The Directors present their Annual Report on the affairs of the Group together with the financial statements and auditor's report for the year ended 30th June 2015.

Principal Activities

The principal activity of the Group during the year was the sale and distribution of licensed veterinary pharmaceuticals and identification products and services to companion animal veterinary markets.

Business Review and Future Developments

A review of the business and future developments is provided in the Chairman's Statement, Chief Executive's Review and Chief Financial Officer's Review.

Research and Development

Our new product development programme is key to the future long-term growth and success of the Group and we are committed to the development of new and innovative products to meet the needs of our customers. Further information in relation to product development can be found in the Our Business and Strategy section of this report. During the year to 30th June 2015 the Group incurred research and development expenses of £143,000 (2014: £260,000) and a further £768,000 (2014: £156,000) was capitalised as development costs.

Dividends

Subject to shareholder approval at the Annual General Meeting on 17th November 2015, the Board proposes paying a final dividend of 4.3 pence per share on 27th November 2015 to shareholders on the register on 23rd October 2015. This will make a total dividend of 6.1 pence per share for 2015.

Capital Structure

The Company's issued share capital as at 30th June 2015 was 21,019,636 ordinary shares of 20 pence each, each credited as fully paid.

Directors

The following Directors held office during the year ended 30th June 2015 and subsequently:

  • C J Brewster
  • Lord Downshire
  • G Gunn (appointed 9th February 2015, resigned 2nd June 2015)
  • R B Harding
  • J S Lambert
  • I D Menneer

Details of Directors' share options and long-term incentive plans are provided in note 7 to the financial statements.

The Company maintains Directors' and Officers' liability insurance for the benefit of its Directors, which was in place throughout the year ended 30th June 2015 and remains in place at the date of this report.

Creditor Payment Policy

We endeavour to maintain strong trading relationships with our suppliers. Terms of payment are agreed with suppliers in advance and it is the Group's policy to settle its liabilities in accordance with these terms. The number of days purchases included in trade creditors at 30th June 2015 was 44 days (2014: 54 days).

Corporate Governance

The Directors support the underlying principles of the UK Corporate Governance Code, notwithstanding that the Group is not required to comply with all of the Code's recommendations. The Board recognises its overall responsibility for the Group's systems of internal control and their effective operation and it has sought to comply with those provisions of the Code judged appropriate for the current size and nature of the Group, being the establishment of an audit committee, a remuneration committee and a nominations committee.

Formally constituted audit, remuneration and nominations committees, with membership comprising two of the Group's three Non-Executive Directors, were established on the Group's admission to AIM and are active in the conduct of internal financial control, Executive performance and remuneration and Board appointments respectively.

Charitable and Political Donations

During the year the Group made charitable donations of £325 (2014: £100). No political donations were made during the year
(2014: £nil).

Employees

The Board recognises that the Group's performance and success are directly related to our ability to attract, retain and motivate high calibre employees. We are committed to linking reward to business and individual performance, thereby giving employees the opportunity to share in the financial success of the Group. Employees are typically provided with financial incentives related to the performance of the Group in the form of annual bonuses. The Board also recognises employees for their contribution through the use of employee incentive plans and share plans within overall remuneration.

Applications for employment by disabled persons are given full and fair consideration. When existing employees become disabled every effort is made to provide continuing employment wherever possible.

Substantial Shareholdings

In accordance with the Disclosure Rules and Transparency Rules, the Company has been notified of the following interests exceeding the 3% notification threshold as at 30th September 2015, a date not more than one month before the date of the notice of the Annual General Meeting:

Name of holderNo. of
ordinary shares
%
holding
Investec Wealth Management Limited including the beneficial shareholding of S F Riddell of 863,500 shares (4.1%)*2,259,49710.7%
Liontrust Asset Management2,059,2519.8%
Octopus Investments1,424,9846.8%
Lord Downshire**1,420,0296.8%
Mr J S Lambert1,413,6916.7%
Unicorn Asset Management1,250,8006.0%
Lazard Freres Gestion1,174,0005.6%
Hargreave Hale1,148,4745.5%

* S F Riddell's shareholding includes a non-beneficial interest in 596,000 ordinary shares

** Lord Downshire's interest includes a non-beneficial interest in 310,446 ordinary shares

Going Concern

The principal risks and uncertainties facing the Group are set out within the performance section.

For the purposes of their assessment of the appropriateness of the preparation of the Group's accounts on a going concern basis, the Directors have considered the current cash position and forecasts of future trading including working capital and investment requirements.

During the year the Group met its day-to-day general corporate and working capital requirements through existing cash resources. At 30th June 2015 the Group had cash on hand of £5.8m (30th June 2014: £3.8m).

Overall, the Directors believe the Group is well placed to manage its business risks successfully and continue to be profitable and cash generative. The Group's forecasts and projections, taking account of reasonable possible changes in trading performance, show that the Group should have sufficient cash resources to meet its requirements for at least the next 12 months. Accordingly, the adoption of the going concern basis in preparing the financial statements remains appropriate.

Auditor

Tortoise

Each of the persons who is a Director at the date of this Annual Report confirms that:

  • So far as the Director is aware, there is no relevant audit information of which the Company's auditor is unaware; and
  • The Director has taken all the steps that he ought to have taken as a Director in order to make himself aware of any relevant audit information and to establish that the Group's auditor is aware of that information.

This confirmation is given and should be interpreted in accordance with the provisions of s418 of the Companies Act 2006.

A resolution to re-appoint KPMG LLP as auditors and to authorise the Directors to determine their remuneration will be put to the members at the forthcoming Annual General Meeting.

Animalcare Group plc

By order of the Board,

Chris Brewster
Company Secretary
13th October 2015