Preliminary Results

RNS Number : 1669A

Eco Animal Health Group PLC

30 July 2008

 



ECO Animal Health Group plc 

(formerly Lawrence plc) 

Preliminary Results for the year ended 31 March 2008

HIGHLIGHTS

• Turnover excluding discontinued operations up over 12 per cent at £16.5 million (2007: £14.7 million) 

• Profit before interest, tax, depreciation and share based payments and other exceptional items was £2.24 million 

• Total dividend of 7.15 pence (net) per share (2007: 7.15 pence (net) per share) 

• Closing cash at 31 March 2008 was £5.5m

• Successful fundraisings totalling £15.7 million (after expenses) from two share placings, principally with financial institutions, which has been used to further ECO's drug registration programme

• Aivlosin®, ECO's patented macrolide antibiotic, increased its global revenues by almost 30 per cent compared with the previous year

• Further important drug registrations granted for Aivlosin® and Ecomectin®

• Company's shares now traded on PLUS Markets in addition to AIM

Peter Lawrence, Executive Chairman of ECO Animal Health Group plc, commented:

'Trading in the current year has started well and is in line with our expectations. I remain confident that ECO is increasingly well placed to establish itself as a major force in the animal health industry.'

Contacts:

ECO Animal Health Group plc  

Peter Lawrence                                                                          020 8336 6190

Spiro Financial

Anthony Spiro                                                                            020 8336 6196

Cenkos Securities plc (Nominated Adviser)  

Stephen Keys                                                                           020 7397 8926

Elizabeth Bowman                                                                     020 7397 8928

ECO Animal Health Group plc is a leader in the development, registration and marketing of pharmaceutical products for animals. Our products for these global growth markets promote well-being. Our financial goals are achieved through the careful and responsible application of science to generate value for our shareholders.

CHAIRMAN'S STATEMENT

FOR THE YEAR ENDED 31 MARCH 2008

It is pleasing to report that we have made further good progress in the year to 31 March 2008 as we move towards our goal of becoming a major force in the global animal health industry.

Group turnover excluding discontinued operations was £16.5 million, over twelve per cent ahead of last year's result of £14.7 million. This was a particularly encouraging performance as the majority of sales are invoiced in US dollars, a currency which weakened by approximately five per cent against sterling during the year. The fall in the dollar masks the strength of our underlying performance. Profit before interest, tax, depreciation, share based payments and other exceptional items was £2.1 million.

In order to achieve marketing authorisations within a competitive time frame, considerable expense is involved and during the year we raised £15.7 million (after expenses) from two share placings, principally with financial institutions. The first placing was in July 2007 and resulted in the issue of 2,718,500 new ordinary shares at 200 pence and the second placing in March 2008 resulted in the issue of a further 10,526,316 new ordinary shares at 100 pence. The placings, together with the scrip dividend alternative scheme, have greatly strengthened our cash position, which will be invested in the drug development programme to reduce times to approval. We are confident that we now have the cash resources to complete the development programme.

As expected, a number of new and important marketing authorisations were granted towards the end of the year and more should follow in the coming months. Achieving these marketing authorisations is the key to the future of the company and reflects many years of planning, product development and field trials. Marketing authorisations bring real value to the company, which is now entirely focussed on farm animal and pet health.

The Board recommends a final dividend of 5.45 pence (net) per share, making a total for the year of 7.15 pence (net) per share (2007: total dividend 7.15 pence). Shareholder approval will be sought at the annual general meeting on 17 September 2008 to pay the final dividend on 7 November 2008 to shareholders on the register on 26 September 2008. At an extraordinary general meeting held on 14 August 2007 shareholders approved a resolution allowing the company to offer shareholders the choice of receiving shares as an alternative to the cash dividend. Holders of over 65 per cent of the Company's shares signed mandates opting for the share alternative for the interim dividend. The Board is most grateful to these shareholders for agreeing to reinvest their cash dividend in the Company and requests that they maintain their mandates as this will have a significant and long term beneficial effect on the Company and its drug development programme.

Erratic and disproportionate movements in the Company's share price, often on small trading volumes, have caused concern, particularly among private shareholders. The Company's shares are traded on AIM using the London Stock Exchange's Electronic Trading Service (SETS). This system was introduced originally in the main market to handle trades in very active and highly liquid stocks. We do not feel it is suited to small companies like ECO and we are pleased to report that on 17 June 2008 we left SETS and reverted to the previous market maker led system. Arrangements have been made for the Company's shares to be traded on PLUS markets in addition to AIM. We hope that these changes will reduce volatility in the Company's share price.

ECO Group

Our core animal health business continued to make good progress, with sales in US dollars some eleven per cent ahead of the previous year. Aivlosin®, our patented macrolide antibiotic, increased its global revenues by almost thirty per cent compared with the previous year and now comprises close to half of total ECO sales. This significant advance demonstrates the market's growing appreciation and understanding of the benefits of using Aivlosin® as a premium positioned drug. Aivlosin® sales outside of Europe and the USA increased by thirty eight per cent over the previous year. Sales in China, which has half the global pig population, were particularly strong.

Sales of Aivlosin® in Europe advanced five per cent over the level of last year, which was well below our expectations. We have carried out a detailed review of our distribution arrangements in Europe and made significant changes. ECO itself will now be responsible for selling Aivlosin® for pigs and poultry in the UK and Aivlosin® for poultry in France. The UK and France are the two largest poultry markets in Europe. Several new national distributors, selected for their local market knowledge of the pig or poultry industry have been appointed in other EU countries. We anticipate that sales of Aivlosin® will improve as a result of these changes.

Considerable progress has been made during the last twelve months with the clinical programme in Europe to support a lower and even more cost effective dose rate for the treatment of ileitis, an enteric disease of pigs. Under the very strict EU rules, a higher than anticipated dose rate was approved for the treatment of this disease, which has had treatment cost implications in a cost sensitive market segment. It is anticipated that the reduction in the label dose rate will result in improved market penetration.

An application for the use of Aivlosin® for treating mycoplasmosis in poultry was approved by the European Commission after the year end. Sales should commence in EU member countries by September 2008, after the approval of labelling requirements in individual member states. Further important Aivlosin® poultry approvals were obtained in India, Turkey and a number of Middle Eastern countries during the financial year. A positive effect on sales is expected in those countries, which export poultry products to Europe. ECO is confident that it will shortly be granted a marketing authorisation in Japan for a new claim for pigs.

.

In the USA the Aivlosin® development programme has advanced well on all fronts and is progressing in accordance with our expectations; discussions with potential distributors are taking place. We remain confident that the granting of US approvals for Aivlosin® will start in two years time.

In order to further expand distribution of Aivlosin® in Brazil, which is a key market for pigs and poultry, ECO has established a locally registered company and as a result, has been able to appoint another Aivlosin® distributor to complement the existing sales effort. These actions will have a positive effect on the quality of the business in this very large market.

Ecomectin®, our antiparasitic brand, achieved total sales slightly ahead of the previous year. New Ecomectin® marketing authorisations in Europe include a pig premix which addresses a market worth about £8 million at manufacturer level and provides a simple solution to the problem of accurately treating a large number of pigs simultaneously.

Sales of Ecomectin® Horse Paste have now commenced following its authorisation in a further sixteen countries of the European Union; the product is licensed for the treatment of adult and immature roundworms and bots in horses. The treatment of internal parasites in horses is the largest equine veterinary market segment in Europe with an estimated value in the region of £25 million. In Japan a marketing authorisation was obtained for Ecoheart, an Ecomectin® chewable tablet for dogs. Ecoheart prevents heartworm disease and is also effective in the treatment and control of roundworms and hookworms in dogs. Canine heartworm is potentially fatal and requires a monthly preventative treatment; it is one of the three key sectors in the companion animal market in Japan and is estimated to be worth in the region of £10 million at manufacturer level.

These formulations for horses and dogs mark ECO's entry into the valuable companion animal sector. Whilst advance orders and initial sales have been encouraging, the full impact of these Ecomectin® marketing authorisations will only be felt in the current year. In addition to the launch of the chewable dog tablet and horse paste, work has started on the formulation and development of other pet medications of potential major importance.

We have started research into further potential uses of Aivlosin® in production animals other than pigs and poultry. We are optimistic that the results of this research will, over time, offer ECO the opportunity to access new global markets. This is an exciting prospect.

Eco has broadened the scope of its collaborative research agreement with the Department of Pathology at Cambridge University in order to allow further investigation of new indications for Aivlosin®. A number of papers reporting this research have already appeared in scientific publications including The Pig Journal and The Journal of Virology. Related studies at Iowa State University have yielded significant preliminary results and were presented at the International Pig Veterinary Society Congress in Durban in June 2008. A confirmatory trial programme has started and field work to support these findings is already underway.

In April 2007 Zhejiang ECO Biok Animal Health Products Limited (ECO Biok), in China, became a subsidiary as we obtained a controlling interest; this strengthens ECO's position in this large and fast growing market. Sales in China, in US dollars, were more than double the level of the previous year, and exceeded our expectations. Exports of other finished products manufactured at ECO Biok's factory in Zhejiang province continue to increase.

Aquarium Products

This small, non-core US based division, formerly part of our Interpet operation, has secured the rights to the popular 'For Dummies' brand for ornamental fish medication. Consumers have responded well to the basics of fish keeping and the helpful Fish Care for Dummies range, which includes books and feed, has boosted fresh interest in this popular hobby. Aquarium Products remains the subject of discussions, which may lead to its sale.

People

We currently employ close to a hundred people in our seventeen offices around the world; their hard work and dedication to growing our company is never underestimated. Our people underpin the development of the company and are committed to generating greater value for both our shareholders and themselves.

Outlook

Trading in the current year has started well and is in line with our expectations. The recent granting of further marketing authorisations around the world will impact positively on our performance in the coming months. I remain confident that ECO is increasingly well placed to establish itself as a major force in the animal health industry.

Peter Lawrence

Chairman

CONSOLIDATED INCOME STATEMENT

FOR THE YEAR ENDED 31 MARCH 2008 

						2008				2007
										( as restated)
	Notes					£				£
Revenue	3
Continuing operations				14,748,776				14,702,667
Acquisitions				1,732,325				-
Discontinued operations				-				3,593,165
				───────				───────
						16,481,101				18,295,832
Cost of sales	4					(10,802,988)				(12,367,047)
						───────				───────
Gross profit						5,678,113				5,928,785
Administrative expenses	4					(6,151,158)				(5,438,472)
Other operating income	4					152,387				432,275
						───────				───────
Operating (loss)/profit	5
Continuing operations				(777,657)				427,438
Acquisitions				456,999				-
Discontinued operations				-				495,150
				───────				───────
						(320,658)				922,588
(Adjustment to)/profit on sale of division	6					(315,115)				2,895,875
Amounts written off investments	7					-				(40,449)
						───────				───────
(Loss)/profit on ordinary activities before interest					(635,773)				3,778,014
Other interest receivable and similar income					40,258				89,667
Interest payable and similar charges		8			(414,668)				(476,624)
					───────				───────
(Loss)/profit on ordinary activities before taxation					(1,010,183)				3,391,057
Tax on (loss)/profit on ordinary activities		10			313,767				(571,286)
					───────				───────
(Loss)/profit on ordinary activities after taxation					(696,416)				2,819,771
					═══════				═══════
ATTRIBUTABLE TO:
Equity holders of the parent					(783,973)				2,819,771
Minority interests					87,557				-
					───────				───────
(Loss)/profit for the financial year					(696,416)				2,819,771
					═══════				═══════

		2008		2007
				(as restated)
EARNINGS PER SHARE		Basic	Diluted	Basic	Diluted
Continuing operations	13	(2.36p)	(2.36p)	-	-
Discontinued operations		-	-	9.04p	8.99p
		─────	─────	────	────
		(2.36p)	(2.36p)	9.04p	8.99p
		═════	═════	════	════

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

 FOR THE YEAR ENDED 31 MARCH 2008

Group	Share Capital	Premium Account	Revaluation Order	Other Reserves	Retained Earnings	Total 2008
						(as restated)
	£	£	£	£	£	£
Balance as at 1 April 07	1,559,011	21,367,211	256,237	548,231	11,453,162	35,183,852
Prior Year Adjustment	-	-	-	-	1,021,112	1,021,112
	───────	───────	───────	───────	───────	───────
Balance restated as at 1 April 07	1,559,011	21,367,211	256,237	548,231	12,474,274	36,204,964
Profit/(loss) for the year	-	-	-	-	(783,973)	(783,973)
Dividends	-	-	-	-	(2,435,660)	(2,435,660)
Arising from issue of shares	697,241	15,728,143	-	-	-	16,425,384
in the year
Foreign currency translation	-	-	-	-	(488,376)	(488,376)
differences
Actuarial losses on pension	-	-	-	-	(80,400)	(80,400)
scheme assets
Share based payments	-	-	-	257,390	-	257,390
Write back of depreciation	-	-	(2,890)	-	-	(2,890)
	───────	───────	───────	───────	───────	───────
	2,256,252	37,095,354	253,347	805,621	8,685,865	49,096,439
	═════	═════	═════	════	═════	══════

	Total 2008 (as restated) £	Minority interest £	Total Equity (as restated) £
Balance as at 1 April 07	35,183,852	2,475	35,186,327
Prior year adjustment	1,021,112	-	1,021,112
	───────	───────	───────
Balance restated as at 1 April 07	36,204,964	2,475	36,207,439
Arising on consolidation	-	511,901	511,901
Profit/(loss) for the year	(783,973)	87,557	(696,416)
Dividends	(2,435,660)	-	(2,435,660)
Arising from issue of shares in the year	16,425,384	-	16,425,384
Foreign currency translation differences	(488,376)	44,705	(443,671)
Actuarial losses on pension scheme assets	(80,400)	-	(80,400)
Share based payments	257,390	-	257,390
Write back of depreciation	(2,890)	-	(2,890)
	───────	────────	───────
	49,096,439	646,638	49,743,077
	═══════	═══════	════════

BALANCE SHEETS

AS AT 31 MARCH 2008

                _    

		Group		Company
		2008	2007	2008	2007
	Notes	£	£	£	£
			(as restated)
Non-current assets
Intangible assets	14	34,798,363	32,140,520	-	-
Property, plant and equipment	15	1,348,663	942,883	656,460	665,384
Investments	16	280,550	778,822	20,986,556	21,462,912
		────────	────────	────────	────────
		36,427,576	33,862,225	21,643,016	22,128,296
		────────	────────	────────	────────
Current assets
Inventories	17	3,825,724	3,356,703	-	-
Trade and other receivable	18	8,354,376	9,257,171	20,432,139	18,149,518
Deferred tax asset	19	228,127	185,282	-	-
Other taxes and social security		150,703	-	143,665	-
Cash and cash equivalents	20	6,143,189	935,911	5,122,408	778,005
		────────	────────	────────	────────
		18,702,119	13,735,067	25,698,212	18,927,523
Current liabilities
Trade and other payables	21	(3,523,613)	(5,320,398)	(237,332)	(2,336,936)
Short term borrowings		(79,043)	(3,863,769)	(79,043)	(3,863,769)
Current portion of long term borrowings		(557,862)	(210,033)	(557,862)	(210,033)
Corporation tax		(357,755)	(630,541)	(294,858)	(471,038)
Other taxes and social security		(82,783)	(91,853)	(59,137)	(82,411)
Dividends		(599,608)	(532,661)	(599,608)	(532,661)
		────────	────────	────────	────────
Net current assets		13,501,455	3,085,812	23,870,372	11,430,675
		────────	────────	────────	────────
Total assets less current liabilities		49,929,031	36,948,037	45,513,388	33,558,971
Non-current liabilities
Long term borrowings	22	(185,954)	(630,098)	(185,954)	(630,098)
Long term provisions	23	-	(110,500)	-	(110,500)
		────────	────────	────────	────────
		49,743,077	36,207,439	45,327,434	32,818,373
		═══════	═════	═════	═════

Equity
Called up share capital	25	2,256,252	1,559,011	2,256,252	1,559,011
Share premium account	26	37,095,354	21,367,211	37,095,354	21,367,211
Revaluation reserve	26	253,347	256,237	253,347	256,237
Other reserves	26	805,621	548,231	805,621	548,231
Retain earnings	26	8,685,865	12,474,274	4,916,860	9,087,683
		────────	────────	────────	────────
	28	49,096,439	36,204,964	45,327,434	32,818,373
Minority interests	27	646,638	2,475	-	-
		────────	────────	────────	────────
		49,743,077	36,207,439	45,327,434	32,818,373
		═══════	══════	══════	══════

CONSOLIDATED CASH FLOW STATEMENT

FOR THE YEAR ENDED 31 MARCH 2008

	Note		2008		2007
			£		£
					(as restated)
(Loss)/profit from operations			(320,658)		922,588
Adjustment for:
Depreciation of plant and equipment			217,735		116,892
Amortisation of intangible assets			2,168,558		1,613,081
Actuarial pension losses			(80,400)		(54,000)
(Decrease) in pension provision			(110,500)		(227,500)
Share based payments			257,390		224,014
Foreign exchange differences			(443,671)		271,264
			────────		────────
Operating cash flow before movement
in working capital			1,688,454		2,866,339
(Increase)/decrease in inventories			(97,090)		269,553
Decrease in receivables			525,734		1,294,699
(Decrease)/increase in payables			(2,291,786)		1,219,453
			────────		────────
Cash (absorbed by)/generated from operations			(174,688)		5,650,044
Interest paid			(414,668)		(476,624)
Taxation			(1,864)		(51,210)
			────────		────────
Net cash (outflow)/inflow from operating activities			(591,220)		5,122,210
			────────		────────
Cash flows from investing activities
Acquired with subsidiary			276,414		-
Proceeds from sale of a division			-		3,031,786
Purchase of property, plant and equipment			(141,914)		(56,582)
Costs of acquiring drug registrations			(4,551,891)		(4,969,912)
Interest received			40,258		89,667
			────────		────────
Net cash (used in) investing activities			(4,377,133)		(1,905,041)
			────────		────────
Cash flows from financing activities
Issue of shares			16,425,384		98,250
(Repayment) of bank borrowings			(444,144)		(2,452,398)
Dividends paid			(2,368,712)		(2,177,454)
			────────		────────
			13,612,528		(4,531,602)
			────────		────────

Net increase/(decrease) in cash and cash equivalents  35,36                          8,644,175                                       (1,314,433)

Cash and cash equivalents at the start of the period                                      (3,137,891)                                     (1,823,458)

                                                                                                                                                                                                                              ────────                                                         ──────── 

Cash and cash equivalents at the end of the period                                       5,506,284                                     (3,137,891) 

                                                                                                                                                                                                                               ════════                       ══════ 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 MARCH 2008

1    Accounting policies

1.1    Basis of preparation

    The financial statements have previously been prepared under the historical cost convention and in accordance with applicable United Kingdom Accounting Standards. Following new accounting standards the group has for the first time presented its annual report and accounts in accordance with International Financial Reporting Standards (IFRS), as endorsed by the European Union.

    The preparation of financial statements in conformity with generally accepted accounting principles requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reported period. Although these estimates are based on management's best knowledge of the amount, event or actions, actual results ultimately may differ from those estimates.

    The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in a period of the revision and future periods if the revision affects both current and future periods.

    The principal accounting policies of the Group are set out below, and have been applied consistently in dealing with items which are considered material in relation to the group's financial statements.

1.2    Basis of consolidation

    The consolidated financial statements comprise the accounts of the company and its subsidiaries drawn up to 31 March 2008. Profit or losses on intra-group transactions are eliminated in full on consolidation.

1.3    Revenue

    Revenue represents amounts receivable for goods and services net of VAT and trade discounts.

1.4    Goodwill

    Goodwill arising on consolidation is included in the balance sheet of the accounts as an asset at cost less impairment. In previous years goodwill has been amortised over the economic life of the asset, subject to an impairment review in line with UK GAAP. However for 2008 in line with International Financial Reporting Standards, goodwill has not been amortised, but has instead been subject to an impairment review.

    For the purpose of impairment testing, goodwill is allocated to each of the company's cash-generating units expected to benefit from the synergies of the combination. Cash-generating units to which goodwill has been allocated are tested annually, or more frequently where there is an indication that the unit may be impaired. If the recoverable amount of the cash-generating unit is less than the carrying amount of the unit, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to other assets of the unit pro-rata on the basis of the carrying amount of each asset in the unit. An impairment loss recognised for goodwill is not reversed.

    The recoverable amount is calculated as a multiple of Earnings Before Interest and Taxation using a multiple at the lower end of the range that would normally be applied to businesses within the same sector.

    In further accordance with International Financial Reporting Standards, the 2007 comparative income statement and balance sheet results have had that year's goodwill amortisation added back to provide a like for like comparison. A reconciliation between the 2007 published results and the 2007 comparative results in these accounts appears in note 2.

1.5    Intangible non-current assets

    Drug registrations are included at cost and amortised on a straight line basis over their estimated useful economic life of 10 years.

1.6    Research and development

    Research expenditure is written off to the income statement in the year in which it is incurred. Development expenditure is written off in the same way unless the directors are satisfied as to the technical, commercial and financial viability of individual projects. In this situation, the expenditure is deferred and amortised over the period during which the company is expected to benefit.

1.7    Property, plant and equipment and depreciation

    Non-current assets are stated at cost less depreciation. Depreciation is provided at rates calculated to write off the cost less estimated residual value of each asset over its expected useful life, as follows:

	Freehold property	2% on valuation
	Long leasehold property	on valuation over the remaining term of the lease
	Plant and machinery	20% on cost
	Alterations to premises	10% on cost
	Fixtures, fittings & equipment	20% on cost
	Motor Vehicles	25% on cost

    The directors changed the accounting policy in respect of land and buildings in the last financial statements and decided to revalue the properties on a regular basis to give a true and fair view in the accounts. The asset will continue to be written off over its estimated useful life.

1.8    Leasing

    Rentals payable under operating leases are charged against income on a straight-line basis over the lease term.

1.9    Investments

    Fixed asset investments are stated at cost less provisions for diminution in value.

1.10    Inventories

    Inventories are valued at the lower of cost and net realisable value, after making allowance for obsolete and slow moving items.

1.11    Contributions to pension schemes

    Defined Contribution Scheme

    The pension costs charged against operating profits represent the amount of the contributions payable to the schemes in respect of the accounting period.

    Defined Benefit Scheme

    The regular cost of providing retirement pensions and related benefits is charged to the profit and loss account over the employees' service lives on the basis of a constant percentage of earnings. Any difference between the charge to the profit and loss account and the contributions paid to the scheme are disclosed as an asset or liability in the balance sheet in accordance with IAS 19.

1.12    Deferred taxation

    Full provision is made for deferred tax assets and liabilities arising from all timing differences between the recognition of gains and losses in the financial statements and recognition in the tax computation.

    A net deferred tax asset is recognised only if it can be regarded as more likely than not that there will be suitable taxable profits from which the future reversal of the underlying timing differences can be deducted.

    Deferred tax assets and liabilities are calculated at the tax rates expected to be effective at the time the timing differences are expected to reverse.

    Deferred tax assets and liabilities are not discounted.

1.13    Foreign currency translation

    Transactions in foreign currencies are translated at the exchange rate ruling at the date of the transaction. Monetary assets and liabilities in foreign currencies are translated at the rates of exchange ruling at the balance sheet date. The financial statements of foreign subsidiaries are translated at the rates of exchange ruling at the balance sheet date. The exchange differences arising from the retranslation of the opening net reserves in subsidiaries are taken directly to reserves. Where exchange differences result from the translation of foreign currency borrowings raised to acquire foreign assets, they are taken to reserves and offset against the differences arising from the translation of those assets. All other exchange differences are dealt with through the income statement.

1.14    Financial Instruments

    Income and expenditure arising on financial instruments is recognised on the accruals basis, and credited or charged to the income statement in the financial period to which it relates.

1.15    Share-based payments

    For equity-settled share-based payment transactions the group, in accordance with IFRS3, measures their value, and the corresponding increase in equity, indirectly, by reference to the fair value of the equity instruments granted. The fair value of those equity instruments shall be measured at grant date, using the Black Scholes method. The expense is apportioned over the vesting period of the financial instrument and is based on the number which are expected to vest and the fair value of those financial instruments at the date of grant. If the equity instruments granted vest immediately, the expense is recognised in full.

2       First time adoption of IFRS

As mentioned in note 1, following new accounting standards the group has for the first time presented its annual report and accounts in accordance with International Financial Reporting Standards (IFRS) as endorsed by the European Union.

      The reconciliations required under IFRS1 for the first time adoption are set out below:

      Reconciliation of equity reported under UK GAAP to equity reported under IFRS

		As at 1st April 2006	As at 31st March 2007
		(First day of Comparative period)	(Last day of comparative period)
	Equity reported under UK GAAP	34,848,808	35,183,852
	Amortisation of goodwill for the year ended 31 March 2007 not required under IFRS	-	1,021,112
		─────────	─────────
	Equity reported under IFRS	34,848,808	36,204,964
		═════════	═════════

     Reconciliation of profit for the year ended 31 March 2007

		Reported under	Effect of transition	Restated results
		UK GAAP	to IFRS	under IFRS
	Revenue	18,295,832	-	18,295,832
	Cost of operations	(18,394,356)	1,021,112	(17,373,244)
		───────	───────	─────────
	Group operating profit	(98,524)	1,021,112	922,588
	Profit on sale of a division	2,895,875	-	2,895,875
	Amounts written off investments	(40,449)	-	(40,449)
	Net finance costs	(386,957)	-	(386,957)
		───────	───────	─────────
	Profit on ordinary activities before taxation	1,021,112	3,391,057	2,369,945
	Taxation	(571,286)	-	(571,286)
		───────	───────	─────────
	Profit for the financial year	1,798,659	1,021,112	2,819,771
		═══════	═══════	═════════

3    Revenue

    The total revenue of the group for the year has been derived from its principal activity.

    Segmental analysis by geographical area

    The analysis by geographical area of the group's turnover and (loss)/profit before taxation is set out as below:

    Turnover 

		2008	2007
		£	£
	Geographical segment
	Europe	3,845,629	5,304,928
	Rest of the World	12,635,472	12,990,904
		────────	────────
		16,481,101	18,295,832
		══════	══════

    (Loss)/Profit before taxation

		2008	2007
		£	£
	Geographical segment
	Europe	(200,779)	3,186,022
	Rest of the World	(809,404)	205,035
		────────	───────
		(1,010,183)	3,391,057
		════════	═══════

It has not been possible to disclose the group's assets and liabilities by geographical area as they are centrally held.

4    Cost of sales and net operating expenses

	2008			2007
	Continuing	Acquisitions	Total	Continuing (as restated	Discontinued	Total (as restated)
	£	£	£	£	£	£
Cost of sales	9,706,351	1,096,637	10,802,988	9,889,482	2,477,565	12,367,047
Administrative expenses	5,702,163	448,995	6,151,158	4,818,022	620,450	5,438,472
Other operating income	(127,470)	(24,917)	(152,387)	(432,275)	-	(432,275)
	────────	───────	────────	───────	───────	────────
	15,281,044	1,520,715	16,801,759	14,275,229	3,098,015	17,373,244
	════════	════════	═══════	════════	═══════	═══════

5     Operating (loss)/profit

		2008	2007
	Operating (loss)/profit is stated after charging:	£	£
	- audit services	43,000	45,000
	- non audit services	11,343	11,757
	R & D expenditure	31,041	15,781
	Operating lease rentals	100,358	100,611
	Foreign exchange loss	23,036	-
		──────────	──────────

6    Adjustment to profit on sale of division

The financial statements for 2007 reported a profit on the sale of the group's Agil trading division, in the amount of £2,895,875. This profit was based on management's best estimate of the total consideration received, some of which was deferred, and depended on the recovery of certain old debtor balances. The management now believe it would be prudent to fully provide for the remaining unprovided balances and have therefore included this provision in the current financial statements.

7    Amounts written off investments

		2008	2007
		£	£
	Amounts written off non-current asset investments
	- Diminution in value	-	40,449
		═══════	═══════

8    Interest payable

		2008	2007
		£	£
	On bank loans and overdrafts	408,631	453,624
	Other interest	6,037	23,000
		───────	───────
		414,668	476,624
		═══════	═══════

9    Equity Settled Share Based Payments

The measurement requirements of IFRS2 have been implemented in respect of share-options that were granted after 7th November 2002. The expense recognised for share based payments made during the year is shown in the following table;

		2008	2007
		£	£
	Total expense arising from equity -
	Settled share-based transactions	257,390	224,000

    The share-based payment plan is described below.

    Eco Animal Health Group plc Executive Share Option Scheme

In accordance with the Executive Share Option Scheme, approved and unapproved share options are granted to full time directors and employees who devote at least 25 hours per week to the performance of duties or employment with the company.

The exercise price of the options is equal to the market price of the shares at the date of grant. The options vest three years from the date of grant and if the option holder ceases to be a director or employee of the company due to injury, disability, redundancy or retirement on reaching pensionable age or any other age at which he is bound to retire in accordance with the terms of his contract of employment , the option may be exercised within a period of six months after the option holders so ceasing, although the Board may at its discretion extend this period by up to 36 months after the date of cessation.

If the option holder ceases employment for any other reason , the option may not be exercised unless the Board permits. The approved and unapproved options will be forfeited where they remain unexercised, at the end of their respective contractual lives of ten and seven years.

The fair value of share options granted is estimated at the date of grant using the Black Scholes pricing model, taking into account all the terms and conditions upon which the options were granted.

    Movements in Issued Share Options during the Year

The following table illustrates the number and weighted average exercise prices (WAEP) of, and movements in, share options during the period:

			2008		2007
		2008	WAEP	2007	WAEP
	Outstanding at the beginning of the period	2,852,165	2.41	2,265,825	2.88
	Granted during the period	2,527,760	1.19	1,757,340	2.38
	Forfeited /cancelled during the period	2,008,360	2.37	1,131,000	3.34
	Exercised during the period	-	-	40,000	1.44
	Outstanding at the period end	3,371,565	1.51	2,852,165	2.41
	Exercisable at the end of the period	555,325	2.38	523,325	1.89

The maximum aggregate number of shares over which options may currently be granted cannot exceed 10% of the nominal share capital of the company on the grant date.

The options outstanding at 31 March 2008 had a weighted average share price of £1.51, and a weighted average remaining contractual life of 6.7 years.

    Inputs to the Valuation Model

The fair value of share options granted prior to 31st March 2007 were estimated at the time of grant using a trinomial pricing model, taking into account all the terms and conditions upon which the options were granted. For options granted after 1st April 2007 the directors took the decision that a Black-Scholes model would be more appropriate.

    The following table lists the inputs to the respective models:

		2008	2007
	Expected dividend yield	5.00%	5.00%
	Expected volatility	25.00%	25.00%
	Contractual life of the options	7-10 years	7-10 years
	Weighted average risk free interest rate	4.66%	4.66%
	Weighted average fair value	£0.171	£0.42

The expected volatility was estimated by reference to the historical volatility of the company's share price. The risk free rate of return is estimated as the yield on zero coupon UK government bonds of a term consistent with the contractual life of the options granted.

10    Taxation                

		2008	2007
		£	£
			(as restated)
	Domestic current year tax
	U.K. corporation tax	-	660,000
	Adjustment for prior years	(270,922)	(134,156)
		────────	────────
	Current tax (credit)/charge	(270,922)	525,844
	Deffered tax
	Origination and reversal of timing differences	(42,845)	45,442
		────────	────────
		(313,767)	571,286
		═══════	══════
	Factors affecting the tax (credit)/charge for the year
	(Loss)/profit on ordinary activities before taxation	(1,010,183)	3,391,057
		═══════	══════
	Loss)/profit on ordinary activities before taxation multiplied by standard rate or UK corporation tax of 30% (2007 - 30%)	(303,055)	1,017,371
	Effects of:
	Non deductible expenses	118,801	1,750
	Depreciation add back	25,025	25,646
	Capital allowances	(14,569)	(16,883)
	Relief for enhanced expenditure	(459,790)	(422,978)
	Other tax adjustments	362,666	(79,008)
		────────	────────
	Current (credit)/charge	(270,922)	525,844
		═══════	═════

Deferred tax unprovided for in the financial statements is set out below. All amounts have been provided for according to the provisions of IAS12.

    Unprovided deferred tax for gains rolled over into new assets is £51,252 (2007: £51,252).            

11    (Loss)/profit for the financial year

As permitted by section 230 of the Companies Act 1985, the holding company's income statement has not been included in these financial statements. The (loss)/profit for the financial year is made up as follows:

		2008	2007
		£	£
	Holding company's (loss)/profit for the financial year	(1,751,076)	1,752,602
		═══════	══════

12    Dividends paid and proposed

		2008 £	2007 £
	Final dividend for the period ended 31 March 2006 of 5.45p per ordinary share	-	1,697,687
	Interim dividend for the period ending 31 March 2007 of 1.7p per ordinary share	-	530,064
	Final dividend for the period ended 31 March 2007 of 5.45p per ordinary share	1,847,481	-
	Interim dividend for the period ending 31 March 2008 of 1.7p per ordinary share	588,179	-
		────────	────────
		2,435,660	2,227,751
		────────	────────

13    Earnings per share

Basic earnings per share is calculated upon the result of the continuing activities for the financial year shown in the income statement divided by the weighted average number of shares in issue during the year.

    Diluted earnings per share takes into account the dilutive effect of share options.

			2008			2007
		Earnings  '000	Weighted average number of shares '000	Per share Amount (pence)	Earnings £'000 (as restated)	Weighted average number of shares '000	Per share Amount  (pence)
	Basic earnings per share
	Earnings attributable to ordinary shareholders on continuing operations	(784)	33,199	(2.36)	-	33,199	0.00
	Dilutive effect of securities options on continuing operations	-	24	-	-	24	0.00
		───────	───────	───────	───────	───────	───────
		(784)	33,223	(2.36)	-	33,223	0.00
		═════	══════	═════	═══════	═════	═══════

14    Intangible non-current assets

    Group

	Cost	Goodwill	Development Costs	Total
		(as restated)		(as restated)
		£	£	£
	At 1 April 2007	20,258,054	18,802,536	39,060,590
	Arising on consolidation of subsidiary	-	262,186	262,186
	Additions	94,257	4,551,891	4,646,148
		────────	────────	─────────
	At 31 March 2008	20,352,311	23,616,613	43,968,924
		────────	────────	─────────
	Amortisation
	At 1 April 2007	2,575,436	5,365,746	7,941,182
	Prior year adjustment	(1,021,112)	-	(1,021,112)
		────────	────────	────────
	As restated at 1 April 2007	1,554,324	5,365,746	6,920,070
	Arising on consolidation of subsidiary	-	81,933	81,933
	Charge for the year	-	2,168,558	2,168,558
		────────	────────	─────────
	At 31 March 2008	1,554,324	7,616,237	9,170,561
		────────	────────	─────────
	Net book value
	At 31 March 2008	18,797,987	16,000,376	34,798,363
		═══════	═══════	═══════
	At 31 March 2007	18,703,730	13,436,790	32,140,520
		═══════	════════	═══════

   An impairment review has indicated that goodwill is not impaired.

15    Property, plant and equipment

    Group

		Freehold Property	Long leasehold property	Plant and machinery	Fixtures fittings and equipment	Total
	Cost or valuation	£	£	£	£	£
	At 1 April 2007	650,000	15,532	311,755	522,051	1,499,338
	Arising on consolidation of subsidiary	-	-	-	584,043	584,043
	Additions	-	-	93,395	48,519	141,914
	Disposals	-	(15,532)	-	-	(15,532)
		───────	───────	───────	───────	───────
	At 31 March 2008	650,000	-	989,193	570,570	2,209,763
		───────	───────	───────	───────	───────
	Depreciation
	At 1 April 2007	13,000	15,532	185,108	342,815	556,455
	Arising on consolidation of subsidiary	-	-	-	-	99,552
	Charge for the year	13,000	-	141,412	66,213	220,625
	On disposals	-	(15,532)	-	-	(15,532)
		───────	───────	───────	───────	───────
	At 31 March 2008	26,000	-	426,072	409,028	861,100
		───────	───────	───────	───────	───────
	Net book value
	At 31 March 2008	624,000	-	563,121	161,542	1,348,663
		══════	═══════	══════	══════	═════
	At 31 March 2007	637,000	-	126,647	179,236	942,883
		══════	═══════	══════	══════	═════

The freehold property was valued on 21 June 2007 by Mr R. L. Sworn of Kelion Sworn, Chartered Surveyors and Valuers, London W1. The freehold property was valued at £650,000 with value in use. The property will continue to be revalued on a regular basis.

The value of the freehold property would have been recorded at £370,655 on a historical cost basis. The current revaluation surplus is £253,347.

Company

		Freehold property	Long leasehold property	Fixtures Fittings & equipment	Total
		£	£	£	£
	Cost or valuation
	At 1 April 2007	650,000	180	118,099	768,279
	Additions	-	-	13,353	13,353
	Disposals	-	(180)	-	(180)
		───────	───────	───────	───────
	At 31 March 2008	650,000	-	131,452	781,452
		───────	───────	───────	───────
	Depreciation
	At 1 April 2007	13,000	180	89,715	102,895
	On disposals	-	(180)	-	(180)
	Charge for the year	13,000	-	9,277	22,277
		───────	───────	───────	───────
	At 31 March 2008	26,000	-	98,992	124,992
		───────	───────	───────	───────
	Net book value
	At 31 March 2008	624,000	-	32,460	656,460
		═══════	═══════	═══════	═══════
	At 31 March 2007	637,000	-	28,384	665,384
		═══════	═══════	═══════	═══════

16    Non-current asset investments

		Unlisted investments
		£
	Cost or valuation
	At 1 April 2007	819,271
	Consolidation adjustment on acquisition of Eco Biok	(538,721)
		───────
	At 31 March 2008	280,550
		───────
	Provisions for diminution in value
	At 1 April 2007	40,449
	Consolidation adjustment on acquisition of Eco Biok	(40,449)
		───────
	At 31 March 2008	-
		───────
	Net book value
	At 31 March 2008	280,550
		═══════
	At 31 March 2007	778,822
		═══════

The group acquired a controlling interest in Zhejiang Eco Biok Animal Health Products Limited (Eco Biok) with effect from 1 April 2007 and has therefore included the results and net assets of that company into the consolidated financial statements for the first time. Prior to the date of acquisition the group had held a 49% stake in Eco Biok and had carried the investment at lower of cost or net realisable value. The assets acquired and consideration paid are detailed below:

		Book Value	Fair Value Adjustment	Fair Value
		£	£	£
	Patents and registrations	180,210	-	180,210
	Property, plant and equipment	484,492	-	484,492
	Inventories	440,190	(68,178)	372,012
	Trade and other receivables	88,757	-	88,757
	Cash and cash equivalents	276,414	-	276,414
	Trade and other payables	(484,981)	-	(484,981)
		───────	───────	───────
		985,082	(68,178)	916,904
	Less: Minority interests	(482,690)	-	(482,690)
		──────	───────	───────
	Group share of net assets acquired	502,392	(68,178)	434,214
	Goodwill acquired			125,597
				───────
	Total cost of acquisition			559,811
	Satisfied by:
	Elimination of existing investment		499,179
	Cash paid for controlling interest		60,632
				───────
				559,811
				═══════

In addition the group set up a Brazilian subsidiary, Eco Animal Health do Brasil Ltda, in order to obtain better control over its drug registrations in that area and also to better exploit the potential of that region.

    Company

		Unlisted investments £
	Cost or valuation
	At 1 April 2007	21,462,912
	Additions	60,590
		───────
	At 31 March 2008	21,523,502
		───────
	Provisions for diminution in value
	At 1 April 2007	-
	Charge for the year	536,946
		───────
	At 31 March 2008	536,946
		───────
	Net book value
	At 31 March 2008	20,986,556
		═══════
	At 31 March 2007	21,462,912
		═══════

    Holdings of more than 20%

    The company holds more than 20% of the share capital of the following companies:

	Company	Country of registration	Class	Shares held    %
	Subsidiary undertakings
	Eco Animal Health Limited	Great Britain	Ordinary	100
	Eco Animal Health (Europe) Limited	B.V.I	Ordinary	100
	Eco Group Limited	B.V.I.	Ordinary	100
	Eco Animal Health Southern Africa (pty) Ltd	South Africa	Ordinary	100
	Petlove Limited	Great Britain	Ordinary	91
	Interpet Llc	USA	Ordinary	100
	Zhejiang Eco Biok Animal Health Products Ltd	P.R. of China	Ordinary	51
	Eco Animal Health do Brasil Ltda	Brazil	Ordinary	100

16    Non-current asset investments (continued)

    The principal activity of these undertakings for the last relevant financial year was as follows:

	Eco Animal Health Limited	Manufacture of animal drugs
	Eco Animal Health (Europe) Limited	Holding company for Eco Animal Health Limited
	Eco Group Limited	Holding company for Eco Animal Health (Europe) Limited
	Eco Animal Health Southern Africa (pty) Ltd	Manufacture of animal drugs
	Petlove Limited	Non trading
	Interpet Llc	Manufacture of pet products
	Zhejiang Eco Biok Animal Health Products Limited	Manufacture of animal drugs
	Eco Animal Health do Brasil Ltda	Distribution of animal drugs

17    Inventories

		Group		Company
		2008	2007	2008	2007
		£	£	£	£
	Raw materials and consumables	2,864,305	2,308,467
	Finished goods and goods for resale	961,419	1,048,236
		───────	───────	───────	───────
		3,825,724	3,356,703
		══════	══════	══════	═════

18.  Trade and other receivables

		Group		Company
		2008 £	2007 £	2008 £	2007 £
	Trade receivables	8,096,018	8,045,856	-	67,771
	Amounts owed by group undertakings	-	-	20,358,332	17,107,394
	Other receivables	139,155	859,538	59,978	813,681
	Prepayments and accrued income	119,203	351,777	13,829	160,672
		───────	───────	────────	────────
		8,354,376	9,257,171	20,432,139	18,149,518
		═════	═════	══════	═════

19    Deferred tax

		Group		Company
		2008 £	2007 £	2008 £	2007 £
	Balance at 1 April 2007	185,282	-	-	-
	Movement in the year	42,845	185,282	-	-
		───────	───────	───────	───────
	Balance at 31 March 2008	228,127	185,282	-	-
		═══════	══════	══════	══════

The deferred tax balance is a result of timing differences between the company's Research and Development expenditure between the years 2002 to 2005 and the enhanced tax relief thereon which is given over a period of ten years.

20    Cash and cash equivalents

Cash and cash equivalents comprise cash and short term deposits held by the group companies. The carrying amount of these assets approximate their fair value.

21    Current liabilities: Trade and other payable

		Group		Company
		2008 £	2007 £	2008 £	2007 £
	Trade payables	2,801,960	4,589,880	53,158	2,143,601
	Other payables	379,916	225,470	70,046	-
	Accruals and deferred income	341,737	505,048	114,128	193,335
		───────	──────	──────	────
		3,523,613	5,320,398	237,332	2,336,936
		══════	══════	══════	════

22. Non-current liabilities

		Group				Company
		2008 £		2007 £		2008 £	2007 £
	Bank loans	185,954	630,098		185,954		630,098
		═════	══════		══════		═════
	Analysis of loans
	Wholly repayable within five years	185,954	630,098		185,954		630,098
		═════	══════		══════		═════
	Loan maturity analysis
	In more than one year but not more than two years	185,954	210,033		185,954		210,033
	In more than two years but not more than five years	-	420,065		-		420,065
		═════	══════		══════		═════

Included within creditors are the following amounts secured by a debenture on the assets of the group:

	Bank loans and overdrafts	822,859	4,703,900	822,859	4,703,900
		══════	══════	═════	═════

23    Long term provisions

    Pension obligations 

		Group			Company
		2008 £		2007 £	2008 £		2007 £
	Balance at 1 April 2007	110,500	338,000		110,500	338,000
	Contributions paid to pension schemes	(110,500)	(227,500)		(110,500)	(227,500)
		───────	──────		───────	──────
	Balance at 31 March 2008	-	110,500		-	110,500
		═════	══════		═════	══════

24    Pension costs

    Defined Contribution Pension Scheme

The group operates a defined contribution pension scheme for the benefit of certain directors and senior employees. The assets of the defined contribution scheme are held separately from the group and independently administered by an insurance company. The pension cost charge represents contributions payable to the fund in the year and amounted to £30,124 (2007: £111,736).

    Defined Benefit Pension Scheme

The group operates a defined benefit scheme in the UK. A full actuarial valuation was carried out at 6 April 2003 and updated to 31 March 2008 by a qualified independent actuary. The major assumptions used by the actuary were:

		At 1 March 2008	At 31 March 2007
	Rate of increase in salaries	-	4.3%
	Discount rate	6.2%	5.3%
	Rate of increase in pensions in payment	3.1%	3.1%
	Inflation assumption	3.4%	3.1%

    The assets in the scheme and the expected rate of return were:

		Long term rate of return expected at 31 March 2008	Value at 31 March 2008 £'000s	Long Term rate of return expected at 31 March 2007	Value at 31 March 2007 £000s
	Deposit administration contract	6.00%	533	6.00%	751
	Annuities	6.20%	1,835	5.30%	1,716
			───────		───────
	Total market value of assets		2,368		2,467
	Present value of scheme liabilities		(2,325)		(2,625)
			───────		───────
	Surplus/(Deficit) in scheme		43		(158)
	Related deferred tax (liability)/asset		(13)		48
			───────		───────
			30		(110)
			═══════		═══════

    Analysis of amount recognised in statement of total recognised gains and losses .

	Actual return less expected return on pension scheme assets	261	13
	As % of scheme assets	11%	0.5%
	Experience gains and losses arising on the scheme liabilities	(8)	12
	As % of present value of scheme liabilities	1.5%	0.5%
	Changes in assumptions underlying the present value of the scheme liabilities	(233)	255
	As % of present value of scheme liabilities	10.0%	9.71%
		───────	───────
	Actuarial loss recognised in statement of total recognised gains and losses	20	280
		══════	══════

24    Pension costs (continued)

	As % of present value of scheme liabilities	0.86%		10.67%
		───────		───────
	Analysis of amount charges to operating profit	£'000s		£'000s
	Current service cost	6		33
		══════		══════

    Analysis of the amount credited to other finance costs/income

	Expected return on pension scheme assets	130	123
	Interest on pension scheme liabilities	(126)	(139)
		──────	───────
		4	(16)
		══════	══════
	Movement in deficit during the year
	Deficit in scheme at beginning of year	(158)	(483)
	Movement in year:
	Current service costs	(6)	(33)
	Contributions	266	110
	Loss on settlements/curtailments	(33)	-
	Net returns on assets	4	(16)
	Actuarial (losses)/gains	(20)	271
	Expenses paid by scheme	(10)	(7)
		───────	───────
	Surplus/(deficit) in scheme at end of the year	43	(158)
		══════	══════

25    Share capital

		2008 £	2007 £
	Authorised
	68,100,000 Ordinary shares of 5p each (2007: 40,000,000)	3,405,000	2,000,000
	10,790 Deferred ordinary shares of 10p each	1,079	1,079
	32,334 Convertible preference shares of £1 each	32,334	32,334
		───────	───────
		3,438,413	2,033,413
		═══════	═══════
	Allotted, called up and fully paid
	45,125,040 Ordinary shares of 5p each	2,256,252	1,559,011
		═══════

During the year 13,944,816 ordinary shares of 5p were issued at a premium of £15,728,143

26    Statement of movements on reserves

    Group    

		Share premium account		Revaluation reserve		Other reserves (see below)	Retained earnings  (as restated)
		£	£		£		£
	Balance at 1 April 2007	21,367,211	256,237		548,231		11,453,162
	Prior year adjustment	-	-		-		1,021,112
		────────	────────		────────		────────
	Balance as restated at 1 April 2007	21,367,211	-  256,237		548,231		12,474,274
	Loss for the year	-	-		-		(783,973)
	Foreign currency translation differences	-	-		-		(488,376)
	Premium on shares issued during the year	15,728,143	-		-		-
	Dividends paid	-	-		-		(2,435,660)
	Depreciation written back	-	(2,890)		-		-
	Movement during the year	-	-		257,390		-
	Actuarial losses on pension scheme	-	-		-		(80,400)
		────────	────────		────────		────────
		37,095,354	253,347		805,621		8,685,865
	Balance at 31 March 2008	══════	════════		════════		══════
	Other reserves
	Capital redemption reserve
	Balance at 1 April 2007 & at 31 March 2007				105,829
	Share option reserve
	Balance at 1 April 1007				442,402
	Other reserve movement				257,390
					────────
	Balance at 31 March 2008				699,792
					════════

26    Statement of movements on reserves (continued)

    Company

		Share premium account		Revaluation reserve		Other reserves (see below)	Retained earnings  (as restated)
		£	£		£		£
	Balance at 1 April 2007	21,367,211	256,237		548,231		9,087,683
	Loss for the year	-	-		-		(1,751,076)
	Foreign currency translation differences	-	-		-		96,313
	Premium on shares issued during the year	15,728,143	-		-		-
	Dividends paid	-	-		-		(2,435,660)
	Depreciation written back	-	(2,890)		-		-
	Movement during the year	-	-		257,390		-
	Actuarial gains or losses on pension scheme	-	-		-		(80,400)
		────────	────────		────────		────────
	Balance at 31 March 2008	37,095,354	253,347		805,621		4,916,860
		══════	════════		════════		══════
	Other reserves Capital redemption reserve
	Balance at 1 April 2007 & at 31 March 2008				105,829
					════════
	Share option reserve
	Balance at 1 April 2007				442,402
	Other reserve movement				257,390
					────────
					699,792
	Balance at 31 March 2008				═══════

27    Minority interests

		2008	2007
		£	£
	Balance at 1 April 2007	2,475	2,475
	Arising on consolidation of subsidiary	511,901	-
	Share of subsidiary's profit for the year	87,557	-
	Share of foreign exchange gain on net investment	44,705	-
		─────────	─────────
		646,638	2,475
		════════	════════

28.   Reconciliation of movements in total equity

		2008	2007
			(as restated)
	Group	£	£
	(Loss)/Profit for the financial year	(783,973)	2,819,771
	Dividends	(2,435,660)	(2,227,751)
		────────	─────────
		(3,219,633)	592,020
	Other recognised gains and losses	(568,776)	444,764
	Proceeds from issue of shares	16,425,384	98,250
	Cost of share options granted	257,390	224,013
	Write back of depreciation	(2,890)	(2,891)
		─────────	────────
	Net addition to shareholders' funds	12,891,475	1,356,156
	Opening total equity	36,204,964	34,848,808
		────────	─────────
	Closing total equity	49,096,439	36,204,964
		════════	════════
		2008	2007
	Company	£	£
	(Loss)/Profit for the financial year	(1,751,076)	1,752,602
	Dividends	(2,435,660)	(2,227,751)
		────────	────────
		(4,186,736)	(475,149)
	Other recognised gains and losses	15,913	447,369
	Proceeds from issue of shares	16,425,384	98,250
	Cost of share options granted	257,390	224,013
	Write back of depreciation	(2,890)	(2,891)
		────────	────────
	Net addition to shareholders' funds	12,509,061	291,592
	Opening total equity	32,818,373	32,526,781
		────────	────────
	Closing total equity	45,327,434	32,818,373
		════════	════════

29    Contingent liabilities

    Group

    There were no contingent liabilities at 31 March 2008 and 31 March 2007.

30    Financial commitments

    At 31 March 2008 the group had annual commitments under non-cancellable operating leases as follows:

		Land and buildings		Other
		2008	2007	2008	2007
	Expiry date:	£	£	£	£
	Within one year	20,491	-	1,639	6,215
	Between two and five years	105,845	123,345	34,219	15,358
	In over five years	25,698	-	-	-
		────────	────────	────────	────────
		152,034	123,345	35,858	21,573
		════════	════════	════════	════════

31    Capital commitments

    The group had no authorised capital commitments as at 31 March 2008 (2007: Nil)

32    Directors' emoluments

		2008	2007
		£	£
	Emoluments for qualifying services	237,220	216,000
	Company pension contributions to money to purchase schemes	1,675	-
		───────	───────
		238,895	216,000
		═══════	═══════

The number of directors for whom retirement benefits are accruing under money purchase pension schemes amounted to 1 (2007- 0).

Non-executive directors' fees arising from the services of P A Lawrence to Baronsmead VCT plc, Baronsmead AIM VCT plc, First State Investments AIM VCT plc, Higher Natures Limited and Kiotech International plc amounted to £85,202 (2007: £82,202) and were paid to the company.

33    Employees

    Number of employees

    The average monthly number of employees (including directors) during the year was:

		2008	2007
		Number	Number
	Directors	4	4
	Production and development	29	32
	Admin and distribution	33	22
	Sales	29	13
		───────	───────
		95	71
		═══════	═══════
	Employment costs	2008	2007
		£	£
	Wages and salaries	1,564,325	1,719,747
	Social security costs	132,460	265,130
	Other pension costs	76,631	6,156
		───────	───────
		1,773,416	1,991,033
		═══════	═══════

34    Related party transactions

    Group and Company

At the balance sheet date, Eco Animal Health Group plc owed P A Lawrence, a director of Eco Animal Health Group plc, and members of his family a balance amounting £69,199 (2007:£1,593,585). This amount represents dividends reinvested into the company.

During the year the group provided management services to Kiotech International plc, a company in which P A Lawrence is a director and holds share options. Fees charged were of £37,500 (2007: £37,500).

During the year the group provided the services of a representative to C-Corp Limited, a company in which P A Lawrence is a director and shareholder. No fees were charged during the year (2007: £6000).

During the year the group made sales to Eco Biok on an arm's length basis to the value of £632,158 (2007: £166,700). At the end of the year there was an inter-company balance owing from this company of £481,063 (2007: £257,666). Since Eco Biok is a subsidiary of Eco Animal Health Group plc, these transactions and balances have been eliminated on consolidation.

35    Analysis of net funds/(debt)  

		1 April 2007	Cash flow	Other non - 31 March 2008	Cash changes
	Net cash:	£	£	£	£
	Cash at bank and in hand	935,911	5,207,278	-	6,143,189
	Bank Overdrafts	(4,073,802)	3,436,897		(636,905)
		────────	────────	────────	────────
		(3,137,891)	8,644,175	-	5,506,284
		────────	────────	────────	────────
	Debts falling due after one year	(630,098)	444,144	-	(185,954)
		────────	────────	────────	────────
	Net (debt)/funds	(3,767,989)	9,088,319	-	5,320,330
		════════	════════	════════	════════

36    Reconciliation of net cash flow to movement in net debt

		2008	2007
		£	£
	Increase/(decrease) in cash in the year	8,644,175	(1,314,433)
	Cash outflow from decrease in debt	444,144	2,452,396
		───────	───────
	Movement in net funds/(debt) in the year	9,088,319	1,137,963
	Opening net debt	(3,767,989)	(4,905,952)
		───────	───────
	Closing net funds/(debt)	5,320,330	(3,767,989)
		═══════	═══════

37    Financial Instruments

The group uses financial instruments comprising borrowings, cash and liquid resources and various items, such as trade debtors, trade creditors etc. that arise directly from its operations. The main purpose of these financial instruments is to raise finance for the group's operations.

The main risks arising from the group's financial statements are interest rate risk, liquidity risk and foreign currency risk. The board review and agree policies for managing each of these risks and they are summarised below. The policies have remained unchanged since 1 April 2002.    

It is and has been throughout the year under review, the group policy that no trading in financial instruments shall be undertaken.

    Short term debtors and creditors

Short term debtors and creditors have been excluded from all the following disclosures, other than the currency risk disclosure.

    Interest rate risk

The group finances its operations through a mixture of retained earnings and bank borrowings. At the year end the interest rate exposure of the group arose on sterling floatation facilities of £79,043 (2007: £4,073,802) and a South African Rand loan of R12,000,000 (2007: R12,000,000). The South African Rand bears an interest rate which is the aggregate of (a) 1.5% per annum and (b) the rate at which the bank is offered deposits in South African Rand by the leading banks in the London Interbank Market two business days before the start of each repayment period.

    Liquidity of risk

The group ensures short-term flexibility through the use of the overdraft facilities. The board does not at present consider that it is necessary to adopt a detailed borrowings policy as there are sufficient funds available within the current facilities. the maturity of liabilities is shown on note 22. The committed undrawn borrowing facilities of the group were £250,000 (2007; £1,426,198).

    Currency risk

The group has an overseas subsidiary which operates in South Africa and whose revenues and expenses are denominated exclusively in Rand. In order to protect the group's sterling balance sheet from the movements in the Rand/Sterling exchange rates, the group finances its net investments in this subsidiary by means of a South African Rand borrowing. Gains and losses arising from this borrowing are recognised in the consolidated statements of changes in equity.

The group operates in overseas markets particularly through its subsidiaries in China and Brazil and is subject to currency exposure on transactions undertaken during the year. The group does not hedge any transactions, and foreign exchange differences on retranslation of foreign assets and liabilities are taken to the income statement.

37    Financial Instruments (continued)

The table below shows the extent to which the group companies have monetary assets and liabilities in currencies other than in sterling:

		US		South
		Dollar	Euro	African Rand	Other
	Functional currency of group operations	£'000	£'000	£'000	£'000
	2008
	Sterling equivalent	5,286	1,767	(350)	565
	2007
	Sterling equivalent	1.233	86	(832)	53

The company has no financial assets other than debtors and cash at the bank. Any group bank overdrafts are repayable on demand and are included in the balance sheet as a creditor due in less than one year. Thebalance sheet values of financial assets and liabilities are not materially different to their fair values.

 

END

 

 

FR EANXNASKPEFE