Kiotech International plc · 2020. 7. 24. · Kiotech International plc Annual Report 2009 3...

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Kiotech International plc

Annual Report and Accounts2009

Kiotech supplies high-performance natural feed additives to enhance health, growth and sustainability in agriculture and aquaculture.

Financial Highlights• Headlineprofitbeforetaxof£1,409,105(2008:£482,211)includes£675,417

exceptionalgainfromtheUltrabite®disposal.

• Underlyingprofitbeforetaxandshare-basedpaymentsroseto£763,659(2008:£553,836).

• Salesadvancedto£10,955,355(2008:£5,428,169).

• Cashbalanceincreasedto£5,014,819(2008:£1,867,592)atyearend.

• 25percentincreaseintheproposedfinaldividendto0.05pencepershare(2008:0.04pence).

Operational Highlights• Profitimprovementachievedthrough31percentgrowthinsalesatAgil.

• AcquisitionandintegrationofOptiviteprogressingtoplan.

• FirstsalesofourSalkilgutacidifierachievedinBrazil.

• RegistrationreceivedinChinaforpHorceandfirstsalesachieved.

• Aquatice®givenapprovaltomarketforfinfishspeciesinThailand.

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Kiotech International plc Annual Report 2009 1

Company information

Directors RichardSRoseRichardPEdwardsPeterALawrenceRichardHScraggKarenLPriorDavidMABullen

Secretary KarenLPrior

Company number RegisteredinEnglandnumber03345857

Registered office and Head Office Unit5,MantonWoodEnterprisePark,Worksop,Nottinghamshire,S802RSTelephone:01909537380

Registered Auditors PricewaterhouseCoopersLLP,BensonHouse,33WellingtonStreet,LeedsLS14JP

Bankers Barclays,1ChapelQuarter,MaidMarionWay,Nottingham,NG16HQ

Nominated Adviser and Broker FinnCap,4ColemanStreet,London,EC2R5TA

Registrars ShareRegistrarsLimited,9LionandLambYard,Farnham,Surrey,GU97LLTelephone:01252821390

Website www.kiotech.com

Chairman’sstatement 2Directors’report 4Independentauditors’report 7Consolidatedincomestatement 8Consolidatedstatementofcomprehensiveincome 8Consolidatedandparentcompanybalancesheets 9Consolidatedstatementofchangesinequity 10Consolidatedandparentcompanystatementsofcashflows 11Notestothefinancialstatements 12NoticeofAnnualGeneralMeeting 32

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2 Kiotech International plc Annual Report 2009

Chairman’s statementFortheyearended31December2008

I am pleased to report that this has been another verygood year for the Group, characterised by sound financialresultsfromAgilandtheacquisitionofOptiviteGroup,whichconsolidatesourpositionasaleaderinanimalnutritionandfeed additives. The integration of Optivite is progressingwell with a particularly encouraging performance from itsinternationaldivision.

The disposal of our sports fishing interests has enabledmanagementtoconcentrateonthecommercialisationofourpatentedAquatice®fishfeedingattractant.Thebalancesheetremains strong with good cash generation; management’sfocus is to secure the financial and strategic benefits fromthe recent corporate actions and deliver profit growth andfinancialreturnsforshareholders.

Corporate activityThere were two key events during the year, the purchaseof Optivite Group and the disposal of our Ultrabite® sportsfishinginterests.

On 30 September 2009 shareholders approved the purchaseofOptiviteGroupforapurchasepriceof£3,423,000.Optivite isoneofthelargestanimalnutritionandfeedadditivebusinessesin the UK and specialises in the design, development andmanufacture of non-hazardous, drug-free animal products forthe maintenance and enhancement of feed quality. The pricewas calculated on a debt and excess cash free basis andthe consideration was satisfied by the issue of considerationshares to the value of £342,300 with the balance payable incash.AtthesametimetheCompanyraised£4,752,307beforeexpenses, through the placing of 158,410,233 new ordinarysharesatthreepenceeach.Intheyearto28February2009OptiviteGrouphadsalesof£17,520,000andprofitbeforetaxof£654,000.

On 16 December 2009 Kiotech announced the sale of itsUltrabite® sports fishing pheromone attractant brand andtheassociatedrightsunderitslicenseagreementwithCefas(Centre for the Environment, Fisheries and AquacultureScience). Kiotech is retaining its licensing rights for thetechnology to the global aquaculture and commercialfishing markets under the Aquatice® brand. The grosscash consideration was e900,000 (£803,571 at £1 = e1.12).Ultrabite® represented a small part of the Company’s salesandtheBoardofKiotechconsidersthisdisposaltobeinthebestinterestsofshareholders.

ResultsIn the year to 31 December 2009 headline profit before taxwas £1,409,105 (2008: £482,211), including the exceptionalgain of £675,417 on the Ultrabite® sale. Sales more thandoubledto£10,955,355(2008:£5,428,169)whilepretaxprofit,before share-based payments and the Ultrabite® disposal,advancedsignificantlyto£763,659(2008:£553,836).Thisresultwas driven by an excellent performance from Agil and amaidenthreemonthscontributionfromOptivite.Thebalancesheet remains very sound and the year ended with a cash

balance of over £5 million (2008: £1.87 million) underliningthe cash generative quality of the business, the sale of thesports fishing business and the share placing. These fundswillbeavailableforinvestingintheexpansionofthebusinessthroughtradingandappropriateacquisitions.

The Board is delighted to declare a final dividend of0.05 pence per share for the year to 31 December 2009, anincreaseof25percentoverthepreviousyear’smaidenfinaldividendof0.04pence.Shareholderapprovalwillbesoughtat the Annual General Meeting on 30 June 2010 to pay thefinaldividendon30July2010toshareholdersontheregisteron2July2010.

Operations — AgricultureThis was another very good year for the division withAgil delivering a sales increase of over thirty per cent.Performances in Bangladesh, Chile, Greece, Iran, SaudiArabia and Turkey were particularly encouraging; we haveworked closely with our distributors to win business fromsome of the leading poultry integrators in these countries.SalmonellaissuesinFinlandincreaseddemandforourSalkilproductandVietnam,anewterritoryforAgil,performedwell.

Management continues to review, and where necessaryamend, its distribution arrangements to ensure that theglobalmarketingofitsproductsisbeinghandledinthemostefficient and cost effective manner by distributors with astrongpresenceintheirmarkets.InThailandourdistributorcommencedsalesofouranti-oxidantproductsusedinanimalfeedapplicationsandhasnowstartedtoregisteranumberof organic acid products for sale in the Thai agriculturalmarket. We have recently registered a number of productsin Brazil and South Africa, including Salkil, the Company’skey acidifier for the poultry market. Securing registrationin Brazil has been a lengthy process and we are delightedthatourorganicacidproductsarenowbeingsold intooneof the world’s largest poultry and pig meat markets. This isan important step and we look forward to receiving furtherregulatoryapprovalsinduecourse.

The Group’s wholly owned subsidiary in China is nowfully established and we have recently received productregistrationforourgutacidifierpHorce;furtherapprovalsareexpected.WehavealreadybeguntocapitaliseonOptivite’spresence in China with Genex®, a performance enhancingacid and essential oil combination, which is registered inChina as a feed additive. We have transferred the productto the Kiotech team, who, with the technical support ofOptivite,haverecentlyheldaseriesofcustomerseminarstopromote the product. China is the world’s largest producerandconsumerofpigandpoultrymeatandisrapidlyadoptingsophisticated production techniques with a requirement forourrangeofspecialisttechnicalfeedadditiveproducts.

Product development is central to driving organic growthandourrecentlylaunchedgutacidifier,pHorce,continuestogrowasnewcustomers,particularlyinthegrowerpigmarket,

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experience the health and financial benefits from usingthe product. We are also in the final stages of developingand launching a number of other products drawing on thenutritionalexpertiseofOptivite.

Optivite integrationOptivite’sUKbusinesssellsfeedadditives,mineralandvitaminpremixes, fats and concentrates and organic feed; the lattermarketed under the Vitrition brand. There are opportunities toimprovegrossmarginsintheseareasbyapplyingbetterpricingcontrolmethodsandensuringthatrawmaterialpriceincreasesarepassedonasquicklyaspossiblethroughsellingprices.Wehavealsoimprovedoursalesmanagementstructureidentifyingkey market segments that require a more relationship drivenapproach, such as the pig and poultry home-mix market. Asa result, we are strengthening the sales and technical teamthroughrecruitment.

We have consolidated the purchasing function and there hasbeensomecrosssellingofproductsbetweenthetwobrands,which is helping to broaden Agil’s product range. We arestrengthening the international account management team tohelp speed up the opening of new territories and in turn thesalesgrowth,giventhatOptivite’sinternationalbusinesshasapresenceinover30countriescomparedtoAgil’s50countries.

A feature of the integration has been the positive reactionfromemployeesofbothcompaniesandtheirhardworkandenthusiasm has helped to facilitate the process. Financialmanagement and control has been fully integrated and isnowbasedattheOptiviteofficeinWorksop.Wearealreadysecuring cost savings and identifying market and productopportunities. Further investment is being made to improveinformation systems and head office infrastructure. It willinevitablybeawhilebeforethefullbenefitsoftheacquisitionarefeltbuttheearlyindicationsareverypromising.

Operations — AquacultureAt the end of 2009 the Thailand Department of FisheriesapprovedtheuseofAquatice®forfinfishasawateradditive.ThissignificanteventallowstheGrouptomarketandsellfinfishproducttotilapiaandcatfishfarmersinThailand,wherewecandemonstrateeffective results in these twospecies.TotalannualproductionforallspeciesoftilapiaandcatfishinThailandisaround350,000metrictonnes,requiringabouthalfamilliontonnesoffeed.Ourtrialsintilapiaandcatfishhaveproducedsignificantimprovementsinfeedconversionratio,which potentially will deliver attractive financial benefits tofarmers.

The registration dossier for shrimp Aquatice® is in thefinal stages of preparation and further trials are beingundertakeninanumberofcountries.Newtechnology,suchasAquatice®,requiresacertainamountofpioneeringintermsof determining the most appropriate route to registrationandworkingwithcustomers toadopt theproduct into theirfarmingregimes.OurkeyfocusremainsThailandwherewewillprovethecommercialvalueinherentinAquatice®.

Board membershipThe Board has been enlarged following the Optiviteacquisitionwiththeappointmentofthreeexecutivedirectors.RichardScragg,theChairmanandfounderofOptivite,joinedthe Board on 30 September 2009, following the completionoftheacquisition.KarenPriorwasappointedGroupfinancedirectorandCompanysecretaryon1October2009andjoinedthe Company on that date. David Bullen was appointed adirectorandchiefoperatingofficeron13October2009;DavidhasbeengeneralmanagerofAgilsinceJuly2007.IamverypleasedtowelcomeRichard,KarenandDavidtotheBoard,whereeachisalreadymakingasignificantcontribution.

OutlookTheyearhasstartedencouraginglywithourinternationalbrandstradingwellandtheintegrationofOptivitecontinuingonplan.WeareparticularlyexcitedbythepotentialinChinaandBrazilandalsoanumberofnewproductdevelopments,whichareduetobelaunchedlaterthisyear.Theregistrationtimetableandcustomeradoptionwillgoverntheperformanceofouraquaculturedivision,but our focus in Thailand should begin to see some success.Financiallyweareverysoundwithastrongcashposition,whichallows us to consider further acquisition opportunities, at therightprice,tobroadenourproductandgeographicspreadandenhanceshareholdervalue.

Richard S RoseChairman

25May2010

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Thedirectorspresenttheirannualreportandauditedfinancialstatementsfortheyearended31December2009.

DirectorsThedirectorsduringtheyearunderreviewwere:

RichardRoseRichardEdwardsPeterLawrenceMarkNicholls(retired26April2010)RichardScragg(appointed30September2009)KarenPrior(appointed1October2009)DavidBullen(appointed13October2009)

Principal activitiesTheprincipalactivitiesoftheGroupintheyearunderreviewwere those of the manufacture and supply of animal feedadditivesandthedevelopmentandmarketingofbiochemicalstimulantsforaquaculture.

Results and dividendsTheconsolidatedincomestatementfortheyearissetoutonpage8.

The profit for the year before tax was £1,409,105 (2008:£482,211).Thedirectorsproposeafinaldividendof0.05ppershare(2008:0.04p).

Substantial shareholdingsAt20April2010,theCompanyhadbeennotifiedofthefollowingholdingsof3percentormoreofitsissuedsharecapital.

Ordinary sharespercent

ISISEPLLP 66,667,293 15.84UnicornAssetManagement 54,333,634 12.91AmatiGlobalInvestors 29,600,000 7.03WilliamsDeBroë 28,103,668 6.68InvescoAssetManagement 25,630,905 6.09ArtemisInvestmentManagement 20,238,097 4.81AXAFramlingtonInvestmentManagement19,309,527 4.59

Group research and development activitiesThe Group is continually researching into and developingnew products and markets. Details of expenditure incurredandwrittenoffduringtheyearareshowninthenotestothefinancialstatements.

Review of the business and future developmentsAfullreviewoftheyear,togetherwithanindicationoffuturedevelopments,isgivenintheChairman’sstatementonpages2and3.

On30September2009theGroupacquiredtheOptiviteGroupwhoseassetsandliabilitieswerethenhiveduptotheParentCompanyon31December2009.

Principal risks and uncertainties

TheDirectorspresentbelowtheirreviewoftheprincipalrisksanduncertainties facing thebusiness. Ifanyof the followingrisksmaterialise,theCompany’sbusiness,financialcondition,prospectsandsharepricecouldbemateriallyandadverselyaffected.TheDirectorsconsiderthefollowingrisksalongwithspecific financial risks outlined in Note 2.18 to the financialstatements, are the most significant but not necessarily theonlyonesassociatedwiththeCompanyanditsbusinesses.

CompetitionTheGroupoperatesincompetitiveglobalmarketsandthereare no assurances that the Group’s competitiveness willimproveor that itwillwinanyadditionalmarketshare fromanyofitscompetitorsormaintainexistingmarketshares.Wereviewourpricingandtakeactiontocontrolourcostbasetoensurethatweremainascompetitiveaspossibleandprotectourmargins.Failuretodothismayresultinmateriallylowermarginsandlossofmarketshare.

DependenceonkeycustomersThe Group is dependent on a number of customers anddistributors in each of the territories it sells to. The loss ofoneormoreof itskeycustomerscouldresult in lowerthanexpectedsalesandhaveasignificantimpactonthescaleofitsoperations.TheGroupseekstominimiserelianceonkeyterritoriesandindividualcustomersanddistributors.

PricesofrawmaterialsThe Group’s profitability may be reduced due to increasesin the price of raw materials and commodities, which canexperiencepricevolatility,causedbythepriceofoil,demandand specific commodity market and currency fluctuations.InmitigationtheGroupseekstopassonincreasedcoststoits customers and a number of suppliers are used in orderto secure the best prices and there is close monitoring ofmarginswithindividualcustomers.

Directors’ reportFortheyearended31December2008

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Key performance indicatorsThe key performance indicators (“KPIs”) for the Group arethose that communicate the financial performance andstrength of the Group, as a whole, to shareholders. Inaddition, other key non-financial performance indicatorsarealsousedbymanagement inrunningandassessingtheperformanceoftheindividualbusinesseswithintheGroup.

AsummaryoftheKPIsisasfollows:

2009 2008 £ £

Financial Revenue 10,955,3555,428,169Grossprofit 3,132,331 1,897,022Underlyingprofitbeforetaxandshare-basedpayments 763,659 553,836

Non-financial Healthandsafety–majoraccidentsreportabletotheBoardintheyear — —

TheGroupalso regards theongoingachievementofproductregistrationsandqualityassuranceaccreditationsasamajorKPI.

Directors’ interestsThe directors’ interests in the shares of the Company andotherGroupcompanieswereasstatedbelow:

Ordinaryshares of1peach

31Dec 31Dec 2009 2008

(ordateofappointment)

RSRose 714,300 714,300RPEdwards 751,667 751,667PALawrence 642,870 642,870MRNicholls 71,430 71,430RHScragg 6,637,529 —KLPrior — —DMABullen — —

UndertheGroup’senterprisemanagementincentiveschemeandunapprovedshareschemethefollowingdirectorshavetherighttoacquireOrdinarysharesasfollows:

2009 2008 (ordateof appointment)

RSRose at7.00p 500,000 500,000 at5.00p 500,000 500,000RPEdwards at1.38p 2,500,000 2,500,000 at3.00p 14,276,967 6,276,967PALawrence at7.38p 500,000 500,000 at5.00p 500,000 500,000MRNicholls at1.38p 750,000 750,000 at3.00p 750,000 — at5.00p 500,000 500,000 at7.25p 250,000 250,000KLPrior at3.00p 3,000,000 —DMABullen at1.38p 750,000 750,000 at3.00p 6,000,000 — at3.50p 500,000 500,000

Creditors payment policyThe Company agrees terms and conditions for its businesstransactions with its suppliers and payments are made ontheseterms,subjecttothetermsandconditionsbeingmetbythesuppliers.Tradecreditorsattheyearendamountedto62days(2008:83days)ofaveragesuppliesfortheyearagainsttermsagreedwithoursuppliers.

Internal financial controlTheboardofdirectorsisresponsiblefortheGroup’ssystemof internal financial control. Internal control systems aredesigned to meet the particular needs of the companiesconcerned and the risks to which they are exposed. Thisprovides reasonable, but not absolute, assurance againstmaterial misstatement or loss. Strict financial and othercontrols are exercised by the Group over its subsidiarycompanies by day-to-day supervision of the businesses bythedirectors.

Corporate governanceThe Company’s shares are traded on the AlternativeInvestment Market of the London Stock Exchange and theCompany is therefore not required to report on compliancewiththeCombinedCode.ThedirectorssupporttheCombinedCode and are implementing many of the recommendationswhich are relevant to a business the size of KiotechInternationalplc.

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Directors’ report

Charitable and political contributionsTherewerenocharitabledonationsmadeintheyear(2008:nil).

Therewerenodonationsmadetopoliticalparties(2008:nil).

StockbrokersFinnCapistheCompany’sstockbrokerandnominatedadviser.

Theclosingsharepriceon31December2009was3.62ppershare(2008:1.125p).

AuditorsOn23December2009FWStephensresignedasauditorsandthedirectorsappointedPricewaterhouseCoopersLLPintheirplace.Aresolutionproposing thatPricewaterhouseCoopersLLPbereappointedwillbeputtotheAnnualGeneralMeeting.

IndemnitiesByvirtueof,andsubjectto,Article172ofthecurrentArticlesofAssociationoftheCompany,theCompanyhasgrantedanindemnity to every director, alternate director, Secretary orotherofficeroftheCompany.Suchprovisionsremaininforceatthedateofthisreport.TheGrouphasarrangedappropriateinsurancecoverforanylegalactionagainstthedirectorsandofficers.

Statement of directors’ responsibilitiesThedirectorsareresponsibleforpreparingtheAnnualReportand the financialstatements inaccordancewithapplicablelawandregulations.

Company law requires the directors to prepare financialstatements for each financial year. Under that law thedirectors have prepared the Group and Parent Companyfinancial statements in accordance with InternationalFinancial Reporting Standards (IFRSs) as adopted by theEuropeanUnion.Undercompanylawthedirectorsmustnotapprove the financial statements unless they are satisfiedthattheygiveatrueandfairviewofthestateofaffairsoftheGroupandtheCompanyandoftheprofitorlossoftheGroupforthatperiod. Inpreparingthesefinancialstatements,thedirectorsarerequiredto:

— selectsuitableaccountingpoliciesandthenapplythemconsistently;

— make judgements and accounting estimates that arereasonableandprudent;

— state whether applicable IFRSs as adopted by theEuropean Union have been followed, subject to anymaterial departures disclosed and explained in thefinancialstatements;

— prepare the financial statements on the going concernbasis unless it is inappropriate to presume that theCompanywillcontinueinbusiness.

The directors are responsible for keeping adequateaccounting records that are sufficient to show and explainthe Company’s transactions and disclose with reasonableaccuracy at any time the financial position of the CompanyandtheGroupandenable themtoensurethat thefinancialstatements comply with the Companies Act 2006. They arealsoresponsibleforsafeguardingtheassetsoftheCompanyandtheGroupandhencefortakingreasonablestepsforthepreventionanddetectionoffraudandotherirregularities.

The directors are responsible for the maintenance andintegrityoftheCompany’swebsite.LegislationintheUnitedKingdom governing the preparation and dissemination offinancial statements may differ from legislation in otherjurisdictions.

Statement of disclosure to auditorSofarasthedirectorsareaware;

(a) there is no relevant audit information of which theGroup’sauditorsareunaware,and

(b) they have taken all the steps that they ought to havetakenasdirectorsinordertomakethemselvesawareofany relevant audit information and to establish that theGroup’sauditorsareawareofthatinformation.

OnbehalfoftheBoard

Karen L PriorCompanySecretary

25May2010


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We have audited the Group and Parent Company financialstatements (the ‘‘financial statements’’) of KiotechInternational plc for the year ended 31 December 2009which comprise the Consolidated income statement,the Consolidated and parent company balance sheets,the Consolidated statement of changes in equity, theConsolidatedandparentcompanystatementsofcashflows,and the related notes. The financial reporting frameworkthathasbeenapplied in theirpreparation isapplicable lawand International Financial Reporting Standards (IFRSs) asadopted by the European Union and, as regards the ParentCompanyfinancialstatements,asappliedinaccordancewiththeprovisionsoftheCompaniesAct2006.

Respective responsibilities of directors and auditorsAs explained more fully in the Directors’ ResponsibilitiesStatement set out on page 6, the directors are responsibleforthepreparationofthefinancialstatementsandforbeingsatisfiedthattheygiveatrueandfairview.Ourresponsibilityis to audit the financial statements in accordance withapplicable lawand InternationalStandardsonAuditing (UKandIreland).ThosestandardsrequireustocomplywiththeAuditingPracticesBoard’sEthicalStandardsforAuditors.

Thisreport,includingtheopinions,hasbeenpreparedforandonly for the Company’s members as a body in accordancewithChapter3ofPart16oftheCompaniesAct2006andfornootherpurpose.Wedonot,ingivingtheseopinions,acceptorassumeresponsibilityforanyotherpurposeortoanyotherpersontowhomthisreportisshownorintowhosehandsitmaycomesavewhereexpresslyagreedbyourpriorconsentinwriting.

Scope of the audit of the financial statementsAn audit involves obtaining evidence about the amountsand disclosures in the financial statements sufficient togive reasonable assurance that the financial statementsare free from material misstatement, whether caused byfraud or error. This includes an assessment of: whetherthe accounting policies are appropriate to the Group’s andParentCompany’scircumstancesandhavebeenconsistentlyapplied and adequately disclosed; the reasonableness ofsignificantaccountingestimatesmadebythedirectors;andtheoverallpresentationofthefinancialstatements.

Opinion on financial statements Inouropinion:

— thefinancialstatementsgiveatrueandfairviewof thestateoftheGroup’sandoftheParentCompany’saffairsas at 31 December 2009 and of the Group’s profit andGroup’s and Parent Company’s cash flows for the yearthenended;

— the Group financial statements have been properlyprepared in accordance with IFRSs as adopted by theEuropeanUnion;

— the Parent Company financial statements have beenproperlypreparedinaccordancewithIFRSsasadoptedbytheEuropeanUnionandasappliedinaccordancewiththeprovisionsoftheCompaniesAct2006;and

— the financial statements have been prepared inaccordancewiththerequirementsoftheCompaniesAct2006.

Opinion on other matter prescribed by the Companies Act 2006Inouropinion the informationgiven in theDirectors’ reportforthefinancialyearforwhichthefinancialstatementsarepreparedisconsistentwiththefinancialstatements.

Matters on which we are required to report by exceptionWehavenothingtoreportinrespectofthefollowingmatterswheretheCompaniesAct2006requiresustoreporttoyouif,inouropinion:

— adequateaccountingrecordshavenotbeenkeptbytheParentCompany,orreturnsadequateforouraudithavenotbeenreceivedfrombranchesnotvisitedbyus;or

— the Parent Company financial statements are not inagreementwiththeaccountingrecordsandreturns;or

— certain disclosures of directors’ remuneration specifiedbylawarenotmade;or

— wehavenotreceivedalltheinformationandexplanationswerequireforouraudit.

Ian Morrison (SeniorStatutoryAuditor)forandonbehalfofPricewaterhouseCoopersLLPCharteredAccountantsandStatutoryAuditorsLeeds

25May2010

Independent auditors’ reporttothemembersofKiotechInternationalplc

Consolidated income statementFortheyearended31December2009


2009 2008 Notes £ £

Revenue 3 10,955,355 5,428,169Costofsales (7,823,024) (3,531,147)

Gross profit 3,132,331 1,897,022Administrativeexpenses (2,429,534) (1,468,185)Gainsonsaleofintellectualproperty 5 675,417 —

Operating profit 1,378,214 428,837Interestreceivable 8 31,463 53,374Interestpayable 8 (572) —

Profit before income tax 1,409,105 482,211Incometaxexpense 11 (193,667) (146,583)

Profit for the year from continuing operations 1,215,438 335,628

Profitfortheyearattributableto:Ownersoftheparent 1,211,068 335,628Minorityinterest 4,370 —

1,215,438 335,628

TheConsolidatedincomestatementhasbeenpreparedonthebasisthatalloperationsarecontinuingoperations.

EarningspershareattributabletotheequityholdersoftheCompany:Basicearningspershare(pence) 9 0.41 0.13Dilutedearningspershare(pence) 9 0.41 0.13

TheCompanyhaselectedtotaketheexemptionundersection408oftheCompaniesAct2006tonotpresenttheParentCompanyprofitandlossaccount.TheprofitfortheParentCompanyfortheyearwas£1,147,790(2008:£335,628).

Consolidated statement of comprehensive incomeFortheyearended31December2009

2009 2008 £ £

Profit for the year 1,215,438 335,628Currencytranslationdifferences 1,394 —

Totalcomprehensiveincomefortheyear 1,216,832 335,628

Attributable to owners of the parent 1,212,462 335,628Minorityinterest 4,370 —

Totalcomprehensiveincomefortheyear 1,216,832 335,628

Thenotesonpage12to31formpartofthesefinancialstatements.

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Group Company 2009 2008 2009 2008 Notes £ £ £ £

Non-current assetsIntangibleassets 12 6,772,475 4,279,084 6,772,475 4,279,084Property,plantandequipment 13 663,013 359,461 651,803 359,461Investmentsinsubsidiaries 14 — — 2,623,963 —

7,435,488 4,638,545 10,048,241 4,638,545

Current assetsInventories 15 1,290,663 469,595 1,230,298 469,595Tradeandotherreceivables 16 4,910,850 1,694,559 4,846,553 1,694,559Cashandcashequivalents 17 5,014,819 1,867,592 4,901,476 1,867,592

11,216,332 4,031,746 10,978,327 4,031,746

Total assets 18,651,820 8,670,291 21,026,568 8,670,291

Equity and liabilitiesCalledupsharecapital 24 4,208,989 2,510,787 4,208,989 2,510,787Sharepremiumaccount 24 2,956,612 — 2,956,612 —Otherreserves 26 508,293 248,728 506,899 248,728Specialreserve 4,441,396 4,441,396 4,441,396 4,441,396Retainedearnings 25 1,445,313 334,675 1,478,360 334,675

13,560,603 7,535,586 13,592,256 7,535,586

Minority Interests 44,781 — — —

Total equity 13,605,384 7,535,586 13,592,256 7,535,586

Non-current liabilitiesBorrowings 19 29,626 — 29,626 —Deferredincometaxliabilities 20 492,867 — 492,867 —

522,493 — 522,493 —

Current liabilitiesTradeandotherpayables 18 4,108,976 1,002,495 6,488,025 1,002,495Corporationtax 414,967 132,210 423,794 132,210

4,523,943 1,134,705 6,911,819 1,134,705

Total liabilities 5,046,436 1,134,705 7,434,312 1,134,705

Total equity and liabilities 18,651,820 8,670,291 21,026,568 8,670,291

Thenotesonpages12to31formpartofthesefinancialstatements.

ApprovedbytheBoardandauthorisedforissueon25May2010.

Richard P EdwardsDirector

Consolidated and parent company balance sheetsAsat31December2009

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Consolidated statement of changes in equityFortheyearended31December2009

Attributable to Share Share Special Other Retained Minority Totalthe owners capital premium reserve reserves earnings Total interests equityof the Parent £ £ £ £ £ £ £ £

Balanceat1January2008 2,510,787 9,844,198 — 177,103 (7,244,830) 5,287,258 — 5,287,258

Profit — — — — 335,628 335,628 — 335,628

Totalcomprehensiveincomefortheyear — — — — 335,628 335,628 — 335,628

TransactionswithownersCapitalrestructuring — (9,844,198) 4,441,396 — 7,243,877 1,841,075 — 1,841,075Share-basedpaymentadjustments — — — 71,625 — 71,625 — 71,625

Transactionswithowners — (9,844,198) 4,441,396 71,625 7,243,877 1,912,700 — 1,912,700

Balanceat1January2009 2,510,787 — 4,441,396 248,728 334,675 7,535,586 — 7,535,586Profit — — — — 1,211,068 1,211,068 4,370 1,215,438Currencytranslationdifferences — — — 1,394 — 1,394 — 1,394

Totalcomprehensiveincomefortheyear — — — 1,394 1,211,068 1,212,462 4,370 1,216,832

TransactionswithownersIssueofshares 1,698,202 2,956,612 — 228,200 — 4,883,014 — 4,883,014Share-basedpaymentadjustments — — — 29,971 — 29,971 — 29,971Dividendsrelatingto2008 — — — — (100,430) (100,430) — (100,430)

Transactionswithowners 1,698,202 2,956,612 — 258,171 (100,430) 4,812,555 — 4,812,555

Minorityinterestsarisingonacquisitionofsubsidiary(note28) — — — — — — 40,411 40,411

Balance at 31 December 2009 4,208,989 2,956,612 4,441,396 508,293 1,445,313 13,560,603 44,781 13,605,384


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Consolidated and parent company statements of cash flowsFortheyearended31December2009at31December2008

Group Company 2009 2008 2009 2008 Notes £ £ £ £

Cash flows from operating activitiesCashgeneratedfromoperatingactivities 29 2,421,103 573,124 2,378,457 573,124Interestpaid (572) — — —Incometaxpaid (340,092) (140,948) (121,638) (140,948)

Net cash generated from operating activities 2,080,439 432,176 2,256,819 432,176

Cash flows from investing activitiesAcquisitionofsubsidiary,netofcashacquired 14,28 (3,126,656) — (3,971,715) —Cashacquiredfromsubsidiarieshivedup 28 — — 517,341 —Paymentstoacquireintangiblefixedassets 12 (225,870) (276,594) (225,870) (276,594)Purchasesofplantandequipment 13 (43,989) (7,073) (13,832) (7,073)Interestreceived 31,463 53,374 30,857 53,374

Net cash used in investing activities (3,365,052) (230,293) (3,663,219) (230,293)

Cash flows from financing activitiesProceedsfromissuanceofordinaryshares 24 4,540,714 — 4,540,714 —DividendpaidtoCompany’sshareholders 10 (100,430) — (100,430) —Repaymentofborrowings (8,444) — — —

Net cash used in financing activities 4,431,840 — 4,440,284 —

Netincreaseincashandcashequivalents 3,147,227 201,883 3,033,884 201,883Cashandcashequivalentsatbeginningofyear 1,867,592 1,665,709 1,867,592 1,665,709

Cash and cash equivalents at end of year 17 5,014,819 1,867,592 4,901,476 1,867,592


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Notes to the financial statementsFortheyearended31December2008

1 General informationKiotech International plc (“the Company”) and its subsidiaries (together “the Group”) manufacture and supply products to enhancehealth,growthandsustainabilityinagricultureandaquaculture.TheCompanyacquiredtheOptiviteGroupon30September2009.

TheCompany is tradedon theLondonStockExchangeAiMmarketand is incorporatedanddomiciled in theUK.Theaddressof itsregisteredofficeisUnit5,MantonWoodEnterprisePark,Worksop,Nottinghamshire,S802RS.

2 Summary of significant accounting policies

2.1 Basis of preparationThe Group has presented its annual report and accounts in accordance with International Financial Reporting Standards (IFRS), asendorsedbytheEuropeanUnion,IFRICinterpretationsandtheCompaniesAct2006applicabletocompaniesreportingunderIFRS.

Thepreparationoffinancialstatementsinconformitywithgenerallyacceptedaccountingprinciplesrequirestheuseofestimatesandassumptionsthataffectthereportedamountsofassetsandliabilitiesatthedateofthefinancialstatementsandthereportedamountsofrevenuesandexpensesduringthereportingperiod.Althoughtheseestimatesarebasedonmanagement’sbestknowledgeof theamount,eventoractions,actualresultsultimatelymaydifferfromthoseestimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised intheperiodinwhichtheestimateisrevisediftherevisionaffectsonlythatperiod,orinaperiodoftherevisionandfutureperiodsiftherevisionaffectsbothcurrentandfutureperiods.

TheprincipalaccountingpoliciesoftheGrouparesetoutbelow,andhavebeenappliedconsistentlyindealingwithitemswhichareconsideredmaterialinrelationtotheGroup’sfinancialstatements.

2.2 Adoption of new and revised standardsThegrouphasadoptedthefollowingnewandamendedIFRSsasof1January2009:

IAS1(revised),‘Presentationoffinancialstatements’.Therevisedstandardprohibitsthepresentationofitemsofincomeandexpenses(thatis‘non-ownerchangesinequity’)inthestatementofchangesinequity,requiring‘non-ownerchangesinequity’tobepresentedseparately from owner changes in equity. All ‘non-owner changes in equity’ are required to be shown in a performance statement.Entitiescanchoosewhethertopresentoneperformancestatement(thestatementofcomprehensiveincome)ortwostatements(theincomestatementandthestatementofcomprehensiveincome).

TheGrouphaselectedtopresenttwostatements:anincomestatementandastatementofcomprehensiveincome.

IFRS8, ‘Operatingsegments’. IFRS8 replaces IAS14, ‘Segment reporting’. It requiresa ‘managementapproach’underwhichsegmentinformationispresentedonthesamebasisasthatusedforinternalreportingpurposes.

IFRS2 (amendment) ‘Share-based payment’ deals with vesting conditions and cancellations. It clarifies that vesting conditions areserviceconditionsandperformanceconditionsonly.Otherfeaturesofashare-basedpaymentarenotvestingconditions.Thesefeatureswouldneedtobeincludedinthegrantdatefairvaluefortransactionswithemployeesandothersprovidingsimilarservices;theywouldnotimpactonthenumberofawardsexpectedtovestorvaluationthereofsubsequenttograntdate.Allcancellations,whetherbytheentityorbyotherparties,shouldreceivethesameaccountingtreatment.TheamendmentdoesnothaveamaterialimpactontheGroup’sfinancialstatements.

Atthedateofauthorisationofthesefinancialstatements,thefollowingStandardsandInterpretationswhichhavenotbeenappliedinthesefinancialstatementswereinissuebutnotyeteffective(andinsomecaseshadnotyetbeenadoptedbytheEU):

IFRS1(amended2008)FirsttimeadoptionofIFRSIFRS2Groupcashsettledshare-basedpaymenttransactionsIFRS3(revised2008)BusinessCombinationsIAS17(amended)LeasesIAS27(revised2008)ConsolidatedandSeparateFinancialStatementsIAS39(amended2008)FinancialInstruments:RecognitionandMeasurement

ThedirectorsanticipatethattheadoptionoftheseStandardsandInterpretationsinfutureperiodswillhavenomaterialimpactonthefinancialstatementsoftheGroup.

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2.3 Basis of consolidation TheconsolidatedfinancialstatementscomprisetheaccountsoftheCompanyanditssubsidiariesdrawnupto31December2009.

The purchase method of accounting is used to account for the acquisition of subsidiaries by the Group. The cost of an acquisition ismeasured,asthefairvalueoftheassetsgiven,equityinstrumentsissuedandliabilitiesincurredorassumedatthedateofexchange,pluscostsdirectlyattributabletotheacquisition.Identifiableassetsacquiredandcontingentliabilitiesassumedinabusinesscombinationaremeasuredinitiallyattheirfairvaluesattheacquisitiondate,irrespectiveoftheextentofanyminorityinterest.TheexcessofthecostofacquisitionoverthefairvalueoftheGroup’sshareoftheidentifiablenetassetsacquiredisrecordedasgoodwill.Ifthecostofacquisitionislessthanthefairvaluethedifferenceisrecogniseddirectlyintheincomestatement.

Intercompanytransactions,balancesandunrealisedgainsontransactionsbetweengroupcompaniesareeliminatedonconsolidation. AccountingpolicieshavebeenchangedwherenecessarytoensureconsistencywiththepoliciesadoptedbytheGroup.

2.4 Segment reportingOperating segments are reported in a manner consistent with the internal reporting to the chief operating decision-maker. The chiefoperatingdecision-makerwhoisresponsibleforallocatingresourcesandassessingperformanceoftheoperatingsegments,hasbeenidentifiedastheBoard.

2.5 Foreign currency translationMonetaryassetsandliabilitiesdenominatedinforeigncurrenciesaretranslatedintoPoundsSterlingattheratesofexchangerulingatthebalancesheetdate.Transactionsinforeigncurrenciesarerecordedattheraterulingatthedateofthetransaction.Alldifferencesareincludedintheprofitorlossfortheperiod.

(a) Functionalandpresentationalcurrency ItemsincludedinthefinancialstatementsofeachoftheGroup’sentitiesaremeasuredusingthecurrencyoftheprimaryeconomic

environment in which the entity operates (‘functional currency’). The consolidated financial statements are presented in PoundsSterling,whichistheCompany’sfunctionalandpresentationalcurrency.

(b) Transactionsandbalances Foreign currency transactions are translated into the functional currency using exchange rates prevailing at the date of the

transactions.Foreignexchangegainsandlossesresultingfromthesettlementofsuchtransactionsandfromthetranslationatperiodendexchangeratesofmonetaryassetsandliabilitiesdenominatedinforeigncurrenciesarerecognisedintheincomestatement,exceptwhendeferredinequityasqualifyingcashflowhedgesandqualifyingnetinvestmenthedges.

Translationdifferencesonnon-monetaryfinancialassetsandliabilitiesarereportedaspartofthefairvaluegainorloss.Translationdifferencesonnon-monetaryfinancialassetsandliabilitiessuchasequitiesheldatfairvaluethroughprofitorlossarerecognisedaspartofthefairvaluegainorloss.

(c) Groupcompanies TheresultsandfinancialpositionofallGroupentitiesthathaveafunctionalcurrencydifferentfromthepresentationcurrencyare

translatedintothepresentationcurrencyasfollows:

—assetsandliabilitiesforeachbalancesheetpresentedaretranslatedattheclosingexchangerateatthedateofthebalancesheet;

—income and expenses for each income statement are translated at average exchange rates (unless this average is not areasonableapproximationofthecumulativeeffectoftheratesprevailingonthetransactiondates,inwhichcasetheincomeandexpensesaretranslatedattherateonthedatesofthetransaction);and

—allresultingexchangedifferencesarerecognisedasaseparatecomponentofequity.

Onconsolidation,exchangedifferencesarisingfromthetranslationofthenet investment inforeignoperations,andofborrowingsandothercurrency instrumentsdesignatedashedgesofsuch investments,are takentoshareholders’equity.Whena foreignoperation ispartiallydisposedoforsold,exchangedifferencesthatwererecognisedinequityarerecognisedintheincomestatementaspartofthegainorlossonsale.Goodwillandfairvalueadjustmentsarisingontheacquisitionofaforeignentityaretreatedasassetsandliabilitiesoftheforeignentityandtranslatedattheclosingexchangerate.

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2.6 Intangible assets(a) Patentsandtrademarks Separatelyacquiredpatentsand trademarksareshownathistoricalcost.Patentsand trademarkshave finiteuseful lifeandare

carried at cost less accumulated amortisation. Amortisation is calculated using the straight-line method to allocate the cost ofpatentsandtrademarksovertheirestimatedusefullivesof20years.

(b) Goodwill GoodwillrepresentstheexcessofthecostofanacquisitionoverthefairvalueoftheGroup’sshareoftheidentifiablenetassets

acquired.Goodwillistestedannuallyforimpairmentandcarriedatcostlessaccumulatedimpairmentlosses.Goodwillisallocatedtotheappropriatecash-generatingunitforthepurposeofimpairmenttesting.Anyimpairmentisrecognisedimmediatelythroughtheincomestatementandisnotsubsequentlyreversed.

(c) Developmentcosts Developmentcostsarerecognisedifitisprobablethattherewillbefutureeconomicbenefitsattributabletotheasset,thecostof

theassetcanbemeasuredreliably,theassetisseparatelyidentifiableandthereiscontrolovertheuseoftheasset.Theassetsareamortisedonastraight-linebasisovertheperiodoverwhichtheGroupexpectstobenefitfromtheseassets.Researchexpenditureiswrittenofftotheprofitandlossaccountintheyearinwhichitisincurred.

(d) Brandnames Brandnamesacquiredinabusinesscombinationarerecognisedatfairvalueattheacquisitiondate.Brandnamesaredeemedto

haveanindefiniteusefullifeandarenotdepreciated.However,theyareallocatedtoappropriatecash-generatingunitsandsubjectto impairment testing on an annual basis. Any impairment is recognised immediately through the income statement and is notsubsequentlyreversed.

(e) Customerrelationships Customer relationships acquired in a business combination are recognised at fair value at the acquisition date. Customer

relationshipsaredeemedtohaveafiniteusefullifeandarecarriedatfairvaluelessamortisation.Amortisationiscalculatedusingthestraight-linemethodovertheexpectedusefullife.

2.7 Impairment of non-financial assetsThecarryingamountsof theGroup’sassetsarereviewedateachbalancesheetdate todeterminewhether there isany indicationofimpairment. Ifanysuchindicationexists, theasset’srecoverableamount isestimated.Therecoverableamount is thehigherof itsnetsellingpriceanditsvalueinuse.Forintangibleassetsthatarenotyetavailableforuse,goodwillorintangibleassetswithanindefiniteusefullife,animpairmenttestisperformedateachbalancesheetdate.

Inassessingvalueinuse,theexpectedfuturecashflowsfromtheassetarediscountedtotheirpresentvalueusingapre-taxdiscountratethatreflectscurrentmarketassessmentsofthetimevalueofmoneyandtherisksspecifictotheasset.Animpairmentlossisrecognisedintheincomestatementwheneverthecarryingamountofanassetoritscash-generatingunitexceedsitsrecoverableamount.

Apreviouslyrecognisedimpairmentlossisreversediftherecoverableamountincreasesasaresultofachangeintheestimatesusedtodetermine therecoverableamount,butnot toanamounthigher than thecarryingamount thatwouldhavebeendetermined(netofdepreciation)hadnoimpairmentlossbeenrecognisedinprioryears.Forgoodwill,arecognisedimpairmentlossisnotreversed.

2.8 InvestmentsFixedassetinvestmentsarestatedatcostlessprovisionfordiminutioninvalue.

2.9 Property, plant and equipmentNon-currentassetsarestatedatcostlessdepreciation.Landisnotdepreciated.Depreciationisprovidedatratescalculatedtowriteoffthecostlessestimatedresidualvalueofeachassetoveritsexpectedusefullife,asfollows:

Landandbuildingslongleasehold 50yearsorperiodofleaseifshorterPlantandmachinery 4-10yearsFixtures,fittingsandequipment 3-6yearsVehicles 3-5years

2.10 InventoriesInventoriesarevaluedat the lowerofcostandnetrealisablevalue.Cost isdeterminedusingthefirst-in, first-outmethod.Thecostoffinishedgoodscomprisesrawmaterials,directlabour,otherdirectcostsandrelatedproductionoverheads.Netrealisablevalueistheestimatedsellingpriceintheordinarycourseofbusiness.

2.11 Trade receivablesTradereceivablesarerecognisedandcarriedatoriginalinvoiceamountslessanallowanceforanyamountestimatedtobeuncollectable.

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2.12 Revenue recognitionRevenue comprises the fair value of the consideration received or receivable for the sale of goods in the ordinary course of theGroup’s activities. Revenue is shown net of value added tax, returns, rebates and discounts and after eliminating sales withintheGroup.

TheGrouprecognisesrevenueondespatchofgoodstothecustomer.

2.13 Leasing and hire purchaseTheGrouphasenteredintohirepurchasecontractsandleasescertainproperty,plantandequipment.

Assets obtained under finance leases and hire purchase contracts, where the Group has substantially all the risks and rewards ofownershiparecapitalisedasproperty,plantandequipmentanddepreciatedovertheshorteroftheleasetermandtheirusefullives.Obligationsundersuchagreementsareincludedinborrowingsnetofthefinancechargeallocatedtofutureperiods.Thefinanceelementof therentalpayment ischarged to the incomestatementsoas toproduceconstantperiodicratesofchargeon thenetobligationsoutstandingineachperiod.

Leasesinwhichasignificantportionoftherisksandrewardsofownershipareretainedbythelessorareclassifiedasoperatingleases.Paymentsmadeunderoperatingleasesarechargedtotheincomestatementonastraight-linebasisovertheperiodofthelease.

2.14 Taxation Currenttax,includingUKcorporationtaxandforeigntaxisprovidedatamountsexpectedtobepaid(orrecovered)usingthetaxratesandlawsthathavebeenenactedorsubstantiallyenactedbythebalancesheetdate.

Deferredincometaxisrecognised,usingthefullliabilitymethod,ontemporarydifferencesarisingbetweenthetaxbasesofassetsandliabilitiesandtheircarryingamount intheconsolidatedfinancialstatements.Deferred incometax isdeterminedusingtaxrates(andlaws)thathavebeenenacted,orsubstantiallyenacted,bythebalancesheetdateandareexpectedtoapplywhentherelateddeferredtaxassetisrealisedordeferredtaxliabilityissettled.

Deferredtaxassetsarerecognisedonlytotheextentthatitisprobablethatfuturetaxableprofitswillbeavailableagainstwhichthetemporarydifferencescanbeutilised.

2.15 Employee benefits(a) Share-basedpayments Thegroupissuesequity-settledshare-basedpaymentstocertainemployeeswhichmustbemeasuredatfairvalueandrecognisedasan

expenseintheincomestatementwithacorrespondingincreaseinequity.Thefairvaluesofthesepaymentsaremeasuredatthedatesofgrantusingoptionpricingmodels,takingintoaccountthetermsandconditionsuponwhichtheawardsaregranted.ThefairvalueisrecognisedovertheperiodduringwhichemployeesbecomeunconditionallyentitledtotheawardssubjecttotheGroup’sestimateofthenumberofawardswhichwilllapse,eitherduetoemployeesleavingtheGrouppriortovestingorduetonon-marketbasedperformanceconditionsnotbeingmet.Proceedsreceivedontheexerciseofshareoptionsarecreditedtosharecapitalandsharepremium.

(b) Pensionobligations TheGroupoperatesadefinedcontributionpensionschemeandcontributesapercentageofsalarytoindividualemployeeschemes.

Thepensionexpenserepresentscontributionspayableintheyear.

2.16 Share capital Ordinarysharesareclassifiedasequity.Incrementalcostsdirectlyattributabletotheissueofnewsharesoroptionsareshowninequityasadeduction,netoftax,fromtheproceeds.

2.17 Dividend distribution DividenddistributiontotheCompany’sshareholdersisrecognisedasaliabilityintheGroup’sfinancialstatementsintheperiodinwhichthedividendsareapprovedbytheCompany’sshareholders.


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2.18 Financial risk management TheGroupisexposedtoanumberoffinancialrisks,includingcreditrisk,liquidityrisk,marketpriceriskandexchangeraterisk.

(a) CreditRisk CreditriskistheriskoffinanciallosstotheGroupifacustomerorcounterpartytoafinancialinstrumentfailstomeetitscontractual

obligations,andarisesprincipallyfromtheGroup’sreceivablesfromcustomersanddepositswithfinancialinstitutions.TheGroup’sexposure to credit risk is influenced mainly by the individual characteristics of each customer. The Group has an establishedcreditpolicyunderwhicheachnewcustomerisanalysedforcreditworthinessbeforetheGroup’spaymentanddeliverytermsandconditionsareoffered.Riskisminimisedthroughsettlementvialettersofcreditandpurchaseofcreditinsurance.

TheGroup’sinvestmentpolicyrestrictstheinvestmentofsurpluscashtointerestbearingdepositswithbanksandbuildingsocietieswithhighcreditratings.

(b) Liquidityrisk LiquidityriskistheriskthattheGroupwillnotbeabletomeetitsfinancialobligationsastheyfalldue.TheGroup’sapproachto

managing liquidity is toensurethat itwillalwayshavesufficient liquidity tomeet its liabilitieswhendue,underbothnormalandstressedconditions,withoutincurringunacceptablelossesordamagetotheGroup’sreputation.

(c) Marketpricerisk Market price risk primarily comprises interest rate exposure risk on its investment income. The Group limits the amount of exposure by

continuallyassessingtheperformanceoftheseinvestmentsandmaintainingflexibilitytotransfertootherinvestmentvehiclesasappropriate.

(d) Exchangeraterisk TheGroup’sprincipalfunctionalcurrencyisPoundsSterling.However,duringtheyeartheGrouphadexposuretoEurosandUSDollars.The

Group’spolicyistomaintainnaturalhedges,wherepossible,bymatchingrevenueandreceiptswithexpenditure.

(e) Capitalrisk The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern in order to

providereturnsforshareholdersandbenefitsforotherstakeholdersandtomaintainanoptimalcapitalstructuretoreducethecostofcapital.Inordertomaintainoradjustthecapitalstructure,theGroupmayadjusttheamountofdividendspayabletoshareholders,returncapitaltoshareholders,issuenewsharesorsellassetstoreducedebt.

2.19 Critical accounting estimates and judgements TheGroupmakesestimatesandassumptionsconcerningthefuture.Theresultingaccountingestimateswill,bydefinition,seldomequaltherelatedactualresults.Theestimatesandassumptionsthathaveasignificantriskofcausingamaterialadjustmenttothecarryingamountsofassetsandliabilitieswithinthenextfinancialyearare:

(a) Estimatedimpairmentvalueofintangibleassets TheGrouptestsannuallywhetherintangibleassetshavesufferedanyimpairment.Impairmentprovisionsarerecordedasapplicable

basedondirectors’estimatesofrecoverablevalues.

(b) Incometaxes TheGroupissubjecttoincometaxespredominatelyintheUnitedKingdombutalsoinotherjurisdictions.

Significantestimatesarerequiredindeterminingtheprovisionforincometaxes.Therearesometransactionsandcalculationsforwhichtheultimatetaxdeterminationisuncertain.TheGrouprecognisesliabilitiesforanticipatedqueriesbythetaxauthoritiesbasedonestimatesofwhetheradditionaltaxeswillbedue.Wherethefinaltaxoutcomeofthesemattersisdifferentfortheamountsthatwereinitiallyrecorded,suchdifferenceswillimpacttheincometaxanddeferredtaxprovisionsintheperiodinwhichsuchdeterminationismade.

2.20 Cash and cash equivalents Cashandcashequivalentsincludecashinhand,depositsheldoncallwithbanks,othershort-termhighlyliquidinvestmentswithoriginalmaturitiesofthreemonthsorlessandbankoverdrafts.Bankoverdraftsareshownwithinborrowingsincurrentliabilitiesonthebalancesheet.


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3 Segment informationAll revenues from external customers are derived from the sale of goods in the ordinary course of business to the agricultural andaquaculturalmarketsandaremeasuredinamannerconsistentwiththatintheincomestatement.

Management has determined the operating segments based on the reports reviewed by the Board that are used to makestrategic decisions. The Board considers the business from a geographic perspective. Geographically, management considers theperformance in the UK and Eire and International performance. The segment information provided to the Board for the year ended31December2009isasfollows:

ManagementconsidersadjustedEBITDA,whichcomprisesEarningsbeforeInterest,Tax,DepreciationandAmortisationadjustedforshare-basedpayments.

Salesbetweenoperatingsegmentsarecarriedoutatarm’slength. UK and Eire International Total £ £ £

Year ended 31 December 2009Total segmental revenue 3,761,894 7,644,012 11,405,906Inter-segment revenue (439,135) (11,416) (450,551)

Revenue from external customers 3,322,759 7,632,596 10,955,355

Adjusted EBITDA 95,248 1,394,846 1,490,094Depreciation and amortisation 59,277 22,632 81,909Income tax expense (12,379) (181,288) (193,667)

Total assets 3,664,798 14,987,022 18,651,820

Total liabilities (2,437,362) (2,609,074) (5,046,436)

Yearended31December2008Totalsegmentalrevenue 397,900 5,030,269 5,428,169Inter-segmentrevenue — — —

Revenuefromexternalcustomers 397,900 5,030,269 5,428,169

AdjustedEBITDA 62,955 521,684 584,639Depreciationandamortisation — 84,177 84,177Incometaxexpense (17,628) (128,955) (146,583)

Totalassets 107,648 8,562,643 8,670,291

Totalliabilities (17,628) (1,117,077) (1,134,705)

AreconciliationofadjustedEBITDAtoprofitbeforetaxisprovidedasfollows:

2009 2008 £ £

AdjustedEBITDAforreportablesegments 1,490,094 584,639Depreciation (79,610) (10,076)Amortisationandimpairmentprovisions (2,299) (74,101)Share-basedpaymentcharges (29,971) (71,625)Financeincome-net 30,891 53,374

Profit before tax 1,409,105 482,211


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4 Expenses by nature 2009 2008 £ £

Changesininventoriesoffinishedgoods 392,409 (12,527)Rawmaterialsandconsumablesused 7,826,813 4,070,786Employeebenefitexpense(note7) 1,497,566 683,252Researchanddevelopmentexpenditure 75,664 36,707Transportationexpenses 136,037 101,843Operatingleasepayments 102,807 40,668Depreciation,amortisationandimpairmentcharges 81,909 84,177Share-basedpaymentcharges 29,971 71,625Loss/(profit)onforeignexchangetransactions 109,382 (77,199)

Total cost of sales, distribution and administrative expenses 10,252,558 4,999,332

5 Gain on sale of intellectual propertyDuring the year the Company sold its intellectual property relating to the Ultrabite® sports fishing pheromone attractant brand andtheassociatedrightsunder its licenseagreementwithCefas(CentrefortheEnvironment,FisheriesandAquacultureScience)whilstretainingitslicensingrightsforthetechnologytotheglobalaquacultureandcommercialfishingmarketsundertheAquatice®brand.

2009 2008 £ £

Considerationreceived 803,571 —Directlyattributableexpenses (128,154) —

Gain on sale of intellectual property 675,417 —

6 Auditor remunerationDuringtheyeartheGroupobtainedthefollowingservicesfromtheCompany’sauditor: 2009 2008 £ £

GroupFeespayabletoCompany’sauditorfortheauditofParentCompanyandConsolidatedstatements 16,000 14,000FeespayabletotheCompany’sauditorforotherservices: TheauditoftheCompany’ssubsidiariespursuanttolegislation 8,000 —Taxservices 5,000 4,000Otheradvisory 3,000 —

32,000 18,000


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7 EmployeesNumber of employeesTheaveragemonthlynumberofemployeesincludingdirectorsduringtheyearwas:

Group 2009 2008

Production 6 —Administration 12 8Salesandtechnical 6 4

Total average headcount 24 12

Company 2009 2008

Administration 8 8Salesandtechnical 4 4

Total average headcount 12 12

2009 2008Employment costs £ £

Wagesandsalaries 1,304,508 617,201Socialsecuritycosts 126,457 56,768Otherpensioncosts 66,601 9,283

1,497,566 683,252

8 Interest 2009 2008Interest receivable £ £

Interestreceivableonshort-termbankdeposits 31,463 53,374

Interest payable

Hirepurchaseinterestpayable (572) —

9 Earnings per share 2009 2008 pence pence

Basicearningspershare 0.41 0.13Gainsonsaleofintellectualproperty (0.21) —

Underlying earnings per share 0.20 0.13

The calculation of the basic earnings per share is based on the profit for the year being £1,211,068 (2008: £335,628) divided by theweightedaveragenumberofsharesinissueduringtheyear,being293,533,758(2008:251,078,700)shares.

Thecalculationofunderlyingearningspershareisbasedonthebasicearningspershare,adjustedforexceptionalprofitsof£628,138(2009:£nil).Exceptionalprofitsinclude£47,279oftaxinrelationtoexceptionalincome.

Thecalculationofdilutedearningspershareisbasedonthebasicearningspershare,adjustedtoallowfortheissueofsharesontheassumedconversionofalldilutiveordinaryshares,being4,833,000shares(2008:4,500,000).

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10 Dividend payable 2009 2008 £ £

Dividendpaid: 2008finalpaid:0.04pper1pshare 100,430 —

TheDirectorsareproposingafinaldividendinrespectofthefinancialyearended31December2009of0.05ppershare,whichwillabsorbanestimated£210,449ofshareholders’fundsandwillbepaidon30July2010toshareholderswhoareontheRegisterofMemberson2July2010.

11 Taxation 2009 2008 £ £

Current taxCurrenttaxonprofitsfortheyear 179,476 145,983Adjustmentforprioryears — 600

Total current tax 179,476 146,583

Deferred taxOriginationandreversaloftemporarydifferences 14,191 —

Total deferred tax 14,191 —

Income tax expense 193,667 146,583

2009 2008 £ £

Factors affecting the tax charge for the yearProfitbeforetax 1,409,105 482,211

TaxationcalculatedatdomesticratesapplicabletoProfitsintherespectivecountries 397,013 144,663Taxeffectsof:Nondeductibleexpenses 34,509 27,567Capitalallowances (10,720) (2,925)Researchanddevelopmenttaxcredits (141,838) (23,308)Exceptionalgainonsaleofpost2003intellectualpropertynotsubjecttotax (82,991) —Othertaxadjustments (2,306) 586

Tax charge 193,667 146,583

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12 Intangible fixed assets Customer Development Goodwill Brands relationships Patent costs Total

Group £ £ £ £ £ £

CostAsat1January2008 3,551,921 — — 41,071 539,394 4,132,386Additions — — — 4,950 271,644 276,594

Asat1January2009 3,551,921 — — 46,021 811,038 4,408,980Additions — — — — 225,870 225,870Acquisitionofsubsidiary(note28) 592,483 1,500,891 176,446 — — 2,269,820

As at 31 December 2009 4,144,404 1,500,891 176,446 46,021 1,036,908 6,904,670

Amortisation/impairmentAsat1January2008 — — — 1,403 54,392 55,795Charge/impairmentfortheyear — — — 2,134 71,967 74,101

Asat1January2009 — — — 3,537 126,359 129,896Chargefortheyear — — — 2,299 — 2,299

As at 31 December 2009 — — — 5,836 126,359 132,195Net book valueAs at 31 December 2009 4,144,404 1,500,891 176,446 40,185 910,549 6,772,475

Asat31December2008 3,551,921 — — 42,484 684,679 4,279,084

Asat1January2008 3,551,921 — — 39,668 485,002 4,076,591

Customer Development Goodwill Brands relationships Patent costs Total

Company £ £ £ £ £ £

CostAsat1January2008 3,551,921 — — 41,071 539,394 4,132,386Additions — — — 4,950 271,644 276,594

Asat1January2009 3,551,921 — — 46,021 811,038 4,408,980Additions — — — — 225,870 225,870Acquisitionofsubsidiaries(note28) 592,483 1,500,891 176,446 — — 2,269,820

As at 31 December 2009 4,144,404 1,500,891 176,446 46,021 1,036,908 6,904,670

Amortisation/impairmentAsat1January2008 — — — 1,403 54,392 55,795Charge/impairmentfortheyear — — — 2,134 71,967 74,101

Asat1January2009 — — — 3,537 126,359 129,896Chargefortheyear — — — 2,299 — 2,299

As at 31 December 2009 — — — 5,836 126,359 132,195Net book valueAs at 31 December 2009 4,144,404 1,500,891 176,446 40,185 910,549 6,772,475

Asat31December2008 3,551,921 — — 42,484 684,679 4,279,084

Asat1January2008 3,551,921 — — 39,668 485,002 4,076,591

GoodwillisallocatedtotheGroup’scash-generatingunits(CGU’s)identifiedaccordingtotradingbrand.TherecoverableamountofaCGUisdeterminedbasedonvalue-in-usecalculations.Thesecalculationsusepre-taxcashflowprojectionsbasedonfinancialbudgetsapprovedby management covering a five-year period. Cash flows beyond a five-year period are extrapolated using estimated growth rates of1%perannum(2008:1.5%).

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12 Intangible fixed assets(continued)Thediscountrateusedof12%(2008:15%)ispre-taxandreflectsspecificrisksrelatingtotheoperatingsegments.

Goodwillisallocatedasfollows:

2009 2008 £ £

AcquisitionofKiotechagiloperations 3,551,921 3,551,921AcquisitionofOptiviteoperations 592,483 —

Total goodwill 4,144,404 3,551,921

Brands relate to the fair value of the Optivite brands acquired in the year ended 31 December 2009. These are deemed to have anindefiniteusefullifeduetotheinherentintellectualpropertycontainedintheproducts,thelongevityoftheproductlivesandglobalmarketopportunities.

Amortisationofpatents£2,299(2008:£2,134)isincludedinadministrativeexpenses.

Thecarryingamountofdevelopmentcostswasreducedtoitsrecoverableamountinpreviousyearsthroughrecognitionofanimpairmentprovision.ThisprovisionwasbasedonmanagementforecastsoftheremainingdevelopmentcostsandexpectedfutureeconomicbenefitsarisingtotheGroup.Costscapitalisedinthecurrentyearareinlinewithmanagementforecastsoftheexpectedremainingdevelopmentcostshencenofurtherimpairmenthasbeenrecognised.

13 Property, plant and equipment Land and Fixtures, buildings Plant and fittings and leasehold machinery equipment TotalGroup £ £ £ £

CostAt1January2008 325,000 23,958 38,612 387,570Additions — 7,073 — 7,073

At1January2009 325,000 31,031 38,612 394,643Additions — 26,380 17,609 43,989Acquisitionofsubsidiaries(note28) 5,409 233,815 99,949 339,173

At 31 December 2009 330,409 291,226 156,170 777,805

DepreciationAt1January2008 6,500 7,605 11,001 25,106Chargefortheyear — 4,586 5,490 10,076

At1January2009 6,500 12,191 16,491 35,182Chargefortheyear 1,324 58,974 19,312 79,610

At 31 December 2009 7,824 71,165 35,803 114,792

Net book valueAt 31 December 2009 322,585 220,061 120,367 663,013

At31December2008 318,500 18,840 22,121 359,461

At1January2008 318,500 16,353 27,611 362,464

Heldwithinlandandbuildingsisanamountof£200,000inrespectofnon-depreciableland.

Plantandmachineryincludesthefollowingamountsheldunderhirepurchasecontracts 2009 2008 £ £

Cost - capitalisedhirepurchasecontracts 80,344 —Accumulateddepreciation (35,926) —

Net book value 44,418 —



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13 Property, plant and equipment(continued) Land and Fixtures, buildings Plant and fittings and leasehold machinery equipment TotalCompany £ £ £ £

CostAt1January2008 325,000 23,958 38,612 387,570Additions — 7,073 — 7,073

At1January2009 325,000 31,031 38,612 394,643Additions — 11,733 2,099 13,832Acquisitionofsubsidiaries(note28) 5,085 187,100 97,824 290,009

At 31 December 2009 330,085 229,864 138,535 698,484

DepreciationAt1January2008 6,500 7,605 11,001 25,106Chargefortheyear — 4,586 5,490 10,076

At1January2009 6,500 12,191 16,491 35,182Chargefortheyear 1,000 5,055 5,444 11,499

At 31 December 2009 7,500 17,246 21,935 46,681

Net book valueAt 31 December 2009 322,585 212,618 116,600 651,803

At31December2008 318,500 18,840 22,121 359,461

At1January2008 318,500 16,353 27,611 362,464

Heldwithinlandandbuildingsisanamountof£200,000inrespectofnon-depreciableland.

14 Fixed asset investments Unlisted investmentsCompany £

CostAt1January2008andat1January2009 1,054Additions 4,314,015Arisingonhiveupofsubsidiaryoperations (1,690,052)

At 31 December 2009 2,625,017

Provisions for diminution in valueAt1January2008 —Chargefortheyear 1,054

At 31 December 2008 and 31 December 2009 1,054

Net book valueAt 31 December 2009 2,623,963

At31December2008 —

At1January2008 1,054

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14 Fixed asset investments(continued)Holdings of more than 20 per centTheCompanyholdsmorethan20percentofthesharecapitalofthefollowingcompanies:

Country of registration Principal Shares heldCompany or incorporation activity Class per cent

Subsidiary undertakingsKiotechLimited EnglandandWales Dormant Ordinary 100AquaticeLimited EnglandandWales Dormant Ordinary 100AgilLimited EnglandandWales Dormant Ordinary 100KiotechagilLimited EnglandandWales Dormant Ordinary 100OptiviteLimited EnglandandWales Dormant Ordinary 100OptiviteInternationalLimited EnglandandWales Dormant Ordinary 100Kiotechagil(Shanghai)AgricultureScienceandTechnologyLimited China Technologyservices Ordinary 100OptiviteAnimalNutritionPrivateLimited* India Technologyservices Ordinary 100OptiviteLatinoamericanaSAdeCV* Mexico Technologyservices Ordinary 98OptiviteSA(Proprietary)Limited* SouthAfrica Technologyservices Ordinary 60

*Sharesheldbysubsidiaryundertaking

15 Inventories Group Company 2009 2008 2009 2008 £ £ £ £

Rawmaterialsandconsumables 817,338 388,679 817,338 388,679Finishedgoodsandgoodsforresale 473,325 80,916 412,960 80,916

1,290,663 469,595 1,230,298 469,595

Thecostofinventoriesrecognisedasexpenseandincludedin“costofsales”amountedto£8,206,908(2008:£4,212,657)fortheGroupand£4,529,402(2008:£4,212,657)fortheCompany.

16 Trade and other receivables Group Company 2009 2008 2009 2008 £ £ £ £

Tradereceivables 4,786,453 2,032,947 4,592,923 2,032,947Less:provisionforimpairmentoftradereceivables 252,255 395,742 252,255 395,742

Tradereceivables–net 4,534,198 1,637,205 4,340,668 1,637,205Receivablesfromsubsidiaryundertakings — — 152,612 —Otherreceivables 183,501 32,981 173,367 32,981Prepaymentsandaccruedincome 193,151 24,373 179,906 24,373

4,910,850 1,694,559 4,846,553 1,694,559

Allreceivablesarestatedatfairvalueandareduewithinfiveyearsfromtheendofthereportingperiod.

Theageinganalysisofnettradereceivablesisasfollows: Group Company 2009 2008 2009 2008 £ £ £ £

Upto3months 2,836,123 1,041,374 2,658,840 1,041,3743to6months 1,421,732 485,129 1,421,732 485,129Over6months 276,343 110,702 260,096 110,702

Tradereceivables–net 4,534,198 1,637,205 4,340,668 1,637,205


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16 Trade and other receivables(continued) Asof31December2009tradereceivablesof£999,732(2008:£436,206)fortheGroupand£965,515(2008:£436,206)fortheCompanywere

pastduebutnotimpaired.Theserelatetolong-standingcustomersforwhotherearenorecenthistoryofdefault.Theageinganalysisofthesetradereceivablesisasfollows:

Group Company 2009 2008 2009 2008 £ £ £ £

Upto3months 552,129 74,850 527,686 74,8503to6months 445,306 268,616 436,440 268,616Over6months 2,297 92,740 1,390 92,740

999,732 436,206 965,515 436,206

Asof31December2009tradereceivablesof£252,255(2008:£395,742)fortheGroupand£252,255(2008:£395,742)fortheCompanywereimpairedandfullyprovidedfor.Theindividuallyimpairedreceivablesmainlyrelatetohistoricdebtforwhichrecoveryisstillbeingsought.TheGroupmitigatesitsexposuretocreditriskbyextensiveuseofcreditinsuranceandlettersofcredittoremitamountsdue.Theageinganalysisofthesetradereceivablesisasfollows: Group Company 2009 2008 2009 2008 £ £ £ £

3to6months 46,496 — 46,496 —Over6months 205,759 395,742 205,759 395,742

252,255 395,742 252,255 395,742

MovementontheGroupprovisionforimpairmentoftradereceivablesisasfollows: Group and Company £

At1January2009 395,742Provisionsforreceivablescreated/utilised (143,487)

At 31 December 2009 252,255

Thecarryingamountsoftradeandotherreceivablesaredenominatedinthefollowingcurrencies: Group Company 2009 2008 2009 2008 £ £ £ £

PoundsSterling 2,888,323 1,304,318 2,888,323 1,304,318Euros 805,357 31,379 805,357 31,379USDollar 664,025 301,508 646,988 301,508Othercurrencies 176,493 — — — 4,534,198 1,637,205 4,340,668 1,637,205

17 Cash and cash equivalentsCashandcashequivalentscomprisecashandshort-termdepositsheldbyGroupcompanies.Thecarryingamountoftheseassetsapproximatestotheirfairvalue.

18 Trade and other payables Group Company 2009 2008 2009 2008 £ £ £ £

Tradepayables 3,223,306 936,814 3,124,624 936,814Amountsowedtosubsidiaryundertakings — — 2,489,458 —Otherpayables 301,002 — 289,445 —Taxesandsocialsecuritycosts 67,427 16,275 67,392 16,275Accrualsanddeferredincome 517,241 49,406 517,106 49,406

4,108,976 1,002,495 6,488,025 1,002,495

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19 Borrowings Group Company 2009 2008 2009 2008 £ £ £ £

Amountsdueunderhirepurchaseagreements 29,626 — 29,626 —

Ofamountsdueasat31December2009underhirepurchaseagreements£26,618isduewithinoneyearand£3,008isduebetweenoneandfiveyears.

20 Deferred income tax Thegrossmovementofdeferredincometaxaccountisasfollows:

2009 2008Group £ £

At1January — —Acquisitionofsubsidiaries(note28) 478,676 —Incomestatementcharge 14,191 —At 31 December 492,867 —

Deferred tax liabilities Accelerated tax Fair value depreciation gains Total £ £ £

At1January2008and2009 — — —Acquisitionofsubsidiaries(note28) 8,676 470,000 478,676Chargedtoincomestatement 14,191 — 14,191At 31 December 2009 22,867 470,000 492,867

2009 2008Company £ £

At1January — —Hiveupofsubsidiaries(note28) 492,867 —At 31 December 492,867 —

Deferred tax liabilities Accelerated tax Fair value depreciation gains Total £ £ £

At1January2008and2009 — — —Hiveupofsubsdiaries(note28) 22,867 470,000 492,867At 31 December 2009 22,867 470,000 492,867

21 Contingent liabilities OntheacquisitionofAgil,partoftheconsiderationwasdeferredpendingreceiptoftradereceivablesoutstandingatNovember2006.Managementisoftheopinionthat£192,799(2008:£427,148)ofthesetradereceivableswillnotprovetoberecoverableandthesehavebeenwrittenoffinthefinancialstatements.

Shouldthereceivablesbecollectedthesebalanceswillbeduetothevendorofthebusiness,ECOAnimalHealthGroupplc.

Inviewoftheuncertaintysurroundingtherecoveryofthesereceivablesthedirectorsdonotconsideritappropriatetoprovideforthedeferredconsiderationintheseaccounts,asthiswillonlybepaidonrecoveryofthereceivables.

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22 Financial commitmentsAt31December2009theGrouphasfutureaggregateminimumleasepaymentsundernon-cancellableoperatingleasesasfollows: Vehicles, plant and equipment Land and buildings 2009 2008 2009 2008 £ £ £ £

Lessthanoneyear 74,464 3,168 107,336 37,500Betweenoneandfiveyears 142,696 — — 22,808

TheGroupleasespropertiesundernon-cancellableoperatingleaseagreements.Theleasetermsare10yearswithanoptiontobreakafter5years.Theagreementsarerenewableattheendoftheleaseperiodatmarketrate.

TheGroupalsoleasespropertyundercancellableoperatingleaseagreements,requiringbetween3monthsand12monthsnotice.Theleaseexpenditurechargedtotheincomestatementduringtheyearisdisclosedinnote4.

23 Capital commitmentsTheGrouphadauthorisedcapitalcommitmentsasat31December2009of£54,000(2008:£nil).

At 31 December 2009 £289,000 was due and subsequently paid to the vendors of the Optivite Group of companies in respect of thebalanceofconsideration.

24 Share capital 2009 2008 £ £

Authorised2,000,000,000Ordinarysharesof1peach 20,000,000 20,000,0001,859,672‘A’sharesof99peach 1,841,075 1,841,075

21,841,075 21,841,075

Allotted, called up and fully paid251,078,696Ordinarysharesof1peach 2,510,787 2,510,787IssueofOrdinarysharesof1peach 1,584,102 —Sharesissuedonacquisitionofsubsidiaries 114,100 —

4,208,989 2,510,787

On14August2008theCompanyundertookarestructuringofitsequityandreserves.The‘A’shareswerecancelledandthesharepremiumanddebitbalanceontheCompany’sretainedearningswereeliminated.Asaresult,adistributablespecialreservewascreated,whichwouldallowtheproposalofdividendsinthefuture,oncetheprovisionsoftheCourtOrderrelatingtocreditors’interestshavebeensatisfied.

On1October2009theCompanyundertookashareplacementtofundtheacquisitionofOptiviteGroup.158,410,233Ordinarysharesof1pwereissuedatapriceof3p.Thisresultedin£2,956,612(netofexpenses)beingcreditedtothesharepremiumreserve.Onthesamedayafurther11,410,000ordinarysharesof1pwereissuedatapriceof3pasconsiderationsharesresultingin£228,200beingcreditedtothemergerreserve.

25 Retained earnings Group Company £ £

At1January2008 (7,244,830) (7,243,877)Profitfortheyear 335,628 334,675Capitalrestructuring 7,243,877 7,243,877At31December2008 334,675 334,675

Profitfortheyear 1,211,068 1,147,790Dividendsrelatingto2008 (100,430) (100,430)Arisingonhiveupofsubsidiaries — 96,325At 31 December 2009 1,445,313 1,478,360


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26 Other reservesOtherreservescomprise: 2009 2008 £ £

Mergerreserve 228,200 —Sharebasedpaymentreserve 278,699 248,728Translationreserve 1,394 — 508,293 248,728

MovementsinotherreservesbalancesareshownintheConsolidatedstatementofchangesinequity.

27 Share-based paymentsMovementsinthenumberofshareoptionsoutstandingareasfollows: Weightedaverage Shares exerciseprice(p) 2009 2008

Outstandingat1January 3.64 18,876,967 20,999,817Grantedduringtheyear 2.99 18,350,000 4,500,000Forfeitedduringtheperiod — — (6,276,967)Expiredduringtheyear — — (345,883)Outstandingat31December 3.32 37,226,597 18,876,967Exercisableat31December 15,626,967 15,126,967

Shareoptionsoutstandingattheendoftheyearhavethefollowingexpirydatesandweightedaverageexerciseprices:

Expirydate Weightedaverage Shares exerciseprice(p) 2009 2008

2015 7.20 1,250,000 1,250,0002016 3.00 6,276,967 6,276,9672017 4.81 4,000,000 4,000,0002018 2.93 7,350,000 7,350,0002019 2.99 18,350,000 —

37,226,967 18,876,967

On 5 October 2009 and 31 December 2009 options were awarded under the Company’s Enterprise Management Incentive Schemein tranches which vest subject to performance criteria being met linked to increases in the Company’s share price. The fair valueofservicesreceivedinreturnforshareoptionsgrantedismeasuredbyreferencetothefairvalueoftheshareoptionsgranted.Theestimateoffairvaluereceivediscalculatedbasedonappropriatevaluationmodels.

Theexpenseisapportionedoverthevestingperiodandisbasedonthenumberoffinancialinstrumentswhichareexpectedtovestandthefairvalueofthosefinancialinstrumentsatthedateofgrant.Thechargefortheyearinrespectofshareoptionsgrantedamountsto£29,971(2008:£71,625).

Theweightedaveragefairvalueofoptionsgrantedduringtheyearwasdeterminedbasedonthefollowingassumptions:

Grantdate 30April 5Octoberand31DecemberNumberofoptionsgranted 500,000 17,850,000Grantprice(p) 2.625 3.00Exerciseprice(p) 2.625 3Vestingperiod(years) 3 0Optionexpiry(years) 10 10Expectedvolatilityoftheshareprice 37percent 37percentDividendsexpectedontheshares 1.52percent 1.52percentRisk-freerate 2.77percent 2.77percentFairvalue(p) 0.82 1.13Pricingmodel Black–Scholes MonteCarlo



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28 Business combinationsGroupOn1October2009,theGroupacquired100%ofthesharecapitalofOptiviteLimitedandOptiviteInternationalLimited(“OptiviteGroup”)for£3,994,412beforecosts.

Atthatdate,thefairvalueofthenetassetsandliabilitiesoftheOptiviteGroupequalled£3,647,485andconsequentlygivesrisetogoodwillonthetransactionof£592,483.

Theacquiredbusinesscontributedrevenuesof£3,150,565andnetprofitaftertaxof£106,895totheGroupfortheperiod1October2009to31December2009.Iftheacquisitionhadoccurredon1January2009Grouprevenueforthefullyearwouldhavebeen£23,172,057andnetprofitwouldhavebeen£1,849,343.TheseamountshavebeencalculatedusingtheGroup’saccountingpolicies.

ThegoodwillarisingonacquisitionisattributabletothesynergiesexpectedfromcombiningtheoperationsoftheGroupwiththeOptiviteGroup.

Thefairvalueofthesharesissuedwasbasedonthepriceusedfortheshareplacingon1October2009.

Detailsofnetassetsacquiredandgoodwillareasfollows:

Purchase consideration 2009 £

Cashpaid 3,652,112Directcostsrelatingtotheacquisition 205,146Fairvalueofsharesissued 342,300

Total purchase consideration 4,199,558

Theassetsandliabilitiesasat1October2009arisingfromtheacquisitionareasfollows: Fair value Acquiree’s carrying value

Cashandcashequivalents 730,602 730,602Property,plantandequipment 339,173 339,173Investmentsinsubsidiaries 13,353 13,353Brands 1,500,891 —Customerrelationships 176,446 —Inventories 637,935 637,935Tradeandotherreceivables 3,545,628 3,545,628Tradeandotherpayables (2,386,984) (2,386,984)Borrowings (38,070) (38,070)Corporationtax (443,373) (443,373)Deferredtaxliabilities (478,676) (8,676)Othernetassets 50,560 50,560

Fair value of assets 3,647,485 2,440,148Goodwill 592,483Minorityinterests (40,410)

Total purchase consideration 4,199,558

Purchaseconsiderationsettledincash 3,857,258Cashandcashequivalentsinsubsidiariesacquired (730,602)

Cash outflow on acquisition 3,126,656

Therewerenoacquisitionsintheyearended31December2008.


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28 Business combinations(continued)On31December2009theoperationsandnetassetsofOptiviteLimitedandOptiviteInternationalLimitedweretransferredtoKiotechInternationalplcasahiveuptransaction.

ThisrepresentsacommoncontroltransactionandhenceisoutsidethescopeofIFRS3.TheGrouphasthereforeselectedtoaccountforthetransactionusingpredecessorvalueswhichrepresentthevalueoftheassetsandliabilitiesinthehighestlevelofGroup.ThesevalueshavethereforebeendeterminedfromthecarryingvalueofassetsandliabilitiesintheconsolidatedGroupasat31December2009.Theassetsandliabilitiestransferredasat31December2009areasfollows:

CarryingvalueCompany £

Goodwill 592,483Cashandcashequivalents 517,341Property,plantandequipment 290,009Investmentinsubsidiaries 13,353Brands 1,500,891Customerrelationships 176,446Inventories 751,844Tradeandotherreceivables 3,864,676Tradeandotherpayables (2,628,492)Corporationtax (266,781)Borrowings (29,626)Deferredtaxliabilities (492,867)

Carrying value of assets hived up 4,289,277

29 Cash generated from operations Group Company 2009 2008 2009 2008 £ £ £ £

Profitbeforeincometax 1,409,105 482,211 1,294,232 482,211

Adjustmentsfor:Financecosts (30,891) (53,374) (30,857) (53,374)Depreciation 79,610 10,076 11,499 10,076Amortisation 2,299 74,101 2,299 74,101Share-basedpayments 29,971 71,625 29,971 71,625Changesinworkingcapital:Inventories (183,133) (75,550) (8,859) (75,550)Tradeandotherreceivables 350,369 752,956 712,682 752,956Tradeandotherpayables 763,773 (688,921) 367,490 (688,921)

Cashgeneratedfromoperations 2,421,103 573,124 2,378,457 573,124



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30 Related party transactionsGroup and CompanyThefollowingtransactionswerecarriedoutwithrelatedparties:

ECOAnimalHealthGroupplchasanaccountingmanagementagreementwiththeGroupforwhichitreceives£40,968perannum(2008:£39,504).WorkdonebycertainemployeesofECOAnimalHealthGroupplc inconnectionwiththemarketinganddevelopmentofthechemosensorystimulantswaschargedamounting to£92,164 (2008:£86,604).PeterLawrence,ChairmanofECOAnimalHealthGroupplc,isalsoanon-executivedirectoroftheCompanyand£22,250(2008:£20,167)waspaidtoECOAnimalHealthGroupplcinrespectofhisservicesandexpenses.ElectroSwitchLimited,acompanycontrolledbyRichardRose,receivedthesumof£5,000(2008:£5,000)inrespectofservicesprovidedbyhim.

KeymanagementcomprisesthedirectorsofKiotechInternationalplc.

Theiremolumentsareasfollows:

2009 2008Directors emoluments £ £

Salariesandothershort-termemploymentbenefits 416,714 264,009Postemploymentbenefits 10,777 6,240Share-basedpayments 29,285 33,254

456,776 303,503

Highestpaiddirector 203,374 131,184


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Notice of Annual General Meeting

THISDOCUMENTISIMPORTANTANDREQUIRESYOURIMMEDIATEATTENTION. Ifyouare inanydoubtas towhataction to take,youshould consult your stockbroker, solicitor, accountant or otherappropriate independent professional adviser authorised underthe Financial Services and Markets Act 2000. If you have sold orotherwise transferred all your shares in Kiotech International plc,pleaseforwardthisdocumentandtheaccompanyingformofproxyto the person through whom the sale or transfer was effected, fortransmissiontothepurchaserortransferee.

TheBoardofKiotechInternationalplcconsidersalloftheproposedresolutionstobeinthebestinterestsofshareholdersasawholeandaccordinglyrecommendsthatshareholdersvoteinfavourofalltheresolutionsproposed.

Notice of Annual General Meeting (AGM)

NoticeisherebygiventhattheAGMofKiotechInternationalplcwillbeheldattheofficesofFinnCap,4ColemanStreet,LondonEC2R5TAonWednesday30June2010,at10.30amforthefollowingpurposes:

Resolution 1

ToreceivetheDirectors’ReportandtheFinancialStatementsfortheyearended31December2009.

Resolution 2

To declare a final dividend of 0.05p per ordinary share payable toshareholdersontheregisteratcloseofbusinesson2July2010.

Resolution 3

ToreappointREEdwardsasaDirector,whoretiresbyrotation.

Resolution 4

ToreappointPALawrenceasaDirector,whoretiresbyrotation.

Resolution 5

To reappoint R H Scragg, who as a new director appointed by theBoard, must retire and seek reappointment at the next generalmeetingfollowingappointment.

Resolution 6

ToreappointKLPrior,whoasanewdirectorappointedbytheBoard,must retire and seek reappointment at the next general meetingfollowingappointment.

Resolution 7

To reappoint D M A Bullen, who as a new director appointed bythe Board, must retire and seek reappointment at the next generalmeetingfollowingappointment.

Resolution 8

To reappoint PricewaterhouseCoopers LLP as auditors and toauthorisetheDirectorstodeterminetheauditors’remuneration.

And

Toconsiderand,ifthoughtfit,passthefollowingresolutions,whichwillbeproposedastoResolutions9asanordinaryresolutionoftheCompanyandas toResolutions10and11asspecial resolutionsoftheCompany.

Resolution 9

ThatpursuanttoSection551oftheCompaniesAct2006,theDirectorsbeandaregenerallyandunconditionallyauthorised toexerciseallpowers of the Company to allot shares in the Company or to grantrights tosubscribe foror toconvertanysecurity intoshares in theCompanyuptoanaggregatenominalamountof£1,388,966,providedthat (unless previously revoked varied or renewed) this authorityshallexpireon30September2011oruntilthenextAGM,whicheveristhesooner,savethattheCompanymaymakeanofferoragreementbeforethisauthorityexpireswhichwouldormightrequiresharestobeallottedorrightstosubscribeforortoconvertanysecurity intoshares to be granted after this authority expires and the Directorsmay allot shares or grant such rights pursuant to any such offeror agreement as if this authority had not expired. This authority isin substitution for all existing authorities under Section 80 of theCompaniesAct1985(which,totheextentunusedatthedateofthisresolution,arerevokedwithimmediateeffect).

Resolution 10

THATsubjecttothepassingofResolution9andpursuanttoSection570 of the Companies Act 2006, the Directors be and are generallyempoweredtoallotequitysecurities(withinthemeaningofSection560 of the Companies Act 2006) for cash pursuant to the authoritygranted by Resolution 9 as if Section 561(1) of the Companies Act2006 did not apply to any such allotment, provided that this powershallbelimitedtotheallotmentofequitysecurities:

(a) inconnectionwithanofferofequitysecurities(whetherbywayofarightsissue,openofferorotherwise):

(i) toholdersofordinarysharesinthecapitaloftheCompanyin proportion (as nearly as practicable) to the respectivenumbersofordinarysharesheldbythem;and

(ii) to holders of other equity securities in the capital of theCompany, as required by the rights of those securities or,subjecttosuchrights,astheDirectorsotherwiseconsidernecessary,

but subject to such exclusions or other arrangements as theDirectors may deem necessary or expedient in relation totreasury shares, fractional entitlements, record dates or anylegalorpracticalproblemsunderthelawsofanyterritoryortherequirementsofanyregulatorybodyorstockexchange;and


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(b) otherwise than pursuant to paragraph (a) of this resolution,up to an aggregate nominal amount of £210,449 and (unlesspreviously revoked varied or renewed) this power shall expireon30September2011oruntil thenextAGM,whichever is thesooner,savethattheCompanymaymakeanofferoragreementbefore thispowerexpireswhichwouldormight requireequitysecurities to be allotted for cash after this power expires andtheDirectorsmayallotequitysecuritiesforcashpursuanttoanysuchofferoragreementas if thispowerhadnotexpired.ThispowerisinsubstitutionforallexistingpowersunderSection95of theCompaniesAct1985 (which, to theextentunusedat thedateofthisresolution,arerevokedwithimmediateeffect).

Resolution 11

THAT pursuant to Section 701 of the Companies Act 2006, theCompanybeanditisherebygenerallyandunconditionallyauthorisedtomakemarketpurchases(within themeaningofSection693(4)oftheCompaniesAct2006)ofordinarysharesof1peachinthecapitaloftheCompany(ordinaryshares)providedthat:

(a) the maximum aggregate number of ordinary shares herebyauthorisedtobepurchasedis42,089,890;

(b) theminimumprice(excludingexpenses)whichmaybepaidforanordinaryshareis1p;

(c) themaximumprice(excludingexpenses)whichmaybepaidforanordinaryshareisnotmorethanthehigherof:

(i) an amount equal to 105% of the average of the middlemarketquotationsforanordinaryshareasderivedfromtheAIMappendixtotheLondonStockExchangeDailyOfficialListforthefivebusinessdaysbeforethepurchaseismade;and

(ii) an amount equal to the higher of the price of the lastindependent trade of an ordinary share and the highestcurrentindependentbidforanordinaryshareonthetradingvenuewherethepurchaseiscarriedout;

(d) theauthorityherebyconferredshallexpireattheconclusionofthenextAGMoftheCompanyafterthepassingofthisresolutionor,ifearlier,on30September2011;and

(e) theCompanymaymakeacontracttopurchaseordinarysharesundertheauthorityherebyconferredpriortotheexpiryofsuchauthoritywhichwillormaybeexecutedwhollyorpartlyaftertheexpiryofsuchauthority.

ByOrderoftheBoard

Karen PriorCompanySecretary

25May2010

Notes to the Notice of Annual General Meeting

Entitlement to attend and vote

1. Pursuant to Regulation 41 of the Uncertificated Securities Regulations 2001, theCompanyspecifiesthatonlythosemembersregisteredontheCompany’sregisterofmembers48hoursbeforethetimeoftheMeetingshallbeentitledtoattendandvoteattheMeeting.

Appointment of proxies

2. IfyouareamemberoftheCompanyatthetimesetoutinnote1above,youareentitledtoappointaproxytoexercisealloranyofyourrightstoattend,speakandvoteattheMeetingandyoushouldhavereceivedaproxyformwiththisnoticeofmeeting.Youcanonlyappointaproxyusingtheproceduressetoutinthesenotesandthenotestotheproxyform.

3. AproxydoesnotneedtobeamemberoftheCompanybutmustattendtheMeetingtorepresentyou.Detailsofhowtoappoint theChairmanof theMeetingoranotherpersonasyourproxyusingtheproxyformaresetoutinthenotestotheproxyform.IfyouwishyourproxytospeakonyourbehalfattheMeetingyouwillneedtoappointyour own choice of proxy (not the Chairman) and give your instructions directly tothem.

4. Youmayappointmorethanoneproxyprovidedeachproxyisappointedtoexerciserights attached to different shares. You may not appoint more than one proxy toexercise rightsattached toanyoneshare.Toappointmore thanoneproxy,pleasecontacttheregistrarsoftheCompany,ShareRegistrarsLimitedon01252821390.

5. Avotewithheldisnotavoteinlaw,whichmeansthatthevotewillnotbecountedinthecalculationofvotesfororagainsttheresolution.Ifnovotingindicationisgiven,yourproxywillvoteorabstainfromvotingathisorherdiscretion.Yourproxywillvote(orabstainfromvoting)asheorshethinksfitinrelationtoanyothermatterwhichisputbeforetheMeeting.

Appointment of proxy using hard copy proxy form

6. The notes to the proxy form explain how to direct your proxy how to vote on eachresolutionorwithholdtheirvote.

Toappointaproxyusingtheproxyform,theformmustbe:

• completedandsigned;

• sentordeliveredtoShareRegistrarsLimitedatSuiteE,FirstFloor,9LionandLambYard,Farnham,SurreyGU97LLorbyfacsimiletransmissionto01252719232;

• alternatively, the completed proxy form can be scanned and emailed [email protected];

• andreceivedbyShareRegistrarsLimitednolaterthan48hours(excludingnon-businessdays)priortotheMeeting.

Inthecaseofamemberwhichisacompany,theproxyformmustbeexecutedunderitscommonsealorsignedonitsbehalfbyanofficeroftheCompanyoranattorneyfortheCompany.

Anypowerofattorneyoranyotherauthorityunderwhichtheproxyformissigned(oradulycertifiedcopyofsuchpowerorauthority)mustbeincludedwiththeproxyform.

Appointment of proxy by joint members

7. In the case of joint holders, where more than one of the joint holders purports toappoint a proxy, only the appointment submitted by the most senior holder will beaccepted.SeniorityisdeterminedbytheorderinwhichthenamesofthejointholdersappearintheCompany’sregisterofmembersinrespectofthejointholding(thefirst-namedbeingthemostsenior).

Changing proxy instructions

8. Tochangeyourproxyinstructionssimplysubmitanewproxyappointmentusingthemethodssetoutabove.Note that thecut-off timeforreceiptofproxyappointments(see above) also apply in relation to amended instructions; any amended proxyappointmentreceivedaftertherelevantcut-offtimewillbedisregarded.

Whereyouhaveappointedaproxyusingthehard-copyproxyformandwouldliketochange the instructions using another hard-copy proxy form, please contact ShareRegistrarsLimitedon01252821390.

Ifyousubmitmorethanonevalidproxyappointment, theappointmentreceived lastbeforethelatesttimeforthereceiptofproxieswilltakeprecedence.

Termination of proxy appointments

9. InordertorevokeaproxyinstructionyouwillneedtoinformtheCompanyusingoneofthefollowingmethods:

By sending a signed hard copy notice clearly stating your intention to revoke yourproxyappointmenttoShareRegistrarsLimitedatSuiteE,FirstFloor,9LionandLambYard,Farnham,SurreyGU97LLorby facsimile transmissionto01252719232. In thecaseofamemberwhichisacompany,therevocationnoticemustbeexecutedunderitscommonsealorsignedonitsbehalfbyanofficeroftheCompanyoranattorneyfortheCompany.Anypowerofattorneyoranyotherauthorityunderwhichtherevocationnoticeissigned(oradulycertifiedcopyofsuchpowerorauthority)mustbeincludedwiththerevocationnotice.

Ineithercase,therevocationnoticemustbereceivedbyShareRegistrarsLimitednolaterthan48hours(excludingnon-businessdays)priortotheMeeting.

If you attempt to revoke your proxy appointment but the revocation is receivedafter the time specified then, subject to the paragraph directly below, your proxyappointmentwillremainvalid.

AppointmentofaproxydoesnotprecludeyoufromattendingtheMeetingandvotinginperson.IfyouhaveappointedaproxyandattendtheMeetinginperson,yourproxyappointmentwillautomaticallybeterminated.

Issued shares and total voting rights

10. Asat21May2010theCompany’sissuedsharecapitalcomprised420,898,929ordinaryshares of 1p each. Each ordinary share carries the right to one vote at an AnnualGeneralMeetingoftheCompanyand,therefore, thetotalnumberofvotingrights intheCompanyasat21May2010is420,898,929.

17716 26/05/10 Proof6

Kiotech International plc · 2020. 7. 24. · Kiotech International plc Annual Report 2009 3...

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