TIDMANP
Anpario plc
("Anpario" or the "Group")
Final Results
Anpario plc (AIM:ANP), the international producer and
distributor of natural animal feed additives for animal health,
nutrition and biosecurity is pleased to announce its full year
results for the twelve months to 31 December 2019.
Highlights
Financial highlights
-- 3% increase in revenue to GBP29.0m (2018: GBP28.3m)
-- 7% increase in gross profit to GBP14.5m (2018: GBP13.5m)
-- 6% improvement in adjusted EBITDA1 to GBP5.7m (2018: GBP5.3m)
-- Diluted earnings per share down 5% to 17.61p (2018: 18.53p)
-- Proposed final dividend of 5.5p (2018: 5.0p) per share, total dividend
for the year 8.0p (2018: 7.2p) an increase of 11%
-- Cash balances of GBP13.8m at the year end (2018: GBP12.9m)
Operational highlights
-- Strong performance in Latin America and the Middle East
-- Improved second half performance in Asia despite the impact to Anpario
from African Swine Fever
-- German subsidiary set up
-- GBP1m investment in automated bottling plant completed
-- Launch of Anpario Direct online channel to smaller farm customers
Peter Lawrence, Chairman, commented:
"The Board is encouraged by the performance in the second half
of 2019 driven by strong trading in Latin America and the Middle
East, and a welcome recovery in sales in our Asia region. It is
also pleasing that the recent targeting of China's poultry industry
has helped to reduce the impact of African Swine Fever (ASF) on our
business there. Costs continue to be managed closely and our
strategy to market higher value-added products and develop more
direct routes to market has helped to improve gross margins.
The outbreak and subsequent spread of Covid-19 (coronavirus) is
causing concerns to all industries. Anpario's regional sales
network is enabling the Group to continue to support local
customers and at this stage, we are confident we can manage any
disruption which may be temporary in nature. Currently, there are
travel restrictions to certain countries and a number of industry
trade events have been cancelled. There may be some disruptions to
shipping around the world but as most of our raw material supplies
come from Europe, we expect to be able to fulfil orders
effectively. With governmental financial support offered to the
agriculture industry to ensure continuity of food supplies, Anpario
is well positioned to take full advantage of the situation during
the recovery period from Covid-19 and beyond and continue its work
worldwide, in establishing natural additives for biosecure,
efficient and profitable protein production to feed the world's
fast growing population. While we have not yet experienced any
material impact on our business, we continue to monitor the
situation closely."
(1) Adjusted EBITDA represents operating profit for the year
GBP4.297m (2018: GBP4.473m) adjusted for: share based payments and
associated costs GBP0.124m (2018: GBP0.118m); loss on disposal of
property GBP0.061m (2018: GBPnil); foreign exchange losses
GBP0.332m (2018: GBP0.238m gain); foreign exchange hedging gains
GBP0.274m (2018: GBP0.003m); and depreciation, amortisation and
impairment charges of GBP1.140m (2018: GBP0.992m).
Chairman's statement
Anpario is pleased to report a solid performance with underlying
growth achieved in a difficult year for global agriculture markets
challenged by extreme weather conditions, animal diseases and
political uncertainty.
Group sales for the year to 31 December 2019 grew by 3% to
GBP29.0m. The strong recovery experienced in Latin America and the
Middle East during the first half was maintained, and there was a
second half recovery in Asia.
China continues to be affected by African Swine Fever ("ASF")
however the effect on Anpario is limited as our sales in that
country comprise some 8% of total sales. The decision to enter the
poultry industry in China two years ago coupled with our business
development initiatives focused on poultry products in the wider
Asia region, have helped offset the impact of ASF. The United
States -- China trade dispute has not been helpful and has affected
agricultural markets in the United States depressing the level of
trading.
Gross profit improved by GBP1m with an 8% increase in gross
profit per tonne as a result of selling higher value-added
products. The proportion of sales direct to end users continues to
grow reflecting our strategic focus to work more closely with
customers and major distributors.
The GBP1m investment in the automated bottling plant at Manton
Wood was completed during the period and all previously
toll-manufactured products have now been brought in-house.
Anpario Direct's online channel was launched in the UK to
smaller farm customers as well as the equine and pigeon markets. It
is our intention to offer Anpario Direct in a number of other
geographic markets during 2020. Our product offering has been
developed to include smaller package sizes suited to both the
direct online channel and customers who prefer to work with
them.
Costs continue to be managed closely and our financial strength
enables the Group to invest in its multi-channel offering, regional
sales teams and product development initiatives. Sales of our three
main value-added product ranges, phytogenics, mycotoxin binders and
acid-based eubiotics, grew during the year as product brands such
as Orego-Stim(R), Anpro(R) and pHorce(R) became more widely adopted
by customers.
The Board is recommending a final dividend of 5.5 pence per
share (2018: 5.0 pence) making a total of 8.0 pence per share for
the year (2018: 7.2 pence), an increase of 11%. This dividend,
payable on 31 July to shareholders on the register on 17 July,
continues to reflect the Board's continued confidence in the Group
and its ability to generate cash.
Americas
Latin America delivered a very strong performance with sales
growth of 39% compared with the same period last year. Further
progress has been made with our customers helping to drive growth
in Brazil to 123% compared to last year. Argentina also experienced
a recovery from a poor 2018 with sales growth of 78%.
The initial results of extensive trials undertaken with North
Carolina State University on improved egg laying performance when
using Orego-Stim(R), have been well received in Brazil, with
indications of improved production through additional eggs per
laying hen and more consistent egg sizes.
Our second largest market in Latin America is Mexico which
achieved 30% sales growth. We have been developing our business in
a number of other Central American countries and have also been
targeting the aquaculture market, which is beginning to exhibit
some early promise following recent product registrations.
Some of our Latin American customers are supplying the Chinese
market to help overcome the shortfall resulting from African Swine
Fever. We believe these sales will continue and therefore continue
to deliver good growth.
US growth slowed in the second half with sales flat compared
with the same period last year. The US agriculture market has been
affected by the US -- China trade dispute and a poor dairy
industry, which has seen the bankruptcy of America's largest dairy
producer. Anpario's US business experienced a decline in lower
value-added acidifier sales but encouragingly, continues to grow
Orego-Stim(R) and other premium brands such as Anpro(R). We have
recently strengthened and expanded our sales team in the US as this
represents our largest sales region and provides an opportunity for
future growth working with some of the world's largest food
producers.
Anpario's success in the USA has come from the poultry and dairy
sectors and we are now investing in additional sales resource to
target the swine sector. Recent extensive trials with one of the
leading swine veterinary companies in the country showed that our
phytogenic formulations support sows in delivering more pigs at
weaning stage, using less feed and reducing the need for other
types of antimicrobial interventions. These USA trials match our
experience in similar trials performed in China and the UK giving
us a strong platform to target the USA swine market where
antibiotic free production continues to increase in momentum.
Asia
In China sales declined 9% compared to the same period last year
with gross profit down only 5%, this is a very creditable
performance, given the impact of ASF. This performance arises from
our decision, two years ago, to target the Chinese poultry market.
More recently we have accelerated our efforts which has helped to
diversify our business in China. We have had success in selling our
acid based eubiotic products for both broilers and layers and, in
particular, pHorce(R) which is our high strength low inclusion
acidifier on a unique carrier matrix.
The positive results in the USA for swine performance and
intestinal health will benefit our Chinese customers as they start
to re-stock with improved biosecurity and housekeeping to produce
pork to meet strong domestic demand following ASF.
The Anpario Direct team is working closely with our Chinese
colleagues to launch some of our products on one of China's leading
Internet platforms. This will target the smaller users of these
products such as pigeon enthusiasts, which is a large and valuable
market segment.
S E Asia delivered a strong recovery in the second half, ending
the year with sales only 8% below the same period last year. In the
first half, the region was down 30%. If the non-core and low margin
product sales to the Philippines, a market we exited in 2018 are
excluded, then sales declined by just 2% and gross profit increased
by 3% for the region. Thailand, Bangladesh and Taiwan experienced
the strongest performances with sales growth of 83%, 45% and 55%
respectively. It is encouraging that in countries where we have
formed new subsidiaries and local sales teams such as Thailand and
Indonesia, sales and profit growth is starting to accelerate as we
build relationships and take Anpario's products direct to end
users. The weakest country was South Korea, where the local swine
market was badly affected by the USA -- China trade dispute.
We have launched our new Anpro(R) mycotoxin binder range in
Asia. These products have been shown to outperform our competitors'
products. We have developed a new natural pellet binder in our
Mastercube (TM) range for the aquaculture market in Asia, which has
superior performance over urea-formaldehyde, a substance customers
are moving away from due to its formaldehyde toxicity
characteristics.
Australasia saw a small decline in sales compared to last year's
outstanding performance. The main markets of Australia and New
Zealand increased by 13% and 15% respectively. This growth was
offset by Papua New Guinea, where a significant customer had
financial difficulties which has impacted sales, all amounts
outstanding have been recovered. Australia is experiencing severe
climatic conditions, including drought, which is making conditions
for agriculture extremely tough especially in the dairy and beef
cattle industries. However, our subsidiary has a number of business
development initiatives underway including targeting the pet food
industry. In addition, we recently launched a more direct sales
channel to target the smaller farmers and other niche segments such
as pigeons and the backyard layer market.
The Middle East and Africa
Middle East and Africa delivered a strong performance with sales
growth of 19% compared with the same period last year with major
contributions from Iraq, Israel, Syria and the UAE. Growth was
driven by increased sales of Orego-Stim(R) as customers look to
reduce and ultimately replace antibiotics and seek out performance
benefits to improve the profitability of their operations. Other
products which contributed to growth included Mastercube (TM) and
Genex (R) our pellet binder and phyto-acid combination product.
Turkey continued to disappoint due to the challenging economic
situation and Saudi Arabia experienced difficult trading
conditions.
We launched a natural insecticide to combat red mite and other
insects, supplying applicators for dusting grain silos and poultry
houses. Red mite is becoming an increasing problem around the world
especially in free range layers, where they are more susceptible to
insect infestation as the birds have more freedom to roam around in
cage free systems.
The geopolitical tensions in the region present challenges, so
we are also focusing on new territories, which we hope will help
offset any headwinds.
Europe
Sales in Europe declined by 5% reflecting withdrawal from low
margin non-core business. Excluding this lost business, which in
total accounted for almost GBP1m in sales during 2018, the region
delivered underlying growth. In general, the UK market was stable
and we have recently seen an increase in demand for our organic
acid products for feed and raw material hygiene applications where
we have been able to supply customers with a quick turnaround as
they seek to decontaminate raw material imports. Territories that
delivered strong performances included Belgium and Italy, the
latter benefiting from our ability to supply products in smaller
package sizes for which we are being increasingly asked by our
customers.
The Anpario Direct online platform is increasing its presence
and customers order online not only through the website but also
via social media sites such as Facebook and Twitter. We have
recently agreed a deal with a disinfectant company to market one of
their products on our website enabling their sales team to offer a
simple, fast and efficient way for their smaller farm customers to
order. These customers will also be able to purchase the whole
range on the Anpario Direct platform. We hope to expand other
supplier relationships as we seek to broaden the range in line with
our online value proposition.
A German subsidiary has been incorporated and recently recruited
a business manager to help establish our direct sales presence in
other German speaking markets. Our strategy is to develop direct
end user relationships through account management but supported by
the Anpario Direct online platform to target the smaller farmer
segment. This is similar in characteristics to the UK and we intend
to launch the German Anpario Direct version towards the end of this
year.
Brexit
We are closely monitoring the next stage of negotiations as well
as providing input to various government departments while putting
contingency arrangements in place. Anpario's products and processes
comply with European Union regulations and Anpario will continue to
supply the same high standard of products to all jurisdictions
around the world. The ideal outcome is that both the UK and EU
agree to an equivalence or common arrangement for agricultural
products, similar to the way we currently supply our USA subsidiary
and its customers. In the event that such arrangements are not
achieved, then we shall work with our EU customers and suppliers to
minimise any disruption.
Innovation and development
The recent launch of Anpro(R) has seen early successes in the
USA and Europe with extensive global registrations underway. Our
new aqua product is gaining acceptance in targeted Latin American
markets. Groundbreaking development of a new dietary supplement for
calves focused on antibiotic reduction and gut health benefits has
resulted in a patent filing.
Our product development activity continues apace with new
formulations and extensive trial work with leading universities and
producers to demonstrate the capabilities of our technology in
delivering health, production and ultimately performance benefits
for customers. These capabilities include being able to reduce and
replace antibiotics as part of a biosecurity solution. Our
customers face many challenges and by understanding their business
better we can help them continuously improve their outputs and meet
the increasing demands of the consumer.
People
This has been a challenging year, yet it is testament to the
Anpario way of working and to our staff across the globe that we
have been able to deliver sales and profit growth and still invest
in our people and initiatives to support future growth. The
commitment and dedication of all our people is greatly
appreciated.
Outlook
There has been a solid start to trading in the current year and
we look forward to implementing a number of business development
initiatives to maintain this momentum. Investing and developing our
sales and marketing channels around the world remains a priority,
as does finding an earnings enhancing and complementary
acquisition. Our strong balance sheet and cash generation provide
Anpario with the confidence to grow its business across the many
markets we serve and also the financial strength to capitalise on
any opportunities which may arise provided they are aligned with
our strategy.
The outbreak and subsequent spread of Covid-19 (coronavirus) is
causing concerns to all industries. Anpario's regional sales
network is enabling the Group to continue to support local
customers and at this stage, we are confident we can manage any
disruption which may be temporary in nature. Currently, there are
travel restrictions to certain countries and a number of industry
trade events have been cancelled. There may be some disruptions to
shipping around the world but as most of our raw material supplies
come from Europe, we expect to be able to fulfil orders
effectively. With governmental financial support offered to the
agriculture industry to ensure continuity of food supplies, Anpario
is well positioned to take full advantage of the situation during
the recovery period from Covid-19 and beyond and continue its work
worldwide, in establishing natural additives for biosecure,
efficient and profitable protein production to feed the world's
fast growing population. While we have not yet experienced any
material impact on our business, we continue to monitor the
situation closely.
Anpario is at the forefront of changing attitudes to intensive
farming around the world using natural ingredients. The demand for
our products is expected to continue to increase due to their
effects of enhancing biosecurity, replacing non therapeutic
antibiotics and improving production efficiency which is exactly
what is now expected from consumers and farmers. As ever, with a
global business there are a number of challenges but the quality
and ambition of our employees and our return to sales growth gives
me confidence that we can successfully build on last year's
result.
Peter Lawrence
Chairman
18 March 2020
Financial Review
Key performance indicators - Financial restated(1)
2019 2018
Note GBP000 GBP000
Revenue 3 29,046 28,277
Gross profit 14,510 13,542
Adjusted EBITDA 6 5,680 5,342
Profit before tax 4,394 4,555
Diluted adjusted earnings per share 12 18.61p 17.33p
Net assets 35,554 33,148
Net cash from operating activities 3,970 2,689
Cash and cash equivalents 13,842 12,912
Revenues for the year rose by 3% to GBP29.0m (2018: GBP28.3m).
Prior year sales included GBP0.4m of non-core and low margin
business to the Philippines, the negative impact of this planned
strategic withdrawal was offset by realised foreign exchange
gains.
Gross profit was 7% higher than last year at GBP14.5m (2018:
GBP13.5m), with gross margins increasing to 50% (2018: 48%).
Margins were helped by a number of factors including the focus on
marketing higher value-added products and withdrawing from
low-margin business, developing more direct routes to market that
contribute higher margins and the benefit of cost savings from
reduced use of external manufacturers.
Total administrative expenses rose during the year by GBP1.1m.
Excluding foreign exchange amounts, the underlying increase was
GBP0.5m (6%). This included increases of GBP0.2m in employment
costs and GBP0.1m in marketing costs as we continue to invest in
our sales channels to support future sales growth.
Depreciation charges in the year increased by GBP0.1m, this
relates to previously completed plant-automation projects and the
completion in the second half of the year of the GBP1m investment
in a bottling plant. The positive impact of which are being seen
through the reduction in external manufacturing costs and the
ability to extend our product range and reach new customers and
markets with enhanced packaging options.
The increase in the value of sterling during the year has
impacted the income statement as realised exchange gains GBP0.1m
(2018: losses GBP0.2m) have been materially outweighed by
unrealised losses GBP0.5m (2018: gains GBP0.4m). These
uncrystallised amounts primarily arise on the revaluation of
unsettled trading balances and intercompany debtors at spot rates
at period ends and are generated by the investments in subsidiaries
such as USA, Brazil, Indonesia and Thailand to better access direct
supply channels. The GBPUSD exchange rate at 31 December 2019 was
1.3268 (2018: 1.2760).
The scale and volatility of recent foreign exchange movements
from one reporting date to the next can cause difficulty for the
user of these financial statements in assessing the underlying
operational performance of the Group in the period. Accordingly,
these financial statements include amendments to the calculation of
adjusted EBITDA, adjusted profit and adjusted earnings per share,
prior year comparatives have been restated and more information is
contained in note 6.
Foreign exchange risk is extensively monitored and strategies
and actions taken to mitigate its short and long-term impacts. At
the year end the Group has recognised a GBP0.5m financial asset
(2018: GBPnil), of which GBP0.3m (2018: GBPnil) has been recognised
in the income statement. This is in relation to hedges in place
against changes in the value of future US Dollar sales receipts
totalling $18.6m (2018: $2.4m). This consists of a number of
hedging contracts that extend into 2022 with further detail
provided in note 19. Also during the year, the Group took steps to
reduce the income statement exposure to foreign exchange risk from
intercompany debtors by converting balances owed by the US
Subsidiary into equity.
Adjusted EBITDA for the year increased by 6% to GBP5.7m (2018:
GBP5.3m) and diluted adjusted earnings per share increased by 7% to
18.61p per share (2018: 17.33p). Conversely, in large part due to
the GBP0.6m adverse swing in foreign exchange charges, profit
before tax fell by GBP0.2m to GBP4.4m (2018: GBP4.6m) and basic
earnings per share fell 7% to 18.10p per share (2018: 19.54p).
The balance sheet remains strong and debt free, with a year end
cash balance of GBP13.8m (2018: GBP12.9m).
The Board is recommending a final dividend of 5.5 pence per
share (2018: 5.0 pence) making a total of 8.0 pence per share for
the year (2018: 7.2 pence), an increase of 11%.
Key performance indicators - Non-financial
Health and safety -- there were no major accidents reportable to
the Board in the year (2018: nil).
The Group also regards growth of business in key target markets
and the on-going achievement of product registrations and quality
assurance accreditations as other KPIs.
(1) Prior period comparatives have been restated following the
adoption of IFRS 16 as disclosed in note 29.
Our business model and strategy
Business Model
Anpario is an international producer and distributor of high
performance natural feed additives for animal health, hygiene and
nutrition. Our products work in harmony with the natural aspects of
the animal's biology; and Anpario's expertise is focused on
intestinal and animal health, and utilizing this understanding to
improve animal performance and customer profitability.
Anpario supplies its customers with quality assured products
manufactured in the United Kingdom and has an established global
sales and distribution network in over 70 countries.
Anpario was built up through a combination of acquisitions and
organic growth by establishing wholly owned subsidiaries in a
number of key meat producing countries. The portfolio of products
has been developed with the customer and the animal in mind, taking
into account the life stages of the animal and the periods when
they will be more challenged.
Anpario is well positioned to benefit from the trends in growth
of the world's population, the increasing demand for meat and fish
protein in developing countries and the tightening of global
regulation which favours more natural feed additive solutions.
Seizing these opportunities is how Anpario intends to deliver
long-term shareholder value.
Our business model is based on:
-- Products - high quality efficacious products presented well;
-- Channel - control the sales channel to ensure we develop strong technical
and commercial relationships with the end users of Anpario products;
-- Story - powerful value add proposition demonstrating the financial and
performance benefits of our product solutions;
-- Branding -- build an impeccable Anpario brand which global customers can
trust as having innovative, high quality and effective solutions for
customers;
-- Quality -- throughout supply chain and manufacturing processes; and
-- Efficiency -- efficient automated production with high operational
gearing.
Strategy
-- Regional focus
-- Developing local commercial and technical relationships across the
world
-- Delivered through:
-- regional sales structure;
-- local language speakers;
-- resource that understands local market needs and
challenges; and
-- closer relationships with key end customers.
-- Actions in 2019:
-- launch of Anpario Direct in the UK market to target the
smaller farm segment;
-- Indonesia import licence obtained to enable commencement of
direct supplies; and
-- set up of new subsidiary operations to serve local markets.
-- Future plans:
-- rollout of Anpario Direct to other suitable territories;
and
-- further selective recruitment of high calibre regional
resource.
-- Technical & Products
-- Add value by developing products that help overcome the challenges
of modern day farming
-- Delivered through:
-- scientific research and development, working closely with
the end customers' meat protein operations, to help improve
gut function leading to improved animal performance;
-- support the producer through prevention rather than
treatment; and
-- help the customer meet disease and regulatory challenges.
-- Actions in 2019:
-- further research and development of Orego-Stim in helping
to support gut health and improve productivity through
disease challenge;
-- launch of Orego-stim milk supplementation for dairy calves
in reducing development of anti-microbial resistance;
-- extensive pullet layer trials at North Carolina State
University showing encouraging results;
-- development of a new product Orego-Stim(R) TD -- "top
dress" and trials demonstrate feed supplemented with
Orego-Stim(R) improves sow and weaned piglet performance
development; and
-- further aquaculture trials in Latin America of new aqua
products.
-- Future plans:
-- continue to retain and recruit technical and animal
production experts;
-- continued investment in research and development working
closely with key global customers and respected
institutions; and
-- look for product opportunities which broaden our range and
species opportunities.
-- Acquisitions
-- Growth through complementary and earnings enhancing acquisitions.
-- Delivered through:
-- successful integration to derive both operational and
financial synergies;
-- specific searches to identify suitable targets in the
specialty feed additive market; and
-- applying strict acquisition and valuation criteria; targets
must either complement our current product range, offer
market consolidation opportunities or strengthen our sales
and distribution channels.
-- Actions in 2019:
-- evaluated a number of acquisition opportunities; and
-- updated Board strategy on acquisition target criteria.
-- Future plans
-- continue active search for acquisition opportunities within
defined criteria.
-- Operations
-- High quality, consistent and efficient manufacturing.
-- Delivered through:
-- automated production facilities;
-- key industry quality accreditations; and
-- quality supply partners.
-- Actions in 2019:
-- automated liquid bottling plant; and
-- production in smaller pack sizes.
-- Future plans:
-- evaluating further production investment opportunities;
-- continued expansion of packaging options; and
-- developing enhanced production contingency plans.
Corporate governance
Chairman's introduction
The Company's shares are traded on the Alternative Investment
Market ("AIM") of the London Stock Exchange. Anpario applies the
Quoted Companies Alliance Corporate Governance Code ("QCA
Code").
Anpario offers natural solutions to the food farming industry
which work in harmony with the natural aspects of an animal's
biology to promote healthy growth at the least cost to the
environment and the producer. Our products enable the production of
top quality protein that partners future farming practice around
the world. This objective and our engagement with stakeholders,
ensures that we act in a manner that is responsible and beneficial
to all.
The board and staff at the Company are committed to behaving
professionally and responsibly to ensure that the highest standards
of honesty, integrity and corporate governance are maintained.
Enshrining these values through the Company's culture, objectives
and processes is essential to support the success of the Company in
creating long-term shareholder value.
Principle 1: Our strategy and business model to promote
long-term value for shareholders
Anpario is well positioned to benefit from the trends in growth
of the world's population, the increasing demand for meat and fish
protein in developing countries and the tightening of global
regulation which favours more natural feed additive solutions.
Seizing these opportunities is how Anpario intends to deliver
long-term shareholder value. More information is included in the
Strategic Report.
Anpario has specific resource and processes in place to
proactively identify and manage risk to protect the continued
growth and long-term future that is possible as outlined above. Our
annual report details specific financial and non-financial risks
and uncertainties facing the business and measures in place to
mitigate them.
Principle 2: Understanding and meeting shareholder needs and
expectation
Communications with shareholders are given high priority and
Anpario recognises the importance and value in reciprocal and open
communication with its many investors. This is key to ensure
alignment between the motivations and expectations of our
shareholders and our strategy and business model.
This communication takes place in many forms to serve different
purposes. Our Interim Statements and Annual Reports contain
detailed information for shareholders to understand our
performance, strategy and future plans. Between these disclosures,
the Company also issues RNS announcements, as required, which serve
to keep shareholders updated about regulatory matters or changes
that they should be notified of. These RNS announcements, as well
as wider news articles about the Company, are available on our
website www.anpario.com.
The Annual General Meeting ("AGM") is the main opportunity for
all shareholders to engage with Anpario. Shareholders are notified
in advance of the date and location of the meeting as well as the
resolutions that are to be voted on. At the meeting, the Board and
key personnel give a presentation about the most recent published
results and our strategy; they are also available to answer any
questions that shareholders may have.
The Directors actively seek to build strong relationships with
institutional investors and investment analysts. Presentations are
given immediately following Interim Statement and Annual Report
announcements. Feedback directly from shareholders via the
Company's advisers after these regular analyst and shareholder
meetings ensures that the Board understands shareholder views. The
Board as a whole are kept informed of the views and concerns of
major shareholders and are made aware of any significant investment
reports from analysts.
Shareholders are encouraged to contact the Company should they
have any questions or concerns and can do so using a dedicated
email address investor@anpario.com. This is actively used by our
Shareholders and successfully enables them to engage with the Board
in addition to attaining assistance on individual shareholder
specific matters with which we may be able to help. The Chairman
and other Directors will meet or have contact with major
shareholders as necessary.
The Executive Directors hold shares and participate in incentive
plans in the Company which ensures that their interests are fully
aligned with those of other shareholders.
Principal 3: Corporate social responsibilities and wider
stakeholders
Anpario seeks to ensure a sustainable business, behaving
socially, ethically and environmentally responsibly and engaging
with all of its key stakeholders, including the communities in
which the Company operates, its people and the environment. As we
evolve our business model and strategy we ensure that we identify
any new stakeholders and seek to understand them alongside existing
stakeholders. Some of the key stakeholders are discussed below.
Employees
Anpario is an inclusive organisation where everyone is treated
equally irrespective of gender, nationality, marital status,
colour, race, ethnic origin, creed, sexual orientation or
disability. Employees embody Anpario's key values of
"Integrity,Teamwork, Innovation and Leadership".
Over 100 employees work for Anpario in the UK and its global
operations. It is the Group's policy to involve colleagues in the
business and to ensure that matters of concern to them, including
the Group's aims and objectives and its financial performance, are
communicated in an open way. Where appropriate and permitted,
employees are offered the opportunity to become shareholders in
order to promote active participation in, and commitment to, the
Group's success.
The Employee handbook which applies globally and includes
detailed policies and guides for employees which cover:
-- Behaviour -- Equal Opportunities and Dignity at Work, Anti-Bribery and
Anti-Corruption, Communications and Privacy.
-- Family -- Parental, Dependents, Maternity, Paternity, Flexible working,
Adoption.
-- General -- Grievance, Whistle blowing, Discrimination and Bullying, and
Disciplinary.
-- Safety -- Health and Safety handbook, Occupational Health Policy, Drug
and Alcohol abuse.
Specific training is given to all employees in respect of key
policies including online training videos on the Company's intranet
and appropriate health and safety training.
Employees are encouraged to further develop their skills and the
Group will provide appropriate training in order to support our
people and grow organisational capabilities. Anpario currently:
-- has several apprentices places;
-- recruits graduates and doctorates in disciplines such as biosciences,
accountancy, law and HR.
-- works closely with several global universities on joint scientific
initiatives;
-- provides ongoing professional training support, extensive coaching and
management development programmes; and
-- provides financial and study leave for professional and work related
qualifications.
The Company has a bonus scheme in place for its employees with
targets aligned with shareholders as appropriate to their roles and
responsibilities.
Anpario supports local community initiatives and employee
charity work including supporting a local school to care for
chickens.
An analysis of Directors, senior managers and other employees by
gender as at 31 December 2020 is as follows:
Male Female
Directors 3 1
Production 23 3
Administration 9 13
Sales and Technical 35 28
Total 70 45
Environment
The Group recognises the importance of good environmental
controls. It is the Group's policy to comply with environmental
legislation currently in place, adopt responsible sustainable
practices and give consideration to minimising the impact of its
operations on the environment.
Material supply:
-- fish & marine oils used for our products are processed by-products from
farmed fish productions for human consumption or sourced from suppliers
certified for sustainable fishing;
-- raw materials used within products are primarily common minerals in high
grade quality from plentiful natural resources; and
-- pre-used reconditioned & cleaned intermediate bulk containers are used
for packaging & supply of bulk liquids.
Environmental Controls & good practices:
-- 90% of carrier and materials are supplied in bulk and added directly into
production to minimise packaging waste and labour requirements;
-- 100% liquid bulk ingredients are stored in bunded storage silos; liquid
bulk deliveries are accepted only when the site drainage system is
blocked with a bung to prevent accidental spills from entering into the
general sewerage system;
-- A dust extraction system is used to minimise dust in the production area
and prevent dust from being emitted into the environment;
-- Manufacturing processes generate 2.5% of the production volume as product
and material waste due to manufacturing and cleaning activities. This
product and material waste is collected by a waste contractor to be
environmentally recycled as far as possible;
-- Digital marketing brochures are created that can easily be emailed or
viewed via the website as opposed to being printed and posted out;
-- Travel is managed to ensure trips are multi-purpose or alternatively
using telephones, Skype and conference centres and webinars; and
-- A paperless office policy is encouraged.
Sustainability
Anpario's Responsibilities
All of Anpario's activities are dedicated to providing
innovative solutions which contribute to sustainable development of
new products, protecting precious resources and enabling farmers to
produce healthy and productive food producing animals. Through our
cutting-edge natural products, innovations and collaborations,
Anpario:
-- seeks to contribute to feeding a growing global population in a world
with finite resources;
-- contributes to the more efficient use of feed ingredients to reduce
environmental footprints and ensures responsibly produced food;
-- creates good health and nutrition from feed to farm; and
-- helps to prevent and manage animal diseases that can destroy animals,
livelihoods and food supplies.
Our innovative products work in harmony with the animals'
biology to promote healthy growth and demonstrate value:
-- to the animals fed directly through all life stages;
-- indirectly to their progeny; and
-- and ultimately within the human food chain.
Sustainability Embedded into Company Culture
Our people are passionate about sustainability. Our team are
motivated to create programmes to lead and educate consumers
because of the global challenges facing the world health, food
sources and biosecurity.
Through our initiatives and education programmes we work closely
with external vets and nutritionists to help, and where possible,
responsibly reduce, remove and replace antibiotics by changing
animal diets to include our products. Anpario are committed to
extensive field trial work over several months and years to find
cost effective solutions for farmers.
The Anpario 'Green Team', with representatives from all
departments, initiate improved ways of working which are more
sustainable for our environment.
Anpario's Sustainable Development Goals
Sustainable development should meet the needs of the present
without compromising the ability of future generations to meet
their own needs. Our global responsibility is inherent throughout
our company values and reflected in Anpario's own goals. These are
in tune with the United Nations Sustainable Development Goals 17
Sustainable Development Goals (SDGs).
Goal 2: Zero Hunger
Agriculture and fisheries can provide nutritious food for all
and generate decent incomes, while supporting people-centered rural
development and protecting the environment. Anpario's products work
in tune with nature's inherent processes within each of the animal
species to support production of safe and affordable food for a
growing population and can help to:
-- conserve, protect and enhance natural resources;
-- improve rural livelihood, equity and social well-being through productive
farming; and
-- enhance resilience of people, communities and ecosystems.
Goal 3: Good Health and Well-being
The misuse of antibiotics in agricultural production is a
significant threat to veterinary and human health. Anpario provides
products and guidance to support farmers to:
-- improve animal gut health;
-- defend against mycotoxin;
-- reduce and where possible remove the unnecessary use of antibiotics; and
-- safeguard the use of antibiotics for effective treatment of sick animals.
We are leading in work in collaboration with major feed
producers to successfully reduce the unnecessary use of antibiotics
and other substances such as zinc oxide and urea-formaldehyde to
promote optimal animal health and welfare. Anpario has spearheaded
the 4 R's campaign globally to Review, Reduce and Replace
antibiotics Responsibly to help manage gut health and support
healthier livestock through the use of natural products.
Goal 12: Responsible Consumption and Production
Anpario's products help improve biosecurity and prevent animal
diseases, which can eliminate significant animal populations,
leading to devastating losses of food producing animals (e.g.
Coccidiosis, Necrotic Enteritis, Porcine Epidemic Diarrhoea (PEDV),
and African Swine Fever (ASF)). Anpario's products are proven to
work effectively alongside vaccines to aid in disease control.
Goal 6: Clean Water and Sanitation
Clean water is vital to both animal and human health. Our
product portfolio includes a highly efficacious effervescent
water-soluble tablet (Credence) that kills harmful moulds, fungi,
bacteria and viruses in water as a cost effective one-step process
on farm.
Goal 13: Climate Action
Our products help farmers to feed more nutritious diets with a
lower environmental footprint to their animals which reduce
negative environmental impacts such as:
-- nutrient loss;
-- greenhouse gas and ammonia emissions; and
-- degradation of ecosystems.
Goal 14: Life Below Water
Our 100% natural, aquaculture products work on the same
principles as for land animals and are effective for shrimp and
other farmed fish such as Salmon and Tilapia. We work with
aquaculture experts on new formulations for sustainable fish
production.
Impact of Anpario's products
Anpario has a substantial portfolio of proven products that make
a difference to animal and ultimately human health. Some of our key
innovations and animal health programmes with significant
qualitative and measurable benefits which are working to achieve
SDG's include:
-- Antibiotic free and Pathogen control The solution to eliminating
antibiotic dependency requires programmes that are multifaceted in their
approach combining biosecurity, management and nutrition. Anpario's gut
health products have beneficial effects including: reduction of E.coli;
increased levels of lactobacillus creating a favourable microbial
environment and increase in levels of energy sources (propionate and
butyrate); improved animal strength, body weight gain and reduction in
mortality rate. This results in reduced energy costs and improved dietary
utilisation, aiding animal performance and helping to ensure they are
more robust and better able to resist pathogen challenges. Anpario
phytogenic products contain natural oregano oil with actives carvacrol
and thymol which are natural antimicrobials. It regulates gut microbiota;
has anti-inflammatory and antioxidant properties, and stimulates appetite
for efficient feed conversion. Its benefits are proven in fighting
intestinal diseases such as coccidiosis in poultry and ileitis in pigs,
which infects 96% of US and 90% of EU pig farms. Anpario's market leading
acid-based gut health products comprise of organic acids blended on a
unique mineral carrier system using our sophisticated proprietary
blending processes. They work inside the gastrointestinal tract of the
animal and promote the proliferation of beneficial bacteria, enabling it
to develop a well-balanced gut microflora population (lactobacillus)
which naturally decreases the number of viable enteropathogens, such as
Salmonella, E Coli, and Campylobacter. Proven to increase breeder
fertility, hatchability and egg weight, and also progeny have been found
to have significantly increased weight gain and improved feed conversion
rate.
-- Mycotoxin Binders Mycotoxins are toxic chemicals produced by moulds.
Their presence in animal feed can have a detrimental effect including:
reduced growth rates; lower fertility and abortions; impaired resistance
and secondary infections; kidney and liver toxicities resulting in organ
failure; and potentially death. Products such as Anpro(R) range have
demonstrated efficacy when independently tested over various species and
generate many positive health benefits.
-- Zinc Oxide replacement Traditionally, zinc oxide has been included at
high levels in a piglet's diet under veterinary prescription, to control
E. coli infections which cause post-weaning scours and has been linked to
environmental pollution and antibiotic resistance. Anpario eubiotic
products can support piglet performance in the absence of therapeutic
levels of zinc oxide and increase the amount of pig meat produced per
year for the unit.
Suppliers, Customers and Regulators
Anpario supplies products to many countries and aims to enhance
animal health and nutrition. Internal quality control ensures: the
safety of its products; transparency and traceability.
Anpario sources 100% natural oregano oil which is organically
grown and produced in a carbon neutral European factory.
Anpario retain key industry quality accreditations in particular
UFAS and FEMAS certifications. The Group is committed to achieving
a safe and secure working environment in all locations operating an
established Group health and safety policy applicable to all
employees. Other measures include:
-- responsible procurement policies are in place to source raw materials to
high specification and rigorous quality standards. Anpario seeks to
partner suppliers operating to highest standards of honesty and
integrity. These ethics include through responsible procurement and due
diligence, ensuring: suppliers operate rigorous quality standards and
comply with all applicable ethical labour and, trade laws and regulations,
including the requirements of The Modern Slavery Act 2015;
-- the operation of manufacturing facilities to the highest standards;
compliance with recognised quality standards; and a safe and secure
working environment in all our locations;
-- compliance with environmental legislation and responsible practices
minimising the impact of its operations on the environment;
-- absolute transparency and traceability of raw materials and compliance
with international regulations; and
-- zero tolerance of bribery and corruption.
The Group adopts a clear Code of Conduct setting out the
behaviour expected from all employees and business partners
(including suppliers, customers, consultants, agents and
representatives). It shall not knowingly take any actions which
violate any applicable national and international anti-bribery and
corruption legislation, including the UK Bribery Act 2010.
Principle 4: Effective Risk Management
Anpario has specific resource and processes in place to
proactively identify and manage risk to protect the continued
growth and long-term future. However, any such system of internal
control can provide only reasonable, but not absolute, assurance
against material misstatement or loss. The Board considers that the
internal controls in place are appropriate for the size, complexity
and risk profile of the Company and that they balance exploiting
opportunities and protecting against threats. The Principal Risks
and Uncertainties section of this annual report details specific
financial and non-financial risks and uncertainties facing the
business and where possible the measures in place to mitigate
them.
Risk management and control
Effective risk analysis is fundamental to the execution of
Anpario's business strategy and objectives.
Our risk management and control processes are designed to make
management of risk an integrated part of the organisation. The
framework is used to identify, evaluate, mitigate and monitor
significant risks; and to provide reasonable but not absolute
assurance that the Group will be successful in achieving its
objectives.
The focus is on significant risks that, if they materialise,
could substantially and adversely affect the Group's business,
viability, prospects and share price.
The requirement for an Internal Audit function is to be kept
under review.
Risk management process
We recognise that a level of risk taking is inherent within a
commercial business; our risk management process is designed to
identify, evaluate and mitigate the risks and uncertainties we
face.
The CEO is the ultimate Risk Manager. The Board establishes our
risk appetite; oversees the risk management and internal control
framework and monitors the Group's exposure to principal risks.
The Executive Management Board (EMB) owns the risk management
process and is responsible for managing specific risks. The EMB
members are also responsible for embedding rigorous risk management
in operational processes and performance management and review.
The EMB members are responsible for the risk analysis, controls
and mitigation plans for their individual section of the
business.
The Audit Committee reviews the effectiveness of the risk
management process and the internal control framework and ensures
appropriate executive ownership for all key risks.
These processes ensure that all Directors receive detailed
reports from management and are able to discuss the risks, controls
and mitigations in place and therefore satisfy themselves that key
risks are being effectively managed.
Internal control framework
Anpario's internal control framework is designed to ensure
the:
-- effectiveness and efficiency of business operations;
-- reliability of financial reporting;
-- compliance with all applicable laws and regulations; and
-- assignment of Authority and Responsibility.
Anpario's values underpin the control framework and it is the
Board's aim that these values drive the behaviours and actions of
all employees. The key elements of the control framework are:
Management Structure
The Board sets formal authorisation levels and controls that
allow it to delegate authority to the EMB and other Managers in the
Group. The management structure has clearly defined reporting lines
and operating standards.
Strategy and Business Planning
-- Anpario has a strategic plan which is developed by the EMB and endorsed
by the Board.
-- Business objectives and performance measures are defined annually,
together with budgets and forecasts.
-- Monthly business performance reviews are conducted at both Group and
business unit levels.
Policies and Procedures
Our key financial, legal and compliance policies and procedures
that apply across the Group are:
-- Code of Conduct;
-- levels of designated authorities and approvals;
-- Ways of Working (WOWs);
-- Anti-Bribery and Corruption Policy;
-- GDPR and Privacy Policy; and
-- Due diligence processes including rigorous sanctions checks.
Operational controls
Our operational control processes include:
-- Product Pipeline Review: product pipeline is reviewed regularly to
consider new product ideas and determine the fit with our product
portfolio. We assess if the products in development are progressing
according to plan and evaluate the expected commercial return on new
products;
-- Lifecycle Management: lifecycle management activities are managed and
reviewed for our key products to meet the changing needs of our customers,
environmental and regulatory standards;
-- Quality Assurance: a manufacturing facility with an established Quality
Management System operating under FEMAS and UFAS and designed to ensure
that all products are manufactured to a consistently high standard in
compliance with all relevant regulatory requirements;
-- Product Registration: a robust system operated by our regulatory team to
ensure all products are correctly registered within the jurisdiction in
which they are sold; and
-- Pricing: a pricing structure which is managed and monitored to provide
equitable pricing for all customer groups and compliance with regulatory
authorities.
Financial controls
Our financial controls are designed to prevent and detect
financial misstatement or fraud. This provides reasonable, but not
absolute, assurance against material misstatement or loss. They
include:
-- a formalised reporting structure which incorporates the setting of
detailed annual budgets and key performance indicators which are updated
on a regular basis to form forecasts;
-- management and Board meetings where all key aspects of the business are
presented, reviewed and discussed including comparison of current and
historical performance as well as budgets and forecasts;
-- defined authorisation levels for expenditure; the placing of orders and
contracts; and signing authorities;
-- transactional level controls operated on a day-to-day basis;
-- daily reconciliation and monitoring of cash movements by the finance
department and the Group's cash flow is monitored;
-- segregation of accounting duties;
-- reconciliation and review of financial statements and judgements;
-- internal and external training to ensure staff are aware of the latest
standards and best practice; and
-- membership of professional bodies and compliance with associated code of
ethics.
Principle 5: The Board
The Board of Directors is collectively responsible and
accountable to shareholders for the long-term success of the
Company. The Board provides leadership within a framework of
prudent and effective controls designed to ensure strong corporate
governance and enable risk to be assessed and managed.
The Board regularly reviews the operational performance and
plans of the Company and determines the Company's strategy,
ensuring that the necessary financial and human resources are in
place in order to meet the Company's objectives. The Board also
sets the Company's values and standards, mindful of its obligations
to shareholders and other stakeholders.
Full details and biographies of the Board are available on our
website, the Board comprises of two independent Non-Executive
Directors and two Executive Directors.
Executive Directors
Key Committees
Name Role Qualifications Audit Nom. Rem.
Richard Chief Executive B Eng (Hons), M
Edwards Officer C Eng, MBA.
Karen Prior Group Finance BSc (Hons),
Director FCA.
Independent Non-Executive Directors
Key Committees
Name Role Qualifications Audit Nom. Rem.
Peter Lawrence Non-Executive MSc, BSc, DIC, C C M
Chairman ACGI.
Richard Wood Senior BSc, C Eng M M C
Independent
Director
Audit = Audit Committee, Nom. = Nomination Committee, Rem. =
Remuneration Committee
C = Chair, M = Member
The Board considers that Peter Lawrence and Richard Wood are
independent. In Peter Lawrence's case the Board has specifically
considered his length of service on the Board and determined that
in terms of interest, perspective and judgement he remains
independent.
All Directors are subject to reappointment by shareholders at
the first AGM following their appointment and thereafter by
rotation.
The Board delegates its authority for certain matters to its
Audit, Remuneration and Nomination Committees. The Board approves
and reviews the terms of reference of each of the Committees which
are available on the Company's website,
http://www.anpario.com/aim-26/.
The Board meets formally at least four times per annum. All
Board members receive agendas and comprehensive papers prior to
each Board meeting. The Group Finance Director is also the Company
Secretary and is responsible to the Board for ensuring that Board
procedures are followed and that applicable rules and regulations
are adhered to.
In addition to formal Board and Committee meetings, ad hoc
decisions of the Board and Committees are taken after discussion
throughout the financial year as necessary through the form of
written resolutions.
All Directors in office at the time of the various committee
meetings were in attendance for all of the meetings convened
between 7 March 2019 and 18 March 2020. A list of the meetings
convened during the year is set out below.
Number of meetings Full attendance of
convened meeting
Board meetings 4 Yes
Audit Committee meetings 2 Yes
Remuneration Committee meetings 1 Yes
The Chief Executive Officer works full time for the Group. The
Group Finance Director is contractually employed for a four day
week, however, additional hours are worked to ensure the roles and
responsibilities of the position are fully met. The Non-executive
Directors have commitments outside of Anpario plc. They are
summarised on the Board biographies available from
https://www.anpario.com/investor/aim-26/. All the Non-Executive
Directors give the appropriate amount of time required to fulfil
their responsibilities to Anpario.
Principal 6: Ensuring Directors have between them the necessary
up-to-date experience, skills and capabilities
The Nomination Committee aims to ensure that composition of the
Board reflects appropriate balance of skills and experience
required to ensure long-term shareholder value and manage risk.
Details of the role of the Nomination Committee and the activities
it performs in relation to these matters is included in the
"Maintaining Governance Structures" section later on in this
document.
The Board biographies available on the website give an
indication of their breadth of skills and experience. Each member
of the Board takes responsibility for maintaining their own skill
set, which includes roles and experience with other boards and
organisations as well as formal training and seminars.
Principal 7: Evaluating Board Performance
The performance of the Board is evaluated formally on an annual
basis, following the conclusion of the annual Audit and
finalisation of the Annual Report. The Chairman leads this process
which looks at the effectiveness of both the Board as a unit and
its individual members.
When addressing overall Board performance the factors
considered, include but are not limited to, underlying group
financial performance, the success of new strategy implementation
and the effectiveness of risk and control measures. This process
further looks at the performance of each member and considers their
individual successes, commitment and alignment to the overall Group
strategy. As appropriate, it will also look to confirm that members
have maintained their independence.
The Nomination Committee is responsible for determining Board
level appointments, details of its role and terms of reference are
provided later in this document. The Executive Board members
determine the appointments to the Executive Management team, in
line with Board approval procedures.
Succession planning is a key part in ensuring the long-term
success of the Company. The Executive team ensure that potential
successors are in place within the business and are given the
required support and guidance to develop further. At the required
time, it is the Nomination Committee's role to make decisions about
future appointments to the Board.
Principle 8: Promoting a corporate culture based on ethical
values and behaviours
Anpario has a strong ethical culture, the Board is responsible
for setting and promoting this throughout our processes and
behaviours. The policies related to these matters are regularly
reviewed and updated and distributed to employees and other
stakeholders as appropriate. Further, specific training is given to
keep staff updated on relevant changes, these sessions are often
recorded for future reference and new staff.
A copy of our Code of Conduct is available on our website,
http://www.anpario.com/code-of-conduct/. Anpario has stated
policies on Corporate Social Responsibility and Anti-Bribery and
Anti-Corruption and a whistleblowing policy that is applicable to
all our employees, other workers, our suppliers and those providing
services to our organisation.
Principal 9: Maintaining governance structures
Anpario is confident that the governance structures in place in
the Company are appropriate for its size and individual
circumstances whilst ensuring they are fit for purpose and support
good decision making by the Board.
The Board defines a series of matters reserved for its decision.
These include strategy, finance, corporate governance, approval of
significant capital expenditure, appointment of key personnel and
compliance with legal and regulatory requirements.
There is clear segregation of responsibility within the Board.
The Non-Executive Chairman is responsible for providing leadership
to and managing the business of the Board, in particular ensuring
strong Corporate Governance policies and values. The role of
Chief-Executive Officer is concerned with the formulation and
implementation of the strategy of the Company and is responsible
for all operational aspects of the business. The role of the Group
Finance Director is to provide strategic and financial guidance and
to develop the necessary policies and procedures to ensure sound
financial management and control of the Company. The Group Finance
Director also acts as Company Secretary and is further responsible
for advising on corporate governance matters and ensuring
compliance with relevant legislative and legal requirements.
Details of the key committees are set out below, the terms of
reference for each are available on our website as part of the
committee section of the AIM 26 disclosures
http://www.anpario.com/aim-26/.
Audit Committee
Details are contained within the Audit Committee Report section
of this Annual Report.
Remuneration Committee
Details are contained within the Remuneration Committee Report
section of this Annual Report.
Nomination Committee
The Nomination Committee is comprised of the two Non-Executive
Directors and the Chief Executive Officer and is chaired by Peter
Lawrence. Meetings are held as required by the Chairman. The role
of the committee is as follows.
-- regularly review the structure, size and composition (including the
skills, knowledge, experience and diversity) of the Board and make
recommendations to the Board with regard to any changes;
-- give full consideration to succession planning for Directors and other
senior executives taking into account the challenges and opportunities
facing the Company, and the skills and expertise needed on the Board in
the future;
-- keep under review the leadership needs of the organisation, both
executive and non-executive, with a view to ensuring the continued
ability of the organisation to compete effectively in the marketplace;
-- keep up to date and informed about strategic issues and commercial
changes affecting the Company and the market in which it operates;
-- review and approve selection procedures for potential Board members,
whether executive or non-executive, whether for immediate appointment to
the Board or after a probationary period;
-- be responsible for identifying and nominating for approval of the Board,
candidates to fill Board vacancies as they arise;
-- ensure that on appointment to the Board, non-executive Directors receive
a formal letter of appointment setting out clearly what is expected of
them in terms of time commitment, committee service and involvement
outside Board meetings;
-- ensure that following appointment to the Board, Directors undergo an
appropriate induction programme; and
-- make recommendations to the Board on membership of the Board's committees,
in consultation with the chair of such committees; the reappointment of
any non-executive at the conclusion of their specified term of office;
the reappointment by shareholders of Directors under the Company's
rotation requirements taking into account the need for progressive
refreshing of the Board.
Before any appointment is made by the Board, evaluate the
balance of skills, knowledge, experience and diversity on the
Board, and, in the light of this evaluation, prepare a description
of the role and capabilities required for a particular
appointment.
For the appointment of a Chairman, the committee shall produce a
job specification, including the time commitment expected. A
proposed Chairman's other significant commitments should be
disclosed to the Board before appointment and any changes to the
Chairman's commitments should be reported to the Board as they
arise.
Prior to the appointment of a Director, the proposed appointee
should be required to disclose any other business interests that
may result in a conflict of interests and be required to report any
future business interests that could result in a conflict of
interest.
Principal 10: Communicating governance and performance matters
with shareholders and wider stakeholders
Communications with shareholders are given high priority and we
proactively promote engagement through a range of measures. More
details of which are provided earlier in this document about how
Anpario seek to engage with and understand Shareholders and wider
Stakeholders.
The most recent AGM took place on 27 June 2019, full details of
which are included in the 2018 annual report available from our
Website. The results of the AGM are set out below. None of the
resolutions had a significant number of votes cast against it.
No. Resolution Result
1 Accept Financial Statements and Statutory Reports Passed
2 Approve Final Dividend Passed
3 Re-elect Richard Edwards as Chief Executive Officer Passed
4 Re-appoint Deloitte LLP as Auditors Passed
5 Authorise Issue of Equity with Pre-emptive rights Passed
6 Authorise Issue of Equity without Pre-emptive rights Passed
7 Authorise Market Purchase of Ordinary Shares Passed
Our Company website includes historical Annual Reports and
Interim Statements; both in RNS format as part of its News section,
and the published documents are available from
https://www.anpario.com/investor/annual-reports/. Included within
these documents are the notices of previous AGMs, the results of
which are released as RNS announcements and can be found in the
News Releases section of our website http://www.anpario.com/.
Board of Directors
Peter A Lawrence, MSc, BSc, DIC, ACGI.
Non-Executive Chairman (A, N, R)
Peter joined the Board in August 2005 as a Non-Executive
Director and became Non-Executive Chairman in 2017. Peter is the
founder of ECO Animal Health Group plc from which he retired in
March 2019 as the Non-Executive Chairman, having been an Executive
Director ever since its formation in 1972. Peter is the
Non-Executive Chairman of Baronsmead Venture Trust plc and Amati
AIM VCT plc.
Richard K Wood, BSc, C Eng.
Senior Independent Director (A, N, R)
Richard joined the Board in November 2017 as a Senior
Independent Director. Richard has considerable global animal health
experience having built Genus plc from a small company privatised
by the government, into a world leading animal genetics company.
More recently, Richard was a senior independent non-executive
director of Avon Rubber plc and was also chairman of Ocean Harvest
Technology Inc., a small manufacturer of therapeutic animal feeds
using seaweeds.
Richard has previously held the position of Chairman at Atlantic
Pharmaceuticals plc, Innovis (a sheep genetics company) and Silent
Herdsman Limited (Farming Technology) and was interim Chairman of
ECO Animal Health Group plc in early 2019.
Richard P Edwards, B Eng (Hons), C Eng, MBA.
Chief Executive Officer (N)
Richard Edwards joined the Board in November 2006 as Chief
Executive following the acquisition of Agil. He was appointed
Executive Vice-Chairman in April 2011 with specific responsibility
for implementing acquisition strategy. In January 2016, Richard was
appointed to the position of CEO.
Richard has extensive general management and corporate strategy
experience gained in the sales and distribution sector both in the
UK and internationally. Previously he was Director and General
Manager of WF Electrical, a GBP140 million turnover division of
Hagemeyer (UK) plc, a distributor of industrial products, and
gained significant experience in corporate development at Saint
Gobain UK building materials business.
Karen L Prior, BSc (Hons), FCA.
Group Finance Director
Karen joined the board in October 2009 as Group Finance
Director. Previously, Karen has had roles as Finance Director of
Town Centre Securities PLC, a listed property group and UK Finance
Director of Q-Park, where she was instrumental in its establishment
and growth in the UK.
Karen has also been Financial Controller of train builders
Bombardier Transportation and spent 10 years of her early career
with Ernst and Young specialising in providing audit and business
services to entrepreneurial businesses.
Key
A: Audit Committee N: Nomination Committee R: Remuneration
Committee
The Terms of Reference of the Audit, Nomination and Remuneration
Committees are available on the Company's website:
www.anpario.com/aim-26/.
Directors' report
The Directors present their annual report and audited
consolidated financial statements for the year ended 31 December
2019.
Results and dividends
The profit for the year after tax was GBP3.7m (2018: GBP4.0m).
The Directors propose a final dividend of 5.5p per share (2018:
5.0p) making a total of 8.0p per share for the year (2018: 7.2p),
amounting to a total dividend of GBP1.7m (2018: GBP1.5m).
Directors
The Directors during the year under review and subsequently and
up to the date of this report were:
Peter A Lawrence Non-Executive Chairman
Richard P Edwards Chief Executive Officer
Karen L Prior Group Finance Director
Richard K Wood Senior Independent Director
The Board regards the Non-Executive Directors as being
independent. The biographies and roles of all Directors and their
roles on the Audit, Remuneration and Nomination Committees are set
out earlier in this report.
Details of the Directors' interests in the shares of the Company
are provided in the Directors' remuneration report.
Substantial shareholdings
At 28 February 2020, analysis of the share register showed the
following holdings of 3 per cent or more of its issued share
capital:
Ordinary
Shares
(000) % held
RBC Wealth Management 2,750 11.8
Unicorn Asset Management 2,433 10.4
Investec Wealth & Investment 2,378 10.2
Gresham House 1,399 6.0
Downing 1,124 4.8
BlackRock Investment Management 1,073 4.6
BMO Global Asset Management 769 3.3
Hargreaves Lansdown Asset Management 763 3.3
Interactive Investor 724 3.1
Review of the business and future developments
A full review of the year, together with an indication of future
developments, is given in the Chairman's statement.
Group research and development activities
The Group is continually researching into and developing new
products. Details of expenditure incurred and impaired or written
off during the year are shown in the note 4 of the Group financial
statements.
Share capital
During the year 50,000 (2018: 41,853) Ordinary shares of 23p
each were issued pursuant to the exercise of share options. During
the year the Company issued 100,000 (2018: nil) Ordinary shares of
23p at market price to the Trustees of The Anpario plc Employees'
Share Trust.
A Special Resolution will be proposed at our AGM to renew the
Directors' limited authority last granted in 2019 to make market
purchases of Ordinary shares in the capital of the Company.
As at 31 December 2019, the Company holds 143,042 (2018:
143,042) Ordinary shares of 23p in treasury. On 5 February 2020,
the Company announced a Share Buyback Programme. . On 12 March 2020
the Company completed the Buyback Programme and in total purchased
297,346 additional Ordinary shares of 23p to be held in treasury,
taking the total number of treasury shares to 440,388 shares.
Independent auditor
The auditor, Deloitte LLP, have indicated their willingness to
continue in office, and a resolution that they be re-appointed will
be proposed at the AGM.
Stockbrokers
Peel Hunt LLP is the Company's stockbroker and nominated
adviser.
The closing share price on 31 December 2019 was 340p per share
(2018: 325p per share).
Indemnities
By virtue of, and subject to, Article 172 of the current
Articles of Association of the Company, the Company has granted an
indemnity to every Director, alternate Director, Secretary or other
officer of the Company. Such provisions remain in force at the date
of this report. The Group has arranged appropriate insurance cover
for any legal action against the Directors and officers.
Financial risk management
Details of the Company's financial risk management policy are
set out in note 2.21 of the financial statements.
The Directors' report was approved by the Board of Directors on
18 March 2020 and is signed on its behalf by:
Karen Prior
Company Secretary
Statement of Directors' responsibilities
The Directors are responsible for preparing the Annual Report
and the financial statements in accordance with applicable law and
regulations.
Company law requires the Directors to prepare financial
statements for each financial period. Under that law the Directors
are required to prepare the Group financial statements in
accordance with International Financial Reporting Standards (IFRSs)
as adopted by the European Union and Article 4 of the IAS
Regulation and have elected to prepare the Parent Company financial
statements in accordance with United Kingdom Generally Accepted
Accounting Practice (United Kingdom Accounting Standards and
applicable law), including FRS 101 'Reduced Disclosure Framework'.
Under company law the Directors must not approve the accounts
unless they are satisfied that they give a true and fair view of
the state of affairs of the Company and of the profit or loss of
the Company for that period.
In preparing the Parent Company financial statements, the
Directors are required to:
-- select suitable accounting policies and then apply them consistently;
-- make judgements and accounting estimates that are reasonable and prudent;
-- state whether applicable UK Accounting Standards have been followed,
subject to any material departures disclosed and explained in the
financial statements; and
-- prepare the financial statements on the going concern basis unless it is
inappropriate to presume that the Company will continue in business.
In preparing the Group financial statements, International
Accounting Standard 1 requires that Directors:
-- properly select and apply accounting policies;
-- present information, including accounting policies, in a manner that
provides relevant, reliable, comparable and understandable information;
-- provide additional disclosures when compliance with the specific
requirements in IFRSs are insufficient to enable users to understand the
impact of particular transactions, other events and conditions on the
entity's financial position and financial performance; and
-- make an assessment of the Company's ability to continue as a going
concern.
The Directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the Company's
transactions and disclose with reasonable accuracy at any time the
financial position of the Company and enable them to ensure that
the financial statements comply with the Companies Act 2006. They
are also responsible for safeguarding the assets of the Company and
hence for taking reasonable steps for the prevention and detection
of fraud and other irregularities.
The Directors are responsible for the maintenance and integrity
of the corporate and financial information included on the
Company's website. Legislation in the United Kingdom governing the
preparation and dissemination of financial statements may differ
from legislation in other jurisdictions.
Responsibility statement
We confirm that to the best of our knowledge:
-- the financial statements, prepared in accordance with the relevant
financial reporting framework, give a true and fair view of the assets,
liabilities, financial position and profit or loss of the Company and the
undertakings included in the consolidation taken as a whole;
-- the Strategic report includes a fair review of the development and
performance of the business and the position of the Company and the
undertakings included in the consolidation taken as a whole, together
with a description of the principal risks and uncertainties that they
face; and
-- the Annual Report and financial statements, taken as a whole, are fair,
balanced and understandable and provide the information necessary for
shareholders to assess the Company's performance, business model and
strategy.
Statement of disclosure to auditor
So far as the Directors are aware:
-- there is no relevant audit information of which the Company's auditor is
unaware; and
-- they have taken all the steps that they ought to have taken as Directors
in order to make themselves aware of any relevant audit information and
to establish that the Company's auditor is aware of that information.
This responsibility statement was approved by the Board of
Directors on 18 March 2020 and is signed on its behalf by:
Karen Prior
Company Secretary
Report of the Remuneration Committee
Introduction
On behalf of the Remuneration Committee, I am pleased to present
the Remuneration Report for the year ended 31 December 2019. The
Committee seeks to provide a framework that is aligned to the
strategy and values of the Company and to the interests of
shareholders. It recognises the need to recruit, retain and
appropriately incentivise high calibre directors and managers to
deliver the Company's strategy.
Overview
The Remuneration Committee is responsible for reviewing the
performance of Executive Directors as well as determining the scale
and structure of their remuneration, their terms and conditions of
service and the grant of share awards, having due regard to the
interests of shareholders.
The Committee is also responsible for reviewing the overall
policy in respect of remuneration of all other employees of the
Company and establishing the Company's policy and operation of
share incentive schemes.
In determining the remuneration of senior executives, the
Committee seeks to enable the Company to attract and retain
executives of the highest calibre. The Committee also makes
recommendations to the Board concerning the allocations of options
to executives under the long-term incentive plan and for the
administration of the scheme.
The terms of reference of the Remuneration committee can be
found on the Company's website http://www.anpario.com/aim-26/.
Composition and meetings
The Remuneration Committee comprises Richard Wood, Senior
Non-Executive Director and Committee Chairman, and Peter Lawrence,
Non-Executive Chairman of the Board. Executive Directors are
invited to attend meetings as required if thought advantageous for
consideration of a particular agenda item. The Remuneration
Committee meets as necessary to fulfil its objectives but as a
minimum, at least once a year. The committee met once during the
year ended 31 December 2019 with full attendance by the Committee
members.
AIM requirements
As an AIM company, Anpario plc, is not required to comply with
schedule 8 of the large and medium-sized companies' regulations
2008. However, it is moving towards this full level of reporting
and disclosures in this report reflect this.
Directors' remuneration
The remuneration of the Chairman and each Director during the
year ended 31 December 2019 is set out in the tables below. The
detail contained in this summary has been expanded this year, as
such the prior year figures have been re-presented.
Share-based
Salary Pension Benefits Bonus* payments Total
2019 2019 2019 2019 2019 2019
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Executive
Directors
R P Edwards 209 - 2 - 34 245
K L Prior 146 - 15 - 43 204
Non-Executive
Directors
P A Lawrence 40 - - - - 40
R K Wood 35 - - - - 35
Total 430 - 17 - 77 524
The comparative figures for the previous year is shown below
Share-based
Salary Pension Benefits Bonus* payments Total
2018 2018 2018 2018 2018 2018
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Executive
Directors
R P Edwards 209 - 11 133 55 408
K L Prior 146 - 13 99 58 316
Non-Executive
Directors
P A Lawrence** 40 - - - - 40
R K Wood 35 - - - - 35
Total 430 - 24 232 113 799
* The bonuses to Directors are determined and paid after the
publication of annual results, so the above figures are awards made
for the previous financial year. No bonus has been accrued for
2019.
** The payment of the Chairman's remuneration changed during
2018 and is now paid as a salary directly as an employee of Anpario
plc. Previously these amounts were paid to ECO Animal Health Group
plc. For clarity and consistency, the salary figure above includes
these amounts.
Key Activities
During the year, the Committee:
-- reviewed the salary and bonus arrangements to the Executive Directors and
approved cost of living increases, where appropriate, for staff. No cost
of living adjustment has been made for Executive and Non-Executive
Directors;
-- Reviewed the allocation of issued share capital for all incentive
schemes;
-- Reviewed proposals for the grant of share related incentive schemes; and
-- Approved recommended proposals for short-term bonus incentives.
Remuneration Policy and Advisors
The objectives of the remuneration policy are to ensure that the
overall remuneration of senior executives is aligned with the
performance of the Company and preserves an appropriate balance of
annual profit delivery and longer term shareholder value.
The Committee keeps the remuneration policy, in particular the
need for share ownership guidelines for Executive Directors,
regularly under review and will take action whenever deemed
necessary to ensure that remuneration is aligned with the overall
strategic objectives of the Company.
The Committee seeks advice, if appropriate, from independent
advisors where required on remuneration related matters.
Long Term Incentive Plans
The Executive Directors receive remuneration under three long
term incentive plans: Enterprise Management Scheme ("EMI" which is
now closed; Joint Share Ownership Plan ("JSOP"); and Save As You
Earn Scheme ("SAYE").
Under the Company's EMI and SAYE Scheme the following Directors
have the right to acquire Ordinary shares of 23p each as
follows:
Option
Price
(pence per 31 Dec 31 Dec
Share) 2019 2018
R P Edwards 158.50 80,000 80,000
290.00 42,400 42,400
224.13 4,015* 4,015
334.00 2,694 2,694
K L Prior 158.50 80,000 80,000
290.00 42,400 42,400
224.13 4,015* 4,015
334.00 2,694 2,694
* These right to purchase these shares was exercised on 5
February 2020, and as of 18 March 2020 they have added to the
respective Directors' interests as listed in relevant section
below.
Joint Share Ownership Plan
The Joint Share Ownership Plan ("JSOP") and the Anpario plc
Employees Shares Trust ("the Trust") were established and approved
by resolution of the Non-Executive Directors on 26 September 2011.
The JSOP provides for the acquisition by employees, including
Executive Directors, of beneficial interests as joint owners (with
the Trust) of Ordinary Shares in the Company upon the terms of a
Joint Ownership Agreement ("JOA").
The terms of the JOAs provide, inter alia, that if jointly owned
shares become vested and are sold, the proceeds of sale will be
divided between the joint owners so that the participating Director
receives an amount equal to any growth in the market value of the
jointly owned Ordinary shares above the initial market value, less
a "carrying cost" (equivalent to simple interest at 4.5 per cent
per annum on the initial market value) and the Trust receives the
initial market value of the jointly owned shares plus the carrying
cost. Jointly owned Ordinary shares will become vested if the
participant remains with the Company for a minimum period of 3
years.
The Directors interests in the JSOP shares are as follows:
2019 2018
R P Edwards 1,350,000 1,350,000
K L Prior 1,200,000 1,200,000
Directors' interests
The interests of the Directors who served during the period, as
at 31 December 2019, in the ordinary shares of the Company were as
follows: -
Ordinary shares
of 23p each
31 Dec 31 Dec
2019 2018
P A Lawrence 63,350 63,350
R P Edwards 206,687 206,687
K L Prior 211,800 206,800
On 5 June 2019, Karen Prior purchased 5,000 ordinary shares of
23p each in the Company ("Ordinary Shares") at a price of
356.5p.
Directors' interests between 31 December 2019 and 18 March 2020
have changed, reflecting the exercise by Richard Edwards and Karen
Prior of SAYE options of 224.13p per share totalling 4,015 shares
each. As such at the 18 March 2020, Directors' interests are as
follows, Richard Edwards 210,702 and Karen Prior 215,815.
Non-Executive Directors and Chairman
Remuneration of the Non-Executive directors is determined by the
Chairman and the Chief Executive Officer. The Non-Executive
Directors are not entitled to annual bonuses or employee benefits
and their fees are subject to annual review.
The Chairman's remuneration is determined by Remuneration
Committee in conjunction with the Chief Executive Officer. However,
the Chairman is not entitled to vote on the matter.
Each of the Chairman and Non-Executive Director have a letter of
appointment stating their annual fee and termination terms.
The Chairman and Non-Executive Director appointments are for a
period of three years from the date of the letter of appointment.
The appointments are terminable on three months written notice at
any time by either the Company or the Non-Executive Director.
Executive Directors
The Executive Directors remuneration is determined by the
Committee. They are eligible to participate in a discretionary
annual bonus scheme which is based on annual target profit measures
and corporate activities including acquisitions and disposals
aligned with shareholder returns.
The Executive Directors are also eligible to participate in the
employee long term incentive plans as mentioned above.
Richard Edwards
Richard Edwards is engaged as Chief Executive Officer of the
Company under a service agreement dated 5 November 2006. His
appointment is terminable by the Company on 12 months' written
notice and the Executive on 6 months' notice.
Karen Prior
Karen Prior is engaged as Group Finance Director of the Company
under a service agreement dated 1 October 2009. Her appointment is
terminable by the Company on 12 months' written notice and the
Executive on 6 months' notice.
Richard Wood
Chairman, Remuneration Committee
18 March 2020
Audit committee report
Composition and meetings of the Audit Committee
The Audit Committee is comprised of the two Non-Executive
Directors, whom the Board considers to be independent and is
chaired by Peter Lawrence. Meetings are also attended, by
invitation, by the Finance Director, external auditors and other
management as appropriate.
The Committee meets at least twice each financial year with the
external auditors and considers any issues that are identified
during the course of their audit work. The Board is satisfied that
the Committee members have recent and relevant financial
experience.
The Committee met twice during the year ended 31 December 2019
with full attendance by the Committee members.
Role, responsibilities and terms of reference
The Audit Committee's role is to assist the Board in the
effective discharge of its responsibilities for financial reporting
and internal control. The Audit Committee's responsibilities
include:
Financial reporting
Monitor the integrity of the financial statements of the
Company, and any formal announcements relating to the Company's
financial performance, reviewing significant financial reporting
judgments contained in them focusing particularly on:
-- the consistency of and any changes to accounting policies and practices;
-- the methods used to account for significant or unusual transactions where
different approaches are possible;
-- whether the Company has followed appropriate accounting standards and
made appropriate estimates and judgments, taking into account the views
of the external auditor; and
-- the clarity of disclosure in the Company's financial reports and the
context in which statements are made.
Internal controls and risk management
-- Keep under review the adequacy and effectiveness of the Company's
internal financial controls and internal control and risk management
systems; and
-- review and approve the statements to be included in the annual report
concerning internal controls and risk management.
Compliance, whistleblowing and fraud
-- Review the Company's arrangements for its employees to raise concerns, in
confidence, about possible wrong doing in financial reporting or other
matters so as to ensure that arrangements are in place for the
proportionate and independent investigation of such matters and for
appropriate follow-up action; and
-- review the Company's systems and controls for the detection of fraud and
prevention of bribery.
External audit
Consider and make recommendations to the Board, to be put to
shareholders for approval at the AGM, in relation to the
appointment, re-appointment and removal of the external auditor.
The Committee shall oversee the selection process for a new auditor
and if an auditor resigns, the Committee shall investigate the
issues leading to this and decide whether any action is required.
Oversee the relationship with the external auditor including (but
not limited to):
-- recommendations on their remuneration, whether fees for audit or
non-audit services and that the level of fees is appropriate to enable an
adequate audit to be conducted;
-- approval of their terms of engagement, including any engagement letter
issued at the start of each audit and the scope of the audit;
-- assessing annually the external auditor's independence and objectivity
taking into account relevant UK professional and regulatory requirements
and the relationship as a whole, including the provision of any non-audit
services;
-- satisfying itself that there are no relationships (such as family,
employment, investment, financial or business) between the auditor and
the Company (other than in the ordinary course of business);
-- monitoring the auditor's compliance with relevant ethical and
professional guidance on the rotation of audit partner;
-- assessing annually the qualifications, expertise and resources of the
auditor and the effectiveness of the audit process which shall include a
report from the external auditor on their own internal quality
procedures;
-- develop and implement a policy on the engagement of the external auditor
to supply non-audit services;
-- discuss with the external auditor(s) before the audit commences the
nature and scope of the audit, and ensure co-ordination where more than
one audit firm is involved;
-- review the findings of the audit, discussing any major issues which arose
during the audit, any problems and reservations arising from the Interim
and Final audits, and any matters the auditors may wish to discuss (in
the absence of management where necessary); and
-- review the external auditor's management letter and management's
response.
The Committee regularly reviews its terms of reference and makes
recommendations to the Board for any changes as appropriate. The
current terms of reference are available on the Company's
website.
Independence of external auditor
The Committee reviews the independence of the external auditor,
Deloitte LLP on an annual basis. It receives a detailed audit plan,
from Deloitte LLP, identifying their assessment of the key risks.
The Committee assesses the effectiveness of the audit process in
addressing these matters through the reporting it receives from
Deloitte LLP.
Peter Lawrence
Chairman, Audit Committee
18 March 2020
Risk management
We have examined in detail key risks and evaluated the
likelihood and potential impact. These risks are the most
significant but not necessarily the only ones associated with the
Group and its businesses. In common with all businesses, we face
risks of a generic nature, for example failure of projects, foreign
exchange, supply chain disruption and the recruitment, development
and retention of employees. The following table shows some of the
risks that are more specific to our business together with details
of the controls and mitigation in place to manage our exposure.
More information on our risk management framework can be found in
the Corporate Governance Statement.
1. Market Risk 2. Political and Economic Risk
Risks Risks
Gaining market entry for products and Brexit outcome still unknown -
access to end users. Competition from transition period until end 2020.
global operators. M & A activity Exchange rate fluctuations.
resulting in market consolidation. Geopolitical risks including political
Human movement restrictions e.g. and economic instability. Bad debts or
COVID-19, SARS. Animal diseases e.g. trade disputes.
African Swine Fever, Avian Influenza,
PEDV. Climate and environmental
changes. IP theft e.g. trademark
infringements.
Potential impact Potential impact
Lower sales revenue and profit. Volatility in markets. Supply chain:
Reduction in customers or target delays, additional costs, tariffs or
customers. Loss of market share. Loss lack of continuity. Regulatory
of market. changes. Unable to sell or transport
finished goods to EU. Unable to import
goods from EU. Border delays. Reduced
revenue, increased costs and lower
profitability.
Control and mitigation Control and mitigation
Establishing a global marketing Established a cross functional team to
strategy with clearly defined product assess and monitor Brexit impact.
and species related goals for each Increased inventory of EU sourced raw
region. Regular monitoring of sales materials. Extended terms provided to
budgets and sales prospects by the EU distributors to ensure supply in
management and the Board. Effective short term. Limiting and hedging of
disaster planning communicated on a foreign currency exposure. Wide
timely basis Regional and species geographic diversity reduces
diversity and an extensive range of dependency in a single country or
products with new product development region. Rigorous customer and supplier
and launches. A clear and effective due diligence and monitoring of
marketing strategy communicating the regional and customer exposures. Use
benefits of Anpario sustainable of credit insurance and letters of
solutions. Close customer engagement, credit.
relationships to understand and
address their needs. Global trademark
watches and pre-emptive legal action.
Risk rating Trend Risk rating Trend
Likelihood Medium Increasing Likelihood Medium No change
Impact Medium Impact Medium
3. Product Development Risk 4. Production and Quality Risk
Risks Risks
Failure to deliver new products due to Plant closures due to major accident
lack of innovation, pipeline delays or or incident or disaster. Health and
products not meeting commercial Safety issues. Reliance on 3(rd) party
expectations. Failed or aborted trials manufacturers. Inadequate or poor
during development or customer adherence to quality systems allow
acceptance stages. Lack of significant faulty product to reach customer.
financial, R&D and other resources. Defective raw materials. Defective
plant and equipment in our
manufacturing facility.
Potential impact Potential impact
Reduction in competitiveness in the Loss of production for a significant
market. Lost opportunities. A period e.g. more than one month
succession of trial failures could potentially leading to loss of sales.
adversely affect our ability to Accidents, fatality leading to
deliver shareholder expectations. Our possible closure or fine. Poor product
market position in key areas could be quality or product contamination.
affected, resulting in reduced Damage to customer relationship,
revenues and profits. Where we are reputation and financial loss.
unable to develop and launch a product
this would result in impairment of
intangible assets. Valuable resources
may be wasted.
Control and mitigation Control and mitigation
Continual monitoring and review of the All products can be produced at
lifestyle and potential return from approved toll manufacturers in the UK.
current products. Different regions Business interruption and property
have markets that are at different insurance policies arranged. Business
points in development. Potential new Continuity Plan in place. Third party
development projects are evaluated advisor utilised and strict management
from a commercial, financial and controls enforced. Employers'
technical perspective. The pipeline is liability insurance arranged.
reviewed regularly by the Board. Continued investment in automation has
Regular updates are provided to the improved product consistency and
Board. Each research project or trial quality. Supplier accreditation, UFAS
is managed by qualified technical and FEMAS certification, HACCP and
managers. Projects and trials are Trading Standards compliance. Public
monitored to ensure that they are and product liability insurance
completed on time, deliver expected arranged.
outcomes and provide useable data.
Final review and evaluation to ensure
learning. Multiple studies are
conducted to assess the effects of the
product on target species. In respect
of all new product launches a detailed
marketing plan is established and
progress against that plan is
regularly monitored.
Risk rating Trend Risk rating Trend
Likelihood Medium Decreasing Likelihood Low No change
Impact Medium Impact Medium
5. Systems Risk 6. Legislation, Regulatory and
Non-compliance Risk
Risks Risks
IT or communications failure, due to, Changing market, legislative and
accident or sabotage. Cyber-attack. regulatory needs. Failure to comply
Data breach. with export controls and sanctions.
Failure to comply with anti-bribery
and corruption legislation.
Non-compliance with tax, legal or
regulatory obligations. Failure to
comply with regulatory requirements.
Potential impact Potential impact
Unable to operate. Criminal attack Loss of market presence and or share
could be aimed at stealing money, Litigation against Anpario, potential
extortion, fraud, data theft etc. GDPR fines and reputational damage.
imposes heavy financial penalties, Financial penalties, reputational
plus reputational damage. damage, unable to operate in certain
jurisdictions. Prevented from trading
with countries even though our
products are exempt from sanctions.
Control and mitigation Control and mitigation
Regular back up of data, third party Vigilance and monitoring of all
provider for storage and system appropriate notifications to ensure
support. Firewall, regular back up of compliance and pre-emptive actions.
data, crime and cyber insurance in Clear communicated policies and Code
place. Continual review and of Conduct issued to all employees and
strengthening of processes, controls partners. Internal training and
and security. Information Policy, awareness communications. Support from
Privacy Policy, Breach Notification external experts in all countries in
Policy and Disaster Recovery Plan in which we operate. Due diligence is
place. Staff and partner awareness carried out on all customers,
communication and training. directors and shareholders. Sanction
checking processes are implemented.
Risk rating Trend Risk rating Trend
Likelihood Medium Increasing Likelihood Medium No change
Impact High Impact Medium
Risk Management
What has been successful?
The implementation of our direct customer sales strategy, set up
of new subsidiaries and launch of new products has mitigated global
challenges, reduced key customer reliance and created a platform
for future growth.
During 2019 we have:
-- established new operations:
-- established subsidiaries in Mexico and Germany;
-- gained export licences for Indonesia;
-- launch of Anpario Direct to access end users in UK; and
-- new global registrations obtained for Anpro and Optomega plus;
-- innovated, developed and created new products;
-- conducted successful trials with a number of well-known universities;
-- progressed international product registrations; and
-- successfully implemented a liquid bottling plant to bring manufacturing
in-house.
We continually endeavour to improve our key control processes.
During 2019 we have:
-- updated our Business Continuity Plan designed to ensure that critical
functions and services undertaken by Anpario are able to continue under
all circumstances; and
-- developed and coached key managers and staff.
What can be improved?
We will continue to review our internal control framework and
improve our risk management capabilities. We will revise our
processes in response to new or emerging risks and to any
improvements recommended by management, external auditors and
advisors.
Brexit contingency planning
In the absence of clarity on post Brexit trading arrangements,
we set out below some of the key steps being taken to plan for and
mitigate any disruption resulting from changes to the way in which
we currently conduct business. Anpario has been proactively engaged
in understanding the potential scenarios and drawing up plans to
mitigate any future risks to the business. We have appointed a
steering group of experienced cross-functional professional
managers who are working together with our stakeholders to manage
the process and challenges we face.
Business continuity
Anpario is a global business with a long history of both
exporting and importing from EU and non-EU countries. We have
Anpario subsidiaries in ten countries with representation in every
continent. We continually review, explore options and implement
planning decisions to optimise this representation and recruit key
management to ensure continuity and growth of the business. The
Group seeks to minimise reliance on key territories and individual
customers and distributors by increasing geographic spread and
market penetration.
We have incorporated a wholly owned subsidiary in Germany as
part of our Brexit strategy; this will give us a base within the EU
if we need it for manufacturing, warehousing, product registration
or other purpose.
Import of raw materials and packaging
Anpario import a significant proportion of raw materials and
packaging from the EU. We potentially face congestion in ports and
temporary import delays by customs agents and freight forwarders
struggling with new or unclear legislation in 2021.
In 2019, the value of raw materials and packaging purchased from
the EU 27 was GBP5.2m representing 43% of total purchasing. Our EU
partners are equally concerned to ensure that supply chains are not
disrupted. Meetings and discussions have therefore been ongoing
with key suppliers regarding planning for Brexit implications and
potential outcomes. We have received assurances from our acid
supplier that buffer stocks will be stored in the UK.
Where possible, we have purchased key raw materials and these
are already in stock at our premises and a third party warehouse.
We hold approximately one-month's raw material requirements.
Anpario also imports goods from other territories outside of the EU
and has a long history of dealing with import freight clearance and
working with agents who provide effective professional customs
clearance services. If necessary, this will enable us to purchase
raw materials and packaging from alternative suppliers outside the
EU.
Export of Anpario products
Anpario is a long established business, which has developed
through exports and currently supplies more than 70 countries
across the world. In 2019, GBP3.4m, approximately 12% of our sales
were to EU 27 countries. We continue to review sales strategy and
resources to create expansion across all regions and target growth
territories both within and outside the EU.
Product regulatory requirements
All Anpario products conform to current EU standards and we
expect this to continue. Our products are on the EU register of
safe to use and do not require registration in EU. There is a risk
that we may have to register products or that a certificate of free
sale will be required after Brexit.
The Group has clearly established quality systems and procedures
in place to obtain required regulatory approvals and always strives
to meet or exceed regulatory requirements and ensure that its
employees have detailed experience and knowledge of the
regulations. The compliance and legal teams liaise closely with
government bodies who oversee the industry standards such as DEFRA
and remain constantly updated in respect of proposed and actual
changes in order to ensure that the business is equipped to deal
with and adhere to such changes.
Where any changes are identified which could affect our ability
to continue to market and sell any of our products, a response team
will be dedicated to mitigate such risk and to retain effective
communication with the relevant regulators.
Trade tariffs
In the absence of a trade agreement between the EU and the UK,
trade tariffs may be applied on goods we import from the EU, which
could affect future prices of Anpario products. They may also
increase prices to our EU customers by the addition of any duties
imposed on their purchases from our operations in the UK. We
already continually review our pricing and will take action to
control our cost base and to ensure that we remain as competitive
as possible. We will communicate any potential impact to our
customers directly and as soon as possible if they are likely to be
affected.
Exchange rate
Anpario's businesses could be affected by significant currency
fluctuations. As a consequence of Anpario's extensive international
dealings, Board approved hedging policies have been in place for
many years. We have a number of options in place to sell USD/buy
GBP. Exchange rates are continually monitored and action will be
taken as far as possible to mitigate negative effects and
anticipated exposures through implementation of our hedging policy
and entering into financial instrument contracts.
Employees
We have EU citizens based in the UK who have been employed for a
number of years; they have applied, or will be applying, for
settled status. The deadline to apply under the EU Settlement
Scheme to continue living in the UK is 30 June 2021. We do not
anticipate any difficulties caused by the lack of free movement. We
also employ people in several EU countries under direct local
employment contracts.
Conclusion
Whilst it is not currently possible to fully understand and
gauge the future obstacles facing UK & EU businesses we have
continually been very active in making our views known to senior
government ministers.
We are also actively working with government departments such as
the Department for International Trade and DEFRA on issues such as
trade barriers and regulations.
Anpario will continue to monitor developments and take whatever
steps are necessary to protect our operations and minimise any
disruption to our business. The final agreement between the UK and
the EU may impose tariffs and additional administrative burden on
our business but the UK will be able to conclude Free Trade
Agreements with other countries that will provide us with
opportunities in other markets.
Independent auditors' report to the members of
Anpario plc
Report on the audit of the financial statements
1. Opinion
In our opinion:
-- the financial statements of Anpario plc (the 'parent company') and its
subsidiaries (the 'group') give a true and fair view of the state of the
group's and of the parent company's affairs as at 31 December 2019 and of
the group's profit for the year then ended;
-- the group financial statements have been properly prepared in accordance
with International Financial Reporting Standards (IFRSs) as adopted by
the European Union;
-- the parent company financial statements have been properly prepared in
accordance with United Kingdom Generally Accepted Accounting Practice,
including Financial Reporting Standard 101 "Reduced Disclosure
Framework"; and
-- the financial statements have been prepared in accordance with the
requirements of the Companies Act 2006.
We have audited the financial statements, which comprise:
-- the consolidated statement of comprehensive income;
-- the consolidated and parent statement of financial position;
-- the consolidated and parent company statements of changes in equity;
-- the consolidated statement of cash flows;
-- the related notes 1 to 46.
The financial reporting framework that has been applied in the
preparation of the group financial statements is applicable law and
IFRSs as adopted by the European Union. The financial reporting
framework that has been applied in the preparation of the parent
company financial statements is applicable law and United Kingdom
Accounting Standards, including FRS 101 "Reduced Disclosure
Framework" (United Kingdom Generally Accepted Accounting
Practice).
2. Basis for opinion
We conducted our audit in accordance with International
Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our
responsibilities under those standards are further described in the
auditor's responsibilities for the audit of the financial
statements section of our report.
We are independent of the group and the parent company in
accordance with the ethical requirements that are relevant to our
audit of the financial statements in the UK, including the
Financial Reporting Council's (the 'FRC's') Ethical Standard as
applied to listed entities, and we have fulfilled our other ethical
responsibilities in accordance with these requirements.
We believe that the audit evidence we have obtained is
sufficient and appropriate to provide a basis for our opinion.
3. Summary of our audit approach
Key audit matters The key audit matter that we identified
in the current year was: The existence of
intangible assets relating to product
brands Within this report, key audit
matters are identified as follows:
Similar level of risk
Materiality The materiality that we used for the
group financial statements was GBP220k
(2018: GBP228k) which was determined on
the basis of 5% of profit before
taxation.
Scoping Our full scope procedures included the UK
entity, which covered 70% of the total
revenue for the group and 97% of profit
before taxation generated by profit
making entities.
Significant changes in our approach There have been no significant changes in
our audit approach for the current year.
4. Conclusions relating to going concern
We are required by ISAs (UK) to report We have nothing to report in respect
in respect of the following matters of these matters.
where: the directors' use of the going
concern basis of accounting in
preparation of the financial
statements is not appropriate; or the
directors have not disclosed in the
financial statements any identified
material uncertainties that may cast
significant doubt about the group's or
the parent company's ability to
continue to adopt the going concern
basis of accounting for a period of at
least twelve months from the date when
the financial statements are
authorised for issue.
5. Key audit matters
Key audit matters are those matters that, in our professional
judgement, were of most significance in our audit of the financial
statements of the current period and include the most significant
assessed risks of material misstatement (whether or not due to
fraud) that we identified. These matters included those which had
the greatest effect on: the overall audit strategy, the allocation
of resources in the audit; and directing the efforts of the
engagement team.
These matters were addressed in the context of our audit of the
financial statements as a whole, and in forming our opinion
thereon, and we do not provide a separate opinion on these
matters.
5.1. Existence and valuation of intangible assets in relation to
product brands
Key audit matter description The Group has material balances for
brands and development of new brands
of GBP4.0m (2018: GBP3.7m). These
relate to the fair value of previously
acquired brands or developed product
technologies. Included within this
balance is GBP1.5m in relation to the
Optivite brand, which has an
indefinite useful life. When
performing an assessment over the
commercial viability of the products,
management is required to make
judgements over the future performance
of the products to which these brands
relate. These judgements determine
whether development costs are eligible
for capitalisation and whether
existing assets should be impaired.
There is also a potential for fraud
through manipulation in relation to
the assessment made by management in
order to support the existence of the
intangible. Further details are
included within the critical
accounting estimates and judgements
note in note 2 and the intangibles
note (note 13) to the financial
statements.
How the scope of our audit responded We have obtained an understanding of
to the key audit matter relevant controls relating to the
assessment over the existence of these
intangible assets. We have assessed
the commercial viability of brands in
the development phase by considering
the market environment for the
proposed product. We have tested that
capitalised costs meet the eligibility
criteria to be recognised. We have
assessed the level of sales and gross
profits achieved historically in
relation to the carrying value of the
existing brands to consider any
reduced appetite for such products. We
have considered the commercial
rationale for the Optivite asset with
an indefinite useful life and the
market potential for the product. We
have assessed the forecasts for the
future performance of existing
brands.
Key observations Our full scope procedures included the
UK entity, which covered 70% of the
total revenue for the group and 97% of
profit before taxation generated by
profit making entities.
6. Our application of materiality
6.1. Materiality
We define materiality as the magnitude of misstatement in the
financial statements that makes it probable that the economic
decisions of a reasonably knowledgeable person would be changed or
influenced. We use materiality both in planning the scope of our
audit work and in evaluating the results of our work.
Based on our professional judgement, we determined materiality
for the financial statements as a whole as follows:
Group financial Parent company financial
statements statements
Materiality GBP220k (2018: GBP228k) GBP209k (2018: GBP205k)
Basis for determining 5% of pre-tax profit Parent company
materiality materiality equates to
3.8% of this entity's
pre-tax profit, which is
capped at 95% of group
materiality.
Rationale for the We have assessed the use We have assessed the use
benchmark applied of a headline measure to of a headline measure to
be appropriate as this be appropriate as this
continues to be a key continues to be a key
driver of the business's driver of the business's
value. This is a value. This is a critical
critical component of component of the
the financial statements financial statements and
and a key metric that a key metric that
management use to management use to monitor
monitor the performance the performance of the
of the business and business and communicate
communicate this to this to shareholders.
shareholders.
6.2. Performance materiality
We set performance materiality at a level lower than materiality
to reduce the probability that, in aggregate, uncorrected and
undetected misstatements exceed the materiality for the financial
statements as a whole. Group performance materiality was set at 70%
of group materiality for the 2019 audit (2018: 70%). In determining
performance materiality, we considered the low level of uncorrected
misstatements identified in previous audits.
6.3. Error reporting threshold
We agreed with the Audit Committee that we would report to the
Committee all audit differences in excess of GBP9k (2018: GBP11k),
as well as differences below that threshold that, in our view,
warranted reporting on qualitative grounds. We also report to the
Audit Committee on disclosure matters that we identified when
assessing the overall presentation of the financial statements.
7. An overview of the scope of our audit
7.1. Identification and scoping of components
The group operates predominantly in the UK with a number of
distribution entities around the world in locations such as Asia,
the US and Australia. A full scope audit was performed on the UK
entity, which represents 70% (2018: 78%) of the group's total
external revenue.
Audit work to respond to the risks of material misstatement,
including the consolidation, was performed directly by the group
audit engagement team. Due to the nature of the group, we have
undertaken specific procedures on certain balances within the
overseas subsidiaries, specifically in relation to the entity in
the USA. Audit work to respond to the risks of material
misstatement in these subsidiaries was undertaken at a component
materiality that was 50% (2018: 40%) of the group's materiality.
Component materiality ranged between GBP97k and GBP209k in the
current year.
8. Other information
The directors are responsible for the other information. The
other information comprises the information included in the annual
report, other than the financial statements and our auditor's
report thereon.
Our opinion on the financial statements does not cover the other
information and, except to the extent otherwise explicitly stated
in our report, we do not express any form of assurance conclusion
thereon.
In connection with our audit of the financial statements, our
responsibility is to read the other information and, in doing so,
consider whether the other information is materially inconsistent
with the financial statements or our knowledge obtained in the
audit or otherwise appears to be materially misstated.
If we identify such material inconsistencies or apparent
material misstatements, we are required to determine whether there
is a material misstatement in the financial statements or a
material misstatement of the other information. If, based on the
work we have performed, we conclude that there is a material
misstatement of this other information; we are required to report
that fact.
We have nothing to report in respect of these matters.
9. Responsibilities of directors
As explained more fully in the directors' responsibilities
statement, the directors are responsible for the preparation of the
financial statements and for being satisfied that they give a true
and fair view, and for such internal control as the directors
determine is necessary to enable the preparation of financial
statements that are free from material misstatement, whether due to
fraud or error.
In preparing the financial statements, the directors are
responsible for assessing the group's and the parent company's
ability to continue as a going concern, disclosing as applicable,
matters related to going concern and using the going concern basis
of accounting unless the directors either intend to liquidate the
group or the parent company or to cease operations, or have no
realistic alternative but to do so.
10. Auditor's responsibilities for the audit of the financial
statements
Our objectives are to obtain reasonable assurance about whether
the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an
auditor's report that includes our opinion. Reasonable assurance is
a high level of assurance, but is not a guarantee that an audit
conducted in accordance with ISAs (UK) will always detect a
material misstatement when it exists. Misstatements can arise from
fraud or error and are considered material if, individually or in
the aggregate, they could reasonably be expected to influence the
economic decisions of users taken on the basis of these financial
statements.
A further description of our responsibilities for the audit of
the financial statements is located on the FRC's website at:
www.frc.org.uk/auditorsresponsibilities. This description forms
part of our auditor's report.
Report on other legal and regulatory requirements
11. Opinions on other matters prescribed by the Companies Act
2006
In our opinion, based on the work undertaken in the course of
the audit:
-- the information given in the strategic report and the directors' report
for the financial year for which the financial statements are prepared is
consistent with the financial statements; and
-- the strategic report and the directors' report have been prepared in
accordance with applicable legal requirements.
In the light of the knowledge and understanding of the group and
the parent company and their environment obtained in the course of
the audit, we have not identified any material misstatements in the
strategic report or the directors' report.
12. Matters on which we are required to report by exception
12.1. Adequacy of explanations received and accounting
records
Under the Companies Act 2006 we are required to report to you
if, in our opinion:
-- we have not received all the information and explanations we require for
our audit; or
-- adequate accounting records have not been kept by the parent company, or
returns adequate for our audit have not been received from branches not
visited by us; or
-- the parent company financial statements are not in agreement with the
accounting records and returns.
We have nothing to report in respect of these matters.
12.2. Directors' remuneration
Under the Companies Act 2006 we are also required to report if
in our opinion certain disclosures of directors' remuneration have
not been made.
We have nothing to report in respect of this matter.
13. Use of our report
This report is made solely to the company's members, as a body,
in accordance with Chapter 3 of Part 16 of the Companies Act 2006.
Our audit work has been undertaken so that we might state to the
company's members those matters we are required to state to them in
an auditor's report and for no other purpose. To the fullest extent
permitted by law, we do not accept or assume responsibility to
anyone other than the company and the company's members as a body,
for our audit work, for this report, or for the opinions we have
formed.
Matthew Hughes BSc (Hons) ACA (Senior statutory auditor)
For and on behalf of Deloitte LLP
Statutory Auditor
Leeds, United Kingdom
18 March 2020
Consolidated statement of comprehensive income
for the year ended 31 December 2019
restated(1)
2019 2018
Note GBP000 GBP000
Revenue 3 29,046 28,277
Cost of sales (14,536) (14,735)
Gross profit 14,510 13,542
Administrative expenses (10,213) (9,069)
Operating profit 4 4,297 4,473
Depreciation and amortisation 1,140 992
Adjusting items 6 243 (123)
Adjusted EBITDA 6 5,680 5,342
Net finance income 9 97 82
Profit before tax 4,394 4,555
Income tax 10 (679) (552)
Profit for the year 3,715 4,003
Items that may be subsequently
reclassified to profit or loss:
Exchange difference on translating foreign
operations (121) (3)
Cashflow hedge movements (net of deferred
tax) 125 (184)
Total comprehensive income for the year 3,719 3,816
Basic earnings per share 12 18.10p 19.54p
Diluted earnings per share 12 17.61p 18.53p
Adjusted earnings per share 12 19.13p 18.28p
Diluted adjusted earnings per share 12 18.61p 17.33p
(1) Prior period comparatives have been restated following the
adoption of IFRS 16 as disclosed in note 29. This footnote has been
referenced throughout the notes to the accounts.
Consolidated statement of financial position
as at 31 December 2019
restated(1)
2019 2018
Note GBP000 GBP000
Intangible assets 13 11,517 11,373
Property, plant and equipment 14 4,011 3,710
Right of use assets 15 184 196
Deferred tax assets 16 744 641
Derivative financial instruments 19 362 -
Non-current assets 16,818 15,920
Inventories 17 4,102 4,031
Trade and other receivables 18 5,539 5,328
Derivative financial instruments 19 119 6
Cash and cash equivalents 20 13,842 12,912
Current assets 23,602 22,277
Total assets 40,420 38,197
Lease liabilities 21 (121) (115)
Deferred tax liabilities 16 (1,384) (1,182)
Non-current liabilities (1,505) (1,297)
Trade and other payables 22 (3,206) (3,426)
Lease liabilities 21 (67) (83)
Derivative financial instruments 19 (2) (11)
Current income tax liabilities (86) (232)
Current liabilities (3,361) (3,752)
Total liabilities (4,866) (5,049)
Net assets 35,554 33,148
Called up share capital 23 5,394 5,360
Share premium 10,849 10,423
Other reserves 24 (5,650) (5,449)
Retained earnings 25 24,961 22,814
Total equity 35,554 33,148
(1) Prior period comparatives have been restated following the
adoption of IFRS 16 as disclosed in note 29. This footnote has been
referenced throughout the notes to the accounts.
The Company has elected to take the exemption under Section 408
of the Companies Act 2006 to not present the Parent Company income
statement. The profit for the Parent Company for the year was
GBP4,814,000 (2018: GBP5,099,000).
The financial statements were approved by the Board and
authorised for issue on 18 March 2020.
Richard Edwards Karen Prior
Chief Executive Officer Group Finance Director
Company Number: 03345857
Consolidated statement of changes in equity
for the year ended 31 December 2019
Called
up
share Share Other Retained Non-controlling Total
Group capital premium reserves earnings interest equity
Note GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Balance at 1
Jan 2018 5,350 10,330 (5,406) 20,248 - 30,522
IFRS 16
Adjustment 29 - - - (5) - (5)
Balance at 1
Jan 2018 -
restated(1) 5,350 10,330 (5,406) 20,243 - 30,517
Profit for the
period - - - 4,003 - 4,003
Currency
translation
differences - - (3) - - (3)
Cash flow hedge
reserve 19 - - (184) - - (184)
Total
comprehensive
income for the
year - - (187) 4,003 - 3,816
Issue of share
capital 23 10 93 - - - 103
Share-based
payment
adjustments 26 - - 167 - - 167
Deferred tax
regarding
share--based
payments - - (23) - - (23)
Final dividend
relating to
2017 - - - (965) - (965)
Interim
dividend
relating to
2018 11 - - - (467) - (467)
Transactions
with owners 10 93 144 (1,432) - (1,185)
Balance at 31
Dec 2018 5,360 10,423 (5,449) 22,814 - 33,148
Profit for the
period - - - 3,715 - 3,715
Currency
translation
differences - - (121) - - (121)
Cash flow hedge
reserve 19 - - 125 - - 125
Total
comprehensive
income for the
year - - 4 3,715 - 3,719
Issue of share
capital 23 34 426 - - - 460
Joint-share
ownership
plan 26 - - (320) - - (320)
Share-based
payment
adjustments 26 - - 104 - - 104
Deferred tax
regarding
share--based
payments - - 11 - - 11
Final dividend
relating to
2018 11 - - - (1,048) - (1,048)
Interim
dividend
relating to
2019 11 - - - (520) - (520)
Transactions
with owners 34 426 (205) (1,568) - (1,313)
Balance at 31
Dec 2019 5,394 10,849 (5,650) 24,961 - 35,554
(1) Prior period comparatives have been restated following the
adoption of IFRS 16 as disclosed in note 29. This footnote has been
referenced throughout the notes to the accounts.
Consolidated statement of cash flows
for the year ended 31 December 2019
restated(1)
2019 2018
Note GBP000 GBP000
Operating profit for the year 4,297 4,473
Depreciation, amortisation and impairment 4 1,140 992
Loss on disposal of property, plant and
equipment 14 70 13
Share-based payments 7 104 167
Fair value adjustment to derivatives (332) 32
Operating cash flows before changes in
working capital 5,279 5,677
Increase in inventories (174) (900)
(Increase)/decrease in trade and other
receivables (281) 401
Decrease in trade and other payables (101) (1,816)
Changes in working capital (556) (2,315)
Cash generated by operations 4,723 3,362
Income tax paid (753) (673)
Net cash from operating activities 3,970 2,689
Investment in subsidiary - (132)
Purchases of property, plant and equipment 14 (894) (695)
Proceeds from disposal of property, plant
and equipment 147 -
Payments to acquire intangible assets 13 (775) (1,106)
Interest received 9 106 87
Net cash used in investing activities (1,416) (1,846)
Joint share ownership plan 26 (320) -
Proceeds from issuance of shares 460 103
Cash payments in relation to lease
liabilities (134) (124)
Operating lease interest paid (9) (5)
Dividend paid to Company's shareholders (1,568) (1,432)
Net cash used in financing activities (1,571) (1,458)
Net increase in cash and cash equivalents 983 (615)
Effect of exchange rate changes (53) (32)
Cash and cash equivalents at the beginning
of the year 12,912 13,559
Cash and cash equivalents at the end of the
year 13,842 12,912
(1) Prior period comparatives have been restated following the
adoption of IFRS 16 as disclosed in note 29. This footnote has been
referenced throughout the notes to the accounts.
Notes to the financial statements
for the year ended 31 December 2019
1. General information
Anpario plc ("the Company") and its Subsidiaries (together "the
Group") produce and distribute natural feed additives for animal
health, hygiene and nutrition. Anpario plc is a public company
traded on the Alternative Investment Market ("AIM") of the London
Stock Exchange and is incorporated in the United Kingdom and
registered in England and Wales. The address of its registered
office is Unit 5 Manton Wood Enterprise Park, Worksop,
Nottinghamshire, S80 2RS. The presentation currency of the Group is
pounds sterling. For details of the basis of consolidation see note
2.2.
2. Summary of significant accounting policies
2.1. Basis of preparation
The Group has presented its financial statements in accordance
with International Financial Reporting Standards ("IFRSs"), as
endorsed by the European Union, IFRS IC interpretations and the
Companies Act 2006 applicable to companies reporting under
IFRS.
The financial statements have been prepared on the historical
cost basis, except for financial instruments that are measured at
revalued amounts or fair values at the end of each reporting
period, as explained in the accounting policies below. Historical
cost is generally based on the fair value of the consideration
given in exchange for goods and services.
The preparation of financial statements in conformity with IFRS
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 revenues and
expenses during the reporting period. Although these estimates are
based on management's best knowledge of the amount, event or
actions, actual results ultimately may differ from those
estimates.
The estimates and underlying assumptions are reviewed on an
on-going 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.
The Company has taken advantage of the exemption provided in
section 408 of the Companies Act 2006 not to publish its individual
income statement and related notes.
2.2. Basis of consolidation
The consolidated financial statements comprise the financial
statements of the Company and its Subsidiaries drawn up to 31
December 2019.
Subsidiaries are all entities (including special purpose
entities) over which the Group has the power to govern the
financial and operating policies generally accompanying a
shareholding of more than one half of the voting rights. The
existence and effect of potential voting rights that are currently
exercisable or convertible are considered when assessing whether
the Group controls another entity. The Group also assesses
existence of control where it does not have more than 50% of the
voting power but is able to govern the financial and operating
policies by virtue of de-facto control.
De-facto control may arise in circumstances where the size of
the Group's voting rights relative to the size and dispersion of
holdings of other shareholders give the Group the power to govern
the financial and operating policies, etc. Subsidiaries are fully
consolidated from the date on which control is transferred to the
Group. They are de-consolidated from the date that control
ceases.
The Group applies the acquisition method to account for business
combinations. The consideration transferred for the acquisition of
a Subsidiary is the fair values of the assets transferred, the
liabilities incurred to the former owners of the acquiree and the
equity interests issued by the Group. The consideration transferred
includes the fair value of any asset or liability resulting from a
contingent consideration arrangement. Identifiable assets acquired
and liabilities and contingent liabilities assumed in a business
combination are measured initially at their fair values at the
acquisition date. The Group recognises any non-controlling interest
in the acquiree on an acquisition-by-acquisition basis, either at
fair value or at the non-controlling interest's proportionate share
of the recognised amounts of acquiree's identifiable net
assets.
Acquisition-related costs are expensed as incurred. If the
business combination is achieved in stages, the acquisition date
carrying value of the acquirer's previously held equity interest in
the acquiree is remeasured to fair value at the acquisition date;
any gains or losses arising from such re-measurement are recognised
in profit or loss.
Any contingent consideration to be transferred by the Group is
recognised at fair value at the acquisition date. Subsequent
changes to the fair value of the contingent consideration that is
deemed to be an asset or liability is recognised in accordance with
IAS 39 in profit or loss. Contingent consideration that is
classified as equity is not re-measured and its subsequent
settlement is accounted for within equity.
Goodwill is initially measured as the excess of the aggregate of
the consideration transferred and the fair value of non-controlling
interest over the net identifiable assets acquired and liabilities
assumed. If this consideration is lower than the fair value of the
net assets of the Subsidiary acquired, the difference is recognised
in profit or loss.
Inter-company transactions, balances, income and expenses on
transactions between Group companies are eliminated. Profits and
losses resulting from intercompany transactions that are recognised
in assets are also eliminated. Accounting policies of Subsidiaries
have been changed where necessary to ensure consistency with the
policies adopted by the Group.
2.3. Revenue recognition
On 1 January 2018, the Group adopted IFRS 15 'Revenue from
Contracts with Customers', which did not result in a classification
or measurement adjustment to retained earnings on transition or a
restatement of comparative information.
Revenue comprises the fair value of the consideration received
or receivable for the sale of goods in the ordinary course of the
Group's activities. Revenue is shown net of value added tax,
returns, rebates and discounts and after eliminating sales within
the Group.
Revenue is derived principally from the sales of goods and in
some instances the goods are sold on Cost and Freight (CFR) or
Cost, Insurance and Freight (CIF) Incoterms. When goods are sold on
a CFR or CIF basis, the Group is responsible for providing these
services (shipping and insurance) to the customer, sometimes after
the date at which Anpario has lost control of the goods. Revenue is
recognised when the performance obligations have been satisfied,
which is once control of the goods has transferred from Anpario to
the buyer. Anpario considers revenue related to the shipping and
insurance service element of the contract to be immaterial and does
not consider there to be separate performance obligations.
2.4. Segment reporting
Operating segments are reported in a manner consistent with the
internal reporting to the chief operating decision-maker. The chief
operating decision-maker, who is responsible for allocating
resources and assessing performance of the operating segments, has
been identified as the Board.
2.5. Foreign currency translation
Monetary assets and liabilities denominated in foreign
currencies are translated into pounds sterling at the rates of
exchange ruling at the balance sheet date. Transactions in foreign
currencies are recorded at the rate ruling at the date of the
transaction. All differences are included in the profit or loss for
the period.
Functional and presentational currency
Items included in the financial statements of each of the
Group's entities are measured using the currency of the primary
economic environment in which the entity operates ("functional
currency"). The consolidated financial statements are presented in
pounds sterling, which is the Company's functional and
presentational currency.
Transactions and balances
Foreign currency transactions are translated into the functional
currency using exchange rates prevailing at the date of the
transactions. Foreign exchange gains and losses resulting from the
settlement of such transactions and from the translation at period
end exchange rates of monetary assets and liabilities denominated
in foreign currencies are recognised in the income statement,
except when deferred in equity as qualifying cash flow hedges and
qualifying net investment hedges.
Translation differences on non-monetary financial assets and
liabilities are reported as part of the fair value gain or loss.
Translation differences on non-monetary financial assets and
liabilities such as equities held at fair value through profit or
loss are recognised as part of the fair value gain or loss.
Group companies
The results and financial position of all Group entities that
have a functional currency different from the presentational
currency are translated into the presentational currency as
follows:
-- assets and liabilities for each balance sheet presented are translated at
the closing exchange rate at the date of the balance sheet;
-- income and expenses for each income statement are translated at average
exchange rates (unless this average is not a reasonable approximation of
the cumulative effect of the rates prevailing on the transaction dates,
in which case the income and expenses are translated at the rate on the
dates of the transaction) ; and
-- all resulting exchange differences are recognised as a separate component
of equity.
On consolidation, exchange differences arising from the
translation of the net investment in foreign operations, and of
borrowings and other currency instruments designated as hedges of
such investments, are taken to shareholders' equity. When a foreign
operation is partially disposed of or sold, exchange differences
that were recognised in equity are recognised in the income
statement as part of the gain or loss on sale. Goodwill and fair
value adjustments arising on the acquisition of a foreign entity
are treated as assets and liabilities of the foreign entity and
translated at the closing exchange rate.
2.6. Intangible assets
Goodwill
Goodwill represents the excess of the cost of an acquisition
over the fair value of the Group's share of the identifiable net
assets acquired. Goodwill is reviewed for impairment at least
annually or more frequently if events or changes in circumstances
indicate a potential impairment. Goodwill is carried at cost less
accumulated impairment losses and is allocated to the appropriate
cash-generating unit for the purpose of impairment testing. Any
impairment is recognised immediately through the income statement
and is not subsequently reversed.
Brands
Brands are stated at cost less accumulated amortisation and
impairment. Brand names acquired in a business combination are
recognised at fair value based on an expected royalty value at the
acquisition date. Useful lives of brand names are estimated and
amortised over 10 to 20 years on a straight-line basis and included
in administrative expenses in the income statement, except where
they are deemed to have an indefinite life and consequently are not
amortised. Brands with an indefinite useful life are reviewed for
impairment at least annually or more frequently if events or
changes in circumstances indicate a potential impairment. However,
they are allocated to appropriate cash-generating units and subject
to impairment testing on an annual basis. Any impairment is
recognised immediately through the income statement and is not
subsequently reversed.
Customer relationships
Customer relationships acquired in a business combination are
recognised at fair value at the acquisition date. Customer
relationships are deemed to have a finite useful life and are
carried at original fair value less accumulated amortisation.
Amortisation is calculated using the straight-line method over the
expected useful life of 10 years and included in administrative
expenses in the income statement.
Patents, trademarks and registrations
Separately acquired patents, trademarks and registrations are
shown at historical cost. Patents, trademarks and registrations
have finite useful lives and are carried at cost less accumulated
amortisation. Amortisation is calculated using the straight-line
method to allocate the cost of patents, trademarks and
registrations over their estimated useful lives of 5 to 20 years
and included in administrative expenses in the income
statement.
Development costs
Development costs are stated at cost less accumulated
amortisation and impairment. Development costs are recognised if it
is probable that there will be future economic benefits
attributable to the asset, the cost of the asset can be measured
reliably, the asset is separately identifiable and there is control
over the use of the asset. The assets are amortised when available
for use on a straight-line basis over the period over which the
Group expects to benefit from these assets and included in
administrative expenses in the income statement. Research
expenditure is written off to the income statement in the year in
which it is incurred.
Where appropriate, once development work has been completed the
asset(s) generated may be reclassified to another intangible asset
category and be subjected to the relevant accounting treatment as
defined in this note.
Development costs that are directly attributable to the design
and testing of identifiable and unique products controlled by the
Group are recognised as intangible assets when the following
criteria are met:
-- it is technically feasible to complete the product so that it will be
available for use;
-- management intends to complete the product and use or sell it;
-- there is an ability to use or sell the product;
-- it can be demonstrated how the product will generate probable future
economic benefits;
-- adequate technical, financial and other resources to complete the
development and to use or sell the product are available; and
-- the expenditure attributable to the product during its development can be
reliably measured.
Directly attributable costs that are capitalised as part of the
product include the development employee costs and an appropriate
portion of relevant overheads.
Software and licenses
Software and licenses are stated at cost less accumulated
amortisation and impairment. Cost includes the original purchase
price of the asset and the costs attributable to bringing the asset
to its working condition for its intended use. Amortisation is
calculated using the straight-line method to allocate the cost of
software and licenses over their estimated useful lives of 5 to 7
years and included in administrative expenses in the income
statement.
2.7. Impairment of non-financial assets
The carrying amounts of the Group's assets are reviewed at each
balance sheet date to determine whether there is any indication of
impairment, if so the asset's recoverable amount is estimated. The
recoverable amount is the higher of its fair value less costs to
sell and its value in use. For intangible assets that are not yet
available for use, goodwill or other intangible assets with an
indefinite useful life, an impairment test is performed at each
balance sheet date.
In assessing value in use, the expected future cash flows from
the asset are discounted to their present value using a pre-tax
discount rate that reflects current market assessments of the time
value of money and the risks specific to the asset. An impairment
loss is recognised in the income statement whenever the carrying
amount of an asset or its cash-generating unit exceeds its
recoverable amount.
A previously recognised impairment loss is reversed if the
recoverable amount increases as a result of a change in the
estimates used to determine the recoverable amount, but not to an
amount higher than the carrying amount that would have been
determined (net of depreciation and or amortisation) had no
impairment loss been recognised in prior years. For goodwill, a
recognised impairment loss is not reversed.
2.8. Investments
Investments in Subsidiaries are stated at cost less provision
for diminution in value.
2.9. Property, plant and equipment
Property, plant and equipment are stated at cost less
accumulated depreciation and impairment. Cost includes the original
purchase price of the asset and the costs attributable to bringing
the asset to its working condition for its intended use. Land is
not depreciated. Depreciation is provided at rates calculated to
write off the cost less estimated residual value of each asset over
its expected useful life using the straight-line method, as
follows:
Buildings 50 years or period of lease if shorter
Plant and machinery 3--10 years
Fixtures, fittings and equipment 3--10 years
Assets in the course of construction for production, supply or
administrative purposes, or for purposes not yet determined, are
carried at cost, less any recognised impairment loss. Cost includes
professional fees and, for qualifying assets, borrowing costs
capitalised in accordance with the Group's accounting policy.
Depreciation of these assets, on the same basis as other assets,
commences when the assets are ready for their intended use.
The carrying amounts of the Group's assets are reviewed at each
balance sheet date to determine whether there is any indication of
impairment and an impairment loss is recognised in the income
statement where appropriate.
Gains and losses on disposals are determined by comparing the
proceeds with the carrying amount and are recognised within the
income statement.
2.10. Inventories
Inventories are valued at the lower of cost and net realisable
value. Cost is determined using the weighted average cost method.
The cost of finished goods comprises raw materials, direct labour,
other direct costs and related production overheads that have been
incurred in bringing the inventories to their present location and
condition. Net realisable value is the estimated selling price in
the ordinary course of business.
2.11. Trade receivables
The Group applies the simplified approach when using the
expected credit loss (ECL) impairment model for trade receivables.
Under the simplified approach the Group always measures the loss
allowance at an amount equal to the lifetime expected credit losses
for trade receivables.
The measurement of expected credit losses is a function of the
probability of default, loss given default (i.e. the magnitude of
the loss if there is a default) and the exposure at default. Loss
given default is an estimate of the loss arising on default. It is
based on the difference between the contractual cash flows due and
those that the lender would expect to receive. Probability of
default constitutes a key input in measuring ECL. Probability of
default is an estimate of the likelihood of default over a given
time horizon, the calculation of which includes historical data,
assumptions and expectations of future conditions.
The expected credit losses on these financial assets are
estimated using a provision matrix based on the Group's historical
credit loss experience, adjusted for factors that are specific to
the debtors, general economic conditions and an assessment of both
the current as well as the forecast direction of conditions at the
reporting date, including time value of money where
appropriate.
The ECL's are updated each reporting period to reflect changes
in credit risk since initial recognition.
The Group writes off a trade receivable when there is
information indicating that the debtor is in severe financial
difficulty and there is no realistic prospect of recovery, e.g.
when the debtor has been placed under liquidation or has entered
into bankruptcy proceedings. None of the trade receivables that
have been written off is subject to enforcement activities.
2.12. Trade payables
Trade payables are obligations to pay for goods or services that
have been acquired in the ordinary course of business from
suppliers. Trade payables are classified as current liabilities if
payment is due within one year or less (or in the normal operating
cycle of the business if longer). If not, they are presented as
non-current liabilities.
2.13. Cash and cash equivalents
Cash and cash equivalents comprise cash at bank and short-term
deposits that are readily convertible into cash.
2.14. Financial instruments
The Group's principal financial instruments comprise derivatives
and cash and cash equivalents. These financial instruments are used
to manage currency exposures, funding and liquidity requirements.
Other financial instruments which arise directly from the Group's
operations includes trade and other receivables (note 18) and trade
and other payables (note 22). The main risks arising from the
Group's financial instruments and related policies are detailed in
note 2.21.
The Group uses the following valuation hierarchy to determine
the carrying value of financial instrument that are measured at
fair value:
Level 1 Quoted (unadjusted) prices in active markets for identical
assets or liabilities.
Level 2 Inputs other than quoted prices included within level 1
that are observable for the asset or liability, either
directly (that is, as prices) or indirectly (that is,
derived from prices).
Level 3 Inputs for the asset or liability that are not based on
observable market data (that is, unobservable inputs)
2.15. Derivative financial instruments
On 1 January 2018, the Group adopted IFRS 9 'Financial
Instruments', which replaced IAS 39 'Financial Instruments:
Recognition and Measurement'. The new standard has been applied
retrospectively, but did not result in a material change to the
Group's accounting policies or a restatement of prior period
financial assets and liabilities.
The Group designates certain hedging instruments, which include
derivatives, in respect of foreign currency risk, as cash flow
hedges. Hedges of foreign exchange risk on firm commitments are
accounted for as cash flow hedges.
At the inception of the hedge relationship, the entity documents
the relationship between the hedging instrument and the hedged
item, along with its risk management objectives and its strategy
for undertaking various hedge transactions. Furthermore, at the
inception of the hedge and on an ongoing basis, the Group documents
whether the hedging instrument is highly effective in offsetting
changes in fair values or cash flows of the hedged item.
The Group uses derivative financial instruments to manage
certain exposures to fluctuations in foreign currency exchange
rates, these have been designated as qualifying cash flow
hedges.
IFRS 9 removes the requirement to demonstrate hedge
effectiveness between a range of 80-125% and instead requires that
you can demonstrate an economic relationship between the hedged
item and hedging instrument. The effective portion of changes in
the fair value of derivatives that are designated and qualify as
cash flow hedges is recognised in other comprehensive income and
accumulated in reserves in equity. The gain or loss relating to the
ineffective portion is recognised immediately in profit or loss
within other income or other expense. Amounts accumulated in equity
are reclassified to profit or loss in the periods when the hedged
item affects profit or loss (for instance when the forecast sale
that is hedged takes place).
There has been no material impact on adoption of IFRS 9.
2.16. Exceptional items
Exceptional items are disclosed separately in the financial
statements where it is necessary to do so to provide further
understanding of the financial performance of the Group. They are
material items of income or expense that have been shown separately
due to the significance of their nature or amount.
2.17. Taxation
The tax expense for the period comprises current and deferred
tax. Tax is recognised in the income statement, except to the
extent that it relates to items recognised in other comprehensive
income or directly in equity. In this case the tax is also
recognised in other comprehensive income or directly in equity,
respectively.
The current income tax charge is calculated on the basis of the
tax laws enacted or substantively enacted at the balance sheet date
in the countries where the Company's Subsidiaries operate and
generate taxable income. Management periodically evaluates
positions taken in tax returns with respect to situations in which
applicable tax regulation is subject to interpretation. It
establishes provisions where appropriate on the basis of amounts
expected to be paid to the tax authorities.
Deferred income tax is recognised, using the liability method,
on temporary differences arising between the tax bases of assets
and liabilities and their carrying amounts in the consolidated
financial statements. However, deferred tax liabilities are not
recognised if they arise from the initial recognition of goodwill;
deferred income tax is not accounted for if it arises from initial
recognition of an asset or liability in a transaction other than a
business combination that at the time of the transaction affects
neither accounting nor taxable profit or loss. Deferred income tax
is determined using tax rates and laws that have been enacted or
substantively enacted by the balance sheet date and are expected to
apply when the related deferred income tax asset is realised or the
deferred income tax liability is settled.
Deferred income tax assets are recognised to the extent that it
is probable that future taxable profit will be available against
which the temporary differences can be utilised.
Deferred income tax is provided on temporary differences arising
on investments in Subsidiaries, except where the timing of the
reversal of the temporary difference is controlled by the Group and
it is probable that the temporary difference will not reverse in
the foreseeable future.
Deferred income tax assets and liabilities are offset when there
is a legally enforceable right to offset current tax assets against
current tax liabilities and when the deferred income tax assets and
liabilities relate to income taxes levied by the same taxation
authority on either the same taxable entity or different taxable
entities where there is an intention to settle the balances on a
net basis.
2.18. Employee benefits
Share-based payments
The Group issues equity-settled share-based payments and shares
under the Joint Share Ownership Plan ("JSOP") and Company Share
Option Plan ("CSOP") to certain employees. These are measured at
fair value and along with associated expenses are recognised as an
expense in the income statement with a corresponding increase (net
of expenses) in equity. The fair values of these payments are
measured at the dates of grant using appropriate option pricing
models, taking into account the terms and conditions upon which the
awards are granted. The fair value is recognised over the period
during which employees become unconditionally entitled to the
awards subject to the Group's estimate of the number of awards
which will lapse, either due to employees leaving the Group prior
to vesting or due to non-market based performance conditions not
being met.
The Group operates a number of equity-settled, share-based
compensation plans, under which the entity receives services from
employees as consideration for equity instruments (options) of the
Group. The fair value of the employee services received in exchange
for the grant of the options is recognised as an expense. The total
amount to be expensed is determined by reference to the fair value
of the options granted:
-- including any market performance conditions (for example, an entity's
share price);
-- excluding the impact of any service and non-market performance vesting
conditions (for example, profitability, sales growth targets and
remaining an employee of the entity over a specified time period); and
-- including the impact of any non-vesting conditions (for example, the
requirement for employees to save).
Non-market performance and service conditions are included in
assumptions about the number of options that are expected to vest.
The total expense is recognised over the vesting period, which is
the period over which all of the specified vesting conditions are
to be satisfied.
In addition, in some circumstances employees may provide
services in advance of the grant date and therefore the grant date
fair value is estimated for the purposes of recognising the expense
during the period between service commencement period and grant
date.
At the end of each reporting period, the Group revises its
estimates of the number of options that are expected to vest based
on the non-market vesting conditions. It recognises the impact of
the revision to original estimates, if any, in the income
statement, with a corresponding adjustment to equity.
When the options are exercised, the Company issues new shares.
The proceeds received net of any directly attributable transaction
costs are credited to share capital (nominal value) and share
premium.
The grant by the Company of options over its equity instruments
to the employees of Subsidiary undertakings in the Group is treated
as a capital contribution. The fair value of employee services
received, measured by reference to the grant date fair value, is
recognised over the vesting period as an increase to investment in
Subsidiary undertakings, with a corresponding credit to equity in
the Parent entity financial statements.
The social security contributions payable in connection with the
grant of the share options is considered an integral part of the
grant itself, and the charge will be treated as a cash-settled
transaction.
Pension obligations
The Group operates a defined contribution pension scheme and
contributes a percentage of salary to individual employee schemes.
Pension contributions are recognised as an expense as they fall due
and the Group has no further payment obligations once the
contributions have been paid.
2.19. Equity and reserves
Share capital
Share capital is determined using the nominal value of Ordinary
shares that have been issued. Incremental costs directly
attributable to the issue of new shares or options are shown in
equity as a deduction, net of tax, from the proceeds.
Share premium
The share premium account includes any premiums received on the
initial issuing of the share capital. Any transaction costs
associated with the issue of shares are deducted from the share
premium account, net of any related income tax benefits.
Treasury shares
Treasury shares represents shares in Anpario plc that are held
by the Company.
Joint Share Ownership Plan
The JSOP shares reserve arises when the Company issues equity
share capital under the JSOP, which is held in trust by Anpario plc
Employees' Share Trust ("the Trust"). The interests of the Trust
are consolidated into the Group's financial statements and the
relevant amount treated as a reduction in equity.
Merger reserve
The premium arising on the issue of consideration shares to
acquire a business is credited to the merger reserve.
Special reserve
Amounts arising on the restructuring of equity and reserves to
protect creditor interests are credited to the special reserve.
Cash flow hedge reserve
The cash flow hedge reserve represents the cumulative amount of
gains and losses on hedging instruments deemed effective as cash
flow hedges. The cumulative deferred gain or loss on the hedging
instrument is recognised only when the hedged transaction impacts
the profit or loss.
Share-based payment reserve
The share-based payment reserve is credited with amounts charged
to the income statement in respect of the movements in the fair
value of equity-settled share-based payments and shares issued
under the JSOP.
Translation reserve
Exchange differences relating to the translation of the net
assets of the Group's foreign operations, from their functional
currency into the Parent Company's functional currency, being
pounds Sterling, are recognised directly in the foreign exchange
reserve.
2.20. Dividend distribution
Dividend distribution to the Company's shareholders is
recognised as a liability in the Group's financial statements in
the period in which the dividends are approved by the Company's
shareholders.
2.21. Financial risk management
The Group is exposed to a number of financial risks, including
credit risk, liquidity risk, exchange rate risk and capital
risk.
Credit risk
Credit risk is the risk of financial loss to the Group if a
customer or counterparty to a financial instrument fails to meet
its contractual obligations, and arises principally from the
Group's receivables from customers and deposits with financial
institutions. The Group's exposure to credit risk is influenced
mainly by the individual characteristics of each customer. The
Group has an established credit policy under which each new
customer is analysed for creditworthiness before the Group's
payment and delivery terms and conditions are offered. Where
possible, risk is minimised through settlement via letters of
credit and purchase of credit insurance. The Group's investment
policy restricts the investment of surplus cash to interest bearing
deposits with banks and building societies with high credit
ratings.
Liquidity risk
Liquidity risk is the risk that the Group will not be able to
meet its financial obligations as they fall due. The Group's
approach to managing liquidity is to ensure that it will always
have sufficient liquidity to meet its liabilities when due, under
both normal and stressed conditions, without incurring unacceptable
losses or damage to the Group's reputation.
Exchange rate risk
The Group's principal functional currency is pounds sterling.
However, during the year the Group had exposure to Euros, US
dollars and other currencies. The Group's policy is to maintain
natural hedges, where possible, by matching revenue and receipts
with expenditure and put in place hedging instruments as considered
appropriate to mitigate the risk.
Capital risk
The Group's objectives when managing capital are to safeguard
the Group's ability to continue as a going concern in order to
provide returns for shareholders and benefits for other
stakeholders and to maintain an optimal capital structure to reduce
the cost of capital. The Group's overall strategy remains unchanged
from 2018.
The capital structure of the Group consists of equity of the
Group, comprising issued capital, reserves and retained earnings as
disclosed in notes 23 to 25. In order to maintain or adjust the
capital structure, the Group may adjust the amount of dividends
payable to shareholders, return capital to shareholders or issue
new shares.
2.22. Leases
The Group assesses whether a contract is or contains a lease, at
inception of the contract. The Group recognises a right-of-use
asset and a corresponding lease liability with respect to all lease
arrangements in which it is the lessee, except for short-term
leases (defined as leases with a lease term of 12 months or less).
For these leases, the Group recognises the lease payments as an
operating expense on a straight-line basis over the term of the
lease unless another systematic basis is more representative of the
time pattern in which economic benefits from the leased assets are
consumed.
The lease liability is initially measured at the present value
of the lease payments that are not paid at the commencement date,
discounted by using the rate implicit in the lease. If this rate
cannot be readily determined, the Group uses its incremental
borrowing rate.
The lease liability is presented as a separate line in the
consolidated statement of financial position.
The lease liability is subsequently measured by increasing the
carrying amount to reflect interest on the lease liability (using
the effective interest method) and by reducing the carrying amount
to reflect the lease payments made.
The Group remeasures the lease liability (and makes a
corresponding adjustment to the related right-of-use asset)
whenever:
-- The lease term has changed or there is a significant event or change in
circumstances resulting in a change in the assessment of exercise of a
purchase option, in which case the lease liability is remeasured by
discounting the revised lease payments using a revised discount rate.
-- The lease payments change due to changes in an index or rate or a change
in expected payment under a guaranteed residual value, in which cases the
lease liability is remeasured by discounting the revised lease payments
using an unchanged discount rate (unless the lease payments change is due
to a change in a floating interest rate, in which case a revised discount
rate is used).
-- A lease contract is modified and the lease modification is not accounted
for as a separate lease, in which case the lease liability is remeasured
based on the lease term of the modified lease by discounting the revised
lease payments using a revised discount rate at the effective date of the
modification.
The right-of-use assets are presented as a separate line in the
consolidated statement of financial position. Right-of-use assets
are depreciated over the shorter period of lease term and useful
life of the underlying asset.
2.23. Critical accounting judgements and key sources of
estimation uncertainty
The Group makes estimates and assumptions concerning the future.
The resulting accounting estimates will, by definition, seldom
equal the related actual results. The estimates and assumptions
that have a significant risk of causing a material adjustment to
the carrying amounts of assets and liabilities within the next
financial year are:
Estimated impairment value of intangible assets
The Group tests annually whether intangible assets have suffered
any impairment. Impairment provisions are recorded as applicable
based on Directors' estimates of recoverable values. Following the
assessment of the recoverable amount of goodwill and intangibles of
the Group that totalled GBP11.5m as per note 13 of the financial
statements, the Directors consider the recoverable amount of
goodwill and intangibles to be supported by their value in use
calculation. Budgets comprise forecasts of revenue, staff costs and
overheads based on current and anticipated market conditions that
have been considered and approved by the Board. Whilst the Group is
able to manage aspects of costs, the revenue projections are
inherently uncertain due to the short term nature of business and
unstable market conditions driven by external factors such as
African Swine Fever. The sensitivity analysis in respect of the
recoverable amount of goodwill is presented in note 13.
The Directors do not consider there to be any key
judgements.
2.24. Impact of accounting standards and interpretations
New and amended IFRS Standards that are effective for the
current year
In the current year, the Group has applied IFRS 16 (as issued by
the IASB in January 2016) that is effective for annual periods that
begin on or after 1 January 2019. The Group has applied IFRS 16
using the full retrospective approach, with restatement of the
comparative information. The date of initial application of IFRS 16
for the Group is 1 January 2019.
IFRS 16 introduces new or amended requirements with respect to
lease accounting. It introduces significant changes to lessee
accounting by removing the distinction between operating and
finance lease and requiring the recognition of a right-of-use asset
and a lease liability at commencement for all leases, except for
short-term leases and leases of low value assets. Details of these
new requirements are described in note 2.22. The impact of the
adoption of IFRS 16 on the Group's consolidated financial
statements is described in note 29.
IFRS 16 changes how the Group accounts for leases previously
classified as operating leases under IAS 17, which were off balance
sheet.
Applying IFRS 16 for all leases the Group:
-- Recognises right-of-use assets and lease liabilities in the consolidated
statement of financial position, initially measured at the present value
of the future lease payments;
-- Recognises depreciation of right-of-use assets and interest on lease
liabilities in profit or loss;
-- Separates the total amount of cash paid into a principal portion
(presented within financing activities) and interest (presented within
financing activities) in the consolidated statement of cash flows.
3. Operating segments
Management has determined the operating segments based on the
information that is reported internally to the Chief Operating
Decision Maker, the Board of Directors, to make strategic
decisions. The Board considers the business from a geographic
perspective and is organised into four geographical operating
divisions: Americas, Asia, Europe, Middle-East and Africa (MEA) and
Head Office.
All revenues from external customers are derived from the sale
of goods and services in the ordinary course of business to the
agricultural markets and are measured in a manner consistent with
that in the income statement. Inter-segment revenue is charged at
prevailing market prices or in accordance with local transfer
pricing regulations.
for the year
ended 31 Dec Head
2019 Americas Asia Europe MEA Office Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Total segmental
revenue 6,802 11,009 12,545 4,323 - 34,679
Inter-segment
revenue - - (5,633) - - (5,633)
Revenue from
external
customers 6,802 11,009 6,912 4,323 - 29,046
Depreciation
and
amortisation (4) (71) - (4) (1,061) (1,140)
Net finance
income - (3) - 2 98 97
Profit before
income tax 1,268 3,717 3,051 1,377 (5,019) 4,394
for the year
ended 31 Dec Head
2018 Americas Asia Europe MEA Office Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Total segmental
revenue 5,703 11,563 12,341 3,614 - 33,221
Inter-segment
revenue - - (4,944) - - (4,944)
Revenue from
external
customers 5,703 11,563 7,397 3,614 - 28,277
Depreciation
and
amortisation (7) (12) - - (973) (992)
Net finance
income - 1 - 2 79 82
Profit before
income tax 1,437 3,765 2,971 1,099 (4,717) 4,555
4. Operating profit
Operating profit for the year has been arrived at after
charging/(crediting) the following items:
restated(1)
2019 2018
Notes GBP000 GBP000
Cost of inventories recognised as an expense 10,932 11,510
Employment costs 7 5,785 5,588
Share-based payment charges 124 118
Amortisation of intangible assets 629 552
Depreciation of property, plant and
equipment 375 319
Depreciation of right-of-use assets 136 121
Loss on disposal of tangible and intangible
assets 70 13
Net foreign exchange losses/(gains) 280 (275)
Research and development expenditure 23 45
Other expenses 6,395 5,813
Our specialist technical team includes experts in poultry,
swine, ruminant and aquaculture species. During the year we have
capitalised internal costs of GBP302,000 (2018: GBP275,000) and
expended a further GBP149,000 (2018: GBP453,000) on external trials
in respect of current development projects.
5. Auditor's remuneration
During the year the Group obtained the following services from
the Company's auditor:
2019 2018
GBP000 GBP000
Fees payable to Company's auditor for the audit of Parent
Company and consolidated financial statements 61 58
Fees payable to Company's auditor for other services: 9 -
The audit of Company Subsidiaries - 8
Total fees payable to Company's auditor 70 66
6. Alternative performance measures
In reporting financial information, the Group presents
alternative performance measures (APMs), which are not defined or
specified under the requirements of IFRS. The Group believes that
these APMs, which are not considered to be a substitute for or
superior to IFRS measures, provide depth and understanding to the
users of the financial statements to allow for further assessment
of the underlying performance of the Group.
The Board considers that adjusted EBITDA is the most appropriate
profit measure by which users of the financial statements can
assess the ongoing performance of the Group. EBITDA is a commonly
used measure in which earnings are stated before net finance
income, amortisation and depreciation. The Group makes further
adjustments to remove items that are non-recurring or are not
reflective of the underlying operational performance either due to
their nature or the level of volatility.
The Group have determined in the year that it would further
benefit the users of these financial statements to make adjustments
for foreign exchange and disposals of property. For comparability,
the prior year figures also reflect this change.
restated(1)
2019 2018
GBP000 GBP000
Operating profit 4,297 4,473
Share-based payments 124 118
Loss on disposal of property 61 -
Foreign exchange losses/(gains) 332 (238)
Foreign exchange hedging - Fair value movements (274) (3)
Total adjustments 243 (123)
Adjusted operating profit 4,540 4,350
Depreciation and amortisation 1,140 992
Adjusted EBITDA 5,680 5,342
restated(1)
2019 2018
GBP000 GBP000
Adjusted operating profit 4,540 4,350
Income tax expense (679) (552)
Income tax impact of adjustments 67 (55)
Adjusted profit after tax 3,927 3,743
7. Employment costs
2019 2018
Notes GBP000 GBP000
Wages and salaries 4,987 4,808
Social security costs 586 590
Other pension costs 212 190
Share-based payment charges 26 124 118
Employment costs 5,909 5,706
8. Number of employees
The average monthly number of employees, including Directors,
during the year was:
2019 2018
GBP000 GBP000
Directors 4 4
Production 28 25
Administration 20 21
Sales and Technical 62 62
Average headcount 114 112
In addition to employees, sales and technical specialists are
engaged on a consultancy basis in several countries.
9. Net finance income
restated(1)
2019 2018
GBP000 GBP000
Interest receivable on short-term bank deposits 106 87
Finance income 106 87
Operating lease interest paid (9) (5)
Finance costs (9) (5)
Net finance income 97 82
10. Income tax
restated(1)
2019 2018
Notes GBP000 GBP000
Current tax on profits for the year 662 732
Adjustment for prior years (46) (99)
Current tax 616 633
Origination and reversal of temporary
differences 27 (50)
Adjustment for prior years 36 (31)
Deferred tax 16 63 (81)
Income tax expense charged to the income
statement 679 552
Adjustments in respect of prior years represent the benefits
from enhanced research and development tax credits.
The tax on the Company's profit before tax differs from the
theoretical amount that would arise using the standard domestic tax
rate applicable to profits of the Company as follows:
restated(1)
2019 2018
GBP000 GBP000
Profit before tax 4,394 4,555
Tax at the UK domestic rate 835 865
Non-deductible expenses 66 33
Losses not recognised for deferred tax 189 232
Research and development tax credits (310) (363)
Prior year tax adjustments (10) (130)
Tax credit recognised directly in equity (24) (24)
Difference in tax rates (90) (87)
Other tax adjustments 23 26
Tax adjustments (156) (313)
Income tax expense charged to the income statement 679 552
Corporation tax is calculated at 19% (2018: 19%) of the
estimated assessable profit for the year. The latest UK government
budget announcement stated that planned reductions to the tax rate
will no longer occur and the rate will remain at 19%, this is not
enacted at the balance sheet date and the balance sheet position as
at 31 December 2019 is a tax rate of 17% effective from 1 April
2020.
In addition to the amount charged to the income statement, the
following amounts relating to tax have been recognised in other
comprehensive income.
restated(1)
2019 2018
Note GBP000 GBP000
Current tax on profits for the year (8) (15)
Current tax (8) (15)
Origination and reversal of temporary
differences 23 39
Deferred tax 16 23 39
Income tax recognised in other comprehensive
income 15 24
11. Dividends
Amounts recognised as distributions to equity holders for the
year ended 31 December:
2019 2019 2018 2018
pence GBP000 pence GBP000
Interim dividend per share - Paid 2.50p 520 2.20p 467
Final dividend per share - Paid - - 5.00p 1,048
Final dividend per share - Proposed 5.50p 1,144 - -
Final dividend per share 5.50p 1,144 5.00p 1,048
Total dividend per share 8.00p 1,664 7.20p 1,515
The proposed final dividend is subject to approval by the
shareholders at the AGM and has not been included as a liability in
these financial statements.
Under the Joint Share Ownership Plan ("JSOP") the proceeds of
dividends received on jointly owned shares will be divided between
the employees and the Trust according to any growth in the market
value. Dividend amounts due to the Trust are waived. The
calculation of the split is made at the time of payment and the
estimated dividend amount shown above includes an estimate of the
amounts to be waived.
12. Earnings per share
The calculation of the basic and diluted earnings per share is
based on the following data:
restated(1)
2019 2018
Profit for the year (GBP000's) 3,715 4,003
Weighted average number of shares in issue 20,529,625 20,481,580
Number of dilutive shares 570,500 1,121,146
Weighted average number for diluted earnings per
share 21,100,125 21,602,726
Basic earnings per share 18.10p 19.54p
Diluted earnings per share 17.61p 18.53p
The calculation of the adjusted and diluted adjusted earnings
per share is based on the following data:
restated(1)
Note 2019 2018
Adjusted profit attributable to owners of
the Parent (GBP000's) 6 3,927 3,743
Weighted average number of shares in
issue 20,530,000 20,482,000
Number of dilutive shares 570,000 1,121,000
Weighted average number for diluted
earnings per share 21,100,000 21,603,000
Adjusted earnings per share 19.13p 18.28p
Diluted adjusted earnings per share 18.61p 17.33p
13.Intangible assets
Patents,
trademarks Software
Customer and Development and
Goodwill Brands relationships registrations costs Licenses Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Cost
As at 1 January
2018 5,960 2,768 786 1,346 2,447 589 13,896
Additions - - - 291 716 99 1,106
Reclassifications - 664 - - (664) - -
Foreign exchange - - - (1) - - (1)
As at 31 December
2018 5,960 3,432 786 1,636 2,499 688 15,001
Additions - - - 323 432 20 775
Reclassifications - 241 - - (242) - (1)
Disposals - - - (172) (1,823) - (1,995)
Foreign exchange - - - (1) - - (1)
As at 31 December
2019 5,960 3,673 786 1,786 866 708 13,779
Accumulated
amortisation
As at 1 January
2018 - 310 443 395 1,758 170 3,076
Charge for the year - 84 79 240 65 84 552
As at 31 December
2018 - 394 522 635 1,823 254 3,628
Charge for the year - 155 78 281 - 115 629
Disposals - - - (172) (1,823) - (1,995)
As at 31 December
2019 - 549 600 744 - 369 2,262
Net book value
As at 1 January
2018 5,960 2,458 343 951 689 419 10,820
As at 31 December
2018 5,960 3,038 264 1,001 676 434 11,373
As at 31 December
2019 5,960 3,124 186 1,042 866 339 11,517
The reclassification to Brands represents newly generated
Product Brands from Development projects.
Goodwill is allocated to the Group's cash-generating units
("CGUs") identified according to trading brand. The recoverable
amount of a CGU is determined based on value-in-use
calculations.
These calculations use pre-tax cash flow projections based on
financial budgets approved by management covering a five-year
period. Cash flows beyond a five-year period are extrapolated using
estimated growth rates of 2.5% per annum (2018: 2.5%).
The discount rate used of 12% (2018: 12%) is pre-tax and
reflects specific risks relating to the operating segments.
Based on the calculations of the recoverable amount of each CGU,
no impairment to goodwill was identified.
The Group has conducted a sensitivity analysis on the impairment
test of each CGU and the group of units carrying value. A cut in
the annual growth rate of 8.5 percentage points to a negative
growth of minus 6 percentage points would cause the carrying value
of goodwill to equal its recoverable amount.
Goodwill is allocated as follows:
GBP000
Acquisition of Kiotechagil operations 3,552
Acquisition of Optivite operations 592
Acquisition of Meriden operations 1,346
Acquisition of Cobbett business 470
Goodwill as at 31 December 2018 and 31 December 2019 5,960
Brands primarily relate to the fair value of previously acquired
brands. The Optivite brand was acquired in 2009 and has a net book
value at 31 December 2019 of GBP1,501,000 (2018: GBP1,501,000). The
Meriden brand was acquired in 2012 and has a net book value at 31
December 2019 of GBP434,000 (2018: GBP469,000). These are deemed to
have between 20 years and an indefinite useful life due to the
inherent intellectual property contained in the products, the
longevity of the product lives and global market opportunities.
Brands with indefinite useful lives are assessed for impairment
with goodwill in the annual impairment review as described
above.
14. Property, plant and equipment
Fixtures, Assets in
fittings the course
Land and Plant and and of
buildings machinery equipment construction Total
GBP000 GBP000 GBP000 GBP000 GBP000
Cost
As at 1
January 2018 2,181 2,088 430 - 4,699
Additions - 82 59 554 695
Disposals - (33) (1) - (34)
As at 31
December
2018 2,181 2,137 488 554 5,360
Additions 1 187 181 525 894
Transfer of
assets in
construction - 1,078 1 (1,079) -
Disposals (325) (106) (85) - (516)
Foreign
exchange - - (2) - (2)
As at 31
December
2019 1,857 3,296 583 - 5,736
Accumulated
depreciation
As at 1
January 2018 308 776 268 - 1,352
Charge for the
year 32 217 70 - 319
Disposals - (20) (1) - (21)
As at 31
December
2018 340 973 337 - 1,650
Charge for the
year 31 265 79 - 375
Disposals (118) (103) (78) - (299)
Foreign
exchange - - (1) - (1)
As at 31
December
2019 253 1,135 337 - 1,725
Net book
value
As at 1
January 2018 1,873 1,312 162 - 3,347
As at 31
December
2018 1,841 1,164 151 554 3,710
As at 31
December
2019 1,604 2,161 246 - 4,011
Held within land and buildings is an amount of GBP500,000 (2018:
GBP700,000) in respect of non-depreciable land. During the year the
Group has disposed of property that had not been in use for a
number of years following the closure of offices previously used by
Kiotechagil. This property had been in use by a charity rent free
in return for reduced business rates. The property had a net book
value of GBP207,000 and a loss of GBP61,000 has been recognised in
the income statement.
15. Right-of-use assets
Fixtures,
Land and Plant and fittings and
Group buildings machinery equipment Total
GBP000 GBP000 GBP000 GBP000
Cost
As at 1 January
2018 279 119 33 431
Additions 196 15 7 218
Modification to
lease terms (71) - - (71)
Disposals - (28) (12) (40)
As at 31 December
2018 404 106 28 538
Additions 148 - - 148
Modification to
lease terms (27) 5 - (22)
Disposals (221) (64) - (285)
As at 31 December
2019 304 47 28 379
Accumulated
depreciation
As at 1 January
2018 179 88 19 286
Charge for the year 82 30 9 121
Modification to
lease terms (26) - - (26)
Disposals - (28) (12) (40)
Foreign exchange 1 - - 1
As at 31 December
2018 236 90 16 342
Charge for the year 117 12 7 136
Disposals (221) (64) - (285)
Foreign exchange 2 - - 2
As at 31 December
2019 134 38 23 195
Net book value
As at 1 January
2018 100 31 14 145
As at 31 December
2018 168 16 12 196
As at 31 December
2019 170 9 5 184
16. Deferred tax
restated(1)
2019 2018
Notes GBP000 GBP000
As at 1 January 541 597
Income statement charge/(credit) 10 63 (81)
Deferred tax charged directly to
equity 10 23 39
Foreign exchange 13 (14)
As at 31 December 640 541
Accelerated Fair Other
tax value Cashflow timing
allowances gains hedge Losses differences Total
Notes GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
As at 1
January
2018 555 461 28 (172) (275) 597
Income
statement
credit 10 78 87 - (103) (143) (81)
Deferred
tax
charged
directly
to equity - - (27) - 66 39
Foreign
exchange - - - (14) - (14)
As at 31
December
2018 633 548 1 (289) (352) 541
Income
statement
charge 10 172 3 - (61) (51) 63
Deferred
tax
charged
directly
to equity - - 27 - (4) 23
Foreign
exchange - - - 13 - 13
As at 31
December
2019 805 551 28 (337) (407) 640
restated(1)
2019 2018
GBP000 GBP000
Deferred income tax asset (744) (641)
Deferred income tax liability 1,384 1,182
Net deferred income tax liability 640 541
Included in 'Other timing differences' above is GBP307,000
(2018: GBP253,000) that relates to the tax impact of the
elimination of intercompany unrealised profit held in
inventory.
The latest 2020 UK government budget announcement stated that
planned reductions to the tax rate will no longer occur and the
rate will remain at 19%, this is not enacted at the balance sheet
date and the balance sheet position as at 31 December 2019 is a tax
rate of 17% effective from 1 April 2020.
A deferred tax asset has been recognised for US tax losses
carried forward on the grounds that sufficient future taxable
profits are forecast to be realised. No deferred tax asset is
recognised in respect of losses incurred in other overseas
subsidiaries, due to the uncertainty surrounding the timing of the
utilisation of those losses.
17. Inventories
2019 2018
GBP000 GBP000
Raw materials and consumables 1,996 1,933
Finished goods and goods for resale 2,106 2,098
Inventory 4,102 4,031
The cost of inventories recognised as expense and included in
'cost of sales' amounted to GBP10,932,000 (2018:
GBP11,510,000).
18. Trade and other receivables
2019 2018
GBP000 GBP000
Trade receivables - gross 5,127 4,871
Less: expected credit losses (IFRS 9) (111) -
Less: provision for impairment (IAS 39) - (247)
Trade receivables -- net 5,016 4,624
Taxes 163 276
Other receivables 46 52
Prepayments 314 376
Total trade and other receivables 5,539 5,328
The carrying amount of gross trade receivables are denominated
in the following currencies:
2019 2018
GBP000 GBP000
Pounds sterling 1,690 1,611
US dollars 2,021 1,821
Euros 435 603
Other currencies 981 836
Trade receivables - gross 5,127 4,871
No interest is charged on trade receivables if balances are paid
in full and to terms, there has been no interest charged in the
current or previous financial year. There is no security against
outstanding balances.
For 2019, the Group has applied the simplified approach to
provisioning for expected credit losses prescribed by IFRS 9, which
permits the use of the lifetime expected loss provisioning for all
trade receivables. The provisions for impairment calculated under
IAS 39 are not materially different, and accordingly there are no
transition adjustments to the prior year.
The Group measures the loss allowance for trade receivables at
an amount equal to lifetime expected credit loss "ECL". The ECL on
trade receivables are estimated using a provision matrix by
reference to past default experience of the debtor and an analysis
of the debtor's current financial position, adjusted for factors
that are specific to the debtors, general economic conditions of
the industry in which the debtors operate and an assessment of both
the current as well as the forecast direction of conditions at the
reporting date. The Group will also, using this and all other
information available, make specific judgements about receivables
which may need to be individually assessed for impairment. Where
required these are marked as Credit Impaired amounts and detailed
analysis undertaken to assess the amount likely to be recovered
including consideration of the effect of credit enhancements.
The Group seeks to mitigate credit risk, in so far as possible,
through the use of credit insurance. The Group has historically
suffered low levels of credit losses, whilst there are no
guarantees on future performance, the credit losses experienced in
the past have come from customers that we were unable to obtain
specific credit insurance for. The credit insurance in place allows
for the recovery of 90% of trading debt with a customer according
to a pre-agreed insured limit. The Group sometimes trades beyond
this credit insured limit according to internal approval
procedures.
Accordingly, the Group have segmented customers according to
their credit insurance status. The following table details the risk
profile of trade receivables based on the Group's provision matrix
and individual assessments as at 31 December 2019. The expected
loss rates are the same for the Group and Company.
1-60 61-120 >121
Not days days days
past past past past Credit
due due due due impaired Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Specifically
insured
customers 3,520 275 - 3 - 3,798
Uninsured
customers 1,058 19 12 4 - 1,093
Credit
impaired - - - - 212 212
Trade
receivables -
gross 4,578 294 12 7 212 5,103
Expected loss
rates:
Specifically
insured
customers 0% 0% 1% 4% - 0%
Uninsured
customers 0% 1% 13% 42% - 1%
Credit
impaired - - - - 49% 49%
Specifically
insured
customers 1 - - - - 1
Uninsured
customers 3 - 2 2 - 7
Credit
impaired - - - - 103 103
Expected
credit
losses 4 - 2 2 103 111
Trade
receivables
-- net 4,574 294 10 5 109 4,992
The movement on the prior year's provision for impairment under
IAS 39 and current year's expected credit losses under IFRS 9 are
as follows:
Collectively Individually
assessed assessed Total
GBP000 GBP000 GBP000
As at 1 January 2018 - 82 82
Provisions for receivables
created - 234 234
Amounts written off as
unrecoverable - (69) (69)
As at 31 December 2018 (IAS 39) - 247 247
Provisions for receivables
created 8 11 19
Amounts written off as
unrecoverable - (49) (49)
Amounts recovered during the
year - (100) (100)
Foreign exchange (losses) and
gains - (6) (6)
As at 31 December 2019 (IFRS 9) 8 103 111
19. Financial instruments and risk management
Carrying amount of financial instruments
Measured
Measured at at fair
fair value value
As at 31 Measured at through other through
December amortised comprehensive profit or
2019 cost income loss Total
Note GBP000 GBP000 GBP000 GBP000
Derivative
financial
instruments - 154 208 362
Non-current - 154 208 362
Trade and
other
receivables 18 5,539 - - 5,539
Derivative
financial
instruments - - 119 119
Cash and cash
equivalents 20 13,842 - - 13,842
Current 19,381 - 119 19,500
Financial
assets 19,381 154 327 19,862
Lease
liabilities 21 (121) - - (121)
Non-current (121) - - (121)
Trade and
other
payables 22 (3,206) - - (3,206)
Derivative
financial
instruments 19 - (2) - (2)
Lease
liabilities 21 (67) - - (67)
Current (3,273) (2) - (3,275)
Financial
liabilities (3,394) (2) - (3,396)
Measured
Measured at at fair
fair value value
As at 31 Measured at through other through
December amortised comprehensive profit or
2018 cost income loss Total
Note GBP000 GBP000 GBP000 GBP000
Derivative
financial
instruments - - - -
Non-current - - - -
Trade and
other
receivables 18 5,328 - - 5,328
Derivative
financial
instruments - 1 5 6
Cash and cash
equivalents 20 12,912 - - 12,912
Current 18,240 1 5 18,246
Financial
assets 18,240 1 5 18,246
Lease
liabilities 21 (115) - - (115)
Non-current (115) - - (115)
Trade and
other
payables 22 (3,426) - - (3,426)
Derivative
financial
instruments 19 - (11) - (11)
Lease
liabilities 21 (83) - - (83)
Current (3,509) (11) - (3,520)
Financial
liabilities (3,624) (11) - (3,635)
Fair values of financial instruments
Financial instruments are measured in accordance with the
accounting policy set out in note 2.14. Derivative financial
instruments, consisting of foreign exchange forward and options
contracts, are considered Level 2. The carrying value of the
financial instruments is deemed to be approximate to fair
value.
Credit risk
The only financial instrument deemed to be subject to credit
risk is trade receivables, note 18 details these amounts and the
estimation of the maximum exposure to credit risk at the end of the
year.
Liquidity risk
The Group maintains cash balances and monitors working capital
to ensure it has sufficient available funds for operations and
planned investment activity.
Excluding those related to working capital, the only
non-derivative financial liability relates to lease liabilities,
disclosed in note 21. Derivative financial liabilities are minimal
and detailed in the exchange rates risk section below.
Currently management consider liquidity risk to be minimal.
Exchange rate risk
The Group is exposed to foreign currency exchange rate risk
mainly as a result of trade receivables and intercompany balances
that will be settled in US dollars.
The Group seeks to minimise the effects of exchange rate risk
using various methods, including entering into foreign currency
forward and option contracts. Where applicable these are designated
as cash flow hedges against highly probable forecast foreign
currency sales. If cash flow hedge accounting is not applicable
then the value is taken through profit or loss.
Included within other comprehensive income is the movement in
the cash flow hedge reserve as outlined below.
2019 2018
GBP000 GBP000
Change in value of cash flow hedges 152 (211)
Deferred tax (liability)/asset (27) 27
Cash flow hedge movements (net of deferred tax) 125 (184)
The financial instruments in place are to mitigate the risks
associated with net future US dollar receipts. The Group uses two
types of hedging instrument, fixed forwards and participating
forwards. The fixed forward contracts are fixed agreements to
exchange currency at the hedged rate. The participating forwards
provide protection at the hedged rate, each contract is divided
into monthly windows, at the end of each month the Group has the
right but not the obligation to sell at the hedged rate, however if
spot trades below the barrier rate in the month then the Group must
sell USD at the hedged rate. This means that Anpario has protection
at the hedged rate, but may also benefit from exchange between the
barrier rate and hedged rate. The details of the notional amounts,
hedged rate and spot rate at 31 December are outlined below.
2019 2018
GBP/USD spot rate at 31 December 1.3268 1.2760
Fixed forward contracts
Weighted average forward rate 1.3295 -
Maturing in the next year (Notional amount in US
dollars 000's) 1,200 -
Notional amount (US Dollars 000's) 1,200 -
Participating forward contracts
Weighted average forward rate 1.2993 1.3050
Weighted average barrier rate 1.1839 1.2050
Maturing in the next year (Notional amount in US
dollars 000's) 6,348 2,400
Maturing between one and two years (Notional amount
in US dollars 000's) 7,548 -
Maturing between two and three years (Notional
amount in US dollars 000's) 3,474 -
Notional amount (US Dollars 000's) 17,370 2,400
20. Cash and cash equivalents
Cash and cash equivalents comprise cash and short-term deposits
held by Group companies. The carrying amount of these assets
approximates to their fair value.
As at 31 December 2019, the Group held GBP388,000 (2018: GBPnil)
of cash which was restricted in its use. This restriction was
temporary and was lifted on the 6 January 2020.
21. Lease Liabilities
At 31 December the Group had lease liabilities with maturities
as follows:
2019 2018
GBP000 GBP000
Less than one year 121 115
Current lease liabilities 121 115
Between one and five years 67 83
Non-current lease liabilities 67 83
Lease Liabilities 188 198
22. Trade and other payables
2019 2018
GBP000 GBP000
Trade payables 2,119 2,374
Taxes and social security costs 112 119
Other payables 186 144
Accruals and deferred income 789 789
Trade and other payables 3,206 3,426
There is no interest payable on trade payables and no security
against outstanding balances.
23. Called up share capital
Note Number GBP000
Authorised
Ordinary shares of 23p each 86,956,521 20,000
'A' Shares of 99p each 1,859,672 1,841
Authorised share capital 21,841
Ordinary shares of 23p each - Allotted,
called up and fully paid
As at 1 January 2018 23,261,362 5,350
Shares issued pursuant to employee share plans 26 41,853 10
As at 31 December 2018 23,303,215 5,360
Shares issued pursuant to employee share plans 26 150,000 34
As at 31 December 2019 23,453,215 5,394
24. Other reserves
2019 2018
GBP000 GBP000
Treasury shares 185 185
Joint Share Ownership Plan 7,530 7,210
Merger reserve (228) (228)
Share-based payment reserve (1,972) (1,857)
Cash flow hedge reserve (117) 8
Translation reserve 252 131
Other reserves 5,650 5,449
25. Retained earnings
GBP000
As at 1 January 2018 20,248
IFRS 16 Adjustment (5)
As at 1 January 2018 - restated 20,243
Profit for the year 4,003
Dividends (1,432)
As at 31 December 2018 - restated 22,814
Profit for the year 3,715
Dividends (1,568)
As at 31 December 2019 24,961
26. Share-based payments
Movements in the number of share options outstanding are as
follows:
Weighted Weighted
average average
Number exercise price Number exercise price
of options (p) of options (p)
2019 2019 2018 2018
Outstanding at 1
January 793,033 253 749,086 238
Granted during
the year - - 94,500 376
Lapsed during
the year (101,741) 327 (8,700) 343
Exercised during
the year (50,000) 262 (41,853) 245
Outstanding at
31 December 641,292 241 793,033 253
Exercisable at
31 December 514,127 222 418,800 223
Share options outstanding at the end of the year have the
following expiry dates and weighted average exercise prices:
Weighted Weighted
average average
Number exercise price Number exercise price
of options (p) of options (p)
2019 2019 2018 2018
2020 55,327 224 75,679 224
2021 30,165 334 45,354 334
2023 160,000 159 160,000 159
2024 124,000 244 144,000 244
2025 84,800 290 114,800 287
2026 140,000 238 140,000 238
2027 10,000 343 68,700 350
2028 37,000 403 44,500 402
Total
outstanding
share options 641,292 241 793,033 253
The range of exercise prices of outstanding share options at the
year end was 159p to 428p (2018: 159p to 428p).
During the year, on 11 March 2019, under the Joint Share
Ownership Plan the company issued 100,000 shares at 23p each to key
management personnel at a price of 330p per share
The fair value of services received in return for share options
granted and the shares which have been issued into the joint
beneficial ownership of the participating Executive Directors and
the Trustee of The Anpario plc Employees' Share Trust is calculated
based on appropriate valuation models.
The expense is apportioned over the vesting period and is based
on the number of financial instruments which are expected to vest
and the fair value of those financial instruments at the date of
the grant. The charge for the year in respect of share options
granted and associated expenses amounts to GBP124,000 (2018:
GBP118,000) of which a charge of GBP20,000 (2018: GBP49,000 credit)
relates to professional fees.
The weighted average fair value of options granted during the
year was determined based on the following assumptions using the
Black-Scholes pricing model. Expected volatility was determined by
management using historical data.
Plan JSOP
Grant date 11 Mar
Number of options granted 100,000
Grant price (p) 330.0
Exercise price (p) 374.6
Carrying cost (per annum) 4.5%
Vesting period (years) 3
Option expiry (years) 10
Expected volatility of the share price 20.0%
Dividends expected on the shares 2.2%
Risk-free rate 0.7%
Fair value (p) 23.2
27. Related party transactions
Balances and transactions between the company and its
subsidiaries, which are related parties, have been eliminated on
consolidation and are not disclosed in this note.
P A Lawrence, former Chairman of ECO Animal Health Group plc, is
a Non-Executive Director of the Company and GBPnil (2018:
GBP16,667) was paid to ECO Animal Health Group plc in respect of
his services and expenses. During 2018 this arrangement was changed
and P A Lawrence is now remunerated through salary payments from
Anpario plc. There was GBPnil due to Eco Animal Health Group plc at
31 December 2019 (2018: GBPnil).
28. Capital commitments
The Group had authorised capital commitments as at 31 December
as follows:
2019 2018
GBP000 GBP000
Property, plant and equipment 41 373
Capital commitments 41 373
29. Prior year restatement
IFRS 16 Leases has been adopted by the Group. The standard has
been applied from 1 January 2019, the comparatives for prior
periods have been restated accordingly. IFRS16 requires operating
leases to be capitalised on the statement of financial position.
Anpario has applied the full retrospective approach and as such at
the end of 2018 fixed assets increased by GBP0.2m being the present
value of future lease obligations with a corresponding increase in
liabilities of GBP0.2m. The impact on the profit before tax in the
Consolidated Income Statement is not material and the cash flow
impact is nil. The tables below detail the full impact of the
restatement.
As reported Restated
Statement of year ended IFRS 16 year ended
comprehensive income 31 Dec 2018 adjustments 31 Dec 2018
GBP000 GBP000 GBP000
Revenue 28,277 - 28,277
Gross profit 13,541 1 13,542
Administrative expenses (9,076) 7 (9,069)
Operating profit 4,465 8 4,473
Net finance income 87 (5) 82
Profit before income tax 4,552 3 4,555
Profit for the year 4,000 3 4,003
As reported Changes to
year ended adjusted Restated
31 Dec IFRS 16 EBITDA year ended
Adjusted EBITDA 2018 adjustments calculation 31 Dec 2018
GBP000 GBP000 GBP000 GBP000
Operating profit 4,465 8 - 4,473
Share-based
payments 118 - - 118
Foreign exchange
losses/(gains) - - (238) (238)
Foreign exchange
hedging - Fair
value
movements - - (3) (3)
Depreciation and
amortisation 871 121 - 992
Adjusted EBITDA 5,454 129 (241) 5,342
As reported Restated
Consolidated statement of year ended IFRS 16 year ended
financial position 31 Dec 2018 adjustments 31 Dec 2018
GBP000 GBP000 GBP000
Right of use assets - 196 196
Total assets 38,001 196 38,197
Lease liabilities - (115) (115)
Non-current liabilities (1,182) (115) (1,297)
Lease liabilities - (83) (83)
Current liabilities (3,669) (83) (3,752)
Net assets 33,150 (2) 33,148
Retained earnings 22,816 (2) 22,814
Total equity 33,150 (2) 33,148
As reported Restated
Consolidated statement of year ended IFRS 16 year ended
cash flows 31 Dec 2018 adjustments 31 Dec 2018
GBP000 GBP000 GBP000
Operating profit for the
year 4,465 8 4,473
Depreciation, amortisation
and impairment 871 121 992
Net cash from operating
activities 2,560 129 2,689
Net cash used in investing
activities (1,846) - (1,846)
Cash payments in relation
to lease liabilities - (124) (124)
Operating lease interest
paid - (5) (5)
Net cash used in financing
activities (1,329) (1,458)
Net increase in cash and
cash equivalents (615) - (615)
Cash and cash equivalents
at the end of the year 12,912 12,912
30. Post balance sheet events
Anpario is pleased to announce that following the purchase of
ordinary shares on 12 March 2020, the Company's GBP1.0 million
share buyback programme as announced on 5 February 2020 was
completed.
In aggregate, between 5 February 2020 and 12 March 2020, the
Company repurchased 297,346 ordinary shares at a VWAP of 336.31
pence per share, taking the total number of treasury shares to
440,388.
Company statement of financial position
as at 31 December 2019
2019 2018
Note GBP000 GBP000
Intangible assets 35 10,966 10,811
Property, plant and equipment 36 3,988 3,689
Right of use assets 85 151
Investment in subsidiaries 37 9,598 5,393
Deferred tax assets 38 100 99
Derivative financial instruments 395 -
Non-current assets 25,132 20,143
Inventories 39 2,406 2,458
Trade and other receivables 40 9,954 11,471
Derivative financial instruments 86 6
Cash and cash equivalents 11,665 11,580
Current assets 24,111 25,515
Total assets 49,243 45,658
Lease liabilities (20) (87)
Deferred tax liabilities 38 (1,384) (1,182)
Non-current liabilities (1,404) (1,269)
Trade and other payables 41 (6,909) (7,025)
Lease liabilities (67) (65)
Derivative financial instruments (2) (11)
Current income tax liabilities (117) (170)
Current liabilities (7,095) (7,271)
Total liabilities (8,499) (8,540)
Net assets 40,744 37,118
Called up share capital 42 5,394 5,360
Share premium 10,849 10,423
Other reserves 43 (3,377) (3,297)
Retained earnings 44 27,878 24,632
Total equity 40,744 37,118
The Company profit for the year ended 31 December 2019 was
GBP4,814,000 (2018: GBP5,099,000).
The financial statements were approved by the Board and
authorised for issue on 18 March 2020.
Richard Edwards Karen Prior
Chief Executive Officer Group Finance Director
Company Number: 03345857
Company statement of changes in equity
for the year ended 31 December 2019
Called
up
share Share Other Retained Non-controlling Total
capital premium reserves earnings interest equity
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Balance at 1
Jan 2018 5,350 10,330 (3,257) 20,968 - 33,391
IFRS 16
Adjustment 29 - - - (3) - (3)
Balance at 1
Jan 2018 -
restated(1) 5,350 10,330 (3,257) 20,965 - 33,388
Profit for the
period - - - 5,099 - 5,099
Cash flow hedge
reserve - - (184) - - (184)
Total
comprehensive
income for the
year - - (184) 5,099 - 4,915
Issue of share
capital 42 10 93 - - - 103
Share-based
payment
adjustments 26 - - 167 - - 167
Deferred tax
regarding
share--based
payments - - (23) - - (23)
Final dividend
relating to
2017 - - - (965) - (965)
Interim
dividend
relating to
2018 11 - - - (467) - (467)
Transactions
with owners 10 93 144 (1,432) - (1,185)
Balance at 31
Dec 2018 5,360 10,423 (3,297) 24,632 - 37,118
Profit for the
period - - - 4,814 - 4,814
Cash flow hedge
reserve - - 125 - - 125
Total
comprehensive
income for the
year - - 125 4,814 - 4,939
Issue of share
capital 42 34 426 - - - 460
Joint-share
ownership
plan 26 - - (320) - - (320)
Share-based
payment
adjustments 26 - - 104 - - 104
Deferred tax
regarding
share--based
payments - - 11 - - 11
Final dividend
relating to
2018 11 - - - (1,048) - (1,048)
Interim
dividend
relating to
2019 11 - - - (520) - (520)
Transactions
with owners 34 426 (205) (1,568) - (1,313)
Balance at 31
Dec 2019 5,394 10,849 (3,377) 27,878 - 40,744
31. Significant accounting policies
Please refer to note 1 for full details of the Company's
incorporation, registered office, operations and principal
activity.
The separate financial statements of the Company are presented
as required by the Companies Act 2006. The Company meets the
definition of a qualifying entity under FRS 101 (Financial
Reporting Standard 101) issued by the Financial Reporting Council.
The financial statements have therefore been prepared in accordance
with FRS 101 (Financial Reporting Standard 101) 'Reduced Disclosure
Framework' as issued by the Financial Reporting Council.
As permitted by FRS 101, the Company has taken advantage of the
disclosure exemptions available under that Standard in relation to
share-based payments, financial instruments, capital management,
presentation of comparative information in respect of certain
assets, presentation of a cash flow statement and certain related
party transactions. Where required, equivalent disclosures are
given in the Group financial statements.
The financial statements have been prepared on the historical
cost basis. The principal accounting policies, and critical
accounting judgements and key sources of estimation uncertainty
adopted are the same as those set out in notes 3 and 4 to the Group
financial statements except as noted below. These have been applied
consistently throughout the period and the preceding period.
In the current period the Company has applied a number of
amendments to IFRS standards issued by the IASB that are
mandatorily effective for an accounting period that begins on or
after 1 January 2018. Their adoption has not had any material
impact on the disclosures or on the amounts reported in these
financial statements.
Investments
Fixed asset investments in subsidiaries and associates are shown
at cost less provision for impairment.
32. Profit for the period
As permitted by Section 408 of the Companies Act 2006, the
Company has elected not to present its own profit and loss account
for the period. Anpario plc reported a profit for the year ended 31
December 2019 of GBP4,814,000 (2018: GBP5,099,000).
The auditor's remuneration for audit and other services is
disclosed within note 5 to the Group financial statements.
Dividends declared and paid during the financial period are
disclosed in note 11 to the Group financial statements.
33. Employment costs
2019 2018
Notes GBP000 GBP000
Wages and salaries 3,103 3,253
Social security costs 355 388
Other pension costs 154 152
Share-based payment charges 26 124 118
Employment costs 3,736 3,911
34. Number of employees
The average monthly number of employees, including Directors,
during the year was:
2019 2018
GBP000 GBP000
Directors 4 4
Production 28 25
Administration 14 14
Sales and Technical 31 34
Average headcount 77 77
35. Intangible assets
Patents,
trademarks Software
Customer and Development and
Goodwill Brands relationships registrations costs Licenses Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Cost
As at 1 January
2018 5,490 2,679 559 1,336 2,447 589 13,100
Additions - - - 289 716 99 1,104
Reclassifications - 664 - - (664) - -
As at 31 December
2018 5,490 3,343 559 1,625 2,499 688 14,204
Additions - - - 323 432 20 775
Reclassifications - 241 - - (242) - (1)
Disposals - - - (172) (1,823) - (1,995)
As at 31 December
2019 5,490 3,584 559 1,776 866 708 12,983
Accumulated
amortisation
As at 1 January
2018 - 221 307 395 1,758 170 2,851
Charge for the year - 84 69 240 65 84 542
As at 31 December
2018 - 305 376 635 1,823 254 3,393
Charge for the year - 155 68 281 - 115 619
Disposals - - - (172) (1,823) - (1,995)
As at 31 December
2019 - 460 444 744 - 369 2,017
Net book value
As at 1 January
2018 5,490 2,458 252 941 689 419 10,249
As at 31 December
2018 5,490 3,038 183 990 676 434 10,811
As at 31 December
2019 5,490 3,124 115 1,032 866 339 10,966
The reclassification to Brands represents newly generated
Product Brands from Development projects.
More information about Goodwill can be found in note 13 to the
financial statements.
36. Property, plant and equipment
Fixtures, Assets in
fittings the course
Land and Plant and and of
buildings machinery equipment construction Total
GBP000 GBP000 GBP000 GBP000 GBP000
Cost
As at 1 January
2018 2,181 2,034 395 - 4,610
Additions - 82 56 554 692
As at 31
December 2018 2,181 2,116 451 554 5,302
Additions 1 186 171 525 883
Transfer of
assets in
construction - 1,078 1 (1,079) -
Disposals (325) (84) (85) - (494)
As at 31
December 2019 1,857 3,296 538 - 5,691
Accumulated
depreciation
As at 1 January
2018 308 741 261 - 1,310
Charge for the
year 32 210 61 - 303
As at 31
December 2018 340 951 322 - 1,613
Charge for the
year 31 265 71 - 367
Disposals (118) (81) (78) - (277)
As at 31
December 2019 253 1,135 315 - 1,703
Net book
value
As at 1 January
2018 1,873 1,293 134 - 3,300
As at 31
December 2018 1,841 1,165 129 554 3,689
As at 31
December 2019 1,604 2,161 223 - 3,988
Held within land and buildings is an amount of GBP500,000 (2018:
GBP700,000) in respect of non-depreciable land. During the year the
Company has disposed of property that had not been in use for a
number of years following the closure of offices previously used by
Kiotechagil. This property had been in use by a charity rent free
in return for reduced business rates. The property had a net book
value of GBP207,000 and a loss of GBP61,000 has been recognised in
the income statement.
37. Investment in subsidiaries
Unlisted
investments
GBP000
Cost
As at 1 January 2018 and 31 December 2018 8,009
Investment in Subsidiaries 4,205
As at 31 December 2019 12,214
Provisions for diminution in value
As at 1 January 2018, 31 December 2018 and 31 December 2019 2,616
Net book value
As at 1 January 2018 and 31 December 2018 5,393
As at 31 December 2019 9,598
Total investments in Subsidiaries in the year were GBP4,205,000
(2018: GBPnil). This primarily relates to a debt to equity
conversion totalling GBP3,199,000 related to the US Subsidiary,
Anpario Inc. Additional investment of GBP977,000 was made to
Subsidiary, PT. Anpario Biotech Indonesia, to meet requirements for
100% foreign ownership. Other amounts were invested as part of the
establishment of subsidiaries in Turkey, Mexico and Germany.
Full list of investments
The Group holds share capital in the following Companies which
are accounted for as Subsidiaries, all of which have a principal
activity of Technology Services and the Group holds 100% of the
Ordinary Shares.
Country of registration
or incorporation
Directly held
Anpario (Shanghai) Biotech Co. , Ltd.
Room 703, No.8 Dong An Road, Xu Hui District, China
Shanghai
Anpario Inc
2 W. Washington Street, Suite 400, Greenville, SC US
29601
Anpario Pty Ltd
Level 17, 383 Kent Street, Sydney, NSW, 2000 Australia
Anpario Saúde e Nutrição Animal Ltda
Rua Brigadeiro Henrique Fontenelle, 745 - room 4, Brazil
Parque São Domingos, São Paulo, 05125-000
Anpario (Thailand) Ltd
65/152 Chamnan Phenjati Building Floor 18, Rama 9 Thailand
Road, Huaykwang Sub-district, Huaykwang District,
Bangkok 10310
PT. Anpario Biotech Indonesia
Gedung 18 Office Park Iantai Mezz- unit F2, Jl. , TB Indonesia
Simatupang Kav. 18, Jakarta 12520
Anpario Malaysia Sdn. Bhd.
Real Time Corporate Services Sdn. Bhd. Unit C-12-4, Malaysia
Level 12, Block C, Megan Avenue II, 12 Jalan Yap Kwan
Seng, 50450 Kuala Lumpur
Anpario Latinoamerica SA de CV
Av. Technologico Sur # 134 cas 4, Colonia Moderna, CP Mexico
76030, Queretaro
Anpario Turkey Hayvan Sa lı ı ve Yem
Katkıları İthalat İhracat Sanayi
ve Ticaret Anonim irketi
Barbaros Mahallesi Halk Cad. Palladium Residence, (A Turkey
Blok) Apt. No: 8 A/3 Ata ehir/Ä°stanbul.
Anpario GmbH
c/o Startplatz, IM Mediapark 5, 50670 Cologne Germany
Optivite International Limited - Company Number
0234608 *
Agil Limited
Anpario UK Limited
Aquatice Limited
Kiotech Limited
Kiotechagil Limited
Meriden Animal Health Limited
Orego-Stim Limited
Optivite Limited
Unit 5 Manton Wood Enterprise Park, Worksop, United Kingdom
Nottinghamshire, S80 2RS
Indirectly held
Meriden (Shanghai) Animal Health Co. , Ltd.
Room 703, No.8 Dong An Road, Xu Hui District, China
Shanghai
Optivite Animal Nutrition Private Limited
1103-04 Windsor Apartment, T-28, Shastri Apartment, India
Andheri - West Mumbai Mumbai City MH 400053
Optivite Latinoamericana SA de CV
20 Boulevard de la Industria, Cuautitlan-Izcalli, Mexico
54716
Optivite SA (Proprietary) Limited
PO Box 578, Cape Town 8000 South Africa
The Group has no associates or joint-ventures.
* Companies where the Directors have taken advantage of the
exemption from having an audit of the entities' individual
financial statements for the year ended 31 December 2019 in
accordance with Section 479A of The Companies Act 2006.
38. Deferred tax
2019 2018
GBP000 GBP000
As at 1 January 1,083 880
Income statement credit 178 164
Deferred tax charged/(credited) directly to equity 23 39
As at 31 December 1,284 1,083
Accelerated Fair Other
tax value Cashflow timing
allowances gains hedge Losses differences Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
As at 1
January
2018 555 461 28 - (164) 880
Income
statement
credit 78 87 - - (1) 164
Deferred
tax
charged
directly
to equity - - (27) - 66 39
As at 31
December
2018 633 548 1 - (99) 1,083
Income
statement
credit 172 3 - - 3 178
Deferred
tax
charged
directly
to equity - - 27 - (4) 23
As at 31
December
2019 805 551 28 - (100) 1,284
2019 2018
GBP000 GBP000
Deferred income tax asset (100) (99)
Deferred income tax liability 1,384 1,182
Net deferred income tax liability 1,284 1,083
39. Inventories
2019 2018
GBP000 GBP000
Raw materials and consumables 1,996 1,933
Finished goods and goods for resale 410 525
Inventory 2,406 2,458
40. Trade and other receivables
2019 2018
GBP000 GBP000
Trade receivables - gross 3,896 3,757
Less: expected credit losses (IFRS 9) (17) -
Less: provision for impairment (IAS 39) - (37)
Trade receivables -- net 3,879 3,720
Receivables from Subsidiary undertakings 5,744 7,277
Taxes 59 86
Other receivables 18 28
Prepayments 254 360
Total trade and other receivables 9,954 11,471
No interest is charged on trade receivables if balances are paid
in full and to terms, there has been no interest charged in the
current or previous financial year. There is no security against
outstanding balances.
For 2019, the Company has applied the simplified approach to
provisioning for expected credit losses prescribed by IFRS 9, which
permits the use of the lifetime expected loss provision for all
trade receivables. The provisions for impairment calculated under
IAS 39 are not materially different, and accordingly there are no
transition adjustments to the prior year. More information about
how ECL is calculated is contained in note 18 to the Group
financial statements.
The movement on the prior year's provision for impairment under
IAS 39 and current year's expected credit losses under IFRS 9 are
as follows:
Collectively Individually
assessed assessed Total
GBP000 GBP000 GBP000
As at 1 January 2018 - 82 82
Provisions for receivables
created - 24 24
Amounts written off as
unrecoverable - (69) (69)
Amounts recovered during the
year - - -
As at 31 December 2018 (IAS 39) - 37 37
Provisions for receivables
created 6 11 17
Amounts written off as
unrecoverable - (38) (38)
Amounts recovered during the
year - - -
Foreign exchange (losses) and
gains - 1 1
As at 31 December 2019 (IFRS 9) 6 11 17
41. Trade and other payables
2019 2018
GBP000 GBP000
Trade payables 2,013 2,296
Amounts due to subsidiary undertakings 4,093 4,075
Taxes and social security costs 95 103
Other payables 57 54
Accruals and deferred income 651 497
Trade and other payables 6,909 7,025
There is no interest payable on trade payables and no security
against outstanding balances.
42. Share capital
The movements in share capital are disclosed in note 23 to the
Group financial statements.
43. Other reserves
2019 2018
GBP000 GBP000
Treasury shares 185 185
Joint Share Ownership Plan 7,530 7,210
Merger reserve (228) (228)
Unrealised reserve (2,021) (2,021)
Share-based payment reserve (1,972) (1,857)
Cash flow hedge (117) 8
Translation reserve - -
Other reserves 3,377 3,297
44. Retained earnings
GBP000
As at 1 January 2018 20,968
IFRS 16 Adjustment (3)
As at 1 January 2018 - restated 20,965
Profit for the year 5,099
Dividends (1,432)
As at 31 December 2018 - restated 24,632
Profit for the year 4,814
Dividends (1,568)
As at 31 December 2019 27,878
45. Related party transactions
Balances and transactions between the company and its
subsidiaries, which are related parties, have been eliminated on
consolidation and are not disclosed in this note.
P A Lawrence, Chairman of ECO Animal Health Group plc until
March 2019, is a Non-Executive Director of the Company and GBPnil
(2018: GBP16,667) was paid to ECO Animal Health Group plc in
respect of his services and expenses. During 2018 this arrangement
was changed and P A Lawrence is now remunerated through salary
payments from Anpario plc. There was GBPnil due to Eco Animal
Health Group plc at 31 December 2019 (2018: GBPnil).
The following transactions were carried out with related
parties:
Sale of goods Purchase of services Loan interest charged
2019 2018 2019 2018 2019 2018
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Subsidiaries 5,633 4,944 322 - 19 40
Related
parties - - - 20 - -
The following amounts were outstanding at the reporting
date:
2019 2018
Note GBP000 GBP000
Amounts owed by Subsidiaries 18 5,744 7,277
Amounts owed to Subsidiaries 22 4,093 4,075
The amounts outstanding are unsecured and will be settled in
cash. No guarantees have been given or received. No provisions have
been made for doubtful debts in respect of the amounts owed by
related parties.
46. Post balance sheet events
Details of post balance sheet events are contained in note 30 of
the Group financial statements.
Enquiries:
Anpario plc
Richard Edwards, Chief Executive Officer +44 (0) 777 6417
129
Karen Prior, Finance Director +44 (0) 190 9537 380
Peel Hunt LLP +44 (0) 20 7418 8900
Adrian Trimmings
Andrew Clark
Will Bell
View source version on businesswire.com:
https://www.businesswire.com/news/home/20200318005162/en/
CONTACT:
Anpario plc
SOURCE: Anpario plc
Copyright Business Wire 2020
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