilities
21
(252)
(291)
(4)
(11)
Principal paid on lease liabilities
21
(638)
(593)
(38)
(34)
Dividends paid
(1,065)
(2,813)
-
-
Net cash used in financing activities
(1,954)
(3,691)
(41)
(39)
Net increase in cash and cash equivalents
3,888
2,310
1,146
178
Foreign exchange movements
(1,256)
(1,594)
6
(203)
Balance at the beginning of the period
22,374
21,658
363
388
Balance at the end of the period
19
25,006
22,374
1,515
363
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2025
1. General information
ECO Animal Health Group plc ("the Company") and its subsidiaries (together "the Group") manufacture and supply animal health products globally.
The Company is traded on the AIM market of the London Stock Exchange and is incorporated and domiciled in the UK. The address of its registered office is The Grange, 100 High Street, Southgate, N14 6BN.
2. Summary of the Group and Company's significant accounting policies
2.1 Basis of preparation
These financial statements have been prepared in accordance with UK-adopted International Financial Reporting Standards. There were no changes to accounting policies on adoption of UK IFRSs.
The preparation of financial statements, in accordance with UK-adopted international accounting standards, requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Although these estimates are based on management's best knowledge of the amount, event or actions, actual results ultimately may differ from those estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and future periods if the revision affects both current and future periods. Further details of estimates and judgements are provided in note 2.29 and 2.30.
The principal accounting policies are set out below and have been applied consistently in dealing with items which are considered material in relation to the financial statements. They are prepared under the historical cost convention with the exception of certain items which are measured at fair value as described in the accounting policies below.
Going concern
After making appropriate enquiries, the Directors have, at the time of approving the financial statements, formed a judgement that there is a reasonable expectation that the Group and Company have adequate resources to continue in operational existence for the foreseeable future. For this reason, the Directors continue to adopt the going concern basis in preparing the financial statements.
This conclusion is based on a review of the resources available to the Group, taking account of the Group's financial projections together with available cash and committed borrowing facilities. The Directors have performed a reverse stress test on the business, by considering what quantum of revenue and gross margin reduction would be required to exhaust all available funds within 12 months of the date of approving the accounts, having due regard to the identified strategic risks. The Directors concluded that the likelihood of such a reduction was remote, and therefore that no material uncertainty exists in respect of going concern.
2.2 Adoption of new and revised standards
The below are the standards that are new/amended for accounting periods that begin on or after 1 January 2024:
• Classification of liabilities as current or non-current (Amendments to IAS 1);
• Deferred tax related to assets and liabilities arising from a single transaction (Amendments to IAS 12);
• Lease Liability in a Sale and Leaseback (Amendments to IFRS 16);
• Classification of Financial Instruments (Amendments to IFRS 9);
• Non-current liabilities with covenants (Amendments to IAS 1); and
• Supplier Finance Arrangements (Amendments to IAS 7 and IFRS 7).
No new standards or amendments that became effective in the financial year had a material impact in preparing these financial statements. There are a number of standards and amendments to standards which have been issued by the IASB that are effective in future accounting periods that have not been adopted early.
The following amendments are effective for annual reporting periods beginning on or after 1 January 2025:
· Guidance on the exchange rate to use when a currency is not exchangeable (Amendments to IAS 21);
· Accounting treatment for the sale or contribution of assets (Amendments to IFRS 10 and IAS 28).
The following amendments are effective for annual reporting periods beginning on or after 1 January 2026:
· Amendments to the classification and measurement of financial instruments (Amendments to IFRS 9 and IFRS 7);
· Annual Improvements to IFRS Standards 2022 - 2024 Cycle (covering amendments to IFRS 1, IFRS 7, IFRS 9, IFRS 10, IAS 7).
The following standards are effective for annual reporting periods beginning on or after 1 January 2027:
· IFRS 18 Presentation and Disclosure in Financial Statements;
· IFRS 19 Subsidiaries without Public Accountability: Disclosures.
Beyond the information above, it is not practicable to provide a reasonable estimate of the effect of these standards until a detailed review has been completed.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
FOR THE YEAR ENDED 31 MARCH 2025
2.3 Basis of consolidation
The consolidated financial statements comprise the accounts of the Company and its subsidiaries drawn up to 31 March 2025.
An entity is classed as a subsidiary of the Company when, as a result of contractual arrangements, the Company has the power to govern its financial and operating policies so as to obtain benefits from its activities.
The purchase method of accounting is used to account for the acquisition of subsidiaries by the Group. The cost of an acquisition is measured as the fair value of the assets given, equity instruments issued and liabilities incurred or assumed at the date of exchange. Identifiable assets acquired and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date, irrespective of the extent of any non-controlling interest. The excess of the cost of acquisition over the fair value of the Group's share of the identifiable net assets acquired is recorded as goodwill. If the cost of acquisition is less than the fair value, the difference is recognised directly in the income statement.
Accounting policies of subsidiaries have been changed where material to ensure consistency with the policies adopted by the Group. Although the subsidiaries in Brazil and China and the joint operations in the USA and Canada all have December year ends, the Group uses management accounts to the end of March to prepare the Group accounts.
Subsidiaries are wholly consolidated from the date on which control is transferred to the Group. They are deconsolidated from the date that control ceases.
Inter-company transactions, balances and unrealised gains on transactions between Group companies are eliminated on consolidation.
The Group initially recognises any non-controlling interest in the acquiree at the non-controlling interest's proportionate share of the acquiree's net assets. For each business combination, the Group elects whether to measure the non-controlling interests in the acquiree at fair value or at the proportionate share of the acquiree's identifiable net assets. Acquisition-related costs are expensed as incurred and included in administrative expenses. The Group has not elected to take the option to use fair value in acquisitions completed to date.
Profit or loss and each component of other comprehensive income are attributed to the equity holders of the parent of the Group and to the non-controlling interests, even if this results in the non-controlling interests having a deficit balance.
2.4 Segment reporting
Operating segments are reported in a manner consistent with the internal reporting to the chief operating decision-maker. The chief operating decision-maker who is responsible for allocating resources and assessing performance of the operating segments has been identified as the Board.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
FOR THE YEAR ENDED 31 MARCH 2025
2.5 Foreign currency translation
(a) Functional and presentation currency
Items included in the financial statements of each of the Group's entities are measured using the currency of the primary economic environment in which the entity operates ('functional currency'). The consolidated and Company financial statements are presented in Pounds Sterling, which is the Group and the Company's functional currency.
(b) Transactions and balances
Monetary assets and liabilities denominated in foreign currencies are translated into Pounds Sterling at the rates of exchange ruling at the date of the financial statements.
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the date of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at period end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the income statement within administrative expenses.
Foreign exchange gains and losses that relate to borrowing and cash and cash equivalents are presented in the income statement within administrative expenses.
(c) Group companies
The results and financial position of all Group entities that have a functional currency different from the Group's functional and presentation currency are translated into the Group's functional and presentation currency as follows:
· assets and liabilities for each statement of financial position presented are translated at the closing exchange rate at the date of the statement of financial position;
· income and expenses for each income statement are translated at average exchange rates unless this average is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case the income and expenses are translated at the rate on the dates of the transaction; and
· all resulting exchange differences are recognised through other comprehensive income as a separate component of equity.
When a foreign operation is partially disposed or sold, exchange differences that were recognised in equity are recognised in the income statement as part of the gain or loss on sale. Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and translated at the closing exchange rate.
2.6 Financial instruments
Financial assets
Financial assets comprise mainly trade and other receivables and cash and cash equivalents in the consolidated statement of financial position. These financial assets arise principally from the provision of goods to customers and are measured at amortised cost.
Impairment provisions for current and non-current trade receivables are recognised based on the simplified approach within IFRS 9 using a provision matrix in the determination of the lifetime expected credit losses. During this process, the probability of the non-payment of the trade receivables is assessed with reference to historical data adjusted by forward-looking information. This probability is then multiplied by the amount of the expected loss arising from default to determine the lifetime expected credit loss for the trade receivables. For trade receivables, which are reported net, such provisions are recorded in a separate provision account with the loss being recognised within administrative expenses in the consolidated income statement. On confirmation that the trade receivable will not be collectable, the gross carrying value of the asset is written off against the associated provision.
Impairment provisions for receivables from related parties and loans to related parties are recognised based on a forward-looking expected credit loss model. The methodology used to determine the amount of the provision is based on whether there has been a significant increase in credit risk since initial recognition of the financial asset. For those where the credit risk has not increased significantly since initial recognition of the financial asset, 12-month expected credit losses along with gross interest income are recognised. For those where the credit risk has increased significantly, lifetime expected credit losses along with gross interest income are recognised. Where there is a high level of variation and uncertainty in possible outcomes, management will assess these on a probability weighted basis to determine an appropriate provision. For those that are determined to be credit impaired, lifetime expected credit losses along with interest income on a net basis are recognised.
The group uses forward foreign exchange contracts to manage its currency exposure. Certain foreign currency inflows that would typically be translated to sterling at spot to meet liabilities are sold forward to reduce the Group's exposure to fluctuations in exchange rates. The group has not opted to use hedge accounting for these instruments, and any changes in fair value are recognised in the income statement.
Financial liabilities
Financial liabilities comprise mainly trade and other payables and bank overdrafts in the consolidated statement of financial position. These financial liabilities are initially recognised at fair value and subsequently measured at amortised cost in accordance with IFRS 9.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
FOR THE YEAR ENDED 31 MARCH 2025
2.7 Goodwill
Goodwill arising on the acquisition of an entity represents the excess of the costs of acquisition over the Group's interest in the net fair value of the identifiable assets, liabilities and contingent liabilities of the entity recognised at the date of acquisition. Please refer to note 11 for further details.
Goodwill is initially recognised as an asset at cost and is subsequently measured at cost less any accumulated impairment losses. Goodwill is not subject to amortisation but is tested for impairment annually.
Negative goodwill arising on an acquisition is recognised directly in the income statement. On disposal of a subsidiary or a jointly controlled entity, the attributable amount of goodwill is included in the determination of the profit or loss recognised in the income statement on disposal. Goodwill arising before the date of transition to IFRS, on 1 April 2004, has been retained at the previous UK GAAP amounts, subject to being tested for impairment at that date. Goodwill written off to reserves under UK GAAP prior to 1998 has not been reinstated and is not included in determining any subsequent profit or loss on disposal.
2.8 Other intangible assets
Other intangibles are detailed in note 11. IAS 38 - Intangible Assets includes guidance on the accounting for research and development expenditure. Such an intangible asset is a resource that is controlled by the entity as a result of past events (for example, purchase or self-creation) and from which future economic benefits (inflows of cash or other assets) are expected. The three critical attributes of an intangible asset are:
· identifiability;
· control (power to obtain benefits from the asset); and
· future economic benefits (such as revenues or reduced future costs).
Identifiability
An intangible asset is identifiable when it:
· is separable (capable of being separated and sold, transferred, licensed, rented, or exchanged, either individually or together with a related contract); or
· arises from contractual or other legal rights, regardless of whether those rights are transferable or separable from the entity or from other rights and obligations.
Development expenditure - whether purchased or self-created (internally generated) is an example of an intangible asset, governed under IAS 38.
Recognition criteria
IAS 38 requires an entity to recognise an intangible asset (at cost) if, and only if:
· it is probable that the future economic benefits that are attributable to the asset will flow to the entity; and
· the cost of the asset can be measured reliably.
IAS 38 includes additional recognition criteria for internally generated intangible assets.
Expenditure on the research phase of an internal project is expensed as incurred. Expenditure in the development phase of an internal project is capitalised if the entity can demonstrate:
a) the technical feasibility of completing the intangible asset so that it will be available for use or sale.
b) its intention to complete the intangible asset and use or sell it.
c) its ability to use or sell the intangible asset.
d) how the intangible asset will generate probable future economic benefits. Among other things, the entity can demonstrate the existence of a market for the output of the intangible asset or the intangible asset itself or, if it is to be used internally, the usefulness of the intangible asset.
e) the availability of adequate technical, financial and other resources to complete the development and to use or sell the intangible asset.
f) its ability to measure reliably the expenditure attributable to the intangible asset during its development.
The probability of future economic benefits must be based on reasonable and supportable assumptions about conditions that will exist over the life of the asset.
If an entity cannot distinguish the research phase of an internal project to create an intangible asset from the development phase, the entity treats the expenditure for that project as if it were incurred in the research phase only.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
FOR THE YEAR ENDED 31 MARCH 2025
2.8 Other intangible assets (continued)
The Group context of IAS 38
Since the early start-up stages of the business, the Group has and continues to invest significant expenditure in research and development into new animal treatments and therapies. This has resulted in a significant family of pharmaceutical treatments for pigs and poultry. Branded as Aivlosin®, this product has developed over 20 years into treatments for multiple respiratory and intestinal infections - each of which have separate regulatory and marketing approvals in each target market. The work to bring Aivlosin® from the laboratory to the commercial farm has moved through the classical phases of pharmaceutical development and the ECO Animal Health R&D model can be described by the following broad phases:
• The discovery phase - in vitro, in laboratory.
• The proof of concept phase - key efficacy trials in small groups of animals.
• The exploratory development phase - optimisation of dose, economic validation.
• The full development phase - building the data set for dossier submission.
• Submission of an application for regulatory approval.
• Marketing and regulatory approval granted - commercial revenue begins.
The application of the principles of IAS 38 to the above model is to treat expenditure on research and development as an expense until the likely commercial benefits that will flow from the project can be judged to be highly probable. This means that the technical feasibility (judged by reference to efficacy) must be certain, the economic feasibility (judged by reference to manufacturing methodology, market intelligence, overall programme cost) has to be highly probable and the likelihood of gaining regulatory approval must be judged to be highly probable. The Directors consider that capitalisation will generally commence once a project enters the full development phase.
In practice, work that is undertaken to build towards regulatory approval for a new treatment claim using Aivlosin®, vaccines or other technologies, or an approval for marketing new technologies of applications in a new geographical market can be viewed as starting at the full development phase and are likely to meet the capitalisation criteria whereas costs in relation to some of the Group's recently announced projects, on vaccine development, for example, are likely to meet the capitalisation requirements once they are approved internally to commence the full development phase, subject to careful consideration of residual technical feasibility/risk.
The Group's R&D team prepare a technical profile for new products in development, with timings for development activity reflecting the technical challenges that must be overcome in order to obtain a marketing authorisation for the relevant regulator. In turn the R&D team work with the Group's marketing team to develop a business case for a new product by considering a number of additional factors. These additional factors will include local intelligence on the appetite for new products gathered through the Group's global network of existing sales channels, third-party data on the size of potential markets for new products, and suitable pricing strategies in the context of potential competitor products.
Amortisation of capitalised expenditure is determined with reference to the point at which regulatory approval is given to the product to which the expenditure relates. For historic periods, the approach adopted has been to amalgamate the expenditure incurred on all projects relating to the same product since the last regulatory approval and then identify the next nearest regulatory approval given for that product in either the same or a subsequent half-year. Amortisation begins in the half-year following the receipt of regulatory approval. A full six months of amortisation is charged in the first half-year for which costs are amortised.
Where it is possible to allocate an individual capitalised cost to a single identifiable project the start date for amortisation is the half-year following the half-year period in which the project receives regulatory approval. Where regulatory approval has not been received for a project, the amortisation has not started.
Amortisation is provided at rates calculated to write off the cost less estimated residual value of each asset over its expected useful life, as follows:
Aivlosin® 5% on cost
Ecomectin® 10% on cost
Vaccines 5% on cost
Trade marks and patents 10% on cost
2.9 Property, plant and equipment and depreciation
Plant and equipment are stated at cost less depreciation. Depreciation is provided at rates calculated to write off the cost less estimated residual value of each asset over its expected useful life, as follows:
Plant and machinery 10%-20% on cost
Fixtures, fittings and equipment 10%-20% on cost
Motor vehicles 25% on cost
Leasehold improvement 18%-25% on cost
Freehold land and buildings valuations are measured as a level 3 recurring fair value measurement. The property is professionally valued by a qualified surveyor at least once every three years. Surpluses (which are not reversals of previous deficits) arising from the periodic valuations are taken to other comprehensive income, and deficits (which are not reversals of previous surpluses) are taken to the income statement within administrative expenses. Depreciation is provided at a rate calculated to expense the valuation less estimated residual value over the remaining useful life of the building at a rate of 2% per annum on a straight-line basis. Land is not depreciated.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
FOR THE YEAR ENDED 31 MARCH 2025
2.10 Impairment of non-financial assets
The carrying amounts of assets are reviewed at each year end to determine whether there is any indication of impairment. If any such indication exists, the asset's recoverable amount is estimated in order to determine the impairment loss if any. The recoverable amount is the higher of its fair value and its value in use. For intangible assets with an indefinite useful life or not available for use, an impairment test is performed at each year end.
In assessing value in use, the expected future cash flows from the asset are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset.
An impairment loss is recognised in the income statement whenever the carrying amount of an asset or its cash-generating unit exceeds its recoverable amount.
A previously recognised impairment loss for costs other than goodwill is reversed if the recoverable amount increases as a result of a change in the estimates used to determine the recoverable amount, but not to an amount higher than the carrying amount that would have been determined (net of depreciation) had no impairment loss been recognised in prior years and no reversal of impairment losses recognised on goodwill.
2.11 Investments in subsidiaries
An investment in a subsidiary is where the Group own a controlling interest in an entity. Investments in subsidiaries are stated at cost less impairment in the parent Company's statement of financial position.
Other non-current asset investments are stated at fair value. They are recognised or derecognised on the date when the contract for acquisition or disposal requires the delivery of that investment.
Investments are assessed for impairment at the end of each reporting period. An impairment is recognised in profit or loss when the recoverable amount of an asset is less than its carrying amount, with the value of any impairment being the difference between the recoverable amount and carrying amount.
Impairments can be reversed in subsequent periods where there is any indication that the impairment loss recognised in a prior period may no longer exist or have decreased.
During the year the Group established an Employee Share Ownership Trust (the 'ESOT'). The assets, liabilities and returns of the ESOT are consolidated within the results of the ESOT's sponsoring company, Eco Animal Health Group plc.
During the year the ESOT acquired shares in Eco Animal Health Group plc. The shares held by the ESOT are treated as treasury shares in the accounts of Eco Animal Health Group plc.
2.12 Joint arrangements
A joint arrangement is a contractual arrangement whereby the Group and other parties undertake an economic activity that is subject to joint control; that is, when the strategic financial and operating policy decisions relating to the activities require the unanimous consent of the parties sharing control.
The Group classifies its interests in joint arrangements as either:
- Joint ventures: where the Group has rights to only the net assets of the joint arrangement; or
- Joint operations: where the Group has both the rights to assets and obligations for the liabilities of the joint arrangement.
In assessing the classification of interests in joint arrangements, the Group considers:
- The structure of the joint arrangement;
- The legal form of joint arrangements structured through a separate vehicle;
- The contractual terms of the joint arrangement agreement;
- Any other facts and circumstances (including any other contractual arrangements).
The Group has interests in joint operations. The Group recognises its share of the assets, liabilities, income, expenses and cash flows of joint operations combined with the equivalent items in the consolidated financial statements on a line-by-line basis.
2.13 Investments in associates
An associate is an entity in which an investor has significant influence but not control or joint control. Significant influence is defined as "the power to participate in the financial and operating policy decisions but not to control them".
The Group reports its interests in associates using the equity method of accounting. Under this method, an equity investment is initially recorded at cost (subject to initial fair value adjustment if acquired as part of the acquisition of a subsidiary) and is subsequently adjusted to reflect the Group's share of the net profit or loss of the associate. If the Group's share of losses of an associate equal or exceed its "interest in the associate", the Group discontinues recognising its share of further losses. If the associate subsequently reports profits, the investor resumes recognising its share of those profits only after its share of the profits equals the share of losses not recognised.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
FOR THE YEAR ENDED 31 MARCH 2025
2.14 Leasing
The Group assesses at contract inception whether a contract is, or contains, a lease. That is, if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.
The Group applies a single recognition and measurement approach for all leases under IFRS 16, except for short-term leases and leases of low-value assets.
Right-of-use assets
The Group recognises right-of-use assets at the commencement date of the lease, which is the date the underlying asset is available for use. Right-of-use assets are measured at cost, less any accumulated depreciation and impairment losses, and adjusted for any remeasurement of lease liabilities. The cost of right-of-use assets includes the amount of lease liabilities recognised, initial direct costs incurred, and lease payments made at or before the commencement date, less any lease incentives received. Right-of-use assets are depreciated on a straight-line basis over the lease term.
If ownership of the leased asset transfers to the Group at the end of the lease term or the cost reflects the exercise of a purchase option, depreciation is calculated using the estimated useful life of the asset.
The right-of-use assets are also subject to impairment. Refer to the accounting policies in section 2.10 for further details.
Lease liabilities
At the commencement date of the lease, the Group recognises lease liabilities measured at the present value of the lease payments to be made over the lease term. The lease liabilities include the present value of the following lease payments:
• fixed payments (including in-substance fixed payments), less any lease incentives receivable;
• variable lease payments that are based on an index or a rate, initially measured using the index or rate as at the commencement date;
• amounts expected to be payable by the Group under residual value guarantees;
• the exercise price of a purchase option if the Group is reasonably certain to exercise that option; and
• payments of penalties for terminating the lease, if the lease term reflects the Group exercising that option.
Lease payments to be made under reasonably certain extension options are also included in the measurement of the liability.
The lease payments are discounted using the interest rate implicit in the lease. If that rate cannot be readily determined, the lessee's incremental borrowing rate is used, being the rate that the individual lessee would have to pay to borrow the funds necessary to obtain an asset of similar value to the right-of-use asset in a similar economic environment with similar terms, security and conditions. In addition, the carrying amount of lease liabilities is remeasured if there is a modification, a change in the lease term, a change in the lease payments (for example, changes to future payments resulting from a change in an index or rate used to determine such lease payments) or a change in the assessment of an option to purchase the underlying asset.
The Group is exposed to potential future increases in variable lease payments based on an index or rate, which are not included in the lease liability until they take effect. When adjustments to lease payments based on an index or rate take effect, the lease liability is reassessed and adjusted against the right-of-use asset.
Lease payments are allocated between principal and finance cost. The finance cost is charged to profit or loss over the lease period to produce a constant periodic rate of interest on the remaining balance of the liability for each period.
Extension and termination options
Extension and termination options are included in a number of property and equipment leases across the Group. These are used to maximise operational flexibility in terms of managing the assets used in the Group's operations. The majority of extension and termination options held are exercisable only by the Group and not by the respective lessor.
The Group applies judgement in evaluating whether it is reasonably certain whether or not to exercise the option to renew or terminate the lease. That is, it considers all relevant factors that create an economic incentive for it to exercise either the renewal or termination. After the commencement date, the Group reassesses the lease term if there is a significant event or change in circumstances that is within its control and affects its ability to exercise or not to exercise the option to renew or to terminate.
Recognition exemptions
The Group applies the short-term lease recognition exemption to its short-term leases, being those leases that have a lease term of 12 months or less from the commencement date and do not contain a purchase option.
The Group also applies the recognition exemption to leases of which the underlying asset is of low value, comprising assets below the Group's capitalisation threshold. Lease payments on short-term leases and leases of low-value assets are recognised as an expense on a straight-line basis over the lease term.
Practical expedients
The Group applies a single discount rate to a portfolio of leases with reasonably similar characteristics.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
FOR THE YEAR ENDED 31 MARCH 2025
2.15 Inventories
Inventories are valued at the lower of cost and net realisable value. Cost is determined using the historical batch price of the principal raw materials and the weighted average cost for other ingredients and other product costs. The cost of finished goods comprises raw materials, packaging costs and sub-contracted manufacturing costs. Net realisable value is the estimated selling price in the ordinary course of business, less any costs which would be incurred in completing the goods ready for sale.
2.16 Trade receivables
Trade receivables are initially measured at fair value and are subsequently measured at amortised cost using the effective interest rate method. Trade receivables are presented net of discounts or other variable consideration adjustments earned, where the expectation and intention is to settle the balance net. Impairment provisions are recognised based on the simplified approach in accordance with IFRS 9 using a provision matrix in the determination of the lifetime expected credit losses. See impairment section in section '2.6 Financial instruments' for more details.
2.17 Cash and cash equivalents
Cash and cash equivalents include cash in hand, deposits held on call with banks, and other short‑term highly liquid investments with original maturities of three months or less. For the purpose of the statement of cash flows, bank overdrafts are included in the presentation of cash and cash equivalents.
2.18 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 assets after deducting all of its liabilities.
2.19 Bank borrowings and loans
Interest-bearing bank loans and overdrafts are recorded as the proceeds received, net of direct issue costs (which equate to fair value). Finance charges including premiums payable on settlement or redemption and direct issue costs are accounted for on an amortised cost basis in profit or loss using the effective interest rate method and are added to the carrying amount of the instrument to the extent that they are not settled in the period in which they arise.
2.20 Trade payables
Trade payables are initially measured at fair value and are subsequently measured at amortised cost using the effective interest rate method.
2.21 Provisions
Provisions are recognised when there is a present obligation as a result of a past event and it is probable that an outflow of resources will be required to settle the obligation. Provisions are measured at the Directors' best estimate of the expenditure required to settle the obligation outstanding at the year end and are discounted to present value where the effect is material.
2.22 Revenue recognition
Revenue comprises the fair value of the consideration received or receivable for the sale of goods in the ordinary course of the Group's activities. The Group's revenue is principally derived from selling goods with revenue recognised at a point in time when control of the goods has transferred to the customer. This point in time is determined with reference to INCO terms with that customer, with control of goods deemed to have transferred as per the relevant INCO terms. The most common terms used by the Group are Carriage, Insurance and Freight (CIF), Free On Board (FOB), ExWorks (EXW) and Carriage and Insurance Paid to (CIP).
· For transactions under CIF and FOB, the revenue is recognised at the point the goods are loaded onto the vessel or aircraft and a bill of lading or airway bill is issued.
· For transactions under EXW, the revenue is recognised at the point the goods are collected from the Group's warehouses or factory.
· For transactions under CIP, the revenue is recognised at the point the goods are loaded on to a truck at the designated point of departure and a loading note is issued.
Revenue is shown net of value added tax, returns, rebates and discounts and after eliminating sales within the Group. Transaction price is determined by the contract and variable consideration relating to discounts, free goods or volume rebates has been constrained in estimating contract revenue that is highly probable by using the most likely amount method.
The Group's contracts for delivery of goods are less than 12 months; there are no warranties within its sales contracts.
Revenue is recognised when the performance obligation is fulfilled, and the amount can be measured reliably. The performance obligation is fulfilled when control of the goods passes to the customer, which is normally in accordance with Incoterms or receipt by customer. No goods are dispatched on a sale or return basis. Distributors trade on their own account and not as agents.
The Group also receives interest and royalty income, which are recognised on an accrual basis.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
FOR THE YEAR ENDED 31 MARCH 2025
2.23 Pensions
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. The present value of the defined benefit obligation less the fair value of the plan assets is disclosed as an asset or liability in the statement of financial position in accordance with IAS 19. The disclosure of a net defined benefit asset is limited to the present value of any economic benefit available in the form of refunds from the plan or reductions in future contributions to the plan. Actuarial gains or losses are recognised through other comprehensive income.
2.24 Share-based payments
The Group issues equity-settled share options to certain employees in exchange for services from those employees. Equity-settled share options are measured at fair value (excluding the effect of non-market based vesting conditions) at the date of grant.
The fair value determined at the grant date of such equity-settled share options is expensed on a straight-line basis over the vesting period, based on the Group's estimate of shares that will eventually vest and adjusted for the effect of non-market based vesting conditions (with a corresponding movement in equity).
Fair value is measured by use of the Black-Scholes model for those options granted with non-market performance conditions. The expected life used in the model has been established based on management's best estimate of the effects of non-transferability, exercise restrictions and behaviour considerations.
In addition, the binomial model has been used to model future market outcomes for those options granted with a market performance condition.
Further details of the inputs to the Black-Scholes and the binomial model can be found in note 24 to the accounts.
Share-based payment charges are credited to retained earnings.
2.25 Taxation
Tax expense for the period comprises current and deferred tax.
Current tax, including UK corporation tax and foreign tax, is provided at amounts expected to be paid (or recovered) using the tax rates and laws that have been enacted or substantially enacted by the year end. Tax expenses are recognised in profit or loss or other comprehensive income according to the treatment of the transactions which give rise to them.
Deferred income tax is recognised, using the liability method, on temporary differences arising between the tax basis of assets and liabilities and their carrying amount in the financial statements.
Deferred income tax is determined using tax rates (and laws) that have been enacted, or substantially enacted, by the date of the statement of financial position and are expected to apply when the related deferred tax asset is realised or deferred tax liability is settled.
Deferred tax assets are recognised only to the extent that it is probable that future taxable profits will be available against which the temporary differences can be utilised.
IFRIC 23 Uncertainty over Income Tax Treatments
IFRIC 23 provides guidance on the accounting for current and deferred tax liabilities and assets in circumstances in which there is uncertainty over income tax treatments. The interpretation requires:
· the Group to determine whether uncertain tax treatments should be considered separately or together as a group, based on which approach provides better predictions of the resolution;
· the Group to determine if it is probable that the tax authorities will accept the uncertain tax treatment; and
· if it is not probable that the uncertain tax treatment will be accepted, measure the tax uncertainty based on the most likely amount or expected value, depending on whichever method better predicts the resolution of the uncertainty. The measurement is required to be based on the assumption that each of the tax authorities will examine amounts they have a right to examine and have full knowledge of all related information when making those examinations.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
FOR THE YEAR ENDED 31 MARCH 2025
2.26 Equity
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds.
Amounts arising on the restructuring of equity and reserves to protect creditor interests are credited to the capital redemption reserve.
Amounts arising from share-based payment expenses are recorded within retained earnings.
The cost of its own shares bought into treasury is debited to retained earnings as required by the Companies Act 2006. A subsequent sale of these shares would result in this entry being wholly or partly reversed with any profit on the sale being credited to share premium.
Amounts arising from the revaluation of non-monetary assets and liabilities held in foreign subsidiaries, and joint operations are held within the foreign exchange revaluation reserve.
2.27 Non-controlling interest
For each business combination, the Group elects to measure any non-controlling interest in the acquiree either at fair value or at their proportionate share of the acquiree's identifiable net assets. Changes in the Group's interest in a subsidiary that do not result in a loss of control are accounted for as transactions with owners in their capacity as owner. Adjustments to non-controlling interests are based on a proportionate amount of the net assets of the subsidiary. No adjustments are made to goodwill and no gain or loss is recognised in the statement of profit or loss.
2.28 Dividend distribution
Dividends are recorded when they become a legal obligation of the Company. For final dividends, this will be when they are approved by the shareholders at the AGM. For interim dividends, this will be when they have been paid.
2.29 Critical accounting estimates
The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are as follows:
Fair value measurement
A number of assets and liabilities included in the Group's financial statements require measurement, and/or disclosure of, fair value.
The fair value measurement of the Group's financial and non-financial assets and liabilities utilises market observable inputs and data as far as possible. Inputs used in determining fair value measurements are categorised into different levels based on how observable the inputs used in the valuation technique utilised are (the 'fair value hierarchy'):
- Level 1: Quoted prices in active markets for identical items (unadjusted).
- Level 2: Observable direct or indirect inputs other than level 1 inputs.
- Level 3: Unobservable inputs (i.e. not derived from market data).
The classification of an item into the above levels is based on the lowest level of inputs used that has a significant effect on the fair value measurement of the item.
The Group measures a number of items at fair value, including:
· land and buildings (note 12);
· investment property;
· forward foreign exchange contracts;
· pension and other post-retirement benefit commitments (note 23);
· share-based payments (note 24); and
· initial recognition of financial instruments (note 31).
For more detailed information in relation to the fair value measure of the items above, please refer to the applicable notes.
Pension scheme
The Group maintains one defined benefit pension scheme which has been accounted for according to the provisions of IAS 19. Although the assumptions were determined by a qualified actuary, any change in those assumptions may materially impact the financial position and results of the Group. Details of the assumptions used can be found in note 23 of the financial statements.
Share-based payments
The charge to the income statement in respect of share-based payments has been externally calculated using management's best estimates of the number of options expected to vest and various other inputs to the Black-Scholes and the binomial model, as disclosed in note 24. Variations in those assumptions in the model may have a material impact on the Group's results and financial position at the time of valuation. Those options that contain market conditions have been valued using the binomial model, and those without have been calculated using the Black-Scholes model. Management assesses whether the charge or vested portion should be amended based on an annual reassessment of the likelihood of non-market based vesting conditions being met.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
FOR THE YEAR ENDED 31 MARCH 2025
2.30 Critical accounting estimates (continued)
Leases - estimating the incremental borrowing rate
Where the Group cannot readily determine the interest rate implicit in the lease, it uses its incremental borrowing rate (IBR) to measure lease liabilities. The IBR is the rate of interest that the Group would have to pay to borrow over a similar term, and with a similar security, the funds necessary to obtain an asset of a similar value to the right-of-use asset in a similar economic environment. The IBR therefore reflects what the Group 'would have to pay', which requires estimation when no observable rates are available or when they need to be adjusted to reflect the terms and conditions of the lease.
In practice, the Group considered the following aspects in the assessment of IBR. Once decided, the IBR will remain unchanged unless there are modifications in lease terms or changes in the assessment of an option to purchase the underlying asset.
A base rate that reflects economic environment and the term of the lease. This is mainly derived from the yield of a government bond issued by the country in which the Group has in scope leases. Where the term of the lease does not conform with the maturity period of the bond, the Group considered other available information such as yields on the bonds with the nearest maturity period, or the yield curve published by the country's treasury department. Considering there is often a difference in the cash flow profile between a lease and government bond, the Group has decided to reduce the base rate by 0.05% to 0.10%.
Financing factors that reflect the lessee companies' risk premium on borrowing. Management considered the financial strength and credit risk of the lessee companies and has estimated the credit spread to be in the range of 1.50% to 5.00%.
Asset factors that reflect the quality of hypothetical security. Depending on the location and type of underlying assets, the Group expects the quality of security in this hypothetical borrowing transaction to vary. For example, the right to use a warehouse in rural areas may provide less relevant security compared to a commercial office in a major city's central business district. Based on the Group's assessment, the asset factor ranges between - 0.45% to - 0.50%.
The following are the critical judgements that have been made in the process of applying the Group's accounting policies and have the most significant effects on the amounts recognised in financial statements.
Income taxes
The Group is subject to income taxes in the United Kingdom and also in other jurisdictions.
Significant judgements are required in determining the provision for income taxes including the use of tax losses and in estimating deferred tax assets arising from unused tax losses or credits. There are some transactions and calculations for which the ultimate tax determination is uncertain, including tax credits for research and development expenditures. The Group recognises assets and liabilities based on estimates of the final agreed position.
Where the final tax outcome of these matters is different from the amounts that were initially recorded, such differences will impact the income tax and deferred tax provisions in the period in which such determination is made.
Deferred tax assets on timing differences are recognised to the extent by which the Directors estimate that future profits will be generated to utilise the underlying costs or losses to which they relate.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
FOR THE YEAR ENDED 31 MARCH 2025
2.30 Critical accounting judgements
Capitalisation of intangible assets
The Group assesses development costs incurred for capitalisation in accordance with the requirements of IAS 38 and the Group's accounting policy described in note 2.8. In carrying out its assessment the Group considers a range of factors, each of which requires the use of judgement, in consultation with the new product development team. Factors considered include: the stage of development and assessment of technical and commercial feasibility of the project; the size of the markets in which the Group currently sells products; and the size of any additional markets in which the Group intends to sell the product. For key development projects, where there is a higher degree of estimation uncertainty over future product releases, independent external consultants are engaged to validate both technical progress and the overall market appetite for the new product in order to ensure that it remains reasonable to capitalise associated project costs.
Impairment review of intangible assets
The Group tests annually whether goodwill or other intangible assets with indefinite life, or not yet available for use, have suffered any impairment. Other intangible assets are reviewed for impairment when an indication of potential impairment exists. Impairment provisions are recorded as applicable based on Directors' estimates of recoverable values.
The recoverable amounts of the cash-generating units (CGUs) to which intangible assets are allocated are determined from value in use calculations. The key assumptions for the value in use calculations are those regarding discount rates, growth rates and the assumption of an indefinite future life for the assets giving rise to the cash flows. Where intangible assets relate to future product releases the key assumptions also relate to forecasts for market share and product pricing. The Group also reviews and quantifies the tax implications related to any recognised impairments and these are included within tax calculations as appropriate.
Further details of the impairment reviews performed can be found in note 11 of the financial statements.
Provisions
Certain aspects of a sales tax related to imported products in a Group subsidiary might have been applicable. The subsidiary has been importing an increasing volume of product in recent years but has recently implemented for its largest customer a new system to avoid this possible dispute. This matter has been reviewed by the group's local tax experts but is subject to further review of the tax legislation and ongoing case law. No tax payment has yet been determined. However, a substantial tax settlement may be required in due course and a provision has been recognised due to IFRIC 23 Uncertainty over Income Tax Treatments.
Accounting for ECO Biok as a subsidiary
The Group has determined that it has control over Zhejiang ECO Biok Animal Health Products Limited ('ECO Biok') and its results are therefore consolidated within the Group accounts. The Group owns a 51% interest in ECO Biok, although decisions are made jointly, it is the entity through which the Group has chosen to enter the Chinese market. ECO Biok depends on the Group for the right to sell Aivlosin® products, which gives the Group power over ECO Biok's activities. Therefore it is appropriate to treat ECO Biok as a subsidiary.
Calculation of expected credit loss
The Group assesses on an annual basis the expected credit loss on the debtors it holds as at the balance sheet date. It does so by using the higher of historic loss rates experienced by the group, or a wider measure of likely default at a country or regional level and applying this against the debtor balance when profiled for age and origin.
Where there is indicator of possible non-recovery of a large debtor, management may separately assess the risk of irrecoverability via probabilistic modelling of possible outcomes or other means.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
FOR THE YEAR ENDED 31 MARCH 2025
3. Segment information
Management has determined the operating segments based on the reports reviewed by the Board to make strategic decisions. The Board considers the business from a geographical perspective. Geographically, management considers the performance in the Corporate/UK, China and Japan, North America, South and Southeast Asia, Latin America, Europe and the Rest of the World.
Revenues are geographically allocated by the destination of customer.
The performance of these geographical segments is measured using earnings before interest, tax, depreciation and amortisation ('Adjusted EBITDA**'), adjusted to exclude share-based payments, revaluation, impairment and personnel related litigation matters. Adjusted EBITDA is a non-GAAP measure used by the management to assess the underlying business performance. The details of Adjusted EBITDA is given in note 5.
Corporate /UK
China & Japan
North America
S & SE Asia
Latin America
Europe
Rest of World
Total
£000's
£000's
£000's
£000's
£000's
£000's
£000's
£000's
Year ended 31 March 2025
Sale of goods
1,110
22,898
21,414
11,854
16,307
4,913
796
79,292
Royalties
-
-
-
-
-
-
304
304
Revenue from external customers
1,110
22,898
21,414
11,854
16,307
4,913
1,100
79,596
Adjusted EBITDA**
(16,986)
7,349
7,529
4,974
1,993
1,035
685
6,579
Year ended 31 March 2024
Sale of goods
925
24,656
18,480
17,440
19,891
6,452
1,529
89,373
Royalties
-
-
-
-
-
-
49
49
Revenue from external customers
925
24,656
18,480
17,440
19,891
6,452
1,578
89,422
Adjusted EBITDA**
(17,281)
7,007
7,229
5,610
3,578
488
843
7,474
Material non-current assets held by non-UK subsidiaries are disclosed in note 15 to these financial statements.
A reconciliation of Adjusted EBITDA for reportable segments to profit from operating activities is provided as follows:
2025
2024
£000's
£000's
Adjusted EBITDA for reportable segments
6,579
7,474
Depreciation
(984)
(958)
Amortisation of right-of-use assets
(681)
(683)
Amortisation
(1,166)
(1,154)
Impairment of right-of-use assets
-
(80)
Other exceptional items
954
(651)
Share-based payment charges
(401)
(413)
Profit from operating activities
4,301
3,535
Foreign exchange differences
720
572
Adjusted EBITDA for the Group
7,299
8,046
**Adjusted EBITDA reported for the segments includes foreign exchange gains and losses. The Adjusted EBITDA for the Group is presented in note 5.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
FOR THE YEAR ENDED 31 MARCH 2025
3. Segment information (continued)
Product revenues
All product revenues are recognised at a point in time.
2025
2024
£000's
£000's
Aivlosin®
72,914
82,436
Ecomectin®
2,156
3,340
Others
4,526
3,646
Total
79,596
89,422
Contract balances
2025
2024
Within one year or on demand
£000's
£000's
At 1 April
3
1,079
Amounts included in contract liabilities that were recognised as revenue during the period
(3)
(1,079)
Cash received in advance of performance and not recognised as revenue during the period
706
3
At 31 March
706
3
The Group recognised contract liabilities of £706,000 at 31 March 2025 (2024: £3,000). The Group does not hold any long-term sales contracts and any rebates, discounts or free goods incentives are settled and recognised as revenue within the next accounting period. Contract balances are reported within trade and other payables on the statement of financial position.
4. Other income
2025
2024
£000's
£000's
Sundry income
148
66
148
66
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
FOR THE YEAR ENDED 31 MARCH 2025
5. Result from operating activities
2025
2024
Notes
£000's
£000's
Result from operating activities is stated after charging/(crediting):
Cost of inventories recognised as an expense
43,164
51,108
Employee benefits expenses
29
15,054
16,795
Amortisation of intangible assets
11
1,166
1,154
Depreciation
12
984
958
Amortisation of right-of-use assets
14
681
683
(Loss)/gain on foreign exchange transactions
(720)
(572)
Research and development
3,988
4,169
Impairment losses on trade receivables
17
485
603
Fees payable to the Company's auditor for the audit of the parent Company and Group annual accounts
334
312
Alternative performance measures
Earnings before interest, tax, depreciation, amortisation, revaluation, impairment, share-based payments and foreign exchange differences (Adjusted EBITDA)
2025
2024
£000's
£000's
Profit from operating activities
4,301
3,535
Depreciation
984
958
Amortisation of right-of-use assets
681
683
Amortisation
1,166
1,154
Impairment of right-of-use assets
-
80
Other exceptional items
(954)
651
Share-based payments
401
413
6,579
7,474
Foreign exchange differences
720
572
Adjusted EBITDA
7,299
8,046
Exceptional items
2025
2024
£000's
£000's
Cessation of distribution business
-
(933)
Profit on disposal of properties
-
282
Profit on disposal of Ecomectin® Horsepaste assets
1,073
-
Cost associated with acquisition activities
(249)
-
Profit on disposal of Southern African licences
176
-
Other
(46)
-
Total exceptional items
954
(651)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
FOR THE YEAR ENDED 31 MARCH 2025
5. Result from operating activities (continued)
Management believe that adjusted EBITDA is an appropriate measure of the Group's performance as it is the initial source for all re-investment and for all returns to shareholders. Investors, bankers and analysts all focus on this important measure of underlying performance because it enables them to make judgements about the Group's ability to generate sufficient cash to meet all the re-investment needs of the business while still providing adequate returns to shareholders. Therefore, adjusted EBITDA has a direct relationship with the value of the Group and is seen by our investors as a key performance indicator for management.
The following items are adjusted for in the calculation of Adjusted EBITDA as defined by the Group.
Item
Rationale for Adjustment
Depreciation and amortisation
These items are a result of past investments and therefore, although they are correctly recorded as a cost of the business, they do not reflect current or future cash outflows. Additionally, depreciation and amortisation calculations are subject to judgement regarding useful lives and residual values of particular assets and the adjustment removes the element of judgement.
Revaluation of investment property
These are subject to judgement and do not reflect cash flows.
Impairment of right-of-use assets
This item is a result of past investments and therefore, although they are correctly recorded as income or cost of the business, they do not reflect current or future cash outflows.
Exceptional items
These items are a result of one-off changes to cessation of distribution business and property disposals and therefore, although they are correctly recorded as income or cost of the business, they do not reflect current or future cash outflows.
Share-based payments
This item is subject to judgement and will never be reflected in the Group's cash flows.
Foreign exchange differences
Since the key driver of this figure is the revaluation of monetary assets denominated in foreign currency at the period end, which may reverse prior to settlement, taking this figure out of the EBITDA figure removes volatility from the performance measure. Foreign exchange movements are largely outside of the Group's control, so this gives a better measure of the Group's progress than statutory profit measures which include them.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
FOR THE YEAR ENDED 31 MARCH 2025
6. Finance income/(expense)
2025
2024
£000's
£000's
Finance income
Interest received on short-term bank deposits
110
150
Finance costs
Interest paid
(200)
(473)
Interest paid on lease liabilities
(252)
(291)
(452)
(764)
Net finance costs
(342)
(614)
7. Earnings per share
The calculation of basic earnings per share is based on the post-tax profit for the year divided by the weighted average number of shares in issue during the year.
2025
2024
Earnings
Weighted average number of shares
Per share amount
Earnings
Weighted average number of shares
Per share amount
£000's
000's
pence
£000's
000's
pence
Earnings attributable to ordinary shareholders on continuing operations after tax
1,686
67,630
2.49
1,048
67,745
1.55
Dilutive effect of share options
-
1,812
-
-
1,335
-
Diluted earnings per share
1,686
69,442
2.43
1,048
69,080
1.52
The diluted EPS figure reflects the impact of historic grants of share options and is calculated by reference to the number of options granted for which the average share price for the year was in excess of the option exercise price.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
FOR THE YEAR ENDED 31 MARCH 2025
8. Taxation
2025
2024
£000's
£000's
Current tax charge / (credit)
Foreign corporation tax on profits for the year
1,543
1,745
Foreign withholding tax
162
180
Research and development tax credits claimed in the year
(119)
(1,027)
Research and development tax credits - adjustment for prior year
16
(333)
Research and development tax credits - true-up for prior year
-
-
Deferred tax
Origination and reversal of temporary differences
(227)
401
Income tax charge
1,375
966
2025
2024
£000's
£000's
Factors affecting the tax charge for the year
Profit on ordinary activities before taxation
4,009
2,974
Profit on ordinary activities before taxation multiplied by the applicable rate of UK corporation tax of 25% (2024: 25%)
1,002
743
Effects of:
Non-deductible expenses
568
1,403
Non-chargeable credits
(3)
(10)
Right-of-use assets depreciation
-
(55)
Withholding tax on inter-company dividends
162
180
Enhanced allowance on research and development expenditure
(347)
(627)
Adjustment in respect of prior years
40
(169)
Different tax rate for foreign subsidiaries
6
(57)
Intra-Group dividend
-
34
Origin and reversal of temporary differences
(272)
720
Unused tax losses carried forward
1,003
(367)
Tax effect of share based payments
-
(71)
Patent Box claim
(784)
(758)
Income tax charge
1,375
966
Effective income tax rate
34%
32%
9. Loss for the financial year
2025
2024
£000's
£000's
Parent Company's (loss) for the financial year
(658)
(1,158)
The Company has elected to take the exemption under Section 408 of the Companies Act 2006 not to present the parent Company income statement.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
FOR THE YEAR ENDED 31 MARCH 2025
10. Dividends
The Board of Directors does not propose that a dividend be paid for the year ended 31 March 2025 (2024: Nil).
Proposed dividends on ordinary shares are subject to approval at the Annual General Meeting and are not recognised as a liability as at the date of the statement of financial position.
11. Intangible assets
Group
Goodwill
Distribution rights
Drug registrations, patents and licence costs
Total
£000's
£000's
£000's
£000's
Cost
At 31 March 2023
17,930
407
25,711
44,048
Additions
-
-
4,122
4,122
Impairment
-
-
(287)
(287)
At 31 March 2024
17,930
407
29,546
47,883
Additions
-
-
4,648
4,648
Disposal
-
-
(105)
(105)
At 31 March 2025
17,930
407
34,089
52,426
Amortisation
At 31 March 2023
-
(178)
(8,234)
(8,412)
Charge for the year
-
(20)
(1,134)
(1,154)
Disposal
-
-
268
268
Impairment
-
-
(234)
(234)
At 31 March 2024
-
(198)
(9,334)
(9,532)
Charge for the year
-
(20)
(1,146)
(1,166)
Disposal
-
-
106
106
Impairment
-
-
-
-
At 31 March 2025
-
(218)
(10,374)
(10,592)
Net book value
At 31 March 2025
17,930
189
23,715
41,834
At 31 March 2024
17,930
209
20,212
38,351
At 31 March 2023
17,930
229
17,477
35,636
The amortisation and impairment charges are included within administrative expenses in the income statement.
Distribution rights are amortised over their estimated useful life of 20 years and reviewed for impairment when any indication of potential impairment exists. The remaining amortisation period at the date of the financial statements ranged from 3 to 20 years.
The acquisition of ECO Animal Health Limited in October 2004 gave the Group ownership of the intellectual property and established distribution networks in respect of Aivlosin® and Ecomectin® and gave rise to £17,359,000 of goodwill. The acquisitions of Zhejiang Eco Biok Animal Health Products Limited in 2007 and ECO Animal Health Japan Inc in 2009 opened further distribution and sale opportunities for Aivlosin® and Ecomectin® and gave rise to £94,000 and £477,000 of goodwill respectively.
Goodwill acquired in a business combination is allocated at acquisition to the cash-generating units (CGUs) that are expected to benefit from the business combination.
The Group has recalculated the headroom as it would have been at March 2025 when comparing the net present value of cash flows to the carrying value of goodwill. The goodwill impairment review uses cash flows from the Group's global revenues in respect of Aivlosin® and Ecomectin®. Expected future cash flows in respect of new vaccines - both the outflows on research and development of these new products and the forecast revenues from sales - are excluded. Intangible assets in respect of new vaccines are tested for impairment separately. This approach is appropriate given that the acquisitions which gave rise to the goodwill balance were made to enhance the Group's global capacity to sell Aivlosin® and Ecomectin® products rather than new products expected to be introduced following successful completion of current R&D projects.
The recoverable amount of the CGU is determined from value in use calculations. The key assumptions for the value in use calculations are those regarding discount rates, growth rates and the estimated remaining useful life of the asset.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
FOR THE YEAR ENDED 31 MARCH 2025
11. Intangible assets (continued)
The Group prepares cash flow forecasts that represent a reasonable expectation of performance over the 12 months post year-end. This expectation is then extrapolated into the future using a 3% annual growth rate. The directors believe that the long-term growth rate does not exceed the average long-term growth rate for the relevant markets.
Management estimates discount rates using the pre-tax rates that reflect current market assessments of the time value of money and the risks specific to the CGU. In the current year management estimated the applicable rate to be 11% (2024: 10%). Management considers that there is adequate headroom when comparing the net present value of the cash flows to the carrying value of goodwill to conclude that no impairment is necessary this year. On assumptions as at each period end the excess of recoverable amount over carrying value is over £107m (2024: £86m).
Management believes that the most significant assumption in the calculation of value in use is the term over which the cash flows are modelled. However, even if the growth rate were to be zero, the present value of the cashflows over the next three years would exceed the carrying amount.
The net book value of drug registrations, patents and licence costs can be broken down as follows:
2025
2024
£000's
£000's
Aivlosin®
11,653
12,655
Ecomectin®
360
500
Vaccines
11,649
7,001
Others
53
56
23,715
20,212
Aivlosin® is a highly effective antibiotic that treats a range of specific enteric (gut) and respiratory diseases in pigs and poultry, ensuring a rapid return to health. In addition to the welfare benefits, healthy animals gain weight faster, digest food more efficiently and get to market earlier which all bring economic benefit to the farmer. Substantial ongoing product development covering more formulations, species and diseases is expected to substantially further increase its revenue generating potential. The remaining useful life ranges between 7 and 20 years, where the shortest period relates to assets on the balance sheet which received regulatory approval a number of years ago and have been amortised over a number of years, and where the remaining useful life of 20 years relates to capitalised assets which have not yet received regulatory approval and whose amortisation has not yet commenced. Ecomectin® is an endectocide that controls worms, ticks, lice and mange in grazing stock and pigs. The remaining useful life is 2 years.
At 31 March 2025 intangible assets included £11,745,000 (2024: £7,173,000) of assets capitalised that had not commenced their useful life, of which approximately £75,000 (2024: £75,000) were Aivlosin® related products.
The impairment review for intangible assets relating to ongoing development activity, for which regulatory approval is expected to be received at a future date, is performed with reference to cash flow projections modelled in each development project's business case. The cash flows in these business cases reflect the expected economic life of the new product (a period of more than 5 years) and the variables captured include the costs to complete the development activity, the future product sale price, expected future market share, the rate of market penetration for new product releases and overall market size. The market size comprises a number of factors, including the total population of the target animal species, the replacement rate (which in the case of poultry is the length of time during which they are productive layers), the proportion of the species population prone to the diseases to which ECO's product is directed and the proportion of the population which is subject to vaccination. In determining these factors uses the expertise of own teams, particularly members of the R&D, marketing, sales and finance teams. Third-party data is reviewed to enhance the accuracy of the estimates used. For key development projects, independent external consultants are engaged to validate both technical progress and the overall market appetite for the new product.
Drug registrations and licences are amortised over their estimated useful lives of 10 to 20 years, which is the Directors' estimate of the time it would take to develop a new product allowing for the Group's patent protection and the exclusivity period which comes with certain registrations. All such costs are recorded in the Corporate/UK reporting segment.
The Group continuously reviews the status of its research and development activity, paying close attention to the likelihood of technical success and the commercial viability of development projects. In the year to March 2025 there were no indications that an impairment was necessary (2024: impairment of £234,000).
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
FOR THE YEAR ENDED 31 MARCH 2025
12. Property, plant and equipment
Group
Freehold land and buildings
Leasehold improvements
Plant and machinery
Fixtures, fittings and equipment
Motor vehicles
Total
£000's
£000's
£000's
£000's
£000's
£000's
Cost or valuation
At 31 March 2023
720
751
4,604
2,398
372
8,845
Additions
-
-
366
82
54
502
Disposals
(615)
-
(90)
(737)
(35)
(1,477)
Foreign exchange movements
(7)
-
(144)
(127)
(18)
(296)
At 31 March 2024
98
751
4,736
1,616
373
7,574
Additions
32
-
95
230
-
356
Disposals
-
-
(42)
(98)
-
(140)
Foreign exchange movements
(4)
-
(58)
(34)
(28)
(124)
At 31 March 2025
126
751
4,731
1,714
345
7,667
Depreciation
At 31 March 2023
(63)
(331)
(451)
(1,651)
(252)
(2,748)
Charge for the year
(26)
(129)
(453)
(333)
(17)
(958)
Disposals
69
-
90
737
35
931
Foreign exchange movements
1
-
2
-
-
3
At 31 March 2024
(19)
(460)
(812)
(1,247)
(234)
(2,772)
Charge for the year
(8)
(137)
(461)
(354)
(24)
(984)
Disposals
-
-
42
98
-
140
Foreign exchange movements
-
-
(13)
4
(4)
(13)
At 31 March 2025
(27)
(597)
(1,244)
(1,499)
(262)
(3,629)
Net book value
At 31 March 2025
99
154
3,487
215
83
4,038
At 31 March 2024
79
291
3,924
369
139
4,802
At 31 March 2023
657
420
4,153
747
120
6,097
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
FOR THE YEAR ENDED 31 MARCH 2025
12. Property, plant and equipment (continued)
Company
Freehold land and buildings
Fixtures, fittings and equipment
Total
£000's
£000's
£000's
Cost or valuation
At 31 March 2023
615
183
798
Additions
-
-
-
Disposals
(615)
(182)
(797)
At 31 March 2024
-
1
1
Additions
-
-
-
Disposals
-
-
-
At 31 March 2025
-
1
1
Depreciation
At 31 March 2023
(50)
(183)
(233)
Charge for the year
(19)
-
(19)
Disposals
69
182
251
At 31 March 2024
-
(1)
(1)
Charge for the year
-
-
-
Disposals
-
-
-
At 31 March 2025
-
(1)
(1)
Net book value
At 31 March 2025
-
-
-
At 31 March 2024
-
-
-
At 31 March 2023
565
-
565
13. Income tax recoverable and payable
Income tax recoverable
2025
2024
£000's
£000's
UK repayable tax credit in respect of R&D expenditure
1,143
2,743
Other overseas tax (payable)/receivable
-
(56)
1,143
2,687
Income tax payable
2025
2024
£000's
£000's
Overseas tax payable
(801)
(687)
(801)
(687)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
FOR THE YEAR ENDED 31 MARCH 2025
14. Right-of-use assets
Group
Property
Vehicles
Other
Total
£000's
£000's
£000's
£000's
Cost or valuation
At 31 March 2023
5,387
295
9
5,691
Additions
412
52
-
464
Disposals
(315)
-
(9)
(324)
Impairment
-
-
-
-
Foreign exchange movements
(238)
-
-
(238)
At 31 March 2024
5,246
347
-
5,593
Additions
430
65
-
495
Disposals
(132)
(83)
-
(215)
Impairment
-
-
-
-
Foreign exchange movements
(151)
-
-
(151)
At 31 March 2025
5,393
329
-
5,722
Depreciation
At 31 March 2023
(1,263)
(145)
(1)
(1,409)
Charge for the year
(620)
(63)
-
(683)
Disposals
187
-
1
188
Impairment
(52)
-
-
(52)
Foreign exchange movements
35
-
-
35
At 31 March 2024
(1,713)
(208)
-
(1,921)
Charge for the year
(610)
(71)
-
(681)
Disposals
132
68
-
200
Impairment
-
-
-
-
Foreign exchange movements
79
-
-
79
At 31 March 2025
(2,112)
(211)
-
(2,323)
Net book value
At 31 March 2025
3,281
118
-
3,399
At 31 March 2024
3,533
139
-
3,672
At 31 March 2023
4,124
150
8
4,282
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
FOR THE YEAR ENDED 31 MARCH 2025
14. Right of use assets (continued)
Company
Vehicles
Other
Total
£000's
£000's
£000's
Cost or valuation
At 31 March 2023
140
-
140
Additions
21
-
21
At 31 March 2024
161
-
161
At 31 March 2025
100
-
100
Depreciation
At 31 March 2023
(69)
-
(69)
Charge for the year
(33)
-
(33)
At 31 March 2024
(102)
-
(102)
Charge for the year
(32)
-
(32)
At 31 March 2025
(80)
-
(80)
Net book value
At 31 March 2025
20
-
20
At 31 March 2024
59
-
59
At 31 March 2023
71
-
71
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
FOR THE YEAR ENDED 31 MARCH 2025
15. Investments
Group
Investment in associate
Unlisted investments
Total
£000's
£000's
£000's
At 31 March 2023
243
9
252
Share of associate's result for the year
53
-
53
Foreign exchange differences
(37)
-
(37)
At 31 March 2024
259
9
268
Share of associate's result for the year
50
-
50
Foreign exchange differences
(2)
-
(2)
At 31 March 2025
307
9
316
Company
Unlisted investments (subsidiaries)
Total
£000's
£000's
Cost
At 31 March 2023
21,165
21,165
Additional investment
286
286
At 31 March 2024
21,451
21,451
Additional investment
239
239
At 31 March 2025
21,690
21,690
Impairment
At 31 March 2023
-
-
Impairment charge
-
-
At 31 March 2024
-
-
Impairment charge
-
-
At 31 March 2025
-
-
Net book value
At 31 March 2025
21,690
21,690
At 31 March 2024
21,451
21,451
At 31 March 2023
21,165
21,165
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
FOR THE YEAR ENDED 31 MARCH 2025
15. Investments (continued)
The Company holds more than 20% of the share capital of the following companies:
Subsidiary undertakings held by the Company
Company
Registered office address
Country of registration or incorporation
Class
Shares held %
Zhejiang ECO Biok Animal Health Products Limited
Zhongguan Industrial Area, Deqing, Zhejiang Province
Zhongguan Industrial Area, Deqing, Zhejiang Province
P. R. China
Ordinary
100
ECO Animal Health do Brasil Comercio de Produtos Veterinarios Ltda.
Rua Antonio Amstalden Nº 70, R Antonio Amstalden, Armazem III ALA 02, Capela, Vinhedo
Brazil
Ordinary
100
ECO Animal Health Japan Inc.
1-2-1, Hamamatsu-cho, Minato-Ku, Tokyo
Japan
Ordinary
100
ECO Animal Health USA Corp.
344 Nassau Street, Princeton, New Jersey, 08540
USA
Ordinary
100
Interpet LLC.
3775 Columbia Pike, Ellicott City, Maryland, 21043
USA
Ordinary
100
ECO Animal Health de Mexico, S de R.L. de C.V.
Av Techologico Sur 134-4, Unidad Habitacional Moderna, Queretaro, 76030
Mexico
Ordinary
100
ECO Animal Health de Argentina S.A.
Calle 4 E 43/44 N: 581 P.6 D:B La Plata, Buenos Aires
Argentina
Ordinary
100
ECO Animal Health Malaysia Sdn. Bhd.
10th Floor, Menara Hap Seng, No 1 & 3, Jalan P Ramlee, 50250 Kuala Lumpur
Malaysia
Ordinary
100
ECO Animal Health India (Private) Ltd
No 33/5, Second Floor, Mount Kailash Building, Meanee Avenue Road, Ulsoor Bangalore, Karnataka, 560042
India
Ordinary
100
ECO Animal Health Europe Ltd
6th Floor, South Bank House, Barrow Street, Dublin, D18 TR29
Republic of Ireland
Ordinary
100
*The Group's control over its China based subsidiary Zhejiang ECO Biok Animal Health Products Limited is achieved via a joint holding of 51% of the entity's ordinary share capital between the Company (3%) and its UK based trading subsidiary ECO Animal Health Limited (48%).
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
FOR THE YEAR ENDED 31 MARCH 2025
15. Investments (continued)
Subsidiary undertakings held by the Group (continued)
The principal activity of these undertakings for the last relevant financial year was as follows:
Company name
Principal activity
ECO Animal Health Limited
Distribution of animal medicines
ECO Animal Health Southern Africa (Pty) Limited
Non-trading
Zhejiang ECO Biok Animal Health Products Limited
Manufacture of animal medicines
Shanghai ECO Biok Veterinary Drug Sale Company Ltd.
Distribution of animal medicines
Zhejiang ECO Animal Health Limited
Procurement of raw materials
ECO Animal Health do Brasil Comercio de Produtos Veterinarios Ltda
Distribution of animal medicines
ECO Animal Health Japan Inc.
Distribution of animal medicines
ECO Animal Health USA Corp.
Distribution of animal medicines
Interpet LLC
Non-trading
ECO Animal Health de Mexico, S. de R. L. de C. V.
Distribution of animal medicines
ECO Animal Health de Argentina S.A.
Non-trading
ECO Animal Health Malaysia Sdn. Bhd
Non-trading
ECO Animal Health India (Private) Ltd
Non-trading
ECO Animal Health Europe Ltd
Distribution of animal medicines
During the year the Group established an Employee Share Ownership Trust (the 'ESOT'). The assets, liabilities and returns of the ESOT are consolidated within the results of the ESOT's sponsoring company, Eco Animal Health Group plc.
The address of the ESOT is 26 New St, St Helier, Jersey JE2 3RA, Jersey.
Zhejiang ECO Biok Animal Health Products Limited, Zhejiang ECO Animal Health Limited and ECO Animal Health do Brasil Comercio de Produtos Veterinarios Ltda all have 31 December year ends. The Group receives management accounts for the three months to 31 March for these subsidiaries for use in preparing the consolidated financial statements.
Interpet LLC has been excluded from consolidation as it holds no assets or liabilities and has ceased trading.
The following trading subsidiaries have no requirement for audit under local legislation:
ECO Animal Health do Brasil Comercio de Produtos Veterinarios Ltda.
ECO Animal Health Japan Inc.
ECO Animal Health USA Corp.
ECO Animal Health de Mexico, S. de R. L. de C. V.
ECO Animal Health Group plc has given statutory guarantees against all the outstanding liabilities of ECO Animal Health Ltd, thereby allowing its subsidiary to be exempt from the annual audit requirement under Section 479A of the Companies Act, for the year ended 31 March 2025.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
FOR THE YEAR ENDED 31 MARCH 2025
15. Investments (continued)
Non-controlling interests
Zhejiang ECO Biok Animal Health Products Limited (Zhejiang ECO Biok) and Shanghai ECO Biok Veterinary Drug Sale Company Limited (Shanghai ECO Biok), both 51% owned subsidiaries of the Group, have material non-controlling interests (NCI). Summarised financial information in relation to these two subsidiaries is presented below together with amounts attributable to NCI.
Please note that as Shanghai ECO Biok is a 100% owned subsidiary of Zhejiang ECO Biok, the summarised results below are consolidated at Zhejiang ECO Biok level, before wider Group eliminations.
Summarised statement of comprehensive income
2025
2024
For the year ended 31 March
£000's
£000's
Revenue
19,523
21,599
Cost of sales
(12,324)
(13,322)
Gross profit
7,199
8,277
Administrative expenses
(4,517)
(5,394)
Operating profit/(loss)
2,682
2,883
Other income
109
32
Finance income
(143)
(142)
Profit before tax
2,648
2,773
Tax expense
(713)
(814)
Profit after tax
1,935
1,959
Profit allocated to NCI
948
960
Other comprehensive (loss)/income allocated to NCI
(307)
(738)
Summarised balance sheet
2025
2024
As at 31 March
£000's
£000's
Assets:
Property, plant and equipment
440
570
Right-of-use assets
2,572
3,002
Deferred tax assets
184
189
Inventories
2,875
3,963
Trade and other receivables
5,053
4,528
Cash and cash equivalents
10,951
11,948
22,075
24,200
Liabilities:
Trade and other payables
2,126
2,873
Contract liabilities
705
3
Lease liabilities - short term
286
255
Lease liabilities - long term
2,673
3,050
5,790
6,181
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
FOR THE YEAR ENDED 31 MARCH 2025
15. Investments (continued)
Summarised cash flows
2025
2024
For the year ended 31 March
£000's
£000's
Cash flows from operating activities
2,058
4,357
Cash flows from investing activities
(74)
(75)
Cash flows from financing activities
(2,622)
(6,221)
Foreign exchange movements
(359)
(989)
Net increase/(decrease) in cash and cash equivalents
(997)
(2,928)
Joint operations
The Group also holds (by means of its ownership of ECO Animal Health USA Corp.), a 50% interest in Pharmgate Animal Health LLC, which is resident in the USA. Pharmgate Animal Health LLC distributes the Group's products in the USA.
The Group also holds (by means of its ownership of ECO Animal Health Ltd) a 50% interest in Pharmgate Animal Health Canada Inc, which distributes its products into Canada.
Both Pharmgate Animal Health LLC and Pharmgate Animal Health Canada Inc. have accounting years which end on 31 December.
The Group's holdings in each of the joint operations' share capital is given in the table below:
Pharmgate Animal Health Canada Inc
Holding
Shares
Holding
(shares)
in issue
%
Common shares
100
200
50
Class A shares
100
100
100
Class B shares
-
100
-
Pharmgate Animal Health USA LLC
Holding
Shares
Holding
(shares)
in issue
%
Common shares
100
200
50
Class A shares
100
100
100
Class B shares
-
100
-
ECO-Pharm Limited
Holding
Shares
Holding
(shares)
in issue
%
Common shares
25,000
50,000
50
Class A shares
1
1
100
Class B shares
-
1
-
In the case of Pharmgate Animal Health Canada Inc and Pharmgate Animal Health USA LLC, A shares carry the rights to dividends payable out of profits attributable to the Group. These are made up of profits made by products supplied by the ECO Group plus 50% of any profit relating to new products developed jointly by the partners to the joint operation.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
FOR THE YEAR ENDED 31 MARCH 2025
15. Investments (continued)
The following amounts included in the Group's financial statements are related to its interest in these joint operations.
Pharmgate Animal Health LLC
Pharmgate Animal Health Canada Inc
2025
2024
2025
2024
£000's
£000's
£000's
£000's
Non-current assets
-
-
-
-
Current assets
2,292
2,012
418
473
Current liabilities
(2,265)
(1,984)
(418)
(473)
Sales
17,366
14,912
4,047
3,568
Profit after tax
-
-
-
-
Associated company
The Group also holds (by means of its ownership of ECO Animal Health Japan Inc.) a 47.62% interest in EcoPharma.com which is resident in Japan. This company distributes animal health products and other general merchandise within Japan.
ECO Animal Health Japan Inc's holding in EcoPharma.com is 10,000,000 shares out of a total of 21,000,000 shares.
The following amounts included in the Group's financial statements are related to its interests in this associated company.
2025
2024
£000's
£000's
Investments (share of net assets)
At 1 April
259
243
Share of results for the year
50
53
Foreign exchange movement
(2)
(37)
At 31 March
307
259
2025
2024
Summarised financial information
£000's
£000's
At 31 March
Current assets
920
813
Non-current assets
90
71
Current liabilities
(282)
(239)
Non-current liabilities
(83)
(101)
Net assets (100%)
645
544
Group share of net assets (47.62%)
307
259
Year ended 31 March
Revenue
2,124
2,106
Net profit
105
110
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
FOR THE YEAR ENDED 31 MARCH 2025
16. Inventories
Group
Company
2025
2024
2025
2024
£000's
£000's
£000's
£000's
Raw materials and consumables
6,542
9,039
-
-
Finished goods and goods for resale
3,832
5,425
-
-
Work in progress
4,179
2,491
-
-
14,553
16,955
-
-
The above total includes the provision of inventory amounting to £187,000 (2024: £631,000).
£75,000 of stock was written off in the year ended 31 March 2025 (2024 £nil). Inventory provisions totalling £439,000
were released in this period (2024 £nil).
17. Trade and other receivables
Group
Company
2025
2024
2025
2024
£000's
£000's
£000's
£000's
Non-current:
Amounts owed by group undertakings
-
-
48,937
51,078
The inter-company debt is due on demand, however the Company has classified the receivable as a non-current asset as it does not expect to realise the asset within 12 months after the reporting period.
Group
Company
2025
2024
2025
2024
£000's
£000's
£000's
£000's
Current:
Trade receivables
25,435
29,835
-
-
Other receivables
2,217
1,816
1,393
1,444
Prepayments and accrued income
864
524
271
254
28,516
32,175
1,664
1,698
The ageing analysis of these trade receivables is as follows:
Trade receivables
ECL rate
ECL allowance
Net of impairment
£000's
%
£000's
£000's
Current
18,572
2.09%
388
18,184
Up to 3 months past due
2,581
11.00%
284
2,297
3 to 6 months past due
2,592
5.75%
149
2,443
Over 6 months past due
3,587
30.00%
1,076
2,511
27,332
1,897
25,435
Group 2024
Trade receivables
ECL rate
ECL allowance
Net of impairment
£000's
%
£000's
£000's
Current
24,458
0.66%
161
24,297
Up to 3 months past due
4,115
4.41%
181
3,934
3 to 6 months past due
1,137
9.11%
104
1,033
Over 6 months past due
1,564
63.49%
993
571
31,274
1,439
29,835
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
FOR THE YEAR ENDED 31 MARCH 2025
17. Trade and other receivables (continued)
The Group measures its trade receivables at amortised cost and estimates the allowance for expected credit loss ("ECL") using a provision matrix based on the Group's historical credit loss experience or market rates. The market rates are then adjusted for factors that are specific to the debtors, general economic conditions and an assessment of both the current as well as the forecast conditions.
This approach enables the Group to determine unbiased and probability-weighted estimates of credit losses for the lifetime of those trade receivables as required by IFRS 9.
The allowance for ECL in FY25 makes up 6.9% of all trade receivable balances while in FY24, the allowance made up 4.3% of total trade receivable balances. The allowance for ECL in FY25 makes up 21.7% of all overdue balances.
The increase in the provision is driven by:
- Worsening age profiles of outstanding trade debtors;
- Circumstances affecting certain of the Group's customer requiring additional allowance.
Movement on the Group provision for impairment of trade receivables is as follows:
Group
2025
2024
£000's
£000's
Balance at 1 April
1,439
845
Additional provision made
753
837
(Recovered) in the year
(268)
(175)
Written off in the year
-
(59)
Other
(27)
(9)
Balance at 31 March
1,897
1,439
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
FOR THE YEAR ENDED 31 MARCH 2025
18. Deferred tax
Group
Deferred tax assets and liabilities are attributable to the following:
2024
2023
£000's
£000's
Trade related temporary differences
(3,527)
(3,875)
Freehold property
-
-
Investment property
-
-
Plant and equipment
4
(96)
Pension scheme
(58)
(58)
Deferred tax on share options
97
128
Tax losses carried forward
2,622
2,622
Total deferred tax (liabilities)
(862)
(1,279)
Overseas deferred tax assets
1,074
1,437
Total deferred tax assets
1,074
1,437
Sum of assets minus liabilities
212
158
The movement on the deferred tax account can be summarised as follows:
Deferred tax
Trade related temporary differences
Tax losses carried forward
Property
Plant and machinery
Pension scheme
Shares
Overseas temporary differences
Overseas tax losses
Total
£000's
£000's
£000's
£000's
£000's
£000's
£000's
£000's
£000's
(Charge) / credit for the year through income statement
(790)
-
(26)
-
(13)
72
141
215
(401)
At 31 March 2024
(3,875)
2,622
-
(96)
(58)
128
396
1,041
158
(Charge) for the year through income statement
348
-
-
100
-
(31)
(396)
33
54
At 31 March 2025
(3,527)
2,622
-
4
(58)
97
-
1,074
212
Trade related temporary differences relate predominantly to research and development tax deductions claimed in advance of expense recognition in the income statement, carried forward trading losses and a provision for unrealised profit arising on consolidation. The tax losses carried forward are not expected to expire under current legislation.
Any future dividend received from the Chinese subsidiary Zhejiang ECO Biok Animal Health Products Limited will be subject to a 5% withholding tax. The deferred tax liability in respect of this has not been recognised.
Company
Property
Pension scheme
Shares
Total
2025
2025
2025
2025
£000's
£000's
£000's
£000's
At 1 April 2023
26
(45)
31
12
Credit/(charge) for the year through income statement
(26)
(13)
27
(12)
At 1 April 2024
-
(58)
58
-
Credit/(charge) for the year through income statement
-
-
(9)
(9)
At 31 March 2025
-
(58)
49
(9)
At the year ended 31 March 2025 the Group has unused unrecognised overseas tax losses amounting to £332,000 (2024: £547,000), and unused unrecognised UK tax losses amounting to £12,315,000 (2024: £6,311,000). These tax losses are not expected to expire.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
FOR THE YEAR ENDED 31 MARCH 2025
19. Cash and cash equivalents
Cash and cash equivalents comprise cash and short-term deposits held by the Group net of amounts outstanding on bank overdraft. The carrying amount of these assets is not significantly different to their fair value.
Group
Company
2025
2024
2025
2024
£000's
£000's
£000's
£000's
Cash and cash equivalents
25,006
22,374
1,515
363
Cash and cash equivalents presented in the statement of cash flows
25,006
22,374
1,515
363
Balances drawn on the bank overdraft facility are repayable on demand and form an integral part of the cash management of the Group and Company. In the statement of cash flows, the Group and the Company have presented cash and cash equivalents net of balances outstanding on bank overdrafts. Amounts drawn and repaid on the overdraft facility are therefore considered as part of changes in cash and cash equivalents and are not presented as financing cash flows.
Cash and short-term deposits held in China are subject to local exchange control regulations. These regulations provide for restrictions on exporting capital from those countries, other than through normal dividends. The carrying amount of the assets included within the consolidated financial statements to which these restrictions apply is £14.9m (2024: £14.3m).
Significant non-cash transactions from investing activities are as follows:
Group
Company
2025
2024
2025
2024
£000's
£000's
£000's
£000's
Acquisition of property, plant and equipment by means of leases or not yet paid at year end
495
464
-
21
Acquisition of intangible assets not yet paid at year end
1,160
272
-
-
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
FOR THE YEAR ENDED 31 MARCH 2025
20. Trade and other payables
Group
Company
2025
2024
2025
2024
£000's
£000's
£000's
£000's
Trade payables
9,794
10,119
149
75
Contract liabilities
706
3
-
-
Other payables
1,030
1,205
141
167
Accruals and deferred income
3,541
6,026
383
562
15,071
17,353
673
804
21. Borrowings
Group
Company
2025
2024
2025
2024
£000's
£000's
£000's
£000's
Cash and cash equivalents
25,006
22,374
1,515
363
Lease liabilities
(3,785)
(4,025)
(18)
(62)
Net cash
21,221
18,349
1,497
301
The Group has an overdraft facility in certain currencies in respect of a pool of bank accounts held with NatWest Bank plc.
The interest rate for all currency overdrafts is 1.8% over the relevant currency base rate and the borrowings are secured by two debentures held over the assets of the Group. Any drawdown of this facility is repayable on demand. The Company and ECO Animal Health Limited have each given a guarantee to the Group's bankers for the overdraft facility. The facility has a gross and net limit of £5,000,000, which may be borrowed and repaid at will.
At 31 March 2025, the undrawn facility was £5,000,000 (2023: £5,000,000).
At 31 March 2025, the Group has an undrawn revolving credit facility £10,000,000 (2023: £10,000,000) with Natwest. This facility is interest bearing and can be drawn by the Group on demand, The facility expires on 30 June 2026.
Reconciliation of lease liabilities
Group
Company
2025
2024
2025
2024
£000's
£000's
£000's
£000's
Opening lease liabilities
(4,025)
(4,480)
(63)
(75)
New lease liabilities
360
(416)
-
(22)
Repayment
890
884
42
45
Lease liabilities interest
(252)
(291)
(4)
(11)
Disposal
25
92
7
-
Foreign exchange
(783)
186
-
-
Closing lease liabilities
(3,785)
(4,025)
(18)
(63)
Current lease liabilities
(621)
(646)
(15)
(50)
Non-current lease liabilities
(3,164)
(3,379)
(3)
(13)
The Group leases a number of properties and motor vehicles in the jurisdictions it operates in. At 31 March 2025 there were no termination or extension options on leases.
The Group expensed £70,000 for the year ended 31 March 2025 (2024: £71,000) for short-term leases.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
FOR THE YEAR ENDED 31 MARCH 2025
21. Borrowings (continued)
Group leases maturity
At 31 March 2025 the Group held the following number of leases in each of the maturity categories below.
At 31 March 2025
Property
Vehicle
Other
Total
Number
Number
Number
Number
Up to 1 year
9
2
1
12
Between 1 - 5 years
6
6
2
14
Over 5 years
1
-
2
3
Total number of leases
16
8
5
29
Average remaining lease term (in years)
1.7
1.6
3.2
1.9
At 31 March 2024
Property
Vehicle
Other
Total
Number
Number
Number
Number
Up to 1 year
4
1
2
7
Between 1 - 5 years
8
9
3
20
Over 5 years
2
-
-
2
Total number of leases
14
10
5
29
Average remaining lease term (in years)
2.5
1.8
1.5
2.1
Amounts payable under lease arrangements for the Group
The undiscounted contractual cash flows payable under the existing lease arrangements at 31 March are analysed into the following maturity categories.
Group
2025
2024
£000's
£000's
Up to 1 year
1,036
1,135
Between 1 - 5 years
2,123
2,055
Over 5 years
748
1,085
Total
3,907
4,275
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
FOR THE YEAR ENDED 31 MARCH 2025
22. Provisions
Litigation
Overseas tax
Customer goodwill
Total
£000's
£000's
£000's
£000's
At 31 March 2023
456
4,598
124
5,178
Charge for year through income statement
-
507
208
715
Foreign Exchange
-
(34)
-
(34)
At 31 March 2024
456
5,071
332
5,859
Charge for year through income statement
-
216
(332)
(116)
Foreign Exchange
-
(779)
-
(779)
At 31 March 2025
456
4,508
-
4,964
Provisions include an amount of £456,000 in respect of personnel related litigation matters. Management has assessed the range of possible outcomes to these claims and the provision made represents a best estimate, and is mid-range of the possible outcomes, having taken legal advice. ECO management is vigorously defending the claims and the timing of any settlement is uncertain due to the varying nature of the claims and the availability of the relevant courts if required.
Provisions also include an amount of £4,508,000 in respect of overseas tax liabilities. Certain aspects of a sales tax related to imported products in a Group subsidiary might have been applicable. The subsidiary has been importing an increasing volume of product into this country in recent years. This matter remains uncertain and subject to further review of the tax legislation and case law. No tax payment has yet been determined. However, a substantial tax settlement may be required in due course and a provision has been recognised alongside a corresponding deferred tax asset.
23. Pension and other post-retirement benefit commitments
Defined contribution pension scheme
The Group operates defined contribution pension schemes. The assets of the schemes are held separately from the Group and independently administered by insurance companies. The pension cost charge represents contributions payable to the funds in the year and amounted to £56,269 (2024: £108,491).
Defined benefit pension scheme
The Group operates a defined benefit pension scheme in the UK for a number of ex-employees which is closed to new members. A full actuarial valuation was carried out at 6 April 2022 and updated on 31 March 2025 for IAS 19 purposes by a qualified independent actuary. The major assumptions used by the actuary were:
31 March 2025
31 March 2024
Discount rate
5.25%
4.75%
RPI inflation
n/a
3.45%
Deferred revaluation rate CPI max 5% p.a.
n/a
2.45%
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
FOR THE YEAR ENDED 31 MARCH 2025
23. Pension and other post-retirement benefit commitments (continued)
Mortality rates
No pre-retirement mortality is assumed (2024: none). Post retirement mortality is based on 100% of the SAPS 'S4' normal tables, based on the members' year of birth, improving in line with CMI 2023 projections with a 1.00% long-term trend rate (2024: 1.00%).
Under these mortality assumptions, the expected future lifetime for a member retiring at age 65 at the year-end would be 20.9 years for males (2024: 21.0 years) and 23.4 years for females (2024: 23.2 years). For members retiring in 20 years' time, the expectation of life would be 21.9 years for males (2024: 22.0 years) and 24.6 years for females (2024: 24.4 years).
The weighted average term of the liabilities is 5 years (2024: 7 years).
The scheme is exposed to a number of risks including:
§ Interest rate risk: Movements in the discount rate used could affect the present value of the defined benefit pension obligations.
§ Longevity risk: Changes in the estimated mortality rates of former employees could affect the present value of the defined benefit pension obligations.
§ Investment risk: Variations in the actual return from the scheme's investments could affect the scheme's ability to meet its future pension obligations
2025
2024
£000's
£000's
Assets at start of year
1,202
1,135
Defined benefit obligation at start of year
(969)
(954)
Net asset/(liability) at 1 April
233
181
Return on assets
54
55
Interest cost
(43)
(46)
11
9
Gain/(loss) on return on plan assets in excess of interest income
77
40
Gain/(loss) on demographic assumptions
23
4
Gain/(loss) on financial assumptions
26
(1)
Gain/(loss) on experience adjustment
(140)
-
Statement of other comprehensive income
(14)
43
Employer contributions (gross)
-
-
Net asset at 31 March
230
233
Actual assets at end of year
1,213
1,202
Actual defined benefit obligation at end of year
(983)
(969)
Gain/(loss) on changes in assumptions was £23,000 gain (2024: £nil) relating to changes in demographic assumptions and a gain of £26,000 (2024: £1,000 loss) relating to changes in financial assumptions.
The pension fund assets (principally made up of annuities for the benefit of active pensioners) are all held within a policy managed by an insurance company regulated by the Financial Conduct Authority of the United Kingdom and the United Kingdom Pensions Regulator. By law, the trustees are required to act in the best interests of participants to the schemes. Responsibility for governance of the plans - including investment decisions and contribution schedules - lies with trustees.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
FOR THE YEAR ENDED 31 MARCH 2025
23. Pension and other post-retirement benefit commitments (continued)
Reconciliation of changes in the asset value during the year
2025
2024
£000's
£000's
Fair value of assets at 1 April
1,202
1,135
Return on assets
54
55
Gain/(loss) on asset return
77
40
Employer contributions (gross)
-
-
(Decrease)/increase in secured pensioners' value due to scheme experience
-
(28)
Benefits paid
(120)
-
Fair value of assets at 31 March
1,213
1,202
Reconciliation of changes in the liability value during the year
Defined benefit obligation at 1 April
969
954
Interest cost
43
46
(Loss)/gain on demographic assumptions
(26)
1
(Loss)/gain on financial assumptions
(23)
(4)
(Loss)/gain on experience adjustment
140
-
(Decrease)/increase in secured pensioners' value due to scheme experience
-
(28)
Benefits paid
(120)
-
Defined benefit obligation at 31 March
983
969
No annual contribution to be paid by the employer is expected (2024: £nil).
Year ended 31 March
2025
2024
2,023
2,022
2,021
£000's
£000's
£000's
£000's
£000's
Fair value of plan assets
1,213
1,202
1,135
1,648
1,795
Present value of defined benefit obligation
983
969
954
1,569
1,799
(Deficit)/surplus in plan
230
233
181
79
(4)
Experience (losses)/gains on plan liabilities
77
40
17
(5)
-
Plan assets
2025
2024
£000's
£000's
Assets under management
341
345
Insured annuities
872
857
Total
1,213
1,202
Assets under management composition
2025
2024
Corporate bonds
43.6%
42.6%
Overseas equities
37.7%
37.1%
UK equities
10.4%
12.5%
Property
7.3%
7.0%
Cash
1.0%
0.8%
100.0%
100.0%
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
FOR THE YEAR ENDED 31 MARCH 2025
23. Pension and other post-retirement benefit commitments (continued)
Defined benefit obligation - sensitivity analysis
The following amounts are the effect (on the defined benefit obligation) of reasonably possible changes to the key actuarial assumptions, as required by IAS 19.
Reasonably possible change
(Decrease)/increase in defined benefit obligation
2025
2024
Actuarial assumptions
£000's
£000's
£000's
£000's
Discount rate
+/- 0.1%
(55)
61
(56)
64
Members' life expectancy
+/- 1 year
(72)
72
(73)
73
The above sensitivity analyses are based on a change in an assumption while holding all other assumptions constant. In practice, this is unlikely to occur, and changes in some of the assumptions may be correlated. When calculating the sensitivity of the defined benefit obligation to significant actuarial assumptions the same method (present value of the defined benefit obligation calculated with the projected unit credit method at the end of the reporting period) has been applied as when calculating the defined benefit liability recognised in the statement of financial position.
The methods and types of assumptions used in preparing the sensitivity analysis did not change compared to the prior period.
The Company has given a floating charge dated 1 December 2006 over all of its assets to the trustees of the pension fund to secure all present and future obligations and liabilities to the pension fund.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
FOR THE YEAR ENDED 31 MARCH 2025
24. Share-based payments
The expense recognised for share-based payments made during the year is shown in the following table:
Group
Company
2025
2024
2025
2024
£000's
£000's
£000's
£000's
Total expense arising from equity-settled share-based payments transactions
401
413
162
127
The share-based payment plans are described below:
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:
Options
Options
2025
2025
2024
2024
000's
WAEP (£)
000's
WAEP (£)
Outstanding at 1 April
3,560
2.18
2,777
2.84
Granted during the year - Employee scheme
128
0.12
485
0.95
Granted during the year - LTIPs
535
0.05
418
0.05
Granted during the year - Deferred bonus
143
0.05
45
0.05
Granted during the year - Restricted stock units
182
0.05
-
-
Expired / cancelled during year
(1,368)
3.54
(142)
4.47
Exercised during year
(15)
0.05
(23)
0.05
Outstanding at 31 March
3,165
0.95
3,560
2.18
Granted < 3 years ago and not vested
(2,530)
(1,559)
Exercisable at 31 March
635
3.76
2,001
3.62
635,000 options were exercisable at 31 March 2025 (2024: 2,001,493). The WAEP of exercisable options at 31 March 2025 was 376.0p (2024: 362.0p).
The average share price during the year was 89.1p (2024: 106.9p).
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 2025 had a weighted average exercise price of £0.95 (2024: £2.18) and a weighted average remaining contractual life of 7.6 years (2024: 5.4 years).
ECO Animal Health Group plc Executive Share Option Scheme
In accordance with the Executive Share Option Scheme, approved and unapproved share options are granted to Directors and employees who devote at least 25 hours per week to the performance of duties or employment with the Group.
127,000 share options have been granted in the year under this scheme (2024: 484,900). In addition 535,260 options have been issued under the Group's Long Term Incentive Plan (2024: 417,704), 182,225 options have been issued under the Group's new Restricted Stock Units scheme (2024: nil) and 143,452 under the Group's deferred bonus arrangements (2024: 44,562).
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
FOR THE YEAR ENDED 31 MARCH 2025
24. Share-based payments (continued)
The exercise price of the options is equal to the market price of the shares at the date of grant. The options vest three years from the date of grant and if the option holder ceases to be a Director or employee of the Company due to injury, disability, redundancy or retirement on reaching pensionable age or any other age at which they are bound to retire at in accordance with the terms of their contract of employment, the option may be exercised within a period of six months after the option holders so ceasing, although the Board may, at its discretion, extend this period by up to 36 months after the date of cessation.
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 respectively.
An analysis of the expiry dates of the outstanding options at 31 March 2025 is given below:
Date of grant
Unapproved
Approved
Exercise price
Expiry date
26 August 2015
21,350
£ 2.650
26 August 2025
19 January 2016
10,200
£ 3.150
19 January 2026
17 February 2016
19,600
£ 3.125
17 February 2026
01 March 2016
9,600
£ 3.125
01 March 2026
12 September 2016
16,200
£ 4.325
12 September 2026
15 September 2016
2,000
£ 4.350
15 September 2026
21 September 2017
35,650
£ 6.200
21 September 2027
12 April 2018
3,900
£ 5.450
12 April 2028
23 October 2018
53,100
£ 3.800
23 October 2028
23 October 2018
205,900
£ 3.800
23 October 2025
19 December 2018
7,800
£ 3.800
19 December 2028
19 December 2018
2,200
£ 3.800
19 December 2025
28 April 2021
129,981
£ 3.495
28 April 2031
28 April 2021
117,519
£ 3.495
28 April 2028
12 December 2022
45,606
£ 0.050
12 December 2032
27 February 2023
550,953
£ 0.050
27 February 2033
25 April 2023
269,800
£ 1.011
24 April 2033
22 December 2023
44,562
£ 0.050
22 December 2033
22 March 2024
417,704
£ 0.050
22 March 2034
22 March 2024
213,600
£ 0.880
22 March 2034
28 August 2024
143,452
£ 0.050
28 August 2034
27 October 2024
535,260
£ 0.050
27 October 2034
27 October 2024
102,725
£ 0.050
27 October 2034
26 March 2025
79,500
£ 0.050
26 March 2035
26 March 2025
127,100
£ 0.585
26 March 2035
2,245,381
919,881
The market price of the shares at 31 March 2025 was 53.5p (2024: 85.5p) with a range in the year of 58.0p to 131.5p (2024: 84.0p to 122.5p).
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
FOR THE YEAR ENDED 31 MARCH 2025
24. Share-based payments (continued)
The Company uses a Black-Scholes model to value share-based payments for options with service conditions and/or non-market performance conditions and the following table lists the inputs to this model for the last five years.
2025
2024
2023
2022
2021
Vesting period (years)
3 - 4
3 - 4
3 - 4
3 - 4
n/a
Option expiry (years)
10
10
10
7 - 10
Dividends expected on the shares
0.00%
0.00%
0.00%
1.00%
Risk free rate (average)
4.00% - 4.13%
3.74% - 4.13%
3.20% - 3.75%
0.18%
Volatility of share price
40%
40%
40%
40%
Weighted average fair value (pence)
21.5 -103.3
47.0 -106.2
84.0 -108.0
101.0 - 316.0
The risk-free rate has been based on the yield from UK Government Treasury coupons. The volatility of the share price was estimated based on standard deviation calculations on the historic share price.
Long Term Incentive Plan
Under this plan share options may be granted to certain Executive Directors and members of the Company's Executive Leadership Team. The share options awarded under the LTIP are subject to an exercise price of £0.05 per share and performance conditions being achieved that have been set by the Remuneration Committee and relate to total shareholder return (TSR) and research and development targets.
Subject to the performance conditions being met, the share options will vest after the end of a three-year vesting period. The proportion of share options relating to each performance condition is: (i) 75% in relation to the TSR conditions; and (ii) 25% in relation to the R&D targets.
The TSR conditions mean that the share options subject to these conditions will vest subject to the following: (i) 25% of the share options will vest if the annual compound TSR over the performance period equals 7.5%; (ii) 50% of the share options will vest if the annual compound TSR over the performance period equals 10%; and (iii) 100% of the share options will vest if the annual compound TSR over the performance period equals 20%.
The R&D targets mean that the share options subject to these targets will vest subject to the following: (i) 25% of the shares options will vest if specified R&D targets agreed between Executive management and the Remuneration Committee during the performance period are achieved; and (ii) 100% of the shares options will vest if specified R&D targets agreed between Executive management and the Remuneration Committee during the performance period are achieved. The R&D targets comprise a range of identifiable and quantifiable criteria relating to the introduction of new R&D projects, the progress of existing R&D projects to later stages of the development cycle, the submission of projects for approval to relevant regulators and for the approval of projects by the relevant regulators.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
FOR THE YEAR ENDED 31 MARCH 2025
25. Share capital
2025
2024
£000's
£000's
Authorised
68,100,000 ordinary shares of 5p each
3,405
3,405
10,790 deferred ordinary shares of 10p each
1
1
32,334 convertible preference shares of £1 each
32
32
3,438
3,438
Allotted, called up and fully paid
67,759,671 (2024: 67,744,889) ordinary shares of 5p each
3,388
3,387
During the year 14,782 shares were issued (2024: 22,973 shares were issued). The options were issued following the exercise of share options. The exercise price was 5 pence per option and consideration of £1,000 was received.
All share issued are non-redeemable and rank equally in terms of voting rights (one vote per share); rights to participate in all approved dividend distribution for that class of shares; and right to participate in any capital distribution on winding up.
The shares in the original or any increased capital of the Company may be issued with such preferred, deferred or other special rights or restrictions, whether in regard to dividend, voting, return of capital as the Company may from time to time determine.
26. Non-controlling (minority) interests
2025
2024
£000's
£000's
Balance as at 1 April
9,690
12,281
Share of subsidiary's profit/(loss) for the year
948
960
Share of foreign exchange gain/(loss) on net investment
(307)
(738)
641
222
Share of dividend paid by subsidiary
(1,065)
(2,813)
Balance as at 31 March
9,266
9,690
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
FOR THE YEAR ENDED 31 MARCH 2025
27. Other reserves
The Group held a revaluation reserve of £271,000 as at 31 March 2025 (2024: £271,000) relating to the acquisition of ECO Animal Health Japan Inc in 2009 and corresponding to the carrying value of its assets.
The Group and Company held a capital redemption reserve of £106,000 as at 31 March 2025 (2024: £106,000).
The Group held a Treasury Shares reserve of £(204,000) as at 31 March 2025 (2024: £nil).
During the year the Group established an Employee Share Ownership Trust (the 'ESOT'). The assets, liabilities and returns of the ESOT are consolidated within the results of the ESOT's sponsoring company, Eco Animal Health Group plc.
During the year the ESOT acquired shares in Eco Animal Health Group plc. The shares held by the ESOT are treated as treasury shares in the accounts of Eco Animal Health Group plc, with a debit to the Treasury Shares reserve (see note 15).
Included in the Group's foreign exchange reserve are the following exchange movements on consolidation of the subsidiaries and joint operations listed below:
At 31 March 2024
Movement in the year
At 31 March 2025
£000's
£000's
£000's
In respect of:
Zhejiang ECO Biok Animal Health Products Limited
331
(320)
11
Zhejiang ECO Animal Health Limited
115
(136)
(21)
ECO Animal Health do Brasil Comercio de Produtos Veterinarios Ltda
215
468
683
ECO Animal Health Japan Inc.
(184)
(5)
(189)
ECO Animal Health USA Corp.
(15)
(33)
(48)
ECO Animal Health de Mexico, S. de R. L. de C. V.
370
(15)
355
ECO South Africa
(49)
-
(49)
Pharmgate LLC
5
-
5
Foreign exchange reserve movements charged to consolidated statement of comprehensive income
788
(41)
747
28. Directors' emoluments
2025
2024
£000's
£000's
Emoluments for qualifying services
986
1,211
Company pension contributions to money purchase schemes
31
25
Share-based payments
108
108
Benefits in kind
22
13
1,147
1,357
During the year no Directors exercised share options (2024: none) realising a gain of £10,000 (2024: £nil).
The highest paid Director received £498,000 (2024: £619,000) including £33,000 (2024: £33,000) of share-based payments and £nil (2024: £nil) of pension contributions.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
FOR THE YEAR ENDED 31 MARCH 2025
29. Employees
Number of employees
The average number of employees (including Directors) during the year was:
2025
2024
Number
Number
Directors
5
5
Production and development
89
91
Administration
43
48
Sales
87
83
224
227
Employment costs (including amounts capitalised)
2025
2024
£000's
£000's
Wages and salaries
12,354
14,393
Share-based payments
401
413
Social security costs
1,997
1,558
Other pension costs
302
431
15,054
16,795
30. Related party transactions
Dividends paid to related parties
During the year Mr P Lawrence (a significant shareholder) and his family received no dividends (2024: £nil).
The other Directors and their families received dividends to the value of £nil (2024: £nil).
Interest and management charges from parent to the other Group companies
During the year the Company made management charges on an arm's length basis to ECO Animal Health Limited amounting to £1,230,000 (2024: £603,786) and charged interest of £1,100,000 (2024: £1,707,579) to the subsidiary company. Both of these transactions were made through the inter-company account and were eliminated on consolidation.
During the year Zhejiang ECO Animal Health Ltd paid dividends to ECO Animal Health Ltd of £1,860,759 (RMB 17,118,983).
During the year Zhejiang ECO Biok Animal Health Products Limited paid dividends of £85,217 (RMB 784,000) to ECO Animal Health Group plc (2024: £255,029) and £1,023,478 (RMB 9,416,000) to ECO Animal Health Limited (2024: £2,702,641).
During the year ECO Animal Health do Brasil Comercio de Produtos Veterinarios Ltda paid dividends to ECO Animal Health Ltd of £Nil (2024: £1,398,471).
Key management compensation
The Group regards the Board of Directors as its key management.
2025
2024
£000's
£000's
Salaries and short-term benefits
1,008
1,224
Retirement benefits
31
25
Share-based payments
108
108
1,147
1,357
The number of Directors for which retirement benefits were accruing was 1 (2024: 1).
The highest paid Director received £464,000 (2024: £619,000) including £33,000 (2024: £33,000) of share-based payments and £nil (2024: £nil) of pension contributions.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
FOR THE YEAR ENDED 31 MARCH 2025
31. Financial instruments
The Group uses financial instruments comprising borrowings, cash and cash equivalents and various items, such as trade receivables, trade payables etc. that arise directly from its operations. The main purpose of these financial instruments is to raise finance for the Group's operations. The Directors are responsible for the overall risk management.
The main risks arising from the Group's use of financial instruments are capital and liquidity risk, credit risk and foreign currency risk and they are summarised below. The policies have remained unchanged throughout the year.
Capital and liquidity risk
The Group manages its capital to ensure continuity as a going concern whilst maximising returns through the optimisation of debt and equity. As part of this, the Board considers the cost and risk associated with each class of capital. The capital structure of the Group consists of cash and cash equivalents in note 19, borrowings in note 21 and equity attributable to equity holders of the parent comprising issued capital, reserves and retained earnings as disclosed in the Group's statement of changes in equity.
Liquidity risk is managed by maintaining adequate reserves and banking facilities with continuous monitoring of the latest developments by management.
The Group's objectives when maintaining capital are:
- to safeguard the entity's ability to continue as a going concern, so that it can continue to provide returns for shareholders and benefits for other stakeholders; and
- to provide an adequate return to shareholders by pricing products and services commensurately with the level of risk.
The Group sets the amount of capital it requires in proportion to risk. The Group manages its capital structure and makes adjustments to it in the light of changes in economic conditions and the risk characteristics of the underlying assets. In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares, or sell assets to reduce debt.
As an AIM quoted company, our governance framework is underpinned by the AIM Rules and the Quoted Companies Alliance (QCA) Corporate Governance Code 2023 (the 'QCA Code'). In addition to the QCA Code, we monitor developments and guidance in the UK Corporate Governance Code, applicable to main market listed companies, to keep abreast of matters which we feel could also be embedded as best practice as part of a progressive approach. We also review the Investment Association guidelines and seek to comply with these where applicable.
At 31 March 2025, the Group was contractually obliged to make repayments as detailed below:
2025
2024
Within one year or on demand
£000's
£000's
Trade payables
9,794
10,119
Other payables
1,030
1,205
Accruals
3,541
6,026
14,365
17,350
Credit risk
Credit risk is that of financial loss as a result of default by a counterparty on its contractual obligations. The Group's exposure to credit risk arises principally in relation to trade receivables from customers and on short-term bank deposits. Customers' creditworthiness is wherever possible checked against independent rating databases and filing authorities, or otherwise assessed on the basis of trade knowledge and experience. Exposure and customer credit limits are continually monitored both on specific debts and overall.
The credit risk in relation to short-term bank deposits is limited because the counterparties are banks with good credit ratings.
The Group operates in certain geographical areas which are from time to time subject to restrictions in the free movement of funds. The Board seeks to minimise the Group's exposure to these markets but the nature of our business makes it impossible to eliminate this exposure completely.
None of those receivables has been subject to a significant increase in credit risk since initial recognition and, consequently, 12-month expected credit losses have been recognised, and there are no non-current receivable balances lifetime expected credit losses.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
FOR THE YEAR ENDED 31 MARCH 2025
31. Financial instruments (continued)
Foreign currency risk
The Group operates in overseas markets particularly through its subsidiaries in China, Brazil, Mexico, the USA and Japan as well as its joint operation in Canada and is therefore subject to currency exposure on transactions undertaken during the year. The Group does some simple economic hedging of receivables when the Board feels it is appropriate to do so and foreign exchange differences on retranslation of foreign monetary items are recorded in administrative expenses in 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 Dollar
Euros
Chinese RMB
Japanese Yen
Brazilian Real
Canadian Dollar
Mexican Peso
Other
2025
£000's
£000's
£000's
£000's
£000's
£000's
£000's
£000's
Trade and other receivables
50,589
3,660
6,626
542
669
699
2,374
55
Trade and other payables
(36,335)
(2,775)
(7,187)
(151)
(976)
(511)
(3,000)
(108)
Cash and cash equivalents
6,008
369
15,702
511
988
223
110
40
Total
20,262
1,254
15,141
902
681
411
(516)
(13)
US Dollar
Euros
Chinese RMB
Japanese Yen
Brazilian Real
Canadian Dollar
Mexican Peso
Other
2024
£000's
£000's
£000's
£000's
£000's
£000's
£000's
£000's
Trade and other receivables
30,924
2,961
6,753
134
677
759
2,699
125
Trade and other payables
(13,115)
(681)
(7,312)
(1,074)
(656)
(494)
(3,387)
(80)
Cash and cash equivalents
4,638
439
14,356
618
878
321
378
64
Total
22,447
2,719
13,797
(322)
899
586
(310)
109
At 31 March 2025 the Group was mainly exposed to the US Dollar, Euro, Chinese RMB, Japanese Yen, Brazilian Real, Canadian Dollar and Mexican Peso. The following table details the effect of a 10% movement in the exchange rate of these currencies against Sterling when applied to outstanding monetary items denominated in foreign currency as at 31 March 2025.
2025
2024
£000's
£000's
U S Dollar
2,251
2,278
Euro
139
265
Chinese RMB
1,682
1,450
Japanese Yen
100
(39)
Brazilian Real
76
100
Canadian Dollar
46
65
Mexican Peso
(57)
(41)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
FOR THE YEAR ENDED 31 MARCH 2025
31. Financial instruments (continued)
Analysis of financial instruments by category
Group
Financial assets
Financial liabilities
Total
2025
£000's
£000's
£000's
Trade and other receivables1
28,516
-
28,516
Cash and cash equivalents
25,006
-
25,006
Trade and other payables2
-
(14,365)
(14,365)
Amounts due under leases
-
(3,784)
(3,784)
Borrowings
-
-
-
1.This includes prepayments and accrued income £864,000.
2.This excludes contract liabilities but includes accruals and deferred income (£3,541,000).
2024
£000's
£000's
£000's
Trade and other receivables1
32,175
-
32,175
Cash and cash equivalents
22,374
-
22,374
Trade and other payables2
-
(17,350)
(17,350)
Amounts due under leases
-
(4,025)
(4,025)
Borrowings
-
-
-
1.This includes prepayments and accrued income £524,000.
2.This excludes contract liabilities but includes accruals and deferred income (£6,026,000).
Company
Financial assets
Financial liabilities
Total
2025
£000's
£000's
£000's
Trade and other receivables1
1,664
-
1,664
Cash and cash equivalents
1,515
-
1,515
Trade and other payables2
-
(673)
(673)
Amounts due under leases
-
(17)
(17)
Borrowings
-
-
-
Amounts due from group undertakings
48,937
-
48,937
1.This includes prepayments and accrued income £271,000.
2.This excludes contract liabilities but includes accruals and deferred income (£383,000).
2024
£000's
£000's
£000's
Trade and other receivables1
1,698
-
1,698
Cash and cash equivalents
363
-
363
Trade and other payables2
-
(804)
(804)
Amounts due under leases
-
(62)
(62)
Borrowings
-
-
-
Amounts due from group undertakings
51,078
-
51,078
1.This includes prepayments and accrued income £254,000.
2.This excludes contract liabilities but includes accruals and deferred income (£562,000).
All financial assets and liabilities in the Group's and Company's statements of financial position are classified as held at amortised cost for both the current and previous year.
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