Last checked at 12 Apr 2011 07:00
KIOTECH INTERNATIONAL PLC (AIM: KIO)
("Kiotech" or "the Company")
Unaudited preliminary announcement of results for the year ended 31 December 2010
Kiotech International plc, the international supplier of natural high performance feed additives to enhance growth, health and sustainability in agriculture and aquaculture, is pleased to announce its preliminary results for the year ended 31 December 2010. The Group significantly increased its sales, profit and underlying earnings per share 2 over the previous year and also largely completed the integration of the Optivite Group, whose results are included for the full year.
Key points: Financial
146% increase in underlying profit before tax and exceptional items1 of £1.9m (2009: £0.8m). 58% increase in underlying earnings per share 2 to 7.27p (2009: 4.60p). Sales advanced to £21.6m (2009: £11.0m). Cash balance of £3.5m at 31 December 2010 (2009: £5.0m). 74% increase in the proposed final dividend to 2.00 pence per share (2009: 1.15 pence).Key points: Operational
Integration of Optivite largely complete with planned benefits being realised earlier than anticipated. Good performance from our international agriculture division. Purchase of Manton Wood production and head office site completed for £1.5m.Richard Rose, Chairman, commented:
"This has been a very successful year during which the management team has worked hard to integrate the Optivite acquisition of September 2009. The benefits are being realised earlier than anticipated at the time of the acquisition. The success of the Optivite deal gives us the confidence to pursue similar opportunities in addition to developing and promoting our existing trading brands in global markets."
Enquiries:
| Kiotech International plc | ||
| Richard Edwards, Executive Vice-Chairman | +44 (0)7776 417129 | |
| Karen Prior, Group Finance Director | +44 (0)1909 537380 | |
| FinnCap | +44 (0)20 7600 1658 | |
| Matthew Robinson / Henrik Persson - Corporate Finance | ||
| Stephen Norcross - Corporate Broking |
Chairman's statement
I am pleased to report a very successful year for the Group, enhanced by the completion of the majority of the integration projects following the acquisition of Optivite in September 2009. The Group is now well placed to build on its trading brands, supplying natural animal feed additives for global agricultural markets with specialty products, which improve the health and output of animals, thereby increasing profits for the farmer.
The balance sheet remains strong with good cash generation and management's focus is to develop the business in international markets through organic growth and suitable acquisitions which fit well with our strategy.
Financial review
Total underlying profit before tax and exceptional items1 more than doubled to £1.877 million (2009: £0.764 million) from total revenues of £21.565 million (2009: £10.955 million). This outturn was boosted by a maiden full year contribution from Optivite coupled with organic growth (2009: 3 months contribution).
Profit before tax of £1.517 million (2009: £1.409 million) includes exceptional costs of £0.261 million relating to the restructuring of the Group and site closures. The previous year's result was boosted by an exceptional profit of £0.675 million arising from the sale of the Ultrabite sports fishing brand.
Underlying earnings per share 2 increased 58% to 7.27 pence per share (2009: 4.60 pence per share) and diluted underlying earnings per share rose 59% to 7.20 pence per share (2009: 4.53 pence per share).
The Board is delighted to declare a final dividend of 2.00 pence per share, an increase of 74% over the previous year's final dividend of 1.15 pence. Shareholder approval will be sought at the Annual General Meeting, to be held on 30 June 2011, to pay the final dividend on 29 July 2011 to shareholders on the register on 8 July 2011.
In October 2010 we completed the acquisition of a long leasehold interest in Optivite's Manton Wood production and head office site for £1.532 million including costs. The premises comprise the main production facilities for the group's feed additive business and its administrative and finance functions have been substantially centralised on the site. The acquisition provides security of tenure on which to make long term investment decisions and is earnings enhancing. Further expenditure of £0.125 million has been incurred in the latter part of 2010 and early 2011 on extending the premises and new production facilities costing £0.190 million will be completed in 2011.
The balance sheet remains strong and debt free with a year-end cash balance of £3.531 million (2009: £5.015 million). It is expected that these funds will be used to invest in the expansion of the business through appropriate acquisitions.
On 1 October 2010 the Company consolidated its share capital on the basis of one ordinary share for every 23 ordinary shares. The Directors believe that the consolidation was desirable with a view to achieving a higher market price per share and reducing the significance of the current bid-offer spread. Accordingly all relevant prior year numbers have been restated.
Optivite integration
As previously reported, production of our feed additive products has now been consolidated at Manton Wood. This plant has almost trebled its production throughput, with the additional Agil volume and growth from our international operations. We have also recently commissioned a third production line at Manton Wood, which has enabled us to transfer our omega-3 supplements from Optivite's North Scarle site, as well as providing additional capacity for our acid product range. The North Scarle site has just been closed leaving the Group operating from two production sites: Manton Wood for the functional feed additive business and Boroughbridge, in North Yorkshire, where Vitrition, our organic feed business is located.
The office extension was completed in November, when the Optivite International team transferred from their leased offices. We continue to occupy Agil's offices at Aldermaston in Berkshire, where a number of administrators continue to support the Agil export business. It is our intention to transfer these functions to Manton Wood in the coming months and in due course close and sell the office.
Optivite's UK business has a high proportion of low margin products which were either sold on a resale basis or manufactured at the North Scarle plant and supplied to price sensitive markets. The value-added products manufactured at this site have now been transferred to Manton Wood, where consolidation will help to improve their margins. The manufacture of some low margin commodity products has been outsourced and we have exited from others.
Following the sales and production consolidation, overall UK sales have declined but profitability is expected to improve as the sales team focus on selling higher margin products to customers who value our more sophisticated and in-house designed ranges, which improve both the health and output of animals.
Operations - International agriculture
The Agil core business delivered another solid performance. The international division, operating under the Optivite and Kiotechagil brands, continued to make progress during the year. Of the 61 countries supplied, there were particularly strong performances in Argentina, Bangladesh, Japan, Korea, Malaysia, Mexico and Turkey. In 2009 a major Chilean integrator bought significant volumes of Salkil, Kiotechagil's leading acidifier product. Sales were disrupted by the earthquake in early 2010, however, we have recently won back some of this business with Optivite's Salgard brand, which demonstrates the value of operating more than one trading brand.
The main focus of the international sales team is to continue to introduce a number of new products to our distributors around the world. Malaysia demonstrated the potential of Agil's Neutox, our new feed safety product, which achieved significant sales growth in that country. Other new products being launched include a new range of enzymes and omega-3 supplements; the latter enhancing fertility, viability of young animals, growth rate and also increase the omega-3 content of meat and eggs. Our omega-3 supplements range is creating considerable interest in developing countries such as China where human health, especially in children, is a key factor in household purchasing decisions.
In China and Brazil we are starting to make inroads into the larger meat producers. The Chinese agricultural market was weak in the first half of the year, owing to a number of infectious disease outbreaks and a downturn in consumption, which led to lower pig prices. However, the second half saw an improvement, which has continued into 2011.
Genex®, an Optivite registered performance enhancing acid and essential oil combination, is currently under trial with a number of major pig producers in China. We are also supplying a number of smaller customers in that country through our local distribution channel with a range of products. In Brazil, we are now selling our acidifier products to some of the major integrators and we anticipate volumes to grow as our products gain wider use.
Operations - UK agriculture
Our UK agriculture business was re-structured during the year resulting in the formation of a new sales team. Sales are now focused on our higher margin feed additive products to the major integrators, vitamin and mineral premixers, and the pig and poultry home-mix segment. It is still early days in raising the profitability of our UK division as customers tend to spend time assessing and trialling our products before incorporating them into their feeding regime. However, the team has been making progress and we are confident we have the products and the people to improve our performance in the UK.
Vitrition, our organic feed brand, had a solid year with the focus on widening margins rather than chasing volume. Vitrition accounts for around 17 per cent of total group turnover, and the key to improving profitability in its market is to ensure raw materials are bought well and that any price increases are quickly passed on through selling prices. The well publicised grain price inflation experienced at the end of 2010 and running into 2011 has meant the Vitrition team is focused on ensuring our margins are maintained. We anticipate that more stringent EU legislation, relating to the proportion of use of solely organic raw materials in feed, coming into force over the next 12 months, will favour Vitrition, owing to its dedicated organic feed content, mill and formulations. We wait to see how this legislation will influence the decisions of our competitors in their commitment to this niche market.
Operations - Aquaculture
Our Head of Aquaculture, based in Thailand, has been working with a number of farmers and hatcheries in the region on Shrimp, Tilapia and Asian Sea Bass species. The product technology has been well received although, as expected, trial data is mixed, reflecting the inherent nature of trialling at fish farm level, where disease and events such as flooding can undermine results. In addition there is a learning curve for local farmers as they understand how to use Aquatice® effectively. This process is continuing and we are about to start trials with one of South East Asia's largest feed mill and farm groups. Furthermore, we are continuing to work with a major multi-national whose aquaculture team understands the potential of Aquatice®, and are continuing to test the product to assess its scope. Aquatice® is a unique technology and requires focused sales support in order for it to gain acceptance in the aquaculture industry. We are conscious that it may be some time before we generate significant sales from this technology but we will continue to work with key partners to achieve this.
Board roles and responsibilities
Our strategy is to position the Company to benefit from the increasing demand for meat protein across both the developed and developing world economies by supplying meat producers with innovative natural feed additive solutions. Management believe the best way to achieve this, is to build a group which goes to market through a series of individual trading brands supported by a central finance, production and research and development infrastructure. Following the success of the Optivite acquisition and subsequent integration we now consider it appropriate to speed up our acquisition process by redefining roles and responsibilities at board level.
Richard Edwards, who has been Chief Executive since November 2006, becomes Executive Vice-Chairman and will be responsible for implementing our acquisition strategy. He will also retain responsibility for Aquatice® to ensure continuity of its commercial development.
David Bullen, currently Chief Operating Officer, will become Chief Executive, responsible for executive management of the Kiotech Group. David has played a key role in managing the successful integration of Optivite, and has a clear understanding of the combined business.
These appointments take effect immediately.
People
I would like to thank all staff for their hard work and commitment during 2010. A significant amount was achieved in integrating the two companies ahead of the acquisition timetable, which is commendable and reflects the teamwork and quality of our people.
Outlook
The group has made a solid start to the year, with further sales growth in our international division. Management's focus is to capture the cross-selling opportunities between the Optivite and Kiotechagil brands as well as launch a number of new product ideas across the group. Our territory expansion initiatives will concentrate on China and Brazil which between them account for over 40 per cent of world pig and poultry meat production.
We are continuing our search to identify suitable acquisitions, at the right price, which offer both strategic and commercial benefits to the group.
Richard S RoseChairman12 April 2011
1 Underlying profit before tax and exceptional items comprises profit before tax of £1.5m (2009: £1.4m) adjusted for closure and restructuring costs of £0.3m (2009: £nil), gains on sale of intellectual property of £nil (2009: £0.7m) and share-based payment expense of £0.1m (2009: £0.03m).
2 Underlying earnings per share represents profit for the year before exceptional items divided by the weighted average number of shares in issue.
| Kiotech International plc | ||||
| Unaudited consolidated income statement | ||||
| For the year ended 31 December 2010 | ||||
| 2010 | 2009 | |||
| Notes | £000 | £000 | ||
| Revenue | 3 | 21,565 | 10,955 | |
| Cost of sales | (15,618) | (7,823) | ||
| Gross profit | 5,947 | 3,132 | ||
| Administrative expenses | (4,225) | (2,429) | ||
| Closure and restructuring costs | 5 | (261) | - | |
| Gains on sale of intellectual property | 6 | - | 675 | |
| Operating profit | 1,461 | 1,378 | ||
| Finance income | 9 | 56 | 31 | |
| Profit before income tax | 1,517 | 1,409 | ||
| Income tax expense | 12 | (229) | (194) | |
| Profit for the year from continuing operations | 1,288 | 1,215 | ||
| Profit for the year attributable to : | ||||
| Owners of the parent | 1,282 | 1,211 | ||
| Non-controlling interest | 6 | 4 | ||
| 1,288 | 1,215 | |||
| The Consolidated income statement has been prepared on the basis that all operations are continuing operations. | ||||
| As restated | ||||
| Basic earnings per share (pence) | 10 | 7.01 | 9.52 | |
| Diluted earnings per share (pence) | 10 | 6.94 | 9.37 | |
| The Company has elected to take the exemption under section 408 of the Companies Act 2006 to not present the Parent Company profit and loss account. The profit for the Parent Company for the year was £1,334,000 (2009: £1,148,000). | ||||
| Unaudited consolidated statement of comprehensive income | ||||
| For the year ended 31 December 2010 | ||||
| 2010 | 2009 | |||
| £000 | £000 | |||
| Profit for the year | 1,288 | 1,215 | ||
| Currency translation difference | 5 | 1 | ||
| Total comprehensive income for the year | 1,293 | 1,216 | ||
| Attributable to owners of the parent | 1,287 | 1,212 | ||
| Non-controlling interest | 6 | 4 | ||
| Total comprehensive income for the year | 1,293 | 1,216 | ||
| Unaudited consolidated and parent company balance sheets | |||||||||
| As at 31 December 2010 | |||||||||
| Group | Company | ||||||||
| 2010 | 2009 | 2010 | 2009 | ||||||
| Notes | £000 | £000 | £000 | £000 | |||||
| Non current assets | |||||||||
| Intangible assets | 13 | 7,007 | 6,772 | 7,007 | 6,772 | ||||
| Property, plant and equipment | 14 | 2,619 | 663 | 2,609 | 652 | ||||
| Investments in subsidiaries | 15 | - | - | 233 | 2,624 | ||||
| Deferred income tax assets | 21 | 289 | - | 289 | - | ||||
| 9,915 | 7,435 | 10,138 | 10,048 | ||||||
| Current assets | |||||||||
| Inventories | 16 | 1,200 | 1,291 | 1,042 | 1,230 | ||||
| Trade and other receivables | 17 | 5,284 | 4,911 | 5,297 | 4,847 | ||||
| Cash and cash equivalents | 18 | 3,531 | 5,015 | 3,357 | 4,901 | ||||
| 10,015 | 11,217 | 9,696 | 10,978 | ||||||
| Total assets | 19,930 | 18,652 | 19,834 | 21,026 | |||||
| Equity and liabilities | |||||||||
| Called up share capital | 25 | 4,209 | 4,209 | 4,209 | 4,209 | ||||
| Share premium account | 2,957 | 2,957 | 2,957 | 2,957 | |||||
| Other reserves | 27 | 613 | 508 | 607 | 507 | ||||
| Special reserve | 4,441 | 4,441 | 4,441 | 4,441 | |||||
| Retained earnings | 26 | 2,517 | 1,445 | 2,602 | 1,478 | ||||
| 14,737 | 13,560 | 14,816 | 13,592 | ||||||
| Non-controlling interest | 51 | 45 | - | - | |||||
| Total equity | 14,788 | 13,605 | 14,816 | 13,592 | |||||
| Non-current liabilities | |||||||||
| Borrowings | 20 | 3 | 30 | 3 | 30 | ||||
| Deferred income tax liabilities | 21 | 944 | 493 | 944 | 493 | ||||
| 947 | 523 | 947 | 523 | ||||||
| Current liabilities | |||||||||
| Trade and other payables | 19 | 3,907 | 4,109 | 3,789 | 6,487 | ||||
| Corporation tax | 288 | 415 | 282 | 424 | |||||
| 4,195 | 4,524 | 4,071 | 6,911 | ||||||
| Total liabilities | 5,142 | 5,047 | 5,018 | 7,434 | |||||
| Total equity and liabilities | 19,930 | 18,652 | 19,834 | 21,026 | |||||
|
| |||||||||||||||
| Unaudited consolidated and parent company statements of changes in equity | |||||||||||||||
| For the year ended 31 December 2010 | |||||||||||||||
| Group | Share | Share | Special | Other | Retained | Non-controlling | Total | ||||||||
| capital | premium | reserve | reserves | earnings | interest | equity | |||||||||
| £000 | £000 | £000 | £000 | £000 | £000 | £000 | |||||||||
| Balance at 1 January 2009 | 2,511 | - | 4,441 | 249 | 335 | - | 7,536 | ||||||||
| Profit | - | - | - | - | 1,211 | 4 | 1,215 | ||||||||
| Currency translation differences | - | - | - | 1 | - | - | 1 | ||||||||
| Total comprehensive income for the year | - | - | - | 1 | 1,211 | 4 | 1,216 | ||||||||
| Transactions with owners | |||||||||||||||
| Issue of shares | 1,698 | 2,957 | - | 228 | - | - | 4,883 | ||||||||
| Share based payment adjustments | - | - | - | 30 | - | - | 30 | ||||||||
| Dividends relating to 2008 | - | - | - | - | (101) | - | (101) | ||||||||
| Transactions with owners | 1,698 | 2,957 | - | 258 | (101) | - | 4,812 | ||||||||
| Non-controlling interests arising on acquisition | |||||||||||||||
| of subsidiary | - | - | - | - | - | 41 | 41 | ||||||||
| Balance at 31 December 2009 | 4,209 | 2,957 | 4,441 | 508 | 1,445 | 45 | 13,605 | ||||||||
| Profit | - | - | - | - | 1,282 | 6 | 1,288 | ||||||||
| Currency translation differences | - | - | - | 5 | - | - | 5 | ||||||||
| Total comprehensive income for the year | - | - | - | 5 | 1,282 | 6 | 1,293 | ||||||||
| Transactions with owners | |||||||||||||||
| Share based payment adjustments | - | - | - | 100 | - | - | 100 | ||||||||
| Dividends relating to 2009 | - | - | - | - | (210) | - | (210) | ||||||||
| Transactions with owners | - | - | - | 100 | (210) | - | (110) | ||||||||
| Balance at 31 December 2010 | 4,209 | 2,957 | 4,441 | 613 | 2,517 | 51 | 14,788 | ||||||||
| Company | Share | Share | Special | Other | Retained | Total | |||||||||
| capital | premium | reserve | reserves | earnings | equity | ||||||||||
| £000 | £000 | £000 | £000 | £000 | £000 | ||||||||||
| Balance at 1 January 2009 | 2,511 | - | 4,441 | 249 | 335 | 7,536 | |||||||||
| Profit | - | - | - | - | 1,148 | 1,148 | |||||||||
| Total comprehensive income for the year | - | - | - | - | 1,148 | 1,148 | |||||||||
| Transactions with owners | |||||||||||||||
| Issue of shares | 1,698 | 2,957 | - | 228 | - | 4,883 | |||||||||
| Share based payment adjustments | - | - | - | 30 | - | 30 | |||||||||
| Dividends relating to 2008 | - | - | - | - | (101) | (101) | |||||||||
| Arising on hive up of subsidiaries | - | - | - | - | 96 | 96 | |||||||||
| Transactions with owners | 1,698 | 2,957 | - | 258 | (5) | 4,908 | |||||||||
| Balance at 31 December 2009 | 4,209 | 2,957 | 4,441 | 507 | 1,478 | 13,592 | |||||||||
| Profit | - | - | - | - | 1,334 | 1,334 | |||||||||
| Total comprehensive income for the year | - | - | - | - | 1,334 | 1,334 | |||||||||
| Transactions with owners | |||||||||||||||
| Share based payment adjustments | - | - | - | 100 | - | 100 | |||||||||
| Dividends relating to 2009 | - | - | - | - | (210) | (210) | |||||||||
| Transactions with owners | - | - | - | 100 | (210) | (110) | |||||||||
| Balance at 31 December 2010 | 4,209 | 2,957 | 4,441 | 607 | 2,602 | 14,816 | |||||||||
|
| |||||||||
| Unaudited consolidated and parent company statements of cashflows | |||||||||
| For the year ended 31 December 2010 | |||||||||
| Group | Company | ||||||||
| 2010 | 2009 | 2010 | 2009 | ||||||
| £000 | £000 | £000 | £000 | ||||||
| Cash generated from operating activities | 1,211 | 2,421 | (1,236) | 2,379 | |||||
| Interest paid | - | (1) | - | - | |||||
| Income tax paid | (197) | (340) | (203) | (121) | |||||
| Net cash generated from operating activities | 1,014 | 2,080 | (1,439) | 2,258 | |||||
| Cash flows generated from investing activities | |||||||||
| Acquisition of subsidiary net of cash acquired | - | (3,127) | - | (3,972) | |||||
| Cash acquired from subsidiaries hived up | - | - | - | 517 | |||||
| Purchases of property, plant and equipment | (2,071) | (44) | (2,069) | (14) | |||||
| Proceeds from disposal of property, plant and equipment | 10 | - | 10 | - | |||||
| Payments to acquire intangible fixed assets | (256) | (226) | (256) | (226) | |||||
| Interest received | 56 | 31 | 56 | 31 | |||||
| Dividends received | - | - | 2,391 | - | |||||
| Net cash used in investing activities | (2,261) | (3,366) | 132 | (3,664) | |||||
| Cashflows from financing activities | |||||||||
| Proceeds from issuance of shares | - | 4,541 | - | 4,541 | |||||
| Dividend paid to Company's shareholders | (210) | (101) | (210) | (101) | |||||
| Repayment of borrowings | (27) | (7) | (27) | - | |||||
| Net cash used in financing activities | (237) | 4,433 | (237) | 4,440 | |||||
| Net (decrease)/increase in cash and cash equivalents | (1,484) | 3,147 | (1,544) | 3,034 | |||||
| Cash and cash equivalents at the beginning of the year | 5,015 | 1,868 | 4,901 | 1,867 | |||||
| Cash and cash equivalents at the end of the year | 3,531 | 5,015 | 3,357 | 4,901 | |||||
| Cash generated from operations | |||||||||
| Group | Company | ||||||||
| 2010 | 2009 | 2010 | 2009 | ||||||
| £000 | £000 | £000 | £000 | ||||||
| Profit before income tax | 1,517 | 1,409 | 1,556 | 1,294 | |||||
| Adjustments for: | |||||||||
| Finance income | (56) | (31) | (2,447) | (31) | |||||
| Depreciation and amortisation | 137 | 82 | 134 | 14 | |||||
| Profit on disposal of plant and equipment | (10) | - | (10) | - | |||||
| Share based payments | 100 | 30 | 100 | 30 | |||||
| Provision against investment in subsidiaries | - | - | 2,391 | - | |||||
| Changes in working capital: | |||||||||
| Inventories | 91 | (183) | 188 | (9) | |||||
| Trade and other receivables | (373) | 350 | (450) | 713 | |||||
| Trade and other payables | (195) | 764 | (2,698) | 368 | |||||
| Cash generated from operations | 1,211 | 2,421 | (1,236) | 2,379 | |||||
Notes to the unaudited preliminary results
For the year ended 31 December 2010
1 General Information
On 30 September 2009 the company acquired the Optivite group of companies and the results for these entities are included in these financial statements from 1 October 2009.
On 1 October 2010 the Company undertook a 1 for 23 share consolidation. Accordingly, all relevant prior year numbers have been restated.
2 Basis of preparation
The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards ("IFRS") as adopted by the European Union.
The same accounting policies and methods of computation are followed as in the latest published audited accounts for the year ended 31 December 2009, which are available on the Company's website at www.kiotech.com.
Of the new standards, amendments and interpretations that are in issue and mandatory for the financial year ended 31 December 2010, there is no financial impact on these preliminary results.
The preliminary results for the year ended 31 December 2010 are unaudited. The financial information set out in the announcement does not constitute the Group's statutory accounts for the years ended 31 December 2010 or 31 December 2009 as defined by Section 434 of the Companies Act 2006.
The financial information for the year ended 31 December 2009 is derived from the statutory accounts for that year which have been delivered to the Registrar of Companies. The auditors have reported on those accounts and their report was unqualified, did not contain an emphasis of matter paragraph and did not contain any statement under section 498(2) or (3) of the Companies Act 2006.
The statutory accounts for the year ended 31 December 2010 will be finalised on the basis of the financial information presented by the Directors in this preliminary announcement and will be delivered to the Registrar of Companies following the Company's Annual General Meeting.
| 3 | Segment information | ||||||||||
| All revenues from external customers are derived from the sale of goods in the ordinary course of business to the agricultural and aquacultural markets and are measured in a manner consistent with that in the income statement. | |||||||||||
| Management has determined the operating segments based on the reports reviewed by the Board that are used to make strategic decisions. The Board considers the business from a geographic perspective. | |||||||||||
| Management considers adjusted EBITDA, which comprises Earnings before interest, tax , depreciation and amortisation adjusted for share-based payments and exceptional items. | |||||||||||
| Inter-segment revenue is charged at prevailing market prices. | |||||||||||
| UK and Eire | International | Total | |||||||||
| £000 | £000 | £000 | |||||||||
| Year ended 31 December 2010 | |||||||||||
| Total segmental revenue | 9,300 | 12,686 | 21,986 | ||||||||
| Inter-segment revenue | - | (421) | (421) | ||||||||
| Revenue from external customers | 9,300 | 12,265 | 21,565 | ||||||||
| Adjusted EBITDA | 243 | 1,716 | 1,959 | ||||||||
| Depreciation and amortisation | (99) | (38) | (137) | ||||||||
| Income tax expense | (68) | (161) | (229) | ||||||||
| Total assets | 8,624 | 11,306 | 19,930 | ||||||||
| Total liabilities | (1,614) | (3,528) | (5,142) | ||||||||
| Year ended 31 December 2009 | |||||||||||
| Total segmental revenue | 3,762 | 7,644 | 11,406 | ||||||||
| Inter-segment revenue | (439) | (12) | (451) | ||||||||
| Revenue from external customers | 3,323 | 7,632 | 10,955 | ||||||||
| Adjusted EBITDA | 95 | 720 | 815 | ||||||||
| Depreciation and amortisation | 59 | 23 | 82 | ||||||||
| Income tax expense | (12) | (181) | (193) | ||||||||
| Total assets | 3,665 | 14,987 | 18,652 | ||||||||
| Total liabilities | (2,438) | (2,609) | (5,047) | ||||||||
| A reconciliation of adjusted EBITDA to profit before tax is provided as follows: | |||||||||||
| 2010 | 2009 | ||||||||||
| £000 | £000 | ||||||||||
| Adjusted EBITDA for reportable segments | 1,959 | 815 | |||||||||
| Depreciation, amortisation and impairment provisions | (137) | (82) | |||||||||
| Share-based payment charges | (100) | (30) | |||||||||
| Finance income | 56 | 31 | |||||||||
| Closure and restructuring costs | (261) | - | |||||||||
| Gains on sale of intellectual property | - | 675 | |||||||||
| Profit before tax | 1,517 | 1,409 | |||||||||
| 4 | Expenses by nature | ||||||||
| 2010 | 2009 | ||||||||
| £000 | £000 | ||||||||
| Changes in inventories of finished goods | (72) | 392 | |||||||
| Raw materials and consumables used | 15,155 | 7,283 | |||||||
| Employee expenses (note 8) | 3,349 | 1,498 | |||||||
| Research and development expenditure | 51 | 75 | |||||||
| Transportation expenses | 1,194 | 679 | |||||||
| Operating lease payments | 297 | 103 | |||||||
| Depreciation, amortisation and impairment charges | 137 | 82 | |||||||
| Bad debt provision | 49 | - | |||||||
| Share based payment charges | 100 | 30 | |||||||
| (Profit)/loss on foreign exchange transactions | (156) | 110 | |||||||
| Total cost of sales, distribution and administative expenses | 20,104 | 10,252 | |||||||
| 5 | Closure and restructuring costs | ||||||||
| During 2010 the Group closed a number of administrative and production sites which resulted in costs associated with staff redundancies, removal costs, early termination costs and asset disposals. | |||||||||
| 6 | Gain on sale of intellectual property | ||||||||
| In 2009 the Company sold its intellectual property relating to the Ultrabite® sports fishing pheromone attractant brand and the associated rights under its license agreement with Cefas (Centre for the Environment, Fisheries and Aquaculture Science) whilst retaining its licensing rights for the technology to the global aquaculture and commercial fishing markets under the Aquatice® brand. This generated a gain after directly attributable expenses of £675,000. | |||||||||
| 7 | Auditor remuneration | ||||||||
| During the year the Group obtained the following services from the Company's auditor: | |||||||||
| 2010 | 2009 | ||||||||
| £000 | £000 | ||||||||
| Group | |||||||||
| Fees payable to the Company's auditor for the audit of Parent Company and Consolidated financial statements | 23 | 16 | |||||||
| Fees payable to the Company's auditor for other services: | |||||||||
| The audit of the Company's subsidiaries pursuant to legislation | - | 8 | |||||||
| Tax services | 26 | 5 | |||||||
| Other advisory | - | 3 | |||||||
| 49 | 32 | ||||||||
| 8 | Employees | ||||||||
| Number of employees | |||||||||
| The average monthly number of employees including directors during the year was: | |||||||||
| 2010 | 2009 | ||||||||
| Number | Number | ||||||||
| Group | |||||||||
| Production | 28 | 6 | |||||||
| Administration | 21 | 12 | |||||||
| Sales and Technical | 23 | 6 | |||||||
| Total average headcount | 72 | 24 | |||||||
| Company | |||||||||
| Production | 28 | - | |||||||
| Administration | 20 | 8 | |||||||
| Sales and Technical | 17 | 4 | |||||||
| Total average headcount | 65 | 12 | |||||||
| 2010 | 2009 | ||||||||
| £000 | £000 | ||||||||
| Employment costs | |||||||||
| Group | |||||||||
| Wages and salaries | 2,910 | 1,305 | |||||||
| Social security costs | 297 | 126 | |||||||
| Other pension costs | 142 | 67 | |||||||
| 3,349 | 1,498 | ||||||||
| 9 | Finance income | ||||||||
| 2010 | 2009 | ||||||||
| £000 | £000 | ||||||||
| Interest receivable on short-term bank deposits | 56 | 31 | |||||||
| 10 | Earnings per share | 2010 | 2009 | ||||||
| As restated | |||||||||
| Weighted average number of shares in issue (000's) | 18,300 | 12,762 | |||||||
| Adjusted for effects of dilutive potential ordinary shares (000's) | 173 | 196 | |||||||
| Weighted average number for diluted earnings per share (000's) | 18,473 | 12,958 | |||||||
| Profit attributable to equity holders of the company (£000's) | 1,282 | 1,211 | |||||||
| Basic earnings per share (pence) | 7.01 | 9.52 | |||||||
| Diluted earnings per share (pence) | 6.94 | 9.37 | |||||||
| 2010 | 2009 | ||||||||
| £000 | £000 | ||||||||
| Underlying profit attributable to equity owners: | |||||||||
| Profit attributable to equity owners | 1,282 | 1,211 | |||||||
| Closure and restructuring costs (net of tax) | 187 | - | |||||||
| Gains on sale of intellectual property (net of tax) | - | (628) | |||||||
| Prior year tax benefits | (138) | - | |||||||
| Underlying profit | 1,331 | 583 | |||||||
| Underlying earnings per share (pence) | 7.27 | 4.60 | |||||||
| Diluted underlying earnings per share (pence) | 7.20 | 4.53 | |||||||
| Earnings per share has been restated to take account of the 1 for 23 ordinary share consolidation. | |||||||||
| 11 | Dividend payable | ||||||||
| 2010 | 2009 | ||||||||
| £000 | £000 | ||||||||
| 2008 final dividend paid: 0.92p per 23p share (as restated) | - | 101 | |||||||
| 2009 final dividend paid: 1.15p per 23p share (as restated) | 210 | - | |||||||
| 210 | 101 | ||||||||
| Dividends per share have been restated to take account of the 1 for 23 ordinary share consolidation. | |||||||||
| 12 | Taxation | ||||||||
| 2010 | 2009 | ||||||||
| £000 | £000 | ||||||||
| Current tax | |||||||||
| Current tax on profits for the year | 288 | 180 | |||||||
| Adjustment for prior years | (221) | - | |||||||
| Total current tax | 67 | 180 | |||||||
| Deferred tax | |||||||||
| Origination and reversal of temporary differences | 79 | 14 | |||||||
| Adjustment for prior years | 83 | - | |||||||
| Total deferred tax | 162 | 14 | |||||||
| Income tax expense | 229 | 194 | |||||||
| 2010 | 2009 | ||||||||
| £000 | £000 | ||||||||
| Factors affecting the tax charge for the year | |||||||||
| Profit before tax | 1,517 | 1,409 | |||||||
| Tax at domestic rates applicable to profits in the respective countries | 425 | 397 | |||||||
| Tax effects of: | |||||||||
| Non deductible expenses | 27 | 35 | |||||||
| Capital allowances | 2 | (10) | |||||||
| Research and development tax credits | (119) | (142) | |||||||
| Exceptional gain of intellectual property not subject to tax | - | (83) | |||||||
| Prior year tax adjustments | (138) | - | |||||||
| Other tax adjustments | 32 | (3) | |||||||
| Tax charge | 229 | 194 | |||||||
| During the year the company reached agreement with HMRC in relation to the deductability of capitalised development costs and acquired goodwill, resulting in prior year tax adjustments. | |||||||||
| 13 | Intangible fixed assets | ||||||||||||||||||||
| Goodwill | Brands | Customer relationships | Patents | Development costs | Total | ||||||||||||||||
| £000 | £000 | £000 | £000 | £000 | £000 | ||||||||||||||||
| Group and Company | |||||||||||||||||||||
| Cost | |||||||||||||||||||||
| As at 1 January 2009 | 3,552 | - | - | 46 | 811 | 4,409 | |||||||||||||||
| Additions | - | - | - | - | 226 | 226 | |||||||||||||||
| Acquisition of subsidiaries | 592 | 1,501 | 176 | - | - | 2,269 | |||||||||||||||
| As at 1 January 2010 | 4,144 | 1,501 | 176 | 46 | 1,037 | 6,904 | |||||||||||||||
| Additions | - | - | - | 13 | 243 | 256 | |||||||||||||||
| As at 31 December 2010 | 4,144 | 1,501 | 176 | 59 | 1,280 | 7,160 | |||||||||||||||
| Accumulated amortisation/impairment | |||||||||||||||||||||
| As at 1 January 2009 | - | - | - | 3 | 126 | 129 | |||||||||||||||
| Charge for the year | - | - | - | 2 | - | 2 | |||||||||||||||
| As at 1 January 2010 | - | - | - | 5 | 126 | 131 | |||||||||||||||
| Charge for the year | - | - | 18 | 4 | - | 22 | |||||||||||||||
| As at 31 December 2010 | - | - | 18 | 9 | 126 | 153 | |||||||||||||||
| Net book value | |||||||||||||||||||||
| As at 31 December 2010 | 4,144 | 1,501 | 158 | 50 | 1,154 | 7,007 | |||||||||||||||
| As at 31 December 2009 | 4,144 | 1,501 | 176 | 40 | 911 | 6,772 | |||||||||||||||
| As at 1 January 2009 | 3,552 | - | - | 43 | 685 | 4,280 | |||||||||||||||
| Goodwill is allocated to the Group's cash-generating units (CGU's) identified according to trading brand. The recoverable amount of a CGU is determined based on value-in-use calculations. These calculations use pre-tax cash flow projections based on financial budgets approved by management covering a five-year period. Cash flows beyond a five-year period are extrapolated using estimated growth rates of 1% per annum (2009: 1%). | |||||||||||||||||||||
| The discount rate used of 12% (2009: 12%) is pre-tax and reflects specific risks relating to the operating segments. | |||||||||||||||||||||
| Goodwill is allocated as follows: | |||||||||||||||||||||
| At 31 December 2009 and 2010 | £000 | ||||||||||||||||||||
| Acquisition of Kiotechagil operations | 3,552 | ||||||||||||||||||||
| Acquisition of Optivite operations | 592 | ||||||||||||||||||||
| Total goodwill | 4,144 | ||||||||||||||||||||
| Brands relate to the fair value of the Optivite brands acquired in the year ended 31 December 2009. These are deemed to have an indefinite useful life due to the inherent intellectual property contained in the products, the longevity of the product lives and global market opportunities. | |||||||||||||||||||||
| Amortisation of customer relationships and patents totalling £22,000 (2009: £2,000) is included in administrative expenses. | |||||||||||||||||||||
| The carrying amount of development costs was reduced to its recoverable amount in previous years through recognition of an impairment provision. This provision was based on management forecasts of the remaining development costs and expected future economic benefits arising to the Group. Costs capitalised in the current year are in line with management forecasts of the expected remaining development costs hence no further impairment has been recognised. | |||||||||||||||||||||
| 14 | Property, plant and equipment | ||||||||||||
| Land & buildings | Plant and machinery | Fixtures, fittings and equipment | Total | ||||||||||
| £000 | £000 | £000 | £000 | ||||||||||
| Group | |||||||||||||
| Cost | |||||||||||||
| As at 1 January 2009 | 325 | 31 | 39 | 395 | |||||||||
| Additions | - | 26 | 18 | 44 | |||||||||
| Acquisition of subsidiaries | 5 | 234 | 100 | 339 | |||||||||
| As at 1 January 2010 | 330 | 291 | 157 | 778 | |||||||||
| Additions | 1,532 | 223 | 316 | 2,071 | |||||||||
| As at 31 December 2010 | 1,862 | 514 | 473 | 2,849 | |||||||||
| Depreciation | |||||||||||||
| As at 1 January 2009 | 7 | 12 | 16 | 35 | |||||||||
| Charge for the year | 1 | 60 | 19 | 80 | |||||||||
| As at 1 January 2010 | 8 | 72 | 35 | 115 | |||||||||
| Charge for the year | 1 | 48 | 66 | 115 | |||||||||
| As at 31 December 2010 | 9 | 120 | 101 | 230 | |||||||||
| Net book value | |||||||||||||
| As at 31 December 2010 | 1,853 | 394 | 372 | 2,619 | |||||||||
| As at 31 December 2009 | 322 | 219 | 122 | 663 | |||||||||
| As at 1 January 2009 | 318 | 19 | 23 | 360 | |||||||||
| Held within land and buildings is an amount of £1,200,000 (2009: £200,000) in respect of non- depreciable land. | |||||||||||||
| Plant and machinery includes the following amounts held under hire purchase contracts | |||||||||||||
| 2010 | 2009 | ||||||||||||
| £000 | £000 | ||||||||||||
| Cost-capitalised hire purchase contracts | 11 | 80 | |||||||||||
| Accumulated depreciation | (3) | (35) | |||||||||||
| Net book value | 8 | 45 | |||||||||||
| Land & buildings | Plant and machinery | Fixtures, fittings and equipment | Total | ||||||||||
| £000 | £000 | £000 | £000 | ||||||||||
| Company | |||||||||||||
| Cost | |||||||||||||
| As at 1 January 2009 | 325 | 31 | 39 | 395 | |||||||||
| Additions | - | 11 | 2 | 13 | |||||||||
| Acquisition of subsidiaries | 5 | 187 | 98 | 290 | |||||||||
| As at 1 January 2010 | 330 | 229 | 139 | 698 | |||||||||
| Additions | 1,532 | 223 | 314 | 2,069 | |||||||||
| As at 31 December 2010 | 1,862 | 452 | 453 | 2,767 | |||||||||
| Depreciation | |||||||||||||
| As at 1 January 2009 | 7 | 12 | 16 | 35 | |||||||||
| Charge for the year | 1 | 5 | 5 | 11 | |||||||||
| As at 1 January 2010 | 8 | 17 | 21 | 46 | |||||||||
| Charge for the year | 1 | 46 | 65 | 112 | |||||||||
| As at 31 December 2010 | 9 | 63 | 86 | 158 | |||||||||
| Net book value | |||||||||||||
| As at 31 December 2010 | 1,853 | 389 | 367 | 2,609 | |||||||||
| As at 31 December 2009 | 322 | 212 | 118 | 652 | |||||||||
| As at 1 January 2009 | 318 | 19 | 23 | 360 | |||||||||
| Held within land and buildings is an amount of £1,200,000 (2009: £200,000) in respect of non- depreciable land. | |||||||||||||
| 15 | Fixed asset investment | ||||||||||||
| Unlisted Investments | |||||||||||||
| £000 | |||||||||||||
| Company | |||||||||||||
| Cost | |||||||||||||
| As at 1 January 2009 | 1 | ||||||||||||
| Additions | 4,314 | ||||||||||||
| Arising on hive up of subsidiary operations | (1,690) | ||||||||||||
| As at 1 January 2010 and at 31 December 2010 | 2,625 | ||||||||||||
| Provisions for diminution in value | |||||||||||||
| As at 1 January 2009 | 1 | ||||||||||||
| Charge for the year | - | ||||||||||||
| As at 1 January 2010 | 1 | ||||||||||||
| Charge for the year | 2,391 | ||||||||||||
| As at 31 December 2010 | 2,392 | ||||||||||||
| Net book value | |||||||||||||
| As at 31 December 2010 | 233 | ||||||||||||
| As at 31 December 2009 | 2,624 | ||||||||||||
| As at 1 January 2009 | - | ||||||||||||
| Holdings of more than 20 per cent | |||||||||||||
| The Company holds more than 20 percent of the share capital of the following companies: | |||||||||||||
| Company | Country of registration or incorporation | Principal activity | per cent | Shares held Class | |||||||||
| Subsidiary undertakings | |||||||||||||
| Kiotech Limited | England and Wales | Dormant | 100 | Ordinary | |||||||||
| Aquatice Limited | England and Wales | Dormant | 100 | Ordinary | |||||||||
| Agil Limited | England and Wales | Dormant | 100 | Ordinary | |||||||||
| Kiotechagil Limited | England and Wales | Dormant | 100 | Ordinary | |||||||||
| Optivite Limited | England and Wales | Dormant | 100 | Ordinary | |||||||||
| Optivite International Limited | England and Wales | Dormant | 100 | Ordinary | |||||||||
| Kiotechagil (Shanghai) Agriculture | |||||||||||||
| Science and Technology Limited | China | Technology services | 100 | Ordinary | |||||||||
| Optivite Animal Nutrition Private Limited | India | Technology services | 100 | Ordinary | |||||||||
| Optivite Latinoamericana SA de CV | Mexico | Technology services | 98 | Ordinary | |||||||||
| Optivite SA (Proprietary) Limited | South Africa | Technology services | 60 | Ordinary | |||||||||
| 16 | Inventories | ||||||||||
| Group | Company | ||||||||||
| 2010 | 2009 | 2010 | 2009 | ||||||||
| £000 | £000 | £000 | £000 | ||||||||
| Raw materials and consumables | 799 | 818 | 799 | 818 | |||||||
| Finished goods and goods for resale | 401 | 473 | 243 | 412 | |||||||
| 1,200 | 1,291 | 1,042 | 1,230 | ||||||||
| The cost of inventories recognised as expense and included in "cost of sales" amounted to £13,265,000 (2009: £8,207,000) for the Group and £12,793,000 (2009: £4,529,000) for the Company. | |||||||||||
| 17 | Trade and other receivables | ||||||||||
| Group | Company | ||||||||||
| 2010 | 2009 | 2010 | 2009 | ||||||||
| £000 | £000 | £000 | £000 | ||||||||
| Trade receivables | 5,224 | 4,786 | 4,820 | 4,593 | |||||||
| Less: provision for impairment of trade receivables | (244) | (252) | (230) | (252) | |||||||
| Trade receivables- net | 4,980 | 4,534 | 4,590 | 4,341 | |||||||
| Receivables from subsidiary undertakings | - | - | 487 | 153 | |||||||
| VAT recoverable | 165 | - | 99 | - | |||||||
| Other receivables | - | 184 | - | 173 | |||||||
| Prepayments and accrued income | 139 | 193 | 121 | 180 | |||||||
| 5,284 | 4,911 | 5,297 | 4,847 | ||||||||
| All receivables are stated at fair value and are due within five years from the end of the reporting period. | |||||||||||
| The ageing analysis of net trade receivables is as follows: | |||||||||||
| Group | Company | ||||||||||
| 2010 | 2009 | 2010 | 2009 | ||||||||
| £000 | £000 | £000 | £000 | ||||||||
| Up to 3 months | 3,500 | 2,836 | 3,139 | 2,659 | |||||||
| 3 to 6 months | 1,317 | 1,422 | 1,295 | 1,422 | |||||||
| Over 6 months | 163 | 276 | 156 | 260 | |||||||
| Trade receivables- net | 4,980 | 4,534 | 4,590 | 4,341 | |||||||
| As of 31 December 2010 trade receivables of £1,049,000 (2009: £1,000,000) for the Group and £1,042,000 (2009: £965,000) for the Company were past due but not impaired. These relate to longstanding customers for who there are no recent history of default. The aging analysis of these receivables is as follows: | |||||||||||
| Group | Company | ||||||||||
| 2010 | 2009 | 2010 | 2009 | ||||||||
| £000 | £000 | £000 | £000 | ||||||||
| Up to 3 months | 244 | 552 | 244 | 528 | |||||||
| 3 to 6 months | 711 | 445 | 711 | 436 | |||||||
| Over 6 months | 94 | 3 | 87 | 1 | |||||||
| 1,049 | 1,000 | 1,042 | 965 | ||||||||
| As of 31 December 2010 trade receivables of £244,000 (2009: £252,000) for the group and £230,000 (2009: £252,000) for the Company were impaired and fully provided for. The individually impaired receivables mainly relate to historic debt for which recovery is still being sought. The Group mitigates its exposure to credit risk by extensive use of credit insurance and letters of credit to remit amounts due. The aging of these trade receivables is as follows: | |||||||||||
| Group | Company | ||||||||||
| 2010 | 2009 | 2010 | 2009 | ||||||||
| £000 | £000 | £000 | £000 | ||||||||
| 3 to 6 months | 18 | 46 | 18 | 46 | |||||||
| Over 6 months | 226 | 206 | 212 | 206 | |||||||
| 244 | 252 | 230 | 252 | ||||||||
| Movement on the group provision for impairment of trade receivables is as follows: | |||||||||||
| Group | Company | ||||||||||
| £000 | £000 | ||||||||||
| At 1 January 2010 | 252 | 252 | |||||||||
| Provisions for receivables created | 56 | 42 | |||||||||
| Amounts recovered during the year | (64) | (64) | |||||||||
| At 31 December 2010 | 244 | 230 | |||||||||
| The carrying amounts of trade and other receivables are denominated in the following currencies: | |||||||||||
| Group | Company | ||||||||||
| 2010 | 2009 | 2010 | 2009 | ||||||||
| £000 | £000 | £000 | £000 | ||||||||
| Pounds sterling | 2,775 | 2,888 | 2,776 | 2,888 | |||||||
| Euros | 1,183 | 805 | 1,183 | 805 | |||||||
| US Dollar | 651 | 664 | 631 | 648 | |||||||
| Other currencies | 371 | 177 | - | - | |||||||
| 4,980 | 4,534 | 4,590 | 4,341 | ||||||||
| 18 | Cash and cash equivalents | ||||||||||
| Cash and cash equivalents comprise cash and short-term deposits held by Group companies. The carrying amount of these assets approximates to their fair value. | |||||||||||
| 19 | Trade and other payables | ||||||||||
| Group | Company | ||||||||||
| 2010 | 2009 | 2010 | 2009 | ||||||||
| £000 | £000 | £000 | £000 | ||||||||
| Trade payables | 2,724 | 3,223 | 2,538 | 3,125 | |||||||
| Amounts due to subsidiary undertakings | - | - | 114 | 2,490 | |||||||
| Other payables | - | 301 | - | 289 | |||||||
| Taxes and social security costs | 80 | 67 | 80 | 67 | |||||||
| Accruals and deferred income | 1,103 | 518 | 1,057 | 516 | |||||||
| 3,907 | 4,109 | 3,789 | 6,487 | ||||||||
| 20 | Borrowings | |||||||||||||
| The total amount due within one year at 31 December 2010 under hire purchase agreements is as follows: | ||||||||||||||
| Group and Company | ||||||||||||||
| 2010 | 2009 | |||||||||||||
| £000 | £000 | |||||||||||||
| Due within one year | 3 | 27 | ||||||||||||
| Due within two to five years | - | 3 | ||||||||||||
| 3 | 30 | |||||||||||||
| 21 | Deferred income tax | |||||||||||||
| 2010 | 2009 | |||||||||||||
| Group | £000 | £000 | ||||||||||||
| At 1 January | 493 | - | ||||||||||||
| Acquisition of subsidiairies | - | 479 | ||||||||||||
| Income statement charge | 162 | 14 | ||||||||||||
| At 31 December | 655 | 493 | ||||||||||||
| Deferred tax liabilities/ (assets) | ||||||||||||||
| Accelerated tax allowances | Fair value gains | Losses | Total | |||||||||||
| £000 | £000 | £000 | £000 | |||||||||||
| At 1 January 2009 | - | - | - | - | ||||||||||
| Income statement charge | 14 | - | - | 14 | ||||||||||
| Acquisition of subsidiaries | 9 | 470 | - | 479 | ||||||||||
| At 1 January 2010 | 23 | 470 | - | 493 | ||||||||||
| Income statement charge | 473 | (22) | (289) | 162 | ||||||||||
| At 31 December 2010 | 496 | 448 | (289) | 655 | ||||||||||
| 2010 | 2009 | |||||||||||||
| Company | £000 | £000 | ||||||||||||
| At 1 January | 493 | - | ||||||||||||
| Hive up of subsidiaries | - | 479 | ||||||||||||
| Income statement charge | 162 | 14 | ||||||||||||
| At 31 December | 655 | 493 | ||||||||||||
| Deferred tax liabilities/ (assets) | ||||||||||||||
| Accelerated tax allowances | Fair value gains | Losses | Total | |||||||||||
| £000 | £000 | £000 | £000 | |||||||||||
| At 1 January 2009 | - | - | - | - | ||||||||||
| Hive up of subsidiaries | 23 | 470 | - | 493 | ||||||||||
| At 1 January 2010 | 23 | 470 | - | 493 | ||||||||||
| Income statement charge | 473 | (22) | (289) | 162 | ||||||||||
| At 31 December 2010 | 496 | 448 | (289) | 655 | ||||||||||
| Losses | ||||||||||||||
| In addition to the losses noted above the Group and Company have not recognised deferred tax assets of £530,000 in respect of unutilised tax losses totalling £1,963,000. | ||||||||||||||
| 22 | Contingent liabilities | |||||||||||||
| On the acquisition of Agil, part of the consideration was deferred pending receipt of trade receivables outstanding at November 2006. Management is of the opinion that £157,000 (2009: £193,000) of these trade receivables will not prove to be recoverable and these have been written off in the financial statements. | ||||||||||||||
| In the event that these receivables are collected then these balances will be due to the vendor of the business, ECO Animal Health Group plc. | ||||||||||||||
| In view of the uncertainty surrounding the recovery of these receivables the directors do not consider it appropriate to provide for the deferred consideration in these accounts, as this will only be paid on recovery of the receivables. | ||||||||||||||
| 23 | Financial commitments | |||||||||||||
| At 31 December 2010 the Group has future aggregate minimum lease payments under non-cancellable operating leases as follows: | ||||||||||||||
| Vehicles, plant and equipment | Land and buildings | |||||||||||||
| 2010 | 2009 | 2010 | 2009 | |||||||||||
| £000 | £000 | £000 | £000 | |||||||||||
| Less than one year | 73 | 74 | 14 | 107 | ||||||||||
| Between one and five years | 67 | 143 | - | - | ||||||||||
| The Group leased properties under non-cancellable operating lease agreements until October 2010, when a long underlease was acquired from the landlord and future obligations ceased. | ||||||||||||||
| The Group also leases property under cancellable operating lease agreements requiring 3 months notice. | ||||||||||||||
| The lease expenditure charged to the income statement during the year is disclosed in note 4. | ||||||||||||||
| 24 | Capital commitments | |||||||||||||
| The Group had authorised capital commitments as at 31 December 2010 of £187,000 (2009: £54,000). | ||||||||||||||
| 25 | Share capital | |||||||||||||
| 2010 | 2009 | |||||||||||||
| £000 | £000 | |||||||||||||
| Authorised | ||||||||||||||
| 86,956,521 Ordinary shares of 23p each | 20,000 | - | ||||||||||||
| 2,000,000,000 Ordinary shares 1p each | - | 20,000 | ||||||||||||
| 1,859,672 'A' shares of 99p each | 1,841 | 1,841 | ||||||||||||
| 21,841 | 21,841 | |||||||||||||
| Allotted, called up and fully paid | ||||||||||||||
| 18,299,952 Ordinary shares of 23p each | 4,209 | - | ||||||||||||
| 251,078,696 Ordinary shares 1p each | - | 2,511 | ||||||||||||
| Issue of ordinary shares of 1p each | - | 1,584 | ||||||||||||
| Shares issued on acquisition of subsidiaries | - | 114 | ||||||||||||
| 4,209 | 4,209 | |||||||||||||
| On 1 October 2009 the Company undertook a share placement to fund the acquisition of Optivite Group. This resulted in £2,957,000 (net of expenses) being credited to the share premium reserve. On the same day consideration shares were issued resulting in £228,000 being credited to the merger reserve. | ||||||||||||||
| On 1 October 2010 the Company undertook a 1 for 23 ordinary share consolidation. | ||||||||||||||
| 26 | Retained earnings | |||||||||||||
| Group | Company | |||||||||||||
| £000 | £000 | |||||||||||||
| At 1 January 2009 | 335 | 335 | ||||||||||||
| Profit for the year | 1,211 | 1,148 | ||||||||||||
| Dividends relating to 2008 | (101) | (101) | ||||||||||||
| Arising on hive up of subsidiaries | - | 96 | ||||||||||||
| At 31 December 2009 | 1,445 | 1,478 | ||||||||||||
| Profit for the year | 1,282 | 1,334 | ||||||||||||
| Dividends relating to 2009 | (210) | (210) | ||||||||||||
| At 31 December 2010 | 2,517 | 2,602 | ||||||||||||
| 27 | Other reserves | |||||||||||||
| Other reserves comprise: | 2010 | 2009 | ||||||||||||
| £000 | £000 | |||||||||||||
| Merger reserve | 228 | 228 | ||||||||||||
| Share based payment reserve | 379 | 279 | ||||||||||||
| Translation reserve | 6 | 1 | ||||||||||||
| 613 | 508 | |||||||||||||
| Movements in other reserves balances are shown in the Consolidated statement of changes in equity. | ||||||||||||||
| 28 | Share-based payments | |||||||||||||
| Movements in the number of share options outstanding have been restated following the share consolidation on 1 October 2010 and are as follows: | ||||||||||||||
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| Weighted average exercise price | Shares | |||||||||||||
| 2010 | 2009 | |||||||||||||
| As restated | ||||||||||||||
| (p) | 000 | 000 | ||||||||||||
| Outstanding at 1 January | 76 | 1,619 | 821 | |||||||||||
| Granted during the year | 82 | 392 | 798 | |||||||||||
| Forfeited or cancelled during the year | 95 | (185) | - | |||||||||||
| Outstanding at 31 December | 76 | 1,826 | 1,619 | |||||||||||
| Exercisable at 31 December | 479 | 679 | ||||||||||||
| Share options outstanding at the end of the year have the following expiry dates and weighted average exercise prices: | ||||||||||||||
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| Shares | ||||||||||||||
| Expiry date | Weighted average |
| ||||||||||||
| exercise price | 2010 | 2009 | ||||||||||||
| (p) |
| As restated | ||||||||||||
| 2015 | 165 | 44 | 54 | |||||||||||
| 2016 | 86 | 397 | 273 | |||||||||||
| 2017 | 104 | 65 | 174 | |||||||||||
| 2018 | 32 | 163 | 320 | |||||||||||
| 2019 | 69 | 765 | 798 | |||||||||||
| 2020 | 82 | 392 | - | |||||||||||
| 1,826 | 1,619 | |||||||||||||
| On 26 April 2010, 98,000 options were forfeit on the retirement of a director. On 28 May 2010 and 27 August 2010 options totalling 305,000 were awarded under the Company's Enterprise Management Incentive Scheme. On 22 December 2010 87,000 options issued in 2007 were cancelled and replaced by new options awarded under the Company's Enterprise Management Incentive Scheme. The fair value of services received in return for share options granted is measured by reference to the fair value of the share options granted. The estimate of fair value received is calculated based on appropriate valuation models. | ||||||||||||||
| The expense is apportioned over the vesting period and is based on the number of financial instruments which are expected to vest and the fair value of those financial instruments at the date of grant. The charge for the year in respect of share options granted amounts to £100,000 (2009: £30,000). | ||||||||||||||
| The weighted average fair value of options granted during the year was determined based on the following assumptions: | ||||||||||||||
| Grant date | 28-May | 27-Aug | 22-Dec | |||||||||||
| Number of options granted (000) | 283 | 22 | 87 | |||||||||||
| Grant price (p) | 86.25 | 88.21 | 88.00 | |||||||||||
| Exercise price (p) | 86.25 | 86.25 | 69.00 | |||||||||||
| Vesting period (years) | 2 | 2 | 0.1 | |||||||||||
| Option expiry (years) | 10 | 10 | 10 | |||||||||||
| Expected volatility of the share price | 37% | 37% | 37% | |||||||||||
| Dividends expected on the shares | 1.33% | 1.30% | 1.31% | |||||||||||
| Risk-free rate | 2.41% | 1.80% | 2.42% | |||||||||||
| Fair value (p) | 27.06 | 27.52 | 34.80 | |||||||||||
| Pricing model | Black-Scholes | Black-Scholes | Black-Scholes | |||||||||||
Copyright Business Wire 2011